1
EXHIBIT 10.19
IRU AND STOCK PURCHASE AGREEMENT
BETWEEN
IXC INTERNET SERVICES, INC.
AND
PSINET INC.
Dated as of July 22, 1997
2
IRU AND STOCK PURCHASE AGREEMENT
between
IXC Internet Services, Inc.
and
PSINet Inc.
Dated as of July 22, 1997
TABLE OF CONTENTS
Page
SECTION 1. RIGHTS GRANTED TO PSINET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Fiber IRU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 IRU Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Additional Rights After the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. USE OF BANDWIDTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Permitted Doubling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Additional Mileage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Additional Routes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Term of IRU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Reincorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Adjustments Relating to Stock Splits and Other Events . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Issuance of Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. ORDERING BANDWIDTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Type of Bandwidth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Ordering Bandwidth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Bandwidth Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Existing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Bandwidth Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5. OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Multiplexing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Reconfiguration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Term of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7. PAYMENT, CPI AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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7.2 Late Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 CPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Default/Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 8. SYSTEM MAINTENANCE AND POPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.1 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.2 Repair or Replacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 POPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.5 Other Party's Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.1 Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Notice of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.3 Defense Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 10. ADMINISTRATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.3 Form of Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.4 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 12. LIMITATION OF LIABILITY; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.2 Release; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 13. REPRESENTATIONS AND WARRANTIES OF PSINET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.3 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.5 PSINet Filings; No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.6 Effect of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.9 No Other Agreements To Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.10 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 14. REPRESENTATIONS AND WARRANTIES OF IXC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.3 Effect of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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14.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.6 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.7 Disclosure; No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.8 IRUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.9 Available System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.10 Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 15. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.1 Xxxx-Xxxxx-Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.3 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.4 Board Seat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.5 Restriction on Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.6 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15.7 Transfer Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.8 Standstill Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 16. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.1 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.2 Reincorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.3 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.4 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.5 Fairness Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.6 Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.7 Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.8 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.10 Preferred Stock Purchase Plan Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 17. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.1 Deliveries by PSINet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.2 Deliveries by IXC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.3 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 18. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 19. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.2 Amendments, Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.3 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.6 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
19.7 Severability; Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
19.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
19.9 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.10 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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19.11 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.12 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.14 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19.15 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19.16 Laws and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19.17 Facsimile Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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IRU AND STOCK PURCHASE AGREEMENT
IRU AND STOCK PURCHASE AGREEMENT made as of this 22nd day of
July, 1997 by and between PSINet Inc., a New York corporation ("PSINet"), and
IXC Internet Services, Inc., a Delaware corporation ("IXC").
WHEREAS, IXC and its Affiliates have constructed or are
planning to construct a fiber optic telecommunications system. Pursuant to a
Contribution Agreement to be dated prior to the Closing Date between IXC
Carrier, Inc. ("Carrier") and IXC, IXC will acquire a non-cancellable,
indefeasible right of use ("IRU") in two fibers and in certain capacity in that
system (such IRU, the "Base IRU") from Carrier (the "Contribution Agreement").
WHEREAS, IXC and PSINet have entered into a Joint Marketing
and Services Agreement dated as of the date hereof (the "Internet Services
Agreement"), pursuant to which IXC will acquire from PSINet, and PSINet will
deliver to IXC, Internet services.
WHEREAS, IXC is willing to grant PSINet a noncancellable
indefeasible right of use in two fibers on the IXC fiber optic
telecommunications system to the extent necessary to secure certain capacity
thereon, and a noncancellable indefeasible right of use in such capacity on
such fibers, and PSINet is willing to exchange therefor shares of its common
stock on the terms and subject to the conditions set forth below.
WHEREAS, as a condition to the effectiveness of this
Agreement, among other things, PSINet will use reasonable efforts to
reincorporate in the State of Delaware, subject to obtaining all required
shareholder consents, by merging into a Delaware corporation to be formed as a
wholly-owned subsidiary of PSINet which will be named the same name as PSINet
upon consummation of such merger ("Newco"; prior to the Closing Date,
references in this Agreement to "PSINet" shall be deemed to refer to PSINet, a
New York corporation, and on and after the Closing Date, references herein to
PSINet shall be deemed to refer to Newco).
NOW, THEREFORE, in consideration of the mutual promises set
forth below, and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
SECTION 1. RIGHTS GRANTED TO PSINet
1.1 Fiber IRU. At the Closing, IXC, as the owner of the
Base IRU, shall grant to PSINet a noncancellable IRU in two fibers in the
portion of the Available System completed at the Closing (the "IXC Fibers") to
the extent necessary to carry one OC-48 (the "PSINet Fiber IRU"). At or prior
to the Closing, IXC shall specify the fibers in the applicable routes in which
such IRU is granted. Except as set forth in the Collocation Agreement and
Section 7.4(b) below, at no time shall PSINet be entitled to have physical
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access to the IXC Fibers. IXC agrees that it has no right to use the portion
of the IXC Fibers comprising the PSINet Fiber IRU during the Term (as defined).
1.2 IRU Capacity. At the Closing, IXC shall grant to
PSINet a noncancellable IRU in the IRU Capacity. As used herein, the "IRU
Capacity" shall mean the use of capacity as permitted by this Agreement on that
portion of the IXC fiber optic telecommunications system as described in
Exhibit A hereto (such portion of such system, together with additional
portions made Available by IXC to PSINet after the date hereof, is referred to
as the "Available System"). The total amount of the IRU Capacity will be
10,000 OC-48 Equivalent Miles. Notwithstanding anything in this Agreement to
the contrary, IXC will have no obligation under this Agreement or otherwise to
extend the Available System except as set forth in Exhibit A, into new
geographic areas or to complete a total 10,000 Route Miles on the Available
System. IXC agrees that it has no right to use the IRU Capacity during the
Term.
1.3 Security Interest. At the Closing, IXC shall grant,
assign and transfer to PSINet a continuing, first priority, perfected and
exclusive security interest in and to all of IXC' right, title and interest in
and to the following, whether now existing or hereafter coming into existence
(collectively, the "Collateral"): (a) a portion of the Base IRU in the IXC
Fibers granted to IXC by Carrier, such portion (the "Long-Term Indivisible
IRU") being an IRU in the IXC Fibers for the purpose of the transmission of
OC-48 capacity pursuant to IXC' grant of the PSINet Fiber IRU to PSINet, which
security interest shall secure IXC' obligation to provide the PSINet Fiber IRU
pursuant to Section 1.1; (b) a portion (separate from the Long-Term Indivisible
IRU) of the Base IRU in the IXC Fibers granted to IXC by Carrier, such portion
(the "Short-Term Indivisible IRU") being an IRU in the IXC Fibers which
supports OC-48 capacity and (c) the Access Right (as defined). The Short-Term
Indivisible IRU shall be a right of use of fiber only and shall not include any
rights in electronics or optronics. The security interest in the Short-Term
Indivisible IRU shall secure IXC' obligations to provide the PSINet Fiber IRU
over 10,000 OC-48 Equivalent Miles. At the Closing, IXC and PSINet shall enter
into a security agreement in substantially the form attached hereto as Exhibit
B (the "Security Agreement") and such UCC statements and other instruments
reasonably necessary to grant, perfect and maintain the security interests
contemplated by this Agreement.
