EXHIBIT 10.38
FIRST MODIFICATION AND REAFFIRMATION
OF LIMITED GUARANTY
THIS FIRST MODIFICATON AND REAFFIRMATION OF LIMITED GUARANTY (this
"Agreement"), dated as of January 25, 2002, is by and between WORLDCOM, INC., a
Georgia corporation ("Guarantor"), and BANK OF AMERICA, N.A., a national banking
association ("Bank of America").
WITNESSETH:
WHEREAS, Bank of America has made certain loans and other credit
accommodations to XXXXXXX X. XXXXXX ("Xxxxxx"); and
WHEREAS, such loans and other credit accommodations from Bank of America
to Xxxxxx were modified and amended pursuant to that certain Omnibus Amendment
to Loan Documents dated as of February 12, 2001 among Xxxxxx, certain entities
owned and controlled by Xxxxxx (each, a "Company Borrower"), and Bank of America
(the "First Amendment"); and
WHEREAS, as a condition precedent to Bank of America's agreement to enter
into the First Amendment, Bank of America requested that Guarantor execute and
deliver, and Guarantor did execute and deliver, that certain Limited Guaranty in
favor of Bank of America dated as of February 12, 2001 (the "Guaranty"); and
WHEREAS, Xxxxxx and the Company Borrowers have requested that Bank of
America further modify and amend the terms and conditions of its loans and other
credit accommodations to Xxxxxx and the Company Borrowers pursuant to that
certain Second Omnibus Amendment to Loan Documents of even date herewith among
Bank of America, Xxxxxx and the Company Borrowers (the "Second Amendment"); and
WHEREAS, as a condition precedent to entering into the Second Amendment,
Bank of America has requested that Guarantor enter into this Agreement; and
WHEREAS, contemporaneously with the execution and delivery of the Second
Amendment, Xxxxxx and Bank of America are entering into that certain
Reimbursement Agreement of even date herewith (the "Reimbursement Agreement")
with respect to that certain Letter of Credit Number 934190 issued by Bank of
America in favor of Xxxxx Fargo Bank Minnesota, National Association, formerly
known as Norwest Bank Minnesota, National Association, as trustee (the "Letter
of Credit"); and
WHEREAS, Xxxxxx is the President and Chief Executive Officer of Guarantor;
and
WHEREAS, in consideration of Xxxxxx' services as an officer of Guarantor,
and in order to facilitate the modifications contemplated by the Second
Amendment and to avoid demand for
payment under the Guaranty or other actions by Bank of America, Guarantor has
agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, Guarantor and Bank of America hereby agree as follows:
1. ACKNOWLEDGMENT OF SECOND AMENDMENT; REAFFIRMATION OF GUARANTY.
Guarantor acknowledges that (a) Guarantor has received and reviewed the Second
Amendment, (b) on or about the date hereof, Bank of America will release
Mississippi College from its reimbursement obligations under the Letter of
Credit and substitute Xxxxxx as the primary obligor for such reimbursement
obligations pursuant to the Reimbursement Agreement, and (c) such Reimbursement
Agreement creates additional Obligations (as defined in the Guaranty). Although
the Guaranty states that it continues to apply even if the underlying documents
are amended, Guarantor nevertheless reaffirms the Guaranty and acknowledges and
agrees that, subject to the modifications hereinafter set forth, the Guaranty
remains in full force and effect and currently is subject to no right of offset,
claim or counterclaim by Guarantor. Guarantor further acknowledges and agrees
that the monetary limit on the Guaranteed Obligations (as defined in the
Guaranty), as such limit is modified below, has not been decreased by any
repayment of or any other decrease in the amount of any of the Obligations
received by Bank of America prior to the date hereof. Guarantor and Bank of
America further acknowledge that the Guaranty shall continue in full force and
effect until the first to occur of (y) subject to the next sentence, receipt by
Bank of America of notice of termination thereof by Guarantor, or (z) payment in
full of all of the Guaranteed Obligations (including any Guaranteed Obligations,
absolute or contingent, under any guaranty by Xxxxxx of the Obligations of any
Company Borrower or, as provided in Section 3(b)(iii) below, under the
Reimbursement Agreement) and the termination of the Loan Documents under which
the Guaranteed Obligations arose (including the Letter of Credit and the
Reimbursement Agreement) and any obligation of Bank of America to make loans or
extend other financial accommodations thereunder to the extent such Loan
Documents and obligations could create additional Guaranteed Obligations. No
notice of termination of the Guaranty shall affect in any manner rights arising
under the Guaranty with respect to Guaranteed Obligations that shall have been
committed, created, contracted, assumed or incurred prior to receipt of such
written notice pursuant to any agreement entered into by Bank of America prior
to receipt of such notice.
