UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 31, 2000
CenturyTel, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 1-7784 72-0651161
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
100 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 388-9000
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to asset purchase agreements dated June 29, 1999 and July 8, 1999, on
July 31, 2000, affiliates of CenturyTel, Inc. (the "Company") acquired certain
assets from affiliates of Verizon Communications (successor to GTE Corporation)
("Verizon") in two separate transactions in exchange for an aggregate of
approximately $1.1 billion cash. Under these transactions:
o The Company purchased approximately 231,000 telephone access
lines and related local exchange assets comprising 106 exchanges
throughout Arkansas for approximately $824 million cash.
o Spectra Communications Group, LLC ("Spectra") purchased
approximately 127,000 telephone access lines and related local
exchange assets comprising 107 exchanges throughout Missouri for
approximately $290 million cash. The Company owns 57.1% of
Spectra, which was organized to acquire and operate these
Missouri properties. At closing, the Company made a preferred
equity investment in Spectra of approximately $55 million and
financed substantially all of the remainder of the purchase
price.
To finance these acquisitions on a short-term basis, the Company borrowed $800
million on a floating-rate basis under a $1.5 billion Revolving Credit Facility
Agreement dated July 31, 2000 with Bank of America, N.A., Citibank, N.A., Banc
of America Securities LLC and Salomon Smith Barney, Inc., and borrowed $300
million on a floating-rate basis under its existing senior unsecured credit
facility with Bank of America, N.A. Depending upon market conditions and other
factors, the Company expects to ultimately finance these transactions, along
with two other pending acquisitions of local exchange assets in Wisconsin, by
either issuing commercial paper, long-term debt, equity or equity-linked
securities, by selling or monetizing non-core assets or by some combination
thereof.
In addition to the continued provision of traditional local exchange telephone
services, the Company intends to provide long distance, Internet access and
other advanced technology services in certain of the service areas. The Company
currently offers long distance and Internet access service in certain of the
Arkansas communities and plans to offer high-speed Digital Subscriber Line
Internet access service in selected markets.
The Company's press release announcing these transactions is filed as Exhibit
99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of Verizon properties acquired.
Financial statements relating to the acquired Verizon properties will be filed
within 75 days subsequent to July 31, 2000.
(b) Pro forma financial information.
Pro forma financial information related to these transactions will be filed
within 75 days subsequent to July 31, 2000.
(c) Exhibits
2.1 Asset Purchase Agreement between Registrant and affiliates of Verizon
Communications, dated June 29, 1999 (incorporated by reference to Exhibit
99 to Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999)
2.2 Asset Purchase Agreement between Spectra Communications Group, LLC and
affiliates of Verizon Communications, dated July 8, 1999.
2.3 First Amendment to Asset Purchase Agreement between Spectra Communica-
tions Group, LLC and affiliates of Verizon Communications, effective
July 31, 2000.
4.1 Revolving Credit Facility Agreement, dated July 31, 2000, among
Registrant, Bank of America, N.A., Citibank, N.A., Banc of America
Securities LLC and Salomon Smith Barney, Inc.
99.1 Press release dated July 31, 2000 related to the Company's announcement
of the purchase of certain assets in Arkansas and Missouri from Verizon
Communications.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CenturyTel, Inc.
By: /s/ Neil A. Sweasy
-------------------------
Neil A. Sweasy
Vice President and Controller
EXECUTION COPY
ASSET PURCHASE AGREEMENT
Between
GTE MIDWEST INCORPORATED
as Seller,
and
SPECTRA COMMUNICATIONS GROUP LLC
as Buyer
July 8, 1999
-------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS....................................................1
1.1 Terms.....................................................1
1.2 Interpretation...........................................11
ARTICLE 2 PURCHASE AND SALE OF ASSETS...................................11
2.1 Purchase and Sale of Assets..............................11
2.2 Purchased Property.......................................11
2.3 Excluded Property........................................12
2.4 Assumption of Liabilities................................13
2.4.1 Assumed Liabilities.............................13
2.4.2 Retained Liabilities............................14
2.5 No Assignment Without Consent............................15
ARTICLE 3 ARTICLE 3. PURCHASE PRICE.....................................16
3.1 Purchase Price...........................................16
3.2 Closing Date Estimate....................................16
3.3 Closing Date Statement...................................16
3.4 Performance Deposit......................................18
ARTICLE 4 REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS................19
4.1 State Regulatory Approval................................19
4.2 Bondholder Consents......................................19
4.3 Material Consents........................................19
4.4 FCC Consents.............................................19
4.5 HSR Act Review...........................................19
4.6 Notification.............................................20
4.7 GTE/Bell Atlantic Merger.................................20
ARTICLE 5 PRE-CLOSING COVENANTS.........................................20
5.1 Investigation by Buyer...................................20
5.2 Operation of the Business in the Ordinary Course.........21
5.2.1 Preservation of Business........................21
5.2.2 No Material Changes.............................21
5.3 Satisfaction of Conditions...............................22
5.4 Approvals................................................22
5.5 Financial Statements.....................................22
5.6 Capital Expenditures.....................................23
5.7 Delivery of Interim Information..........................23
5.8 Cooperation with Respect to Like-Kind Exchange...........23
ARTICLE 6 CONDITIONS PRECEDENT TO THE CLOSING...........................24
6.1 Conditions Precedent to Obligations of Buyer.............24
6.1.1 No Misrepresentation or Breach of
Covenants and Warranties.......................24
6.1.2 Documents.......................................24
6.1.3 HSR.............................................24
6.1.4 No Legal Obstruction............................24
6.1.5 No Material Adverse Effect......................25
6.2 Conditions Precedent to Obligations of Seller............25
6.2.1 No Misrepresentation or Breach of
Covenants and Warranties.......................25
6.2.2 Documents.......................................25
6.2.3 Delivery of Closing Date Amount.................25
6.2.4 HSR.............................................25
6.2.5 No Legal Obstruction............................25
ARTICLE 7 THE CLOSING...................................................25
7.1 The Closing..............................................25
7.2 Seller's Obligations at Closing..........................26
7.3 Buyer's Obligations at Closing...........................27
ARTICLE 8 REPRESENTATIONS AND WARRANTIES................................27
8.1 Representations and Warranties of Seller.................27
8.1.1 Authorization and Effect of Agreement...........27
8.1.2 No Restrictions Against Sale or
Assignment of the Purchased Property...........27
8.1.3 Consents, Approvals and Permits of
Governmental Authorities.......................28
8.1.4 No Violation of Law.............................28
8.1.5 Corporate Organization..........................28
8.1.6 Brokers.........................................28
8.1.7 Title to Owned Real Property....................28
8.1.8 Real Property Leases............................29
8.1.9 Tangible Assets.................................29
8.1.10 No Material Adverse Change......................29
8.1.11 Material Contracts..............................29
8.1.12 Insurance.......................................30
8.1.13 Taxes...........................................31
8.1.14 No Material Claims or Suits.....................31
8.1.15 Tariffs; FCC Licenses...........................31
8.1.16 Employee Matters................................32
8.1.17 Schedules of Telephone Plant....................34
8.1.18 Schedule of Real Property Interests.............34
8.1.19 Environmental Matters...........................34
8.1.20 Schedule of Joint Construction Projects.........35
8.1.21 Financial Statements............................35
8.1.22 Year 2000 Compliance............................35
8.1.23 Access Line Count...............................36
8.2 Representations and Warranties of Buyer..................36
8.2.1 Corporate Organization..........................36
8.2.2 Authorization and Effect of Agreement...........36
8.2.3 No Restrictions Against Purchase of the
Purchased Properties...........................37
8.2.4 No Violation of Law.............................37
8.2.5 Financial Capacity..............................37
8.2.6 Brokers.........................................37
8.2.7 Consents and Approvals of Governmental
Authority......................................37
ARTICLE 9 CONTINUING BUSINESS RELATIONSHIPS.............................38
9.1 Transition Services Agreement............................38
9.2 Optional Services Agreement..............................38
9.3 Directory Publishing.....................................38
9.3.1 Assumption of Certain Directory Publishing
Agreement Rights and Obligations...............38
9.3.2 Co-Bound Directories Acknowledgement............38
9.3.3 Meeting to Discuss Directory Publication........38
9.4 GTE Telecom Agreements...................................39
ARTICLE 10 ADDITIONAL COVENANTS OF THE PARTIES...........................39
10.1 Intellectual Property....................................39
10.1.1 No License......................................39
10.1.2 Infringement....................................39
10.1.3 Trademark Phaseout..............................40
10.1.4 Third Party Software............................41
10.2 Effect of Due Diligence and Related Matters..............41
10.3 Confidentiality..........................................42
10.4 Further Assurances.......................................42
10.5 Prorations...............................................42
10.6 Cost Studies/NECA Matters................................43
10.6.1 Prior to Closing................................43
10.6.2 From and After Closing..........................43
10.7 Customer Deposits and Construction Advances..............44
10.8 Access to Books and Records..............................44
10.9 Purchase Price Allocation................................45
10.10 Owned Real Property Transfers............................45
10.11 Transaction Taxes........................................46
10.12 Bulk Sales Laws..........................................46
10.13 Prepaid Non-regulated Maintenance Agreements.............47
10.14 Vehicle Registration.....................................47
10.15 Carrier Access Billing and Accounts
Receivable Transition...................................47
10.16 End-User Billing and Accounts Receivable
Transition..............................................47
10.17 Cooperation..............................................48
ARTICLE 11 EMPLOYEES AND EMPLOYEE MATTERS................................48
11.1 Employment of Transferred Employees......................48
11.1.1 Assumption of Collective Bargaining
Agreement Obligations..........................48
11.1.2 Assumption of Employment and
Other Agreements...............................49
11.1.3 Recognition of Transferred
Employee Service...............................49
11.1.4 Assumption of Obligation to
Pay Bonuses....................................49
11.1.5 No Duplicate Benefits; Dependents
and Beneficiaries..............................50
11.1.6 Affiliate Employees.............................50
11.1.7 Term of Assumed Obligations.....................50
11.2 Transferred Employee Benefit Matters.....................50
11.2.1 Defined Benefit Plans...........................50
11.2.2 Savings Plans...................................56
11.2.3 Welfare Plans...................................58
11.3 Miscellaneous Benefits...................................61
11.3.1 Loans...........................................61
11.3.2 Vacation........................................61
11.4 Employee Rights..........................................62
11.5 WARN Act Requirements....................................62
11.6 Indemnification..........................................63
11.6.1 Indemnification of Seller.......................63
11.6.2 Indemnification of Buyer........................63
11.7 Special Provisions For Certain Employees.................63
ARTICLE 12 INDEMNIFICATION...............................................64
12.1 Survival of Representations, Warranties
and Covenants...........................................64
12.2 Indemnification..........................................65
12.3 Limitations on Liability.................................65
12.4 Defense of Claims........................................68
ARTICLE 13 TERMINATION...................................................69
13.1 Termination Rights.......................................69
13.2 Good Faith Performance...................................70
13.3 Effect of Termination....................................70
ARTICLE 14 MISCELLANEOUS.................................................71
14.1 Notices..................................................71
14.2 Information Releases.....................................72
14.3 Expenses.................................................72
14.4 Successors and Assigns...................................72
14.5 Amendments...............................................73
14.6 Captions.................................................73
14.7 Entire Agreement.........................................73
14.8 Waiver...................................................73
14.9 Third Parties............................................73
14.10 Counterparts.............................................73
14.11 Governing Law............................................73
14.12 Further Assurances.......................................74
14.13 Severability.............................................74
14.14 Representation by Counsel; Interpretation................74
INDEX OF SCHEDULES
Schedule*....Title
1.1-A Assigned Contracts
1.1-B Excluded Contracts
1.1-C Purchased Exchanges
1.1-D License Agreement
1.1-E National Account Agreement Customers
2.3(g) Other Excluded Property
4.3 Material Consents
4.4 FCC Consents/Waivers
5.2.1 Operation of the Business
5.2.2(c) Increase in Transferred Employee Benefits
5.2.2(d) Dispositions
6.1.1 Seller's Closing Certificate
6.2.1 Buyer's Closing Certificate
7.2(a) Bill of Sale and Assignment and Assumption Agreement
7.2(b) Legal Opinion of Seller's Counsel
7.2(g) Affidavit as to Status of Foreign Person
7.3(c) Legal Opinion of Buyer's Counsel
8.1.3 Consents, Approvals and Permits of Governmental Authorities
8.1.4 Violation of Law
8.1.7(a) Owned Real Property
8.1.7(b) Bondholders Liens
8.1.8 Real Property Leases
8.1.9 Title Exceptions for Tangible Purchased Property
8.1.10 Material Adverse Changes
8.1.11(a) Material Contracts - Limitations on Competition
8.1.11(b) Material Contracts - Liens
8.1.11(c) Material Contracts - Sale of Purchased Property
8.1.11(d) Material Contracts - Ordinary Course
8.1.13 Exceptions to Tax Return Filings
8.1.14 State and Federal Claims/Suits
8.1.15(a) Tariff Proceedings
8.1.15(b) FCC Licenses
8.1.16(a) Employee Matters - Seller's Employee Benefit Plans
8.1.16(b) Employee Matters - Seller's Material Liabilities under ERISA
8.1.16(c) Employee Matters - Seller's ERISA Plans - Compliance
8.1.16(d) Employee Matters - Seller's Multiemployer Plans
8.1.16(e) Employee Matters - Seller's Union Representation
8.1.17 Telephone Plant
8.1.18 Real Property Interests List
8.1.19 Environmental Matters
8.1.20 Joint Construction Projects
8.1.21(a) Financial Statement - Estimated Income Statement
8.1.21(b) Financial Statement - Estimated Balance Sheet
8.1.21(c) Financial Statement - Estimated Statement of Cash Flows
9.1 Transition Services Agreement
9.2 Optional Services Agreement
9.3.1 Directory Publishing Agreements
9.3.2 Co-Bound Directory Agreements
9.4 GTE Telecom Agreements
11.1 Employees and Employee Matters - Transferred Employees and
LTD Recipients
11.1.1 Employees and Employee Matters - Collective Bargaining Agreements
11.1.2 Employees and Employee Matters - Employment Agreement Obligations
and Exceptions
11.1.4 Employees and Employee Matters - Seller's Bonus Plans
11.3.1 Employees and Employee Matters - Employment Loans
* The Schedule numbers refer to the appropriate Section within the Agreement.
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 8th day of July, 1999, by and between Spectra Communications
Group LLC, a Delaware Limited Liability Company ("Buyer"), and GTE Midwest
Incorporated, a Delaware corporation ("Seller").
RECITALS
WHEREAS, Seller is in the business of providing regulated local
exchange telephone service in certain areas of the state of Missouri; and
WHEREAS, Seller desires to sell, convey, assign, transfer and deliver
to Buyer, and Buyer desires to purchase and accept from Seller, certain of its
telephone properties and related assets used in the provision of such service,
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
---------
DEFINITIONS
1.1 Terms. For purposes of this Agreement and any amendment hereto, the
following terms are defined as set out below or in the Section referenced below:
"Accounts Receivable Settlement Statements" is defined in
Section 10.16(b).
"Acquired Local Loop" means a "Local Loop" as defined in 47
C.F.R. Section 51.319(a) of the FCC's rules, which Local Loop is part of the
Purchased Exchanges.
"Active Employees" is defined in Section 11.1.
"Advanced Billings" means amounts arising primarily from the
operation of the Business that have been billed by Seller as of the Closing Date
but that are unearned because they relate to provision of service after the
Closing Date.
"Affiliate" means, with respect to any Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.
"Allocation" is defined in Section 10.9.
"Ancillary Documents" means the Transition Services Agreement,
the Optional Services Agreement, the License Agreement, the GTE Telecom
Agreements and the Bill of Sale and Assignment and Assumption Agreement.
"Assigned Contracts" means Contracts to which Seller is a
party (i) which relate primarily to the operation of the Business, other than
the Excluded Contracts, Real Property Interests, Real Property Leases and Third
Party Intellectual Property Contracts, and (ii) any other Contract to which
Seller or its Affiliates are a party and is listed on Schedule 1.1-A.
"Assigned Permits" means, to the extent assignable, all
permits, licenses, franchises, approvals and authorizations of Seller issued or
granted by any Governmental Authority that relate primarily to the operation of
the Business, other than the FCC Licenses and the Excluded Permits.
"Assumed Liabilities" is defined in Section 2.4.1
"Automated Assets" is defined in Section 8.1.22.
"Bargained Welfare Plans" is defined in Section 11.2.3(a).
"Base Purchase Price" is defined in Section 3.1.
"Bill of Sale and Assignment and Assumption Agreement" is
defined in Section 7.2(a).
"Bondholder Consents" is defined in Section 4.2.
"Bondholders" means the Persons listed on Schedule 8.1.7(b).
"Business" means the business of providing in the geographic
area serviced by the Purchased Exchanges (i) local exchange (including extended
community calling and extended area service), exchange access, switched,
dedicated, special access, tandem, end office switching service and intra-LATA
toll telecommunications services to end users, (ii) exchange access
telecommunications services to interexchange carriers and other local exchange
carriers, (iii) retail sales, leasing and maintenance of telephone equipment and
products (including customer premises equipment), (iv) non-tariffed public
communications (pay telephones) and commercial telecommunications services
facilities leasing, and (v) provision of subscriber listing information
(including directory services).
"Buyer Pension" is defined in Section 11.2.1(c)(iii)(B).
"Buyer Pension Plan" and "Buyer Pension Plans" are defined
in Section 11.2.1(b).
"Buyer Savings Plan" and "Buyer Savings Plans" are defined
in Section 11.2.2(b).
"Buyer Welfare Plans" is defined in Section 11.2.3(a).
"Buyer's Actuary" is defined in Section 11.2.1(d)(ii).
"Buyer's Closing Certificate" is defined in Section 6.2.1.
"Calendar-Related" is defined in Section 8.1.22.
"Capital Expenditure Amount" is defined in Section 5.6.
"Capital Expenditure Deficiency" is defined in Section 5.6.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Closing" is defined in Section 7.1.
"Closing Date" is defined in Section 7.1.
"Closing Date Amount" is defined in Section 3.2(b).
"Closing Date Statement" is defined in Section 3.3.
"CLTA" is defined in Section 10.10.
"Co-Bound Directories" is defined in Section 9.3.2.
"Confidentiality Agreement" means the Confidentiality
Agreement dated as of November 9, 1998, between Buyer, Seller and certain
Affiliates of Seller.
"Construction Advances" means advances collected by Seller for
the future performance of non-regulated construction in the Purchased Exchanges.
"Contracts" means all contracts, leases, indentures,
agreements, and other legally binding arrangements.
"Customer Advances" means amounts arising from the operation
of the Business that have been billed and collected by Seller as of the Closing
Date but that are unearned because they relate to the provision of service after
the Closing Date.
"Customer Deposits" is defined in Section 10.7.
"Date Data" is defined in Section 8.1.22.
"Deposit" is defined in Section 3.4.
"Deposit L/C" is defined in Section 3.4.
"Direct Claim" is defined in Section 12.4(b).
"DOJ" is defined in Section 4.5.
"Due Diligence Materials" means all materials contained in the
six volumes delivered to Buyer on July 8, 1999.
"Earned End-User Accounts Receivable" means accounts
receivable arising primarily from the operation of the Business that have been
earned by Seller's provision of service on or before the Closing Date excluding
amounts billed through the carrier access billing system to interexchange
carriers.
"Earned End-User Accounts Receivable Amount" means the
aggregate amount of all Earned End-User Accounts Receivable as of the Closing
Date, less a discount for anticipated uncollectible Earned End-User Accounts
Receivable in an amount equal to the Uncollectible Factor multiplied by the
Earned End-User Accounts Receivable as of the Closing Date.
"Employment Agreements" is defined in Section 8.1.16(a).
"Environmental Requirements" means all federal, state,
interstate and local government or agency Laws relating to pollution or
protection of human health and safety or the environment (including, without
limitation, air, surface water, ground water, land surface and subsurface
strata), including, without limitation, Laws relating to emissions, discharges,
releases or threatened releases of Regulated Materials; or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of Regulated Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plans" is defined in Section 8.1.16(a).
"Estimated Non-Regulated Construction Work in Process Amount"
is defined in Section 3.2(a).
"Estimated Regulatory Obligation Amount" is defined in
Section 3.2(a).
"Evaluation Material" is defined in the first paragraph of the
Confidentiality Agreement.
"Excluded Contracts" means all billing and collection
agreements, interconnection agreements, National Account Agreements, billing
media agreements, vehicle leasing agreements, except to the extent expressly
listed on Schedule 1.1-A, and (ii) such other agreements as are listed on
Schedule 1.1-B.
"Excluded Marks" means all trademarks, applications for
trademark registration, service marks, applications for service mark
registration, trade names, domain names and related registrations owned by
Seller or an Affiliate of Seller, or licensed to Seller or an Affiliate of
Seller by any Person, and any derivations of the foregoing.
"Excluded Permits" means the permits, licenses, franchises,
approvals and authorizations of Seller by Governmental Authorities that relate
to the Excluded Property.
"Excluded Property" is defined in Section 2.3.
"Executive Officers" of Seller means the regional president of
the region that includes the Purchased Exchanges, the general manager and the
director of infrastructure provisioning for the Purchased Exchanges and the
general manager of customer operations for the Purchased Exchanges.
"Expiration Date" is defined in Section 12.1(a).
"FCC" means the Federal Communications Commission.
"FCC Consents" is defined in Section 4.4.
"FCC Licenses" means all licenses, certificates, permits or
other authorizations granted to Seller by the FCC that are used primarily in the
operation of the Business.
"Final Order" is defined in Section 6.1.4.
"Financial Statements" is defined in Section 8.1.21.
"FRP" is defined in Section 11.2.3(e).
"FTC" is defined in Section 4.5.
"Future Capital Expenditure Obligations" is defined in
Section 2.4.1(h).
"Future Regulatory Obligations" is defined in Section 2.4.1(g)
"GAAP" means United States generally accepted accounting
principles.
"GATT Grandfathered Participant" is defined in Section
11.2.1(c)(ii)(C).
"Governmental Authority" means any court or any federal, state
or foreign governmental, legislative, administrative or regulatory body, agency,
department, authority or other instrumentality.
"GTE Telecom Agreements" is defined in Section 9.4.
"GTE Telecom Assets" is defined in Section 9.4.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indemnifiable Losses" is defined in Section 12.3(a).
"Indemnification Payment" is defined in Section 12.3(a).
"Indemnifying Party" is defined in Section 12.3(a).
"Indemnitee" is defined in Section 12.3(a).
"Intellectual Property" means all inventions (whether
patentable or not and whether or not such inventions are described or claimed in
any patent or patent application), designs (useful or ornamental), and works
subject to copyright protection, invention disclosures, specifications, manuals,
drawings, functional or system block diagrams, flow charts, circuit diagrams,
design or user documentation, engineering notebooks, schematics, test programs,
documented procedures, documented processes, documented flows, devices, software
(in any form), or firmware, and all intellectual property rights therein or
based thereon, including patents, patent applications (including continuations,
continuations-in-part, divisions, reissues), reexamined patents and extensions
thereof, copyrights (whether registered or unregistered), and trade secrets.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Joint Construction Projects" is defined in Section 2.4.1(d).
"LTD Recipient" is defined in Section 11.7.
"Law" or "Laws" means any statute, rule, regulation, mandate,
decree, decision, order or ordinance of any Governmental Authority.
"Leased Real Property" means the real property leased to
Seller under the Real Property Leases.
"License Agreement" means the license agreement attached
hereto as Schedule 1.1-D pursuant to which Seller grants to Buyer certain rights
and licenses under Licensed Intellectual Property.
"Licensed Intellectual Property" means Intellectual Property
owned by Seller, and Third Party Intellectual Property licensed to Seller which
Seller has the right to sublicense to Buyer and its Affiliates without the
payment of compensation or other consideration to any Person, and which
Intellectual Property and Third Party Intellectual Property (i) are required for
the use or maintenance (to the extent not provided by the owner or licensor of
the Third Party Intellectual Property) of the Purchased Exchanges, (ii) are
located in the geographic area of the Purchased Exchanges, and (iii) are used in
the operation of the Business as of the Closing; provided that Licensed
Intellectual Property shall at all times be Excluded Property.
"Lien" means any lien, charge, pledge, option, mortgage,
security interest, right of first refusal or other encumbrance.
"Material Adverse Effect" means a materially adverse effect on
the Business or the Purchased Property, taken as a whole, other than effects
relating to or arising from (i) the execution of this Agreement, (ii) the United
States economy generally or Missouri in particular, or (iii) events or
circumstances that affect the Business in the same manner and to the same extent
as other businesses in the industry generally.
"Material and Supply Inventory" is defined in the FCC's Part
32 Uniform System of Accounts.
"Material Consents" is defined in Section 4.3.
"Material Contracts" is defined in Section 8.1.11.
"Merger" means the proposed merger involving GTE Corporation
and Bell Atlantic Corporation and their respective Subsidiaries.
"National Account Agreements" means agreements between Seller
or its Affiliates with those customers listed on Schedule 1.1-E.
"NECA" is defined in Section 10.6.1.
"Non-Regulated Construction" means all construction related to
non-tariffed activities, including PBX, CPE and related construction activities.
"Non-Regulated Construction Work in Process Amount" means
amounts expended by Seller for non-regulated construction work not completed as
of Closing Date, net of Construction Advances related to such construction work.
Non-Regulated Construction Work in Process Amount is billable by Buyer to third
parties after Closing Date.
"Non-Union Welfare Plans" is defined in Section 11.2.3(a).
"Optional Services Agreement" is defined in Section 9.2.
"Owned Real Property" means the real property (i) owned in fee
by Seller, (ii) located in the geographic area of the Purchased Exchanges and
(iii)used primarily in the operation of the Business, including all land,
buildings, structures, appurtenances and improvements located thereon.
"Participant Loans" is defined in Section 11.2.2(c)(i).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Assets" is defined in Section 11.2.1(d)(i).
"Periodic Taxes" is defined in Section 10.5.
"Permitted Encumbrances" means (i) Liens for current Taxes and
assessments not yet delinquent, or the amount or validity of which is being
contested in good faith by appropriate proceedings during which collection or
enforcement against the relevant property is stayed, (ii) standard utility
easements, covenants and restrictions of record that do not individually or in
the aggregate materially interfere with the operation of the Business as
currently conducted on the Owned Real Property affected thereby, (iii)
mechanics', carriers', workers', repairers' and other statutory Liens,
satisfaction of which has not come due in the ordinary course of business, (iv)
existing zoning or similar Laws or ordinances that do not interfere with the
operation of the Business, (v) leases otherwise disclosed herein, and (vi) any
other Liens that do not materially interfere with the operations of the
Purchased Property in a manner consistent with the current use by Seller.
"Person" means an individual, corporation, partnership, trust,
association, limited liability company or similar entity or organization.
"Plans" is defined in Section 8.1.16(a).
"Price-Cap Regulation Entity" means an entity subject to
price-cap regulation within the meaning of 47 C.F.R. Section 61.41(c)(2) (the
"all-or-nothing" rule).
"Proration Periods" is defined in Section 10.5.
"PSC" means the Missouri Public Service Commission.
"Publisher" is defined in Section 9.3.1.
"Publishing Agreement" is defined in Section 9.3.1.
"Purchase Price" is defined in Section 3.3(c).
"Purchased Exchanges" means the telephone exchanges listed in
Schedule 1.1-C.
"Purchased Property" is defined in Section 2.2.
"Rate-of-Return Regulation Entity" means an entity not subject
to price-cap regulation within the meaning of 47 C.F.R. Section 61.41(c)(2) (the
"all-or-nothing"rule).
"Real Property Interests" means all easements, rights of way,
licenses or other interests in real property of Seller that are used primarily
in the operation of the Business, and are located in the geographic area of the
Purchased Exchanges, other than Owned Real Property or Leased Real Property.
"Real Property Leases" means the Leases set forth on
Schedule 8.1.8.
"Regulated Material" means (i) any "hazardous substance" as
defined in CERCLA, (ii) any petroleum or petroleum substance, and (iii) any
other pollutant, waste, contaminant, or other substance regulated under
Environmental Requirements.
"Regulatory Approvals" is defined in Section 4.1.
"Regulatory Obligation Amount" is defined in Section 3.1.
"Retained Books and Records" means, collectively, all
corporate records and stock books of Seller and its Affiliates, the general
ledger, all records required by Law to be retained by Seller and all books and
records relating to (i) Tax Returns and Tax records, (ii) Excluded Property,
(iii) attorney work product, and (iv) the Retained Liabilities; provided that
where reasonably necessary or prudent, "Retained Books and Records" shall also
include copies of the Transferred Books and Records.
"Retained Future Capital Expenditure Obligations" is defined
in Section 2.4.1(h).
"Retained Future Regulatory Obligations" is defined in
Section 2.4.1(g).
"Retained Liabilities" is defined in Section 2.4.2.
"Retired Non-Union Transferred Employee" is defined in
Section 11.2.3(b)(ii).
"Seller's Actuary" is defined in Section 11.2.1(d)(ii).
"Seller's Bonus Plans" is defined in Section 11.1.4.
"Seller's Closing Certificate" is defined in Section 6.1.1.
"Seller's Hourly Pension Plan" is defined in Section
11.2.1(a)(ii).
"Seller's LTD Plan" is defined in Section 11.7.
"Seller's Pension" is defined in Section 11.2.1(c)(iii)(B).
"Seller's Pension Plan" and "Seller's Pension Plans" are
defined in Section 11.2.1(a)(ii).
"Seller's Salaried Pension Plan" is defined in Section
11.2.1(a)(i).
"Seller's Savings Plans" is defined in Section 11.2.2(a).
"Seller's Welfare Plans" is defined in Section 11.2.3(a).
"Switch Software" means any telephone switch software licensed
to Seller which software is necessary to Seller's current operation and use of
any telephone switching equipment in the Purchased Exchanges and which equipment
is included in Telephone Plant.
System Date" is defined in Section 8.1.22.
"Tax Returns" means a report, return or other information
statement required to be supplied to or filed with a Governmental Authority with
respect to Taxes.
"Tax(es)" means any foreign, federal, state, county or local
income, sales, use, transfer, excise, franchise, stamp duty, custom duty, real
and personal property, gross receipt, capital stock, business and occupation,
disability, employment, payroll, recording, ad valorem, unemployment
compensation, profits, registration, social security, estimated, add-on,
minimum, or withholding tax relating to the Business or the Purchased Exchanges
and any interest and penalties and additions to such taxes (civil or criminal)
related thereto or to the nonpayment thereof and related notarial fees.
"Telephone Plant" means (i) Owned Real Property, (ii) Real
Property Interests, and (iii) the machinery, equipment, inventory, vehicles
(whether currently owned or leased by Seller) and all other assets and
properties used primarily in the operation of the Business, including all plant,
systems, structures, construction work in progress, telephone cable (whether in
service or under construction), microwave facilities (including frequency
spectrum assignment), telephone line facilities, machinery, furniture, fixtures,
tools, implements, conduits, stations, substations, equipment (including central
office equipment, subscriber station equipment, network connection equipment and
other equipment in general), instruments, house wiring connections and other
personal property used primarily in the operation of the Business and located in
the Purchased Exchanges, other than Excluded Property. Without limiting the
generality of the foregoing, Telephone Plant includes the assets that would be
properly included in the fixed assets referenced in Part 32 of the FCC Rules and
Regulations (47 CFR, Part 32), as such accounts are reflected in Schedule
8.1.17.
"Third Party Claim" is defined in Section 12.4(a).
"Third Party Intellectual Property" means Intellectual
Property owned by any Person, other than Seller, without regard as to whether
Seller has any rights therein or the right to assign such rights to Buyer.
"Third Party Intellectual Property Contracts" is defined in
Section 10.1.4.
"Total Service Pension" is defined in Section
11.2.1(c)(iii)(B).
"Transaction Taxes" is defined in Section 10.11.
"Transferred Books and Records" means all of Seller's customer
or subscriber lists and records, accounts and billing records, plant and
continuing property records, plans, blueprints, specifications, drawings,
surveys, engineering reports, personnel records of Transferred Employees (where
applicable), tariffs, orders or other material correspondence or records
relating to regulation of the Business by any Governmental Authority, and all
other documents, computer data and records, in each case relating primarily to
the operation of the Business, except for the Retained Books and Records.
"Transferred Employees" is defined in Section 11.1.
"Transition Services Agreement" is defined in Section 9.1.
"Transitional Year" means any calendar year (beginning with
the calendar year in which the Closing occurs) in which USF distributions are
based upon the costs, whether historic costs or forward-looking economic costs,
reported for a calendar year in which Seller owned the Acquired Local Loop for
any part of such calendar year.
"Uncollectible Factor" is defined in Section 10.16.
"USAC" is defined in Section 10.6.1.
"USF" is defined in Section 10.6.1.
"Vacation Proration Amount" is defined in Section 11.3.2(c).
"Year 2000 Compliant" is defined in Section 8.1.22.
1.2 Interpretation.
(a) Unless the context otherwise requires, (i) all references to Sections,
Articles or Schedules are to Sections, Articles or Schedules of or to this
Agreement, (ii) each accounting term not otherwise defined in this Agreement has
the meaning assigned to it in accordance with GAAP, (iii) all references to the
"knowledge of Seller" are deemed to refer to the actual knowledge of the
Executive Officers of Seller, (iv) the term "primarily" means primarily or
exclusively, and (v) the term "including" means including without limitation.
(b) No provision of this Agreement will be interpreted in favor of or against
either of the parties by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to which
any such provision is inconsistent with any prior draft of such provision or of
this Agreement.
(c) Except as otherwise provided in this Agreement, in the event of any dispute
concerning the "knowledge" of a party to this Agreement, the burden of proof
shall be on the party asserting that another party had such knowledge.
ARTICLE 2
---------
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. Upon the terms and subject to
the conditions of this Agreement, Seller hereby agrees to sell, convey,
transfer, assign and deliver to Buyer and Buyer hereby agrees to purchase,
acquire and accept from Seller, in each case effective as of the Closing, all of
Seller's right, title and interest in and to the Purchased Property.
2.2 Purchased Property. The term "Purchased Property" means all
the following business, properties, assets and rights of Seller on the Closing
Date, other than the Excluded Property:
(i) Telephone Plant;
(ii) Earned End-User Accounts Receivable;
(iii) Material and Supply Inventory
(iv) Non-Regulated Construction Work In Process
(v) FCC Licenses and Assigned Permits;
(vi) Assigned Contracts;
(vii) Transferred Books and Records;
(viii) Real Property Leases;
(ix) Advance Billings;
(x) Insurance proceeds of Seller arising
from any loss, damage or destruction
of Purchased Property between the
date hereof and the Closing Date, to
the extent that (1) such Purchased
Property has not been replaced by
Seller, and (2) such insurance
proceeds do not exceed the
replacement cost of such Purchased
Property; and
(xi) All other business, property, assets
and rights of Seller on the Closing
Date not described above that relate
primarily to the Purchased
Exchanges.
2.3 Excluded Property. For purposes of this Agreement, "Excluded
Property" means the following:
(a) Cash, cash equivalents and investments;
(b) All rights of Seller and its Affiliates under this Agreement, the Ancillary
Documents and the certificates and other documents delivered to Seller by Buyer
in connection with this Agreement;
(c) All records prepared in connection with the sale of the Business, including
bids received from third parties and analysis relating to the Business;
(d) All rights and obligations related to the Retained Liabilities;
(e) The Retained Books and Records;
(f) Seller's interests in any business other than the Business, including the
provision of wireless service (cellular and PCS), inter-LATA long distance and
internet service or internet related services, air-to-ground communications (air
phone service), and any Excluded Permits related thereto, and all assets of
Seller and its Affiliates used in connection with any such business or related
thereto, and all assets used by Seller and its Affiliates in rendering corporate
services to Seller or the Business that are located outside the geographic area
serviced by the Purchased Exchanges;
(g) Such other assets (i.e., encryption decoder devices, AWAS terminals, SODA,
etc.), if any, as set forth on Schedule 2.3(g);
(h) The Excluded Contracts;
(i) The Excluded Marks;
(j) All Intellectual Property, including the Licensed Intellectual Property
and Third Party Intellectual Property (except for such rights to possess
and use Third Party Intellectual Property as may be assigned in accordance with
Section 10.1.4); and
(k) All of Seller's insurance proceeds arising in connection with the operation
of the Business or the Purchased Property prior to the Closing, except as
described in Section 2.2(x).
2.4 Assumption of Liabilities.
2.4.1 Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer hereby agrees to assume, as of the Closing
Date, and agrees, beginning on the day following the Closing Date, to pay,
perform and discharge when due the following (the "Assumed Liabilities"):
(a) Ordinary Course. All liabilities, responsibilities and obligations
(including Taxes), arising out of or accruing or resulting from the use or
ownership of the Purchased Property in the ordinary course after the Closing
Date;
(b) Employment Matters. All liabilities, responsibilities and obligations of
Buyer as provided in Article 11 with respect to Transferred Employees;
(c) Assigned Contracts, Real Property Interests and Real Property Leases.
All liabilities, responsibilities and obligations that arise after the Closing
Date in connection with the performance of the Assigned Contracts, Real Property
Interests and the Real Property Leases;
(d) Joint Construction Projects. All liabilities, responsibilities and
obligations to third parties that relate to arrangements and commitments between
Seller and a third party related to post-Closing engineering and construction
required to complete scheduled construction of mutual transmission facilities
between various switching points included in the Purchased Exchanges ("Joint
Construction Projects");
(e) Construction in Progress. All liabilities, responsibilities and obligations
relating to post-Closing engineering and construction required to complete
scheduled construction and other capital expenditure projects for the Purchased
Exchanges;
(f) Customer Advances, Advance Billings, Customer Deposits and Construction
Advances. All liabilities, responsibilities and obligations relating to Customer
Advances, Advance Billings, Customer Deposits and Construction Advances;
(g) Future Regulatory Obligations. All liabilities, responsibilities and
obligations, other than Future Capital Expenditure Obligations, related to the
Purchased Exchanges arising out of any Law promulgated or issued by a
Governmental Authority after the Closing Date or other action taken by a
Governmental Authority after the Closing Date, regardless of whether such Law or
action is or purports to be based on conduct or actions that occurred at any
time prior to the Closing Date ("Future Regulatory Obligations"), except that
Buyer shall not be liable for any such Future Regulatory Obligation arising
directly out of any intentional misconduct by Seller or conduct by Seller that
was not reasonably prudent based on the circumstances prevailing at the time
that occurred prior to the Closing Date ("Retained Future Regulatory
Obligations"); provided that (i) Seller's reliance on reasonable interpretation
of existing Law or practice shall be deemed reasonably prudent, and (ii) Seller
shall not retain any liability for Future Regulatory Obligations to the extent
that the costs associated with such obligations are included in Buyer's rate
base for the Purchased Exchanges;
(h) Future Capital Expenditure Obligations. All liabilities, responsibilities
and obligations related to the Purchased Exchanges arising out of any Law
promulgated or issued by a Governmental Authority or other action taken by a
Governmental Authority requiring any capital expenditure (other than a Future
Regulatory Obligation) after the date of this Agreement, regardless of whether
such Law or action is or purports to be based on conduct, facts or actions that
occurred at any time prior to the date of this Agreement ("Future Capital
Expenditure Obligations"), except that Buyer shall not be liable for any such
Future Capital Expenditure Obligation arising directly out of any intentional
misconduct by Seller or conduct by Seller that was not reasonably prudent based
on the circumstances prevailing at the time ("Retained Future Capital
Expenditure Obligations"); provided that (i) Seller's reliance on reasonable
interpretation of existing Law or practice shall be deemed reasonably prudent,
and (ii) Seller shall not retain any liability for Future Capital Expenditure
Obligations to the extent that the costs associated with such obligations are
included in Buyer's rate base for the Purchased Exchanges. Prior to the Closing
Date, Seller shall notify Buyer of all material Future Capital Expenditure
Obligations within a reasonable time after publication of said obligations by a
Governmental Authority; and
(i) Litigation and Claims. All liabilities and obligations arising out of (i)
litigation and claims that arise out of an occurrence after the Closing Date,
(ii) litigation and claims in respect of Future Regulatory Obligations (other
than Retained Future Regulatory Obligations) regardless of when filed, and (iii)
claims of a Governmental Authority arising from or related to a Future
Regulatory Obligation (other than Retained Future Regulatory Obligations).
Notwithstanding anything in this Section 2.4.1 to the contrary, "Assumed
Liabilities" shall not include any liabilities, responsibilities or obligations
expressly included in Retained Liabilities pursuant to Section 2.4.2.
2.4.2 Retained Liabilities. Seller shall retain and shall
pay, perform anddischarge when due, the following liabilities, responsibilities
and obligations of Seller (the "Retained Liabilities"); provided that Retained
Liabilities shall not include any liability, responsibility or obligation with
respect to any matter that is the subject of a representation, warranty or
covenant by Seller (breaches of which shall be handled in accordance with
Article 12):
(a) Subject to Section 10.5, all trade payables and other accrued payment
obligations of Seller as of the Closing Date;
(b) All debt of Seller (including indebtedness to the Bondholders) and debt of
Seller owed to any one or more of its Affiliates;
(c) Subject to Section 10.5, all federal, state and local income, franchise,
gross receipts and similar Taxes of Seller or its consolidated or combined group
and all federal, state and local income, franchise, gross receipts and sales,
use, property or other Taxes relating to the operation of the Business on or
before the Closing Date or the use, ownership or operation of the Purchased
Property on or before the Closing Date;
(d) Except to the extent otherwise provided in Article 11, all liabilities and
obligations arising on or before the Closing Date with respect to the
Transferred Employees, including (i) all liabilities responsibilities and
obligations arising on or before the Closing Date relating to collective
bargaining agreements or other union Contracts, and (ii) any such liabilities or
obligations that arise after the Closing Date to the extent that such
liabilities and obligations relate to facts, circumstances or conditions arising
or occurring on or before the Closing Date, but excluding any Future Regulatory
Obligations with respect to the Transferred Employees;
(e) All liabilities, responsibilities and obligations resulting from (i)
litigation and claims that arise out of an occurrence prior to the Closing Date,
(ii) litigation and claims in respect of Retained Future Regulatory Obligations
and (iii) litigation and claims in respect of Retained Future Capital
Expenditure Obligations;
(f) Any Retained Future Regulatory Obligations and any Retained Future Capital
Expenditure Obligations; and
(g) All liabilities, responsibilities and obligations with respect to the
Excluded Property and Excluded Contracts.