1.4 Additional Rights After the Closing. After the
Closing, in the event IXC completes additional portions of the Available
System, (a) IXC hereby grants, without further action on its part, rights to
PSINet so that each of the PSINet Fiber IRU and the Base IRU in the IXC Fibers
is extended to cover such completed portions of the Available System (but only
up to a total of 10,000 Route Miles) effective immediately upon completion of
each portion, and (b) IXC hereby grants, without further action on its part,
and will execute the necessary documents to evidence such grant of, additional
security interests so that PSINet has a continuing, first priority, perfected
and exclusive security interest in (i) the Long- Term Indivisible IRU (with
such defined phrase being extended to cover such completed portions of the
Available System) and the products and proceeds thereof, and (ii) the
Short-Term Indivisible IRU (with such defined phrase being extended to cover
such completed portion of the Available System) and the products and proceeds
thereof, and the Long-Term Indivisible IRU and the Short-Term Indivisible IRU,
as so extended, will thereupon become part of the
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Collateral. Notwithstanding the foregoing, however, commencing in respect of
any completed portion of the Available System, after the date on which such
completed portion of the Available System shall have been completed, the length
of the Short-Term Indivisible IRU shall not exceed the excess, if any, of
10,000 Route Miles over the number of completed Route Miles on the Available
System Accepted by PSINet. To the extent completion of additional portions of
the Available System requires shortening the length of the Short-Term
Indivisible IRU (which is subject to the security interest pursuant to the
preceding sentence) by a certain number of Route Miles (the "Reduction Miles"),
the Short-Term Indivisible IRU shall be deemed to be shortened 30 days after
the date on which such completed portion of the Available System shall have
been completed, by changing its definition to exclude a number of Route Miles
equal to the number of Reduction Miles. The specific Route Miles excluded
shall be determined by excluding that number of Route Miles of the Available
System most recently completed beginning with the eastern most portion along
the applicable route, all as set forth in a written notice from IXC to PSINet
pursuant to the Security Agreement. The security interest in the Short-Term
Indefeasible IRU shall terminate upon the first to occur of the following: (i)
IXC's making Available and PSINet's Acceptance of all of the IRU Capacity, and
granting an IRU therein, to PSINet on the terms and subject to the conditions
of this Agreement, and (ii) the written consent of the parties.
1.5 Quiet Enjoyment. IXC covenants that, at the Closing,
it will have the full right and authority to grant to PSINet the PSINet Fiber
IRU and capacity IRUs hereunder. IXC shall assure that Carrier has obtained or
will obtain all Rights-of-Way necessary for the installation and use of the IXC
Fibers comprising the PSINet Fiber IRU and the fibers underlying the capacity
IRUs granted hereunder, and cause such Rights-of-Way to remain in effect or be
adequately replaced during the Term. IXC shall be responsible for, and timely
pay, any and all (i) taxes and franchises, license and permit fees
(collectively, "Taxes") imposed because of the physical location of the IXC
Fibers and the fibers underlying the IRU Capacity and (ii) Rights-of-Way
payments on the IXC Fibers and the fibers underlying the IRU Capacity. Failure
to pay such taxes or payments shall authorize, but not obligate, PSINet to make
such payments, and IXC will immediately reimburse PSINet for any amounts paid.
PSINet will reimburse IXC for (or at IXC's option, pay directly to the proper
authority) any Taxes based on the revenues or capacity usage of PSINet. IXC
and PSINet will each notify the other party of the assertion of any Taxes which
could reasonably be the responsibility of the other party and, as reasonably
requested by the other party, will cooperate with each other to contest any
such Taxes with the proper authorities.
SECTION 2. USE OF BANDWIDTH
2.1 Permitted Doubling. IXC shall make Available, but
not be obligated to make Available more than, a single OC-48 Equivalent on any
part of the Available System, provided, however, that to the extent the length
of the Available System is less than 10,000 Route Miles, IXC will make
Available to PSINet, at PSINet's option, up to two OC-48 Equivalents on a
portion of the Available System selected by PSINet that is equal in length to
the Shortfall Mileage. For example, if the length of the Available System is
8,000 route miles, PSINet would be allowed to have up to two OC-48 Equivalents
on up to 2,000 miles and no more than one OC-48 Equivalent on the then
remaining 6,000 miles. In the event
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IXC completes portions of the Available System and, as a consequence the
Shortfall Mileage is reduced, IXC, upon six months' notice to PSINet, shall
have the right to require PSINet to reconfigure Bandwidth so that the length of
the portion of the Available System where PSINet has capacity in excess of one
OC-48 does not exceed the then current Shortfall Mileage. After IXC'
completion of 10,000 miles of the Available System, PSINet will be limited to a
maximum of one OC-48 Equivalent on any particular portion of the Available
System.
2.2 Additional Mileage. Subject to the overall IRU
Capacity limitation set forth herein, PSINet, at its option, may order
Bandwidth on portions of the Available System in excess of 10,000 Route Miles
(the "Excess Miles") provided that: (a) the aggregate Route Mileage covered by
Bandwidth Units, regardless of the level or type of Bandwidth which is then
being provided by IXC to PSINet thereon, does not exceed 15,000 Route Miles;
(b) pursuant to the Collocation Agreement in the form attached hereto as
Exhibit C, PSINet will pay the market rate for cabinet space used in connection
with the Excess Miles; and (c) PSINet will pay IXC' fees for add/drop,
multiplexing and reconfiguration on the Excess Miles, as set forth herein. To
the extent PSINet orders Bandwidth on Excess Miles, the parties will in good
faith attempt to negotiate and effect adjustments in PSINet's rights in the
PSINet Fiber IRU and in the security interest in the Long-Term Indefeasible
IRU, with such rights to be expanded to cover such Bandwidth in the Excess
Miles and to be reduced so as not to cover PSINet's usage of Bandwidth to the
extent less than an OC-48 on any portion of the original 10,000 Route Miles of
the Available System.
2.3 Additional Routes. Notwithstanding anything herein
to the contrary, in the event IXC or any of its Affiliates adds or acquires an
additional route to its system in the United States during the Reconfiguration
Period, (a) the route will be deemed to be a part of the Available System if:
(i) IXC or any of its Affiliates has at least 18 fibers in such route, net of
the number of fibers in which IXC or any of its Affiliates shall have granted
IRU's to nonaffiliated third parties pursuant to cost-saving or joint build
arrangements in connection with the construction of such route (the "Net Fiber
Number"), or (ii) IXC gives notice to PSINet that IXC has elected to include
such route as a part of the Available System even though the Net Fiber Number
in the route is less than 18; and (b)(i) if the Net Fiber Number in the route
is less than 18 but more than 11, IXC shall not be obligated to provide more
than two OC-12's to PSINet on the route; (ii) if the Net Fiber Number in the
route is less than 12 but greater than 3, IXC will not be obligated to provide
PSINet with more than one OC-3 (or at IXC's option, three DS-3's) to PSINet on
the route, which OC-3 or DS-3s are subject to availability (that is, IXC may,
at its option, not deliver such OC-3 or DS-3s if needed for IXC's business or
if the applicable fibers have not been lit); and (iii) if the Net Fiber Number
in the route is 3 or less, then IXC will not be obligated to provide PSINet
with any capacity on the route. In the event IXC provides PSINet with an OC-3
pursuant to subsection b(ii) of the preceding sentence, no multiplexing charge
will apply to such OC-3.
2.4 Term of IRU. The term of each Bandwidth Unit of the
IRU Capacity will end on the earlier of: (a) 20 years from the Original Service
Activation Date of the Bandwidth Unit, or (b) 24 years from the Closing Date;
provided, however, that the term of each Bandwidth Unit will be extended by (i)
the length of time, if any, that such Bandwidth Unit commences after the fourth
anniversary of the Closing Date, but only to the extent such delay is
attributable to the completion of the applicable portion of the Available
System
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occurring after such date, and (ii) the length of time performance by IXC is
excused pursuant to Section 11, below, in the event such performance shall have
been so excused for any period of at least 12 consecutive months.