2. REPRESENTATIONS AND WARRANTIES. Guarantor hereby restates, ratifies,
and reaffirms the representations and warranties made by it in the Guaranty as
fully as though such representations and warranties had been made on the date
hereof and with specific reference to this Agreement.
3. MODIFICATIONS TO GUARANTY.
(a) The Guaranty is hereby modified such that all references therein to
the "Amendment" (as defined in the Guaranty) shall be deemed to include both the
First Amendment and the Second Amendment. Without limiting the generality of the
foregoing, it is understood
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and agreed that the term "Obligations" (as defined in the Guaranty) shall
include all Obligations of Xxxxxx and each Company Borrower as defined in the
Second Amendment.
(b) The Guaranty is hereby modified by deleting Section 11 thereof, and
Guarantor and Bank of America hereby agree that, notwithstanding anything to the
contrary contained in the Guaranty or this Agreement:
(i) Guarantor's liability under the Guaranty and this Agreement
shall be limited to the following, to the extent the same constitute
Guaranteed Obligations (as defined in the Guaranty):
(A) $150,000,000 of Guaranteed Obligations, plus
(B) all Additional Payments (as defined in the Second
Amendment), plus
(C) all costs (including reasonable attorneys' fees) of
collecting and enforcing this Guaranty.
(ii) The $150,000,000 limitation set forth in clause (i)(A) above
shall be decreased by the amount of any decrease in the principal amount
of the Obligations (other than Obligations with respect to the Letter of
Credit and the Reimbursement Agreement) from and after the date hereof but
shall be reinstated (but shall not in any event exceed $150,000,000) to
the extent of any increase in such principal amount prior to receipt of
written notice of termination of the Guaranty as provided in the Guaranty,
whether as a result of a loan to Xxxxxx or any Company Borrower or any
protective advance or other cost or expense incurred by Bank of America,
whether or not Guarantor has knowledge thereof or consents thereto.
(iii) Xxxxxx' Obligations with respect to the Reimbursement
Agreement, the Letter of Credit and any Margin Call (as defined in the
Second Amendment) shall only constitute Guaranteed Obligations to the
extent that Additional Payments are triggered by decreases in the closing
price of WCOM Stock (as defined in the Second Amendment) as described in
Section 10(a)(iii) of the Second Amendment.
4. NOTICES. All notices, demands and requests that any party is required
or elects to give to any other in connection with this Agreement or the Guaranty
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) business days after it shall have been mailed by
United States mail, first class, certified or registered, with postage prepaid,
or (c) in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified at the address
or facsimile number set forth below or as may be changed by notice to the other
party:
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If to Guarantor:
WorldCom, Inc.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: 000-000-0000
If to Bank of America:
Bank of America, N.A.
000 Xxxxxxxxx Xxxxxx, X.X., 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Penn Xxxxx, Senior Vice President
Facsimile No.: 000-000-0000
5. MISCELLANEOUS. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Georgia. Except as expressly set forth
herein, the Guaranty shall remain in full force and effect in accordance with
its terms. This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto. This Agreement may be
executed in any number of counterparts, all of which, taken together, shall
constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
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IN WITNESS WHEREOF, Guarantor and Bank of America have caused this
Agreement to be executed by their respective duly authorized officers as of the
day and year first above written.
WORLDCOM, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
BANK OF AMERICA, N.A.
By: /s/ Penn Xxxxx
-------------------------------------
Name: Penn Xxxxx
Title: Senior Vice President