2.5 No Assignment Without Consent. Notwithstanding anything to
the contrary contained in this Agreement, to the extent that the sale,
conveyance, transfer, assignment or delivery or attempted sale, conveyance,
transfer, assignment or delivery to Buyer of any Purchased Property (including
any Contract) is prohibited by any applicable Law or would require any
governmental or third-party authorizations, approvals, consents or waivers and
such authorizations, approvals, consents or waivers shall not have been obtained
prior to the Closing, this Agreement shall not constitute a sale, conveyance,
transfer, assignment or delivery, or an attempted sale, conveyance, transfer,
assignment or delivery thereof, if any of the foregoing would constitute a
breach of applicable Law or the rights of any third party; provided, however,
that, except to the extent that a condition to Closing set forth in Article 6
relating to the foregoing shall not be satisfied, the Closing shall occur
notwithstanding the foregoing without any adjustment to the Purchase Price on
account of such required authorization. Following the Closing, the parties shall
use their commercially reasonable efforts, and shall cooperate with each other,
to obtain promptly such authorizations, approvals, consents or waivers;
provided, however, that neither Seller nor Buyer nor any of their respective
Affiliates shall be required to pay any consideration therefor, other than
filing, recordation or similar fees payable to any Governmental Authority, which
fees shall be shared equally by Seller and Buyer. Pending or in the absence of
such authorization, approval, consent or waiver, the parties shall cooperate
with each other in any reasonable and lawful arrangements to provide to Buyer
the benefits and liabilities of use of such Purchased Property including, if
permitted by the terms of any applicable Real Property Lease or applicable
Material Contract, through a sublease or subcontract in accordance with Article
4. If such authorization, approval, consent or waiver for the sale, conveyance,
transfer, assignment or delivery of any such Purchased Property is obtained,
Seller shall promptly convey, transfer, assign and deliver, or cause to be
conveyed, transferred, assigned and delivered, such Purchased Property to Buyer.
ARTICLE 3
---------
PURCHASE PRICE
3.1 Purchase Price. The purchase price for the Purchased Property
shall be the sum of (i) Two Hundred Ninety Million Dollars ($290,000,000) (the
"Base Purchase Price"), (ii) amounts expended by Seller to comply with Future
Capital Expenditure Obligations between the date of this Agreement and the
Closing Date (the "Regulatory Obligation Amount"), and (iii) the Non-Regulated
Construction Work in Process Amount, minus (iv) any Capital Expenditure
Deficiency and (v) any Vacation Proration Amount (assuming that Buyer receives a
credit under Section 11.3.2, but if Seller receives a credit, the Vacation
Proration Amount shall be added to the Purchase Price).
3.2 Closing Date Estimate.
(a) Not less than three (3) business days prior to the Closing Date, Seller
will give to Buyer a notice, setting forth Seller's good faith estimate as of
the Closing Date of (i) the Regulatory Obligation Amount (the "Estimated
Regulatory Obligation Amount"), (ii) the Non-Regulated Construction Work in
Process Amount (the "Estimated Non-Regulated Construction Work in Process
Amount"), (iii) any Capital Expenditure Deficiency, and (iv) any Vacation
Proration Amount.
(b) On the Closing Date, Buyer shall pay to Seller an amount equal to the sum
of (i) the Base Purchase Price, (ii) the Estimated Regulatory Obligation Amount,
and (iii) the Estimated Non-Regulated Construction Work in Process Amount, minus
(iv) any Capital Expenditure Deficiency and (v) any Vacation Proration Amount
(assuming that Buyer receives a credit under Section 11.3.2, but if Seller
receives a credit, the Vacation Proration Amount shall be added to the Purchase
Price) (the "Closing Date Amount"). The Closing Date Amount shall be paid by
delivery on the Closing Date of immediately available funds in U.S. dollars by
wire transfer to an account that Seller shall designate to Buyer at least two
(2) business days prior to the Closing Date. Payments from Buyer to Seller for
Earned End-User Accounts Receivable and from Seller to Buyer for Customer
Advances and Customer Deposits will occur subsequent to Closing in accordance
with Article 10.
3.3 Closing Date Statement
(a) Within sixty (60) days after Closing Date, Seller shall prepare and
deliver to Buyer a written statement (with appropriate supporting documentation)
of the Base Purchase Price, Regulatory Obligation Amount, Non-Regulated
Construction Work in Process Amount, any Capital Expenditure Deficiency and any
Vacation Proration Amount ("Closing Date Statement"). Within thirty (30) days
after receipt of the Closing Date Statement, Buyer shall, in a written notice to
Seller, either accept the Closing Date Statement or describe in reasonable
detail any proposed adjustments to the Closing Date Statement and the reasons
therefore. If Seller shall not have received a notice of proposed adjustments
within such thirty (30) day period, Buyer will be deemed irrevocably to have
accepted such Closing Date Statement.
(b) Upon the acceptance of any Closing Date Statement by Buyer, the parties
shall, based thereupon, calculate the Base Purchase Price, Regulatory Obligation
Amount and Non-Regulated Construction Work in Process Amount (collectively, the
"Purchase Price"). If the Purchase Price as finally determined above is greater
than the Closing Date Amount, Buyer shall promptly, but no later than three (3)
business days after such acceptance, pay to Seller the amount of such
difference. If the Purchase Price as determined above is less than the Closing
Date Amount, Seller shall promptly, but no later than three (3) business days
after such acceptance, pay to Buyer the amount of such difference.
(c) Seller and Buyer shall negotiate in good faith to resolve any disputes
over any proposed adjustments to the Closing Date Statement, provided that if
any such dispute is not resolved within thirty (30) days following Seller's
receipt of any proposed adjustments delivered by Buyer pursuant to Section
3.3(b), Buyer and Seller jointly shall select an independent public accounting
firm that is nationally recognized in the United States to resolve such disputes
in accordance with the standards set forth in this Section 3.3, which resolution
shall be final and binding. The fees and expenses of such accounting firm shall
be shared by Buyer and Seller in inverse proportion to the relative amounts of
the disputed amount determined to be for the account of Buyer and Seller,
respectively.
(d) If Buyer disputes any portion of the Closing Date Statement, the parties
shall calculate the portion of the Closing Date Statement that is not the
subject of any dispute or proposed adjustment. If the undisputed portion of the
Closing Date Statement (i) is greater than the respective estimated amounts paid
on the Closing Date, Buyer shall promptly pay Seller the amount of such
difference, or (ii) is less than the respective estimated amounts paid on the
Closing Date, Seller shall promptly pay Buyer the amount of such difference.
Payments with respect to any undisputed portions of these adjustments shall be
made no later than three (3) business days after delivery of the notice of the
proposed adjustments. Upon resolution of any dispute over any proposed
adjustments as described above in Section 3.3(d), a party which is determined to
owe the other party an amount shall pay that amount promptly, but no later than
three (3) business days after resolution.
(e) Any amount payable pursuant to this Section 3.3 after the date which is
ninety (90) days following the Closing Date shall bear interest from such
ninetieth day through but excluding the date of payment, at a rate of eight
percent (8%) per annum. Such interest shall accrue daily on the basis of a year
of three hundred sixty-five (365) days and the actual number of days for which
interest is due and shall be payable together with the amount payable pursuant
to this Section 3.3. All amounts payable pursuant to this Section 3.3 shall be
paid by delivery of immediately available funds in U.S. dollars by wire transfer
to, in the case of amounts payable by Buyer, the account identified by Seller as
described in 3.2 above or to an alternate account that Seller may designate on
the Closing Date Statement and, in the case of amounts payable by Seller, to
such account of Buyer as Buyer shall designate in writing to Seller.
3.4 Performance Deposit.
(a) Concurrently with the execution and delivery hereof, Buyer shall pay to
Seller by wire transfer of immediately available funds the sum of Fourteen
Million Five Hundered Thousand Dollars ($14,500,000), an amount equal to five
percent (5%) of the Base Purchase Price (the "Deposit"), to be held by Seller
against payment of the Purchase Price and as security for the performance by
Buyer of its obligations under this Agreement.
(b) Buyer may elect to deliver the Deposit to Seller in cash or in the form of
an irrevocable, clean, standby letter of credit for the same amount (the
"Deposit L/C"). The Deposit L/C shall (i) be in a form reasonably acceptable to
Seller, (ii) be issued in favor of Seller under this Agreement and (iii) be
issued by a bank that has a long-term unsecured debt rating of at least A+ by
Standard & Poor's Rating Services and that is otherwise reasonably satisfactory
to Seller. The Deposit L/C (and any replacement thereof furnished in accordance
with this Section 3.4(b) shall have an expiration date no earlier than the first
anniversary of the date of issuance thereof and shall be automatically renewed
from year to year unless stated not to be so renewed by the issuer thereof in a
written notice given to the Seller not less than 30 days prior to the expiration
thereof. In the event of the termination of the Deposit L/C (and any replacement
thereof furnished in accordance with the provisions of this Section 3.4(b)),
Buyer shall deliver to Seller a replacement letter or letters of credit in lieu
thereof no later than 30 days prior to the expiration of the preceding letter of
credit. If Buyer shall fail to obtain any replacement of the Deposit L/C (and/or
any replacement thereof furnished in accordance with the provisions of this
Section 3.4(b)), then Seller shall draw down the full amount of the existing
letter of credit and retain the same as security for the covenants, agreements
and obligations of Buyer under this Agreement. Any replacement of any Deposit
L/C shall be in a form reasonably acceptable to Seller. Buyer acknowledges that
Seller has agreed to accept the Deposit L/C in lieu of a cash down payment
against the Purchase Price solely as an accommodation to Buyer.
(c) If the transfer of the Purchased Property as contemplated hereunder is
consummated, then the Deposit shall be paid to Seller at the Closing and
credited against the Base Purchase Price. If Buyer elects to deliver the Deposit
L/C in lieu of cash, Seller shall draw down the full amount of the Deposit L/C
at the Closing and pay such proceeds to Seller as a credit against the Base
Purchase Price.
(d) Seller acknowledges that, upon two (2) business days prior written notice
to Seller, Buyer shall have the right to deliver to Seller a cash payment of
$14,500,000, and upon receipt of such payment, Seller shall return to Buyer the
Deposit L/C.
(e) The parties hereto acknowledge and agree that their respective rights and
obligations related to the Deposit are described in Section 13.3.
ARTICLE 4
REQUIRED APPROVALS, CONSENTS AND NOTIFICATIONS
4.1 State Regulatory Approval. Promptly after the date of this
Agreement, Buyer and Seller shall file the appropriate applications and notices
with the PSC, seeking orders permitting the transfer of service in the Purchased
Exchanges to Buyer (collectively, the "Regulatory Approvals"). Buyer will be
responsible for establishing the tariff for its post-Closing operations in the
Purchased Exchanges. Buyer agrees to use its commercially reasonable efforts to
obtain the Regulatory Approvals and Seller agrees to cooperate fully with Buyer
and with the applicable regulatory agency to obtain the Regulatory Approvals at
the earliest practicable date.
4.2 Bondholder Consents. Seller shall use its commercially
reasonable efforts to obtain from its Bondholders the termination or release, at
Closing, of all security agreements, mortgages, financing statements or other
Liens running in favor of the Bondholders and relating to the Purchased Property
(such termination or release being hereinafter referred to as the "Bondholder
Consents"). Buyer agrees to cooperate in good faith with Seller in obtaining the
required Bondholder Consents.
4.3 Material Consents. Promptly after the date hereof, the parties
shall use their commercially reasonable efforts to mutually seek the consent of
the lessor under any Real Property Lease with respect to a central office or any
license with respect to Switch Software which lease or license requires consent
as a condition to an assignment, and which is identified on Schedule 4.3 or
Schedule 8.1.8 (the "Material Consents"). If a lessor or licensor refuses to
consent to an assignment, and if the applicable lease or license permits a
sublease or sublicense without the consent of the lessor or licensor, the
parties hereto shall, effective as of the Closing, enter into a sublease or
sublicense upon terms and conditions as similar and comparable to an assignment
of the lease or license as is reasonably feasible.
4.4 FCC Consents. Promptly after the date of this Agreement, the
parties shall use their commercially reasonable efforts to obtain (i) the FCC's
consent to the transfer of the FCC Licenses from Seller to Buyer, (ii) the FCC
consents and waivers set forth on Schedule 4.4 and (iii) the FCC Final Orders
(all such consents, waivers or orders are collectively referred to as the "FCC
Consents").
4.5 HSR Act Review. Within thirty (30) business days after
the date of this Agreement, the parties will make such filings as may be
required by the HSR Act with respect to the transactions contemplated by this
Agreement. Thereafter, the parties will file as promptly as practicable all
reports or other documents required or requested by the U.S. Federal Trade
Commission ("FTC") or the U.S. Department of Justice ("DOJ") pursuant to the HSR
Act or otherwise and will comply promptly with any requests by the FTC or the
DOJ for additional information concerning such transactions, so that the waiting
period specified in the HSR Act will expire as soon as reasonably possible after
the execution and delivery of this Agreement. Without limiting the foregoing,
Seller and Buyer agree to use their commercially reasonable efforts to cooperate
and oppose any preliminary injunction sought by any Governmental Authority
preventing the consummation of the transactions contemplated by this Agreement.
Buyer agrees to pay all application fees required in connection with any filings
under the HSR Act.
Seller and Buyer shall cause their respective counsel to furnish each
other such necessary information and reasonable assistance as the other may
reasonably request in connection with the preparation of necessary filings or
submissions under the provisions of the HSR Act. Seller and Buyer will cause
their respective counsel to supply to each other copies of all correspondence,
filings or written communications by such party or its Affiliates with any
Governmental Authority or staff members thereof, with respect to the
transactions contemplated by this Agreement and any related or contemplated
transactions, except for documents filed pursuant to Item 4(c) of the
Hart-Scott-Rodino Notification and Report Form or communications regarding the
same documents or information submitted in response to any request for
additional information or documents pursuant to the HSR Act which reveal
Seller's or Buyer's negotiating objectives or strategies or purchase price
expectations.
4.6 Notification. Each of the parties agrees to notify the others
promptly upon learning of any fact or set of circumstances that would be
reasonably likely to delay or prevent receipt of a Regulatory Approval,
Bondholder Consent, FCC Consent, HSR clearance or other consent or approval
referred to in Article 4.
4.7 GTE/Bell Atlantic Merger. Notwithstanding anything else
contained in this Agreement, Seller and its Affiliates shall not be obligated to
take any action that would violate the terms of their agreements regarding the
Merger, or that would interfere with, delay or prevent the consummation of the
Merger; provided that Buyer shall not be obligated to proceed with the Closing
if the Merger has resulted in a Material Adverse Effect.
ARTICLE 5
---------
PRE-CLOSING COVENANTS
5.1 Investigation by Buyer. Prior to the Closing, upon reasonable
notice from Buyer to Seller given in accordance with this Agreement and subject
to approval by Seller's appointed representative (which shall not be
unreasonably withheld), Seller will afford to the authorized representatives of
Buyer reasonable access during normal business hours to the Transferred Books
and Records, the Owned Real Property and the Leased Real Property, so as to
afford Buyer the opportunity to make such review, examination and investigation
of the Business and the Purchased Property as Buyer may reasonably request;
provided, however, that no environmental sampling or other testing shall be
performed without Seller's prior written consent, which consent may be given or
withheld in Seller's sole discretion. Buyer will not contact any employee,
customer or supplier of Seller with respect to this Agreement, the matters
involved herein or the Purchased Property without the prior written consent of
Seller. Nothing herein will obligate Seller to take actions that would
unreasonably disrupt the normal course of the business of Seller or violate the
terms of any applicable Law or any Contract to which Seller or any of its
Affiliates is a party or to which any of its assets is subject. Any information
or documentation provided to Buyer or acquired by Buyer during this
investigation shall be deemed "Evaluation Material" as that term is defined in
the Confidentiality Agreement and shall be subject in all cases to the terms of
the Confidentiality Agreement.
5.2 Operation of the Business in the Ordinary Course.
5.2.1 Preservation of Business. Except as contemplated on
Schedule 5.2.1 or in connection with or relating to the Merger (and disclosed to
Buyer) or as otherwise consented to by Buyer prior to the Closing, from the date
of this Agreement until the Closing Seller shall:
(a) Conduct the Business in the ordinary course consistent with past practice
and shall keep available to the Business its services and the services of its
Affiliates to the same extent generally available on the date hereof;
(b) Operate the Business in substantially the same manner as it is presently
being conducted, and, with respect to the Business, refrain from entering into
any Contract that would be a Material Contract without the prior consent of
Buyer (which shall not be unreasonably withheld);
(c) Not institute or participate in any proceeding with respect to, or other-
wise change, amend or supplement any of its tariffs or make any other filings
(other than periodic reports) with the PSC without the prior consent of Buyer
(which shall not be unreasonably withheld) except as disclosed on Schedule
8.1.15(a);
(d) Maintain the Purchased Property in good repair, order and condition,
reasonable wear and use excepted;
(e) Maintain insurance with respect to the Purchased Property consistent with
past practice;
(f) Make capital expenditures in accordance with Section 5.6; and
(g) Maintain the books and records of the Business substantially in accordance
with prior practice, except as changes are mandated by Governmental Authorities
or required by GAAP, in which event Seller shall promptly notify Buyer.
5.2.2 No Material Changes. Except as contemplated by this
Agreement or in connection with or relating to Merger (and disclosed to Buyer)
or as otherwise consented to by Buyer prior to the Closing, from the date of
this Agreement until the Closing, Seller will not:
(a) Make any material change in the general nature of the Business;
(b) Sell, lease or dispose of, or make any Contract for the sale, lease or
disposition of any Purchased Property, other than in the ordinary course of
business consistent with past practice;
(c) Increase the number of Active Employees other than in a manner consistent
with past practice, or increase the benefit provided under any plans concerning
employee benefits or increase the general rates of compensation of its
Transferred Employees, except (i) as required by Law, (ii) pursuant to any
Contract to which Seller is a party existing on the date hereof, (iii) in the
ordinary course of business of Seller consistent with past practice, or (iv) as
listed or described on Schedule 5.2.2(c);
(d) (i) Enter, amend, modify or terminate any Material Contract or permit any
of the foregoing to occur other than in the ordinary course of business; or (ii)
sell, transfer or otherwise dispose of any Purchased Property other than in the
ordinary course of business or as listed or described on Schedule 5.2.2(d), or
encumber any Purchased Property, except for Permitted Encumbrances;
(e) Enter into any new written employment agreement, or union agreement with,
or commitment to, the Transferred Employees (including any new commitment to pay
retirement or other benefits or other amendments to Seller's retirement plans),
provided that Seller may enter into new union agreements to the extent the new
union agreements succeed any union agreement that expires prior to the Closing;
or
(f) Except as contemplated by this Agreement or the Ancillary Agreements,
enter into any transaction with any of its Affiliates that contemplates (i) the
transfer of any Purchased Property; or (ii) any other contractual arrangement
that will survive the Closing and not be terminable at will by, and with no cost
to, Buyer subsequent to the Closing.
5.3 Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article 6, the parties will use their commercially
reasonable efforts to satisfy promptly all the conditions required to be
satisfied prior to the Closing.
5.4 Approvals.
(a) Between the date of this Agreement and the Closing Date, Buyer and Seller
will (i) cooperate with one another and take all reasonable steps to obtain, as
promptly as practicable, all consents, approvals, authorizations, waivers and
permits of any Governmental Authorities required of either party to consummate
the transactions contemplated by this Agreement and (ii) provide such other
information and communications to any Governmental Authority as may be
reasonably requested.
(b) To the extent that any consents, approvals, authorization or waiver of a
third party with respect to any Assigned Contract is required in connection with
the transactions contemplated by this Agreement, Seller shall use its
commercially reasonable efforts to obtain such authorization, consent, approval
or waiver prior to the Closing Date.
5.5 Financial Statements. Seller will cooperate with the indepen-
dent auditors chosen by Buyer to audit the Financial Statements delivered to
Buyer in accordance with Section 8.1.21. Seller's cooperation will include
access to workpapers and other supporting documents used in the preparation of
the Financial Statements as may be reasonably required by such auditors to
render an opinion, and cooperation with respect to such other financial
statements as Buyer may require with respect to the Business in order to comply
with the reporting requirements of the Securities and Exchange Commission under
Regulations S-K and S-X. Seller will bear the cost of preparation of the
Financial Statements. Buyer will bear the cost of the audit and the cost of
preparation of any financial statements other than the Financial Statements.
Buyer acknowledges that the Financial Statements and any supporting documents
have been made available as an indication of the historical financial
performance and condition of the Business. Except to the extent that the
Financial Statements reflect intentional misrepresentation or fraud, or to the
extent that Seller has breached its representations and warranties under Section
8.1.21, Buyer agrees not to make any claims related to the performance of the
Business after the date of the Financial Statements on the basis of a comparison
to the Financial Statements.
5.6 Capital Expenditures. Seller shall be obligated to make
capital expenditures with respect to the Telephone Plant required to support
normal maintenance and customer growth in a manner consistent with established
regulatory performance objectives, which expenditures (exclusive of any Future
Capital Expenditure Obligations or Future Regulatory Obligations) shall not be
less than $8,000,000 during calendar year 1999, and which amount shall be
discounted on a pro rata daily basis to the extent that the Closing Date occurs
prior to December 31, 1999 (the "Capital Expenditure Amount"). The Purchase
Price shall be adjusted down, on a dollar-for-dollar basis, to the extent that
Seller's actual capital expenditures are less than the Capital Expenditure
Amount (a "Capital Expenditure Deficiency"). In the event the Closing does not
occur prior to January 1, 2000, the Capital Expenditure Amount shall be
increased on a pro rata daily basis and Seller shall be obligated to make
capital expenditures during fiscal year 2000 in the same relative amount, and
the Purchase Price shall be adjusted in the same manner described above for any
Capital Expenditure Deficiency occurring during the period after January 1,
2000. Between the date of this Agreement and the Closing Date, Seller will
notify Buyer of any project involving Non-Regulated Construction Work in Process
in excess of $100,000.
5.7 Delivery of Interim Information. From the date of this
Agreement until the Closing, Seller shall furnish Buyer monthly reports
concerning the operating performance of the Business. Such reports shall contain
such data as typically reported to GTE management with respect to the Purchased
Exchanges, including revenue, access line counts, trouble [capital expenditures
(on a quarterly basis only)] indices and other service measures. All information
provided in accordance with this Section 5.7 shall be subject to compliance with
the Confidentiality Agreement and to compliance with applicable antitrust Laws.
5.8 Cooperation with Respect to Like-Kind Exchange.Buyer agrees
that Seller's transfer of the Purchased Property may, at Seller's election, be
accomplished in a manner enabling such transfer to qualify as part of a
like-kind exchange of property covered by Section 1031 of the IRC. If Seller so
elects, Buyer shall cooperate with Seller (but without being required to incur
any out-of-pocket costs in the course thereof) in connection with Seller's
efforts to effect such like-kind exchange, which cooperation shall include,
without limitation, taking such actions as Seller requests in order to enable
Seller to qualify such transfer as part of a like-kind exchange of property
covered by Section 1031 of the IRC (including any actions required to facilitate
the use of a "qualified intermediary" within the meaning of the United States
Treasury Regulations), and Buyer agrees that Seller may assign all or part of
its rights (but no obligations) under this Agreement to a person or entity
acting as a qualified intermediary to qualify the transfer of the Purchased
Property as part of a like-kind exchange of property covered by Section 1031 of
the IRC. Buyer and Seller agree in good faith to use reasonable efforts to
coordinate the transactions contemplated by this Agreement with any other
transactions engaged in by either Buyer or Seller; provided that such efforts
are not required to include an unreasonable delay in the consummation of the
transactions contemplated by this Agreement.
ARTICLE 6
---------
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to Obligations of Buyer. The obligations
of Buyer to consummate the Closing shall be subject to the satisfaction or
waiver by Buyer, at or prior to the Closing, of each of the following
conditions, any one or more of which may be waived at the option of Buyer:
6.1.1 No Misrepresentation or Breach of Covenants and
Warranties. Seller shall have complied in all material respects with its
covenants to be performed in whole or in part prior to the Closing, and the
representations and warranties of Seller in Section 8.1 shall be true and
correct as of the Closing, except for (i) such representations or warranties
that are made expressly as of and only as of an earlier date, which shall have
been true and correct as of such earlier date except as would not have a
Material Adverse Effect, and (ii) to the extent that any breach of such
representations and warranties has not had and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect; and Seller shall
have delivered to Buyer a certificate ("Seller's Closing Certificate") in the
form attached as Schedule 6.1.1, dated the Closing Date and signed by an
Executive Officer of Seller, certifying each of the foregoing, or specifying
those respects in which such covenants have not been performed or such
representations and warranties are not true and correct.
6.1.2 Documents. Seller shall have delivered to Buyer all
documents required by Section 7.2.
6.1.3 HSR. All required waiting periods under the HSR Act
shall have expired or been terminated.
6.1.4 No Legal Obstruction. Each of the required Bondholder
Consents shall have been obtained, each consent required under Section 4.3 shall
have been obtained and each of the required Regulatory Approvals and FCC
Consents shall have been obtained, free of any special terms, conditions or
restrictions that are materially adverse to Buyer (other than any such approvals
or consents which, if not obtained, would not have a Material Adverse Effect);
provided that any Regulatory Approval that would have the effect of converting
any of Buyer's equity investors or their Affiliates from a Rate-of-Return
Regulation Entity to a Price-Cap Regulation Entity shall be deemed to have a
Material Adverse Effect. For purposes of this Agreement, all such approvals and
consents shall be deemed to have been obtained upon the granting thereof, and
the expiration of any appeals period (a "Final Order"). In addition, there shall
not have been entered a preliminary or permanent injunction, temporary
restraining order or other judicial or administrative order or decree in any
jurisdiction, the effect of which prohibits the Closing.
6.1.5 No Material Adverse Effect. There shall not have
occurred any event or condition, which individually or in the aggregate has
resulted, or could reasonably be expected to result, in a Material Adverse
Effect.
6.2 Conditions Precedent to Obligations of Seller. The obligations
of Seller to consummate the Closing shall be subject to the satisfaction or
waiver by Seller, at or prior to the Closing, of each of the following
conditions:
6.2.1 No Misrepresentation or Breach of Covenants and
Warranties. Buyer shall have complied in all material respects with its
covenants to be performed in whole or in part prior to the Closing, and the
representations and warranties of Buyer in Section 8.2 shall be true and correct
in all material respects as of the Closing, except for (i) representations or
warranties made expressly as of and only as of an earlier date, which shall have
been true and correct as of such earlier date except as would not have a
Material Adverse Effect, and (ii) to the extent that any breach of such
representations and warranties has not, individually or in the aggregate, had a
Material Adverse Effect, and Buyer shall have delivered to Seller a certificate
("Buyer's Closing Certificate") in the form attached as Schedule 6.2.1, dated
the Closing Date and signed by an Executive Officer of Buyer, certifying each of
the foregoing or specifying those respects in which such covenants have not been
performed or such representations and warranties are not true and correct.
6.2.2 Documents. Buyer shall have delivered to Seller all
documents required by Section 7.3.
6.2.3 Delivery of Closing Date Amount. Buyer shall have
delivered to Seller, in the manner specified in Section 3.2, the Closing Date
Amount.
6.2.4 HSR. All required waiting periods under the HSR Act
shall have expired or been terminated.
6.2.5 No Legal Obstruction. Each of the required Bondholder
Consents shall have been obtained, and each of the required Regulatory Approvals
and FCC Consents shall have been obtained free of any special terms, conditions
or restrictions that are materially adverse to Seller based upon good faith
business concerns that are not commercially unreasonable (other than any such
approvals or consents which, if not obtained, would not have a Material Adverse
Effect). For purposes of this Agreement, all such approvals and consents shall
be deemed to have been obtained upon the granting of a Final Order. In addition,
there shall not have been entered a preliminary or permanent injunction,
temporary restraining order or other judicial or administrative order or decree
in any jurisdiction, the effect of which prohibits the Closing.
ARTICLE 7
---------
THE CLOSING
7.1 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Purchased Property and
the assumption of the Assumed Liabilities (the "Closing") shall be held at 9
A.M. local time at the offices of GTE Network Services at 600 Hidden Ridge,
Irving, Texas 75038, on the date agreed upon by the parties, provided such date
shall be (i) the last business day of the month, and (ii) at least five (5)
business days, but not more than ninety (90) days, after the date either party
notifies the other in writing of its determination that all required Regulatory
Approvals, Bondholder Consents, the Material Consents and FCC Consents have been
obtained, or at such other time and place as the parties may agree (the "Closing
Date"). Such Closing shall be deemed to have occurred as of 11:59 P.M., local
time, on the Closing Date. Seller's ownership and operation of the Purchased
Property shall be deemed to cease immediately prior to the Closing.
7.2 Seller's Obligations at Closing. At the Closing, Seller shall
deliver to Buyer the following documents:
(a) (i) The Bill of Sale and Assignment and Assumption Agreement, (ii) subject
to Permitted Encumbrances, special warranty deeds in respect of the Owned Real
Property, and (iii) subject to Section 2.5, assignments of the Assigned
Contracts or to the extent set forth in Section 4.3, sublicenses of certain
Assigned Contracts. For purposes of this Agreement, the term "Bill of Sale and
Assignment and Assumption Agreement" means the form attached hereto as Schedule
7.2(a) executed by Seller;
(b) A legal opinion from William Mundy, general counsel for GTE Network
Services, as counsel for Seller, dated as of the Closing Date and in the form of
Schedule 7.2(b);
(c) Seller's Closing Certificate;
(d) Instruments of assignment of the Real Property Leases and Real Property
Interests or, to the extent set forth in Section 4.3, subleases for the Leased
Real Property;
(e) Mortgage satisfactions, UCC Form 3 Termination Statements and other
instruments necessary to remove, release and terminate all Liens held by any
party on the Purchased Property (except for Permitted Encumbrances);
(f) All of the documents and papers required of Seller as conditions to
Closing pursuant to Section 6.1, including the Regulatory Approvals, Bondholder
Consents and FCC Consents;
(g) A certificate substantially in the form of Schedule 7.2(g) certifying that
Seller is not a "foreign person" within the meaning of Section 1445(b)(2) of the
IRC;
(h) The License Agreement;
(i) All documentation and information required to be delivered by Seller prior
to Closing pursuant to Article 11; and
(j) Such other documents as Buyer may reasonably request.
7.3 Buyer's Obligations at Closing. At the Closing, Buyer shall
deliver to Seller the following:
(a) The Closing Date Amount in the manner specified in Section 3.2;
(b) The Bill of Sale and Assignment and Assumption Agreement and the Ancillary
Agreements executed by Buyer;
(c) A legal opinion from Boles, Boles & Ryan, counsel to Buyer dated as of the
Closing Date and in the form of Schedule 7.3(c);
(d) Buyer's Closing Certificate;
(e) All other documents and papers required of Buyer as conditions of Closing
pursuant to Section 6.2, including the Regulatory Approvals; and
(f) Such other documents as Seller may reasonably request.
ARTICLE 8
---------
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of Seller. Seller represents
and warrants to Buyer as follows:
8.1.1 Authorization and Effect of Agreement. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to perform its obligations hereunder and
thereunder. The execution and delivery by Seller of this Agreement and the
Ancillary Agreements and the fulfillment of its obligations under this Agreement
and the Ancillary Agreements have been duly authorized by all necessary
corporate action on the part of Seller and, to the extent required by Law, any
entity that controls the Seller. This Agreement and the Ancillary Agreements
have been or will be duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement and the Ancillary Agreements by Buyer,
constitute valid and binding obligations of Seller enforceable in accordance
with its terms subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights of creditors generally and subject to
the exercise of judicial discretion in accordance with principles of equity
8.1.2 No Restrictions Against Sale or Assignment of the
Purchased Property. The execution and delivery of this Agreement and the
Ancillary Agreements by Seller does not, and prior to Closing will not, and the
fulfillment by Seller of its obligations under this Agreement and the Ancillary
Agreements will not (i) conflict with or violate any provision of its
certificate of incorporation or bylaws, (ii) subject to obtaining the approvals
and or consents referred to in Section 2.5, Article 4 and Schedule 8.1.11(a-e),
conflict with, violate or result in the breach of any provision of any Material
Contract, or (iii) result in the creation of any Lien (other than Permitted
Encumbrances) upon any of the Purchased Property under (a) any Material Contract
or (b) any Law applicable to any of the Purchased Property, except in the case
of clauses (ii) or (iii) for any such conflict, violation, breach or Lien that
would not have a Material Adverse Effect.
8.1.3 Consents, Approvals and Permits of Governmental
Authorities. Except as set forth in Schedule 8.1.3:
(a) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required to be
obtained or made by or with respect to Seller or in connection with the
execution and delivery of this Agreement and the Ancillary Agreements by Seller
or the fulfillment by Seller of its obligations under this Agreement and the
Ancillary Agreements, except (i) FCC Consents and HSR Act clearance, (ii) the
Regulatory Approvals, and (iii) any consent approval, order or authorization or
registration declaration or filing, which if not obtained or made would not have
a Material Adverse Effect.
(b) Seller holds valid permits, licenses, franchises, approvals and
authorizations issued or granted by any Governmental Authority and adequate for
the operation of the Business as currently conducted, except to the extent
absence of any such permit, license, franchise, approval or authorization would
not have an Material Adverse Effect.
8.1.4 No Violation of Law. Except as indicated in Schedule
8.1.4, the execution and delivery of this Agreement and the Ancillary Agreements
and the fulfillment by Seller of its obligations under this Agreement and the
Ancillary Agreements will not violate any applicable Law, except where such
violation would not reasonably be expected to have a Material Adverse Effect.
8.1.5 Corporate Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and is duly qualified to conduct business in Missouri. Seller has full
power and authority to own its properties and to carry on the Business as it is
now being conducted and to own, or hold under lease or Contract the Purchased
Property.
8.1.6 Brokers. Seller has not paid or become obligated
to pay any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement
in such a manner as to give rise to a valid claim against Buyer or any of the
Purchased Property for any broker's or finder's fees or similar fees or
expenses.
8.1.7 Title to Owned Real Property. As of the date hereof,
the address and a general description of each item of Owned Real Property are
set forth on Schedule 8.1.7(a). Seller has good fee simple title to all of the
Owned Real Property, free and clear of any Lien other than Permitted
Encumbrances and Liens of the Bondholders identified on Schedule 8.1.7(b).
Seller represents that the only creditors that have a Lien (other than any
Permitted Encumbrances) on any of the Owned Real Property are the Bondholders
identified on Schedule 8.1.7(b). The Owned Real Property set forth on Schedule
8.1.7(a) constitutes substantially all of the Owned Real Property used in the
Business during calendar year 1998 and located in the Purchased Exchanges,
except as such (i) has been disposed of since January 1, 1998 in the ordinary
course of business, or (ii) would not have a Material Adverse Effect.
8.1.8 Real Property Leases. Schedule 8.1.8 sets forth (i) a
list of all Real Property Leases as of the date hereof and, except for such Real
Property Leases as may have been executed or terminated in accordance with
Section 5.2, as of the Closing Date, and (ii) all Real Property Leases used in
the Business and with respect to property located in the Purchased Exchanges
during calendar year 1998 except such as (1) have been executed or terminated
since January 1, 1998 in the ordinary course of business, or (2) would not have
a Material Adverse Effect. Each of the leases for the Leased Real Property is
enforceable in accordance with its terms, subject to bankruptcy, insolvency and
other similar laws affecting the rights of creditors generally and subject to
the exercise of judicial discretion in accordance with the principles of equity,
and except as otherwise disclosed in Schedule 8.1.8, there is not under any
lease any material default or a material breach of covenant by Seller.
8.1.9 Tangible Assets. All of the tangible Purchased
Property is in substantially good operating condition and repair, normal wear
and tear excepted. Except as set forth on Schedule 8.1.9 or elsewhere in this
Agreement, Seller has, or as of Closing will have, good title to each item of
tangible Purchased Property (other than Real Property Interests, representations
with respect to which are included in Section 8.1.7 and 8.1.8 hereof, and office
equipment or vehicles subject to leases) with a fair market value in excess of
$10,000, free and clear of any Lien (other than Permitted Encumbrances). Seller
has not received any written notice within the past twelve(12) months of a
violation of any ordinances, regulations or building, zoning or other Laws with
respect to such assets that would have a Material Adverse Effect. EXCEPT AS
EXPRESSLY PROVIDED IN THIS SECTION 8.1.9, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE
PURCHASED PROPERTY AND HEREBY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY AGAINST INFRINGEMENT.
8.1.10 No Material Adverse Change. Except as disclosed in
Schedule 8.1.10 or as may be related to the Merger (and disclosed to Buyer),
between December 31, 1997 and the date of this Agreement there has not occurred
(i) any event or condition that would have a Material Adverse Effect; (ii) any
increase in compensation payable or to become payable by Seller to any of its
Transferred Employees or agents, other than normal merit or promotional
increases made in the ordinary course of business consistent with past practice,
other than Seller's obligation to make payments for service prior to Closing
under the retention pay program announced in connection with the network
business repositioning of Seller and its Affiliates; or (iii) any amendment or
termination by Seller of any Material Contract, except any amendment or
termination in the ordinary course of business.
8.1.11 Material Contracts. Except for the agreements set
forth on Schedule 8.1.11 subparts (a) through (d) (all such contracts being
referred to herein as the "Material Contracts"), there is no Assigned Contract
(other than the Assigned Contracts entered into after the date of this Agreement
in the ordinary course of business) that is:
(a) an agreement containing a non-compete agreement or other covenant that
in either case would by its terms limit the freedom of Buyer following the
Closing to compete in any material respect with respect to the Business with any
third party, other than any such agreement or covenant which does not materially
impair the continued operation of the Business as it is currently conducted;
(b) an agreement granting a Lien with respect to any of the Purchased Property
(other than a Permitted Encumbrance or Lien of a Bondholder);
(c) an agreement for the sale, lease or encumbrance (other than a Permitted
Encumbrance or Lien of a Bondholder) of any material Purchased Property
(including any interconnection agreements) or grant of any preferential rights
to purchase any material Purchased Property in each case outside the ordinary
course of business; or
(d) an agreement other than as set forth above with respect to which the
aggregate amount to be received or paid thereunder with respect to calendar year
1999 is expected to exceed $100,000 based on the payments which have been made
under such agreement with respect to calendar year 1998, to the extent
applicable.
Except as set forth on Schedule 8.1.11, to the knowledge of Seller,
each of the Material Contracts is valid, binding and in full force and effect
and is enforceable by Seller or Seller's Affiliates, as applicable, in
accordance with its terms, except for any such failure to be valid, binding, in
full force and effect or enforceable that is not reasonably likely to have a
Material Adverse Effect. Except as set forth on Schedule 8.1.11, to the
knowledge of Seller, Seller and Seller's Affiliates have performed all material
obligations required to be performed by them to date under the Material
Contracts, and they are not (with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder and, to the knowledge of
Seller, no other party to any Material Contract is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any respect
thereunder, in each case except for such noncompliance, breaches and defaults
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect. As of the date hereof, neither Seller nor any Seller
Affiliate has, except as disclosed on Schedule 8.1.11, received any written
notice of the intention of any party to terminate any Material Contract. Except
as set forth in Schedule 8.1.11, no consents or approvals are required from
third parties with respect to the assignment of any Material Contract. Complete
and correct copies of all the Material Contracts, together with all
modifications and amendments thereto to the date of this Agreement, have been
made available to Buyer or its representatives.
8.1.12 Insurance. The Purchased Property of an insurable
nature and of a character usually insured by companies carrying on similar
businesses is insured under insurance policies or self insured in such amounts
and against such losses or casualties as is usual in Seller's industry.
Effective at 11:59 P.M. on the Closing Date, the coverage under the insurance
policies and programs applicable to the Purchased Property will be terminated.
Thereafter, Buyer will be responsible for providing all insurance coverage for
the Purchased Property.
8.1.13 Taxes. Except as disclosed on Schedule 8.1.13,
(i) all Tax Returns required to be filed by Seller on or before the Closing Date
have or will have been filed, and all Taxes shown as due and payable on such Tax
Returns have been or will be paid by Seller when required by law; (ii) no
deficiencies or assessments for any Taxes have been asserted in writing or
assessed against Seller that remain unpaid and that individually or in the
aggregate are material to the Business; (iii) Seller has withheld all required
federal, state and local payroll Taxes relating to the Business and have
remitted or will remit all amounts required to be remitted to the appropriate
Taxing authorities; (iv) there are no Tax Liens upon any of the Purchased
Property except for statutory liens covering Taxes not yet due and payable; (v)
Seller is not a "foreign person" within the meaning of Section 1445(b)(2) of the
IRC and shall provide an appropriate certificate for purposes of Section
1445(b)(2) of the IRC; and (vi) there are no material, current audits or
material audits for which written notice has been received or, to the knowledge
of Seller, for which verbal notice has been received (in either case,
specifically with respect to the Business).
8.1.14 No Material Claims or Suits. Except as disclosed in
Schedule 8.1.13 or Schedule 8.1.14, there are no claims, actions, lawsuits or
legal proceedings pending before any Governmental Authority, or, to the
knowledge of Seller threatened, against or affecting the Business or Purchased
Property that in Seller's opinion, if determined adversely to Seller, would
reasonably be expected to have a Material Adverse Effect on the Business or
materially adversely affect ability of Seller to consummate the transactions
contemplated hereby.
8.1.15 Tariffs; FCC Licenses.
(a) Schedule 8.1.15(a) sets forth a list of all regulatory tariffs applicable
to the Business. Such tariffs stand in full force and effect on the date of
this Agreement in accordance with all terms, and there is no outstanding notice
of cancellation or terminatio or, to Seller's knowledge, any threatened
cancellation or termination in connection therewith, nor is Seller subject to
any restrictions or conditions applicable to its regulatory tariffs that limit
or would limit the operation of the Business (other than restrictions or
conditions generally applicable to tariffs of that type). Each such tariff has
been duly and validly approved by Seller's regulatory agency. Seller is not in
material default under the terms and conditions of any such tariff and there is
no basis for any claim of default by Seller in any material respect under any
such tariff. Except as disclosed on Schedule 8.1.15(a), there are no
applications by Seller or complaints (other than end-user complaints), or
petitions by others or proceedings pending or threatened before the PSC relating
to the Business or its operations or the regulatory tariffs. To the knowledge of
Seller, there are no material violations by subscribers or others under any such
tariff. A true and correct copy of each tariff set forth on Schedule 8.1.15(a)
has been delivered or made available to Buyer.
(b) Schedule 8.1.15(b) sets forth a list of all FCC Licenses held by Seller
and used in the operation of the Business. Except as set forth on Schedule
8.1.15(b), (i) each such FCC License is in full force and effect on the date of
this Agreement in accordance with its terms, (ii) there is no outstanding notice
of cancellation or termination or, to Seller's knowledge, any threatened
cancellation or termination in connection therewith, nor (iii) are any of such
FCC Licenses subject to any restrictions or conditions that limit the operation
of the Business (other than restrictions or conditions generally applicable to
licenses of that type). Subject to the Communications Act of 1934, as amended,
and the regulations thereunder, the FCC Licenses are free from all security
interests, liens, claims, or encumbrances of any nature whatsoever. There are no
applications by Seller or complaints (other than individual end-user complaints
that would not cause a Material Adverse Effect) or petitions by others or
proceedings pending or threatened before the FCC relating to the Business or the
FCC Licenses that, in Seller's opinion, would reasonably be expected to have a
Material Adverse Effect on the Business.