SECTION 3. CONSIDERATION
3.1 Reincorporation. Prior to the Closing Date, PSINet
will use reasonable efforts to reincorporate in the State of Delaware by
merging into Newco, subject to PSINet obtaining all required shareholder and
third-party approvals and consents therefor.
3.2 Issuance of Shares. In consideration of the
execution and delivery of this Agreement, the grant of the IRUs hereunder by
IXC to PSINet and IXC's other obligations to PSINet hereunder, subject to
Section 3.3 below, PSINet (as merged into Newco) agrees to issue and deliver to
IXC at the Closing, 10,155,536 shares of Common Stock of Newco, par value
$.0001 per share (such shares, as adjusted for post-issuance stock splits,
stock dividends, recapitalization or similar events, the "IXC Initial Common
Shares"), and at the Additional Shares Determination Date (as defined) or no
later than 30 days after the Additional Shares Acceleration Date (as defined),
certain additional shares of Newco Common Stock (such shares, as adjusted for
post-issuance stock splits, stock dividends, recapitalization or similar
events, the "Additional Shares" and, collectively with the IXC Initial Common
Shares, the "IXC Shares") and/or cash, other securities or property, if any, as
may be issued and delivered as set forth in Section 3.5. The IXC Shares shall
be issued and delivered by PSINet to IXC, together with corresponding rights
under PSINet's preferred stock purchase rights plan, as amended, modified or
supplemented (the "preferred stock purchase rights plan") as those held by
other holders of Common Stock (subject to the terms of such plan), free and
clear of any and all claims, liens, pledges, options, charges, security
interests, restrictions, encumbrances or other rights of third parties other
than (a) the rights created in favor of PSINet pursuant to this Agreement, and
(b) restrictions on transferability generally imposed on securities under
federal or state securities laws.
3.3 Adjustments Relating to Stock Splits and Other
Events. It is the intent of the parties that the number of the IXC Initial
Common Shares to be issued by Newco to IXC hereunder shall, at the Closing
Date, be equal to 19.99999% of the outstanding shares of Common Stock of Newco,
as determined in the manner set forth on Exhibit D hereto. If after the date
hereof and before the Closing Date, the number of outstanding shares of Newco
Common Stock (as determined in the same manner set forth on Exhibit D hereto)
shall have changed or if such shares shall have been changed into or exchanged
for a different number or kind of shares or other securities through any
issuance, reorganization, recapitalization, reclassification, merger,
consolidation, share exchange or similar transaction, then a proportionate
adjustment in the number and an appropriate adjustment in the kind of
securities issuable hereunder shall be made.
3.4 Certificates. At the Closing, PSINet agrees to
deliver to IXC certificates issued in IXC's name for all of the IXC Initial
Common Shares.
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3.5 Issuance of Additional Shares.
(a) Subject to Section 15.7(c) and the last
sentence of this Section 3.5(a), on the earlier of (i) the first anniversary of
the date on which the Total Bandwidth has been Accepted and/or Deemed Accepted
by PSINet or (ii) the fourth anniversary of the Closing, (such earlier date,
the "Additional Shares Determination Date"), IXC shall be entitled to receive
such number of Additional Shares, based on the Common Stock Price determined as
of the Additional Shares Determination Date, or, at the sole discretion of
PSINet, such amount of cash, or any combination of Additional Shares and cash,
as shall have an Aggregate Fair Market Value equal to the Additional Shares
Value as of the Additional Shares Determination Date; provided, however, that
PSINet shall be entitled, at its sole option, to accelerate IXC's right to
receive Additional Shares and/or cash pursuant to this Section 3.5(a) at any
time after the Closing Date to a date prior to the Additional Shares
Determination Date pursuant to a notice to such effect given by PSINet to IXC
in accordance with the terms of Section 19.5 of this Agreement (the "Additional
Shares Acceleration Date") by delivering to IXC not later than 30 days after
the Additional Shares Acceleration Date, such number of Additional Shares,
based on the Common Stock Price determined as of the Additional Shares
Acceleration Date, or, at the sole discretion of PSINet, such amount of cash,
or any combination of Additional Shares and cash, as shall have an Aggregate
Fair Market Value equal to the Additional Shares Value as of the Additional
Shares Acceleration Date. Notwithstanding the foregoing, (i) the right of IXC
to receive any Additional Shares and/or cash pursuant to this Section 3.5 shall
terminate and be of no further force or effect on such date as the calculation
of the IXC Common Shares Value would result in a value equal to or greater than
$240,000,000 and (ii) the obligations of IXC under this Agreement shall not be
altered, diminished, modified or impaired by any delivery or payment of
Additional Shares and/or cash pursuant to this Section 3.5.
(b) If at any time or from time to time prior to
the Additional Shares Determination Date, there shall occur a Merger or Other
Reorganization Event, then, as a part of and as a condition to the
effectiveness of such Merger or Other Reorganization Event, lawful and adequate
provision shall be made so that IXC shall thereafter be entitled to receive
pursuant to Section 3.5(a) in lieu of any Additional Shares IXC may be entitled
to receive under Section 3.5(a), the number of shares of Successor Stock or
other securities or property, if any, of PSINet or of the successor Person
resulting from such Merger or Other Reorganization Event to which a holder of
such number of shares of Common Stock as is equal to the number of Additional
Shares that would otherwise be deliverable pursuant to Section 3.5(a) would
have been entitled to receive in connection with such Merger or Other
Reorganization Event. In any such case, appropriate provisions shall be made
with respect to the rights of IXC under this Section 3.5 in connection with the
Merger or Other Reorganization Event to the end that the provisions of this
Section 3.5 shall thereafter be applicable, as nearly as may be, with respect
to any shares of Successor Stock, securities or property that may be
deliverable thereafter upon the Additional Shares Determination Date or the
Additional Shares Acceleration Date, as applicable.
3.6 Tax Reporting. The parties acknowledge that PSINet's
issuance of IXC Shares under this Agreement will be a taxable payment for
income tax purposes and not part of a tax-free acquisition for income tax
purposes and not part of a tax-free reorganization, tax-
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free incorporation or other tax-free transaction for income tax purposes, and
that PSINet's tax acquisition cost and IXC's gross receipts for federal income
tax purposes with respect to PSINet's payments under this Agreement will be
equal to the value of the IXC Shares upon issuance, together with the cash or
other payments, if any, under Section 3.5. The parties shall report such
issuance of IXC Shares and such cash or other payments, if any, consistent with
the prior sentence in connection with the determination of their income,
franchise or other taxes measured by net income.
SECTION 4. ORDERING BANDWIDTH
4.1 Type of Bandwidth. Subject to the terms and
conditions of this Agreement, PSINet may order Bandwidth in increments from
OC-12 to OC-48 along any portion of the Available System. PSINet may order
DS-3's or OC-3's on the Available System or DS-3's on Barter Capacity (in
either case, subject to the capacity limitations set forth herein), but shall
be obligated to pay the multiplexing fees set forth herein (except on the
Barter Capacity). IXC will use good faith efforts to provision DS-3's on the
Barter Capacity subject to availability and subject to IXC's use for its own
network requirements. Furthermore, IXC will cause IXC Carrier to provide
off-net capacity such as DS-1's and greater, pursuant to the Digital Service
Agreement dated as of December 23, 1994, as amended, between IXC Carrier and
PSINet, as the exhibits thereto shall be revised by IXC Carrier from time to
time, on the same payment terms and subject to the same material conditions by
which IXC acquires such capacity (including the cost thereof, including,
without limitation, third party cross-connect fees, if any) plus an
administrative fee (payable once per circuit) in the amount of * per
circuit. PSINet, at its option and subject to availability, may order other
associated services as and at such rates as set forth on Exhibit E hereto. The
rates for such associated services are subject to change by IXC upon 30 days'
notice.
