1
EXHIBIT 10.118
RELEASE AND
SETTLEMENT AGREEMENT
This Release and Settlement Agreement ("Agreement") is entered into
between AT&T Corp. ("AT&T") and MIDCOM Communications Inc. ("MIDCOM" or
"Customer").
Recitals
WHEREAS, Customer currently subscribes to AT&T long distance service
under Contract Tariff 969 ("CT 969"), which comprises Distributed Network
Service ("DNS") and Software Defined Network ("SDN")[*]; and
WHEREAS a dispute has arisen concerning[*]; and
WHEREAS a dispute has arisen concerning[*]; and
WHEREAS a dispute has arisen concerning[*]; and
WHEREAS, Customer and AT&T desire to fully and finally settle and
resolve the Payment Dispute, the AT&T Disputes and the CT 969 Dispute and to
make provision for the resolutions of the Existing Disputes, and to thereby
avoid the time and expense of litigation;
AT&T/MIDCOM Confidential and Proprietary
*CONFIDENTIAL TREATMENT REQUESTED.
2
THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. New Agreement
AT&T will file revisions to CT 969, in the form attached to this
Agreement as Attachment A. On the date such revisions become effective, and
without any further action being required, Customer's subscription to CT 969
will be discontinued without liability, according to the revised terms of CT
969, in conjunction with Customer's order for service under a separate Carrier
Agreement between AT&T and Customer (the "New Service"). If, however, such
Carrier Agreement is not effective as of the date the revisions to CT 969
become effective, the Customer's subscription to CT 969 will not be
discontinued without liability until the effective date of the Carrier
Agreement.
2. Payments to AT&T
(a) AT&T and Customer agree that as of September 30, 1996, Customer
has paid the total amount owed to AT&T for charges billed through and including
July 1, 1996. (b) Customer will pay AT&T $3.8 million within 30 days after
Customer announces quarterly gross revenues in excess of $75 million or upon
completion of a Change in Control. For purposes of this Agreement, a Change in
Control occurs if, (1) as a result of a tender offer, fifty percent (50%) or
more of the outstanding shares of common stock of MIDCOM is acquired by another
person or entity, or (2) the shareholders of MIDCOM approve a merger involving
the conversion or exchange of fifty percent (50%) or more of the outstanding
shares of common stock of MIDCOM into other securities, cash or property (or
any combination thereof).
3. Existing Disputes
AT&T and Customer acknowledge that bona fide billing disputes exist
between the parties in the amount of[*] as described in Attachment B
to this Agreement ("the Existing Disputes").
4. Arbitration
With respect to the Existing Disputes, Customer or AT&T shall have
the right to commence an arbitration proceeding. The party choosing arbitration
shall submit the dispute(s) to the Center for Public Resources ("CPR"). The
arbitration shall be held in Chicago, Illinois and shall be conducted under the
then-current rules and supervision of the CPR. The Federal Arbitration Act, 9
U.S.C. Sections 1 to 16, will govern the arbitrability of all claims. The
arbitral decision and award shall be binding and judgment on the award may be
entered in any
2
AT&T/MIDCOM Confidential and Proprietary
*CONFIDENTIAL TREATMENT REQUESTED.
3
court of competent jurisdiction. The arbitration will be conducted by a single
arbitrator who is knowledgeable in business information, commercial matters or
the telecommunications field, as applicable, except that either party may
require that the arbitration be conducted by a tribunal of three such
arbitrators by providing Notice of such a demand to the other party before a
single arbitrator is selected. The arbitrator(s) may not limit, expand or
otherwise modify the terms of this agreement and will not have authority to
award damages to either party beyond the limitations of liability provided in
this Agreement.
The arbitrator may not expand the amount sought regarding the
applicable dispute beyond that specified in Section 3. The parties, their
representatives, other participants and the arbitrator shall hold the
existence, content and result of the arbitration in confidence. Each party
shall bear its own costs and expenses if arbitration occurs.
5. Transfer of Obligations
The outstanding Customer obligations, not otherwise extinguished
under this Agreement, which have arisen or which may arise under the Former
Service shall be transferred to the New Service at such time as the New Service
Agreement is effective. Such obligations include all tariffed charges provided
that there are not shortfall or termination charges associated with CT 969 at
the time of termination of CT 969.