8.1.16 Employee Matters.
(a) Seller will provide by letter as soon as practicable following the date
hereof the name, annual compensation, incentive compensation target, job title,
job location and collective bargaining unit status as of June 26, 1999, of each
person employed by Seller at a location in the Purchased Exchanges who is
expected to be a Transferred Employee. Schedule 8.1.16(a) lists (and identifies
the sponsor of) each material "Employee Pension Benefit Plan," as that term is
defined in Section 3(2) of ERISA, each material "Employee Welfare Benefit Plan,"
as that term is defined in Section 3(1) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"), and each other material
retirement, pension, profit-sharing, money purchase, deferred compensation,
incentive compensation, bonus, stock option, stock purchase, severance pay,
unemployment benefit, vacation pay, savings, medical, dental, post-retirement
medical, accident, disability, weekly income, salary continuation, health, life
or other insurance, fringe benefit, or other employee benefit plan, program,
agreement, or arrangement maintained or contributed to by Seller or its
Affiliates in respect of or for the benefit of any Transferred Employee or
former employee of Seller, excluding any such plan, program, agreement, or
arrangement maintained or contributed to solely in respect of or for the benefit
of Transferred Employees or former employees employed or formerly employed by
Seller outside of the United States, as of the date hereof (collectively,
together with the ERISA Plans, referred to hereinafter as the "Plans"). Schedule
8.1.16(a) also includes a list of each material written employment, severance,
termination or similar-type agreement between Seller and its Affiliates and any
Transferred Employee (the "Employment Agreements"). Except for retention bonuses
paid in connection with the closing of the transactions contemplated by this
Agreement and except as otherwise disclosed on Schedule 8.1.16(a), the execution
and delivery of this Agreement by Seller and the performance of this Agreement
by Seller will not directly result now or at any time in the future in the
payment to any Transferred Employee of any severance, termination, or
similar-type payments or benefits being paid to any Transferred Employee.
(b) Except as set forth on Schedule 8.1.16(b):
(i) Neither Seller nor any of its Affiliates, any of the ERISA
Plans, any trust created thereunder, or any trustee or administrator thereof,
has engaged in any transaction as a result of which Seller, any of its
Affiliates or the Business could be subject to any material liability pursuant
to Section 409 of ERISA or to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed pursuant to Section 4975 of the IRC;
and
(ii) Since the effective date of ERISA, no material liability
under Title IV of ERISA has been incurred or is reasonably expected to be
incurred by Seller, any of its Affiliates or the Business (other than liability
for premiums due to the PBGC), unless such liability has been, or prior to the
Closing Date will be, satisfied in full.
(c) Except as set forth on Schedule 8.1.16(c), with respect to the Plans
other than those Plans identified on Schedule 8.1.16(a) as "multiemployer plans"
(i) the PBGC has not instituted proceedings to terminate any Plan
that is subject to Title IV of ERISA (the "Retirement Plans");
(ii) none of the ERISA Plans has incurred an "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the IRC),
whether or not waived, as of the last day of the most recent fiscal year of each
of the ERISA Plans ended prior to the date of this Agreement;
(iii) each of the Plans has been operated and administered in all
material respects in accordance with its provisions and with all applicable
laws;
(iv) each of the ERISA Plans that is intended to be "qualified"
within the meaning of Section 401(a) of the IRC and, to the extent applicable,
Section 401(k) of the IRC, has been determined by the IRS to be so qualified,
and nothing has occurred since the date of the most recent such determination
(other than the effective date of certain amendments to the IRC, the remedial
amendment period for which has not yet expired) that would adversely affect the
qualified status of any of such ERISA Plans; and
(v) there are no pending material claims by or on behalf of any of
the Plans, by any employee or beneficiary covered under any such Plan, or other-
wise involving any such Plan (other than routine claims for benefits and routine
expenses).
(d) Except as set forth on Schedule 8.1.16(d), none of the ERISA Plans is a
"multiemployer Plan," as that term is defined in Section 3(37) of ERISA, and
with respect to any such multiemployer plans (as so defined) listed in Schedule
8.1.16(d), neither Seller nor any of its Affiliates have made or incurred a
"complete withdrawal" or a "partial withdrawal," as such terms are respectively
defined in Sections 4203 and 4205 of ERISA that would result in the incurrence
of a material liability by Seller, any of its Affiliates or the Business, and
the transactions contemplated herein shall not constitute a "complete
withdrawal" or a "partial withdrawal" as such terms are defined in Sections 4203
and 4205 of ERISA, respectively.
(e) Except as set forth on Schedule 8.1.16(e), (i) none of the Transferred
Employees are represented by a labor union or labor organization, and (ii)
Seller is not subject to any collective bargaining agreement covering any
Transferred Employee. There are currently no strikes, slowdowns, work stoppages
or lockouts by or with respect to any Transferred Employee covered by collective
bargaining agreements. Except as set forth on Schedule 8.1.16(e), to the best
knowledge of Seller, during the twelve (12) months preceding the date of this
Agreement, there have not been any union organizational campaigns by or directed
at Transferred Employees.
(f) Seller will make available to Buyer, prior to the Closing Date, a list of
those Transferred Employees that Seller believes to have participated in the
health or dependent care reimbursement accounts of Seller, together with the
elections made prior to the Closing Date with respect to such accounts through
the Closing Date.
8.1.17 Schedules of Telephone Plant. Schedule 8.1.17 sets
forth, as of December 31, 1998 and, except for such changes as may occur
pursuant to Section 5.2, as of the Closing Date, a materially accurate summary
of the book value of the Telephone Plant (except for Real Property Interests and
Real Property Leases) and Material and Supply Inventory as reflected in Seller's
continuing property records. Schedule 8.1.17 summarizes substantially all
Telephone Plant used in the Business (other than Excluded Property and the GTE
Telecom Assets) during calendar year 1998 and located in the Purchased
Exchanges, except such as (i) has been disposed of in the ordinary course of
business since January 1, 1998, or (ii) would not have a Material Adverse
Effect.
8.1.18 Schedule of Real Property Interests. To the knowledge
of Seller and as of the date of this Agreement, Schedule 8.1.18 sets forth a
true and accurate list of all its Real Property Interests.
8.1.19 Environmental Matters. Except as set forth in
Schedule 8.1.19 (which Seller may supplement within 30 days of the date hereof
with respect to Leased Real Property):
(a) Seller's current use of the Owned Real Property or Leased Real Property
materially complies with Environmental Requirements;
(b) No Liens under any Environmental Requirement have been or are imposed on
any of the Owned Real Property, except for such Liens as would not have a
Material Adverse Effect;
(c) No action, proceeding, revocation proceeding, procedure, writ, injunction
or claim is pending, or to Seller's knowledge threatened, concerning any
Environmental Requirement and relating to any of the Owned Real Property, except
as would not have a Material Adverse Effect;
(d) Seller has obtained or filed for all permits, licenses, registrations, and
other approvals and has made all reports and notifications required under any
Environmental Requirements in connection with the Owned Real Property, except as
would not have a Material Adverse Effect; and (e) There are no present actions,
activities, circumstances, conditions, events, or incidents relating to Seller's
use of any of the Owned Real Property or Leased Real Property that would
reasonably be expected to involve Seller in any material litigation under the
Environmental Requirements, or impose upon Seller any material liability related
to any Environmental Requirements.
8.1.20 Schedule of Joint Construction Projects. Schedule
8.1.20 sets forth a list of all Joint Construction Projects for which Buyer is
to assume liability as of the Closing.
8.1.21 Financial Statements. Schedules 8.1.21(a), 8.1.21(b)
and 8.1.21(c) present the estimated income statement, estimated balance sheet
and estimated statement of cash flows, respectively for the Business for the
years ended December 31, 1997 and December 31, 1998 (collectively, the
"Financial Statements"). The Financial Statements have been prepared based on
the books and records of Seller. Such books and records have been maintained in
accordance with GAAP. However, because the Business represents only a portion of
Seller, the Financial Statements are based on the extensive use of estimates and
allocations. Seller believes these estimates and allocations have been performed
on a reasonable basis and such Financial Statements materially reflect the
results of operations for the periods set forth therein. However, Buyer
acknowledges that (i) the Financial Statements themselves may not be consistent
with the applicable regulations of the FCC or state regulatory authorities, and
(ii) because the Business represents only a portion of Seller, the Buyer is not
acquiring significant support elements located outside the Purchased Exchanges,
and Buyer will operate under new tariffs, carrier contracts and other conditions
that may significantly impact the future revenue of the Business, the Financial
Statements may not be representative of the financial performance of the
Business during future periods.
8.1.22 Year 2000 Compliance.
(a) As of the Closing Date, Seller shall have caused the modification or
remediation of the Automated Assets in accordance with applicable manufacturer
or vendor recommendations such that the Automated Assets are Year 2000
Compliant; provided that any and all Buyer or third-party supplied computer
software, computer firmware and computer hardware that directly interfaces with
the Automated Assets, co-exists with the Automated Assets, or indirectly
influences the operation of the Automated Assets are also demonstrated to be
Year 2000 Compliant.
(b) Seller shall be deemed to be in satisfaction of the requirements of
subsection (a) of this Section 8.1.22 to the extent that Seller has (i)
performed on or before the Closing Date any modification or remediation in
accordance with applicable manufacturer or vendor recommendations for achieving
Year 2000 compliance or Year 2000 readiness, or (ii) received on or before the
Closing Date reasonable assurances from the applicable manufacturer or vendor
that an Automated Asset, without modification or remediation, is Year 2000
Compliant or Year 2000 ready.
(c) When used in this Section 8.1.22, the following terms shall have the
respective meanings given below:
"Automated Assets" means the computer software, computer firmware,
computer hardware (whether general or special purpose), documentation, data, and
other similar or related items of the automated, computerized, and/or software
system(s) that are provided by Seller to Buyer as part of the Purchased
Exchanges pursuant to this Agreement.
"Calendar-Related" refers to the date values based on the Gregorian
calendar, as defined in Encyclopedia Britannica, 15th edition, 1982, page 602,
and to all uses in any manner of those date values, including without limitation
manipulations, calculations, conversions, comparisons and presentations.
"Date Data" means any Calendar-Related data in the inclusive range
January 1, 1900 through December 31, 2050, which the Automated Assets use in any
manner.
"System Date" means any Calendar-Related data value in the inclusive
range January 1, 1985 through December 31, 2035 (including the natural
transition between such values) which the Automated Assets shall be able to use
as their current date while operating.
"Year 2000 Compliant" means:
(i) As of the Closing Date, in connection with Calendar-Related
data and Calendar-Related processing of Date Data or of any System Date, the
Automated Assets will not malfunction, will not cease to function and will not
produce incorrect results; and
(ii) As of the Closing Date, the Automated Assets will represent
dates without ambiguity as to century when providing Calendar-Related data to
and accepting Calendar-Related data from other automated, computerized and/or
software systems and users by way of user interfaces, electronic interfaces and
data storage.
8.1.23 Access Line Count. As of December 31, 1998, the
Purchased Exchanges served a total of 116,149 access lines.
8.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
8.2.1 Corporate Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and is duly qualified to conduct business in Missouri and has the
requisite corporate power and authority to own, lease or otherwise hold the
assets owned, leased or held by it.
8.2.2 Authorization and Effect of Agreement. Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements, to carry on the Business as presently conducted
and to fulfill all other obligations of Buyer under this Agreement and the
Ancillary Agreements. The execution and delivery by Buyer of this Agreement and
the Ancillary Agreements, and the fulfillment by it of its obligations under
this Agreement and the Ancillary Agreements have been duly authorized by all
necessary corporate action on the part of Buyer. Buyer has the requisite legal
capacity to purchase, own and hold the Purchased Property upon the consummation
of the sale of the Purchased Property. This Agreement and the Ancillary
Agreements have been duly executed and delivered by Buyer and, assuming the due
execution and delivery of this Agreement and the Ancillary Agreements by Seller,
constitute valid and binding obligations of Buyer enforceable in accordance with
their terms subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights of creditors generally and subject to
the exercise of judicial discretion in accordance with principles of equity.
8.2.3 No Restrictions Against Purchase of the Purchased
Properties. The execution and delivery of this Agreement and the Ancillary
Agreements by Buyer do not, and the fulfillment by Buyer of its obligations
under this Agreement and the Ancillary Agreements will not, conflict with,
violate or result in the breach of any provision of the certificate of
incorporation or bylaws of Buyer or, conflict with, violate or result in the
breach of any contract to which Buyer is a party. No material consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect to
Buyer in connection with the execution and delivery of this Agreement by Buyer
or the fulfillment by Buyer of its obligations under this Agreement, except the
filings and approvals described in Article 4.
8.2.4 No Violation of Law. The execution and delivery of
this Agreement and the Ancillary Agreements and the fulfillment by Buyer of its
obligations under this Agreement and the Ancillary Agreements will not violate
any Law except to the extent any such violation would not have a material
adverse effect on the ability of Buyer to fulfill its obligations hereunder and
thereunder.
8.2.5 Financial Capacity.
(a) Buyer has sufficient cash or other sources of funds to pay the Purchase
Price in the manner specified in Section 3.1 and all related fees and expenses.
(b) Buyer has sufficient financial resources to operate the Business after the
Closing Date. Without limiting the generality of the foregoing, Buyer has
sufficient financial resources to satisfy any applicable requirement relating to
financial capacity or capital imposed by any Governmental Authority in any state
in which the Business is conducted. Buyer is solvent, is able to pay its debts
as they become due, and owns property that has both a fair value and a fair
saleable value in excess of the amount required to pay its debts as they become
due.
8.2.6 Brokers. Buyer has not paid or become obligated
to pay any fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by this Agreement
in such a manner as to give rise to a valid claim against Seller for any
broker's or finder's fees or similar fees or expenses.
8.2.7 Consents and Approvals of Governmental Authority.
Subject to Article 4 with respect to Regulatory Approvals and FCC Consents, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or regulatory authority is required in
connection with the execution, delivery and performance of this Agreement by
Buyer or the consummation by Buyer of the transactions contemplated herein,
except for filings with the FTC and DOJ pursuant to the HSR Act, if required.
ARTICLE 9
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CONTINUING BUSINESS RELATIONSHIPS
9.1 Transition Services Agreement. The parties agree to cooperate
with each other to ensure that the transition of the ownership of the Purchased
Property proceeds with minimal disruption to the services being provided to
subscribers. The parties agree that it may be necessary for Seller to assist
Buyer in converting Seller's systems and processes with respect to the Purchased
Property to Buyer's systems and processes. Seller and Buyer agree to execute a
separate "Transition Services Agreement" substantially in the form attached
hereto as Schedule 9.1 for the provision of such services.
9.2 Optional Services Agreement. It is understood and agreed that
Buyer may not have for a period of time after Closing Date, certain systems or
processes necessary to provide some basic customer services. Seller will at
Buyer's request and for the fees described in the attachments to the Optional
Services Agreement provide any or all of the services described in said
attachments on terms and conditions substantially in the form attached hereto as
Schedule 9.2.
9.3 Directory Publishing.
9.3.1 Assumption of Certain Directory Publishing Agreement
Rights and Obligations. Seller is party to a directories publishing agreement
with GTE Directories Service Corporation n/k/a GTE Directories Corporation or
GTE Directories Corporation as purchaser of the rights and interests of
Associated Directory Services, Inc. f/k/a Mast Advertising and Publishing, Inc.
herein "Publisher." These agreements are identified in Schedule 9.3.1 attached
hereto ("Publishing Agreements"). Pursuant to these agreements Publisher has the
exclusive right and obligation to sell advertising, and to publish, print and
distribute directories containing telephone numbers relating to the Purchased
Exchanges.
At Seller's option, Buyer agrees to execute an agreement
effective as of the Closing to assume and appropriately amend the Publishing
Agreements as they relate to the Purchased Exchanges, which agreement will
extend the length of the term of the Publishing Agreements to expire not earlier
than December 31, 2001. Buyer agrees to allow Publisher to participate in any
process for negotiating future directory publishing agreements on terms no less
favorable than any other participant.
9.3.2 Co-Bound Directories Acknowledgement. Buyer acknow-
ledges that Publisher may have a pre-existing obligation (which Publisher may
choose to continue) to sell advertising, publish, print and distribute the
telephone numbers of third party local exchange telephone companies in the same
directory as the Purchased Exchanges ("Co-Bound" directory). Co-Bound directory
agreements of which Seller is aware, if any, are identified on Schedule 9.3.2.
9.3.3 Meeting to Discuss Directory Publication. Within
ninety (90) days following the date of this Agreement, Buyer agrees to meet with
Seller and Publisher for the purpose of having an initial discussion about the
first directory publication after the Closing Date. This meeting will be held at
Publisher's address unless otherwise agreed between the parties and Publisher.
All parties shall employ their respective commercially reasonable efforts to
ensure that directory publication is not interrupted following the Closing Date.
9.4 GTE Telecom Agreements. Buyer acknowledges that GTE Telecom
will retain ownership of certain assets as well as related rights in connection
with fiber loop located in the Purchased Exchanges, all of which assets and
rights are listed on Schedule 2.3(g) (the "GTE Telecom Assets"). Buyer further
acknowledges that the GTE Telecom Assets may be co-located with the Purchased
Property, and may share certain easements, rights of way or other real property
interests. In order to clarify the relationship between Buyer and GTE Telecom
with respect to the GTE Telecom Assets, Buyer agrees to execute and deliver at
Closing certain agreements substantially in the form attached hereto as Schedule
9.4 (the "GTE Telecom Agreements").
ARTICLE 10
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ADDITIONAL COVENANTS OF THE PARTIES
10.1 Intellectual Property.
10.1.1 No License. Buyer and Seller agree and understand
that except as expressly set forth in writing in the License Agreement and
Section 10.1.3, Seller has not granted any rights or licenses, express or
implied, of, and nothing shall constitute or be construed as a license of Seller
under any Intellectual Property now or hereafter owned, obtained or licensable
by Seller or under any Third Party Intellectual Property.
10.1.2 Infringement.
(a) Notwithstanding anything in this Agreement to the contrary, Seller shall
have no obligation to defend, indemnify or hold harmless Buyer or any of its
Affiliates, from any damages, costs or expenses resulting from any obligation,
proceeding or suit based upon any claim that any activity subsequent to the
Closing Date engaged in by Buyer, a customer of Buyer's or anyone claiming under
Buyer, constitutes direct or contributory infringement, misuse of, or
misappropriation of, or inducement to infringe, any Third Party Intellectual
Property.
(b) Buyer shall defend, indemnify and hold harmless Seller and its Affiliates
from and against any and all Indemnifiable Losses resulting from any obligation,
proceeding or suit based upon any claim alleging or asserting direct or
contributory infringement, or misuse or misappropriation of or inducement to
infringe by Seller or any of its Affiliates of any Third Party Intellectual
Property, to the extent that such claim is based on, or would not have arisen
but for, activity conducted or engaged in subsequent to the Closing Date by
Buyer, a customer of Buyer's, or anyone claiming under Buyer.
10.1.3 Trademark Phaseout.
(a) Buyer acknowledges that Seller or its Affiliates are the owners of Excluded
Marks that qualify as Excluded Property under Section 2.3. Buyer understands and
agrees that the Excluded Marks, or any right to or license of the Excluded
Marks, are not being transferred pursuant to this Agreement. Buyer acknowledges
the exclusive and proprietary rights of Seller and its Affiliates in the use of
the Excluded Marks, and Buyer agrees that it shall not use the Excluded Marks
(or any names, domain names, marks or indicia confusingly similar to the
Excluded Marks) except and to the extent expressly set forth in this Section
10.1.3 or assert any rights or claims in such Excluded Marks (or in any names,
domain names, marks or when confusingly similar to the Excluded Marks). After
the Closing, all Excluded Marks of Seller and its Affiliates shall be replaced
by Buyer, at Buyer's expense, as soon as possible, but in no event later than
ninety (90) days after the Closing Date for items with Excluded Marks affixed to
them which Buyer has continued to use in Buyer's operation of the Business,
including buildings, vehicles, heavy equipment, hard hats, tools, tool boxes,
kits (safety and others), signs, public (pay) telephones, manual covers and
notebooks. After the Closing, Buyer will not use, and will destroy or deliver to
Seller, all such items with Excluded Marks affixed to them that have no valid
continuing use in Buyer's operation of the Business, including items affecting
customer or employee relations or items that do not reflect Buyer's true
identity. Specific items to be destroyed or returned include items with Excluded
Marks affixed to them including giveaways; order, purchase or materials forms;
requisitions; invoices; statements; time sheets/labor reports; bill inserts;
stationery; personalized note pads; maps; organization charts;
bulletins/releases; sales/price literature; manuals or catalogs; report
covers/folders; program materials; and materials such as media contact
lists/cards. The ninety (90) day time period for replacement of Excluded Marks
affixed to telephone directories that were already published or closed for
publication at the Closing Date shall be extended to the expiration date of such
directories.
(b) Buyer recognizes the great value of the goodwill associated with the
Excluded Marks, and acknowledges that the Excluded Marks and all rights therein
and the goodwill pertaining thereto belong exclusively to Seller and that the
Excluded Marks have a secondary meaning in the minds of the public. Buyer
further agrees that any and all permitted use of the Excluded Marks pursuant to
this Agreement shall inure to the sole and exclusive benefit of Seller.
(c) Buyer agrees that any permitted use of the Excluded Marks in the operation
of the Business after the Closing shall be provided in accordance with all
applicable federal, state and local laws, and that the same shall not reflect
adversely upon the good name of Seller or its Affiliates, and that the operation
of the Business will be of a high standard and skill.
(d) Buyer acknowledges that its failure to cease use of the Excluded Marks as
provided in this Agreement, or its improper use of the Excluded Marks, will
result in immediate and irreparable harm to Seller and its Affiliates. Buyer
acknowledges and admits that there is no adequate remedy at law for such failure
to terminate use of the Excluded Marks, or for such improper use of the Excluded
Marks. Buyer agrees that in the event of such failure or improper use, Seller
and its Affiliates shall be entitled to equitable relief by way of temporary
restraining order, or preliminary or permanent injunction, or any other relief
available under this Agreement.
(e) Buyer will not contest the ownership or validity of any rights of Seller
or its Affiliates in the Excluded Marks.
10.1.4 Third Party Software. To the extent that the transfer
of Purchased Property by Seller to Buyer under this Agreement results in the
transfer of possession to Buyer of software that at the Closing Date is Third
Party Intellectual Property, which software was located in and rightfully used
by Seller in the geographical areas of the Purchased Exchanges prior to the
Closing Date in the normal and ordinary operation of the Business pursuant to
Contracts with the owners or licensors of such software ("Third Party
Intellectual Property Contracts"), then subject to Section 2.5 and the receipt
of any required consents from Switch Software vendors, effective as of the
Closing and provided that no payments to any Person other than a Switch Software
vendor are thereby required, Seller hereby assigns to Buyer, and Buyer hereby
accepts all rights and licenses, if any, to possess and use such software
pursuant to such Third Party Intellectual Property Contracts. Buyer agrees that
the acceptance by Buyer of such assignment of the Third Party Intellectual
Property Contracts includes the assumption by Buyer of obligations under such
Third Party Intellectual Property Contracts, including all obligations necessary
or incidental to the transfer of such rights and licenses. Buyer understands and
agrees that except as provided above in this Section 10.1.4, or as expressly
provided elsewhere in this Agreement or in another written agreement between
Buyer and Seller, no rights or licenses to use or possess such software or any
Third Party Intellectual Property are transferred to Buyer. Buyer shall properly
dispose of, and shall not use, any software of which Buyer acquires possession
in connection with Purchased Property and which, after the Closing Date, Buyer
knows, or reasonably should know, is not the subject of a Third Party
Intellectual Property Contract that has been rightfully transferred to Buyer.
Seller makes no warranty or representation that any Third Party Intellectual
Property Contract or any right therein is assignable in whole or in part to
Buyer.
10.2 Effect of Due Diligence and Related Matters.
(a) Buyer represents that it is a sophisticated entity that was advised by
knowledgeable counsel and financial advisors and, to the extent it deemed
necessary, other advisors in connection with this Agreement and has conducted
its own independent review and evaluation of the Purchased Property.
Accordingly, Buyer covenants and agrees that (i) except for the representations
and warranties set forth in this Agreement, Buyer has not relied and will not
rely upon any duty to disclose or any document or written or oral information
furnished to or discovered by it or its representatives, including any financial
data, (ii) there are no representations or warranties, express or implied,
statutory or otherwise, by or on behalf of Seller or its Affiliates or
representatives except for those expressly set forth in this Agreement, and
(iii) to the fullest extent permitted by law, Buyer's rights and obligations
with respect to all of the foregoing matters will be solely as set forth in this
Agreement. Buyer further acknowledges and agrees that Seller is not under any
duty to make any inquiry regarding any matter that may or may not be known to
Seller or any of its officers, directors, employees or representatives.
(b) Upon the Closing, Buyer shall be deemed to have waived any claim with
respect to a breach of any representation, warranty, covenant or obligation of
Seller, or any failure of a condition, hereunder of which Buyer had actual
knowledge on or prior to the date hereof; provided that Buyer shall be deemed to
have actual knowledge on or prior to the date hereof of the information made
available to Buyer and/or its representatives during Buyer's due diligence
review, and which information is contained in the Due Diligence Materials.
(c) After the date of this Agreement and prior to the Closing Date, Buyer
shall promptly notify Seller if Buyer obtains actual knowledge of any actual or
prospective breach of any representation, warranty, covenant or obligation of
Seller, or any actual or prospective failure of a condition, hereunder of which
Buyer obtains actual knowledge. Failure to provide timely notice of any such
breach of which Buyer obtains actual knowledge after the date hereof shall be
deemed to constitute a waiver with respect to such breach.
10.3 Confidentiality. Whether or not the Closing occurs, the
parties hereto and their respective officers, directors, employees and repre-
sentatives will comply with the Confidentiality Agreement (to the extent not
inconsistent with this Agreement), the provisions of which are expressly
incorporated herein in their entirety by this reference.
10.4 Further Assurances. After the Closing, Seller will use its
commercially reasonable efforts to furnish to Buyer such other instruments and
information as Buyer may reasonably request in order to convey to Buyer title
to the Purchased Property, to be delivered from time to time upon Buyer's
reasonable request.
10.5 Prorations. The following liabilities that call for periodic
payments shall be prorated between Seller and Buyer: (i) utility charges (which
shall include water, sewer, electricity, gas and other utility charges) with
respect to the Owned Real Property, the property subject to the Real Property
Leases and customer owned equipment, (ii) rental charges (which shall include
rental charges and other lease payments under the Real Property Leases and Real
Property Interests), (iii) personal services (these services are charged for a
period which includes the Closing Date; this shall include contract labor), and
(iv) any Taxes that are imposed on a periodic basis and are payable for a
taxable period that includes (but does not end on) the Closing Date, including
but not limited to real and personal property Taxes, ad valorem Taxes, and
franchise fees or Taxes ("Periodic Taxes"). With respect to measurement periods
during which the Closing Date occurs (all such periods of time being hereinafter
called "Proration Periods"), the liabilities described in clauses (i), (ii) and
(iii) of the preceding sentence shall be apportioned between Seller and Buyer as
of the Closing Date, with Buyer bearing only the expense thereof in the
proportion that the number of days remaining in the applicable Proration Period
after the Closing Date bears to the total number of days covered by such
Proration Period. Real and personal property Taxes and ad valorem Taxes shall be
prorated between Buyer and Seller based on the relative periods the Purchased
Property was owned by each respective party during the fiscal period for which
Periodic Taxes were assessed by the Taxing jurisdiction (as such fiscal period
is reflected on the bill rendered by such taxing jurisdiction). Buyer and Seller
shall pay or be reimbursed for Periodic Taxes (including instances in which such
property Taxes have been paid before the Closing Date) on this prorated basis.
If a payment on a Periodic Tax bill is due after the Closing, the party that is
legally required to make such payment shall make such payment and promptly
forward an invoice to the other party for its pro rata share, if any. If the
other party does not pay the invoice within thirty (30) calendar days of
receipt, the amount of such payment shall bear interest at the rate of eight
percent (8%) per annum. Similarly, all prepayments made by Seller under Assigned
Contracts with respect to service or maintenance agreements requiring periodic
payments with third parties or license or other fees payable to third parties
shall be prorated on an appropriate basis between Seller and Buyer.
10.6 Cost Studies/NECA Matters.
10.6.1 Prior to Closing. Seller agrees that, with respect
to all toll revenues, settlements, pools, separations studies or similar
activities, Seller shall be responsible for (and shall receive the benefit or
suffer the burden of) any adjustments to contributions, or receipt of funds, by
Seller resulting from any such activities that are related to the operation of
the Business or the ownership or operation of the Purchased Property prior to
the Closing Date. Specifically, this paragraph shall apply, but shall not be
limited to, any matters related to the National Exchange Carrier Association
("NECA") or the Universal Service Administration Company ("USAC") including the
Universal Service Fund ("USF"), Long Term Support ("LTS"), and
Telecommunications Relay Services funds established by the FCC.
10.6.2 From and After Closing.
(a) In the case of Purchased Exchanges that comprise less than an entire Study
Area, the following shall apply:
(i) Rural and non-rural carriers currently receive USF funds based
on historic costs computed pursuant to Subpart F of Part 36 of the FCC's rules.
Beginning July 1, 1999 or a date thereafter determined by the FCC, non-rural
carriers shall not receive USF funds pursuant to Part 36, but will receive
support based on forward-looking economic costs pursuant to Part 54. Seller will
take all steps necessary to ensure that, for each Transitional Year, Buyer
receives a pro rata share of any USF funds distributed during each year. Buyer's
pro rata share of such USF funds for a given Transitional Year shall be
determined for each Acquired Local Loop by multiplying the USF funds
attributable to such loop for that year times the number of months of that year
that such loop is owned by the Buyer.
(ii) Buyer shall make all USF filings that are required under FCC
rules after the Closing Date, and Seller shall provide such reasonable
assistance as is required in order to make such filings.
(iii) Notwithstanding the foregoing, Buyer's right to receive a pro
rata share of USF is conditioned upon Buyer's payment, from and after the
Closing Date, of a pro rata share of the annual universal service contribution
liability assessed by the USAC based on end-user retail revenues for the
previous year generated by assets being sold. The resulting Buyer's annual USF
obligation for assets purchased shall be prorated in proportion to the number of
months in the year from and after the Closing Date.
(b) In the case of Purchased Exchanges that comprise an entire Study Area, the
following shall apply:
(i) Buyer shall receive all USF funds, from and after the Closing
Date, as determined by USAC from data submitted by Seller prior to Closing Date
pursuant to FCC Rules and Regulations as stated in Part 36.611 and Part 36.612
for rural carriers and Part 54 for non-rural carriers. After Closing Date Buyer
shall make all submissions and filings for USF funds for all years for which
Seller had not made a submission prior to Closing Date in accordance with FCC
Rules and Regulations. Within a reasonable time after Buyer's written request,
Seller shall furnish to Buyer such necessary information regarding Seller's
ownership of the Purchased Property during any year for which Buyer shall make a
submission, and such reasonable assistance as required in connection with
Buyer's preparation of necessary filings or submissions.
(ii) Notwithstanding the foregoing, Buyer's right to receive all
USF revenue is conditioned upon Buyer's payment, from and after the Closing
Date, of all universal service contribution liability assessed by USAC based on
end-user retail revenues for the previous year generated by assets being sold.
10.7 Customer Deposits and Construction Advances. Within thirty
(30) days after Closing, Seller agrees to transfer to Buyer the customer
deposits together with any interest accrued thereon (collectively "Customer
Deposits") and Construction Advances, together with all of Seller's obligations
(exclusive of pre-Closing disputes with respect thereto) and rights to hold the
Customer Deposits and Construction Advances of the Business, up to the Closing
Date, and Buyer agrees to hold, disburse and retain such deposits so delivered
to it, and to perform related construction, as the case may be, as if it were
Seller.
10.8 Access to Books and Records.
(a) After the Closing, Seller will retain all Retained books and Records for a
period of three (3) years from the date hereof, except for Tax Returns and
supporting documentation, which Seller shall retain until the later to occur of
(i) sixty (60) days subsequent to the expiration of the applicable statute of
limitations or any extensions thereof, or (ii) the expiration of three (3) years
from the date hereof.
(b) After the Closing, upon reasonable notice and subject to the Confiden-
tiality Agreement, the parties will give to the representatives, employees,
counsel and accountants of the other, access, during normal business hours, to
books and records relating to the Business and the Purchased Property, and will
permit such persons to examine and copy such records, in each case to the extent
reasonably requested by the other party in connection with Tax and financial
reporting matters (including any Tax Returns and related information, but not
attorney work product), audits, legal proceedings, governmental investigations
and other business purposes (including such financial information and any
receipts evidencing payment of Taxes as may be requested by Seller to
substantiate any claim for Tax credits or refunds); provided, however, that
nothing herein will obligate any party to take actions that would unreasonably
disrupt the normal course of its business or violate the terms of any Contract
to which it is a party or to which it or any of its assets is subject. Seller
and Buyer will cooperate with each other in the conduct of any Tax audit or
similar proceedings involving or otherwise relating to the Business (or the
income therefrom or assets thereof) with respect to any Tax and each will
execute and deliver such powers of attorney and other documents as are necessary
to carry out the intent of this Section 10.8(b).
10.9 Purchase Price Allocation. No later than ninety (90) days
subsequent to the Closing Date, Buyer and Seller shall use their good faith
efforts to agree to the allocation (the "Allocation") of the Purchase Price, the
Assumed Liabilities and other relevant items (including, for example,
adjustments to the Purchase Price) to the individual assets or classes of assets
within the meaning of Section 1060 of the IRC. If Buyer and Seller agree to such
Allocation prior to Closing, Buyer and Seller covenant and agree that (i) the
values assigned to the assets by the parties' mutual agreement shall be
conclusive and final for all purposes, and (ii) neither Buyer nor Seller will
take any position before any Governmental Authority or in any judicial
proceeding that is in any way inconsistent with such Allocation. Notwithstanding
the foregoing, if Buyer and Seller cannot agree to an Allocation, Buyer and
Seller covenant and agree to file and to cause their respective Affiliates to
file, all Tax Returns and schedules thereto (including, for example, amended
returns, claims for refund, and those returns and forms required under Section
1060 of the IRC and any Treasury regulations promulgated thereunder) consistent
with each of Buyer and Seller's good faith Allocations, unless otherwise
required because of a change in applicable Law.
10.10 Owned Real Property Transfers. Within sixty (60) days of the
date of this Agreement, Seller shall deliver to Buyer copies of all existing
title insurance policies in Seller's possession covering the Owned Real
Property. Thereafter, no later than thirty (30) days before the Closing Date,
Seller shall deliver (at Seller's expense) to Buyer title commitments for
owners' policies of title insurance prepared by a title insurance company
reasonably acceptable to Buyer and a certified current survey, with respect to
all Owned Real Property included in the Purchased Property and in which Seller
purports to own fee title. Buyer acknowledges that such title commitments shall
be for California Land Title Association ("CLTA") owners' policies of title
insurance (or its equivalent) unless Buyer has requested in writing, prior to
the date hereof, that such commitments be issued for other forms of title
insurance (in which event, Buyer shall bear all costs and premiums for such
title insurance to the extent attributable to such coverage being in excess of
CLTA coverage or its equivalent). Such title commitments shall reflect that upon
the consummation of the sale to Buyer contemplated by this Agreement and the
payment of all premiums and charges due for such title insurance, Buyer will be
vested with good, fee simple title to such Owned Real Property, subject only to
the exceptions show thereon, the title company's standard exceptions and
exclusions, and such matters that arise after the date and time of such title
commitment. Except as provided in the following sentence, in the event that
Buyer requires endorsements to such title commitments or the applicable title
insurance policies, such endorsements shall be obtained at Buyer's sole cost and
expense and shall not be a condition to Closing. On the Closing Date, Seller
shall convey the Owned Real Property to be transferred to Buyer subject only to
Permitted Encumbrances, provided that Seller may transfer such property subject
to one or more exceptions that are not Permitted Encumbrances if Seller commits
in writing, in form and substance reasonably acceptable to Buyer, on or before
the Closing Date, to cause any such exception that is not a Permitted
Encumbrance to be removed, insured or bonded over to Buyer's reasonable
satisfaction, or if Seller indemnifies Buyer with respect to such exceptions to
Buyer's reasonable satisfaction on or before the Closing Date. With respect to
each parcel of Owned Real Property covered by a title commitment referenced
above, the amount of title insurance provided under the applicable title
insurance policy shall be the fair market value of the applicable property,
which shall be determined by Buyer at its sole cost and expense using
commercially reasonable methods of valuation, provided that all such valuations
shall be consistent with all allocations of the Purchase Price made hereunder or
pursuant to this Agreement, and shall be acceptable to the title insurance
company. The determination of fair market value shall be made in a timely manner
such that the title commitments can be issued in a timely manner prior to the
Closing Date. Seller agrees that prior to Closing it will provide the title
company with such instructions, authorizations, affidavits, and indemnities as
may be reasonably necessary for the title company to issue title policies to
Buyer, dated as of the Closing Date, for all of the Owned Real Property with
so-called non-imputation endorsements. By no later than forty-five (45) days
after the Closing Date, Seller shall deliver to Buyer a final title insurance
policy covering each parcel of the Owned Real Property covered by the title
commitments. Buyer will use its commercially reasonable efforts to work with the
title company between the date hereof and forty-five (45) days after Closing
Date to resolve any issues with respect to such title commitments. Seller shall
be responsible for the payment of all title insurance premiums attributable to
the CLTA portion of the coverage afforded by each such policy obtained, and
Buyer shall be responsible for the payment of all title insurance premiums in
excess of such amount and for the payment of all endorsement charges and other
fees and costs imposed by the title company.
10.11 Transaction Taxes. Buyer shall bear and be responsible for
paying any sales, use, transfer, documentary, registration, business and
occupation and other similar Taxes (including related penalties (civil or
criminal), additions to Tax and interest) imposed by any Governmental
Authorities with respect to the transfer of Purchased Property to Buyer
(including the Owned Real Property) ("Transaction Taxes"), regardless of whether
the Tax authority seeks to collect the such Taxes from Seller or Buyer. Buyer
shall also be responsible for (i) administering the payment of such Transaction
Taxes, (ii) defending or pursuing any proceedings related thereto, and (iii)
paying any expenses related thereto. Seller shall give prompt written notice to
Buyer of any proposed adjustment or assessment of any Transaction Taxes with
respect to the transaction, or of any examination of said transaction in a
sales, use, transfer or similar Tax audit. In any proceedings, whether formal or
informal, Seller shall permit Buyer to participate and control the defense of
such proceeding, and shall take all actions and execute all documents required
to allow such participation. Seller shall not negotiate a settlement or
compromise of any Transaction Taxes without the written consent of Buyer, which
consent shall not be unreasonably withheld.
10.12 Bulk Sales Laws. Seller and Buyer waive compliance with
applicable Laws under any version of Article 6 of the Uniform Commercial Code
adopted by any state or any similar Law relating to the sale of inventory,
equipment or other assets in bulk in connection with the sale of the Purchased
Property.
10.13 Prepaid Non-regulated Maintenance Agreements. Within thirty
(30) days following Closing, Seller shall pay to Buyer an amount equal to the
pro rata portion of all prepaid but unearned revenues from Seller's customers
for all non-regulated maintenance agreements as of the Closing Date.
10.14 Vehicle Registration. Buyer agrees to use its commercially
reasonable efforts to file promptly the appropriate vehicle title applications
and registrations to change the name of the titled owner on each vehicle title
certificate and change the motor vehicle registration (with respect to license
plate information) on each vehicle being transferred to Buyer from Seller
pursuant to this Agreement. Buyer agrees that it shall remove and destroy
Seller's existing license plates from all vehicles received promptly upon the
receipt of new license plates.
10.15 Carrier Access Billing and Accounts Receivable Transition.
Seller shall render its own final carrier access bills to its interexchange
carriers for minutes, messages and other applicable charges up to the Closing
Date. Seller shall be responsible for collecting and settling any disputes
associated with its final bills to the interexchange carriers.
10.16 End-User Billing and Accounts Receivable Transition. Buyer
agrees to purchase Seller's Earned End-user Accounts Receivable and make payment
to Seller for those accounts in the manner described below.
(a) Seller shall transfer to Buyer, as soon as reasonably available after
Closing, all open end-user customer account records as of the end of business on
the Closing Date. Following the Closing, Buyer will be responsible for
administering those records including the application of cash receipts to
customer accounts, whether related to services rendered before or after the
Closing. Seller will promptly forward to Buyer all customer payments and related
remittance documents received by Seller after the Closing for processing by
Buyer.
(b) Within twenty (20) days following the Closing, Seller will provide an
accounting to Buyer of the Earned End-User Accounts Receivable and the Customer
Advances, as well as the most recent twelve (12) month history of Seller's
uncollectible net writeoffs expressed as a percentage of billings for the
Business (the "Uncollectible Factor"). This data and the resulting calculation
of the Earned End-User Accounts Receivable Amount will be summarized in an
accounts receivable settlement statement (the "Accounts Receivable Settlement
Statement"). Within thirty (30) days following the Closing, Buyer will remit to
Seller an amount equal to 80% of the Earned End-User Accounts Receivable Amount
less 100% of the Customer Advances. Within sixty (60) days following the
Closing, Buyer will remit an additional 15% of the Earned End-User Accounts
Receivable Amount and within ninety (90) days will remit the final 5%.
(c) Not later than ten (10) days prior to the due dates for the sixty (60)
and ninety (90) day payments referred to in Section 10.16(b) above, Seller
will provide Buyer with an updated Accounts Receivable Settlement Statement
reflecting any adjustments based upon non-sufficient funds checks, billing
adjustments or other facts that have become known after the original statement
that relate to pre-closing activity.
(d) If at any time during the ninety (90) day period following the Closing,
Buyer or Seller discovers any material discrepancy in the Accounts Receivable
Settlement Statement, Seller and Buyer agree to use commercially reasonable
efforts to resolve any discrepancy in a timely manner, and also agree to make
payments related to any undisputed amounts as set forth above.
10.17 Cooperation. Subsequent to the Closing Date, Buyer and Seller
agree that they shall cooperate, each with the other, in order to facilitate the
orderly transfer of the operation of the Business from Seller to Buyer; provided
that except as may be otherwise required under that Agreement, no party shall be
required to pay any out-of-pocket costs associated with their respective
obligations hereunder.
ARTICLE 11
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EMPLOYEES AND EMPLOYEE MATTERS
11.1 Employment of Transferred Employees. All Active Employees of
Seller employed in the Business, and all Active Employees of Seller and its
Affiliates who are associated with the Business, on the Closing Date
(hereinafter collectively referred to as "Transferred Employees") shall be
employed by (or become the responsibility of, as applicable) Buyer as of the
Closing Date in the same or comparable positions, and at the same or comparable
total compensation (including base pay and bonus (exclusive of any retention
bonus)), as were in effect on the Closing Date, except as otherwise provided in
this Agreement. The term "Transferred Employees" shall include only those
individuals described in the preceding sentence who are identified as such on
Schedule 11.1. For purposes of the first sentence, the term "Active Employees"
shall include all full-time and part-time employees, employees on workers'
compensation, military leave, maternity leave, leave under the Family and
Medical Leave Act of 1993, short-term disability, non-occupational disability,
on layoff with recall rights, and employees on other approved leaves of absence
with a legal or contractual right to reinstatement. Buyer also shall employ any
employee of Seller or its Affiliates who on the Closing Date is an LTD Recipient
(as defined in Section 11.7) and who immediately before his active employment
with Seller or its Affiliates ceased was employed in or in association with the
Business, provided such employee returns to active employment within one (1)
year of the Closing Date. For a period of six (6) months following the Closing
Date, Buyer shall not employ, and Buyer shall not permit any of its Affiliates
to employ, any person who retires or otherwise terminates from any employment at
or in association with the Business during the six-month period beginning three
(3) months before the Closing Date. All Transferred Employees and LTD Recipients
(as defined in Section 11.7) shall be identified on Schedule 11.1 to be prepared
by Seller and submitted to Buyer at least fifteen (15) days prior to the Closing
Date; such Schedule 11.1 shall identify, as of the date of such Schedule, the
employees who have terminated employment as described in the preceding sentence;
and such Schedule 11.1 shall be updated as of the date that is three months
after the Closing to identify any employees who terminated employment as
described in the preceding sentence after the date of the original Schedule
11.1.