4.2 Ordering Bandwidth. If ordered by PSINet, IXC will
make Available to PSINet at least 10,000 OC-12 Equivalent Miles in each
Six-Month Period. To order Bandwidth on the Available System, PSINet shall
submit a completed, dated and signed Bandwidth Order to IXC. IXC will then
accept or reject the Bandwidth Order within 45 days following the date of the
Bandwidth Order by returning the countersigned Bandwidth Order to PSINet or
setting forth the reason for the rejection on the returned Bandwidth Order. In
accepting a Bandwidth Order, IXC may change the Requested Delivery Date as
reasonably necessary to ensure timely delivery. PSINet shall specify a
Requested Delivery Date in each Bandwidth Order. The sole reasons for
rejection of a Bandwidth Order (other than for Barter Capacity, which is
subject to the conditions set forth above) are (i) the Bandwidth Order pertains
to a portion of the Available System that has not yet been completed, (ii) IXC
shall have provided PSINet with 10,000 OC-12 Equivalent Miles during the
applicable Six-Month Period, (iii) IXC shall have provided PSINet with 10,000
OC-48 Equivalent Miles in the aggregate, or (iv) PSINet shall have been
determined to be in default of a Material Provision pursuant to arbitration
proceedings conducted under Section 19.14(b) and such default remains uncured.
In the event PSINet orders less than 10,000 OC-12 Equivalent Miles over the
Available System during any Six-Month Period, IXC, at its option, can require
that PSINet order Primary Additional Bandwidth (as defined), as Available, so
that up to a total of 10,000 OC-12 Equivalent Miles are ordered during the
Six-Month Period. "Primary Additional
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
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Bandwidth" shall mean the Bandwidth, if any, Available to PSINet on a Major
Route (as defined), which, together with the Bandwidth, if any, already being
used on the route by PSINet, adds up to one OC-48 Equivalent. *
shall mean any route between two metropolitan statistical areas with
populations of at least * . On or before the date 41 months after the Closing,
IXC shall give notice to PSINet of which portions of the Available System will
be Available by the date four years after the Closing and PSINet shall order, on
or before the date 42 months after the Closing, and IXC shall make Available,
Bandwidth so that, at the fourth anniversary of the Closing, PSINet's total
capacity (as measured in OC-48 Equivalent Miles) in use hereunder will be at
least equal to the smaller of: (i) twice the total length of the Available
System at that date or (ii) 10,000.
4.3 Bandwidth Delivery. IXC will use commercially
reasonable efforts to make the requested Bandwidth Available to PSINet by the
Requested Delivery Date. Within five business days of the date on which
Bandwidth is made Available to PSINet, PSINet shall test it in accordance with
the standards set forth in Exhibit F hereto. * IXC will notify PSINet as
quickly as reasonably practicable upon learning of any circumstances that will
cause a delay in delivery of capacity beyond the Requested Delivery Date. In
the event of a late delivery, IXC will use commercially reasonable efforts to
assist PSINet in obtaining temporary replacement capacity.
4.4 Existing Arrangements. As soon as practicable after
the Closing Date, but in no event later than 30 days thereafter, IXC shall, and
shall cause its Affiliates to, deliver any On-net or Barter Capacity bandwidth
leased by PSINet from IXC or any Affiliate immediately prior to Closing,
collocation in the POP's and related cross-connects (but only those
cross-connects within the Available System) and interconnect facilities with
IXC existing at the Closing, to be transferred to and covered by this
Agreement. Bandwidth on order at the Closing Date will also be covered by this
Agreement, including, without limitation this Section 4.4. Furthermore, with
respect to off-net bandwidth leased or on order prior to the Closing, IXC will
use commercially reasonable best efforts to provide such bandwidth On-net if
and when the Available System covers the applicable routes of such off-net
bandwidth. This transfer will be without penalty and without credit for prior
payments, so that all payments for such bandwidth and facilities for the period
commencing on the Closing Date will cease as of such transfer, provided,
however, that maintenance fees as set forth in Section 8.3 will apply to such
bandwidth. Multiplexing charges as set forth herein will not apply to any
bandwidth so transferred unless and until PSINet reconfigures such bandwidth
concurrently with such transfer or, with respect to a particular route, PSINet
orders OC-12 capacity on such route.
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* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
14
4.5 Bandwidth Forecasts. Attached as Exhibit G hereto is
PSINet's good faith, non-binding three-year forecast of the anticipated amount
of Bandwidth that will be required by PSINet under this Agreement, which good
faith, non- binding forecast shall be updated by PSINet quarterly and delivered
to IXC by no later than the 20th day following the end of each calendar
quarter.
4.6 Initial Order. Effective upon the Closing, IXC
accepts the Bandwidth Orders attached hereto as Exhibit G-1 as PSINet's initial
Bandwidth Orders for the Requested Delivery dates specified therein.
SECTION 5. OTHER SERVICES
5.1 Multiplexing. In the event PSINet requires capacity
in units other than OC-48 or OC-12 (for example, an OC-3 or DS-3) it will pay
IXC's fees for multiplexing as set forth in Exhibit H hereto (except as set
forth in the last sentence of Section 2.3). PSINet will also pay IXC's fees
for multiplexing for Barter Capacity DS-3's. IXC may change its fees for
multiplexing at any time in its sole and absolute discretion; provided,
however, that such changed fees will only be effective against PSINet on the
tenth business day after PSINet's receipt of written notice from IXC of such
changed fees.
5.2 Reconfiguration. During the first four years of this
Agreement (or until one year after the Delivery Completion Date, whichever
comes first), PSINet can Reconfigure Bandwidth. PSINet will pay IXC's fee for
reconfiguration as set forth on Exhibit I hereto, which shall include a fee for
reconfiguring from OC-12 to OC-48 or for moving an OC-48. IXC may change its
fees for reconfiguration at any time in its sole and absolute discretion;
provided, however, that such changed fees will only be effective against PSINet
on the tenth business day after PSINet's receipt of written notice from IXC of
such changed fees. In the event of a reconfiguration that leaves OC-12
equipment (for which PSINet has previously paid a multiplexing or
reconfiguration charge) which is not being utilized, IXC will either (i)
utilize the equipment elsewhere for PSINet's capacity (without charging a
multiplexing fee for such OC-12), (ii) deliver the OC-12 equipment to PSINet,
or (iii) purchase the equipment from PSINet at a mutually agreeable price.
SECTION 6. TERM OF AGREEMENT
6.1 Term of the Agreement. This Agreement shall commence
on the Closing Date and shall automatically terminate upon the termination of
the last-to-expire term of the Bandwidth delivered hereunder (the "Term").
SECTION 7. PAYMENT, CPI AND DEFAULT
7.1 Payment. PSINet agrees to pay IXC in advance, as
billed by IXC, each month during the Term, all fees and other charges payable
hereunder for such month, for maintenance, off-net capacity, multiplexing and
add/drops. PSINet agrees to pay IXC in
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arrears, as billed by IXC, each month all fees and other charges payable
hereunder for such months for other services, including for reconfiguration.
