1
EXHIBIT 10.1
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of the 30th day of September, 1999, by and between The Xxxxxxxx
Companies, Inc., a Delaware corporation ("Xxxxxxxx"), those certain subsidiaries
of Xxxxxxxx listed on the Signature Pages of this Agreement (collectively the
"Xxxxxxxx Subsidiaries" and together with Xxxxxxxx, the "Xxxxxxxx Group"),
Xxxxxxxx Communications Group, Inc., a Delaware corporation, ("Communications")
and those certain subsidiaries of Communications listed on the Signature Pages
of this Agreement (collectively the "Communications Subsidiaries").
WITNESSETH:
WHEREAS, Communications plans to sell shares of its Series A Common Stock to
the public in an underwritten Initial Public Offering on the one hand and to SBC
Communications, Inc., Intel Corporation and Telefonos de Mexico, S.A. de C.V.
pursuant to Securities Purchase Agreements on the other, and
WHEREAS, Xxxxxxxx will continue to hold all of the issued and outstanding
Series B Common Stock of Communications after the closing of these sales of the
Series A Common Stock, and
WHEREAS, Communications desires to continue for the term of this Agreement
to obtain certain Support Services from Xxxxxxxx and the Xxxxxxxx Subsidiaries
to facilitate the operations of Communications and the Communications
Subsidiaries (collectively the "Communications Group") upon the terms and
subject to the conditions that are set forth in this Agreement;
NOW, THEREFORE, for good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), and in consideration of the
foregoing premises and the mutual promises and obligations contained herein, the
Parties hereto agree as follows:
1. Support Services. For so long as and to the extent that Xxxxxxxx or any
of the Xxxxxxxx Subsidiaries (or any of their respective subsidiaries or
affiliates) perform the Support Services for themselves or provide the Support
Services (as hereinafter defined) to their respective subsidiaries or
affiliates, Xxxxxxxx and Xxxxxxxx Subsidiaries will provide Support Services to
the Communications Group in accordance with the terms and subject to the
conditions set forth in this Agreement.
The term "Support Services" as used in this Agreement means the services
provided by each of the cost centers identified on Attachment A to the same
extent provided to Xxxxxxxx and the Xxxxxxxx Subsidiaries and use of the
applicable facilities and employees for other services performed by Xxxxxxxx or
the Xxxxxxxx Subsidiaries for the Communications Group during the 12-month
period ended on the date hereof.
Any additional leases, licenses or purchases specifically required by
Xxxxxxxx or the Xxxxxxxx Subsidiaries to provide Support Services to the
Communications Group at any time during the term of this Agreement and not
specifically covered under any other Agreement will be charged
1
2
directly to the Communications Group on an actual cost basis. Communications
Group will be given written notification of these charges by Xxxxxxxx in the
first invoice for service charges reflecting these costs.
2. Reimbursement for Support Services. In consideration of the performance
of the Support Services on the part of the Xxxxxxxx Group, Communications agrees
to pay or reimburse Xxxxxxxx for Support Services rendered by the Xxxxxxxx Group
on the Communications Group's behalf at the same rate Xxxxxxxx charges its Tulsa
based operating companies, as such rates may be revised from time to time, which
charges shall be consistent with past practices regarding the treatment of any
overrecoveries or underrecoveries of cost, which rates and treatment shall be
subject to good faith negotiations between Xxxxxxxx and Communications
consistent with Xxxxxxxx' policies and practices, as applied to all Xxxxxxxx
Subsidiaries (the "Services Charges"). For informational purposes only, Xxxxxxxx
has set forth the current allocation or charge method and the related logic for
Support Services on Attachment A. The intent of the parties with respect to
payment for Support Services performed hereunder is that (i) the Service Charges
will be remitted to Xxxxxxxx, (ii) other reasonable out-of-pocket expenses
incurred by Xxxxxxxx or any Xxxxxxxx Subsidiaries, and reasonable expenses with
respect to travel and charges by third parties incurred by Xxxxxxxx or Xxxxxxxx
Subsidiaries on Communications Group's behalf will be reimbursed to Xxxxxxxx and
(iii) amounts expended by Xxxxxxxx or Xxxxxxxx Subsidiaries on Communications
Group's behalf with respect to claims and litigation (including settlement costs
and reasonable expenses associated therewith including attorneys' fees and
expenses and court costs) pertaining to the Communications Group will be
reimbursed to Xxxxxxxx.