11.1.1 Assumption of Collective Bargaining Agreement
Obligations. On and after the Closing Date, Buyer, as successor employer to
Seller (subject to Seller's Retained Liabilities in Section 2.4.2(d)), shall
assume all of the employer's obligations under, and be bound by the provisions
of, each collective bargaining agreement covering Transferred Employees. Each
such collective bargaining agreement relating to Transferred Employees shall be
identified on a Schedule 11.1.1 to be prepared by Seller and submitted to Buyer
at least fifteen (15) days prior to the Closing Date. Seller shall cooperate
with Buyer in Buyer's efforts to contact the unions representing Transferred
Employees. If a union representing Transferred Employees objects to Buyer's
assumption of, or refuses to allow Buyer to assume, the provisions of any
existing collective bargaining agreement that covers such Transferred Employees
immediately before the Closing Date, or objects to any change in or termination
of employee benefits on or after the Closing Date, Seller and its Affiliates
shall have no liability or obligation to Buyer by reason of such objection or
refusal. If, on or before the Closing Date, an employee objects, or refuses to
assent, to the consummation of the transactions contemplated by this Agreement
insofar as the Agreement affects the employee, Seller and its Affiliates shall
have no liability or obligation to the employee or any other party by reason of
the employee's objection or refusal to assent, and Buyer shall be responsible
for any liability or obligation that arises by reason of the employee's
objection or refusal to assent (other than any liability or obligation that
results from Seller's failure to comply with this Agreement and that does not
result from Buyer's failure to comply with this Agreement).
11.1.2 Assumption of Employment and Other Agreements. On
and after the Closing Date, except as otherwise provided in this Agreement or in
Schedule 11.1.2, Buyer, as successor employer to Seller (subject to Seller's
Retained Liabilities in Section 2.4.2(d)), shall assume all obligations under
and be bound by the provisions of each offer of employment by Seller relating to
the Business, each employment agreement or any other agreement by Seller
relating to conditions of employment, employment separation, severance, or
employee benefits in connection with the Business. All obligations described in
this Section 11.1.2 assumed by and binding Buyer shall be identified on a
Schedule 11.1.2 to be prepared by Seller and submitted to Buyer at least fifteen
(15) days prior to the Closing Date.
11.1.3 Recognition of Transferred Employee Service. On and
after the Closing Date, and subject to the provisions of any applicable
collective bargaining agreement, Buyer shall recognize the service of each
Transferred Employee for all employment-related purposes (other than an employee
achievement award, within the meaning of Section 274(j) of the IRC) determined
in accordance with the practices and procedures of Seller in effect on the
Closing Date, as if such service had been rendered to Buyer. Schedule 11.1 to be
prepared by Seller and submitted to Buyer no later than fifteen (15) days prior
to the Closing Date shall list the service of each Transferred Employee for the
employment-related purposes referred to in the preceding sentence.
11.1.4 Assumption of Obligation to Pay Bonuses. Except as
otherwise expressly provided in this Agreement, Transferred Employees shall not
accrue benefits under any employee benefit policies, plans, arrangements,
programs, practices, or agreements of Seller or any of its Affiliates after the
Closing Date. For the year in which the Closing Date occurs, the Transferred
Employees shall be paid any bonuses that would have been payable to the
Transferred Employees for that year had the Transferred Employees remained
employees of Seller or one of its Affiliates, in accordance with the provisions
of the policy, plan, arrangement, program, practice or agreement under which the
bonus would have been paid (the "Seller's Bonus Plans"). Seller shall pay to
Transferred Employees that portion of any such bonus (exclusive of any retention
bonus) that is attributable to service during such year on or before the Closing
Date, and Buyer shall pay to Transferred Employees that portion of any such
bonus that is attributable to service during such year after the Closing Date.
In determining the amount of the bonus to be paid by Buyer in accordance with
the preceding sentence, Buyer shall apply criteria that are substantially
comparable to the criteria established as of the Closing Date under the Seller
Bonus Plans under which the bonus would have been paid had the Transferred
Employees remained employees of Seller or one of its Affiliates. Seller shall
identify the Seller Bonus Plans on a Schedule 11.1.4 to be delivered to Buyer no
later than fifteen (15) days prior to the Closing Date.
11.1.5 No Duplicate Benefits; Dependents and Beneficiaries.
Nothing in this Agreement shall cause duplicate benefits to be paid or provided
to or with respect to a Transferred Employee under any employee benefit
policies, plans, arrangements, programs, practices, or agreements. References
herein to a benefit with respect to a Transferred Employee shall include, where
applicable, benefits with respect to any eligible dependents and beneficiaries
of such Transferred Employee under the same employee benefit policy, plan,
arrangement, program, practice or agreement.
11.1.6 Affiliate Employees. If any employee identified in
Schedule 11.1 is an employee of an Affiliate of Seller, he or she shall be
considered a Transferred Employee and shall be treated under this Agreement in a
manner that is comparable to the treatment given to the Transferred Employees
who are employed by Seller, except that his or her service as of the Closing
Date shall be determined in accordance with the practices and procedures of his
or her employer, as in effect on the Closing Date.
11.1.7 Term of Assumed Obligations. Except as otherwise
expressly provided in this Agreement, Buyer's obligations with respect to
Transferred Employees under this Article 11 shall continue for a period of not
less than one year after the Closing Date.
11.2 Transferred Employee Benefit Matters.
11.2.1 Defined Benefit Plans.
(a) Seller's Pension Plans. As of the date of this Agreement, Seller partici-
pates in the following single-employer defined benefit pension plans maintained
in the United States:
(i) the GTE Service Corporation Plan for Employees' Pensions (the
"Seller's Salaried Pension Plan"); and
(ii) the GTE Midwest Incorporated Plan for Hourly-Paid Employees'
Pensions (the "Seller's Hourly Pension Plan").
The plans identified in this Section 11.2.1(a) shall be
referred to collectively in this Agreement as the "Seller's Pension Plans," and
each such plan shall be referred to individually as a "Seller's Pension Plan."
(b) Buyer Obligations. Buyer shall take all actions necessary and appropriate
to ensure that, as soon as practicable after the Closing Date, Buyer maintains
or adopts one or more pension plans (hereinafter referred to in the aggregate as
the "Buyer Pension Plans" and individually as the "Buyer Pension Plan")
effective as of the Closing Date and to ensure that each Buyer Pension Plan
satisfies the following requirements as of the Closing Date: (i) the Buyer
Pension Plan is a qualified, single-employer defined benefit plan under Section
401(a) of the IRC; (ii) any Buyer Pension Plan that was in effect before the
Closing Date shall not have any "accumulated funding deficiency," as defined in
Section 302 of ERISA and Section 412 of the IRC, whether or not waived,
immediately before the Closing Date; (iii) the Buyer Pension Plan is not the
subject of termination proceedings or a notice of termination under Title IV of
ERISA; (iv) the Buyer Pension Plan does not exclude Transferred Employees from
eligibility to participate therein; (v) the Buyer Pension Plan does not violate
the requirements of any applicable collective bargaining agreement; and (vi)
with respect to Transferred Employees who were participants in the Seller's
Hourly Pension Plan on the Closing Date, the terms of the Buyer Pension Plan are
substantially identical in all material respects to the terms of the Seller's
Hourly Pension Plan. Within the 30-day period immediately preceding any transfer
of assets and liabilities from a Seller's Pension Plan to a Buyer Pension Plan
pursuant to this Section 11.2.1(b), Buyer shall provide Seller with a written
certification, in a form acceptable to Seller, that the Buyer Pension Plan
satisfies each of the requirements set forth in this Section 11.2.1(b).
(c) Transfer of Liabilities.
(i) In accordance with the provisions of this Section 11.2.1,
Buyer shall cause the Buyer Pension Plans to accept all liabilities for benefits
under the Seller's Pension Plans, whether or not vested, that would have been
paid or payable (but for the transfer of assets and liabilities pursuant to this
Section 11.2.1) to or with respect to the Transferred Employees under the terms
of the Seller's Pension Plans, including, but not limited to, all liabilities
for "Section 411(d)(6) protected benefits" (as defined by Section 411(d)(6) of
the IRC and the regulations thereunder) that have accrued under the Seller's
Pension Plans to or with respect to the Transferred Employees based on
accredited service and compensation under the Seller's Pension Plans as of the
Closing Date. Buyer shall not amend the Buyer Pension Plans, or permit the Buyer
Pension Plans to be amended, to eliminate any benefit, whether or not vested,
that is a "Section 411(d)(6) protected benefit" (as defined by Section 411(d)(6)
of the IRC and the regulations thereunder). Seller or an Affiliate thereof may,
in its sole discretion on or prior to the transfer of liabilities, take action
to fully vest Transferred Employees in their benefits (if any) under the
Seller's Pension Plans.
(ii) (A) For purposes of eligibility and vesting under the Buyer
Pension Plans, each Transferred Employee whose accrued benefit is transferred
from a Seller's Pension Plan to a Buyer Pension Plan shall be credited with
service and compensation as of the Closing Date as determined under the terms of
the Seller's Pension Plan. The benefit under the Buyer Pension Plan for each
Transferred Employee who, on the Closing Date, participates in the Seller's
Hourly Pension Plan, shall be calculated under terms of the Buyer Pension Plan
that are substantially identical in all material respects to the terms of the
Seller's Hourly Pension Plan. The benefit for each Transferred Employee who, on
the Closing Date, participates in the Seller's Salaried Pension Plan, shall not
be less than the greater of (x) the sum of the Transferred Employee's "Seller's
Pension" and "Buyer Pension," or (y) the Transferred Employee's "Total Service
Pension," each as determined under the rules set forth in subsection (c)(iii)(B)
of this Section 11.2.1.
(B) Each Transferred Employee who, as of the Closing Date,
participates or formerly participated in the Seller's Salaried Pension Plan and
who, under the terms of the Seller's Salaried Pension Plan, has at least 15
years of accredited service and combined years of age and accredited service of
at least 74 as of June 1, 1999, shall be eligible, after the Transferred
Employee's employment with the Buyer and its Affiliates is terminated and after
the Transferred Employee's combined years of age and years of accredited service
equal or exceed 76, to receive his or her "Seller's Pension" (as determined
under the rules set forth in subsection (c)(iii) of this Section 11.2.1) as an
immediate early retirement pension under the applicable Buyer Pension Plan in
accordance with early retirement provisions that are no less favorable to the
Transferred Employee than the early retirement provisions of the Seller's
Salaried Pension Plan as of the Closing Date. For a period of at least five (5)
years following June 1, 1999, Buyer shall cause the Buyer Pension Plan to retain
early retirement provisions that are no less favorable to the Transferred
Employees than the early retirement provisions of the Seller's Salaried Pension
Plan to which they were subject as of the Closing Date; provided, however, that
a Transferred Employee shall be entitled to consent to the provision to such
Transferred Employee of a different and less favorable early retirement benefit.
(C) Notwithstanding the foregoing provisions of this sub-
section (c) (ii), if a lump-sum distribution is available under the Buyer
Pension Plan, the benefit under the Buyer Pension Plan of a GATT Grandfathered
Participant, when expressed in the form of a lump sum, shall not be less than
the benefit under the Buyer Pension Plan determined without regard to the
changes to Section 417 of the IRC made by the Uruguay Round Agreements Act. The
method used to convert a GATT Grandfathered Participant's accrued benefit into a
lump-sum amount under the Buyer Pension Plan after 1999 shall be not less
favorable to a GATT Grandfathered Participant than the method used for similar
purposes by the Seller's Pension Plan. For purposes of this paragraph
(c)(ii)(C), "GATT Grandfathered Participant" shall mean a Transferred Employee
(x) with respect to whom liabilities are transferred pursuant to this subsection
(c) and (y) who, taking service from Buyer into account as service with Seller,
would have been eligible under the Seller's Pension Plan, but for the transfer
of liabilities pursuant to this subsection (c), to have his benefit under the
Seller's Pension Plan (when expressed in the form of a lump sum) determined
without regard to the changes to Section 417 of the IRC made by the Uruguay
Round Agreements Act.
(D) For a period of five (5) years following June 1, 1999,
Buyer shall cause the Buyer Pension Plan to retain early retirement provisions
that are no less favorable to the Transferred Employees than the early
retirement provisions of the Seller's Hourly Pension Plan to which they were
subject as of the Closing Date; provided, however, that a Transferred Employee
shall be entitled to consent to the provision to such Transferred Employee of a
different and less favorable early retirement benefit.
(iii) (A) The Buyer Pension Plan benefit of a Transferred Employee
who, on the Closing Date, participates in the Seller's Hourly Pension Plan,
shall be calculated as set forth in paragraph (c)(ii)(a) of this Section 11.2.1.
(B) The Buyer Pension Plan benefit of a Transferred Employee
who, on the Closing Date, participates in the Seller's Salaried Pension Plan,
shall be calculated by applying the benefit formula set forth in paragraph
(c)(ii)(A) of this Section 11.2.1, in accordance with the rules described in the
remainder of this paragraph (B). A Transferred Employee's "Seller's Pension"
shall be calculated by applying the benefit formula under the Seller's Salaried
Pension Plan (as in effect on the Closing Date) to the Transferred Employee's
service and compensation credited under the Seller's Salaried Pension Plan as of
the Closing Date. A Transferred Employee's "Buyer Pension" shall be not less
than an amount calculated by applying the benefit formula under the Buyer
Pension Plan to the Transferred Employee's total accredited service and
compensation under the Buyer Pension Plan (including service and compensation
credited under the Seller's Salaried Pension Plan as of the Closing Date as if
such service and compensation had been earned under the Buyer Pension Plan and
service and compensation credited under the Buyer Pension Plan after the Closing
Date), multiplied by the ratio of accredited service earned after the Closing
Date to such total accredited service; provided that for a period of at least
five (5) years following June 1, 1999, Buyer shall cause the benefit formula
used in determining such "Buyer Pension" to provide benefits at least as
valuable as were provided under the benefit formula applicable to the
Transferred Employee under the Seller's Salaried Pension Plan on the Closing
Date. A Transferred Employee's "Total Service Pension" shall be calculated by
applying the benefit formula under the Buyer Pension Plan to the Transferred
Employee's accredited service (including service and compensation credited with
the Seller under the Seller's Salaried Pension Plan as of the Closing Date as if
such service and compensation was earned under the Buyer Pension Plan and
service and compensation credited under the Buyer Pension Plan on and after the
Closing Date). Solely for purposes of computing a Transferred Employee's "Total
Service Pension," compensation received by such a Transferred Employee from the
Seller shall be treated as compensation received from the Buyer. The Seller's
Pension, the Buyer Pension, and the Total Service Pension shall take into
account the Transferred Employee's actual age and entire period of service
(including service credited under the Seller's Salaried Pension Plan as of the
Closing Date and service credited under the Buyer Pension Plan on and after the
Closing Date) for vesting and benefit eligibility purposes.
(C) Each Transferred Employee who is eligible to receive a
benefit under the Buyer Pension Plan may elect to receive the portion of said
benefit that is equal to the Seller's Pension in any form, and with any early
retirement or other actuarial subsidy, that was available under the Seller's
Pension Plan on the Closing Date, without regard to whether the Transferred
Employee is eligible to elect or receive, or does elect or receive, the same
form of payment or early retirement or actuarial subsidy for the remainder of
the pension under the Buyer Pension Plan.
(iv) As soon as practicable after the Closing Date, Seller shall
deliver to Buyer a list reflecting each Transferred Employee's service and com-
pensation under each of the Seller's Pension Plans and each Transferred
Employee's accrued benefit thereunder as of the Closing Date.
(d) Transfer of Assets.
(i) In accordance with the provisions of subsection (d)(i)
of this Section 11.2.1 and subject to the provisions of subsection (d)(vi) of
this Section 11.2.1, Seller shall direct the trustee of the Seller's Pension
Plans to transfer to the trustee or funding agent of the applicable Buyer
Pension Plan an amount determined as provided in the following sentence (the
"Pension Assets") with respect to the Transferred Employees whose accrued
benefits are transferred to a Buyer Pension Plan pursuant to Section (c) of this
Section 11.2.1. The value of the Pension Assets to be transferred by the
Seller's Pension Plans shall be equal in value to the projected benefit
obligation, as defined in paragraph 17 of Statement of Financial Accounting
Standards No. 87 ("FAS 87"), under the Seller's Pension Plans for the
Transferred Employees whose accrued benefits are transferred to a Buyer Pension
Plan pursuant to Section (c) of this Section 11.2.1, determined in each case on
an on-going plan basis as of the Closing Date, and on the basis of the
assumptions used for the fiscal year which includes the Closing Date in Seller's
determination of pension expense for the Seller's Pension Plans in accordance
with FAS 87; provided, however, that in no event shall the value of the Pension
Assets be less than the amount required to be transferred by Section 414(l) of
the Code and the regulations thereunder, determined using the assumptions used
by the PBGC with respect to a plan termination occurring on the Closing Date.
The Pension Assets shall be in the form of cash or marketable obligations. Under
no circumstances shall Seller or the Seller's Pension Plans be liable to
transfer any additional amount to Buyer or a Buyer Pension Plan or any other
person in respect of the accrued benefits transferred to a Buyer Pension Plan
pursuant to Section (c) of this Section 11.2.1, including but not limited to any
circumstance under which any person (including a governmental agency) states a
claim to some portion or all of the Pension Assets.
(ii) Seller shall appoint an actuary ("Seller's Actuary") to deter-
mine the amount to be transferred pursuant to subsection (d)(i) of this Section
11.2.1 and shall provide such determination to Buyer. Buyer shall appoint an
actuary ("Buyer's Actuary") who shall have the right to audit and review the
determination made by Seller's Actuary. Within thirty (30) days of the date
Seller inform Buyer of the amount of the Pension Assets, Seller's Actuary shall
provide Buyer's Actuary with a computer file containing all the employee data
used by Seller's Actuary to calculate the Pension Assets. If Buyer's Actuary is
unable to agree with Seller's Actuary on the amount of the transfer within sixty
(60) days after Seller inform Buyer of the amount to be transferred, Seller and
Buyer shall jointly select a third actuary, whose determination shall be binding
on Seller and Buyer. Each of Seller and Buyer shall bear the fees, costs and
expenses of their respective actuaries, and the fees, costs, and expenses of the
third actuary shall be borne one-half by Seller and one-half by Buyer.
(iii) The Pension Assets shall be credited with interest from the
Closing Date to the actual date of transfer at the assumed discount rate used in
accordance with paragraph (i) of this Section (d); provided that any Pension
Assets that are distributed from the Seller's Pension Plans before the date of
transfer pursuant to subsection (d)(vi) of this Section 11.2.1 shall be credited
with interest (such interest to be credited to the Buyer Pension Plans) only
from the Closing Date to the date of distribution.
(iv) Under the terms of each Buyer Pension Plan, the accrued
benefit of each Transferred Employee immediately after the transfer of assets
and liabilities pursuant to this Section 11.2.1 shall not be less than the sum
of each Transferred Employee's accrued benefits under the Seller's Pension Plan
and the Buyer Pension Plan immediately before the transfer of assets and
liabilities. Neither Seller nor its Affiliates nor the Seller's Pension Plans
nor any trustee thereof shall retain any liability for benefits under the
Seller's Pension Plans for any Transferred Employee with respect to whom cash or
marketable obligations have been transferred to a Buyer Pension Plan pursuant to
this Section 11.2.1 or distributed pursuant to subsection (d)(vi) of this
Section 11.2.1 (other than any additional liability that results from Seller's
(or its Affiliates') failure to comply with this Agreement, the Seller's Pension
Plan or applicable Law and that does not result from any failure of Buyer or its
Affiliates to comply with this Agreement, the Buyer Pension Plan or applicable
Law).
(v) In connection with the transfer of assets and liabilities
pursuant to this Section 11.2.1, Seller and Buyer shall cooperate with each
other in making all appropriate filings required by the IRC or ERISA and the
regulations thereunder, and the transfer of assets and liabilities pursuant to
this Section 11.2.1 shall not take place until as soon as practicable after the
latest of (i) the expiration of the 30-day period following the filing of any
required notices with the IRS pursuant to Section 6058(b) of the IRC, or (ii)
the date Buyer has delivered to Seller (xx) a copy of the Buyer Pension Plan and
a copy of the most recent determination letter from the IRS to the effect that
the Buyer Pension Plan is qualified under Section 401(a) of the IRC, together
with documentation reasonably satisfactory to Seller of the due adoption of any
amendments to the Buyer Pension Plan required by the IRS as a condition to such
qualification and a certification from Buyer that no events have occurred that
adversely affect the continued validity of such determination letter (apart from
the enactment of any Federal law for which the remedial amendment period under
Section 401(b) of the IRC has not yet expired), and (yy) information enabling
the enrolled actuary for the Buyer Pension Plan to issue the certification
required by Section 6058(b) of the IRC.
(vi) (A) If, after the Closing Date and before the date of transfer
of assets and liabilities from the Seller's Pension Plans pursuant to this
Section 11.2.1, the accrued benefit as of the Closing Date becomes payable under
a Seller's Pension Plan to or with respect to a Transferred Employee, Buyer
shall (xx) furnish GTE Service Corporation with a copy of a properly completed
application for such benefits, and (yy) direct GTE Service Corporation to
instruct the trustee of the Seller's Pension Plan to make benefit payments in
the form and amount determined by GTE Service Corporation in accordance with the
properly completed application for benefits. Seller shall cause GTE Service
Corporation to comply with any such direction.
(B) To the extent that any reasonable custodial, trustee, asset
management, or other plan administration expenses attributable to the Pension
Assets and to the period ending on the date of the transfer of assets and
liabilities from the Seller's Pension Plans pursuant to this Section 11.2.1 are
allocable to the assets and liabilities to be so transferred, Buyer shall
reimburse the trustee of the Seller's Pension Plans in the amount of such
allocable expense if the expense is to be paid from assets then held by the
trustee of the Seller's Pension Plans or, if the expense is not to be paid from
assets then held by the trustee of the Seller's Pension Plans, Buyer shall
reimburse GTE Service Corporation in the amount of the expense, in each case
within fifteen (15) days of the date on which Buyer receives a statement
therefor from GTE Service Corporation.
(C) Notwithstanding anything herein to the contrary, the assets
and liabilities to be transferred from the trustee of the Seller's Pension Plans
to the trustee or funding agent of the Buyer Pension Plan pursuant to this
Section 11.2.1 shall be reduced, as provided in this subsection (vi), to reflect
any benefit payments made pursuant to this subsection (vi) regardless of the
form in which paid and any expenses described in paragraph (B) of this
subsection (vi) that have not otherwise been paid pursuant to this subsection
(vi).
11.2.2 Savings Plans.
(a) As of the date of this Agreement, Seller participates in the GTE Savings
Plan and the GTE Hourly Savings Plan (collectively referred to as the "Seller's
Savings Plans"). Except as provided in Section (g) of this Section 11.2.2,
Transferred Employees shall not be entitled to make contributions to or to
benefit from matching or other contributions under the Seller's Savings Plans on
and after the Closing Date.
(b) Buyer shall take all action necessary and appropriate to ensure that, as
soon as practicable after the Closing Date, Buyer maintains or adopts one or
more savings plans (hereinafter referred to in the aggregate as the "Buyer
Savings Plans" and individually as the "Buyer Savings Plan") effective as of the
Closing Date and to ensure that the Buyer Savings Plans satisfy the following
requirements as of the Closing Date: (i) each Buyer Savings Plan is a qualified,
single-employer individual account plan under Section 401(a) of the IRC; (ii) at
least one (1) Buyer Savings Plan does not exclude Transferred Employees from
eligibility to participate therein; (iii) at least one (1) Buyer Savings Plan
permits Transferred Employees to make before-tax contributions (under Section
401(k) of the IRC) and provides for matching contributions by the Buyer at a
rate of match determined solely in the discretion of Buyer; and (iv) the Buyer
Savings Plan does not violate the requirements of any applicable collective
bargaining agreement to which it is subject. Within the thirty (30) day period
immediately preceding any transfer of assets and liabilities from a Seller's
Savings Plan to a Buyer Savings Plan pursuant to this Section 11.2.2, Buyer
shall provide Seller with a written certification, in a form acceptable to
Seller, that the Buyer Savings Plan satisfies each of the requirements set forth
in this Section (b).
(c) (i) Seller shall direct the trustee of the Seller's Savings Plans
to transfer to the trustee or funding agent of the Buyer Savings Plan designated
by Buyer an amount in cash equal in value to the account balances of the
Transferred Employees covered by the Seller's Savings Plans as of the date of
the transfer; provided that to the extent the account balances to be transferred
consist in whole or in part of outstanding participant loans which comply with
the provisions of the IRC and ERISA (the "Participant Loans"), Seller shall
direct the trustee of the Seller's Savings Plans to transfer to the trustee or
funding agent of the Buyer Savings Plans, in lieu of cash, the promissory notes
and related documents evidencing such Participant Loans. Buyer and Seller shall
take such actions as may be required to effect the assignment of such loans by
the trustee of the Seller's Savings Plan to the trustee or funding agent of the
Buyer Savings Plan, and Buyer shall cause the trustee or funding agent of the
Buyer Savings Plan to accept the assignment of such Participant Loans.
(ii) After the date of the transfer of assets and liabilities
pursuant to this Section 11.2.2, Buyer shall assume all liabilities for the
benefits payable to or with respect to such Transferred Employees under the
Seller's Savings Plans, and Seller and the Seller's Savings Plans and their
implementing trust shall retain no liability for such benefits (other than any
additional liability that results from Seller's (or its Affiliates') failure to
comply with this Agreement, the Seller's Savings Plan or applicable Law and that
does not result from any failure of Buyer or its Affiliates to comply with this
Agreement, the Buyer Savings Plan or applicable Law).
(d) For purposes of eligibility and vesting under the Buyer Savings Plans,each
Transferred Employee shall be credited with service as of the Closing Date as
determined under the terms of the Seller's Savings Plans. As soon as practicable
after the Closing Date, Seller shall cause GTE Service Corporation to deliver to
Buyer a list of the Transferred Employees covered by the Seller's Savings Plans,
together with each Transferred Employee's service under each of the Seller's
Savings Plans as of the Closing Date.
(e) In connection with the transfer of assets and liabilities pursuant to this
Section 11.2.2, Seller and Buyer shall cooperate with each other in making all
appropriate filings required by the IRC or ERISA and the regulations thereunder,
and the transfer of assets and liabilities pursuant to this Section 11.2.2 shall
not take place until as soon as practicable after the latest of (i) the
expiration of the thirty (30) day period following the filing of any required
notices with the IRS pursuant to Section 6058(b) of the IRC, and (ii) the date
Buyer has delivered to Seller (xx) a copy of the Buyer Savings Plan and a copy
of the most recent determination letter from the IRS to the effect that the
Buyer Savings Plan is qualified under Sections 401(a) and 401(k) of the IRC,
together with documentation reasonably satisfactory to Seller of the due
adoption of any amendments to the Buyer Savings Plan required by the IRS as a
condition to such qualification and a certification from Buyer that no events
have occurred that adversely affect the continued validity of such determination
letter (apart from the enactment of any Federal law for which the remedial
amendment period under Section 401(b) of the IRC has not yet expired).
(f) As soon as practicable after the Closing Date, Seller shall cause GTE
Service Corporation to deliver to Buyer a list of the Transferred Employees who
have outstanding Participant Loans under the Seller's Savings Plans, together
with copies of said Transferred Employees' notes, disclosure statements, and
security agreements under the Seller's Savings Plans. Subject to obtaining the
consent of the applicable Transferred Employee if required by law, from the
Closing Date until the earliest of (i) the actual date of transfer of assets and
liabilities pursuant to this Section 11.2.2; (ii) the full amortization of the
Transferred Employee's indebtedness; (iii) the distribution of the entire
balance of the Transferred Employee's accounts; or (iv) the last date on which
Buyer or one of its Affiliates pays remuneration to the Transferred Employee,
Buyer or its Affiliate shall (x) continue the payroll deductions pursuant to
which each such Transferred Employee is discharging indebtedness to a Seller's
Savings Plan and (y) remit the deducted funds to Fidelity Management Trust
Company, the trustee of the Seller's Savings Plans, as soon as practicable, but
in no event more than thirty (30) days, after the date of deduction, together
with an accounting that identifies the Transferred Employees with respect to
whom the funds were deducted and the amount deducted for each Transferred
Employee. All such remitted funds shall be transferred to the appropriate
Seller's Savings Plan and applied to reduce the appropriate Transferred
Employee's outstanding indebtedness. Buyer's obligations under this Section (f)
are limited to payroll deductions of Participant Loans repayments by the
Transferred Employees and remittance of those funds, and nothing herein shall be
construed to obligate Buyer to repay to Seller any portion of the outstanding
indebtedness of the Transferred Employees that are not otherwise discharged by
the Transferred Employees themselves.
(g) Seller shall make all required matching contributions with respect to the
Transferred Employees' contributions to the Seller's Savings Plans that are (i)
eligible for matching and (ii) made before, or relate to a period ending on or
prior to, the Closing Date. Such matching contributions shall be made not later
than the date on which all other matching contributions are made to the Seller's
Savings Plans with respect to contributions made at the same time as the
Transferred Employees' contributions.
11.2.3 Welfare Plans.
(a) Buyer shall take all action necessary and appropriate to ensure that, as
soon as practicable after the Closing Date, Buyer maintains or adopts, as of the
Closing Date, one or more employee welfare benefit plans, including medical,
health, dental, flexible spending account, accident, life, short-term
disability, and long-term disability and other employee welfare benefit plans
(including retiree medical and life) for the benefit of (i) the non-bargained
Transferred Employees (the "Non-Union Welfare Plans") and (ii) the
union-represented Transferred Employees in accordance with the provisions of
applicable collective bargaining agreements (the "Bargained Welfare Plans"). The
Non-Union Welfare Plans and the Bargained Welfare Plans are hereinafter referred
to collectively as the "Buyer Welfare Plans." The Buyer Welfare Plans shall
provide as of the Closing Date pre-retirement benefits to Transferred Employees
(and their dependents and beneficiaries) that, in the aggregate, are comparable
to the pre-retirement benefits to which they were entitled under the
corresponding employee welfare benefit plans maintained by Seller on the Closing
Date. For purposes of determining eligibility to participate in each Buyer
Welfare Plan, each Transferred Employee shall be credited with service,
determined under the terms of the corresponding welfare plans maintained by
Seller on the Closing Date (hereinafter referred to collectively as the
"Seller's Welfare Plans"). Any restrictions on coverage for pre-existing
conditions or requirements for evidence of insurability under the Buyer Welfare
Plans shall be waived for Transferred Employees, and Transferred Employees shall
receive credit under the Buyer Welfare Plans for co-payments and payments under
a deductible limit made by them and for out-of-pocket maximums applicable to
them during the plan year of the Seller's Welfare Plan in accordance with the
corresponding Seller's Welfare Plans. As soon as practicable after the Closing
Date, Seller shall deliver to Buyer a list of the Transferred Employees who had
credited service under a Seller's Welfare Plan, together with each such
Transferred Employee's service, co-payment amounts, and deductible and
out-of-pocket limits under such plan.
(b) (i) Except as otherwise provided in subsection (b)(ii) of this
Section (b) or in an applicable collective bargaining agreement, Buyer shall
provide or cause to be provided retiree medical, health, and life benefits to
each Transferred Employee (or the dependents or beneficiaries of such
Transferred Employee, as the case may be) under substantially comparable terms
and conditions as apply to other comparable employees of Buyer, and Seller shall
have no obligation to provide retiree medical, health and life benefits in
respect of any Transferred Employee on or after the Closing Date.
(ii) Subject to Section 11.4 below, following the retirement from
Buyer and its Affiliates or any successor thereof of a Transferred Employee who
is not subject to a collective bargaining agreement as of the Closing Date, who
has combined age and years of accredited service (within the meaning of the
Seller's Pension Plan) as of June 1, 1999, equal to at least 66, and who as of
his or her retirement has combined age and years of accredited service (within
the meaning of the Seller's Pension Plan) equal to at least 76 and at least 15
years of accredited service (within the meaning of the Seller's Pension Plan) (a
"Retired Non-Union Transferred Employee"), Seller shall provide or cause to be
provided to each such Retired Nonunion Transferred Employee (and/or his or her
dependents and beneficiaries) retiree medical, health, and life benefits under
terms and conditions that are substantially identical to the terms and
conditions under the corresponding programs offered by Seller to its similarly
situated noncollectively bargained employees retiring as of the Closing Date;
provided that nothing in this subsection (b)(ii) shall be construed to prevent
any Retired Non-Union Transferred Employee (or his or her dependents or
beneficiaries) from voluntarily relinquishing such benefits. Buyer shall
reimburse Seller, in accordance with this subsection (b)(ii), for the cost of
the retiree medical, health, and life coverage for which Seller are responsible
and that Seller actually provide pursuant to this subsection (b)(ii). For each
year for which Buyer is required to reimburse Seller under this subsection
(b)(ii), Buyer shall pay Seller annually in arrears, within 30 days after Seller
provides a statement therefor to Buyer, (A) $4,500 with respect to each Retired
Non-Union Transferred Employee who has not yet attained age 65 during the year
for which the payment is made and $4,500 with respect to each spouse who is
covered with respect to a Retired Non-Union Transferred Employee and who has not
yet attained age 65 during the year for which the payment is made, and (B)
$2,000 with respect to each Retired Non-Union Transferred Employee who has
attained at least age 65 during the year for which the payment is made and
$2,000 with respect to each spouse who is covered with respect to a Retired
Non-Union Transferred Employee and who has attained at least age 65 during the
year for which the payment is made. No reimbursement shall be due with respect
to any dependent, other than a spouse, covered with respect to a Retired
Non-Union Transferred Employee. The reimbursement obligation for partial years
shall be prorated based on the portion of the year covered by the obligation.
Each Retired Non-Union Transferred Employee (or his or her dependent or
beneficiary, as the case may be) who is provided benefits by Seller under this
subsection (b)(ii) shall be required to pay to Seller any premium, contribution
or other payment required under, and shall be subject to any co-payment or
deductible required under, the terms of Seller's applicable retiree medical,
health, or life benefit plan; to the extent that any amount constituting such a
payment is deducted from any plan, program, or arrangement maintained by Buyer
or one of its Affiliates or is otherwise paid to Buyer or one of its Affiliates
by such person, Buyer shall cause such amount to be paid to Seller as soon as
administratively practicable.
(iii) Benefits provided pursuant to subsection (b)(ii) of this
Section (b) shall take into account service with and compensation increases from
Buyer on and after the Closing Date in the same manner as if such post-Closing
Date service was performed with, or such compensation was provided by, Seller.
Buyer shall provide Seller with such information as shall be required to
implement the immediately preceding sentence.
(c) Buyer shall refer to GTE Service Corporation and GTE Service Corporation
shall assume responsibility for any valid claim under a Seller's Welfare Plan
for disability, medical, dental or other benefits made by a Transferred Employee
on or after the Closing Date arising from a loss incurred on or before the
Closing Date. Nothing in this Section 11.2.3 shall require Seller, any Affiliate
of Seller, or the Seller's Welfare Plans to make any payment or to provide any
benefit not otherwise provided by the terms of the Seller's Welfare Plans.
(d) Seller, Buyer, their respective Affiliates, and the Seller's Welfare Plans
and the Buyer Welfare Plans shall assist and cooperate with each other in the
disposition of claims made under the Seller's Welfare Plans pursuant to
subsection (c) of this Section 11.2.3, and in providing each other with any
records, documents, or other information within its control or to which it has
access that is reasonably requested by any other as necessary or appropriate to
the disposition, settlement, or defense of such claims.
(e) Except for GTE Flexible Reimbursement Plan (the "FRP") account balances
described in Section 11.2.3(f), nothing in this Agreement shall require Seller
or its Affiliates to transfer assets or reserves with respect to the Seller's
Welfare Plans to Buyer or the Buyer Welfare Plans.
(f) As of the Closing Date, Seller shall cause the portion of the FRP app-
licable to Transferred Employees to be segregated into a separate component and
all account balances of the Transferred Employees in the FRP shall be
transferred to a flexible reimbursement plan that Buyer shall cause to be
maintained for the duration of the calendar year in which the Closing Date
occurs.
(g) On and for a period of at least three (3) years after the Closing Date,
Transferred Employees not subject to a collective bargaining agreement shall be
eligible for benefits under a Buyer severance or separation pay policy or plans
that are the same as or comparable to the severance or separation pay policy
benefits that are provided by Seller (or the applicable Affiliate, if the
Transferred Employee is employed by an employer other than the Seller) or a
Seller's Pension Plan as of the Closing Date. Buyer shall recognize the service
of each such Transferred Employee with Seller and its Affiliates for
eligibility, vesting, and benefit determinations under the Buyer severance or
separation pay policy or plan. Transferred Employees subject to a collective
bargaining agreement shall be eligible for severance or separation pay benefits
in accordance with the terms of the applicable collective bargaining agreement.
11.3 Miscellaneous Benefits.
11.3.1 Loans.
Buyer shall (i) obtain at its own expense newly executed
payroll deduction authorization forms from all Transferred Employees to whom
Seller has made outstanding education loans, mortgage loans, and relocation
loans (excluding any Participant Loans under the Seller's Savings Plans), (ii)
subject to obtaining the consent of the applicable Transferred Employee if
required by law, continue the payroll deductions pursuant to which such
Transferred Employees are discharging such indebtedness, and (iii) as soon as
practicable, but in no event more than thirty (30) days, after the date of
deduction, remit such funds (together with an accounting that identifies the
Transferred Employees with respect to whom the funds were deducted and the
amount deducted for each Transferred Employee) to Seller for application by
Seller to the Transferred Employees' outstanding indebtedness. Buyer's
obligation with respect to each respective Transferred Employee pursuant to the
preceding sentence shall commence as of the Closing Date and continue until the
earlier of the full amortization of the Transferred Employee's indebtedness or
the last date on which Buyer or one of its Affiliates pays remuneration to the
Transferred Employee. Seller shall not seek to accelerate, cancel or otherwise
change the terms of any education loans, mortgage loans, or relocation loans
made by Seller to such Transferred Employees, except in the case of a default by
a Transferred Employee. Buyer's obligations under this Section 11.3.1 are
limited to payroll deductions of loan repayments by the Transferred Employees
and remittance of those funds and the related accounting, and nothing herein
shall be construed to obligate Buyer to repay to Seller any portion of the
outstanding indebtedness of the Transferred Employees that are not otherwise
discharged by the Transferred Employees themselves; provided that,
notwithstanding anything to the contrary in Article 12 of this Agreement or
Section 11.6 of this Agreement, Seller shall indemnify and hold harmless Buyer
for all claims, demands, actions, proceedings, causes of action, liability,
loss, cost, damage, and expense (including reasonable attorney's fees) in any
way arising from or incurred as a result of Buyer's administration of the
outstanding indebtedness or the payroll deduction authorization process as
described above. All Transferred Employees with outstanding indebtedness as
described in this Section 11.3.1 and the amount and nature of this indebtedness
shall be identified on a Schedule 11.3.1 to be prepared by Seller and submitted
to Buyer before the Closing Date.
11.3.2 Vacation.
(a) On or after the Closing Date, Buyer shall allow Transferred Employees to
receive paid time off in the calendar year of the Closing for any unused
vacation time accrued, with respect to the calendar year of the Closing, prior
to the Closing Date. Except as provided in the following sentence, Seller and
its Affiliates shall have no liability to Transferred Employees for the vacation
payments described in this Section 11.3.2. Seller shall pay Transferred
Employees any banked vacation on or before the Closing Date. Schedule 11.1 to be
prepared by Seller and submitted to Buyer on or before the Closing Date shall
list the accrued but unused vacation pay, as of the Closing Date, of each
Transferred Employee for the calendar year in which the Closing Date occurs.
(b) For purposes of determining a Transferred Employee's eligibility for
vacation under Buyer's vacation plan, a Transferred Employee shall be credited,
as of the first day of the first calendar year that begins after the calendar
year in which the Closing Date occurs, with service for the calendar year in
which the Closing Date occurs in an amount equal to the aggregate of the
Transferred Employee's service with both Seller and Buyer during the calendar
year in which the Closing Date occurs.
(c) At the time of Closing, all vacation for Transferred Employees for the
calendar year of Closing shall be prorated and the net liability shall be an
adjustment to the Purchase Price (the "Vacation Proration Amount"). The
adjustment shall be determined by crediting the Buyer with an amount equal to
the accrued and unused vacation for Transferred Employees. In determining said
net liability, Seller shall receive a credit against the total liability for any
vacation used in excess of the accrued vacation for Transferred Employees as of
the Closing Date.
11.4 Employee Rights.
Nothing herein expressed or implied shall confer upon any
employee of Seller or its Affiliates, or Buyer or its Affiliates, or upon any
legal representative of such employee, or upon any collective bargaining agent,
any rights or remedies, including any right to employment or continued
employment for any specified period, of any nature or kind whatsoever under or
by reason of this Agreement.
Nothing in this Agreement shall be deemed to confer upon any
person (nor any beneficiary thereof) any rights under or with respect to any
plan, program, or arrangement described in or contemplated by this Agreement,
and each person (and any beneficiary thereof) shall be entitled to look only to
the express terms of any such plan, program, or arrangement for his or her
rights thereunder.
Nothing in this Agreement shall cause Buyer or its Affiliates,
nor Seller or its Affiliates to have any obligation to provide employment or any
employee benefits to any individual who is not a Transferred Employee or, except
as otherwise provided in Section 11.1.2 with respect to employment agreements,
to continue to employ any Transferred Employee for any period of time following
the Closing Date.
11.5 WARN Act Requirements.
On and after the Closing Date, Buyer shall be responsible with
respect to Transferred Employees and their beneficiaries for compliance with the
Worker Adjustment and Retraining Notification Act of 1988 and any other
applicable Law, including any requirement to provide for and discharge any and
all notifications, benefits, and liabilities to Transferred Employees and
government agencies that might be imposed as a result of the consummation of the
transactions contemplated by this Agreement or otherwise.
11.6 Indemnification.
11.6.1 Indemnification of Seller. Notwithstanding anything
to the contrary in Article 12 of this Agreement, Buyer shall indemnify and hold
harmless Seller, its Affiliates, and their respective directors, officers,
employees, agents, and assigns, and each employee benefit plan or arrangement
maintained or contributed to by Seller or an Affiliate thereof (whether or not
such plan or arrangement is an "employee benefit plan" within the meaning of
Section 3(3) of ERISA) and its administrators, fiduciaries, and agents, from and
against any and all claims, demands, actions, administrative or other
proceedings, causes of action, liability, loss, cost, damage, and expense
(including reasonable attorneys' fees) (i) in any way arising out of or incurred
as a result of any action by Buyer, its Affiliates, their respective directors,
officers, employees, or agents, the administrators or fiduciaries of any
employee benefit plan maintained or contributed to by Buyer or an Affiliate
thereof (whether or not such plan or arrangement is an "employee benefit plan"
within the meaning of Section 3(3) of ERISA), or any of their successors, to
change, reduce contributions to, terminate, fail to continue, fail to pay
benefits under, or fail to manage or administer properly any employee benefit
plan or arrangement (whether or not such plan or arrangement is an "employee
benefit plan" within the meaning of Section 3(3) of ERISA) on or after the
Closing Date, or (ii) in any way arising out of or incurred as a result of any
action that is a breach of any the covenants, representations, warranties, or
obligations of any such person under this Agreement.