7.2 Late Payment. IXC invoices for amounts payable
hereunder shall be due within 30 days of the date of invoice. If a dispute
arises as to any portion of an invoice, PSINet shall pay the undisputed amount
of such invoice when due and shall notify IXC in writing of the disputed amount
no later than 30 days from the date of invoice. The IXC Authorized
Representative and the PSINet Authorized Representative will first attempt in
good faith to promptly resolve the dispute. If the matter has not been
resolved by the IXC Authorized Representative and the PSINet Authorized
Representative within 14 days after PSINet' notice, or if either party will not
agree to meet within such 14-day period, the matter will be referred to the
Chief Executive Officer of IXC and the Chief Executive Officer of PSINet, who
will attempt in good faith to promptly resolve the dispute. If the dispute has
not been resolved by the Chief Executive Officer of IXC and the Chief Executive
Officer of PSINet within an additional 14-day period, or if either party will
not agree to meet within such 14-day period, then the dispute shall be
submitted to arbitration pursuant to Section 19.14. In any such arbitration,
the prevailing party shall be awarded such party's costs and expenses incurred
in bringing such action.
In the event that any payment remains unpaid after its due
date, such payment shall be subject to an interest charge equal to the lesser
of one and one-half percent of the unpaid balance per month or the maximum rate
allowed under applicable state law and, if a payment shall not have been paid
in full within five business days of the applicable due date when no bona fide
dispute exists, IXC may, without any liability to PSINet, at its option,
suspend the provision of maintenance and other services hereunder until such
payment is made in full. Notwithstanding anything herein to the contrary, in
no event shall IXC have the right to terminate, modify or otherwise affect its
grant to PSINet of, or PSINet's right, title and interest in, the IRU Capacity
and the PSINet Fiber IRU.
7.3 CPI. In addition to any other adjustment permitted
or contemplated herein, IXC has the right to make adjustments to the fees and
charges hereunder on each anniversary of the expiration of the Closing Date
(the "Adjustment Date") by multiplying the applicable fee or charge for the
immediately preceding twelve (12) month period (the "Prior Period") by a factor
equal to one (1) plus or minus the decimal equivalent of the total percentage
change, if any, in the U.S. Department of Labor Price Index for Urban
Consumers, All Items, 1982-84 = 100 for the period from three (3) months prior
to the commencement of such Prior Period to three (3) months prior to the
Adjustment Date. IXC shall deliver to PSINet prior to each Adjustment Date
notice of the adjustment in the applicable fee or charge, setting forth the
calculation of such adjustment.
7.4 Default/Termination.
(a) A party may deliver to the other party a
written "Notice of Default" for: (i) failing to make any payment owed
hereunder, when no bona fide dispute exists (a "Monetary Default"); or (ii) the
breaching by either party or its agents, assigns or affiliates of any Material
Provision; or (iii) the filing or initiating of proceedings by or against a
party seeking liquidation, reorganization or other such relief under any
federal or state
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bankruptcy or insolvency law (a "Bankruptcy Proceeding"). Such Notice of
Default must prominently contain the following sentences in capital letters:
"THIS IS A FORMAL NOTICE OF A BREACH OF CONTRACT. FAILURE TO CURE SUCH BREACH
WILL HAVE SIGNIFICANT LEGAL CONSEQUENCES." A party that has received a Notice
of Default shall have five (5) business days to cure a Monetary Default, thirty
(30) days to cure the alleged breach of any other Material Provision (other
than Section 15.8(a) or the Standstill Agreement, which shall be required to be
cured upon demand by PSINet, provided, however, that IXC Communications, Inc.
and/or IXC shall have five (5) business days to cure a nonintentional breach of
clause (vi) of Section 15.8(a) or clause (vi) of Section 2 of the Standstill
Agreement) and, if the defaulting party shall have commenced actions in good
faith to cure such defaults which are not susceptible of being cured during
such 30-day period, such period shall be extended (but not in excess of 90
additional days) while such party continues such actions to cure, and shall be
given ninety (90) days to remove, have dismissed or stay any involuntary
Bankruptcy Proceeding (each such cure period, a "Cure Period"). If such party
fails to cure the breach within the applicable Cure Period or, in the case of
Section 15.8(a) (other than clause (vi) thereof) or the Standstill Agreement
(other than clause (vi) of Section 2 thereof), upon demand by PSINet, as long
as such default shall be continuing, the non-defaulting party shall have the
right to either (a) suspend its performance or payment obligations under this
Agreement and/or any of the Transaction Documents (other than obligations under
Section 15.8(a) and the Standstill Agreement), (b) seek an order of specific
performance or, in the case of a breach of Section 15.8(a) or the Standstill
Agreement, specific performance, injunctive relief or other equitable remedy,
and/or (c) seek the award of compensatory damages. Notwithstanding anything
herein to the contrary, in no event, shall IXC have the right to terminate,
modify or otherwise affect its grant to PSINet of, or PSINet's right, title and
interest in, the IRU Capacity and the PSINet Fiber IRU, provided, however,
that, during the continuance of any breach (as determined by an arbitration
pursuant to Section 19.14) by PSINet of a Material Provision, IXC shall have
the rights set forth in the preceding sentence with respect to matters other
than those affecting PSINet's right, title or interest in the IRU capacity or
the PSINet Fiber IRU; such IXC rights to include, without limitation, the right
to disconnect PSINet's access, and to suspend performance of its obligations
hereunder to allow PSINet access, to IXC's POPs, the IXC Fibers, electronics,
and optronics (whether by way of direct connection, interconnection, or other
means), and the right to suspend maintenance. In the event IXC does not allow
PSINet access to IXC's POPs as set forth in the preceding sentence, IXC will
allow PSINet, upon reasonable notice, to remove PSINet's equipment and any
equipment leased to PSINet or provided by a third party to PSINet from the
POPs.
(b) In the event of, and during the continuance
of, a breach by IXC of any Material Provision (subject to the last sentence of
this section), so long as PSINet shall not have been determined pursuant to
arbitration proceedings conducted under Section 19.14(b) to be in breach of a
Material Provision hereunder which remains continuing, PSINet shall be entitled
to engage an Approved Subcontractor to access the Maintainable Equipment (as
defined) in IXC's POPs as reasonably necessary to assure its continued
uninterrupted use of the PSINet Fiber IRU and the IRU in the IRU Capacity
granted to PSINet hereunder. Such access shall be subject to applicable
rights-of-way and lessor rights; provided, however, that in the event PSINet
exercises its rights pursuant to this Section 7.4(b), IXC shall use reasonable
efforts to obtain any necessary third party consents to such access.
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Such access is referred to as the "Access Right." PSINet shall use its best
efforts to assure that no damage is caused to IXC's equipment, fibers or
systems in connection with such maintenance and access. IXC shall use its
commercially reasonable best efforts to assure that the applicable
rights-of-way and lessors' rights are maintained and exercised at all times in
a manner consistent with PSINet's ability pursuant to this Section 7.4(b) to
access all relevant premises to install and/or maintain equipment associated
with or to be associated with the PSINet Fiber IRU or the IRU in the IRU
Capacity granted to PSINet hereunder. Notwithstanding the foregoing, however,
PSINet shall have no rights under this Section 7.4(b) by reason of an IXC
Bankruptcy Proceeding if IXC is not also at such time in breach of a Material
Provision.
