EXHIBIT 2.5.1.2
AGREEMENT BETWEEN WORLDCOM NETWORK SERVICES INC.
AND ABLE CONSTRUCTION INC.
SEPTEMBER 9, 1998
This Agreement ("Agreement") confirms our agreement with respect to the
settlement of a dispute between the undersigned with respect to the matters set
forth herein.
This Agreement covers the following matters:
1. NOTE TERMS. The existing Promissory Note with Able Telcom Holding
Corp. ("Able") as the maker and MFS Communications Company, Inc. ("MFS") as the
payee shall be assigned to WorldCom Network Services, Inc. ("WorldCom") and
shall be amended and restated to a principal amount of $30,000,000 bearing
interest at 11.5% from September 1, 1998. The note will be adjusted for any
reductions to the WorldCom credit for the March 31, 1998 costs in excess of
xxxxxxxx. For any amount greater than $10,000,000, Able will apply any such
excess as a credit ratably to the outstanding invoice.
The Maturity Date of the Note will be December 15, 2000 (the "Maturity
Date"). Interest shall accrue and be payable quarterly and on the Maturity Date.
The Note may be prepaid in part or in total without penalty.
The principal amount of the Note shall be prepaid as follows:
a. By applying as a credit thereto an amount equal to 8% of the
amount otherwise payable by WorldCom, or any affiliate
thereof, to Able, or any affiliate thereof, under any
"Management Services Agreement" ("MSA"), including, without
limitation, the MSA dated July 2, 1998;
b. By Able paying WorldCom on the first business day after Able
receives the proceeds of any of the following:
i. $7,000,000 upon the sale of NYSTA conduit;
ii. $1,500,000 upon payment by The Xxxxxxxx Companies of
a fee for the installation of conduit; and
iii. The greater of 50% of the net profits or 25% of the
proceeds received from time to time under any
maintenance agreement associated with the sale of
NYSTA conduit.
2. ADDITIONAL PAYMENTS. On December 29, 2000, Able shall pay to
WorldCom the following amounts, if positive:
a. The difference between $9,000,000 related to losses on MFS
Network Technologies, Inc. ("MFSNT") projects in existence on
March 31, 1998 (the "Projects") and recorded by MFSNT as of
June 30, 1998 (the "Recorded Losses"), and the amount recorded
for the Recorded Losses as of the Maturity Date;
b. The difference between $3,000,000 related to losses on the
Projects and not recorded by MFSNT as of June 30, 1998 (the
"Unrecorded Losses") and the amount recorded for the
Unrecorded Losses as of the Maturity Date; and
c. The difference between $5,000,000 recorded as reserves for the
litigation described on SCHEDULE 1 attached hereto (the
"Litigation") and the aggregate costs of Able in defending the
Litigation, and payments made in settlement or in payment of
judgments with respect to the Litigation, as of the Maturity
Date.
3. OTHER DOCUMENTS. The Stock Pledge Agreement and the stock options
dated July 2, 1998 shall remain outstanding and in full force and effect, except
that the exercise and registration periods each respectively shall be extended
one year [ANY OTHER DOCUMENTATION TO REMAIN OUTSTANDING?]
4. EQUITY AWARD. Able shall issue to WorldCom a phantom stock award or
other equity participation convertible into common stock of Able (the "Equity
Award") containing substantially the formal provisions of the stock options
described in Paragraph 2 hereof, (including appropriate anti-dilution
provisions) covering 600,000 shares of Able common stock to be exercised in
whole or part by WorldCom on July 2, 1999 or July 2, 2000 or July 2, 2001, such
award or warrant to expire at 12:01 a.m. on July 3, 2001. The per share exercise
price shall be $5 3/32 and the maximum per share stock price as to which the
valuation difference shall be calculated shall be $30 3/32.
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At the election of Able, the value to be received by WorldCom upon the
exercise of the Equity Award shall be paid in cash or in stock or in a
combination of cash and stock.