11.6.2 Indemnification of Buyer. Notwithstanding anything
to the contrary in Article 12 of the Agreement, Seller shall indemnify and hold
harmless Buyer, its Affiliates, and their respective directors, officers,
employees, agents, and assigns, and each employee benefit plan or arrangement
maintained or contributed to by Buyer or an Affiliate thereof (whether or not
such plan or arrangement is an "employee benefit plan" within the meaning of
Section 3(3) of ERISA) and its administrators, fiduciaries, and agents, from and
against any and all claims, demands, actions, administrative or other
proceedings, causes of action, liability, loss, cost, damage, and expense
(including reasonable attorneys' fees) (i) in any way arising out of or incurred
as a result of any action by Seller, its Affiliates, their respective directors,
officers, employees, or agents, the administrators or fiduciaries of any
employee benefit plan maintained or contributed to by Seller or an Affiliate
thereof (whether or not such plan or arrangement is an "employee benefit plan"
within the meaning of Section 3(3) of ERISA), or any of their successors, to
change, reduce contributions to, terminate, fail to continue, fail to pay
benefits under, or fail to manage or administer properly any employee benefit
plan or arrangement (whether or not such plan or arrangement is an "employee
benefit plan" within the meaning of Section 3(3) of ERISA) before, or relating
to a period before, the Closing Date, or (ii) in any way arising out of or
incurred as a result of any action that is a breach of any the covenants,
representations, warranties, or obligations of any such person under this
Agreement.
11.7 Special Provisions For Certain Employees.
Any individual employed in or in association with the Business
and whose primary work location is within the areas services by the Purchased
Exchanges who as of the Closing Date either (i) is currently receiving long-term
disability benefits under a long-term disability plan of the Seller or one of
its Affiliates (the "Seller's LTD Plan"), (ii) has been approved for receipt of
long-term disability benefits under the Seller's LTD Plan, or (iii) is receiving
a disability pension under a Seller's Pension Plan (collectively, an "LTD
Recipient") shall be treated as a Transferred Employee if and when the LTD
Recipient recovers from his or her disabling condition and returns to active
service with the Buyer. The term "LTD Recipients" shall include only those
individuals described in the preceding sentence who are identified on Schedule
11.1.
Any Transferred Employee described in the preceding paragraph
(whether or not identified on Schedule 11.1 as an "LTD Recipient") shall
continue to receive benefits under Seller's LTD Plan (or, if applicable, a
disability pension under a Seller's Pension Plan) after the Closing Date to the
extent provided under Seller's LTD Plan (or the applicable Seller's Pension
Plan). As long as such individual remains eligible to receive benefits under
Seller's LTD Plan (or the applicable Seller's Pension Plan), the Buyer shall not
be required to provide coverage or benefits to the individual under the employee
benefit plans or programs maintained by the Buyer.
If any LTD Recipient recovers from his or her disabling
condition, Seller shall have no obligation to offer or provide any employment to
such LTD Recipient, and absent a legal or contractual right to reemployment and
except as otherwise provided in Section 11.1, Buyer shall have no obligation to
offer or provide any employment to such LTD Recipient. If an LTD Recipient who
received disability benefits under the Seller's LTD Plan (or the applicable
Seller's Pension Plan, as the case may be) returns to active service with the
Buyer or one of its Affiliates, the LTD Recipient's period of disability covered
under the Seller's LTD Plan (or the applicable Seller's Pension Plan, as the
case may be) shall be treated as a period of service under the employee benefit
plans and programs of the Buyer and its Affiliates to the same extent that the
period of disability is treated as a period of service under the employee
benefit plans and programs of Seller and its Affiliates.
ARTICLE 12
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INDEMNIFICATION
12.1 Survival of Representations, Warranties and Covenants.
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(a) The representations and warranties contained in Sections 8.1.6 and 8.2.6
will survive the Closing and remain in full force and effect indefinitely. The
representations and warranties contained in Section 8.1.13 will terminate upon
the expiration of the applicable statute of limitations. Each of the other
representations and warranties contained in Article 8 will terminate, without
further action, on the date which is (i) the later of one (1) year following the
Closing Date, or (ii) the completion of Buyer's first audit cycle following the
Closing Date, however, that such cycle is completed within fifteen (15) months
following the Closing Date (in each case, the applicable date of expiration of
such representations and warranties is referred to herein as an "Expiration
Date").
(b) This Article 12 shall survive any termination of this Agreement and the
Ancillary Agreements and the indemnification contained in this Article 12 shall
survive the Closing and shall remain in effect (i) indefinitely, with respect to
any Indemnifiable Claim related to the breach of any representation or warranty
which pursuant to Section 12.1(a) survives indefinitely, (ii) indefinitely, with
respect to any Indemnifiable Claim arising under Section 12.2(a)(iii) (Retained
Liabilities) or 12.2(b)(iii) (Assumed Liabilities) and (iii) until the date
Expiration Date for any Indemnifiable Claims that are not specified in any of
the preceding clauses. Unless a claim for indemnification with respect to any
alleged breach of any representation or warranty is asserted by notice given as
herein provided that specifically identifies a particular breach and the
underlying facts relating thereto, which notice is given within the applicable
period of survival for such representation or warranty, such claim may not be
pursued and is irrevocably waived after such time. Without limiting the
generality or effect of the foregoing, no claim for indemnification with respect
to any representation or warranty will be deemed to have been properly made
except (i) to the extent it is based upon a Third Party Claim made or brought
prior to the expiration of the survival period for such representation or
warranty, or (ii) to the extent based on Indemnifiable Losses actually incurred,
or after due inquiry, reasonably expected to be incurred, by an Indemnitee prior
to the expiration of the survival period for such representation or warranty.
12.2 Indemnification.
(a) Following the Closing and subject to the other sections of this Article 12
Seller will indemnify, defend and hold harmless Buyer and its Affiliates and
their respective directors, officers, and agents from and against all
Indemnifiable Losses relating to, resulting from or arising out of (i) any
inaccuracy in any of the representations and warranties made by Seller in
Section 8.1 of this Agreement, (ii) a breach by Seller of any covenant or
agreement of Seller contained in this Agreement, and (iii) any of the Retained
Liabilities.
(b) Following the Closing and subject to the other sections of this Article 12
Buyer will indemnify, defend and hold harmless Seller and its Affiliates and
directors, officers, and agents from and against all Indemnifiable Losses
relating to, resulting from or arising out of (i) any inaccuracy in any of the
representations or warranties made by Buyer in Section 8.2 of this Agreement,
(ii) a breach by Buyer of any covenant or agreement of Buyer contained in this
Agreement, and (iii) any of the Assumed Liabilities.
(c) Payments made under this Section 12.2 shall be treated by Buyer and Seller
as purchase price adjustments and Buyer and Seller shall file all Tax Returns
consistent with such treatment. Notwithstanding anything to the contrary
contained herein, Buyer shall not be indemnified or reimbursed for any Tax
consequences arising from the receipt or accrual of an indemnity payment
hereunder including any Tax consequences arising from adjustments to the basis
of any asset resulting from an adjustment to the Purchase Price or any
additional or reduced taxes resulting from any such basis adjustment.
12.3 Limitations on Liability.
(a) For purposes of this Agreement, (i) "Indemnification Payment" means any
amount of Indemnifiable Losses required to be paid pursuant to this Agreement,
(ii) "Indemnitee" means any person or entity entitled to indemnification under
this Agreement, (iii) "Indemnifying Party" means any person or entity required
to provide indemnification under this Agreement, and (iv) "Indemnifiable Losses"
means any losses, liabilities, damages, costs and expenses (including reasonable
attorneys' fees and expenses and reasonable costs of investigation) actually
incurred in connection with any actions, suits, demands, assessments, judgments
and settlements, in any such case (x) reduced by (i) the amount of insurance
proceeds recovered from any person or entity with respect thereto, and (ii) any
Tax benefits to the Indemnitee as a result of the Indemnifiable Losses involved
and (y) excluding any such losses, liabilities, damages, costs and expenses to
the extent that the underlying liability or obligation is the result of any
action taken or omitted to be taken by any Indemnitee. For purposes of this
12.3(a), the amount of any Tax benefits to the Indemnitee shall be deemed to be
equal to the net present value amount of the reduction in federal, state and
local income or franchise Taxes or the increase of a Tax loss or credit
determined on the basis of the maximum marginal Tax rates in effect for the
Taxable period when payment is made by the Indemnifying Party (regardless of
whether the Indemnitee realizes or will realize an actual reduction in federal,
state or local income or franchise Taxes).
(b) Notwithstanding anything to the contrary contained in this Agreement, if
the Closing occurs, (i) no claim for indemnification may be asserted under
Section 12.2(a)(i) or Section 12.2(a)(ii) with respect to any matter (x) known
to Buyer on or before the date of this Agreement, or (y) after the date of this
Agreement and on or before the Closing Date to the extent that such matter
became known to Buyer prior to Closing and Buyer did not provide timely notice
to Seller of the existence of such claim or condition in accordance with Section
10.2(c), and (ii) no claim for indemnification may be asserted under Section
12.2(b)(i) or Section 12.2(b)(ii) with respect to any matter discovered by or
known to Seller on or before the date of this Agreement.
(c) As between Seller and any Affiliate of Seller, on the one hand, and Buyer
and any Affiliate of Buyer, on the other hand, the remedies, rights and
obligations set forth in this Article 12, Sections 10.1.2, 11.2.2, 11.7, 13.3
and the Ancillary Agreements will be the exclusive remedies, rights and
obligations with respect to the liabilities and obligations referred to in
Section 12.2 and any breach of the representations, warranties or covenants set
forth in this Agreement. Without limiting the foregoing, as a material
inducement to entering into this Agreement, to the fullest extent permitted by
law, each of the parties waives any claim or cause of action that it otherwise
might assert, and any breach of the representations, warranties or covenants set
forth in this Agreement, except for claims or causes of action brought under and
subject to the terms and conditions of this Article 12 and Sections 10.1.2, 11.7
and 13.3, and claims based on common law fraud.
(d) Notwithstanding any other provision of this Agreement or of any applicable
Law, no Indemnitee will be entitled to make a claim against an Indemnifying
Party under Sections 11.2.2, 11.7, 12.2(a)(i), 12.2(a)(ii), 12.2(b)(i) or
12.2(b)(ii) until:
(i) the aggregate amount of Indemnifiable Losses incurred by the
Indemnitee for any individual occurrence giving rise to such Indemnifiable
Losses exceeds $25,000, and
(ii) the aggregate amount of claims that may be asserted for such
Indemnifiable Losses pursuant to Section 12.3(d)(i) exceeds an amount equal to
two percent (2%) of the Purchase Price, but only to the extent such amount, if
any, (a) exceeds an amount equal to two percent (2%) of the Purchase Price, or
in the case of claims for breaches of Section 8.1.19 only, exceeds an amount
equal to $2,400,000 (provided that Indemnifiable Losses with respect to breaches
of Section 8.1.19 shall be payable as Indemnifiable Losses in excess of the
$2,400,000 basket or the two percent (2%) basket, but not both), and (b) is less
than the amount set forth in Section 12.3(e).
(e) Notwithstanding any other provision of this Agreement, the indemnification
obligations of Seller under Section 12.2(a) (except with respect to
indemnification for inaccuracies of the representations contained in Sections
8.1.1 through 8.1.6) or the indemnification obligation of Buyer under Section
12.2(b) will not exceed the amount of an amount equal to ten percent (10%) of
the Purchase Price respectively, after subtracting the floor amount specified in
Section 12.3(d)(ii).
(f) No Indemnifying Party shall be liable to or obligated to indemnify any
Indemnitee hereunder for any consequential, special, multiple, punitive or
exemplary damages including, but not limited to, damages arising from loss or
interruption of business, profits, business opportunities or goodwill, loss of
use of facilities, loss of capital, claims of customers, or any cost or expense
related thereto, except to the extent such damages have been recovered by the
Indemnifying Party under its insurance or have been received by a third person
and are the subject of a Third Party Claim for which indemnification is
available under the express terms of this Section 12.
(g) Notwithstanding anything in this Agreement to the contrary, Seller shall
not be liable to or obligated to indemnify Buyer or any other Indemnitee
hereunder for any claim that any of Seller's representations or warranties in
Section 8.1 is inaccurate, or that any covenant has been breached, if such claim
is predicated on any action by a Governmental Authority (other than a Tax
authority) undertaken after Closing or any action a Governmental Authority
(other than a Tax authority) requires Seller to undertake after Closing.
(h) From the date hereof through the Expiration Date, Buyer shall not be
eligible to seek indemnification from Seller with respect to any resulting
Indemnifiable Losses, and shall indemnify Seller from any losses, liabilities,
damages, costs and expenses (including reasonable attorneys' fees and expenses
and reasonable costs of investigation) actually incurred in connection with any
resulting actions, suits, demands, assessments, judgments and settlements in the
event that Buyer, without the prior written consent of Seller: (i) undertakes
any environmental remediation activity with respect to any Owned Real Property;
or (ii) contacts, or causes or permits any of its subsidiaries, affiliates,
agents, employees, officers or directors to contact on its behalf, any
Governmental Authority for the purpose of initiating any investigation or
inquiry as to the compliance by Seller with Environmental Requirements with
respect to the Owned Real Property, except in each case as is required to comply
with applicable Environmental Requirements.
(i) Seller and Buyer shall cooperate with each other with respect
to resolving any claim or liability with respect to which one party is obligated
to indemnify the other party hereunder, including by making commercially
reasonable efforts to mitigate or resolve any such claim or liability.
12.4 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any claim or of the
commencement of any action or proceeding by any entity that is not a party to
this Agreement or an Affiliate of such a party (a "Third Party Claim") against
such Indemnitee, with respect to which an Indemnifying Party is obligated to
provide indemnification under this Agreement, the Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than ten (10) calendar days after receipt of notice of such Third
Party Claim; provided, however, that the failure of the Indemnitee to notify the
Indemnifying Party shall only relieve the Indemnifying Party from its obligation
to indemnify the Indemnitee pursuant to this Article 12 to the extent that the
Indemnifying Party is materially prejudiced by such failure (whether as a result
of the forfeiture of substantive rights or defenses or otherwise). Upon receipt
of notification of a Third Party Claim, the Indemnifying Party shall be
entitled, upon written notice to the Indemnitee, to assume the investigation and
defense thereof with counsel reasonably satisfactory to the Indemnitee. Whether
or not the Indemnifying Party elects to assume the investigation and defense of
any Third Party Claim, the Indemnitee shall have the right to employ separate
counsel and to participate in the investigation and defense thereof; provided,
however, that the Indemnitee shall pay the fees and disbursements of such
separate counsel unless (i) the employment of such separate counsel has been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party has failed to assume the defense of such Third Party Claim
within reasonable time after receipt of notice thereof with counsel reasonably
satisfactory to such Indemnitee, or (iii) the named parties to the proceeding in
which such claim, demand, action or cause of action has been asserted include
both the Indemnifying Party and such Indemnitee and, in the reasonable judgment
of counsel to such Indemnitee, there exists one or more defenses that may be
available to the Indemnitee that are in conflict with those available to the
Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall
not be liable for the fees and disbursements of more than one counsel for all
Indemnified Parties in connection with any one proceeding or any similar or
related proceedings arising from the same general allegations or circumstances.
Without the prior written consent of the Indemnitee, the Indemnifying Party will
not enter into any settlement of any Third Party Claim that would lead to
liability or create any financial or other obligation on the part of the
Indemnitee unless such settlement includes as an unconditional term thereof the
release of the Indemnitee from all liability in respect of such Third Party
Claim. If a settlement offer solely for money damages is made by the applicable
third party claimant, and the Indemnifying Party notifies the Indemnitee in
writing of the Indemnifying Party's willing-ness to accept the settlement offer
and pay the amount called for by such offer without reservation of any rights or
defenses against the Indemnitee, the Indemnitee may continue to contest such
claim, free of any participation by the Indemnifying Party, and the amount of
any ultimate liability with respect to such Third Party Claim that the
Indemnifying Party has an obligation to pay hereunder shall be limited to the
lesser of (A) the amount of the settlement offer that the Indemnitee declined to
accept plus the Losses of the Indemnitee relating to such Third Party Claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the Indemnitee with respect to such claim.
(b) Any claim by an Indemnitee on account of an Indemnifiable Loss that does
not result from a Third Party Claim (a "Direct Claim") will be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than thirty (30) calendar days after the receipt of notice
thereof, and the Indemnifying Party will have a period of thirty (30) calendar
days within which to respond in writing to such Direct Claim. If the
Indemnifying Party does not so respond within such thirty (30) calendar day
period, the Indemnifying Party will be deemed to have rejected such claim, in
which event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of this
Article 12.
(c) If after the making of any Indemnification Payment the amount of the
Indemnifiable Loss to which such payment relates is reduced by recovery,
settlement or otherwise under any insurance coverage, or pursuant to any claim,
recovery, settlement or payment by or against any other entity, the amount of
such reduction (less any costs, expenses, premiums or taxes incurred in
connection therewith) will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any Indemnification Payment, the Indemnifying
Party will, to the extent of such Indemnification Payment, be subrogated to all
rights of the Indemnitee against any third party that is not an Affiliate of the
Indemnitee in respect of the Indemnifiable Loss to which the Indemnification
Payment relates; provided that (i) the Indemnifying Party shall then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss, and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, all claims of the Indemnifying Party against any such third
party on account of said Indemnification Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
party. Without limiting the generality or effect of any other provision of this
Article 12, each such Indemnitee and Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
ARTICLE 13
----------
TERMINATION
13.1 Termination Rights. This Agreement may be terminated at any
time prior to the Closing Date:
(a) at any time by mutual written consent of the parties;
(b) by Buyer if any of the conditions provided in Section 6.1 of this
Agreement have not been met within eighteen (18) months after execution of this
Agreement and have not been waived by Buyer;
(c) by Seller if any of the conditions provided in Section 6.2 of this Agree-
ment have not been met within eighteen (18) months after execution of this
Agreement and have not been waived by Seller; or by Seller if any obligations of
Buyer provided in Article 3 become incapable of being fulfilled.
13.2 Good Faith Performance. Neither party shall be entitled to
exercise any right of termination pursuant to subsection 13.1(b), (c) or (d)
above if such party shall not have performed diligently and in good faith
the obligations required to be performed by such party hereunder prior
to the date of termination.
13.3 Effect of Termination.
(a) If this Agreement is terminated as a result of a Material Adverse Effect
or Section 13.1(a), this Agreement shall be of no further force and effect and
there shall be no further liability hereunder (except the obligations under the
Confidentiality Agreement and the liability for breach of such obligations) on
the part of either party or their respective Affiliates, directors, officers,
shareholders, agents or other representatives.
(b) If this Agreement is terminated by Buyer pursuant to Section 13.1(b), this
Agreement shall be of no further force and effect and there shall be no further
obligations or liability hereunder (except the obligations under the
Confidentiality Agreement and the liability for breach of such obligations) on
the part of either party or their respective Affiliates, directors, officers,
shareholders, agents or other representatives; provided, however, that (i) in
the event that such termination is the result of one or more Seller's willful or
negligent failure to fulfill its conditions to Closing under Section 6.1 and
Buyer has fulfilled its conditions to Closing under Section 6.2, and Seller has
failed to cure such non-performance within a reasonable period after notice from
Buyer, then Seller shall pay Buyer liquidated damages in an amount equal to the
Deposit, and (ii) Seller shall promptly refund the Deposit following such
termination. Payment of the amount of the Deposit by Seller as liquidated
damages and return of the Deposit to Buyer shall be Buyer's sole and exclusive
remedy. Seller shall promptly pay such amount to Buyer in immediately available
funds following such termination. Notwithstanding anything herein to the
contrary, in no event shall any act or omission of Seller in connection with the
Merger be deemed to be a breach of the terms and conditions of this Agreement
for purposes of this Section 13.3(b).
(c) If this Agreement is terminated by Seller pursuant to Section 13.1(c) or
(d), this Agreement shall be of no further force and effect and there shall be
no further obligations or liability hereunder (except the obligations under the
Confidentiality Agreement and the liability for breach of such obligations) on
the part of either party or their respective Affiliates, directors, officers,
shareholders, agents or other representatives; provided, however, that Seller
shall be entitled to retain the Deposit as liquidated damages as Seller's sole
and exclusive remedy if such termination is (i) the result of Buyer's willful or
negligent failure to fulfill its conditions to Closing under Section 6.2 and
Seller has fulfilled its condition to Closing under Section 6.1, and Buyer has
failed to cure such non-performance within a reasonable period after notice from
Seller, or (ii) the result of Buyer's incapacity to fulfill its obligations
under Article 3.
(d) Upon any termination of the Agreement, each of the parties shall promptly
comply with the obligations of the Confidentiality Agreement regarding return or
destruction of Evaluation Material of the other party. Notwithstanding anything
to the contrary contained herein, the provisions of this Section 13.3 and of
Sections 14.1, 14.2, 14.3, 14.8, 14.11, 14.13 and 14.14, shall survive any
termination of this Agreement.
ARTICLE 14
----------
MISCELLANEOUS
14.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been given when delivered in person or
dispatched by electronic facsimile transfer (confirmed in writing by certified
mail, concurrently dispatched) or one business day after having been dispatched
for next-day delivery by a nationally recognized overnight courier service to
the appropriate party at the address specified below:
(a) If to Buyer, to:
Spectra Communications Group LLC
3190 NE Expressway, Suite 220
Atlanta, GA 30341
Facsimile No.: (770) 455-1866
Attention: Dorothy D. Rollins
President
With a copy to:
CenturyTel, Inc.
100 Century Park Drive
Monroe, LA 71203
Facsimile No.: 318-388-9488
Attention: R. Stewart Ewing, Jr.
Executive Vice President and
Chief Financial Officer
Stacey W. Goff
General Counsel's Office
William R. Boles, Jr.
Boles, Boles & Ryan
1805 Tower Drive
Monroe, LA 71201
Facsimile No.: 318-329-9150
(b) If to Seller, to:
William M. Edwards, III
Vice President - Property Repositioning
600 Hidden Ridge, HQE02J27
Irving, TX 75038
Facsimile No. (972) 719-7062
With a copy to:
Dale R. Chamberlain
Legal Counsel - Property Repositioning
600 Hidden Ridge, HQE02J34
Irving, TX 75038
Facsimile No. (972) 719-7162
or to such other address or addresses as any such party may from time to time
designate for itself by like notice.
14.2 Information Releases. The parties shall consult with each
other (and allow the other party notice, and a reasonable time to comment) in
preparing any employee announcement, press release, public announcement, news
media response or other form of release of information concerning this Agreement
or the transactions contemplated hereby that is intended to provide such
information to the employees generally, news media or the public. Neither party
shall issue or cause the publication of any press release, public announcement
or media response without the prior written consent of the other party;
provided, however, that, after allowing the other party notice and a reasonable
time to comment prior to issuance, nothing herein will prohibit either party
from making an employee announcement, or issuing or causing publication of any
press release, public announcement or media response to the extent that such
action is required by applicable Law or the rules of any national stock exchange
applicable to such party or its Affiliates.
14.3 Expenses. Whether or not the transactions contemplated
hereby are consummated and except as otherwise expressly provided herein, each
party will pay any expenses (including attorneys' fees) incurred by it inci-
dental to this Agreement and in consummating the transactions provided for
herein.
14.4 Successors and Assigns. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but is not assignable or delegable by any party without
the prior written consent of the other party; provided, that (i) Seller may
assign this Agreement to an Affiliate of Seller without the consent of Buyer
including, on and after the closing of the Merger, the ultimate parent entity of
the successor corporation to such merger or any entity controlled thereby and
(ii) Buyer may assign its rights under this Agreement to one or more
wholly-owned subsidiaries, provided that Buyer shall remain responsible for all
of its obligations under this Agreement.
14.5 Amendments. This Agreement may be amended or modified only by
a subsequent writing signed by authorized representatives of both parties.
14.6 Captions. The captions set forth in this Agreement are for
convenience only and shall not be considered as part of this Agreement, nor as
in any way limiting or amplifying the terms and provisions hereof.
14.7 Entire Agreement. The term "Agreement" shall mean collectively
this document, the Schedules hereto and any agreements expressly incorporated
herein. This Agreement supersedes and revokes any prior discussions and
representations, other agreements, commitments, arrangements or understandings
of any sort whatsoever, whether oral or written, that may have been made or
entered into by the parties relating to the matters contemplated hereby, except
the Confidentiality Agreement. This Agreement, the Confidentiality Agreement and
the Ancillary Documents constitute the entire agreement by and among the parties
with respect to the subject matter hereof, and there are no representations,
warranties, agreements, commitments, arrangements or understandings except as
expressly set forth herein.
14.8 Waiver. Except as otherwise expressly provided in this
Agreement, neither the failure nor any delay on the part of any party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise or waiver of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege available to each party at law
or in equity.
14.9 Third Parties. Except as expressly provided herein, nothing
contained in this Agreement is intended to confer upon any Person, other than
the parties hereto and their successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
14.10 Counterparts. This Agreement may be executed in two or more
counterparts, any or all of which shall constitute one and the same instrument.
14.11 Governing Law. This Agreement and the Ancillary Agreements
shall in all respects be governed by and construed in accordance with the laws
of the State of New York (except that no effect shall be given to any conflicts
of law principles of the State of New York that would require the application of
the laws of any other jurisdiction). The parties irrevocably submit to the
exclusive jurisdiction of any Missouri District Court or any Federal Court
located in Missouri for purposes of any suit, action or other proceeding arising
out of this Agreement, the Ancillary Agreements or any transaction contemplated
hereby or thereby. The parties agree that service of process, summons or notice
or document by U.S. registered mail to such party's respective address set forth
in Section 14.1 shall be effective service of process for any action, suit or
proceeding in Missouri with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. The
parties hereto irrevocably and unconditionally waive trial by jury in any legal
action or proceeding relating to this Agreement or any other agreement entered
into in connection therewith and for any counterclaim with respect thereto. In
the event of any breach of the provisions of this Agreement or any other
agreement entered into in connection therewith, the non-breaching party shall be
entitled to equitable relief, including in the form of injunctions and orders
for specific performance, where the applicable legal standards for such relief
in such courts are met, in addition to all other remedies available to the
non-breaching party with respect thereto at law or in equity.
14.12 Further Assurances. From time to time, as and when requested
by one of the parties, the other party will use its commercially reasonable
efforts to execute and deliver, or cause to be executed and delivered, all such
documents and instruments as may be reasonably necessary or appropriate, in the
reasonable opinion of counsel for Seller and Buyer, to consummate and make
effective the transactions contemplated by this Agreement.
14.13 Severability. If any provision of this Agreement is
determined to be invalid, illegal or unenforceable by any Governmental
Authority, the remaining provisions of this Agreement to the extent permitted by
Law shall remain in full force and effect provided that the essential terms and
conditions of this Agreement for both parties remain valid, binding and
enforceable and provided that the economic and legal substance of the
transactions contemplated is not affected in any manner materially adverse to
any party. In the event of any such determination, the parties agree to
negotiate in good faith to modify this Agreement to fulfill as closely as
possible the original intents and purposes hereof. To the extent permitted by
Law, the parties hereby to the same extent waive any provision of Law that
renders any provision hereof prohibited or unenforceable in any respect.
14.14 Representation by Counsel; Interpretation. Seller and Buyer
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of Law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intent of Buyer and Seller.
Intentionally left blank.
IN WITNESS WHEREOF, the parties, acting through their duly
authorized agents, have caused this Agreement to be duly executed and delivered
as of the date first above written.
GTE MIDWEST INCORPORATED SPECTRA COMMUNICATIONS GROUP LLC
By: /s/ William M. Edwards,III By: /s/ Dorothy D. Rollins
--------------------------- -------------------------
Name: William M. Edwards, III Name: Dorothy D. Rollins
--------------------------- -------------------------
Title: Vice President- Title: Chairman
Property Repositioning
First Amendment to APA
7/31/00
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
This is the first amendment to the Asset Purchase Agreement
("Agreement") by and among Spectra Communications Group, LLC, ("Buyer"), and GTE
Midwest Incorporated ("Seller") dated July 8, 1999, as amended by a Supplemental
Agreement dated January 19, 2000.
RECITALS
WHEREAS, Buyer and Seller have determined that it is in their interests
to amend the Agreement and they desire to set forth in this document the terms
and conditions of said amendments;
THEREFORE, in consideration of the mutual covenants herein expressed,
the parties hereby agree to amend the Agreement as follows:
1. Section 3.1 is amended by deleting from the second and third lines
thereof the words and figures "Two Hundred Ninety Million Dollars
($290,000,000)" and inserting in lieu thereof the words and figures "Two Hundred
Eighty-Nine Million Dollars ($289,000,000)."
2. Section 1.1 of the Agreement is hereby amended by adding a new
definition "Waived Claims" which means any claim or potential claim that Buyer
or its successors, assigns, or lenders may now or in the future have that Seller
has violated, breached or otherwise not performed any of Seller's obligations
under any provision of the Agreement, if (i) such claims or potential claims are
related to obligations under the Communications Assistance to Law Enforcement
Act ("CALEA"), or (ii) such claims or potential claims are related to data from
Seller's MARK system, or (iii) the facts or circumstances which are the basis
for such claim or potential claim occurred on or before July 10, 2000, and the
Buyer or any of their employees, officers, directors, investors or agents had
knowledge on or before July 10, 2000 of the facts or circumstances which are the
basis for such claim or potential claim.
3. Subsection 5.2.1 of the Agreement is hereby amended by adding the
following as new Sub-subsection (h):
(h) Notwithstanding any other provision of this Agreement,
Buyer hereby waives for all purposes other than fraud and releases
Seller from all liability and responsibility in respect of all Waived
Claims arising pursuant to subsection 5.2.1 (a) through (g).
4. Subsection 5.2.2 of the Agreement is hereby amended by adding the
following as new Sub-subsection (g):
(g) Notwithstanding any other provision of this Agreement,
Buyer hereby waives for all purposes other than fraud and releases
Seller from all liability and responsibility in respect of all Waived
Claims arising pursuant to subsections 5.2.2 (a) through (f).
5. Section 8.3, entitled "Certain Waived Claims," is hereby added to
and made a part of the Agreement.
8.3 Certain Waived Claims. Notwithstanding any other provision
of this Agreement, Buyer waives for all purposes other than fraud and
releases Seller from all liability and responsibility in respect of all
Waived claims arising pursuant to Section 8.1.
6. Subsection 12.3(j) is hereby added to and made a part of the
Agreement:
(j) Buyer acknowledges and agrees that none of the Waived
Claims shall be an Indemnifiable Loss as defined in the Agreement and
no Waived Claims or any portion of the reduction in the Base Purchase
Price set forth in paragraph 1 of this Amendment shall constitute an
amount claimed against Seller as an Indemnifying Party pursuant to the
provisions of Section 12.3(d) of the Agreement. Seller acknowledges and
agrees that none of the Waived Claims or any portion of the reduction
in the Base Purchase Price set forth in paragraph 1 of this Amendment
shall be credited against the amount of the indemnification obligations
of the Seller set forth in Section 12.3(e) of the Agreement.
In all other respects, the Agreement remains unchanged and in full
force and effect in accord with its terms.
This Amendment shall become effective upon execution by the parties.
Executed this 31st day of July, 2000.
GTE MIDWEST INCORPORATED
By: /s/ William M. Edwards, III
---------------------------
Name: William M. Edwards, III
---------------------------
Title: Vice President - Property Repositioning
SPECTRA COMMUNICATIONS GROUP, LLC
By: /s/ Dorothy D. Rollins
---------------------------
Name: Dorothy D. Rollins
---------------------------
Title: President
$1,500,000,000
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of
July 31, 2000
among
CENTURYTEL, INC.,
THE LENDERS NAMED HEREIN,
and
BANK OF AMERICA, N.A.,
as Administrative Agent,
CITIBANK, N.A., as Syndication Agent,
and
BANC OF AMERICA SECURITIES LLC
and
SALOMON SMITH BARNEY INC.,
as Joint Lead Arranger\s and Joint Book Managers
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
-----------------------
1.1 Certain Defined Terms..........................................1
1.2 Number and Gender of Words.....................................13
1.3 Accounting Principles..........................................13
SECTION 2. FACILITIES 14
2.1 Facility A Commitments.........................................14
2.2 Facility B Commitments.........................................14
2.3 Extension of Facility A Termination Date.......................14
2.4 Borrowing Procedure............................................16
2.5 Conversions....................................................16
2.6 Commitment Fees................................................17
2.7 Optional Termination and Reduction of Commitments..............17
2.8 Loans..........................................................18
2.9 Notes..........................................................19
2.10 Interest on Loans..............................................19
2.11 Interest on Overdue Amounts....................................20
2.12 Alternate Rate of Interest for Eurodollar Loans................20
2.13 Mandatory and Optional Prepayment of Loans.....................20
2.14 Reserve Requirements; Change in Circumstances..................21
2.15 Change in Legality.............................................23
2.16 INDEMNITY......................................................24
2.17 Pro Rata Treatment.............................................25
2.18 Sharing of Setoffs.............................................25
2.19 Payments ......................................................26
2.20 Calculation of Eurodollar Rate.................................27
2.21 Booking Loans..................................................27
2.22 Quotation of Rates.............................................27
SECTION 3 REPRESENTATIONS AND WARRANTIES 27
3.1 Purpose of Credit Facility.....................................27
3.2 Corporate Existence, Good Standing, and Authority..............28
3.3 Subsidiaries...................................................28
3.4 Financial Statements...........................................28
3.5 Compliance with Laws, Charter, and Agreements..................28
3.6 Litigation.....................................................29
3.7 Taxes..........................................................29
3.8 Environmental Matters..........................................29
3.9 Employee Benefit Plans.........................................29
3.10 Properties; Liens..............................................29
3.11 Holding Company and Investment Company Status..................29
3.12 Transactions with Affiliates...................................30
3.13 Leases.........................................................30
3.14 Labor Matters..................................................30
3.15 Insurance......................................................30
3.16 Solvency ......................................................30
3.17 Business ......................................................30
3.18 General ......................................................30
SECTION 4 CONDITIONS PRECEDENT 30
4.1 Initial Loan...................................................30
4.2 Acquisition Loans..............................................31
4.3 Each Loan......................................................31
4.4 Materiality of Conditions......................................32
4.5 Waiver of Conditions...........................................32
SECTION 5 COVENANTS 32
5.1 Use of Proceeds................................................32
5.2 Books and Records..............................................32
5.3 Items to be Furnished..........................................32
5.4 Inspection.....................................................33
5.5 Taxes ......................................................33
5.6 Payment of Obligations.........................................34
5.7 Expenses ......................................................34
5.8 Maintenance of Existence, Assets, Business, and Insurance......34
5.9 Preservation and Protection of Rights..........................34
5.10 Employee Benefit Plans.........................................34
5.11 Liens ......................................................34
5.12 Restricted Payments............................................35
5.13 [Intentionally Omitted]........................................35
5.14 Acquisitions, Mergers, and Dissolutions........................35
5.15 Loans, Advances, and Investments...............................35
5.16 Transactions with Affiliates...................................36
5.17 Sale of Assets.................................................36
5.18 Compliance with Laws and Documents.............................36
5.19 New Businesses.................................................36
5.20 Assignment.....................................................36
5.21 Fiscal Year and Accounting Methods.............................37
5.22 Holding Company and Investment Company Status..................37
5.23 Environmental Laws.............................................37
5.24 Environmental Indemnification..................................37
5.25 Financial Covenants............................................37
SECTION 6 DEFAULT 38
6.1 Payment of Obligation..........................................39
6.2 Covenants......................................................39
6.3 Debtor Relief..................................................39
6.4 Attachment.....................................................39
6.5 Payment of Judgments...........................................39
6.6 Default Under Other Agreements.................................40
6.7 Antitrust Proceedings..........................................40
6.8 Misrepresentation..............................................40
6.9 Change in Control..............................................40
6.10 ERISA ......................................................41
6.11 Validity and Enforceability of Loan Documents..................41
SECTION 7 RIGHTS AND REMEDIES 41
7.1 Remedies Upon Event of Default.................................41
7.2 Waivers ......................................................42
7.3 Performance by Administrative Agent............................42
7.4 Delegation of Duties and Rights................................42
7.5 Lenders Not in Control.........................................42
7.6 Waivers by Lenders.............................................42
7.7 Cumulative Rights..............................................42
7.8 Application of Proceeds........................................43
7.9 Certain Proceedings............................................43
7.10 Setoff ......................................................43
SECTION 8 AGREEMENT AMONG LENDERS 43
8.1 Agents ......................................................43
8.2 Expenses ......................................................45
8.3 Proportionate Absorption of Losses.............................45
8.4 Delegation of Duties; Reliance.................................45
8.5 Limitation of Liability........................................46
8.6 Default ......................................................47
8.7 Limitation of Liability of Lenders.............................47
8.8 Relationship of Lenders........................................47
8.9 Foreign Lenders................................................47
8.10 Benefits of Agreement..........................................48
SECTION 9 MISCELLANEOUS 48
9.1 Changes in GAAP................................................48
9.2 Money and Interest.............................................48
9.3 Number and Gender of Words.....................................48
9.4 Headings ......................................................48
9.5 Exhibits ......................................................49
9.6 Communications.................................................49
9.7 Form and Number of Documents...................................49
9.8 Exceptions to Covenants........................................49
9.9 Survival ......................................................49
9.10 Governing Law..................................................49
9.11 VENUE; SERVICE OF PROCESS; JURY TRIAL..........................49
9.12 Maximum Interest Rate..........................................50
9.13 Invalid Provisions.............................................50
9.14 Entire Agreement...............................................50
9.15 Amendments, Etc................................................51
9.16 Waivers ......................................................51
9.17 Taxes ......................................................51
9.18 Governmental Regulation........................................51
9.19 Multiple Counterparts..........................................51
9.20 Successors and Assigns; Participations; Assignments............52
9.21 Confidentiality................................................53
9.22 Conflicts and Ambiguities......................................54
9.23 General Indemnification........................................54
9.24 Investment Representation......................................54
SCHEDULES
Parties, Addresses, Commitments, Wiring Information Schedule 1
Permitted Liens Schedule 2
Transactions with Affiliates Schedule 3.12
Business of Companies Schedule 3.17
EXHIBITS
Notice of Borrowing Exhibit A
Facility A Note Exhibit B-1
Facility B Note Exhibit B-2
Opinion of Borrower's Counsel Exhibit C
Financial Report Certificate Exhibit D
Assignment and Acceptance Exhibit E
REVOLVING CREDIT FACILITY AGREEMENT
REVOLVING CREDIT FACILITY AGREEMENT dated as of July 31, 2000, among
CENTURYTEL, INC., a Louisiana corporation (the "Borrower"), the lenders listed
on the signature pages hereof (the "Lenders"), BANK OF AMERICA, N.A., a national
banking association, as administrative agent for the Lenders (in such capacity,
the "Administrative Agent"), CITIBANK, N.A., a national banking association, as
syndication agent (in such capacity, the "Syndication Agent") and BANC OF
AMERICA SECURITIES LLC and SALOMON SMITH BARNEY INC. as Joint Lead Arrangers and
Joint Book Managers (in such capacity, collectively the "Arrangers").
The Borrower has requested the Lenders to extend credit to the Borrower
in order to enable it to borrow on a revolving credit basis a principal amount
not in excess of $1,500,000,000 at any time outstanding.
The Lenders are willing to extend such credit to the Borrower on the
terms and conditions herein set forth. Accordingly, the Borrower, the Agents,
and the Lenders agree as follows:
SECTION 1. DEFINITIONS.
---------- ------------
1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acquisitions" means the acquisition by the Borrower or its
subsidiaries of certain properties owned by the GTE Entities pursuant to the
provisions of the Asset Purchase Agreements.
"Acquisition Documents" means the Asset Purchase Agreements and any and
all other documents and instruments executed in connection with the
Acquisitions.
"Adjusted Consolidated Net Worth" means, as of the date of
determination, Consolidated Net Worth minus (i) deferred assets other than
prepaid insurance, prepaid taxes, prepaid interest, extraordinary retirements,
and deferred charges where such deferred charges are considered by Tribunals
when setting rates, (ii) patents, copyrights, trademarks, trade names,
franchises, experimental expense, goodwill (other than goodwill arising from the
purchase of capital stock or assets of a Person engaged in the telephone or
cellular mobile communications business) and similar intangible or intellectual
property, and (iii) unamortized debt discount and expense (other than debt
discount and expense of the Companies located in jurisdictions where such items
are considered by Tribunals when setting rates).
"Administrative Agent" is defined in the introduction to this
Agreement.
"Affiliate" of any Person means any other individual or entity that
directly or indirectly controls, or is controlled by, or is under common control
with, such Person, and, for purposes of this definition only, "control,"
"controlled by," and "under common control with" mean possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person (whether through ownership of Voting Stock, by contract,
or otherwise).
"Agents" means the Administrative Agent, the Syndication Agent and the
Arrangers.
"Agreement" means this Revolving Credit Facility Agreement, as the same
may be amended, supplemented, modified or restated from time to time.
"Alternate Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the greater of (a)
the Federal Funds Rate for such day plus one-half of one percent (0.5%) and (b)
the Prime Rate for such day. Any change in the Alternate Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or Federal Funds Rate.
"Applicable Lending Office" means, with respect to each Lender, and for
each Type of Loan, the "Lending Office" of such Lender (or of an Affiliate of
such Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an Affiliate of such Lender) as such Lender
may from time to time specify to the Administrative Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which its
Loans of such Type are to be made and maintained.
"Applicable Margin" means, at the time of any determination thereof,
for purposes of all Loans, the margin of interest over the Alternate Base Rate
or the Eurodollar Rate, as the case may be, which is applicable at the time of
any determination of interest rates under this Agreement, which Applicable
Margin shall be adjusted based on the Borrower's Senior Unsecured Long-Term Debt
Rating (as hereinafter defined), as determined as of the last day of the
immediately preceding fiscal quarter of the Borrower, as follows:
Borrower's Senior
Unsecured Long-Term Eurodollar Loan Base Rate
Debt Rating Margin Loan Margin
---------------------------------------------------------------------------
A or A2 or better 30.0 basis points 0 basis points
A- or A3 37.5 basis points 0 basis points
BBB+ or Baal 50.0 basis points 0 basis points
BBB or Baa2 62.5 basis points 0 basis points
below BBB or Baa2 75.0 basis points 0 basis points
---------------------------------------------------------------------------
Notwithstanding the foregoing, in the event that (i) the Borrower's Senior
Unsecured Long-Term Debt Rating is below BBB or Baa2 and (ii) the outstanding
principal balance of the Facility A Loans or the Facility B Loans equals or
exceeds one-third of the Total Facility A Commitment or the Total Facility B
Commitment, as the case may be, then the Applicable Margin for such Facility A
Loans or Facility B Loans shall be 87.5 basis points rather than 75.0 basis
points.
"Arrangers" is defined in the introduction to this Agreement.
