GUARANTY AGREEMENT
GUARANTY AGREEMENT, dated as of July 18, 1998, between NEXTLINK,
Communications, Inc., a Delaware corporation ("Guarantor"), and Level 3
Communications, LLC, a Delaware limited liability company ("Beneficiary").
W I T N E S S E T H :
WHEREAS, Guarantor is, directly or indirectly, the owner of 50% of the
issued and outstanding membership interests in INTERNEXT, LLC a Delaware
limited liability company ("Grantee");
WHEREAS, Beneficiary and Grantee have entered into an IRU Agreement,
dated as of July 18, 1998 (the "IRU Agreement"), providing for the grant to
Grantee of an indefeasible right to use and/or ownership of certain facilities
in the Grantor System (as defined in the IRU Agreement);
WHEREAS, pursuant to the terms of the IRU Agreement, Grantee's
obligations under the IRU Agreement are required to be guaranteed from time to
time by one or more of the Permitted Guarantors (as defined in the IRU
Agreement); and
WHEREAS, Guarantor is a Permitted Guarantor.
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the parties hereto agree as follows:
1. DEFINED TERMS. Capitalized terms used herein without other
definition shall have the respective meanings ascribed to them in the IRU
Agreement. In addition, the following terms shall have the following meanings:
(a) "Guaranteed Obligations" shall mean, as of any date of
determination, an amount equal to (but not exceeding) 50% of the the IRU
Obligations, provided that any IRU Obligations (including, without limitation,
interest and penalty obligations) resulting from or relating to another
Permitted Guarantor's failure to make any payment under such Permitted
Guarantor's guaranty shall be excluded for purposes of determining Guaranteed
Obligations.
(b) "IRU Obligations" shall mean (i) the due, prompt and complete
payment of all amounts due to Beneficiary by Grantee under the IRU Agreement,
when and as the same shall become due and payable and (ii) the due, prompt and
faithful performance of, and compliance with, all other covenants, undertakings
and obligations of Grantee set forth in the IRU Agreement.
2. GUARANTY. Guarantor hereby unconditionally and irrevocably
guarantees to Beneficiary the Guaranteed Obligations. This guaranty is a
guaranty of payment, performance and compliance and not of collectibility and is
in no way conditioned
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or contingent upon any attempt to collect from or enforce performance or
compliance by Grantee or upon any other event or condition whatsoever. If
for any reason whatsoever Grantee shall fail or be unable duly, punctually
and fully to pay such amounts as and when the same shall become due and
payable or to perform or comply with any other Guaranteed Obligation,
Guarantor will forthwith pay or cause to be paid the Guaranteed Obligations
to Beneficiary, in lawful money of the United States, or perform or comply
with such Guaranteed Obligations or cause such Guaranteed Obligations to be
performed or complied with. Guarantor, promptly after demand, will reimburse
Beneficiary for all costs and expenses of collecting such amounts or
otherwise enforcing this Agreement, including, without limitation, the fees
and expenses of counsel. Notwithstanding any other provision of this
Agreement to the contrary, Guarantor shall have all rights of Grantee under
IRU Agreement with respect to the determination of amounts due and
determination of other obligations, including, without limitation, the
provisions of Article 24 of the IRU Agreement, except to the extent that such
rights have been exhausted or waived by Grantee.
3. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants as follows:
(a) ORGANIZATION, GOOD STANDING, ETC. Guarantor is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, and to enter into and to carry out the terms of this
Agreement.
(b) AUTHORIZATION AND ENFORCEABILITY. The execution and delivery by
Guarantor of this Agreement and all other agreements and documents to be
executed and delivered by it in connection herewith, the performance by
Guarantor of its obligations hereunder and thereunder, and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate acts and other proceedings of Guarantor.
This Agreement and all other agreements and documents to be executed and
delivered by Guarantor in connection herewith have been duly and validly
executed and delivered by Guarantor and constitute legal, valid and binding
obligations of Guarantor, enforceable against it in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, rearrangment, fraudulent transfers,
conservatorship or other laws (including court decisions) affecting the
enforcement of creditors' rights generally.