With respect to the Service Charges, Xxxxxxxx will submit invoices to
Communications on at least a monthly basis in the amounts determined in
accordance with this Section 2. Communications will pay or cause to be paid each
invoice submitted to Communications pursuant to the foregoing sentence within
fifteen (15) business days after the receipt by Communications of such invoice
(except with respect to amounts in any such invoice that are manifestly in
error). In the event that Communications questions the amount of any such xxxx,
the manner of its computation, or the underlying data on which the xxxx was
based, it will pay the related invoice in accordance with the preceding sentence
(except with respect to amounts in any such invoice that are manifestly in
error) and thereafter notify Xxxxxxxx of such questions and, for a period of 30
days thereafter, Xxxxxxxx will make or cause to be made available to
Communications, its employees and designees, at a location in Xxxxxxxx
headquarters designated by Xxxxxxxx during normal business hours, all
documentation necessary for Communications to review the xxxx, the computation
and the data. If, upon completion of the review, Xxxxxxxx and Communications are
not in agreement upon the amount of the xxxx, the amount will be referred to a
nationally recognized firm of certified public accountants selected by mutual
agreement of Xxxxxxxx and Communications, which firm will make a final binding
decision as to the correct amount of the xxxx. In the event that it is
determined that the correct amount of the xxxx is less than the amount that was
paid by Communications with regard thereto, the excess amount will be promptly
refunded to
2
3
Communications by Xxxxxxxx. Xxxxxxxx and Communications will equally share in
the cost associated with retaining such firm of certified public accountants.
Nothing herein will be deemed to prevent either party from proposing adjustments
to prior Communication invoices that were inadvertently omitted from the prior
invoices that were sent to Communications by Xxxxxxxx.
If either Xxxxxxxx or Communications fails to pay as and when due and
payable any amount hereunder (including, without limitation, the Service
Charges), then either Xxxxxxxx or Communications, as the case may be, shall pay
interest on such amount from the due date up to and including the date when such
amount and all interest thereon are paid in full at the rate per annum equal to
the prime rate of Citibank N.A., plus one percent (1%). For the purposes hereof,
the "prime rate of Citibank N.A." shall mean the annual rate of interest
announced from time to time by Citibank N.A. as a reference rate then in effect
for determining annual interest rates of U.S. dollar commercial loans.
3. Manner and Time of Performance. The Xxxxxxxx Group will perform or cause
to be performed the Support Services hereunder with the same degree of care,
skill and diligence with which they perform or would perform similar services
for themselves and their respective subsidiaries and affiliates consistent with
past practices (including, without limitation, with respect to the type,
quantity, quality and timeliness of such services).
4. Books and Records. The Xxxxxxxx Group will maintain books, records,
documents and other written evidence, consistent with their normal accounting
procedures and practices, sufficient to accurately, completely and properly
reflect the performance of the Support Services hereunder and the amounts due in
accordance with any provision of this Agreement (collectively, the "Services
Evidence"). The members of the Communications Group and their respective
representatives will be given access subject to reasonable notice at all times
during normal business hours to the Services Evidence for any purpose deemed
appropriate by Communications relating to the confirming, checking, reviewing,
examining, auditing or verifying the accuracy of the invoices submitted to them.
5. Independent Contractor. In performing the Support Services hereunder,
each member of the Xxxxxxxx Group will operate as and have the status of an
independent contractor, subject only to the general direction of the
Communications Group regarding the Support Services to be rendered as opposed to
the method of performance of the Support Services.
6. Confidentiality. All non-public information provided by any member of the
Communications Group or by any of their respective representatives pursuant to
this Agreement will be confidential and not disclosed to any person except with
the consent of Communications. All non-public information provided by any member
of the Xxxxxxxx Group
3
4
or by any of their respective representatives pursuant to this Agreement will be
confidential and not disclosed to any person except with the consent of
Xxxxxxxx.
7. Term of Agreement. The terms of Section 1 of this Agreement will continue
in force for an initial term of five (5) years after the date hereof (the
"Initial Term"), and will automatically renew for one(1) additional one (1) year
term thereafter (the "Renewal Term"); provided, however, that either
Communications or Xxxxxxxx may terminate Section 1 hereof, in whole or with
respect to any Support Service being provided at any time and from time to time,
at the end of the Initial Term or during the Renewal Term by providing six (6)
months advance written notice of such termination to the other party. Any such
termination will be effective on the time and date stated therein.