"Asset Purchase Agreements" means that certain Amended and Restated
Asset Purchase Agreement between GTE Arkansas Incorporated, GTE Midwest
Incorporated, GTE Southwest Incorporated and CenturyTel, Inc. dated as of June
29, 1999, that certain Asset Purchase Agreement between GTE Midwest Incorporated
and Spectra Communications Group LLC dated as of July 8, 1999, that certain
Asset Purchase Agreement between GTE North Incorporated and Telephone USA of
Wisconsin, LLC dated August 19, 1999, and that certain Asset Purchase Agreement
between GTE North Incorporated and CenturyTel, Inc. dated October 11, 1999, as
any of the same may have been amended or modified prior to the date hereof.
"Bank of America" means Bank of America, N.A., a national banking
association.
"Base Rate Loan" means any Loan with respect to which the Borrower
shall have selected an interest rate based on the Alternate Base Rate in
accordance with the provisions of Section 2.
"Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Borrower" is defined in the introduction to this Agreement.
"Borrowing" means a Facility A Borrowing or a Facility B Borrowing.
"Borrowing Date" means the Business Day upon which the proceeds of any
Borrowing are to be made available to the Borrower.
"Business Day" means a day when the Administrative Agent and each
Lender's Applicable Lending Office are open for business, other than a Saturday
or Sunday, and if the applicable Business Day relates to any Eurodollar Loan, a
day on which dealings in dollar deposits are carried on in the London interbank
market and commercial banks are open for domestic or international business in
London, England, in New York, New York, and in Dallas, Texas.
"Code" means the Internal Revenue Code of 1986, as amended, together
with rules and regulations promulgated thereunder.
"Commitment" means, with respect to any Lender, collectively, its
Facility A Commitment and Facility B Commitment.
"Commitment Fee" is defined in Section 2.6.
"Commitment Fee Percentage" is defined in Section 2.6
"Companies" means, collectively, Borrower and its Subsidiaries and
"Company" means any of the same.
"Consolidated Net Worth" means, as of the date of determination, the
amount of stated capital plus (or minus, in the case of a deficit) the capital
surplus and earned surplus of the Companies, as calculated in accordance with
GAAP (but treating Minority Interests in Subsidiaries as liabilities and
excluding the contra-equity account resulting from the Borrower's obligations
under its employee stock ownership plan commitments). For purposes of this
Agreement, Consolidated Net Worth shall exclude the effect of Statements No. 101
and 106 of the Financial Accounting Standards Board.
"Current Date" means any date after March 31, 2000.
"Current Financials" means the consolidated Financial Statements of the
Companies for the fiscal year ended December 31, 1999, and the fiscal quarter
ended March 31, 2000.
"Debt" means (without duplication), for any Person, all obligations,
contingent or otherwise (including, without limitation, contingent obligations
in connection with letters of credit), which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, but in any event
including, without limitation, whether or not such obligations in accordance
with GAAP should be classified as liabilities, (a) liabilities secured (or for
which the holder of such Debt has an existing Right, contingent or otherwise, to
be so secured) by any Lien existing on property owned or acquired by such Person
or a Subsidiary thereof (whether or not the liability secured thereby shall have
been assumed), (b) obligations which have been or under GAAP should be
capitalized for financial reporting purposes, (c) all guaranties, endorsements,
and other contingent obligations with respect to Debt of others, including, but
not limited to, any obligations to purchase, sell, or furnish property or
services intended by a Company primarily for the purpose of enabling such other
Person to make payment of any of such Person's Debt, or to otherwise assure the
holder of any of such Debt against loss with respect thereto, and (d)
liabilities under any interest rate swap, collar, floor, cap or similar
contract.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent
transfer or conveyance, suspension of payments, or similar Laws from time to
time in effect affecting the Rights of creditors generally.
"Default" means the occurrence of any event which with the giving of
notice or the passage of time or both would become an Event of Default.
"Default Rate" means an annual interest rate equal to the lesser of (a)
2% plus the greater of (i) the Alternate Base Rate and (ii) the Eurodollar Rate
and (b) the Highest Lawful Rate.
"EBIT" means, for any period, net income before income Tax expense and
interest expense and excluding the effects of nonrecurring and/or unusual
non-cash transactions that reduce net income and items that do not reduce the
cash flow of the Companies (e.g., write-off of intangibles, write-down of
assets, effect of new accounting pronouncements, etc.).
"EBITDA" means, for any period, the sum of (a) EBIT, plus (b) deprecia-
tion and amortization.
"Eligible Assignee" means (a) any Lender and any Affiliate of any
Lender so long as such Affiliate directly or through one or more of its
Subsidiaries engages in commercial financing transactions in the ordinary course
of its business, and (b) any other commercial bank, savings and loan
association, savings bank, finance company, insurance company, mutual fund or
other financial institution, fund or investor which has been approved in writing
by the Borrower and the Administrative Agent as an Eligible Assignee for
purposes of this Agreement, provided that in each such case such approval shall
not be unreasonably withheld.
"Environmental Law" means any Law that relates to the environment or
handling or control of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" means any company or trade or business (whether or
not incorporated) which, for purposes of Title IV of ERISA, is a member of a
group of which Borrower is a member and which is under common control with
Borrower within the meaning of section 414 of the Code.
"Eurocurrency Liabilities" is defined in Regulation D.
"Eurodollar Loan" means any Loan with respect to which the Borrower
shall have selected an interest rate based on the Eurodollar Rate in accordance
with the provisions of Section 2.
"Eurodollar Rate" means, for any Interest Period for any Eurodollar
Loan, an interest rate per annum (rounded upward to the nearest whole multiple
of 0.01% per annum) obtained by dividing (a) the rate per annum appearing on the
Dow Jones Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
If for any reason the rate specified in subsection (a) above is not available,
the applicable rate for purposes of subsection (a) shall be the rate per annum
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Eurodollar Rate Reserve Percentage" for any Interest Period for any
Eurodollar Loan means the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from time to time
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Loans is determined) having a term equal to such
Interest Period.
"Event of Default" means any of the events described in Section 6,
provided there has been satisfied any requirement in connection therewith for
the giving of notice, lapse of time, or happening of any further condition,
event, or act.
"Existing Credit Agreement" means that certain Competitive Advance and
Revolving Credit Facility Agreement dated as of August 28, 1997, by and among
CenturyTel, Inc. (formerly known as Century Telephone Enterprises, Inc.), the
lenders party thereto from time to time, and Bank of America, N.A. (formerly
known as NationsBank, N.A. and successor by merger to NationsBank of Texas,
N.A.), as agent for such lenders and as auction administrative agent, as the
same has been and may be amended, restated, supplemented or modified from time
to time.
"Facility A Commitment" means, with respect to each Lender, the amount
set forth opposite the name of such Lender on Schedule 1, as amended from time
to time.
"Facility A Borrowing" means a borrowing consisting of simultaneous
Facility A Loans from each of the Lenders distributed ratably among the Lenders
in accordance with their respective Facility A Commitments.
"Facility A Loan" means a Loan by a Lender to the Borrower under
Facility A pursuant to Section 2.1, and shall be either a Eurodollar Loan or a
Base Rate Loan.
"Facility A Note" means a promissory note of the Borrower payable to
the order of each Lender, in substantially the form of Exhibit B-1 hereto, with
the blanks appropriately completed, evidencing the aggregate indebtedness of the
Borrower to such Lender resulting from the Facility A Loans made by such Lender
to the Borrower, together with all modifications, extensions, renewals, and
rearrangements thereof.
"Facility A Termination Date" means, at any time, July 30, 2001, or
such later date, if any, to which the Total Facility A Commitment is extended
pursuant to Section 2.3, subject, however, to termination in whole of the Total
Facility A Commitment pursuant to Section 2.7.
"Facility B Commitment" means, with respect to each Lender, the amount
set forth opposite the name of such Lender on Schedule 1, as amended from time
to time.
"Facility B Borrowing" means a borrowing consisting of simultaneous
Facility B Loans from each of the Lenders distributed ratably among the Lenders
in accordance with their respective Facility B Commitments.
"Facility B Loan" means a Loan by a Lender to the Borrower under
Facility B pursuant to Section 2.2, and shall be either a Eurodollar Loan or a
Base Rate Loan.
"Facility B Note" means a promissory note of the Borrower payable to
the order of each Lender, in substantially the form of Exhibit B-2 hereto, with
the blanks appropriately completed, evidencing the aggregate indebtedness of the
Borrower to such Lender resulting from the Facility B Loans made by such Lender
to the Borrower, together with all modifications, extensions, renewals, and
rearrangements thereof.
"Facility B Termination Date" means, at any time, July 30, 2001, or the
earlier date of termination in whole of the Total Facility B Commitment pursuant
to Section 2.7.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Administrative
Agent (in its individual capacity) on such day on such transactions as
determined by the Administrative Agent.
"Financial Report Certificate" means a certificate substantially in the
form of Exhibit D.
"Financial Statements" means balance sheets, income statements,
statements of stockholders' equity, and statements of cash flow prepared in
comparative form to the corresponding period of the preceding fiscal year.
"Funded Debt" shall mean and include, as of any date as of which the
amount thereof is to be determined, (i) all funded indebtedness of the
Companies, (ii) all funded indebtedness of any Subsidiary (other than funded
indebtedness of such Subsidiary owing to the Borrower or another Subsidiary),
and (iii) all indebtedness for borrowed money, but not (iv) indebtedness secured
by or borrowed against the cash surrender value of life insurance policies up to
the amount of such cash surrender value.
"GAAP" means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board which are applicable as of the date of
the Financial Statements in question.
"GTE Entities" means GTE Arkansas Incorporated, GTE Midwest
Incorporated, GTE North Incorporated and GTE Southwest Incorporated,
collectively.
"Guaranty" means by any particular Person, all obligations of such
Person guaranteeing or in effect guaranteeing any Debt, dividend or other
obligation of any other Person (the "primary obligor") in any manner whether
directly or indirectly, including, without limitation of the generality of the
foregoing, obligations incurred through an agreement, contingent or otherwise,
by such particular Person (i) to purchase such Debt or obligation or any
property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Debt or obligation or (y) to
maintain working capital or equity capital or otherwise to advance or make
available funds for the purchase or payment of such Debt or obligation, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of such Debt or obligation of the ability of the primary obligor to
make payment of the Debt or obligation or (iv) otherwise to assure the owner of
the Debt or obligatio n of the primary obligor against loss in respect thereof.
"Hazardous Substance" means any hazardous or toxic waste, pollutant,
contaminant, or substance.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under applicable Laws, the Lenders are then
permitted to charge the Borrower on the Obligation. If the maximum rate of
interest which, under applicable Laws, the Lenders are permitted to charge the
Borrower on the Obligation shall change after the date hereof, the Highest
Lawful Rate shall be automatically increased or decreased, as the case may be,
as of the effective time of such change without notice to the Borrower.
"Indemnified Parties" is defined in Section 9.23.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
each Quarterly Payment Date, or if earlier the Facility A Termination Date or
the Facility B Termination Date, as applicable, or the date of prepayment of
such Loan or conversion of such Loan to a Eurodollar Loan, and (ii) with respect
to any Eurodollar Loan, the last day of the Interest Period applicable thereto
and, in addition in the case of a Eurodollar Loan with an Interest Period longer
than three months, each day that would have been the Interest Payment Date for
such Loan had an Interest Period of three months been applicable to such Loan.
"Interest Period" means, with respect to each Loan, the duration of
such Loan and as to any Eurodollar Loan, the period commencing on the date of
such Loan and ending on the numerically corresponding day (or if there is no
corresponding day, the last day) in the calendar month that is one, two, three,
or six months thereafter, as the Borrower may elect; provided, however, (i) if
any Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
and (ii) no Interest Period may be selected that ends later than the Facility B
Termination Date or the Facility A Termination Date, as applicable. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Laws" means all applicable statutes, laws, treaties, ordinances,
rules, regulations, orders, writs, injunctions, decrees, judgments, or opinions
of any Tribunal.
"Lenders" means those lenders signatory hereto and other financial
institutions which from time to time become party hereto pursuant to the
provisions of this Agreement.
"Lien" means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor to have his claim satisfied out of any
property or assets, or the proceeds therefrom, prior to the general creditors of
the owner thereof.
"Litigation" means any action conducted, pending, or threatened by or
before any Tribunal.
"Loan" means a Facility A Loan, a Facility B Loan, a Eurodollar Loan
or a Base Rate Loan.
"Loan Papers" means (i) this Agreement, certificates delivered pursuant
to this Agreement, and exhibits and schedules hereto, (ii) any notes, security
documents, guaranties, and other agreements in favor of the Agents and the
Lenders, or any or some of them, ever delivered in connection with this
Agreement, and (iii) all renewals, extensions, or restatements of, or amendments
or supplements to, any of the foregoing.
"Majority Lenders" means at any time the Lenders holding at least 51%
of the then aggregate unpaid principal amount of the Loans or, if no Loans are
outstanding, the Lenders having at least 51% of the available Commitments.
"Margin Stock" means "margin stock" within the meaning of Regulations
T, U, or X of the Board.
"Material Adverse Effect" means any set of one or more circumstances or
events which, individually or collectively, will result in any of the following:
(a) a material and adverse effect upon the validity or enforceability of any
Loan Paper, (b) a material and adverse effect on the consolidated financial
condition of the Companies represented in the later of the Current Financials or
the most recent audited consolidated Financial Statements, (c) a Default or (d)
the issuance of an accountant's report on the Companies' consolidated Financial
Statements containing an explanatory paragraph about the entity's ability to
continue as a going concern (as defined in accordance with Generally Accepted
Auditing Standards).
"Material Agreement" of any Person means any material written or oral
agreement, contract, commitment, or understanding to which such Person is a
party, by which such Person is directly or indirectly bound, or to which any
assets of such Person may be subject, and which is not cancelable by such Person
upon 30 days or less notice without liability for further payment other than
nominal penalty, and which requires such Person to pay more than 1 percent of
Consolidated Net Worth during any 12-month period.
"Minority Interest" means, with respect to any Subsidiary, an amount
determined by valuing preferred stock held by Persons other than the Borrower
and its wholly-owned Subsidiaries at the voluntary or involuntary liquidating
value of such preferred stock, whichever is greater, and by valuing common stock
or partnership interests held by Persons other than the Borrower and its
wholly-owned Subsidiaries at the book value of capital and surplus applicable
thereto on the books of such Subsidiary adjusted, if necessary, to reflect any
changes from the book value of common stock required by the foregoing method of
valuing Minority Interest attributable to preferred stock.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in sections
3(37) or 4001(a)(3) of ERISA or section 414 of the Code to which any Company or
any ERISA Affiliate is making, or has made, or is accruing, or has accrued, an
obligation to make contributions.
"Net Cash Proceeds" means the cash proceeds received by the Borrower
from (a) a sale of its assets (including, without limitation, all cash proceeds
received by way of (i) deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received and (ii)
receivables and other assets retained by the Borrower as part of the sales
consideration, minus payments made to retire Debt secured by such assets being
sold or otherwise disposed of where payment of such Debt is required in
connection with such sale or disposition) or (b) the issuance of any public or
privately placed Debt or equity, in either case net of all ordinary reasonable
legal expenses, commissions and other fees and expenses paid or to be paid to
Persons not Affiliates of the Companies and all Taxes assessed in connection
therewith.
"Note" means a Facility A Note or a Facility B Note.
"Notice of Borrowing" is defined in Section 2.4.
"Obligation" means all present and future indebtedness, obligations,
and liabilities, and all renewals, extensions, and modifications thereof, owed
to the Agents and the Lenders, or any or some of them, by the Borrower, arising
pursuant to any Loan Paper, together with all interest thereon and costs,
expenses, and attorneys' fees incurred in the enforcement or collection thereof.
"Participant" is defined in Section 9.20(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereof, established pursuant to ERISA.
"Permitted Liens" means the Liens described on Schedule 2.
"Person" means and includes an individual, partnership, joint venture,
corporation, trust, limited liability company, limited liability partnership, or
other entity, Tribunal, unincorporated organization, or government, or any
department, agency, or political subdivision thereof.
"Plan" means any plan defined in Section 4021(a) of ERISA in respect of
which the Borrower is an "employer" or a "substantial employer" as such terms
are defined in ERISA.
"Prime Rate" means the per annum rate of interest established from time
to time by Bank of America as its prime rate, which rate may not be the lowest
rate of interest charged by Bank of America to its customers.
"Purchaser" is defined in Section 9.20(c).
"Quarterly Payment Date" means the last Business Day of each March,
June, September and December of each year, the first of which shall be the first
such day after the date of this Agreement.
"Regulation D" means Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulatory Change" means, with respect to any Lender, (a) any adoption
or change after the date hereof of or in United States federal, state or foreign
Laws (including Regulation D) or guidelines applying to a class of banks
including such Lender, (b) the adoption or making after the date hereof of any
interpretations, directives or requests applying to a class of banks including
such Lender of or under any United States federal, state or foreign Laws or
guidelines (whether or not having the force of law) by any Tribunal, monetary
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or (c) any change in the interpretation or
administration of any United States federal, state or foreign Laws or guidelines
applying to a class of banks including such Lender by any Tribunal, monetary
authority, central bank, or comparable agency charged with the interpretation or
administration thereof.
"Restricted Payment" means
(a) the declaration or payment of dividends by the Borrower, or
distribution (in cash, property, obligations or other securities or any combi-
nation thereof) on account of any shares of any class of capital stock of the
Borrower, or
(b) other payments or distributions by the Borrower whether by
reduction of capital or otherwise on account of any shares of any class of
capital stock of the Borrower, or
(c) the setting apart of money for a sinking or other analogous fund
by the Borrower for the purchase, redemption, retirement or other acquisition of
any shares of any class of capital stock of the Borrower, or any warrant, option
or other right to acquire any capital stock of the Borrower; but in each case in
(a), (b) and (c) above, excluding dividends or other distributions payable
solely in common stock of the Borrower.
"Rights" means rights, remedies, powers, and privileges.
"S&P" means Standard and Poor's Ratings Services, Inc., a division of
The McGraw Hill Companies, Inc.
"Senior Unsecured Long-Term Debt Rating" means, as of any date, the
public debt rating that has been most recently announced by S&P and Moody's for
that class of non-credit enhanced, senior unsecured debt with an original term
of longer than one year issued by the Borrower which has the lowest rating of
all classes of non-credit enhanced, senior unsecured debt with an original term
of longer than one year issued by the Borrower. For purposes of the foregoing,
(a) if only one of S&P and Moody's shall have in effect a public debt rating,
the Applicable Margin and the Commitment Fee Percentage (as set forth in Section
2.6) shall be determined by reference to the available rating; (b) if the
ratings established by S&P and Moody's shall fall within different levels, the
Applicable Margin and the Commitment Fee Percentage shall be based upon the
higher rating, except that if the difference is two or more levels, the
Applicable Margin and the Commitment Fee Percentage shall be based on the rating
that is one level below the higher rating; (c) if any rating established by S&P
or Moody's shall be changed, such change shall be effective as of the date on
which such change is first announced publicly by the rating agency making such
change; (d) if S&P or Moody's shall change the basis on which ratings are
established, each reference to the public debt rating announced by S&P or
Moody's, as the case may be, shall refer to the then equivalent rating by S&P or
Moody's, as the case may be; (e) if neither S&P nor Moody's shall have in effect
a public debt rating but at least one of S&P and Moody's has in effect a rating
for any class of senior secured debt with an original term of longer than one
year issued by the Borrower, the Applicable Margin and Commitment Fee Percentage
shall be determined by reference to a rating that is one level lower than the
rating that has been most recently announced by S&P and Moody's for such class
of debt; and (f) if neither S&P nor Moody's shall have in effect either a public
debt rating or a rating for any class of senior secured debt with an original
term of longer than one year issued by the Borrower, the Applicable Margin and
Commitment Fee Percentage shall be set in accordance with the lowest level
rating and highest percentage rate set forth in the respective tables relating
to "Applicable Margin" and "Commitment Fee Percentage", as the case may be.
"Significant Subsidiary" means a Subsidiary of the Borrower (i) the
assets of which equal or exceed 5% of all assets of the Borrower and its
Subsidiaries as shown on a consolidated balance sheet of the Borrower and its
Subsidiaries, (ii) the operating revenue of which, for the most recently ended
period of twelve consecutive months, equals or exceeds 5% of the operating
revenues of the Borrower and its Subsidiaries for such period, or (iii) the net
income of which, for the most recently ended period of twelve consecutive
months, equals or exceeds 5% of the net income of the Borrower and its
Subsidiaries for such period.
"Solvent" means, as to any Person at the time of determination, that
(a) the aggregate fair value of such Person's assets exceeds the present value
of its liabilities (whether contingent, subordinated, unmatured, unliquidated,
or otherwise), and (b) such Person has sufficient cash flow to enable it to pay
its Debts as they mature.
"Subsidiary" means any Person with respect to which Borrower or any one
or more Subsidiaries owns directly or indirectly 50% or more of the issued and
outstanding voting stock (or equivalent interests).
"Syndication Agent" is defined in the introduction to this Agreement.
"Taxes" means all taxes, assessments, fees, or other charges at any
time imposed by any Laws or Tribunal.
"Total Commitments" means, at any time the aggregate amount of the
Lenders' Facility A Commitments and Facility B Commitments, as in effect at such
time.
"Total Facility A Commitment" means at any time the aggregate amount of
the Lenders' Facility A Commitments, as in effect at such time.
"Total Facility B Commitment" means at any time the aggregate amount of
the Lenders' Facility B Commitments, as in effect at such time.
"Tribunal" means any municipal, state, commonwealth, federal, foreign,
territorial, or other court, governmental body, subdivision, agency, department,
commission, board, bureau, or instrumentality.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
Eurodollar Loan).
"United States" and "U.S." each means United States of America.
"Voting Stock" shall mean securities (as such term is defined in
Section 2(1) of the Securities Act of 1933, as amended) of any class or classes,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing similar
functions).
1.2 Number and Gender of Words. Whenever in any Loan Paper the
singular number is used, the same shall include the plural where appropriate
and vice versa, and words of any gender shall include each other gender where
appropriate.
1.3 Accounting Principles. All accounting and financial terms used
in the Loan Papers and the compliance with each financial covenant therein shall
be determined in accordance with GAAP as in effect on the date of this Agree-
ment, and all accounting principles shall be applied on a consistent basis so
that the accounting principles in a current period are comparable in all
material respects to those applied in the consolidated Financial Statements for
the Companies for the twelve months ended December 31, 1999.
SECTION 2. FACILITIES.
---------- -----------
2.1 Facility A Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender,
severally and not jointly, agrees to make revolving credit loans ("Facility A
Loans") to the Borrower, at any time and from time to time on and after the
date hereof and until the Facility A Termination Date. Notwithstanding the
foregoing, the aggregate principal amount of all Facility A Loans of a Lender
shall not exceed at any time outstanding such Lender's Facility A Commitment.
Within the foregoing limits, the Borrower may borrow, repay, prepay, and
reborrow hereunder, on and after the date hereof and prior to the Facility A
Termination Date, subject to the terms, provisions, and limitations set
forth herein.
2.2 Facility B Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender,
severally and not jointly, agrees to make revolving credit loans ("Facility B
Loans") to the Borrower, at any time and from time to time on and after the
date hereof and until the Facility B Termination Date. Notwithstanding the
foregoing, the aggregate principal amount of all Facility B Loans of a Lender
shall not exceed at any time outstanding such Lender's Facility B Commitment.
Within the foregoing limits, the Borrower may borrow, repay, prepay and reborrow
hereunder, on and after the date hereof and prior to the Facility B Termination
Date, subject to the terms, provisions, and limitations set forth herein.
2.3 Extension of Facility A Termination Date. (a) The Borrower may
request an extension of the Facility A Termination Date by submitting a request
for an extension to the Administrative Agent (an "Extension Request") not more
than 60, nor less than 45, days prior to the Facility A Termination Date. The
new Facility A Termination Date shall be no more than 364 days after the
Facility A Termination Date in effect at the time the Extension Request is
received, including the Facility A Termination Date as one of the days in the
calculation of the days elapsed. Promptly following receipt of an Extension
Request, the Administrative Agent shall notify each Lender of the Extension
Request and shall specify the date (which must be at least 15 days after the
Extension Request is delivered to the Lenders) as of which the Lenders must
respond to the Extension Request (the "Reply Date"). No extension of the
Facility A Termination Date shall be effective as to a particular Lender without
the approval of such extension by such Lender, and no Lender may submit its
approval more than 45 days prior to the existing Facility A Termination Date.
Approval or disapproval of such extension shall be in the sole and absolute
discretion of each Lender. Each Lender shall notify the Administrative Agent and
the Borrower in writing prior to the Reply Date whether it will extend the
Facility A Termination Date. If all Lenders approve such extension on or before
the Reply Date, the Facility A Termination Date specified in the Extension
Request shall become effective on the existing Facility A Termination Date and
the Administrative Agent shall promptly notify the Borrower and each Lender of
the new Facility A Termination Date. If Lenders holding less than 66-2/3% of the
then aggregate principal amount of the Facility A Loans fail to approve such
extension on or before the Reply Date, the Facility A Termination Date shall not
be extended.
(b) If Lenders holding at least 66-2/3%, but less than 100%,
of the then aggregate principal amount of the Facility A Loans approve
such extension on or before the Reply Date, the Borrower may, by notice
given to the Administrative Agent within ten days of the Administrative
Agent's notification to the Borrower of the failure of all such Lenders
to approve such extension, elect to take one of the following actions
with respect to all Lenders (each a "Non-Consenting Facility A Lender")
that do not approve such extension: (i) terminate the Facility A
Commitments of the Non-Consenting Facility A Lenders, in which case the
Borrower shall pay in full the amounts owing in respect of the Facility
A Loans of all Non-Consenting Facility A Lenders no later than the
existing Facility A Termination Date and the Facility A Commitments of
all Non-Consenting Facility A Lenders shall terminate on such date; or
(ii) replace the Non-Consenting Facility A Lenders in accordance with
subsection (c) below or, to the extent that the Non-Consenting Facility
A Lenders are not entirely replaced, the Borrower shall pay in full the
amounts owing in respect of the Facility A Loans of such Non-Consenting
Facility A Lenders and their Facility A Commitments shall be terminated
as of the existing Facility A Termination Date. Provided the Borrower
gives the Administrative Agent timely notice of such election and pays
or causes to be paid to each of the Non-Consenting Facility A Lenders,
on or before the existing Facility A Termination Date, an amount equal
to all sums owing to such Non-Consenting Facility A Lenders in respect
of their Facility A Loans, then (A) the Facility A Termination Date
shall be extended with respect to all Lenders that approved such
extension and (B) the Total Facility A Commitment shall be reduced by
the amount of the Non-Consenting Facility A Lenders' Facility A
Commitments (except as such are replaced in accordance with Section
2.3(c)). Notwithstanding the foregoing, if the Borrower shall fail to
give timely notice of an election under clauses (i) or (ii) above, or,
having given such notice, shall fail to pay or cause to be paid to the
Non-Consenting Facility A Lenders, on or before the existing Facility A
Termination Date, the amounts required to be paid hereunder, then the
Facility A Termination Date shall not be extended and the Total
Facility A Commitment shall terminate.
(c) In the event a Lender (the "Affected Lender") is a
Non-Consenting Facility A Lender, the Borrower may, upon written notice
to such Affected Lender and to the Administrative Agent, require such
Affected Lender to assign, and such Affected Lender shall assign,
within five Business Days after the date of such notice, to one or more
assignees selected by the Borrower and that are Eligible Assignees and
otherwise comply with the provisions of Section 9.20(c) (each, a
"Replacement Lender"), all of such Affected Lender's Facility A
Commitment and Facility A Loans. With respect to any such assignment,
the Affected Lender shall concurrently with such assignment receive
payment in full of all amounts due and owing to it hereunder or under
any of the other Loan Documents with respect to the Loans and
Commitment so assigned, including without limitation the aggregate
outstanding principal amount of such Loans owed to such Affected
Lender, together with accrued interest thereon through the r date of
such assignment, amounts payable to such Affected Lender under Section
2.14 with respect to such Loans and all fees payable to such Affected
Lender hereunder with respect to such Loans and Commitment so assigned.
Any assignment to a Replacement Lender pursuant to the provisions of
this Section 2.3 shall be in accordance with the provisions of Section
9.20(c) hereof.
2.4 Borrowing Procedure. In order to effect a Borrowing, the Borrower
shall hand deliver or telecopy to the Administrative Agent a duly completed
request for Borrowing, substantially in the form of Exhibit A hereto (a "Notice
of Borrowing"), (i) in the case of Eurodollar Loans, not later than 11:00 a.m.,
Dallas, Texas time, three Business Days before the Borrowing Date specified for
a proposed Borrowing, and (ii) in the case of Base Rate Loans, not later than
11:00 a.m., Dallas, Texas time, on the Business Day which is the Borrowing Date
specified for a proposed Borrowing. No Facility B Loan shall be requested or
made after the Facility B Termination Date. Such notice shall be irrevocable and
shall in each case refer to this Agreement and specify (w) whether the Loans
then being requested are to be made as Facility A Loans or Facility B Loans, (x)
whether the Loans then being requested are to be Eurodollar Loans or Base Rate
Loans, (y) the Borrowing Date of such Loans (which shall be a r Business Day)
and the aggregate amount thereof (which shall not be less than $5,000,000 and
shall be an integral multiple of $1,000,000), and (z) in the case of a
Eurodollar Loan, the Interest Period with respect thereto (which shall not end
later than the Facility A Termination Date or the Facility B Termination Date,
as applicable). If no Interest Period with respect to any Eurodollar Loan is
specified in any such Notice of Borrowing, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly, and in any
event on the same day the Administrative Agent receives a Notice of Borrowing
pursuant to this Section 2.4, if such notice is received by 10:00 a.m., Dallas,
Texas time on a Business Day and otherwise on the next succeeding Business Day,
the Administrative Agent shall advise the other Lenders of such Notice of
Borrowing and of each Lender's portion of the requested Facility A or Facility B
Borrowing by telecopier. Each Borrowing shall consist of Loans of the same Type
made on the same day and having the same Interest Period.
2.5 Conversions. Subject to the conditions and limitations set forth
in this Agreement, the Borrower shall have the right from time to time to
convert all or part of one Type of Loan into another Type of Loan or to continue
all or a part of any Loan that is a Eurodollar Loan from one Interest Period to
another Interest Period by giving the Administrative Agent written notice (by
means of a Notice of Borrowing) (i) in the case of Eurodollar Loans, not later
than 10:00 a.m., Dallas, Texas time, three Business Days before the date
specified for such proposed conversion or continuation, and (ii) in the case of
Base Rate Loans, not later than 10:00 a.m., Dallas, Texas time, on the Business
Day which is the date specified for such proposed conversion or continuation.
Such notice shall specify (A) the proposed date for conversion or continuation,
(B) the amount of the Loan to be converted or continued, (C) in the case of
conversions, the Type of Loan to be converted into, and (D) in the case of a
continuation of or conversion into a Eurodollar Loan, the duration of the
Interest Period applicable thereto; provided that (1) Eurodollar Loans may be
converted only on the last day of the applicable Interest Period, (2) except for
conversions to Base Rate Loans, no conversion shall be made while a Default or
Event of Default has occurred and is continuing and no continuations of any
Eurodollar Loan from one Interest Period to another Interest Period shall be
made while a Default or Event of Default has occurred and is continuing, unless
such conversion or continuation has been approved by Majority Lenders, and (3)
each such conversion or continuation shall be in an amount not less than
$5,000,000 and shall be an integral multiple of $1,000,000. All notices given
under this Section shall be irrevocable. If the Borrower shall fail to give the
Administrative Agent the notice as specified above for continuation or
conversion of a Eurodollar Loan prior to the end of the Interest Period with
respect ase thereto, such Eurodollar Loan shall automatically be converted into
a Base Rate Loan on the last day of the Interest Period for such Eurodollar
Loan.
2.6 Commitment Fees. The Borrower agrees to pay to each Lender,
through the Administrative Agent, on each Quarterly Payment Date and on the
Facility A Termination Date or the Facility B Termination Date, as applicable,
in immediately available funds, a commitment fee (a "Commitment Fee") calculated
on both the unused Facility A Commitment and the unused Facility B Commitment
by multiplying the applicable percentage (the "Commitment Fee Percentage") set
forth below by the average daily unused portion of the Facility A Commitment
and the Facility B Commitment of such Lender, as applicable, during the
preceding quarter (or shorter period commencing with the date hereof and/or
ending with the Facility A Termination Date or the Facility B Termination Date,
as applicable):
Borrower's Senior Unsecured Commitment Fee Percentage
Long-Term Debt Rating
---------------------------------------------------------------------------
A or A2 or better .065 percent
A- or A3 .08 percent
BBB+ or Baa1 .10 percent
BBB or Baa2 .125 percent
below BBB or Baa2 .15 percent
---------------------------------------------------------------------------
Notwithstanding the foregoing, the Commitment Fee Percentage from the date
hereof until completion of the primary general syndication of the Loans shall be
.10 percent so long as the Borrower's Senior Unsecured Long-Term Debt Rating is
BBB or Baa2 or better.
All Commitment Fees shall be computed by the Administrative Agent on
the basis of the actual number of days elapsed in a year of 365 days, and shall
be conclusive and binding for all purposes, absent manifest error. The
Commitment Fee due to each Lender shall commence to accrue on the date hereof
and shall cease to accrue on the earlier of the Facility A Termination Date or
the Facility B Termination Date, as applicable, and the termination of the
Facility A Commitment or Facility B Commitment, as applicable, of such Lender as
provided herein. No Commitment Fee shall be payable on the Facility B Commitment
after the Facility B Termination Date. Notwithstanding the foregoing, in no
event shall any Lender be permitted to receive any compensation hereunder
constituting interest in excess of the Highest Lawful Rate.
2.7 Optional Termination and Reduction of Commitments.(a) Subject to
Section 2.13(b), the Borrower may permanently terminate, or from time to time
in part permanently reduce, either or both of the Total Facility A Commitment
or the Total Facility B Commitment, in each case upon at least two Business Days
prior written notice to the Administrative Agent (who shall promptly forward a
copy thereof to each Lender). Such notice shall specify the date and the amount
of the termination or reduction of either or both of the Total Facility A
Commitment or the Total Facility B Commitment. Each such partial reduction of
either or both of the Total Facility A Commitment or the Total Facility B
Commitment shall be in a minimum aggregate principal amount of $5,000,000 and
in an integral multiple of $1,000,000.
(b) On the Facility A Termination Date the Total Facility A
Commitment shall be zero.
(c) On the Facility B Termination Date, the Total Facility B
Commitment shall be zero.
(d) Each reduction in the Total Facility A Commitment or the
Total Facility B Commitment pursuant to this paragraph shall be made
ratably among the Lenders in accordance with their respective Facility
A Commitments or Facility B Commitments, as applicable.
(e) Simultaneously with any termination or reduction of the
Facility A Commitments or Facility B Commitments pursuant to this
paragraph, the Borrower shall pay to the Administrative Agent for the
accounts of the Lenders the Commitment Fees on the amount of the Total
Facility A or Facility B Commitment, as applicable, so terminated or
reduced, accrued through the date of such termination or reduction.
2.8 Loans. (a) Each Borrowing made by the Borrower on any date shall
be in an integral multiple of $1,000,000 and in a minimum aggregate principal
amount of $5,000,000. Loans shall be made by the Lenders ratably in accordance
with their respective Commitments on the Borrowing Date of the Borrowing;
provided, however, that the failure of any Lender to make any Loan shall not in
itself relieve any other Lender of its obligation to lend hereunder.
(b) Each Loan shall be a Eurodollar Loan or a Base Rate Loan,
as the Borrower may request subject to and in accordance with Section
2.4. Each Lender may at its option make any Eurodollar Loan by causing
a foreign branch of such Lender to make such Loan; provided, however,
that any exercise of such option shall not affect the obligation of
the Borrower to repay such Loan in accordance with the terms of the
applicable Note and this Agreement. Loans of more than one interest
rate option may be outstanding at the same time; provided, however,
that the Borrower shall not be entitled to request any Loan which, if
made, would result in an aggregate of more than 10 separate Borrowings
being outstanding hereunder at any one time. For purposes of the
foregoing, Loans having different Interest Periods, regardless of
whether they commence on the same date, shall be considered separate
Loans.
(c) Subject to Section 2.5, each Lender shall make its portion
of each Borrowing on the proposed Borrowing Date thereof by paying the
amount required to the Administrative Agent in Dallas, Texas in imme-
diately available funds not later than 12:00 noon, Dallas, Texas time,
and the Administrative Agent shall by 2:00 p.m., Dallas, Texas time,
credit the amounts so received to the general deposit account of the
Borrower with the Administrative Agent or, if Loans are not made on
such date because any condition precedent to a Borrowing herein
specified shall not have been met, return the amounts so received to
the respective Lenders as soon as practicable; provided, however, if
and to the extent the Administrative Agent fails to return any such
amounts to a Lender on the Borrowing Date for such Borrowing, the
Administrative Agent shall pay interest on such unreturned amounts,
for each day from such Borrowing Date to the date such amounts are
returned to such Lender, at the Federal Funds Rate.
(d) The outstanding principal amount of each Loan which is a
Eurodollar Loan shall be due and payable on the last day of the
Interest Period applicable to such Loan, as the case may be, and the
outstanding principal balance of each Loan which is a Base Rate Loan
shall be due and payable on the Facility A Termination Date or the
Facility B Termination Date, as applicable.
2.9 Notes. The Facility A Loans made by each Lender shall be
evidenced by a single Facility A Note, payable to the order of such Lender in a
principal amount equal to the Facility A Commitment of such Lender. The Facility
B Loans made by each Lender shall be evidenced by a single Facility B Note
payable to the order of such Lender in a principal amount equal to the Facility
B Commitment of such Lender. Each Note shall bear interest from the date thereof
on the outstanding principal balance thereof as set forth in Section 2.10 and
Section 2.11. Each Lender shall, and is hereby authorized by the Borrower to,
make in its records relating to such Note an appropriate notation evidencing the
date and amount of each Loan of such Lender, and each payment or prepayment of
principal of any Loan. The aggregate unpaid principal amount so recorded shall
be presumptive evidence of the principal amount owing by the Borrower to a
Lender and unpaid under the Note of such Lender. The failure of any Lender to
make such a notation or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans made by such Lender in accordance
with the terms of the relevant Note.
2.10 Interest on Loans. (a) Subject to the provisions of Section
2.11, each Eurodollar Loan shall bear interest at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal to
the lesser of (i) the Highest Lawful Rate and (ii) the Eurodollar Rate for the
Interest Period in effect for such Loan, plus the Applicable Margin. Interest on
each Eurodollar Loan shall be payable on each Interest Payment Date applicable
thereto. The applicable Eurodollar Rate for each Interest Period shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
(b) Subject to the provisions of Section 2.11, each Base Rate
Loan shall bear interest at the rate per annum (computed on the basis
of the actual number of days elapsed over a year of (x) 365 or 366
days, as the case may be if the Base Rate is based on the Prime Rate
or (y) 360 days if the Base Rate is based on the Federal Funds Rate)
equal to the lesser of (i) the Highest Lawful Rate and (ii) the Base
Rate plus the Applicable Margin. Interest on each Base Rate Loan shall
be payable on each Quarterly Payment Date applicable thereto. The
applicable Base Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
2.11 Interest on Overdue Amounts. If the Borrower shall default in
the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, the Borrower shall on demand from time to time pay
interest, to the extent permitted by Law, on such defaulted amount up to (but
not including) the date of actual payment (after as well as before judgment) at
a rate per annum equal to the lesser of (i) the Highest Lawful Rate and (ii) the
Default Rate.
2.12 Alternate Rate of Interest for Eurodollar Loans. In the event,
and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Loan, the Administrative
Agent shall have determined that dollar deposits in the amount of the requested
principal amount of such Eurodollar Loan are not generally available in the
London interbank market, or that dollar deposits are not generally available in
the London interbank market for the requested Interest Period, or that the rate
at which such dollar deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining such Eurodollar Loan
during such Interest Period, or that reasonable means do not exist for
ascertaining the Eurodollar Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination, stating the
specific reasons therefor, to the Borrower and the Lenders. In the event of any
such determination, any request by the Borrower for a Eurodollar Loan shall,
until the circumstances giving rise to such notice no longer exist, be deemed to
be a request for a Base Rate Loan. Each determination by the Administrative
Agent hereunder shall be conclusive absent manifest error.
2.13 Mandatory and Optional Prepayment of Loans. (a) Prior to the
Facility A Termination Date or the Facility B Termination Date, as applicable,
the Borrower shall have the right at any time to prepay any Borrowing, in whole
or in part, subject to the requirements of Section 2.16 and Section 2.17 but
otherwise without premium or penalty, but prepayment of Eurodollar Loans shall
require at least two Business Days prior written notice to the Administrative
Agent; provided, however, that each such partial prepayment shall be in an
integral multiple of $1,000,000 and in a minimum aggregate principal amount of
$2,000,000. Each notice of prepayment shall specify the prepayment date and the
aggregate principal amount of each Borrowing to be prepaid, shall be irrevocable
and shall commit the Borrower to prepay such Borrowing by the amount stated
therein.
(b) On the date of any termination or reduction of the Total
Facility A Commitment or the Total Facility B Commitment pursuant to
Section 2.7(a), the Borrower shall pay or prepay so much of the Loans
as shall be necessary in order that the aggregate principal amount of
the Loans outstanding will not exceed the Total Facility A Commitment
or the Total Facility B Commitment following such termination or
reduction. Subject to the foregoing and the requirements of Section
2.7, any such payment or prepayment shall be applied to such Borrowing
or Borrowings as the Borrower shall select. All prepayments under this
paragraph shall be subject to Section 2.16 and Section 2.17.
(c) All Facility A Loans, together with accrued and unpaid
interest thereon, shall be due and payable in full on the Facility A
Termination Date.
(d) All Facility B Loans, together with accrued and unpaid
interest thereon, shall be due and payable in full on the Facility B
Termination Date.
(e) Upon the sale by the Borrower or any Subsidiary of any of
its assets, the Borrower shall prepay the Facility B Loans in an amount
equal to 100% of the Net Cash Proceeds received above five percent of
the Consolidated Net Worth of the Companies by the Borrower or any
Subsidiary; provided that no prepayment shall be required if the
proceeds of such asset sale are reinvested in equivalent assets within
the 12-month period immediately following the sale; and provided,
further, that no prepayment shall be required unless and until Borrower
has first made any prepayment required pursuant to Section 2.13(e) of
the Existing Credit Agreement. Any prepayment made under this Section
2.13(e) shall reduce the Total Facility B Commitment by the amount of
such prepayment.
(f) Upon the issuance by the Borrower of any public or privately
placed Debt or equity securities, the Borrower shall prepay the
Facility B Loans in an amount equal to 100% of the Net Cash Proceeds
received by the Borrower; provided however, the Borrower shall not be
required to make any prepayments under this Section 2.13(f) if such
issuance by the Borrower is of privately placed equity or equity-linked
securities. Any prepayment made under this Section 2.13(f) shall
reduce the total Facility B Commitment by the amount of such pre-
payment.
(g) All prepayments under this Section 2.13 shall be accompanied
by accrued interest on the principal amount being prepaid to the date
of prepayment.