The Equity award will contain a provision indicating that Able has no
obligation to issue stock in excess of 19.9% of its then outstanding stock
(calculated in accordance with the rules of the national securities exchange or
quotation system upon which Able stock shall be listed at the time of any such
exercise) PROVIDED THAT, Able shall have the election to obtain appropriate
shareholder approval and other approvals required to issue in excess of 19.9% of
its stock.
4. INDEMNIFICATION. Able will indemnify and hold harmless WorldCom, and
its affiliates, and each of their respective employees, representatives,
officers and directors (the "Indemnified Parties") from and against any and all
claims liabilities, losses, damages, actions, attorneys' fees and demands (the
"Indemnified Losses") resulting from the claims, demands, investigations,
proceedings or lawsuits of or by any person arising out of the business
operations acquired by Able in the MFSNT acquisition EXCEPT for Michigan
township for access rights and the Sirit litigation.
Able shall pay for or reimburse an Indemnified Party for any
ascertained Indemnified Loss in advance of a final disposition of the matter as
to which indemnification is sought within ten (10) days after submission of a
claim for Indemnified Losses by an Indemnified Party.
5. PERFORMANCE BONDS. Promptly after the closing of the transactions
contemplated by this Agreement, Able shall cause WorldCom to be released from
any and all liability on existing performance bonds and reimbursement agreements
(other than bond E-470) relating to any project to which MFSNT is or was a
party.
6. MUTUAL RELEASES. The parties shall enter into mutual releases in
customary form with respect to matters arising before the date hereof, but
excluding obligations hereunder and other outstanding documentation between
WorldCom, Able and their affiliates.
7. LEGAL INTENT. The Parties intend to be legally bound by this
Agreement and agree that this Agreement contains the necessary material items to
be considered a contract. The Parties agree to act in good faith and
expeditiously to prepare, sign and deliver the definitive documentation on or
before September 19, 1998.
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8. REMEDIES. The parties agree that in addition to all other remedies
which an aggrieved party may have, this Agreement may be enforced by either
party by an action for specific performance in any court of competent
jurisdiction.
This Agreement is entered into this 9th day of September, 1998.
WORLDCOM NETWORK ABLE CONSTRUCTION, INC.
SERVICES INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXXX
------------------------- ------------------------
Name: XXXXX X. XXXXX Name: XXXXXXX X. XXXXXX
Title: VP & Controller Title: President & CEO
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PARTIAL
UNDISCLOSED LITIGATION/CLAIMS
(Pending or threatened at time of Contract)
1. While item #13 on Exhibit 6h to the Acquisition Contract discloses
XXXXXX VS. XXXXXXXXX CONTRACTING, ET AL, it does not disclose the
existence of claims by subs against LaGuardia (our sub) or that
LaGuardia was in Chapter 11.
2. Xxxxxxx Xxxx wrongful death (February '98). Though insurance should
cover the wrongful death claims, there were significant claims by state
or local government (with possible sanctions) for maintaining an unsafe
worksite and tampering with or removing safety devices from
equipment/machinery.
3. Xxxxxxxx Person. Employment discrimination (Virginia and federal law
claims). Notice given by Virginia Human Rights Commission on 2-17-98.
HRC#98044E and EEOC #10D980153.
4. AMERICAN UNDERGROUND VS. MFSNT, AAA Arbitration, Baltimore. This is a
$650,000+ claim by a sub under an invoice received by MFSNT in February
1998 after a few months of disputing. Arbitration was demanded on
5-5-98 over this dispute that originated in 1997. The demand seeks
$655,015.80.
5. FIBER OPTEK INTERCONNECT VS. MFSNT. This claim by a sub arose from a
dispute in September, 1997. The claimant sought $119,000 and the case
was settled in June 1998 for $105,700.23.
6. XXXXXXXX ALASKA, INC. VS. MFSNT. (Alyeska Project). A dispute arose in
the summer of 1997 over scope of work, change orders, failure to
disclose conditions in job specs. Claimant seeks $4,000,000 above the
contract price. Arbitration demand is expected any day.