(c) RELATIONSHIP TO COMPANY. Guarantor owns, directly or indirectly
50% of the issued and outstanding membership interests in Grantee.
(d) COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The execution and
delivery by Guarantor of, and performance of the obligations of Guarantor under,
this Agreement will not result in any violation of or be in conflict with or
constitute a default under any term of any agreement or instrument to which it
is a party or by which it is bound or any term of any applicable law, ordinance,
rule or regulation of any governmental authority or any term of any applicable
order, judgment or decree of any court, arbitrator or governmental authority or
result in the creation of (or impose any obligation on Guarantor to create) any
lien upon
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any of the properties or assets of Guarantor pursuant to any such term, which
violation, conflict, default or lien might have a materially adverse effect
on the business, operations, condition (financial or physical), properties,
net assets or liabilities of Guarantor or upon the ability of Guarantor to
perform its obligations under this Agreement.
(e) GOVERNMENTAL CONSENT. No consent, approval or authorization of,
or declaration or filing with, any governmental authority, on the part of
Guarantor is required for the valid execution and delivery of this Agreement and
the due performance of the obligations of Guarantor under this Agreement.
4. GUARANTOR'S OBLIGATIONS UNCONDITIONAL. The obligations of
Guarantor under this Agreement are primary, absolute and unconditional
obligations of Guarantor, are not subject to any counterclaim, set-off,
deduction, diminution, abatement, recoupment, suspension, deferment or
defense based upon any claim Guarantor or any other person may have against
Grantee, Beneficiary or any other person, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or
not Guarantor or Grantee shall have any knowledge or notice thereof),
including, without limitation:
(a) any amendment of or change in, or termination or waiver of, the
IRU Agreement;
(b) any furnishing, acceptance or release of, or any defect in any
security for, any of the Guaranteed Obligations;
(c) any waiver of the payment, performance or observance of any of
the obligations, conditions, covenants or agreements contained in the IRU
Agreement, or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of the IRU
Agreement;
(d) any failure, omission or delay on the part of Beneficiary to
enforce, assert or exercise any right, power or remedy conferred on it in this
Agreement;
(e) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar proceedings with
respect to Grantee or any other person or any of their respective properties or
creditors, or any action taken by any trustee or receiver or by any court in any
such proceeding;
(f) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of the IRU
Agreement;
(g) any merger or consolidation of Grantee or Guarantor into or with
any other corporation, or any sale, lease or transfer of any of the assets of
Grantee or Guarantor to any other person;
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(h) any change in the ownership of any membership interests in
Grantee, or any change in the corporate relationship between Grantee and
Guarantor, or any termination of such relationship; or
(i) any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether foreseen or
unforeseen, and any other circumstance which might otherwise constitute a legal
or equitable defense or discharge of the liabilities of a guarantor or surety or
which might otherwise limit recourse against Guarantor.
5. FULL RECOURSE OBLIGATIONS. The obligations of Guarantor set
forth herein constitute the full recourse obligations of Guarantor
enforceable against it to the full extent of all its assets and properties.
6. WAIVER. Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 4, (b) notice to Guarantor of the incurrence of any of the Guaranteed
Obligations, notice to Guarantor or Grantee of any breach or default by Grantee
with respect to any of the Guaranteed Obligations or any other notice that may
be required, by statute, rule of law or otherwise, to preserve any rights of
Beneficiary against Guarantor, (c) presentment to or demand of payment from
Grantee or Guarantor with respect to any Guaranteed Obligation or protest for
nonpayment or dishonor, (d) any right to the enforcement, assertion, exercise or
exhaustion by Beneficiary of any right, power, privilege or remedy conferred in
the IRU Agreement or otherwise, (e) any requirement of diligence on the part of
Beneficiary, (f) any requirement to mitigate the damages resulting from any
default under the IRU Agreement, (g) any notice of any sale, transfer or other
disposition of any right, title to or interest in the IRU Agreement, (h) any
release of Guarantor from its obligations hereunder resulting from any loss by
it of its rights of subrogation hereunder and (i) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety or which might otherwise limit
recourse against Guarantor.