6. Releases
The following releases are effective as of the initial service date
of the Carrier Agreement for the New Service:
(a) Customer, on behalf of itself and its employees, agents,
shareholders, officers, subsidiaries, predecessors, affiliates, parent
corporations, if any, joint venturers, successors and assigns, heirs,
executors, administrators and trustees ("Customer Releasors"), hereby
discharges and releases AT&T and its past and present employees, agents,
shareholders, officers, subsidiaries, predecessors, affiliates, parent
corporations, if any, joint venturers, successors and assigns, heirs,
executors, administrators and trustees ("AT&T Releasees"), from any and all
rights, claims, damages, actions, judgments, obligations, attorneys' fees,
indemnities, subrogations, duties, demands, controversies or liabilities, at
law or in equity, known or unknown, matured or unmatured, foreseeable or
unforeseeable, which Customer Releasors now have or ever had against AT&T
Releasees up to the date of this Agreement relating to CT 969 or the resale of
AT&T long distance telecommunications services,
3
AT&T/MIDCOM Confidential and Proprietary
4
except Customer retains its rights with respect to the Existing Disputes
described in Section 3 of this Agreement.
(b) AT&T, on behalf of itself and its employees, agents, shareholders,
officers, subsidiaries, predecessors, affiliates, parent corporations, if any,
joint venturers, successors and assigns, heirs, executors, administrators and
trustees ("AT&T Releasors"), hereby discharges and releases Customer and its
past and present employees, agents, shareholders, officers, subsidiaries,
predecessors, affiliates, parent corporations, if any, joint venturers,
successors and assigns, heirs, executors, administrators and trustees
("Customer Releases"), from any and all rights, claims, damages, actions,
judgments, obligations, attorneys' fees, indemnities, subrogations, duties,
demands, controversies or liabilities, at law or in equity, known or unknown,
matured or unmatured, foreseeable or unforeseeable, which AT&T Releasors now
have or ever had against Customer Releasees up to the date of this Agreement
relating to its CT 969 service and Customer's resale of AT&T long distance
telecommunications services, except AT&T retains its rights with respect to the
Existing Disputes described in Section 3 of this Agreement, and with respect to
the payments to be made as provided in section 2(b) of this Agreement.
7. Entire Agreement
This Agreement (including any exhibits and CT 969) is the sole, only,
entire and complete agreement of the parties relating in any way to the subject
matter hereof. No statements, promises or representations have been made by any
party to any party, or are relied upon, and no consideration has been or is
offered, promised, expected or held out, other than as stated in this
Agreement. There are no oral or written collateral agreements. All prior
discussions and negotiations regarding the dispute have been, and are, merged
and integrated into, and are superseded by, this Agreement.
8. Breach of Agreement
Except as provided for in Section 4, in the event that either party is
in breach of any material obligation hereunder, the other party, at its option
and without prior Notice to the breaching party, may commence an action against
such breaching party in any court of competent jurisdiction to enforce the
terms and obligations identified in this Agreement.
9. Ownership of Claim
The parties hereto warrant that they have not assigned or transferred,
in any manner, to any person or entity, any right
4
AT&T/MIDCOM Confidential and Proprietary
5
or interest to which they may be entitled regarding the dispute between the
parties. Each party warrants and represents to the other party that it is the
owner and holder of all rights concerning the claim that is the subject of this
Agreement.
10. No Admission of Liability
This Agreement, the contents thereof or its execution shall not be
construed as any admission of liability by either party.
11. Legal Counsel
Each of the parties represents that in the execution of this
Agreement, and the negotiations leading thereto, it had the opportunity to
consult legal counsel of its own selection. Prior to the execution of this
Agreement by each party, the party's attorney reviewed this Agreement, made any
desired changes and advised to the party with respect to making the settlement
and release provided herein and of executing this Agreement.
12. Applicable Law
This Agreement shall be construed in accordance with and be
governed by the internal laws of the State of New York in effect as of the date
of execution, without regard to the principles of conflicts of law thereof.
13. Enforcement of Agreement
Except as provided in Section 4, if any action at law or in equity,
including an action for declaratory or injunctive relief, is brought to enforce
or interpret the provisions of this Agreement, the prevailing party shall be
entitled to all of its ordinary and necessary costs in prosecuting or defending
said action, including reasonable attorneys' fees, which may be set by the court
in which the action for enforcement if brought, or in a separate action for
that purpose, in addition to any other relief to which the prevailing party may
be entitled.