7. ALPHATECH, INC. VS. MFSNT, U.S.D.C. Mass., Case #98CV-11189 DPW. Suits
over a teaming agreement dated 1-17-96 related to the E-470 Project and
a teaming agreement dated 6-28-96 related to the NJ Consortium. The
Palintiff alleges breach of both teaming agreements, bad faith,
misappropriation of trade secrets, deceit, promissory estoppel, quantum
meruit and unjust enrichment and seeks damages of "not less than
$3,750,000" plus injunctive relief. Suit was filed June 17, 1998, but
knowledge of the dispute predated the contract.
Appendix 1, p. 1 of 3
8. U.S. PUBLIC TECHNOLOGIES VS. MFSNT. Initially filed in U.S. District
Court, it has been refiled and is now pending in San Diego Superior
Court, San Diego, California. This is a suit over a teaming agreement
dated 7-19-96 in conjunction with the NJ Consortium. It alleges breach
of contract, bad faith, tortious interference, unfair competition,
promissory estoppel and unjust enrichment, and seeks $8,500,000 plus
costs and fees.
9. AMERICAN INTERNATIONAL CORP. VS. MFSNT. Claim by materialman for
$408,359.80 for materials provided on the Tappan Zee Bridge Project.
Demand letter from claimant's attorney sent 1-12-98. Sent to MFSNT's
outside counsel of 1-26-98.
10. CITY ELECTRIC, INC. Claim/lien notice in the amount of $1,264,838 on
Alyeska Project. Formal claim notice is dated 12-31-97.
11. E-470 PROJECT DISPUTES
Numerous dispute and default threats have been made on this
project claiming lapses, defects and defaults on the part of MFSNT. The
prime contractor's counsel sent a notice of "significant lapses or
defects in performance" on 4-30-97. Threats and demands for cure and
for liquidated damages ($15,000/calendar day, increasing to
$31,000/calendar day) followed. The contractor notified the surety,
Travelers, of its intent to make a claim on the performance bond on
5-29-98, a copy of which was sent to WorldCom. To complete the job
MFSNT projects a loss of approximately $12,000,000. ADR has been
requested.
12. ATCAS PROJECT
This project has been the subject of ongoing disputes
throughout, with numerous claims against MFSNT for noncompliance. MFSNT
also has an ongoing dispute with a major sub, Lockheed. As a result of
these ongoing disputes, monies are being withheld from MFSNT, and
MFSNT's expenses are more than projected.
Appendix 1, p. 2 of 3
13. XXXX XXXX VS. MFSNT OSHA Case #955930
Employee claims wrongful discharge for reporting OSHA violations.
Initial OSHA Complaint #202-389086 was sent to MFSNT on 3-23-98 stating
it had received notice of safety hazards. MFSNT responded 3-25-98. That
file was closed "subject to Complainant's review." Complainant then
made the wrongful termination claim (OSHA #955930) on 4-9-98.
14. XXXXX XXXXXXXX. Employment discrimination claim threatened, resulting
in company wide memo advising employees not to talk to Xxxxxxxx. Notice
of intent to pursue claim made 4-9-98.
15. CITY OF MADISON HEIGHTS VS. MFSNT, ET AL
Substantially the same type of claims involved in items 11 and
12 on Exhibit 6h to the Acquisition Contract (litigation).
16. NYSTA CONSTRUCTION CAP DISPUTE
There has been a dispute ongoing regarding the construction
cap on NYSTA for approximately $14,000.00. Based on the NYSTA contract
this effectively reduces MFSNT's revenues by $4.5 to $5.0 million.
17. CANADA 104 PROJECT
A default notice had been given to MFSNT by SIRIT after
ongoing threats and demands. An acceptance of cure was recently
received, but only after MFSNT incurred the expense to cure.
18. All matters listed on Exhibit 6h to the Acquisition Agreement
19. TAB Electric (Alyeska)
21. Mass Turnpike (limited to costs or expenditures after 7-8-98)
Appendix 1, p. 3 of 3