7. SUBROGATION. Upon the payment and performance in full of all
Guaranteed Obligations, Guarantor shall be subrogated to the rights of
Beneficiary in respect of any payment or other obligation with respect to which
an amount has been payable by Guarantor hereunder. Guarantor shall not seek to
exercise any rights of subrogation, reimbursement or indemnity arising from
payments made by Guarantor pursuant to the provisions of this Agreement until
the full and complete payment or performance and discharge of the Guaranteed
Obligations.
8. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC. This Guaranty shall
continue to be effective or be automatically reinstated, as the case may be, if
at any time any payment made by any person on account of any of the sums due
Beneficiary pursuant to the terms of the IRU Agreement is rescinded or must
otherwise be restored or returned by such holder upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Grantee or any other
person, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to Grantee or other
person or any substantial
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part of its property, or otherwise, all as though such payment had not been
made.
9. TERM OF AGREEMENT. This Agreement and all guarantees, covenants
and agreements of Guarantor contained herein shall continue in full force and
effect and shall not be discharged until such time as all of the Guaranteed
Obligations and other independent payment obligations of Guarantor under this
Agreement shall be paid and performed in full and all of the agreements of
Guarantor hereunder shall be duly paid and performed in full. Notwithstanding
anything in this Agreement to the contrary, this Agreement may be terminated,
replaced or amended in the manner contemplated by, and subject to the provisions
of, Section 20.06 of the IRU Agreement.
10. NOTICES. All notices under the terms and provisions hereof shall
be in writing, and shall be delivered or sent by telex or telecopy or mailed by
first-class mail, postage prepaid, addressed, (a) if to Beneficiary, at the
address set forth in Article 25 of the IRU Agreement, or at such other address
as Beneficiary shall from time to time designate in writing to Guarantor and
(b) if to Guarantor, at SUITE 2200, 000 000XX XXXXXX, XX, XXXXXXXX, XXXXXXXXXX
00000, ATTENTION: GENERAL COUNSEL, or at such other address as Guarantor shall
from time to time designate in writing to Beneficiary. Any notice so addressed
shall be deemed to be given when so delivered or sent or, if mailed, on the
third business day after being so mailed.
11. AMENDMENTS, ETC. Except as provided in Section 9, no amendment,
alteration, modification or waiver of any term or provision of this Agreement,
nor consent to any departure by Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by Beneficiary, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
12. SUBMISSION TO JURISDICTION. Guarantor, for itself and its
successors and assigns, hereby irrevocably (a) agrees that any legal or
equitable action, suit or proceeding against Guarantor arising out of or
relating to this Agreement or any transaction contemplated hereby or the subject
matter of any of the foregoing may be instituted in any state or federal court
in the State of Delaware, (b) waives any objection which it may now or hereafter
have to the venue of any action, suit or proceeding, (c) irrevocably submits
itself to the nonexclusive jurisdiction of any state or federal court of
competent jurisdiction in the State of Delaware for purposes of any such action,
suit or proceeding. Guarantor waives personal service of process and consents
that service of process upon it may be made by certified or registered mail,
return receipt requested, at its address specified or determined in accordance
with the provisions of Section 10, and service so made shall be deemed completed
on the third business day after mailing. Nothing contained in this Section 12
shall be deemed to affect the right of Beneficiary to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against Guarantor in any jurisdiction.
13. WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND BENEFICIARY
IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL
OR EQUITABLE ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY
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TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF
THE FOREGOING.
14. SURVIVAL. All warranties, representations and covenants made by
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been relied upon by Beneficiary
and shall survive the execution and delivery of this Agreement, regardless of
any investigation made by Beneficiary or on its behalf. All statements in any
such certificate or other instrument shall constitute warranties and
representations by Guarantor hereunder.