Either Communications or Xxxxxxxx may terminate this Agreement or any
addendum to this Agreement for any material breach or default of the other party
if such breach or default is not corrected within thirty (30) days of giving
written notice of such breach or default to the defaulting party.
Upon termination of Section 1, Communications agrees to reimburse Xxxxxxxx
for all unpaid amounts due as provided for in Section 2 (with any usage fees
which are fixed monthly fees being prorated to the date of termination thereof)
incurred by the Xxxxxxxx Group up to such date of termination; provided that if
Xxxxxxxx has received more than the portion of such unpaid amounts due as
provided for under Section 2 as of the date of termination, Xxxxxxxx will
reimburse Communications the portion of such unpaid amounts to which it is not
entitled under Section 2. In the event that Communications fails to pay any
amount that is required to be paid hereunder when due and such payment is not
thereafter made within fifteen (15) business days after the date on which
Xxxxxxxx has notified Communications in writing of such failure to pay, Xxxxxxxx
may at its option and without further notice immediately terminate the Support
Services after the expiration of such fifteen (15) business day period, without
prejudice to any other remedies that Xxxxxxxx has at law or in equity.
Upon termination of this Agreement, the Xxxxxxxx Group will, at the request
of a member of the Communications Group, transfer to such member of the
Communications Group historical data then in Xxxxxxxx' custody of the
Communications Group relating to the Support Services provided hereunder.
8. Assignment. Neither Xxxxxxxx, any Xxxxxxxx Subsidiary, Communications,
nor any Communications Subsidiary, will assign, in whole or in part, any of the
rights, obligations or benefits of this Agreement without the prior written
consent of the other parties, except that Xxxxxxxx may assign its rights (but
not Xxxxxxxx' obligations) hereunder to any of its affiliates or majority owned
subsidiaries.
9. Indemnification. Communications and each member of the Communications
Group will, jointly and severally, and to the fullest extent permitted by
applicable law, indemnify and hold harmless Xxxxxxxx, Xxxxxxxx Subsidiaries and
their respective officers,
4
5
directors, agents and employees (collectively, the "Xxxxxxxx Indemnitees") from
and against all claims, demands, damages, losses, liabilities, costs or expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Costs") incurred or suffered by an Xxxxxxxx Indemnitee as a
result of the Support Services; provided, however, that the foregoing terms of
this sentence will not apply to the extent such Costs result from or arise out
of the negligence or willful misconduct of the Xxxxxxxx Group or any member
thereof. Xxxxxxxx will, to the fullest extent permitted by applicable law,
indemnify and hold harmless the members of the Communications Group and their
respective officers, directors, agents and employees (collectively, the
"Communications Indemnitees") from and against all Costs incurred or suffered by
any Communications Indemnitee as a result of the Support Services to the extent
such Costs result from or arise out of the gross negligence or willful
misconduct of the Xxxxxxxx Group or any member thereof. In no case will Costs be
deemed to include Service Charges. This Section 9 will survive the termination
of the other terms of this Agreement.
10. Delegation. Subject to Section 3 above, Communications delegates to
Xxxxxxxx final, binding, and exclusive authority, responsibility, and discretion
to interpret and construe the provisions of employee welfare benefit plans in
which Communications has elected to participate and which are administered by
Xxxxxxxx under this Agreement (collectively, "Employee Welfare Plans").
Xxxxxxxx may further delegate such authority to plan administrators to:
(i)provide administrative and other services;
(ii) reach factually supported conclusions consistent with the terms of the
Employee Welfare Plans;
(iii) make a full and fair review of each claim denial and decision related
to the provision of benefits provided or arranged for under the Employee
Welfare Plans, pursuant to the requirements of ERISA, if within sixty days
after receipt of the notice of denial, a claimant requests in writing a
review for reconsideration of such decisions. The administrator shall notify
the claimant in writing of its decision on review. Such notice shall satisfy
all ERISA requirements relating thereto; and
(iv) notify the claimant in writing of its decision on review.