SECTION 8. SYSTEM MAINTENANCE AND POPs
8.1 Maintenance. IXC shall provide all maintenance and
repair functions on the Available System as well as on the optical and
electronic equipment owned or leased by IXC used to provide the Bandwidth. IXC
agrees it will provide all maintenance and repair functions in the same manner
and with at least the same degree of care and timeliness utilized by IXC or IXC
Communications with respect to other portions of their telecommunications
systems, but at no time shall such maintenance and repair functions be
conducted in a manner which does not equal or exceed that which is normal and
customary in the telecommunications industry.
8.2 Repair or Replacement. In the event that all or any
part of the Available System or optical or electronic equipment owned by IXC
requires replacement during the term of this Agreement, such replacement shall
be on a timely basis, and at the expense of IXC. This replacement will be
scheduled at IXC's reasonable discretion upon adequate notice to PSINet or at
PSINet's reasonable request.
8.3 Consideration. In consideration of IXC's maintenance
obligations hereunder, PSINet shall pay IXC a monthly fee of * per OC-12
Equivalent Mile per month (on lower capacity, * per DS-3 Mile per month)
for each OC-12 (or its equivalent) provided by IXC to PSINet hereunder.
8.4 POPs. PSINet may only interconnect to IXC Fibers to
utilize the IRU Capacity at IXC's POPs. IXC shall provide PSINet with the
applicable Bandwidth only between IXC's POPs and IXC shall provide POP space to
PSINet (including, without limitation, cabinet space for equipment), all as set
forth in the Collocation Agreement. PSINet's right to occupy any POP will
expire upon the earlier of: (i) 20 years after the first date of occupancy in
such POP or (ii) the termination of the last Bandwidth Unit which terminates in
such POP. PSINet shall pay for all costs associated with connecting its system
and POPs to IXC's POPs. IXC will allow PSINet light-to-light and
copper-to-copper connections within IXC's POPs so that PSINet, at its own
expense, can make interconnections to its own POPs. Notwithstanding the
foregoing, if necessary, and where applicable, IXC shall use commercially
reasonable efforts to provide PSINet, at PSINet's expense, access to existing
building entrance facilities, if available, to access and exit IXC POPs.
PSINet will pay IXC time and material agreed upon on a case by case basis for:
(a) equipment
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
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installation and tech-assists and (b) for build-outs for power, cabling and
HVAC for PSINet's needs in excess of * cabinet spaces in the applicable POP.
Interconnect facilities to interconnect to other parties within IXC's POPs
shall be installed and maintained under the terms and conditions that are
specified in the Collocation Agreement.
8.5 Other Party's Equipment. IXC shall be required to
exercise reasonable care with respect to any equipment located in any of IXC's
POPs or any portion or component thereof. IXC shall promptly notify PSINet of
any matters pertaining to damage or impending damage, or loss of any portion of
the Available System that are known to it, which may adversely affect PSINet's
use of the PSINet IRU or the IRU Capacity.
SECTION 9. INDEMNIFICATION.
9.1 Indemnification Obligations. IXC and PSINet
(hereinafter where either has undertaken the action or inaction to be
indemnified against shall be known as the "Indemnifying Party") agree to assume
all liability for and indemnify, defend and hold harmless the other party or
any third party claiming through the other party, from and against all
liability, loss, cost, damage, expense or cause of action, of whatsoever
character, or injury or death of any person and damage to or destruction of any
property, including, without limitation, third parties and all related
expenses, including, but not limited to, reasonable attorneys' fees,
investigators' fees and litigation expenses and costs of enforcing this Section
9 arising out of or relating to, in whole or in part, any of the following:
(i) claims for libel, slander, infringement of copyright
or unauthorized use of a trade secret, trade name or
service xxxx that results from the transmission of
material over the Available System by the
Indemnifying Party, authorized representatives of the
Indemnifying Party or other persons not associated
with, or related to, either IXC or PSINet; or
(ii) claims of any person not a party to this Agreement
arising out of the negligent or willful act or
omission of the Indemnifying Party or its agents,
servants, employees, contractors or representatives
(other than IXC, if PSINet is the Indemnifying Party,
or PSINet, if IXC is the Indemnifying Party); or
(iii) claims for patent infringement arising out of the use
of the Available System by the Indemnifying Party or
any person authorized by the Indemnifying Party or
resulting from the acts of the Indemnifying Party or
the Indemnifying Party's representatives in combining
the Available System with the facilities of the
Indemnifying Party or others, or using the Available
System either alone or in connection with that of the
Indemnifying Party or others; or
(iv) claims, except as otherwise set forth herein, for the
material breach of or failure to comply, in any
material respect, with any term or condition of this
Agreement by the Indemnifying Party or its officers,
employees or invitees; or
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* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
19
(v) claims resulting from patent or trade secret
infringement or infringement or unauthorized use of
trade secrets or trade name by the Indemnifying Party
in connection with this Agreement;
PROVIDED, HOWEVER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER (OR TO ANY THIRD PARTY CLAIMING THROUGH SUCH OTHER PARTY) FOR
CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, AND THE FOREGOING
INDEMNITIES SHALL NOT APPLY WITH RESPECT TO SUCH DAMAGES.
9.2 Notice of Indemnification. Upon receipt by the
Indemnifying Party of a notice from the other party with respect to any claim
of a third party against the other party, the Indemnifying Party shall, within
30 days of the mailing of the other party's notice setting forth such request
for indemnification, either (i) agree in writing to assume the defense of such
third party claim, or (ii) provide the other party with written notice setting
forth the basis for such objection in reasonable detail. In the event the
Indemnifying Party fails to respond to the other party's written request within
such 30 day period, the other party's right to indemnification, as set forth in
the other party's notice, shall be deemed agreed to by the Indemnifying Party.
In the event the Indemnifying Party timely objects to the other party's request
for indemnification, the dispute shall be settled in accordance with the
procedures set forth in Section 7.2, above.
9.3 Defense Obligations. In the event it is determined
that the Indemnifying Party is required to indemnify the other party, the
Indemnifying Party shall assume the defense of such claim with counsel
reasonably satisfactory to the other party, and the other party shall cooperate
to the extent reasonably requested by the Indemnifying Party in defense or
prosecution thereof. If the Indemnifying Party has agreed to indemnify the
other party and has assumed the defense of any such third party claim, the
other party shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the other
party, and the Indemnifying Party shall have the right to settle any claim for
which indemnification has been sought and is available hereunder; provided,
however, that, to the extent that such settlement requires the other party to
take, or prohibits the other party from taking, any action or purports to
obligate the other party, then the Indemnifying Party shall not settle such
claim without the prior written consent of the other party, which shall not be
unreasonably withheld, delayed or conditioned. If the Indemnifying Party does
not assume the defense of any third party claim for which it is obligated to
provide indemnification hereunder, the other party may assume control of the
defense of such claim through counsel of its choice at the Indemnifying Party's
expense and shall have control over the litigation and authority to resolve
such claim. If action is required to be taken with respect to any third party
claim prior to the determination of the Indemnifying Party's obligations
hereunder, the other party may assume control of the defense of such claim
through counsel of its choice until such time as the Indemnifying Party's
obligations hereunder are determined; provided, however, that the Indemnifying
Party shall not be liable hereunder for any settlement of such claim without
the Indemnifying Party's prior written consent unless and until it is
determined that the Indemnifying Party is obligated hereunder to provide
indemnification with respect thereto and refuses or fails to assume the defense
of such claim.