15. MISCELLANEOUS. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, Guarantor hereby waives any provision of law that renders any
provisions hereof prohibited or unenforceable in any respect. The terms of this
Agreement shall be binding upon, and inure to the benefit of, Guarantor and
Beneficiary and their respective successors and assigns. No term or provision
of this Agreement may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by Guarantor and Beneficiary. The
section and paragraph headings in this Agreement and the table of contents are
for convenience of reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof, and all references herein to numbered
sections, unless otherwise indicated, are to sections in this Agreement. This
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to applicable
principles of conflicts of law.
16. SPECIAL COVENANTS. Guarantor hereby covenants and agrees as
follows:
(a) For purposes of this Section 16, the following terms are defined:
(1) "Board of Directors" means the board of directors of Guarantor.
(2) "Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of
corporate stock or other equity participations, including partnership
interests, whether general or limited, of such Person and any rights (other
than debt securities convertible or exchangeable into an equity interest),
warrants or options to acquire an equity interest in such Person.
(3) "Consolidated Net Worth" of any Person means the stockholders'
equity of such Person, determined on a consolidated basis in accordance
with generally accepted accounting principles.
(4) "Fair Market Value" means, with respect to any Property, the
price that could be negotiated in an arm's-length free market transaction,
for cash, between
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a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction. Unless otherwise specified
herein, Fair Market Value shall be determined by the Board of Directors
acting in good faith and shall be evidenced by a Board of Directors
resolution.
(5) "Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible, including Capital Stock in, and other
securities of, any other Person.
(6) "Subsidiary" of any Person means (i) a corporation more than 50%
of the combined voting power of the outstanding Voting Stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and
one or more other Subsidiaries thereof, directly or indirectly, has at
least a majority ownership and power to direct the policies, management and
affairs thereof.
(7) "Voting Stock" of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only
for so long as no senior class of securities has such voting power by
reason of any contingency.
(b) Guarantor shall not, in a single transaction or a series of
related transactions, (i) consolidate with or merge into any other Person or
Persons or permit any other Person to consolidate with or merge into Guarantor
or (ii) directly or indirectly, transfer, sell, lease, convey or otherwise
dispose of all or substantially all its assets to any other Person or Persons,
unless:
(1) in a transaction in which Guarantor is not the surviving Person
or in which Guarantor transfers, sells, leases, conveys or otherwise
disposes of all or substantially all of its assets to any other Person, the
resulting, surviving or transferee Person (the "successor entity") is
organized under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume all of Guarantor's
obligations under this Agreement;
(2) immediately after giving effect to such transaction, the
Consolidated Net Worth of Guarantor (or the successor entity) is equal to
or greater than that of Guarantor immediately prior to the transaction; and
(3) in the case of a transfer, sale, lease, conveyance or other
disposition of all or substantially all of the assets of Guarantor, such
assets shall have been transferred as an entirety or virtually as an
entirety to one Person and such Person shall have complied with all the
provisions of (1) and (2) above.
(c) Guarantor shall cause all properties owned by Guarantor or any
Subsidiary or used or held for use in the conduct of its business or the
business of any
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Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and shall cause to be made
all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of Guarantor may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided that nothing contained herein
shall prevent Guarantor or any Subsidiary from discontinuing the maintenance
of any of such properties if such discontinuance is, in the judgment of
Guarantor, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to Beneficiary.