11. Xxxxxxxx Litigation. In the event that any litigation, proceeding, or
investigation by or before any court or governmental agency or body is commenced
or threatened against Xxxxxxxx or any member of the Xxxxxxxx Group after the
effective date of this Agreement and which relates to Support Services rendered
hereunder and arises out of or is based solely upon the past, present, or future
business or operations of Communications or of any member of the Communications
Group, then at Xxxxxxxx' option, Xxxxxxxx and Communications shall use their
best reasonable efforts to have Communications or the relevant member of the
Communications Group, as the case may be, substituted in the place of and for
5
6
Xxxxxxxx or the relevant member of the Xxxxxxxx Group, as the case may be, and
to have Xxxxxxxx or the relevant member of the Xxxxxxxx Group, as the case may
be, removed as a party, as promptly as is practicable. Pending such
substitution, and in the cases where such substitution cannot be effected,
Communications, with the full cooperation of Xxxxxxxx and the Xxxxxxxx Group,
shall promptly assume and direct the defense, prosecution, and/or settlement of
the claims concerned, employing for such purpose counsel reasonably satisfactory
to Xxxxxxxx, and shall pay all expenses related thereto. To the extent that any
such expenses are paid by Xxxxxxxx or the relevant member of the Xxxxxxxx Group,
as the case may be, Communications shall promptly reimburse Xxxxxxxx or the
relevant member of the Xxxxxxxx Group, as the case may be, therefor.
12. Communications Litigation. In the event that any litigation, proceeding,
or investigation by or before any court or governmental agency or body is
commenced or threatened against Communications or a member of the Communications
Group after the effective date of this Agreement and which relates to Support
Services rendered hereunder and arises out of or is based solely upon the past,
present, or future business or operations of Xxxxxxxx or any member of the
Xxxxxxxx Group but not of Communications or a member of the Communications
Group, then at Communications' option, Communications and Xxxxxxxx shall use
their best reasonable efforts to have Xxxxxxxx or the relevant member of the
Xxxxxxxx Group, as the case may be, substituted in the place of and for
Communications or the relevant member of the Communications Group, as the case
may be, and to have Communications or the relevant member of the Communications
Group, as the case may be, removed as a party, as promptly as is practicable.
Pending such substitution and in cases where such substitution cannot be
effected, Xxxxxxxx shall, with the full cooperation of Communications and
Communications Group, promptly assume and direct the defense, prosecution,
and/or settlement of the claims concerned, employing for such purpose counsel
reasonable satisfactory to Communications, and shall pay all expenses related
thereto. To the extent that any such expenses are paid by Communications or the
relevant member of the Communications Group, Xxxxxxxx shall promptly reimburse
Communications or the relevant member of the Communications Group, as the case
may be, therefor.
13. Compliance with Laws. Xxxxxxxx and Communications agree to comply and
each of Xxxxxxxx and Communications agrees to cause compliance by the Xxxxxxxx
Group and the Communications Group, respectively, providing or receiving, as the
case may be, Support Services hereunder, with all applicable federal, state, and
local laws and regulations in the performance of this Agreement.
14. Governing Law. This Agreement will be construed in accordance with, and
all disputes hereunder will be governed by, the laws of the State of Oklahoma,
without giving regard to its conflicts of laws principles.
6
7
15. Notices. Any notice, request, instruction, correspondence, document or
other communication to be given hereunder by any party to another (herein
collectively called a "Notice") will be in writing and delivered personally or
mailed by certified mail, postage prepared and return receipt requested, or by
facsimile, as follows:
IF TO XXXXXXXX OR ANY XXXXXXXX SUBSIDIARY:
THE XXXXXXXX COMPANIES, INC.
(OR IF TO A XXXXXXXX ONE XXXXXXXX CENTER SUBSIDIARY,
TO IT IN CARE OF
XXXXX, XXXXXXXX 00000 OF XXXXXXXX)
ATTENTION: GENERAL COUNSEL
FACSIMILE NO. 918/573-5942 WITH A COPY TO CORPORATE CONTROLLER
IF TO COMMUNICATIONS:
XXXXXXXX COMMUNICATIONS GROUP, INC.
XXX XXXXXXXX XXXXXX
XXXXX, XXXXXXXX 00000
ATTENTION: GENERAL COUNSEL
Notice given by personal delivery will be effective upon actual receipt.
Notice given by mail will be effective upon forty-eight (48) hours after it is
placed in a mailbox for mailing. Notice given by facsimile will be effective
upon actual receipt if received during the recipient's normal business hours, or
at the beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours; provided that Notices by
facsimile are confirmed promptly after transmission by delivery to the recipient
of a copy thereof in writing by certified mail or personal delivery. Any party
may change any address to which Notice is to be given to it by giving Notice as
provided above of such change of address. For purposes of this Agreement, the
term "business day" means any day other than a Saturday, Sunday or a day on
which national banks in the State of Oklahoma are permitted or required by law
to close.