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SECTION 10. ADMINISTRATION OF AGREEMENT
10.1 Representatives. Within 30 days after the Closing
Date, IXC and PSINet shall each designate, by written notice to the other
party, a representative (each, an "Authorized Representative") who is
authorized to act on the respective party's behalf with respect to those
matters delegated to the Authorized Representative. Each party may designate
an alternate representative with full authority to act in the absence of the
Authorized Representative. Each party shall have the right to change its
Authorized Representative or alternative by written notice to the other party.
10.2 Responsibilities. The Authorized Representatives
shall provide liaison between the parties in order to provide effective
cooperation, exchange of information and consultation on a prompt and orderly
manner concerning the various matters which may arise, from time to time, in
connection with this Agreement. In addition, the Authorized Representatives
shall have the following responsibilities, among others:
1. Perform those functions and duties assigned
to them in this Agreement;
2. Review and attempt to resolve any disputes
between the parties arising under this Agreement. Should the Authorized
Representatives be unable to resolve a dispute, the matter shall be resolved in
accordance with the provisions of Section 19.14, below; and
3. Arrange for the development and completion of
procedures to implement the provisions of this Agreement.
10.3 Form of Actions. All actions, agreements,
resolutions, determinations or reports made by the Authorized Representatives
shall be in writing and shall become effective when signed by both Authorized
Representatives.
10.4 Fees and Expenses. Any and all fees and expenses
incurred by an Authorized Representative in connection with his or her duties
shall be paid by the party he or she represents.
SECTION 11. FORCE MAJEURE
Notwithstanding any provision in this Agreement to the
contrary, neither party shall be liable to the other for any failure of
performance under this Agreement (except with respect to payment or other
monetary obligations or as otherwise specifically set forth herein) due to
causes beyond the reasonable control of a party, including, by way of
illustration and not limitation, acts of God, flood, fire, explosion, storm,
acts of public enemies, insurrection, war, national emergency, riots, strikes,
labor disputes, disturbances, lockouts, labor or material shortages (not
resulting from the responsible party's failure to place reasonable orders
therefor), breakdown of or damage to plants or equipment or facilities (other
than arising out of the neglect or mishandling by such party), failure of a
supplier to supply necessary
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materials or equipment or labor in a timely manner (including warranty
replacements), destruction of property, embargoes, boycotts, governmental
legislation or regulations, orders or acts of civil or military authorities,
governmental acts, or orders of courts or administrative agencies. Any party
excused from performance pursuant to this Section 11 shall use commercially
reasonable efforts to minimize the time during which such performance is
excused pursuant to this Section 11.
SECTION 12. LIMITATION OF LIABILITY; INDEMNIFICATION
12.1 Limitation of Liability. Except for direct damages
otherwise specifically provided for in this Agreement, in no event shall IXC or
PSINet be liable for any special, incidental, direct, indirect, punitive,
reliance or consequential damages, whether foreseeable or not, arising under
this Agreement or from any breach or partial breach of the provisions of this
Agreement or occasioned by any defect in the Bandwidth or other service
provided hereunder, delay in availability of the Bandwidth or any service
provided hereunder, failure of the Bandwidth or other service provided
hereunder, interruptions or outages of the Available System or any other cause
whatsoever or arising out of any act or omission by IXC or PSINet, as
applicable, its employees, servants and/or agents, including but not limited
to, damage or loss of property or equipment, loss of profits or revenue, cost
of capital, cost of replacement services, or claims of customers for service
interruptions or transmission problems.
12.2 Release; Indemnification. Each party (each party in
such capacity being referred to as the "Releasing Party") releases, assumes and
agrees to indemnify, defend, protect and save the other party harmless from and
against any claim, damage, loss, liability, cost and expense (including
reasonable attorneys' fees) in connection with any loss or damage to any
physical property or facilities of the Releasing Party or any injury to or
death of any person arising out of or resulting in any way from the negligence
or misconduct of the Releasing Party or its employees, servants, contractors
and/or agents.
SECTION 13. REPRESENTATIONS AND WARRANTIES OF PSINet
PSINet represents and warrants to IXC that, except as set
forth in the PSINet Disclosure Schedule set forth as Exhibit L hereto, as of
the date hereof and as of the Closing Date, except where a representation and
warranty is made as of a specified date, in which case it is made as of such
date:
13.1 Organization. On the date hereof PSINet is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York. On the Closing Date, PSINet, as merged into
Newco, will be a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. PSINet is qualified to do
business as a foreign corporation in each jurisdiction in which such
qualification is required except in those jurisdictions where the failure to be
so qualified would not have a Material Adverse Effect on PSINet and its
subsidiaries taken as a whole. PSINet has delivered to IXC true and correct
copies of its Certificate of Incorporation and
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Bylaws and, prior to the Closing, will deliver true and correct copies of
Newco's Certificate of Incorporation (which does not include the documents
required to effect the Reincorporation) and Bylaws in substantially the form as
set forth as Exhibit J hereto (with such changes thereto as may be required in
order for such Certificate of Incorporation and Bylaws to comply with Delaware
General Corporation Law while providing the parties with substantially
equivalent economic benefits as provided therein).
13.2 Authorization. The execution, delivery and
performance of this Agreement and the Transaction Documents to which PSINet is
or will be a party has been or, on the Closing Date, will be, duly authorized
by all necessary corporate action on the part of PSINet. This Agreement and
the Transaction Documents to which PSINet is or will be a party are or, when
executed and delivered, will be valid and binding obligations of PSINet,
enforceable against PSINet in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency or other laws relating
to or affecting creditors' rights generally and the exercise of judicial
discretion in accordance with general equitable principles. Except as set
forth in Section 13.2 of the PSINet Disclosure Schedule, no material consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority is required of PSINet in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
13.3 Shares. Upon the issuance of the IXC Initial Common
Shares on the Closing Date in accordance with this Agreement, the IXC Initial
Common Shares will be duly authorized, validly issued, fully paid and
nonassessable. Upon the issuance, if any, of the Additional Shares, the
Additional Shares will be duly authorized, validly issued, fully paid and
nonassessable.
13.4 Capitalization. As of the date of this Agreement,
the authorized capital stock of PSINet consists of 100,000,000 shares of Common
Stock, $.01 par value per share, 29,000,000 shares of undesignated Preferred
Stock, $.01 par value per share, and 1,000,000 shares of Series A Junior
Participating Preferred Stock, $.01 par value per share, of which approximately
40,397,876 shares of Common Stock are issued and outstanding, 99,556 shares of
Common Stock are held as treasury shares and no shares of Preferred Stock are
issued or outstanding. Upon the Closing Date, after giving effect to the
Reincorporation, the authorized capital stock of Newco will be as set forth in
Section 13.4 of the PSINet Disclosure Schedule and each share of Common Stock
of PSINet issued and outstanding on the date hereof will have been exchanged
for one share of Common Stock of Newco. Except as set forth on the PSINet
Disclosure Schedule, as of the date of this Agreement, there is not outstanding
any subscription, option, warrant, call, right or other agreement or commitment
obligating PSINet to issue, sell, deliver or transfer (including any right of
conversion or exchange under any outstanding security or other instrument) any
shares of Common Stock or any other shares of capital stock of PSINet. PSINet
does not have outstanding any bonds, debentures, notes or other obligations,
under the terms of which the holders of which have the rights to vote with the
shareholders of PSINet.