(d) Guarantor shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, sell, lease, transfer or otherwise dispose of any
material portion of its Property to, or purchase any material portion of
Property from, or enter into any material contract, agreement, understanding,
loan, advance, guarantee or transaction (including the rendering of services)
with or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless such Affiliate Transaction or series of Affiliate
Transactions is (i) in the best interest of Guarantor or such Subsidiary and
(ii) on terms that are no less favorable to Guarantor or such Subsidiary than
those that would have been obtained in a comparable arm's-length transaction by
Guarantor or such Subsidiary with a Person that is not an Affiliate (or, in the
event that there are no comparable transactions involving Persons who are not
Affiliates of Guarantor or the relevant Subsidiary to apply for comparative
purposes, is otherwise on terms that, taken as a whole, Guarantor has determined
to be fair to Guarantor or the relevant Subsidiary). Notwithstanding the
foregoing, the following shall not be deemed Affiliate Transactions: (i) any
employment agreement entered into by Guarantor or any of its Subsidiaries in the
ordinary course of business and consistent with industry practice; (ii) any
agreement or arrangement with respect to the compensation of a director or
officer of Guarantor or any Subsidiary approved by a majority of the
disinterested members of the Board of Directors and consistent with industry
practice; (iii) transactions between or among the Company and its Subsidiaries,
provided that no more than 5% of the Voting Stock (on a fully diluted basis) of
any such Subsidiary is owned by an Affiliate of Guarantor (other than a
Subsidiary); (iv) transactions pursuant to the terms of any agreement or
arrangement as in effect on the date hereof; and (v) transactions with respect
to wirelink or wireless transmission capacity, the lease or sharing or other use
of cable or fiber optic lines, equipment, rights-of-way or other access rights,
between Guarantor (or any Subsidiary) and any other Person.
(e) Guarantor shall not, and shall not permit any Subsidiary to,
sell, transfer or dispose of any of its Property with a Fair Market Value of
$5,000,000 or more outside the ordinary course of its business (excluding any
sale, transfer or disposition of Property that is obsolete or no longer used by
or useful to Guarantor or any Subsidiary) unless:
(1) Guarantor or the Subsidiary, as the case may be, receives
consideration for such disposition at least equal to the Fair Market Value
for the Property sold or disposed of.
(2) the consideration received in connection therewith is used by
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Guarantor or such Subsidiary within 360 days of receipt for the payment of
expenses in the ordinary course of business, for the payment of debt of
Guarantor or such Subsidiary, or for reinvestment in the business of
Guarantor or such Subsidiary.
(f) Guarantor shall deliver to Beneficiary on request (but not more
than once per year), a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of Guarantor's compliance during the period covered by such report
with all conditions and covenants of this Agreement.
The covenants and agreements contained in this Section 16 shall terminate
effective as of the date of full and complete payment of the IRU Fee to
Beneficiary in accordance with the terms and provisions of the IRU Agreement.
17. QUALIFICATION TO SPECIAL COVENANTS.. Any Guarantor maintaining
an indenture qualified under the Trust Indenture Act of 1939, as amended, with
at least $100 million of indebtedness outstanding pursuant thereto shall have
the right, in its sole discretion, to re-execute and redeliver this Agreement to
Beneficiary omitting section 16 and substituting in its place a covenant
substantially equivalent to section 16 of the similar agreement executed by
Xxxxx 0 Communications, Inc. as Guarantor, except referencing one of its public
indentures and the sections thereof equivalent to the matters addressed in the
current version of section 16 of this Agreement. In addition, the provisions of
section 16 of this Agreement or of any redelivered Agreement shall be of no
force or effect during any period that, if Guarantor has publicly-traded common
stock, the total market value of Guarantor's outstanding common stock as
determined on the basis of closing price (or, if Guarantor is privately held,
the total value of its outstanding common stock, as demonstrated to the
reasonable satisfaction of Beneficiary) exceeds the amount obtained when $1.5
billion is multiplied by the percentage set forth in paragraph 1(a) of this
Agreement.
IN WITNESS WHEREOF, Guarantor and Beneficiary have each caused this
Agreement to be duly executed as of the day and year first above written.
NEXTLINK COMMUNICATIONS, INC.,
as Guarantor
By /s/ XXXXX X. XXXXX
----------------------------------------
Title: CEO
LEVEL 3 COMMUNICATIONS, LLC,
as Beneficiary
By /s/ XXXXX X'XXXX
----------------------------------------
Title: President
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