16. Mutual Cooperation. Xxxxxxxx and Communications will provide each other
with such assistance as may reasonably be required by any of them in connection
with the performance of all obligations under this Agreement.
17. Waiver. No waiver by any party of any term or breach of this Agreement
will be effective unless in writing and signed by the person against whom such
waiver is asserted, and a waiver of any one term or breach may not be construed
as a waiver of any other term or breach hereof or of the same or a similar term
or breach on any other occasion; provided, however, Xxxxxxxx may effect waivers
or amendments for any member of the Xxxxxxxx Group or Xxxxxxxx Indemnitee, and
Communications may effect waivers or amendments for any member of the
Communications Group.
7
8
18. Dispute Resolutions. The parties agree to attempt to resolve any
disagreement they may have under this Agreement through a mutually acceptable
form of alternative dispute resolution prior to initiating litigation in respect
of such dispute.
19. Construction. Except where otherwise expressly provided, all references
to Sections, paragraphs and Schedules in this Agreement will be deemed to be
references to such Sections and paragraphs of this Agreement or Attachment A
attached to this Agreement, respectively. The terms "hereof," "herein,"
"hereunder" and other terms of similar import will be deemed to refer to this
Agreement in its entirety, and not to any Section or paragraph.
20. Force Majeure. For purposes of this Section, "force majeure" means an
event beyond the control of either party, which by its nature could not have
been foreseen by such party, or if it could have been foreseen, was unavoidable,
and includes without limitation, acts of God, storms, floods, riots, fires,
sabotage, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) and failure of energy sources.
Neither party shall be under any liability for failure to fulfill any
obligation under this Agreement, so long as and to the extent to which the
fulfillment of such obligation is prevented, frustrated, hindered, or delayed as
a consequence of circumstances of force majeure, provided always that such party
shall have exercised all due diligence to minimize to the greatest extent
possible the effect of force majeure on its obligations hereunder.
Promptly on becoming aware of force majeure causing a delay in performance
or preventing performance of any obligations imposed by this Agreement (and
termination of such delay), the party affected shall give written notice to the
other party giving details of the same, including particulars of the actual and,
if applicable, estimated continuing effects of such force majeure on the
obligations of the party whose performance is prevented or delayed. If such
notice shall have been duly given, and actual delay resulting from such force
majeure shall be deemed not to be a breach of this Agreement, and the period for
performance of the obligation to which it relates shall be extended accordingly,
provided that if force majeure results in the performance of a party being
delayed by more than 60 days, the other party shall have the right to terminate
this Agreement with respect to any Support Service effected by such delay
forthwith by written notice.
21. Amendment. No modification or amendment of this Agreement will be
binding upon any party unless in writing and signed by the party against which
the modification or amendment is asserted.
22. Entire Agreement. This Agreement and Attachment A (which is hereby
incorporated herein), constitute the entire understanding of the parties with
respect to the subject matter hereof, superseding all negotiations, prior
discussions and preliminary agreements, if any.
8
9
23. Severability. Any Section or any other provision of this Agreement which
is, or becomes, illegal, invalid or unenforceable shall be severed herefrom and
shall be ineffective to the extent of such illegality, invalidity or
unenforceability and shall not affect or impair the remaining provisions hereof,
which provisions shall (a) be severed from any illegal, invalid or unenforceable
Section or any other provision of this Agreement, and (b) otherwise remain in
full force and effect; provided, however, that the parties shall use their best
efforts to achieve the purpose of the invalid or unenforceable provision or part
thereof by a new valid and enforceable stipulation.
9
10
IN WITNESS WHEREOF, the parties hereto have executed this Administrative
Services Agreement on and as of the date and year first-above written.
[STAMP]
XXXXXXXX:
THE XXXXXXXX COMPANIES, INC.
BY: /s/ XXXX X. XXXXXXXX
--------------------------------------
NAME: Xxxx X. XxXxxxxx
------------------------------------
TITLE: Sr. V.P. - Finance & CFO
-----------------------------------
XXXXXXXX SUBSIDIARIES:
See attached subsidiary list
----------------------------------------------------------------------------
----------------------------------------------------------------------------
COMMUNICATIONS:
XXXXXXXX COMMUNICATIONS GROUP, INC.
BY: /s/ G.L. BEST
--------------------------------------
NAME: G.L. Best
------------------------------------
TITLE: VIce President
-----------------------------------
COMMUNICATION SUBSIDIARIES:
See attached subsidiary list
----------------------------------------------------------------------------
----------------------------------------------------------------------------
10