2.14 Reserve Requirements; Change in Circumstances. (a) Notwith-
standing any other provision herein, if after the date of this Agreement any
Regulatory Change (i) shall change the basis of taxation of payments to any
Lender of the principal of or interest on any Eurodollar Loan made by such
Lender or any other fees or amounts payable hereunder (other than (x) Taxes
imposed on or measured by the capital, receipts or franchises of such Lender or
the overall gross or net income of such Lender by the jurisdiction in which such
Lender has its principal office or by any political subdivision or taxing
authority therein (or any Tax which is enacted or adopted by such jurisdiction,
political subdivision, or taxing authority as a direct substitute for any such
Taxes) or (y) any Tax, assessment, or other governmental charge that would not
have been imposed but for the failure of any Lender to comply with any
certification, information, documentation, or other reporting requirement), (ii)
shall impose, modify, or deem applicable any reserve, special deposit, or
similar requirement with respect to any Eurodollar Loan, against assets of,
deposits with or for the account of, or credit extended by, such Lender under
this Agreement, or (iii) with respect to any Eurodollar Loan, shall impose on
such Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan made by such Lender, and the result of any of
the foregoing shall be to increase the cost to such Lender of maintaining its
Commitment or of making or maintaining any Eurodollar Loan or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest, or otherwise) in respect thereof by an amount deemed in
good faith by such Lender to be material, then the Borrower shall pay to the
Administrative Agent for the account of such Lender such additional amount or
amounts as will compensate such Lender for such increase or reduction to such
Lender, to the extent such amounts have not been included in the calculation of
the Eurodollar Rate, upon demand by such Lender (through the Administrative
Agent). Notwithstanding the foregoing, in no event shall any Lender be permitted
to receive any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(b) If any Lender shall have determined in good faith that any
Regulatory Change regarding capital adequacy or compliance by any
Lender (or its parent or any lending office of such Lender) with any
request or directive regarding capital adequacy (whether or not having
the force of Law) of any Tribunal, monetary authority, central bank, or
comparable agency, has or would have the effect of reducing the rate of
return on such Lender's (or its parent's) capital as a consequence of
its obligations hereunder to a level below that which such Lender (or
its parent) could have achieved but for such Regulatory Change, or
compliance (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed in good faith by such
Lender to be material, then from time to time, the Borrower shall pay
to the Administrative Agent for the account of such Lender such
additional amount or amounts as will compensate such Lender for such
reduction upon demand by such Lender (through the Administrative
Agent). Notwithstanding the foregoing, in no event shall any Lender be
permitted to receive any compensation hereunder constituting interest
in excess of the Highest Lawful Rate.
(c) A certificate of a Lender setting forth in reasonable detail
(i) the Regulatory Change or other event giving rise to such costs,
(ii) such amount or amounts as shall be necessary to compensate such
Lender as specified in paragraph (a) or (b) above, as the case may be,
and (ii) the calculation of such amount or amounts under clause (a)(i),
shall be delivered to the Borrower (with a copy to the Administrative
Agent) promptly after such Lender determines it is entitled to compen-
sation under this Section 2.14, and shall be conclusive and binding
absent manifest error. The Borrower shall pay to the Administrative
Agent for the account of such Lender the amount shown as due on any
such certificate within 15 days after its receipt of the same. In
preparing such certificate, such Lender may employ such assumptions
and allocations of costs and expenses as it shall in good faith deem
reasonable and may use any reasonable averaging and attribution method.
(d) Failure on the part of any Lender to demand compensation for
any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any Interest Period
shall not constitute a waiver of such Lender's rights to demand compen-
sation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to such
Interest Period or any other Interest Period. The protection of this
Section 2.14 shall be available to each Lender regardless of any
possible contention of invalidity or inapplicability of the law,
regulation, or condition which shall have been imposed.
(e) In the event any Lender shall seek compensation pursuant
to this Section 2.14, the Borrower may, provided no Event of Default
has occurred and is continuing, give notice to such Lender (with copies
to the Agents) that it wishes to seek one or more Eligible Assignees to
assume the Commitment of such Lender and to purchase its outstanding
Loans and Notes (if any). Each Lender requesting compensation pursuant
to this Section 2.14 agrees to sell its Commitment, Loans, Notes, and
interest in this Agreement and the other Loan Papers to any such
Eligible Assignee for an amount equal to the sum of the outstanding
unpaid principal of and accrued interest on such Loans and Notes plus
all other fees and amounts (including, without limitation, any
compensation claimed by such Lender under this Section 2.14 and as to
which such Lender has delivered the certificate required by Section
2.14(c) on or before the date such Commitment, Loans, and Notes are
purchased) due such Lender hereunder calculated, in each case, to the
date such Commitment, Loans, Notes (if any), and interest are
purchased, whereupon such Lender shall have no further Commitment or
other obligation to the Borrower hereunder or under any other Loan
Paper.
(f) If the Borrower is required to pay additional amounts to or
for the account of any Lender pursuant to this Section 2.14, then such
Lender will agree to use reasonable efforts to change the jurisdiction
of its Applicable Lending Office so as to eliminate or reduce any such
additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such
Lender.
(g) Without prejudice to the survival of any other obligations
of the Borrower hereunder, the obligations of the Borrower under this
Section 2.14 shall survive for one year after the termination of this
Agreement and/or the payment or assignment of any of the Loans or
Notes.
2.15 Change in Legality. (a) Notwithstanding anything to the contrary
herein contained, if any Regulatory Change shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby, then, by written notice to the Borrower and to the Admini-
strative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder, whereupon the Borrower shall be
prohibited from requesting Eurodollar Loans from such Lender
hereunder unless such declaration is subsequently withdrawn; and
(ii) if such unlawfulness shall be effective prior to the
end of any Interest Period of an outstanding Eurodollar Loan,
require that all outstanding Eurodollar Loans with such Interest
Periods made by it be converted to Base Rate Loans, in which
event (A) all such Eurodollar Loans shall be automatically
converted to Base Rate Loans as of the effective date of such
notice as provided in paragraph (b) below and (B) all payments
and prepayments of principal which would otherwise have been
applied to repay the converted Eurodollar Loans shall instead
be applied to repay the Base Rate Loans resulting from the
conversion of such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower
(with a copy to the Administrative Agent) by any Lender pursuant to
paragraph (a) above shall be effective on the date of receipt thereof
by the Borrower.
2.16 INDEMNITY. THE BORROWER SHALL INDEMNIFY EACH LENDER AGAINST ANY
LOSS OR REASONABLE EXPENSE WHICH SUCH LENDER MAY SUSTAIN OR INCUR AS A
CONSEQUENCE OF (A) ANY FAILURE BY THE BORROWER TO FULFILL ON THE DATE OF ANY
BORROWING HEREUNDER THE APPLICABLE CONDITIONS SET FORTH IN SECTION 4, (B) ANY
FAILURE BY THE BORROWER TO BORROW HEREUNDER AFTER A NOTICE OF BORROWING PURSUANT
TO SECTION 2 HAS BEEN GIVEN, (C) ANY PAYMENT, PREPAYMENT, OR CONVERSION OF A
EURODOLLAR LOAN REQUIRED BY ANY OTHER PROVISION OF THIS AGREEMENT OR OTHERWISE
MADE ON A DATE OTHER THAN THE LAST DAY OF THE APPLICABLE INTEREST PERIOD FOR ANY
REASON, INCLUDING WITHOUT LIMITATION THE ACCELERATION OF OUTSTANDING LOANS AS A
RESULT OF ANY EVENT OF DEFAULT, (D) ANY FAILURE BY THE BORROWER FOR ANY REASON
(INCLUDING WITHOUT LIMITATION THE EXISTENCE OF A DEFAULT OR AN EVENT OF DEFAULT)
TO PAY, PREPAY OR CONVERT A EURODOLLAR LOAN ON THE DATE FOR SUCH PAYMENT,
PREPAYMENT OR CONVERSION, SPECIFIED IN THE RELEVANT NOTICE OF PAYMENT,
PREPAYMENT OR CONVERSION UNDER THIS AGREEMENT. THE INDEMNITY OF THE BORROWER
PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE SHALL INCLUDE, BUT NOT BE LIMITED
TO, ANY LOSS OR REASONABLE EXPENSE SUSTAINED OR INCURRED OR TO BE SUSTAINED OR
INCURRED IN LIQUIDATING OR EMPLOYING DEPOSITS FROM THIRD PARTIES ACQUIRED TO
EFFECT OR MAINTAIN SUCH LOAN OR ANY PART THEREOF AS A EURODOLLAR LOAN. SUCH LOSS
OR REASONABLE EXPENSE SHALL INCLUDE, WITHOUT LIMITATION, AN AMOUNT EQUAL TO THE
EXCESS, IF ANY, AS REASONABLY DETERMINED BY EACH LENDER OF (I) ITS COST OF
OBTAINING THE FUNDS FOR THE LOAN BEING PAID, PREPAID, OR CONVERTED OR NOT
BORROWED, PAID, PREPAID OR CONVERTED (BASED ON THE EURODOLLAR RATE APPLICABLE
THERETO) FOR THE PERIOD FROM THE DATE OF SUCH PAYMENT, PREPAYMENT, OR CONVERSION
OR FAILURE TO BORROW, PAY, PREPAY OR CONVERT TO THE LAST DAY OF THE INTEREST
PERIOD FOR SUCH LOAN (OR, IN THE CASE OF A FAILURE TO BORROW, PAY, PREPAY OR
CONVERT, THE INTEREST PERIOD FOR THE LOAN WHICH WOULD HAVE COMMENCED ON THE DATE
OF SUCH FAILURE TO BORROW, PAY, PREPAY OR CONVERT) OVER (II) THE AMOUNT OF
INTEREST (AS REASONABLY DETERMINED BY SUCH LENDER) THAT WOULD BE REALIZED BY
SUCH LENDER IN REEMPLOYING THE FUNDS SO PAID, PREPAID, OR CONVERTED OR NOT
BORROWED, PAID, PREPAID OR CONVERTED FOR SUCH PERIOD OR INTEREST PERIOD, AS THE
CASE MAY BE. A CERTIFICATE OF EACH LENDER SETTING FORTH ANY AMOUNT OR AMOUNTS
AND, IN REASONABLE DETAIL, THE COMPUTATIONS THEREOF, WHICH SUCH LENDER IS
ENTITLED TO RECEIVE PURSUANT TO THIS SECTION 2.16 SHALL BE DELIVERED TO THE
BORROWER (WITH A COPY TO THE ADMINISTRATIVE AGENT) AND SHALL BE CONCLUSIVE, IF
MADE IN GOOD FAITH, ABSENT MANIFEST ERROR. THE BORROWER SHALL PAY TO THE
ADMINISTRATIVE AGENT FOR THE ACCOUNT OF EACH LENDER THE AMOUNT SHOWN AS DUE ON
ANY CERTIFICATE WITHIN 30 DAYS AFTER ITS RECEIPT OF THE SAME. NOTWITHSTANDING
THE FOREGOING, IN NO EVENT SHALL ANY LENDER BE PERMITTED TO RECEIVE ANY
COMPENSATION HEREUNDER CONSTITUTING INTEREST IN EXCESS OF THE HIGHEST LAWFUL
RATE. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER OBLIGATIONS OF THE BORROWER
HEREUNDER, THE OBLIGATIONS OF THE BORROWER UNDER THIS SECTION 2.16 SHALL SURVIVE
FOR ONE YEAR AFTER THE TERMINATION OF THIS AGREEMENT AND/OR THE PAYMENT OR
ASSIGNMENT OF ANY OF THE LOANS OR NOTES.
2.17 Pro Rata Treatment. (a) Unless otherwise specifically provided
herein, each payment or prepayment of principal and each payment of interest
with respect to a Borrowing shall be made pro rata among the Lenders in accor-
dance with the respective principal amounts of the Loans extended by each
Lender, if any, with respect to such Borrowing, and (b) conversions of Loans to
Loans of another Type and continuations of Loans that are Eurodollar Loans from
one Interest Period, shall be made pro rata among the Lenders in accordance
with their respective Commitments.
2.18 Sharing of Setoffs. Each Lender agrees that if it shall, through
the exercise of a right of banker's lien, setoff, or counterclaim against the
Borrower, including, but not limited to, a secured claim under Section 506 of
Title 11 of the United States Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Lender under any applicable
Debtor Relief Law or otherwise, obtain payment (voluntary or involuntary) in
respect of the Note held by it (other than pursuant to Section 2.14 or Section
2.16) as a result of which the unpaid principal portion of the Note held by it
shall be proportionately less than the unpaid principal portion of the Note held
by any other Lender, it shall be deemed to have simultaneously purchased from
such other Lender a participation in the Note held by such other Lender, so that
the aggregate unpaid principal amount of the Note and participations in Notes
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Notes then outstanding as the principal amount of the
Note held by it prior to such exercise of banker's lien, setoff, or counterclaim
was to the principal amount of all Notes outstanding prior to such exercise of
banker's lien, setoff, or counterclaim; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.18
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Note deemed to have been so purchased may,
upon the existence of an Event of Default, exercise any and all rights of
banker's lien, setoff, or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender as fully as if such Lender had made a Loan
directly to the Borrower in the amount of such participation.
2.19 Payments. (a) The Borrower shall make each payment hereunder
and under any instrument delivered hereunder not later than 1:00 p.m. (Dallas,
Texas time) on the day when due in dollars to the Administrative Agent at its
address referred to on Schedule 1 for the account of the Lenders, in immediately
available funds. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal of or interest on
Loans (other than pursuant to Section 2.14 and Section 2.16) or Commitment Fees
ratably to the Lenders and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of
this Agreement.
(b) Whenever any payment hereunder or under any Note shall be
stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time
shall in all such case be included in the computation of payment of
interest or Commitment Fee, as the case may be; provided, however, if
such extension would cause payment of interest on or principal of a
Eurodollar Loan to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.
(c) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made or will
make such payment in full to the Administrative Agent on such date and
the Administrative Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent the Borrower
shall not have so made such payment in full to the Administrative
Agent, each Lender shall repay to the Administrative Agent forthwith
on demand such amount distributed to such Lender together with interest
thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Admini-
strative Agent, at the Federal Funds Rate.
(d) All payments (whether of principal, interest, fees,
reimbursements, or otherwise) by the Borrower under this Agreement
shall be made without setoff or counterclaim and shall be made free and
clear of and without deduction for any present or future Tax, levy,
impost, or any other charge against the Borrower, if any, of any nature
whatsoever now or hereafter imposed by any Tribunal excluding, in the
case of each Lender and the Agents, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the Laws of
which such Lender (or its Applicable Lending Office) or such Agent (as
the case may be) is organized or any political subdivision thereof. If
the making of such payments by the Borrower is prohibited by Law unless
such a Tax, levy, impost, or other charge is deducted or withheld
therefrom, the Borrower shall pay to the Administrative Agent, on the
date of each such payment, such additional amounts (without duplication
of any other amounts required to be paid by the Borrower pursuant to
Section 2.14) as may be necessary in order that the net amounts
received by the Lenders after such deduction or withholding shall equal
the amounts which would have been received if such deduction or
withholding were not required. The Borrower shall confirm that all
applicable Taxes, if any, imposed on this Agreement or transactions
hereunder shall have been properly and legally paid by it to the
appropriate taxing authorities by sending official Tax receipts or
notarized copies of such receipts to the Administrative Agent within 30
days after payment of any applicable Tax.
(e) So long as no Event of Default has occurred and is
continuing, payments and prepayments of the Obligation shall be applied
first to accrued interest then due and payable and to the remaining
Obligation in the order and manner as the Borrower may direct;
provided, however, unless a Default or Event of Default has occurred
and is continuing, any payments and prepayments made pursuant to
Section 2.7(a) or Sections 2.13(a) through (f) shall be applied first
to accrued interest then due and payable, then to principal of Facility
B Loans and finally to principal of Facility A Loans. At any time
during which an Event of Default has occurred and is continuing or if
the Borrower fails to give direction, any payment or prepayment shall
be applied in the following order: (i) to expenses and fees for which
the Agents and the Lenders have not been reimbursed in accordance with
the Loan Papers; (ii) to accrued interest; and (iii) to the remaining
Obligation in the order and manner as the Majority Lenders deem
appropriate.
2.20 Calculation of Eurodollar Rate. The provisions of this
Agreement relating to calculation of the Eurodollar Rate are included only for
the purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a
Eurodollar Loan as it sees fit. All such determinations hereunder, however,
shall be made as if each Lender had actually funded and maintained funding of
each Eurodollar Loan through the purchase in the London interbank market of one
or more eurodollar deposits, in an amount equal to the principal amount of such
Loan and having a maturity corresponding to the Interest Period for such Loan.
2.21 Booking Loans. Any Lender may make, carry, or transfer Loans
at, to, or for the account of any of its branch offices.
2.22 Quotation of Rates. It is hereby acknowledged that the
Borrower may call the Administrative Agent on or before the date on which
notice of a Borrowing is to be delivered by the Borrower in order to receive
an indication of the rate or rates then in effect, but that such projection
shall not be binding upon the Administrative Agent or any Lender nor affect
the rate of interest which thereafter is actually in effect when the election
is made.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agents and the Lenders as follows:
3.1 Purpose of Credit Facility. The Borrower will use Loan
proceeds only (i) to finance the Acquisitions, (ii) to repay indebtedness of
the Borrower with respect to commercial paper issued by it or for its account,
and (iii) for working capital and other lawful corporate purposes of the
Companies. The proceeds loaned hereunder will not be used directly or
indirectly for the purpose of purchasing or carrying, or for the purpose of
extending credit to others for the purpose of purchasing or carrying, any
Margin Stock, or to repay any Debt which was created for such purposes.
3.2 Corporate Existence, Good Standing, and Authority. Each Company
is, to the best of the Borrower's knowledge, duly organized, validly existing,
and in good standing under the Laws of its state of incorporation (such
jurisdictions being identified on Exhibit 21 of Borrower's most recent annual
report filed with the Securities and Exchange Commission on Form 10-K). Except
where failure would not reasonably be expected to have a Material Adverse
Effect, each Company (a) is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature and
extent of its business and properties require the same, and (b) possesses all
requisite authority, power, licenses, permits, and franchises to conduct its
business as is now being, or is contemplated herein to be, conducted. The
Borrower possesses all requisite authority, power, licenses, permits, and
franchises to execute, deliver, and comply with the terms of the Loan Papers,
all which have been duly authorized and approved by all necessary corporate
action and, except where failure would not reasonably be expected to have a
Material Adverse Effect, for which no approval or consent of any Person or
Tribunal is required which has not been obtained and no filing or other
notification to any Person or Tribunal is required which has not been properly
completed.
3.3 Subsidiaries. Exhibit 21 of Borrower's most recent annual report
filed with the Securities and Exchange Commission on Form 10-K sets forth, in
all material respects, all existing Subsidiaries of the Borrower and correctly
lists, as to each Subsidiary, (a) its name and (b) its jurisdiction of
incorporation. The shares of capital stock of each Subsidiary owned by the
Borrower (either directly or indirectly through another Subsidiary) as set
forth on Exhibit 21 of Borrower's most recent annual report filed with the
Securities and Exchange Commission on Form 10-K are the duly authorized, validly
issued, fully paid, and nonassessable shares of such Subsidiary and are owned
by the Borrower free and clear of all Liens except Permitted Liens.
3.4 Financial Statements. The Current Financials were prepared in
accordance with GAAP and present fairly the consolidated financial condition
and the results of operations of the Companies as of, and for the periods ended,
the dates thereof. There were no material (to the Companies taken as a whole)
liabilities, direct or indirect, fixed or contingent, of any Company as of the
date of the Current Financials which are not reflected therein. No Company has
incurred any material (to the Companies taken as a whole) liability, direct or
indirect, fixed or contingent, between the dates of the Current Financials and
the date hereof, except in the ordinary course of business, such as in connec-
tion with acquisitions and financing activities.
3.5 Compliance with Laws, Charter, and Agreements. No Company is,
nor will the execution, delivery, performance, or observance of the Loan Papers
cause any Company to be, in violation of any Laws or any Material Agreements to
which it is a party, other than such violations which would not reasonably be
expected to have a Material Adverse Effect. Neither the Borrower nor any
Significant Subsidiary is, nor will the execution, delivery, performance, or
observance of the Loan Papers cause the Borrower or any Significant Subsidiary
to be, in violation of its bylaws or charter.
3.6 Litigation. Except as described in the Form 10-Q filed by the
Borrower for the quarterly period ended March 31, 2000 with the Securities and
Exchange Commission and to the knowledge of the Borrower, no Company is aware
of any "Material" Litigation, and there are no Material outstanding or unpaid
judgments against any Company. Material for purpose of this Section 3.6 in
relation to Litigation would include any actions or proceedings pending or
threatened against any Company before any court or Tribunal seeking damages,
net of insurance proceeds to the Company, in excess of $10,000,000 in any case
or 1% of Consolidated Net Worth in the aggregate, or which might result in any
Material Adverse Effect.
3.7 Taxes. All Tax returns of each Company required to be filed
have been filed (or extensions have been granted) except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect, and
all Taxes imposed upon each Company which are due and payable have been paid
other than Taxes for which the criteria for Permitted Liens have been satisfied.
3.8 Environmental Matters. No Company's ownership of its assets
violates any applicable Environmental Law, other than such violations which
would not reasonably be expected to have a Material Adverse Effect. To the
Borrower's knowledge, no investigation or review is pending or threatened by
any Tribunal with respect to any alleged violation of any Environmental Law in
connection with any Company's assets. None of any Company's assets have been
used by such Company or, to the Borrower's knowledge, any other Person as a
dump site for any Hazardous Substance except where such use would not
reasonably be expected to have a Material Adverse Effect.
3.9 Employee Benefit Plans. (a) No employee benefit plan as defined
in the Code and Title IV of ERISA of any Company has incurred an accumulated
funding deficiency in an amount sufficient to have a Material Adverse Effect,
(b) no Company has incurred liability to the PBGC in connection with any such
plan where such liability could reasonably be expected to have a Material
Adverse Effect, (c) no Company has withdrawn in whole or in part from partici-
pation in a Multiemployer Plan where the withdrawal could reasonably be expected
to have a Material Adverse Effect, and (d) to the best of the Borrower's
knowledge, no "prohibited transaction" (as defined in section 406 of ERISA or
section 4975 of the Code) or "reportable event" (as defined in section 4043 of
ERISA) has occurred which could reasonably be expected to have a Material
Adverse Effect.
3.10 Properties; Liens. Each Company has good and marketable
(except for Permitted Liens) title to all its property reflected on the Current
Financials (except for dispositions of property in the ordinary course of
business between the date or dates thereof and the date hereof). Except for
Permitted Liens, there is no Lien on any property of any Company, and the
execution, delivery, performance, or observance of the Loan Papers will not
require or result in the creation of any Lien other than Permitted Liens.
3.11 Holding Company and Investment Company Status. The Borrower is
not (a) a "holding company," a "subsidiary company" of a "holding company," an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, (b) a "public utility" within the meaning of
the Federal Power Act, as amended, (c) an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, (d) an "investment
adviser" within the meaning of the Investment Advisers Act of 1940, as amended,
or (e) directly subject to the jurisdiction of the Federal Communications
Commission or any public service commission.
3.12 Transactions with Affiliates. Except as disclosed on Schedule
3.12, no Company is a party to a material transaction with any of its Affiliates
other than transactions in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than such Company could obtain or
could become entitled to in an arm's-length transaction with a Person that was
not its Affiliate. For purposes of this Section 3.12, such transactions are
"material" if they, individually or in the aggregate, require any Company to pay
more than 1 percent of Consolidated Net Worth over the course of such
transactions.
3.13 Leases. All material leases under which any Company is lessee
or tenant are in full force and effect, and no default or potential default
exists thereunder.
3.14 Labor Matters. There are no actual or, to the Borrower's
knowledge, threatened strikes, labor disputes, slow downs, walkouts, or other
concerted interruptions of operations by any Company's employees, the effect of
which would have a Material Adverse Effect.
3.15 Insurance. Each Company maintains with financially sound
insurance companies or associations (or, as to workers' compensation or similar
insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its properties and
businesses against such casualties and contingencies and of such types and in
such amounts (and with co-insurance and deductibles) as is customary in the case
of same or similar businesses; provided, however, a program of self-insurance in
such amounts and against such risks as are prudent and which is consistent with
accepted business practice shall constitute compliance with this Section 3.15.
3.16 Solvency. The Companies are, and after giving effect to the
transactions contemplated under the Loan Papers will be, Solvent.
3.17 Business. The business of the Borrower, as presently conducted
and as proposed to be conducted, is set forth on Schedule 3.17.
3.18 General. All writings exhibited or delivered to the Agents by
or on behalf of any Company are and will be genuine and in all material respects
what they purport and appear to be.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Initial Loan. No Lender will be obligated to fund the initial
Loan unless the Administrative Agent has received all of the following in form
and substance satisfactory to the Administrative Agent and its special counsel:
(a) Loan Papers. This Agreement, the Notes, a Notice of
Borrowing, and the Current Financials.
(b) Officers' Certificates. A certificate dated as of the
date hereof, executed and delivered by the Borrower, certifying
that (i) attached is a true, correct, and complete copy of (A) the
Borrower's charter, certified by the appropriate state official and
dated a Current Date, (B) the Borrower's bylaws, and (C) resolutions
of the Borrower's board of directors authorizing the execution and
delivery of each Loan Paper to which the Borrower is a party and (ii)
the officers whose specimen signatures appear on such certificate hold
the corporate office indicated and are authorized to sign agreements,
documents, and instruments on behalf of the Borrower.
(c) Good Standing, Existence, and Authority. Certificates
(dated a Current Date) relating to the Borrower's existence, good
standing, and authority to transact business issued by appropriate
state officials.
(d) Opinions of Borrower's Counsel. The favorable opinion,
dated the Closing Date and substantially in the form of Exhibit C of
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., special
counsel to the Borrower.
(e) Fees and Expenses. Payment from the Borrower of all fees
then due the Agents or the Lenders pursuant to this Agreement or any
other agreement.
(f) Other. Such other agreements, documents, instruments,
opinions, certificates, and evidences as the Administrative Agent
may reasonably request.
4.2 Acquisition Loans. No Lender will be obligated to fund any
Loan to finance any Acquisition unless the Administrative Agent has received,
in form and substance satisfactory to the Acquisition Agent and its special
counsel:
(a) Closing of Acquisition. Evidence that all conditions
precedent to the closing of such Acquisition (except payment of the
purchase price) have been satisfied, together with copies of all of
the executed Acquisition Documents relating thereto.
(b) Opinions of GTE Entities' Counsel. A letter from the GTE
Entities' counsel stating that the Administrative Agent and the Lenders
may rely on GTE Entities' counsel's opinion to the Borrower issued in
connection with such Acquisition, together with a copy of such opinion,
both in form and substance satisfactory to Administrative Agent.
4.3 Each Loan. In addition, the Lenders will not be obligated to
fund any Loan unless at the time of such funding (a) the representations and
warranties made in the Loan Papers are true and correct in all material respects
(except to the extent that (i) the representations and warranties speak to a
specific date or (ii) the facts on which such representations and warranties
are based have been changed by transactions contemplated or permitted by this
Agreement), (b) no Default or Event of Default shall have occurred and shall be
continuing, (c) the funding of such Loan is permitted by Law, and (d) if
requested by the Administrative Agent or the Majority Lenders, the Borrower
shall have delivered to the Administrative Agent evidence substantiating any of
the matters contained in this Agreement which are necessary to enable the
Borrower to qualify for such Loan.
4.4 Materiality of Conditions. Each condition precedent herein is
material to the transactions contemplated herein, and time is of the essence
in respect of each thereof.
4.5 Waiver of Conditions. Subject to the provisions of Section
9.15, the Majority Lenders may elect to fund any Loan without all conditions
being satisfied, but this shall not be deemed to be a waiver of the requirement
that each such condition precedent be satisfied as a prerequisite for any
subsequent Loan, unless the Majority Lenders (or, if required by Section 9.15,
all Lenders) specifically waive each such item in writing.
SECTION 5. COVENANTS. So long as the Lenders are committed to make Loans
under this Agreement and thereafter until the Obligation is paid and performed
in full, unless the Borrower receives a prior written notice from the Majority
Lenders (or, if required by Section 9.15, all Lenders) that they do not object
to a deviation, the Borrower covenants and agrees with the Agents and the
Lenders as follows:
5.1 Use of Proceeds. Proceeds of Loans advanced hereunder shall
be used only as represented herein.
5.2 Books and Records. Each Company shall maintain, in accordance
with GAAP, proper and complete books, records, and accounts which are necessary
to prepare the financial statements required to be delivered hereunder.
5.3 Items to be Furnished. The Borrower shall cause the following
to be furnished to the Administrative Agent:
(a) Promptly after preparation, and no later than 120 days
after the last day of each fiscal year of the Borrower, Financial
Statements showing the consolidated financial condition and results of
operations of the Companies as of, and for the year ended on, such last
day, accompanied by (i) the opinion of KPMG Peat Marwick LLP (or
another firm of nationally-recognized independent certified public
accountants reasonably acceptable to Majority Lenders), based on an
audit using generally accepted auditing standards, that such Financial
Statements were prepared in accordance with GAAP and present fairly the
consolidated financial condition and results of operations of the
Companies (and such accountants shall indicate in a letter to the
Administrative Agent, that during their audit no Default or Event of
Default not already reported was discovered or, if such Default or
Event of Default was discovered, the nature and period of existence
thereof) and (ii) a Financial Report Certificate with respect to such
Financial Statements.
(b) Promptly after preparation, and no later than 60 days
after the last day of each of the first three quarters of each fiscal
year of the Borrower, (i)Financial Statements showing the consolidated
financial condition and results of operations of the Companies as of,
and for the period from the beginning of the current fiscal year to,
such last day, and (ii) a Financial Report Certificate with respect to
such Financial Statements.
(c) Promptly after preparation (and no later than the later
of 15 days (a) after such filing is due or (b) after timely filing, if
filed with the Securities and Exchange Commission), true copies of all
regular and periodic reports, statements, documents, plans, and other
written communications furnished by or on behalf of any Company to
stockholders or to the Securities and Exchange Commission. However,
only registration statements covering more than 2 percent of the
Borrower's outstanding shares of common stock shall be required to be
furnished unless specifically requested by the Administrative Agent.
(d) Promptly upon receipt thereof, copies of any notices
received from any Tribunal (including, without limitation, state
regulatory agencies) relating to the possible violation or violation
of any Law which might adversely affect the material franchises,
permits, or rights for the operation of the business of any Company.
(e) Notice, promptly after the Borrower knows or has reason
to know of, (i) the existence of any Material Litigation as defined in
Section 3.6, (ii) any material change in any material fact or circum-
stance represented or warranted in any Loan Paper, or (iii) a Default
or Event of Default, specifying the nature thereof and what action the
Borrower or any other Company has taken, is taking, or proposes to take
with respect thereto.
(f) Notice, promptly after the Borrower knows or has reason
to know of, a Subsidiary Encumbrance, as defined in Section 5.25(c).
(g) Promptly upon the Administrative Agent's reasonable
request, such information (not otherwise required to be furnished
under the Loan Papers) respecting the business affairs, assets, and
liabilities of any Company, and any opinions, certifications, and
documents, in addition to those mentioned herein.
5.4 Inspection. The Borrower shall allow the Administrative Agent
and each Lender, when the Administrative Agent or such Lender reasonably deems
necessary, at such Lender's own expense if no Default then exists, to inspect
any of its properties, to review reports, files, and other records and to make
and take away copies thereof, to conduct tests or investigations, and to discuss
any of its affairs, conditions, and finances with any director, officer, or
employee of such Company from time to time, upon reasonable notice during
reasonable business hours, or otherwise when reasonably considered necessary.
5.5 Taxes. Each Company shall promptly pay when due any Taxes,
except those which if unpaid would not cause a Material Adverse Effect and Taxes
for which the criteria for Permitted Liens have been satisfied. No Company shall
use any proceeds of Loans to pay the wages of employees unless a timely payment
to or deposit with the United States of America of all amounts of Tax required
to be deducted and withheld with respect to such wages is also made.
5.6 Payment of Obligations. Each Company shall promptly pay (or
renew and extend) all of its material obligations as the same become due, but no
Company will make any voluntary prepayment of the principal of any Debt other
than the Obligation, whether subordinate to the Obligation or not, if a Default
or Event of Default exists under any Loan Paper.
5.7 Expenses. The Borrower shall promptly pay (a) all reasonable
and necessary out-of-pocket costs, fees, and expenses paid or incurred by the
Administrative Agent incident to any Loan Paper (including, but not limited to,
the reasonable fees and expenses of counsel to the Administrative Agent in
connection with the negotiation, preparation, delivery, and execution of the
Loan Papers and any related amendment, waiver, or consent); and (b) all
out-of-pocket costs, fees and expenses paid or incurred by the Administrative
Agent and any of the Lenders in connection with the enforcement of the
obligations of any Company or the exercise of any Rights (including, but not
limited to, reasonable attorneys' fees and court costs), all of which shall be a
part of the Obligation.
5.8 Maintenance of Existence, Assets, Business, and Insurance.
Except as permitted by Section 5.14, each Company shall at all times: Maintain
its corporate existence and authority to transact business and good standing in
its jurisdiction of incorporation or organization and all other jurisdictions
where the failure to so maintain could reasonably be expected to have a Material
Adverse Effect; maintain all licenses, permits, and franchises necessary for its
business, where the failure to so maintain could reasonably be expected to have
a Material Adverse Effect; keep all of its assets which are necessary to its
business in good working order and condition (ordinary wear and tear excepted),
and make all necessary repairs and replacements thereto; and maintain either (a)
insurance with such insurers, in such amounts, and covering such risks, as shall
be ordinary and customary in the industry or (b) a comparable self-insurance
program.
5.9 Preservation and Protection of Rights. Each Company shall
perform such acts and duly authorize, execute, acknowledge, deliver, file, and
record any additional agreements, documents, instruments, and certificates as
the Administrative Agent may reasonably deem necessary or appropriate in order
to preserve and protect the Rights of the Agents or the Lenders under any Loan
Paper.
5.10 Employee Benefit Plans. No Company will, directly or indirectly
if it would have a Material Adverse Effect, (a) engage in any "prohibited
transaction" (as defined in section 406 of ERISA or section 4975 of the Code),
(b) permit the funding requirements under ERISA with respect to any employee
benefit plan established or maintained by any Company to ever be less than the
minimum required by ERISA, (c) permit any employee benefit plan established or
maintained by any Company to ever be subject to involuntary termination
proceedings, or (d) fully or partially withdraw from any Multiemployer Plan.
5.11 Liens. No Company will create, incur, or suffer or permit to
be created or incurred or to exist any Lien (other than Permitted Liens) upon
any of its assets unless the Obligations then outstanding shall be secured by
such Lien equally and ratably with any and all obligations and indebtedness
secured by such Lien.
5.12 Restricted Payments. The Borrower will not directly or
indirectly make or declare any Restricted Payment, unless no Default has
occurred and is continuing or would result from such Restricted Payment.
5.13 [Intentionally Omitted]
5.14 Acquisitions, Mergers, and Dissolutions. No Company will merge
or consolidate with any Person other than any merger or consolidation whereby
the Borrower (or another Company, if the Borrower is not a party thereto) is the
surviving corporation and immediately after such merger or consolidation there
shall not exist any Default or Event of Default.
5.15 Loans, Advances, and Investments.Except as permitted by Section
5.14, no Company will make any loan, advance, extension of credit, or capital
contribution to, make any investment in, or purchase or commit to purchase any
stock or other securities or evidences of Debt of, or interests in, any other
Person, other than (a) the Acquisitions, (b) expense accounts for and other
advances to directors, officers, and employees of such Company in the ordinary
course of business not to exceed $1,000,000 in the aggregate outstanding at any
time; (c) investments in (or secured by) obligations of the United States of
America and agencies thereof and obligations guaranteed by the United States of
America maturing within one year from the date of acquisition; (d) certificates
of deposit issued by any of the Lenders; (e) certificates of deposit which are
fully insured by the Federal Deposit Insurance Corporation or are issued by
commercial banks organized under the Laws of the United States of America or any
state thereof and having combined capital, surplus, and undivided profits of not
less than $100,000,000 (as shown on such Person's most recently published
statement of condition), and which certificates of deposit have one of the two
highest ratings from Moody's or S&P, unless Borrower has a written commitment to
borrow funds from such commercial bank; (f) commercial paper rated A-1 by
Moody's or P-1 by S&P; (g) investments having one of the two highest ratings
from Moody's or S&P; (h) extensions of credit in connection with trade
receivables and overpayments of trade payables, in each case resulting from
transactions in the ordinary course of business; (i) loans from any Company to
any other Company, investments by any Company in any other Company, and
Guaranties by any Company of the Debt of any other Company; (j) investments in
the cash surrender value of life insurance policies issued by Persons with a
financial rating from A. M. Best Company (as reported in Best's Insurance
Reports) of at least "A+ "; provided, however, that if such Person's financial
rating is downgraded to less than "A+", then within 90 days following such
downgrading, either (i) such cash value life insurance policies will be
transferred to another insurance company with a financial rating of at least
"A+", (ii) such cash value insurance policies will be collapsed and the cash
value thereof will be collected by the investing Company, or (iii) such
investment will become an investment subject to the limitations of subparagraph
(n) of this Section 5.15; (k) investments in the capital stock or securities of
or loans to or Guaranties of the Debt of any Person engaged in business
comparable to the general business of any Company (x) in which a Company
possesses (or will possess, after such investment) an equity ownership interest
in such Person or (y) secured by the borrower's interest in such business; (l)
in the ordinary course of business, investments in the capital stock of the
Rural Telephone Bank, National Bank for Cooperatives, or the National Rural
Utilities Cooperative Finance Corporation, or any other lender from whom the
investing Company is intending to borrow money which requires such Company to
make an equity investment in such lender in order to so borrow; (m) Guaranties
of the Debt of the Borrower's Employee Stock Ownership Plan; and (n) other
loans, advances, Guaranties, and investments which never exceed in the aggregate
at any time 25% of Adjusted Consolidated Net Worth (valued on the basis of
original cost, plus subsequent cash and stock additions, less any write-down in
value).
5.16 Transactions with Affiliates. No Company will enter into any
material transaction with any of its Affiliates, other than transactions in the
ordinary course of business and upon fair and reasonable terms not materially
less favorable than such Company could obtain or could become entitled to in an
arm's-length transaction with a Person that was not its Affiliate. For purposes
of this Section 5.16, such transactions are "material" if they, individually or
in the aggregate, require any Company to pay more than 1 percent of Consolidated
Net Worth over the course of such transactions.
5.17 Sale of Assets. No Company will sell, lease, or otherwise
dispose of all or any substantial part of its assets other than (a) sales of
inventory in the ordinary course of business, (b) sales of equipment for a fair
and adequate consideration, provided that if any such equipment is sold, and a
replacement is necessary for the proper operation of the business of such
Company, such Company will replace such equipment with adequate equipment, (c)
the exchange of assets -- other than equipment -- for similar assets of equal or
greater value, (d) the sale, discount, or transfer of delinquent notes or
accounts receivable in the ordinary course of business for purposes of
collection, and (e) in any 12-month period, dispositions of assets (net of
acquisitions of similar assets) that, when added to all other such dispositions
by all Companies, do not exceed 10 percent of Consolidated Net Worth.
5.18 Compliance with Laws and Documents. No Company will violate
the provisions of any Laws or any Material Agreement if such violation alone,
or when aggregated with all other such violations, could reasonably be expected
to have a Material Adverse Effect. No Company will violate the provisions of
its charter or bylaws or modify, repeal, replace, or amend any provision of its
charter or bylaws if such action could reasonably be expected to have a Material
Adverse Effect. The Borrower will provide to the Administrative Agent a copy
of each document that materially modifies, repeals, replaces, or amends the
charter or bylaws of the Borrower.
5.19 New Businesses. No Company will engage in any material
business other than the businesses in which it is presently engaged or
businesses related thereto, as described on Schedule 3.17.
5.20 Assignment. The Borrower will not assign or transfer any of
its Rights, duties, or obligations under any of the Loan Papers.
5.21 Fiscal Year and Accounting Methods. The Borrower will not
change its fiscal year or accounting methods (other than immaterial changes and
changes required by changes in GAAP) without the prior written consent of the
Administrative Agent (which shall not be unreasonably withheld).
5.22 Holding Company and Investment Company Status. The Borrower
will not conduct its business in such a way that it will become (a) a "holding
company," a "subsidiary company" of a "holding company," an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company," or a
"public utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended, (b) a "public utility" within the meaning of the Federal Power
Act, as amended, (c) an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or (d) an "investment adviser"
within the meaning of the Investment Advisers Act of 1940, as amended.
5.23 Environmental Laws. Each Company shall conduct its business
so as to comply with all applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance with any Environmental Law,
except where failure to so comply or take such action would not reasonably be
expected to have a Material Adverse Effect. Each Company shall maintain a system
which, in its reasonable business judgment, will assure its continued compliance
with Environmental Laws.
5.24 Environmental Indemnification. Borrower shall indemnify,
protect, and hold each Indemnified Party harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, proceedings, costs, expenses (including, without limitation, all
reasonable attorneys' fees and legal expenses whether or not suit is brought),
and disbursements of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against such Indemnified Parties, with
respect to or as a direct or indirect result of the violation by any Company of
any Environmental Law; or with respect to or as a direct or indirect result of
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence in connection with its properties of a
Hazardous Substance including, without limitation, (a) all damages of any such
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (b) the costs of any required or necessary
environmental investigation, monitoring, repair, cleanup, or detoxification and
the preparation and implementation of any closure, remedial, or other plans. The
provisions of and undertakings and indemnification set forth in this paragraph
shall survive the satisfaction and payment of the Obligation and termination of
this Agreement for a period of time set forth in the statute of limitations in
any applicable Environmental Law.
5.25 Financial Covenants.
(a) As calculated at the end of each fiscal quarter of the
Borrower (but computed with respect to EBITDA for the four fiscal
quarters ending on the last day of such fiscal quarter), the Borrower
shall not permit the ratio of Funded Debt of the Companies to EBITDA
of the Companies to exceed 4.00 to 1.0.
(b) As calculated at the end of each fiscal quarter of the
Borrower (but computed with respect to EBITDA for the four fiscal
quarters ending on the last day of such fiscal quarter), the Borrower
shall not permit the ratio of Funded Debt of its Subsidiaries to EBITDA
of the Companies to exceed 1.50 to 1.0.
(c) As calculated at the end of each fiscal quarter of the
Borrower (but computed for the four fiscal quarters ending on the last
day of such fiscal quarter), the Borrower shall not permit the ratio
of EBIT of the Companies to the sum of (i) consolidated interest
expense of the Companies and (ii) dividends declared or paid by any
Company (other than to another Company) on its preferred capital stock
(but if such dividends are declared and paid during such four-quarter
period, the amount shall not be counted twice) to be less than 1.50
to 1.0.