14. Miscellaneous
(a) The delay or failure of a party to exercise any right, power or
privilege hereunder or failure to strictly enforce any breach or default shall
not constitute a waiver with respect thereto and no waiver of any such right,
power, privilege, breach or default on any one occasion shall constitute a
waiver thereof on any subsequent occasion unless clear and express notice
thereof in writing is provided.
5
AT&T/MIDCOM Confidential and Proprietary
6
(b) If any provision of this Agreement is held to be invalid or
unenforceable, all other provisions shall nevertheless continue in full force
and effect, except that non-occurrence of the conditions specified in paragraph
2(a) herein shall completely void this Agreement in accordance with the terms
thereof.
15. Confidentiality
The parties agree to use their best efforts to keep both the
fact of and the consideration for this Agreement confidential and agree not
to disclose it to others unless required to do so by legal process issued by a
Court or regulatory agency of competent jurisdiction. If asked about the
dispute, each party shall respond only that the dispute has been resolved to
its satisfaction. MIDCOM may disclose the existence of this Agreement and may
describe, generally, its payment obligations to AT&T under the terms of this
Agreement as necessary to comply with State or Federal rules or regulations.
16. Notices
All notices hereunder shall be in writing and shall be deemed
to have been given pursuant to the following schedule:
Overnight Courier - business day following mail;
Telefax - business day of transmission if sent before
2 p.m. recipient's time;
Personal Delivery - business day of delivery;
Mail - postage prepaid, third business day
following date of mailing (date of postmark);
Certified Mail - three days following date of postmark
TO: MIDCOM Communications Inc.
Attention: President
1600 MIDCOM Tower
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
6
AT&T/MIDCOM Confidential and Proprietary
7
WITH COPY TO:
MIDCOM Communications Inc.
Attn: General Counsel
1600 MIDCOM Tower
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
TO: AT&T CORP.
Attn: Xxxxxxx Oyster
Division Manager
Xxxx 00X00
Xxxxxxxxxxx, Xxx Xxxxxx 00000
WITH COPY TO:
AT&T CORP.
Xxxxxxx X. Xxxxx, Xxx.
Xxxx 0000X0
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
17. Amendments
Any amendments, modifications or supplements to this Agreement shall be
valid only if all such amendments, modifications, or supplements are in writing
and are signed by an authorized representative of all parties.
18. Waiver
No waiver of any covenant, condition or limitation herein contained
shall be valid unless the same is made in writing and duly executed by the
party making the waiver. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, whether or not similar. The failure
or neglect of either party on any occasion to enforce any provision of this
Agreement shall not restrain or limit such party from enforcing such provisions
upon any other occasion or occasions if such party elects to do so, and no
written waiver of any breach of this Agreement shall be deemed to be a
continuing waiver of such breach unless so expressly stated. Any waiver shall be
null and void if the party requesting such waiver has not provided a full and
complete disclosure of all material facts relevant to the waiver requested.
19. Assignment
This Agreement is not assignable by any party.
7
AT&T/MIDCOM Confidential and Proprietary
8
20. Captions/References
The captions in this Agreement are inserted solely for the
purpose of facilitating easy reference and shall not be construed in any way as
part of this Agreement, or as altering the provisions of this Agreement.
References herein to Articles, Sections, Schedules or Exhibits are, unless
otherwise stated, references to the specified Article, Section, Schedule or
Exhibit hereof or hereto.
21. Multiple Originals
This Agreement is intended to have multiple executed originals.
The parties agree that each executed original is as valid and binding as any
other executed original.
IN WITNESS whereof, the parties have affixed their signatures
effective as of the date first above written.
AT&T Corp. MIDCOM Communications Inc.
By: /s/ L. I. ZIGALE By: /s/ XXXXXXX X. XXXXXXX
------------------------------- ---------------------------------
(Signature) (Signature)
Xxxxx Xxxxxxx Xxxxxxx X. Xxxxxxx
------------------------------- ----------------------------------
(Name) (Name)
Specialized Mkts. V.P. President & CEO
------------------------------- ------------------------------------
(Title) (Title)
10/31/96 10/31/96
------------------------------- ------------------------------------
(Date Executed) (Date Executed)
8
AT&T/MIDCOM Confidential and Proprietary