For purposes of this Section 5.25(c), EBIT and interest
expense of any Subsidiary which is subject to any Subsidiary
Encumbrance, shall be reduced to the extent such Subsidiary is
restricted by the Subsidiary Encumbrance. As used in this Section
5.25(c), "Subsidiary Encumbrance" shall mean, so long as a default has
occurred and is continuing under the agreement creating such
encumbrance or restriction, any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make any other
distributions on its capital stock or any other interest or
participation in its profits owned by the Borrower or any Subsidiary of
the Borrower, or pay any Debt owed to the Borrower or a Subsidiary of
the Borrower, (ii) make loans or advances to, or grant liens in favor
of, the Borrower or any of the Borrower's Subsidiaries or (iii)
transfer any of its properties or assets to the Borrower, except for
such encumbrances or restrictions (A) existing on the date of this
Agreement, (B) arising in connection with loans made to any Company by
the Rural Electrification Administration, the Rural Utilities Service,
the Rural Telephone Bank, or similar lenders such as the Rural
Telephone Finance Cooperative, or (C) now existing or hereafter arising
under or by reason of either (x) applicable Law or (y) this Agreement
and the other Loan Papers.
(d) If at any time after the date of this Agreement the
Borrower enters into any financing arrangement with a third party which
requires the Borrower or the Companies as a whole to maintain a
specified minimum net worth, then such minimum net worth requirement
or covenant shall be incorporated herein by reference and made a part
of this Agreement for all purposes as of the date such financing
arrangement is entered into by the Borrower.
Further, for purposes of this Section 5.25 Funded Debt shall include any
Company's Guaranty of Funded Debt of any Person other than another Company or
the Borrower's Employee Stock Ownership Plan. For the first four quarters
following any of the Acquisitions, calculations under this Section 5.25 shall be
made on a pro forma basis as if the properties acquired in connection with such
Acquisitions were properties of the Companies during the period of calculation.
SECTION 6. DEFAULT. The term "Event of Default" means the occurrence and
continuance of any one or more of the following events (including the passage
of time, if any, specified therefor) (provided that, if any such event occurs
and the Lenders or Majority Lenders, as required by the provisions of Section
9.15, subsequently agree in writing that they will not exercise any remedies
hereunder as a result thereof, the occurrence and continuance of such event
shall no longer be deemed an Event of Default hereunder insofar as the state
of facts giving rise to such event is concerned):
6.1 Payment of Obligation. The failure or refusal of the Borrower to
pay any portion of the Obligation, as the same become due in accordance with
the terms of the Loan Papers and, in the case of an interest payment, such
failure or refusal continues for a period of 5 Business Days (no grace period
being given for failure or refusal to make a principal payment). Notwithstanding
the foregoing, the Borrower's failure to pay, if caused solely by a wire
transfer malfunction or similar problem outside the Borrower's control, shall
not be deemed an Event of Default.
6.2 Covenants.
(a) The failure or refusal of the Borrower (and, if
applicable, any other Company) to punctually and properly perform,
observe, and comply with any covenant, agreement, or condition con-
tained in Sections 5.3(e)(iii), 5.11, 5.12, 5,14, 5.16, 5.19, 5.20,
5.21, 5.22 and 5.25.
(b) The failure or refusal of the Borrower (and, if applicable
any other Company) to punctually and properly perform, observe, and
comply with any covenant, agreement, or condition contained in any of
the Loan Papers to which such Company is a party, other than covenants
to pay the Obligation and the covenants listed in clause (a) preceding,
and such failure or refusal continues for 10 days after notice from
the Administrative Agent to the Borrower.
6.3 Debtor Relief. The Companies shall not be Solvent, or any
Company (a) fails to pay its Debts generally as they become due, (b) voluntarily
seeks, consents to, or acquiesces in the benefit of any Debtor Relief Law, or
(c) becomes a party to or is made the subject of any proceeding provided for by
any Debtor Relief Law, other than as a creditor or claimant, that could suspend
or otherwise adversely affect the Rights of the Agents or the Lenders granted
in the Loan Papers (unless, in the event such proceeding is involuntary, the
petition instituting same is dismissed within 60 days after its filing).
6.4 Attachment. The failure of any Company to have discharged within
60 days after commencement any attachment, sequestration, or similar proceeding
which, individually or together with all such other proceedings then pending,
affects assets of such Company having a value (individually or collectively) of
1 percent of Consolidated Net Worth or more.
6.5 Payment of Judgments. Any Company fails to pay any judgments or
orders for the payment of money in excess of 1 percent of Consolidated Net Worth
(individually or collectively) rendered against it or any of its assets and
either (a) any enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (b) a stay of enforcement of any such
judgment or order, by reason of pending appeal or otherwise, shall not be in
effect prior to the time its assets may be lawfully sold to satisfy such
judgment.
6.6 Default Under Other Agreements. A default exists under any
Material Agreement to which any Company is a party, the effect of which is to
cause, or which permits the holder thereof (or a trustee or representative of
such holder) to cause, unpaid consideration of at least 2% of Consolidated Net
Worth (individually or in the aggregate) to become due prior to the stated
maturity or prior to the regularly scheduled dates of payment.
6.7 Antitrust Proceedings. A petition or complaint is filed before
or by any Tribunal (including, without limitation, the Federal Trade Commission,
the United States Justice Department, or the Federal Communications Commission)
seeking to cause the Borrower or any Subsidiary to divest a significant portion
of its assets or any of its Subsidiaries pursuant to any antitrust, restraint
of trade, unfair competition, or similar Laws, and such petition or complaint
is not dismissed or discharged within 270 days after the filing thereof.
6.8 Misrepresentation. Administrative Agent or any Lender discovers
that any statement, representation, or warranty in the Loan Papers, any
Financial Statement of the Borrower, or any writing ever delivered to Admini-
strative Agent or any Lender pursuant to the Loan Papers is false, misleading,
or erroneous when made or delivered in any material respect.
6.9 Change in Control. A Change of Control shall occur. For the
purpose of this Section, a "Change of Control" shall be deemed to have occurred
if:
(a) a third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), but excluding any employee benefit plan or plans of
Borrower and its Subsidiaries and Affiliates, becomes the beneficial
owner, directly or indirectly, of thirty percent (30%) or more of
the combined voting power of Borrower's outstanding voting securities
ordinarily having the right to vote for the election of directors of
Borrower; or
(b) the individuals who, as of June 30, 2000 constituted the
Board of Directors of Borrower (the "Board" generally and as of June
30, 2000 the "Incumbent Board") cease for any reason to constitute at
least two-thirds (2/3) of the Board, or in the case of a merger or
consolidation of Borrower, do not constitute or cease to constitute at
least two-thirds (2/3) of the board of directors of the surviving
company (or in a case where the surviving corporation is controlled,
directly or indirectly, by another corporation or entity do not
constitute or cease to constitute at least two-thirds (2/3) of the
board of such controlling corporation or do not have or cease to have
at least two-thirds (2/3) voting seats on any body comparable to a
board of directors of such controlling entity or, if there is no body
comparable to a board of directors, at least two-thirds (2/3) voting
control of such controlling entity), provided that any person becoming
a director (or, in the case of a controlling non-corporate entity,
obtaining a position comparable to a director or obtaining a voting
interest in such entity) subsequent to June 30, 2000, whose election,
or nomination for election, was approved by a vote of the persons
comprising at least two-thirds (2/3) of the Incumbent Board (other than
an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest,
as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board.
6.10 ERISA. Any one of the following shall have occurred: (a) any
"Reportable Event" as such term is defined in ERISA under any Plan, (b) the
appointment by an appropriate Tribunal of a trustee to administer any Plan,
(c) the termination of any Plan within the meaning of Title IV of ERISA, or
(d) any material accumulated funding deficiency within the meaning of ERISA
exists under any Plan, and any of (a), (b), (c) or (d) results in a Material
Adverse Effect.
6.11 Validity and Enforceability of Loan Documents. Any Loan Paper
shall, at any time after its execution and delivery and for any reason, cease
to be in full force and effect in any material respect or be declared to be null
and void or the validity or enforceability thereof be contested by any Company
party thereto or any Company shall deny that it has any liability or obligations
under any Loan Paper to which it is a party.
SECTION 7. RIGHTS AND REMEDIES.
7.1 Remedies Upon Event of Default.
(a) Should an Event of Default occur and be continuing under
Section 6.3, the commitment of the Lenders to make Loans shall auto-
matically terminate and the entire unpaid balance of the Obligation
shall automatically become due and payable without any action of any
kind whatsoever.
(b) Should any other Event of Default occur and be continuing,
subject to any agreement among the Lenders, the Administrative Agent
may (and shall upon the request of the Majority Lenders), at its (or
the Majority Lenders') election, do any one or more of the following:
(i) If the maturity of the Obligation has not already been accelerated
under Section 7.1(a), declare the entire unpaid balance of the
Obligation, or any part thereof, immediately due and payable, whereupon
it shall be due and payable (and notice of such declaration shall
promptly be given thereafter by the Administrative Agent to the
Borrower); (ii) terminate commitments to make Loans hereunder; (iii)
reduce any claim to judgment; (iv) exercise (or request each Lender to
exercise) the Rights of offset or banker's Lien against the interest of
the Borrower in and to every account and other property of the Borrower
which are in the possession of any Lender to the extent of the full
amount of the Obligation; and (v) exercise any and all other legal or
equitable Rights afforded by the Loan Papers, the Laws of the State of
New York or any other jurisdiction as the Administrative Agent shall
deem appropriate, or otherwise, including, but not limited to, the
Right to bring suit or other proceedings before any Tribunal either for
specific performance of any covenant or condition contained in any of
the Loan Papers or in aid of the exercise of any Right granted to the
Lenders in any of the Loan Papers.
7.2 Waivers. The Borrower hereby waives presentment and demand
for payment, protest, notice of intention to accelerate, notice of acceleration,
and notice of protest and nonpayment, and agrees that its liability with respect
to the Obligation, or any part thereof, shall not be affected by any renewal or
extension in the time of payment of the Obligation, by any indulgence, or by
any release or change in any security for the payment of the Obligation.
7.3 Performance by Administrative Agent. If any covenant, duty,
or agreement of any Company is not performed in accordance with the terms of
the Loan Papers, the Administrative Agent may, at its option (but subject to
the approval of the Majority Lenders), perform or attempt to perform such
covenant, duty, or agreement on behalf of such Company. In such event, any
amount expended by the Administrative Agent in such performance or attempted
performance shall be reasonable, payable by the Borrower to the Administrative
Agent on demand, shall become part of the Obligation, and shall bear interest
at the Default Rate from the date of such expenditure by the Administrative
Agent until paid. Notwithstanding the foregoing, it is expressly understood
that the Administrative Agent does not assume and shall never have, except by
its express written consent, any liability or responsibility for the performance
of any covenant, duty, or agreement of any Company.
7.4 Delegation of Duties and Rights. The Administrative Agent and
the Lenders may perform any of their duties or exercise any of their Rights
under the Loan Papers by or through the Administrative Agent and their and the
Administrative Agent's officers, directors, employees, attorneys, agents, or
other representatives.
7.5 Lenders Not in Control. None of the covenants or other
provisions contained in this Agreement or in any other Loan Paper shall, or
shall be deemed to, give the Agents or the Lenders the Right to exercise
control over the assets (including, without limitation, real property), affairs,
or management of any Company, the power of the Agents and the Lenders being
limited to the Right to exercise the remedies provided in this Section 7.
7.6 Waivers by Lenders. The acceptance by the Agents or the
Lenders at any time and from time to time of partial payment on the Obligation
shall not be deemed to be a waiver of any Event of Default then existing.
No waiver by the Agents, the Majority Lenders, or all of the Lenders of any
Event of Default shall be deemed to be a waiver of any other then-existing or
subsequent Event of Default. No delay or omission by the Agents, the Majority
Lenders, or all of the Lenders in exercising any Right under the Loan Papers
shall impair such Right or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such Right preclude
other or further exercise thereof, or the exercise of any other Right under
the Loan Papers or otherwise.
7.7 Cumulative Rights. All Rights available to the Agents and the
Lenders under the Loan Papers are cumulative of and in addition to all other
Rights granted to the Agents and the Lenders at law or in equity, whether or
not the Obligation is due and payable and whether or not the Agents or the
Lenders have instituted any suit for collection, foreclosure, or other action
in connection with the Loan Papers.
7.8 Application of Proceeds. Any and all proceeds ever received
by the Agents or the Lenders from the exercise of any Rights pertaining to the
Obligation shall be applied to the Obligations in the order and manner set forth
in Section 2.19.
7.9 Certain Proceedings. The Borrower will promptly execute and
deliver or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers the
Agents or the Lenders may reasonably request in connection with the obtaining
of any consent, approval, registration, qualification, permit, license, or
authorization of any other Tribunal or other Person necessary or appropriate
for the effective exercise of any Rights under the Loan Papers. Because the
Borrower agrees that the Agents' and the Lenders' remedies at Law for failure
of the Borrower to comply with the provisions of this paragraph would be
inadequate and that such failure would not be adequately compensable in damages,
the Borrower agrees that the covenants of this paragraph may be specifically
enforced.
7.10 Setoff. If an Event of Default shall have occurred and is
continuing, each Lender is hereby authorized at any time and from time to time,
without prior notice to the Borrower (any such notice being hereby expressly
waived by the Borrower), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and any other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any portion of the Obligation owing to such
Lender, irrespective of whether or not all of the Obligation, or any part
thereof, shall be then due. Each Lender agrees promptly to notify the Borrower
(with a copy to the Administrative Agent) after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights and remedies of each Lender hereunder
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which such Lender may have.
SECTION 8. AGREEMENT AMONG LENDERS.
8.1 Agents.
(a) Each Lender hereby irrevocably appoints and authorizes
the Administrative Agents to act on its behalf and to exercise such
powers under this Agreement as are specifically delegated to or
required of the Administrative Agent by the terms hereto, together
with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement or the Notes
(including, without limitation, enforcement or collection of the
Notes), the Administrative Agents shall not be required to exercise
any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders,
and such instructions shall be binding upon all Lenders and all holders
of Notes; provided, however, that the Administrative Agent shall not
be required to take any action which exposes it to personal liability
or which is contrary to this Agreement or applicable Law.
(b) The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be
removed as the Administrative Agent under this Agreement and the Notes
at any time with cause by all Lenders other than the Administrative
Agent (the "Removing Lenders"). Upon any such resignation or removal,
the Majority Lenders shall have the right, with the consent of the
Borrower, not to be unreasonably withheld, to appoint a successor
Administrative Agent from among the Lenders (other than the resigning
Administrative Agent). If no successor Administrative Agent shall have
been so appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 calendar days after the retiring Administrative
Agent's giving notice of resignation or the Removing Lenders' removal
of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lenders, with the consent of the Borrower,
not to be unreasonably withheld, appoint a successor Administrative
Agent, which shall be a commercial bank organized under the Laws of or
authorized to do business in the United States of America or any state
thereof and having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as the
Administrative Agent hereunder and under the Notes by a successor
Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the Notes. After any retiring
Administrative Agent's resignation or removal as the Administrative
Agent hereunder and under the Notes, the provisions of this Section 8
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Administrative Agent under this Agreement
and the Notes.
(c) Citibank, N.A. is hereby appointed to act as Syndication
Agent hereunder. Banc of America Securities LLC and Salomon Smith
Barney Inc. are hereby appointed as Joint Lead Arrangers and Joint
Book Managers hereunder. Neither the Syndication Agent nor the Joint
Lead Arrangers and Joint Book Managers shall have any Right, obliga-
tion, liability, responsibility or duty under this Agreement in such
capacity.
(d) If Administrative Agent fails to take any action under
any Loan Paper after an Event of Default and within a reasonable time
after being reasonably requested to do so by any Lender (when such
Lender is entitled to make such request under the Loan Papers and after
such requesting Lender has obtained the concurrence of such other
Lenders as may be required hereunder), the Administrative Agent shall
not suffer or incur any liability as a result of such failure or
refusal, but such requesting Lender may request the Administrative
Agent to resign as the Administrative Agent, whereupon the Administra-
tive Agent shall so resign upon receiving such request.
(e) The Administrative Agent, in its capacity as a Lender,
shall have the same Rights under the Loan Papers as any other Lender
and may exercise the same as though it were not acting as the Admini-
strative Agent; the term "Lender" shall, unless the context otherwise
indicates, include the Administrative Agent; and any resignation by
the Administrative Agent hereunder shall not impair or otherwise affect
any Rights which it has or may have in its capacity as an individual
Lender.
(f) Subject in all respects to the terms and conditions of
the Loan Papers, the Agents may be engaged in, or may hereafter engage
in, one or more loan, letter of credit, leasing, or other financing
transactions (collectively, the "other financings") not the subject of
the Loan Papers, with one or more of the Companies, or may act as
trustee on behalf of, or depositary for, or otherwise engage in other
business transactions with one or more of the Companies, in each case
with no responsibility to account therefor to the Lenders. Without
limiting Rights to which the Lenders are specifically entitled under
the Loan Papers, no other Lenders shall have, by virtue of their being
parties hereto, any interest in (i) any such other financings, (ii) any
present or future guaranties by or for the account of any Company which
are not contemplated or included in the Loan Papers, (iii) any present
or future offset exercised by such Agent in respect of such other
financings, or (iv) any present or future property taken as security
for any such other financings, even if such property may become
security for the obligations of any Company arising under the Loan
Papers by reason of a general description of indebtedness related to
any such other financings; provided that, if any payments in respect of
such guaranties or such property or the proceeds thereof shall be
applied to reduce the Obligation, then each Lender shall be entitled to
share in such application according to its pro rata part thereof.
8.2 Expenses. Each Lender shall pay its pro rata part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees, and other costs of collection) incurred by the Administrative
Agent in connection with any of the Loan Papers if the Administrative Agent does
not receive reimbursement therefor from other sources within 60 days after
incurred; provided that each Lender shall be entitled to receive its pro rata
part of any reimbursement for such expenses, or part thereof, which the
Administrative Agent subsequently receives from such other sources.
8.3 Proportionate Absorption of Losses. Except as herein provided,
nothing in the Loan Papers shall be deemed to give any Lender any advantage over
any other Lender insofar as the portion of the Obligation arising under the Loan
Papers is concerned, or to relieve any Lender from absorbing its pro rata part
of any losses sustained with respect to the Obligation (except to the extent
unilateral actions or inactions by any Lender result in any credit, allowance,
setoff, defense, or counterclaim solely with respect to all or any part of such
Lender's pro rata part of the Obligation).
8.4 Delegation of Duties; Reliance. The Administrative Agent may
exercise any of its duties under the Loan Papers by or through its officers,
directors, employees, attorneys, or agents (collectively, "Representatives"),
and the Administrative Agent and its Representatives shall (a) be entitled to
rely upon (and shall be protected in relying upon) any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telecopy, telegram
or teletype message, statement, order, or other documents or conversation
believed by it or them to be genuine and correct and to have been signed or made
by the proper Person and, with respect to legal matters, upon opinion of counsel
selected by the Administrative Agent, (b) be entitled to deem and treat each
Lender as the owner and holder of its pro rata part of the Obligation for all
purposes until, subject to Section 9.20, written notice of the assignment or
transfer thereof shall have been given to and received by the Administrative
Agent (and, any request, authorization, consent, or approval of any Lender shall
be conclusive and binding on each subsequent holder, assignee, or transferee of
such Lender's pro rata part of the Obligation or Participant therein), and (c)
not be deemed to have notice of the occurrence of an Event of Default unless an
officer of the Administrative Agent has actual knowledge thereof or the
Administrative Agent has been notified thereof by a Lender or the Borrower.
8.5 Limitation of Liability.
(a) Neither the Administrative Agent nor any of its
Representatives (as defined in Section 8.4) shall be liable for any
action taken or omitted to be taken by it or them under the Loan
Papers in good faith and believed by it or them to be within the
discretion or power conferred upon it or them by the Loan Papers or be
responsible for the consequences of any error of judgment, except for
fraud, gross negligence, or willful misconduct (IT BEING THE EXPRESS
INTENTION OF THE PARTIES THAT THE ADMINISTRATIVE AGENT AND ITS
REPRESENTATIVES SHALL HAVE NO LIABILITY FOR ACTIONS AND OMISSIONS
RESULTING FROM THEIR ORDINARY CONTRIBUTORY NEGLIGENCE), and neither
the Administrative Agent nor any of its Representatives has a fiduciary
relationship with any Lender by virtue of the Loan Papers (provided
that nothing herein shall negate the obligation of Administrative Agent
to account for funds received by it for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss, cost,
liability, and expense, the Administrative Agent shall not be compelled
to do any act under the Loan Papers or to take any action toward the
execution or enforcement of the powers thereby created or to prosecute
or defend any suit in respect of the Loan Papers. If the Administrative
Agent requests instructions from the Lenders or from the Majority
Lenders, as the case may be, with respect to any act or action
(including, but not limited to, any failure to act) in connection with
any Loan Paper, the Administrative Agent shall be entitled (but shall
not be required) to refrain (without incurring any liability to any
Person by so refraining) from such act or action unless and until it
has received such instructions. In no event, however, shall the
Administrative Agent or any of its Representatives be required to take
any action which it or they reasonably determine could incur for it or
them criminal or onerous civil liability.
(c) The Administrative Agent shall not be responsible in any
manner to any Lender or any Participant for, and each Lender represents
and warrants that it has not relied upon the Administrative Agent in
respect of, (i) the creditworthiness of the Borrower and the risks
involved to such Lender, (ii) the effectiveness, enforceability,
genuineness, validity, or the due execution of any Loan Paper, (iii)
any representation, warranty, document, certificate, report, or
statement made therein or furnished thereunder or in connection
therewith, or (iv) observation of or compliance with any of the terms,
covenants, or conditions of any Loan Paper on the part of any Company.
Each Lender also acknowledges and agrees that it will, independently
and without reliance upon the Administrative Agent or any other Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement. Each Lender agrees to
indemnify the Administrative Agent and its Representatives and hold
them harmless from and against (but limited to such Lender's pro rata
part of) any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses, and
reasonable disbursements of any kind or nature whatsoever which may be
imposed on, asserted against, or incurred by any of them in any way
relating to or arising out of the Loan Papers or any action taken or
omitted by them under the Loan Papers, except to the extent the same
result solely from fraud, gross negligence, or willful misconduct by
the Administrative Agent or its Representatives (it being the express
intention of the parties that the Administrative Agent and its
Representatives shall have no liability for actions and omissions
resulting from their ordinary contributory negligence).
8.6 Default. Upon the occurrence and continuance of an Event of
Default, the Lenders agree to promptly confer in order that the Majority Lenders
(or, if required by Section 9.15, all Lenders) may agree upon a course of action
for the enforcement of the Rights of the Lenders; provided that the
Administrative Agent shall be entitled (but not obligated) to proceed to take
any actions necessary in its reasonable judgment to preserve the Rights of the
Administrative Agent and the Lenders hereunder, pending agreement by the
Majority Lenders (or, if required by Section 9.15, all Lenders) on the course of
action to be taken.
8.7 Limitation of Liability of Lenders. No Lender or any
Participant shall incur any liability to any other Lender or Participant except
for acts or omissions in bad faith, and no Lender or any Participant shall incur
any liability to any Company or any other Person for any act or omission of any
other Lender or any Participant.
8.8 Relationship of Lenders. Nothing herein shall be construed
as creating a partnership or joint venture among the Agents, the Agents and the
Lenders, or the Lenders.
8.9 Foreign Lenders. Each Lender that is organized under the
Laws of any jurisdiction other than the United States of America or any State
thereof (a) represents to the Administrative Agent and the Borrower that (i)
under applicable Laws and treaties no Taxes will be required to be withheld by
the Administrative Agent or the Borrower with respect to any payments to be made
to such Lender in respect of the Obligation and (ii) it has furnished to the
Administrative Agent and the Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Lender claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder), and (b) covenants to (i)
provide the Administrative Agent and the Borrower a new Form 4224 or Form 1001
upon the obsolescence of any previously delivered form in accordance with
applicable U.S. Laws and amendments thereto duly executed and completed by such
Lender and (ii) comply from time to time with all applicable U.S. Laws with
regard to such withholding tax exemption.
8.10 Benefits of Agreement. Except for requiring the Borrower's
consent under Section 8.1(b) and the representations and covenants in Section
8.9 in favor of the Borrower, none of the provisions of this Section 8 shall
inure to the benefit of any Company or any Person other than the Agents, the
Lenders, and the Participants; consequently, neither any Company nor any other
Person shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of any Agent or any Lender to comply with such
provisions.
SECTION 9. MISCELLANEOUS.
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9.1 Changes in GAAP. All accounting and financial terms used in
any of the Loan Papers and the compliance with each covenant contained in the
Loan Papers which relates to financial matters shall be determined in accordance
with GAAP, except to the extent that a deviation therefrom is expressly stated
in such Loan Papers. Should a change in GAAP require a change in any method of
accounting or should any voluntary change in the accounting methods be permitted
pursuant to Section 5.21, then such change shall not result in an Event of
Default if, at the time of such change, such Event of Default had not occurred
and was not then continuing, based upon the former methods of accounting used by
or on behalf of the Borrower; provided that, after any such change in accounting
methods, the Financial Statements required to be delivered shall either be (a)
supplemented with financial information prepared in comparative form, in
compliance with the former methods of accounting used prior to such change, as
well as with the new method or methods of accounting and, for the purpose of
determining whether an Event of Default has occurred, Lenders shall look solely
to that portion of such supplemental information that complies with the former
methods of accounting, or (b) supplemented with financial information prepared
in compliance with such new method or methods of accounting but accompanied by
such information, in form and detail satisfactory to Lenders, that will allow
Lenders to readily determine the effect of such changes in accounting methods on
such Financial Statements, and, for the purpose of determining whether an Event
of Default has occurred, Lenders shall look solely to such supplemental
information as adjusted to reflect compliance with such former method or methods
of accounting.
9.2 Money and Interest. Unless stipulated otherwise (a) all
references in any of the Loan Papers to "dollars," "money," "payments," or other
similar financial or monetary terms are references to currency of the United
States of America and (b) all references to interest are to simple and not
compound interest.
9.3 Number and Gender of Words. Whenever in any Loan Paper the
singular number is used, the same shall include the plural where appropriate,
and vice versa; and words of any gender in any Loan Paper shall include each
other gender where appropriate. The words "herein," "hereof," and "hereunder,"
and other words of similar import refer to the relevant Loan Paper as a whole
and not to any particular part or subdivision thereof.
9.4 Headings. The headings, captions, and arrangements used in
any of the Loan Papers are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan Papers,
nor affect the meaning thereof.
9.5 Exhibits. If any Exhibit, which is to be executed and
delivered, contains blanks, the same shall be completed correctly and in
accordance with the terms and provisions contained and as contemplated herein
prior to, at the time of, or after the execution and delivery thereof.
9.6 Communications. Unless specifically otherwise provided,
whenever any Loan Paper requires or permits any consent, approval, notice,
request, or demand from one party to another, such communication must be in
writing (which may be by telecopy) to be effective and shall be deemed to have
been given on the day actually delivered or, if mailed, on the Business Day it
is received by the party to be notified at the address indicated on Schedule 1
(unless changed by notice pursuant hereto).
9.7 Form and Number of Documents. Each agreement, document,
instrument, or other writing to be furnished under any provision of this
Agreement must be in form and substance and in such number of counterparts as
may be reasonably required by the Administrative Agent and its counsel.
9.8 Exceptions to Covenants. The Borrower shall not take any
action or fail to take any action which is permitted as an exception to any of
the covenants contained in any of the Loan Papers if such action or omission
would result in the breach of any other covenant contained in any of the Loan
Papers.
9.9 Survival. All covenants, agreements, undertakings, repre-
sentations, and warranties made in any of the Loan Papers (a) shall survive all
closings under the Loan Papers, (b) except as otherwise indicated, shall not be
affected by any investigation made by any party, and (c) unless otherwise
provided herein shall terminate upon the later of the termination of this
Agreement and the payment in full of the Obligation.
9.10 Governing Law. The Laws (other than conflict-of-laws
provisions thereof) of the State of New York and of the United States of America
shall govern the Rights and duties of the parties hereto and the validity,
construction, enforcement, and interpretation of the Loan Papers.
9.11 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY HERETO, IN
EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (a) IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF
TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY
LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE
OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW, (b) IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN
CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BROUGHT IN DISTRICT COURTS OF
DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, DALLAS DIVISION, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM,
(d) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN DALLAS,
TEXAS, IN CONNECTION WITH ANY SUCH LITIGATION AND TO DELIVER TO THE AGENT
EVIDENCE THEREOF, IF REQUESTED, (e) IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE
MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE
PREPAID, AT ITS ADDRESS SET FORTH HEREIN, (f) IRREVOCABLY AGREES THAT ANY LEGAL
PROCEEDING AGAINST ANY PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE
LOAN PAPERS ON THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED
COURTS, AND (g) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RIGHT TO A JURY TRIAL IN ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE
LOAN PAPERS AND THE OBLIGATION.
9.12 Maximum Interest Rate. Regardless of any provision contained
in any of the Loan Papers, no Lender shall ever be entitled to contract for,
charge, take, reserve, receive, or apply, as interest on the Obligation, or any
part thereof, any amount in excess of the Highest Lawful Rate, and, in the event
the Lenders ever contract for, charge, take, reserve, receive, or apply as
interest any such excess, it shall be deemed a partial prepayment without
penalty of principal and treated hereunder as such and any remaining excess
shall be refunded to the Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Highest Lawful
Rate, the Borrower and the Lenders shall, to the maximum extent permitted under
applicable Law, (a) treat all Borrowings as but a single extension of credit
(and the Lenders and the Borrower agree that such is the case and that provision
herein for multiple Borrowings and multiple Notes is for convenience only), (b)
characterize any nonprincipal payment as an expense, fee, or premium rather than
as interest, (c) exclude voluntary prepayments and the effects thereof, and (d)
"spread" the total amount of interest throughout the entire contemplated term of
the Obligation; provided that, if the Obligation is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Highest Lawful
Rate, the Lenders shall refund such excess, and, in such event, the Lenders
shall not be subject to any penalties provided by any Laws for contracting for,
charging, taking, reserving, or receiving interest in excess of the Highest
Lawful Rate.
9.13 Invalid Provisions. If any provision in any Loan Paper is
held to be illegal, invalid, or unenforceable, such provision shall be fully
severable; the appropriate Loan Paper shall be construed and enforced as if such
provision had never comprised a part thereof; and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by such
provision or by its severance therefrom. Furthermore, in lieu of such provision
there shall be added automatically as a part of such Loan Paper a provision as
similar thereto as may be possible and be legal, valid, and enforceable.
9.14 Entire Agreement. THIS AGREEMENT (AS AMENDED IN WRITING FROM
TIME TO TIME) AND THE OTHER WRITTEN LOAN PAPERS EXECUTED BY THE BORROWER, THE
AGENTS, AND THE LENDERS (OR BY THE BORROWER FOR THE BENEFIT OF THE AGENTS OR ANY
LENDER) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
9.15 Amendments, Etc. No amendment or waiver of any provision of
any Loan Paper nor consent to any departure therefrom by the Borrower shall be
effective unless the same shall be in writing and signed by the Majority
Lenders, and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall, unless in writing and
signed by all Lenders, do any of the following: (a) increase the Commitment, or
extend the due date for payment of any of the Obligation (except as provided in
Section 2.3), (b) reduce the principal amount of Loans due hereunder or any
interest rate or the amount of fees applicable to the Obligation (except such
reductions as are contemplated by this Agreement), (c) amend or waive compliance
with this Section 9.15 or (d) amend the definition of Majority Lenders; provided
that no amendment, waiver, or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this or
any other Loan Paper.
9.16 Waivers. No course of dealing nor any failure or delay by the
Administrative Agent, any Lender, or any of their respective officers,
directors, employees, agents, representatives, or attorneys with respect to
exercising any Right of the Lenders hereunder shall operate as a waiver thereof.
A waiver must be in writing and signed by the Lenders (or the Majority Lenders
to the extent permitted hereunder) to be effective, and such waiver will be
effective only in the specific instance and for the specific purpose for which
it is given.
9.17 Taxes. Any Taxes (excluding income, gross receipts and
franchise taxes) payable or ruled payable by any Tribunal in respect of this
Agreement or any other Loan Paper shall be paid by the Borrower, together with
interest and penalties, if any.
9.18 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, the Lenders shall not be obligated to extend
credit to the Borrower in violation of any Law.
9.19 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one Agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart. It is not necessary that each Lender execute
the same counterpart so long as identical counterparts are executed by the
Borrower and each Lender. This Agreement shall become effective when
counterparts hereof shall have been executed and delivered to the Administrative
Agent by each Lender, the Agents, and the Borrower, or, in the case only of the
Lenders, when the Administrative Agent shall have received telecopied or other
evidence satisfactory to it that each Lender has executed and is delivering to
the Administrative Agent a counterpart hereof.
9.20 Successors and Assigns; Participations; Assignments.
(a) This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns, except that (i) the Borrower may not, directly or indirectly,
assign or transfer, or attempt to assign or transfer, any of its
Rights, duties, or obligations under any Loan Papers to which it is a
party without the express written consent of all Lenders, and (ii)
except as permitted under Section 2.21 and this Section 9.20, no Lender
may transfer, pledge, assign, sell participations in, or otherwise
encumber its portion of the Obligation.
(b) Subject to the provisions of this Section 9.20, any Lender
may sell to one or more Persons (each a "Participant") participating
interests (in each case not less than $5,000,000) in its portion of the
Obligation; provided that the Administrative Agent and the Borrower
shall have the right to approve any Participant which is not a
financial institution. In the event of any such sale to a Participant,
(i) such Lender shall remain a "Lender" under this Agreement and the
Participant shall not constitute a "Lender" hereunder, (ii) such
Lender's obligations under this Agreement shall remain unchanged, (iii)
such Lender shall remain solely responsible for the performance
thereof, (iv) such Lender shall remain the holder of its share of the
Obligation for all purposes under this Agreement, and (v) the Borrower
and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's Rights and
obligations under the Loan Papers. Participants shall have no Rights
under the Loan Papers, other than certain voting rights as provided
below. Each Lender shall be entitled to obtain (on behalf of its
Participants) the benefits of Section 2 with respect to all
participations in its Loans outstanding from time to time. No Lender
shall sell any participating interest under which the Participant shall
have any Rights to approve any amendment, modification, or waiver of
any Loan Paper, except to the extent such amendment, modification, or
waiver extends the due date for payment of any amount in respect of
principal, interest, or fees due under the Loan Papers, or reduces the
interest rate or the amount of principal or fees applicable to the
Obligation (except such reductions as are contemplated by this
Agreement); provided that in those cases where a Participant is
entitled to the benefits of Section 2 or a Lender grants Rights to its
Participants to approve amendments to or waivers of the Loan Papers
respecting the matters previously described in this sentence, such
Lender must include a voting mechanism in the relevant participation
agreement whereby a majority of such Lender's portion of the Obligation
(whether held by such Lender or participated) shall control the vote
for all of such Lender's portion of the Obligation. Except in the case
of the sale of a participating interest to a Lender, the relevant
participation agreement shall not permit the Participant to transfer,
pledge, assign, sell participations in, or otherwise encumber its
portion of the Obligation.
(c) Subject to the provisions of this Section 9.20, any Lender
may sell to one or more Eligible Assignees (each a "Purchaser") a
proportionate part (in each case not less than $5,000,000) of its
Rights and obligations under the Loan Papers pursuant to an Assignment
and Acceptance (herein so called) between such Purchaser and such
Lender in the form of Exhibit E hereto. Upon (i) delivery of an
executed copy of the Assignment and Acceptance to the Borrower and the
Administrative Agent and (ii) payment of a fee of $3,500 from such
Lender to the Administrative Agent, from and after the assignment's
effective date (which shall be after the date of such delivery), such
Purchaser shall for all purposes be a Lender hereunder and shall have
all the Rights and obligations of a Lender hereunder to the same extent
as if it were an original party hereto with commitments as set forth in
the Assignment and Acceptance, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent. Upon
any transfer pursuant to this Section 9.20(c), Schedule 1 shall
automatically be deemed to reflect the name, address, and Commitment of
such Purchaser and the Administrative Agent shall deliver to the
Borrower and the Lenders an amended Schedule 1 reflecting such changes.
A Purchaser shall be subject to all the provisions in this Section 9.20
the same as if it were a Lender as of the date hereof.
(d) If pursuant to Section 9.20(c) any interest in the
Obligation is transferred to any Purchaser which is organized under the
Laws of any jurisdiction other than the United States of America or any
State thereof, the transferor Lender shall cause such Purchaser,
concurrently with the effectiveness of such transfer, (i) to represent
to the transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent, and the Borrower) that under applicable Laws and
treaties no Taxes will be required to be withheld by the Administrative
Agent, the Borrower, or the transferor Lender with respect to any
payments to be made to such Purchaser in respect of the Obligation,
(ii) to furnish to each of the transferor Lender, the Administrative
Agent, and the Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such Purchaser claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments
hereunder), and (iii) to agree (for the benefit of the transferor
Lender, the Administrative Agent, and the Borrower) to provide the
transferor Lender, the Administrative Agent, and the Borrower a new
Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form in accordance with applicable U.S. Laws and amendments
thereto duly executed and completed by such Purchaser, and to comply
from time to time with all applicable U.S. Laws with regard to such
withholding tax exemption.
(e) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans and Notes hereunder to a Federal Reserve
Bank in support of borrowings by such Lender from such Federal Reserve
Bank.
9.21 Confidentiality. All nonpublic information furnished by the
Companies to the Agents or the Lenders in connection with the Loan Papers and
the transactions contemplated thereby will be treated as confidential, but
nothing herein contained shall limit or impair any Agent's or any Lender's
right, and each Agent and the Lenders shall be entitled, (a) to disclose the
same to any Tribunal or as otherwise required by Law or to any prospective or
actual Participant or Purchaser or to the respective affiliates, directors,
officers, employees, attorneys, and agents of any prospective or actual
Participant or Purchaser (provided that such prospective or actual Participant
or Purchaser has agreed in writing to comply with this Section 9.21 and provided
further that the Borrower has given its prior written consent to such
distribution), (b) to use such information to the extent pertinent to an
evaluation of the Obligation, (c) to enforce compliance with the terms and
conditions of the Loan Papers, and (d) to take any action which such Agent or
any Lender deems necessary to protect its interests if an Event of Default has
occurred and is continuing.
9.22 Conflicts and Ambiguities. Any conflict or ambiguity between
the terms and provisions herein and terms and provisions in any other Loan Paper
shall be controlled by the terms and provisions herein.
9.23 General Indemnification. THE BORROWER SHALL INDEMNIFY,PROTECT,
AND HOLD THE AGENTS AND THE LENDERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES,
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS,
ASSIGNS, AND ATTORNEYS (COLLECTIVELY, THE "INDEMNIFIED PARTIES") HARMLESS FROM
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES AND LEGAL EXPENSES WHETHER OR NOT SUIT IS BROUGHT
AND SETTLEMENT COSTS), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE INDEMNIFIED PARTIES, IN
ANY WAY RELATING TO OR ARISING OUT OF THE LOAN PAPERS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN (COLLECTIVELY, THE "INDEMNIFIED LIABILITIES"), TO THE
EXTENT THAT ANY OF THE INDEMNIFIED LIABILITIES RESULTS, DIRECTLY OR INDIRECTLY,
FROM ANY CLAIM MADE OR ACTION, SUIT, OR PROCEEDING COMMENCED BY OR ON BEHALF OF
ANY PERSON OTHER THAN THE INDEMNIFIED PARTIES; PROVIDED, HOWEVER, THAT ALTHOUGH
EACH INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO BE INDEMNIFIED FROM ITS OWN
ORDINARY NEGLIGENCE, NO INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO BE INDEMNIFIED
HEREUNDER FOR ITS OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT. THE
PROVISIONS OF AND UNDERTAKINGS AND INDEMNIFICATION SET FORTH IN THIS PARAGRAPH
SHALL SURVIVE THE SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF
THIS AGREEMENT FOR THE PERIOD OF TIME SET FORTH IN ANY APPLICABLE STATUTE OF
LIMITATIONS.
9.24 Investment Representation. The Notes are being acquired by the
Lenders for their own respective account for investment and not with the view
to, or for sale in connection with, any distribution thereof. The Lenders
understand that the Notes will not be registered under the Securities Act of
1933 or any securities act of any state pursuant to an exemption from the
registration provisions thereof. Each Lender shall indemnify the Borrower
against and hold it harmless from any claim, and any cost or expense therefrom,
that the Borrower shall have committed a violation of applicable Law by virtue
of the exercise by such Lender of its right to sell participations or make
assignments hereunder.
[Remainder of page left intentionally blank. Signature pages follow.]
EXECUTED as of the day and year first mentioned.
CENTURYTEL, INC.
By:
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Name:
--------------------------------
Title:
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BANK OF AMERICA, N.A.
as the Administrative Agent and a Lender
By:
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Name:
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Title:
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CITIBANK, N.A.,
as the Syndication Agent and a Lender
By:
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Name:
--------------------------------
Title:
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BANC OF AMERICA SECURITIES LLC,
as Joint Lead Arranger and Joint Book Manager
By:
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Name:
--------------------------------
Title:
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SALOMON SMITH BARNEY INC.,
as Joint Lead Arranger and Joint Book Manager
By:
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Name:
--------------------------------
Title:
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FOR IMMEDIATE RELEASE: FOR MORE INFORMATION CONTACT:
Media: Patricia Cameron (318) 388-9674
patricia.cameron@centurytel.com
Investors: Jeffrey S. Glover (318) 388-9648
jeff.glover@centurytel.com
CenturyTel adds nearly 360,000 telephone access lines in two transactions
Monroe, La., July 31, 2000 - CenturyTel, Inc.(NYSE Symbol: CTL) acquired nearly
360,000 telephone access lines in two transactions finalized today.
The Louisiana-based communications company purchased about 231,000
access lines in Arkansas from Verizon Communications (formerly GTE) for
approximately $824 million in cash. With this purchase, CenturyTel now serves
approximately 275,000 local exchange customers in Arkansas, making it the
state's second largest telephone company. The company also provides Internet
access, wireless, long distance and security monitoring services to
approximately 87,000 Arkansas customers.
In a separate transaction, Spectra Communications Group, LLC, acquired
about 127,000 access lines in Missouri for approximately $290 million in cash.
Spectra is a joint venture between CenturyTel; Spectronics Corporation, a
Georgia-based, African-American-owned telecommunications contractor; Local
Exchange Carriers, LLC, a private company based in Kansas City, Mo.; and other
African-American co-investors.
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"CenturyTel is pleased to announce the completion of these two
strategic acquisitions," Glen. F. Post, III, CenturyTel's president and chief
executive officer, said. "CenturyTel now operates more than 1.65 million
telephone access lines in 21 states. We expect these properties to make
significant contributions to CenturyTel's future growth."
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Customers in the acquired markets will see no changes in area codes,
telephone numbers or local calling numbers. In both transactions, employees in
the former GTE serving areas retained their positions with CenturyTel and
Spectra.
CenturyTel will finance these transactions through newly established
credit facilities with Bank of America, N.A. and Citibank, N.A. Depending upon
market conditions, the company expects to replace this facility with either a
commercial paper program, the issuance of long-term debt, equity or
equity-linked securities, monetization of non-core assets or some combination
thereof.
CenturyTel, Inc. provides integrated communications services including
local exchange, wireless, long distance, Internet access and security monitoring
services to more than 2.8 million customers in 21 states. The company,
headquartered in Monroe, Louisiana, is publicly traded on the New York Stock
Exchange under the symbol CTL. CenturyTel is the 7th largest local exchange
telephone company, based on access lines, and the 9th largest cellular company,
based on population equivalents owned, in the United States.
Visit CenturyTel's corporate Web site at (www.centurytel.com)