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13.5 PSINet Filings; No Material Adverse Change. Neither
PSINet's Annual Report on Form 10-K for the year ended December 31, 1996 nor
any other of PSINet's periodic reports filed with the U.S. Securities and
Exchange Commission (the "Commission") pursuant to the 1934 Act on or after
March 31, 1997 (each, a "PSINet Filing"), taken as a whole, as of the date of
filing thereof, contained any untrue statement of material facts or omitted to
state any material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such
statements were made. PSINet used reasonable efforts, in good faith, to comply
in all material respects with the requirements of the Commission as to the
contents of such filings. Such PSINet Filings, when they were filed with the
Commission, conformed as to form in all material respects to the requirements
of the 1934 Act and the rules and regulations of the Commission thereunder.
Except as disclosed by PSINet in public announcements or otherwise set forth in
the PSINet Disclosure Schedule, there has been no material and adverse change
to the business, financial condition or results of operation of PSINet and its
subsidiaries taken as a whole since the date of the most recent PSINet Filing.
13.6 Effect of Transactions. Except as set forth in
Section 13.6 of the PSINet Disclosure Schedule, the execution, delivery and
performance by PSINet of this Agreement and the Transaction Documents to which
PSINet is a party and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in any default or require the
consent of any person or entity under the Articles or Certificate of
Incorporation, By-laws or any material agreement of PSINet, or result in the
creation of any lien, charge or encumbrance of any nature upon any of the
properties or assets of PSINet except pursuant to this Agreement. The
execution, delivery and performance of this Agreement by PSINet will not
violate, in any material respect, any judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency applicable to
PSINet or to which PSINet is a party.
13.7 Litigation. Except as disclosed in Section 13.7 of
the PSINet Disclosure Schedule, there is no litigation or governmental
proceeding or investigation pending or, to the knowledge of PSINet, threatened
against PSINet which (i) may call into question the validity or hinder the
enforceability or the performance of this Agreement, the Transaction Documents
to which PSINet is a party or the transactions contemplated hereby and thereby,
or (ii) could reasonably be expected to give rise to a Material Adverse Effect
on PSINet and its subsidiaries taken as a whole.
13.8 Brokers. Except for the fees of Xxxxxxx Xxxxx & Co.
in connection with any fairness or valuation opinions to be provided by it to
PSINet as contemplated by this Agreement, no broker, finder, agent or similar
intermediary has acted on behalf of PSINet in connection with this Agreement or
the transactions contemplated hereby, and there are no brokerage commissions,
finder's fees or similar fees or commissions payable by PSINet in connection
with this Agreement or the transactions contemplated hereby.
13.9 No Other Agreements To Sell. Except as set forth in
this Agreement or as disclosed in Section 13.9 of the PSINet Disclosure
Schedule, neither PSINet nor any of its subsidiaries has any commitment to (i)
sell, assign or transfer a material portion of the assets or capital stock of
PSINet or an Affiliate, (ii) to effect any merger, consolidation or other
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reorganization of PSINet or an Affiliate that could affect the transactions
contemplated by this Agreement, or (iii) to enter into any agreement with
respect to any of the foregoing.
13.10 Full Disclosure. No representation, warranty or
other statement of PSINet contained in this Agreement, or any other document or
certificate delivered at Closing or, to PSINet's knowledge, other written
statement furnished to IXC in connection with the transactions contemplated by
this Agreement (other than any interim financial statements of PSINet not filed
with the Securities and Exchange Commission) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein relating to this Agreement and the
transactions contemplated hereby or to the business or financial condition of
PSINet not materially misleading when taken as a whole in the light of the
circumstances under which they were made. There is no fact known to PSINet
which could reasonably be expected to have, in light of the circumstances in
which it is made, a Material Adverse Effect on PSINet and its subsidiaries,
taken as a whole, that has not been disclosed herein or in such other
documents, certificates and statements furnished to IXC for use in connection
with the transactions contemplated hereby. All interim financial statements
furnished by PSINet to IXC in connection with this Agreement were prepared in
good faith.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET
FORTH IN THIS SECTION 13, PSINET MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND PSINET EXPRESSLY
DISCLAIMS AND EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND.
SECTION 14. REPRESENTATIONS AND WARRANTIES OF IXC
IXC hereby represents and warrants to PSINet that, except as
set forth in the IXC Disclosure Schedule set forth as Exhibit M hereto, as of
the date hereof and as of the Closing Date, except where a representation and
warranty is made as of a specified date, in which case it is made as of such
date:
14.1 Organization. IXC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business as a foreign corporation in each jurisdiction
in which such qualification is required except in those jurisdictions where the
failure to be so qualified would not have a Material Adverse Effect on IXC and
its subsidiaries taken as a whole.
14.2 Authorization. The execution, delivery and
performance of this Agreement, the Transaction Documents to which IXC is or
will be a party and the Contribution Agreement have been duly authorized by all
necessary corporate action on the part of IXC and IXC Carrier, as applicable.
This Agreement, the Transaction Documents to which IXC is or will be a party,
and the Contribution Agreement are or, when executed and delivered, will be
valid and binding obligations of IXC and IXC Carrier, as applicable,
enforceable against IXC or IXC Carrier, as applicable, in accordance with their
terms, except
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as such enforceability may be limited by bankruptcy, insolvency or other laws
relating to or affecting creditors' rights generally and the exercise of
judicial discretion in accordance with general equitable principles. Except as
set forth in Section 14.2 of the IXC Disclosure Schedule, no consent, approval
or authorization of, or designation, declaration or filing with, any
governmental authority is required of IXC or IXC Carrier, as applicable, in
connection with the execution, delivery and performance of this Agreement, the
Transaction Documents to which IXC is or will be a party, and the Contribution
Agreement by IXC or IXC Carrier, as applicable, or the performance or
consummation of any other transaction contemplated hereby or thereby.
14.3 Effect of Transactions. Except as set forth in
Section 14.3 of the IXC Disclosure Schedule, the execution and delivery of this
Agreement, the Transaction Documents to which IXC is or will be a party, and
the Contribution Agreement by IXC and IXC Carrier, as applicable, and the
performance by IXC and IXC Carrier, as applicable, of the transactions
contemplated hereby and thereby will not conflict with or result in any default
or require the consent of any person or entity under the Certificate of
Incorporation, By-laws or any material agreement of IXC or IXC Carrier, as
applicable, or result in the creation of any lien, charge or encumbrance of any
nature upon any of the properties or assets of IXC except pursuant to this
Agreement. The execution and delivery of this Agreement, the Transaction
Documents to which IXC is or will be a party, and the Contribution Agreement by
IXC or IXC Carrier, as applicable, and the performance by IXC and IXC Carrier,
as applicable, of the transactions contemplated hereby and thereby will not
violate, in any material respect, any judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency applicable to
IXC or IXC Carrier, as applicable, is a party.
14.4 Litigation. Except as set forth in Section 14.4 of
the IXC Disclosure Schedule, there is no litigation or governmental proceeding
or investigation pending or, to the knowledge of IXC, threatened against IXC or
IXC Carrier which (i) may call into question the validity or hinder the
enforceability or performance of this Agreement, the Transaction Documents to
which IXC or IXC Carrier is a party or the transactions contemplated hereby or
thereby or (ii) could reasonably be expected to give rise to a Material Adverse
Effect on IXC and its subsidiaries taken as a whole or IXC Carrier.
14.5 Brokers. No broker, finder, agent or similar
intermediary has acted on behalf of IXC or any of its Affiliates in connection
with this Agreement or the transactions contemplated hereby and, there are no
brokerage commissions, finder's fees or similar fees or commissions payable by
IXC or any of its Affiliates in connection with this Agreement or the
transactions contemplated hereby.
14.6 Investment Representations.
(a) IXC (i) has received and reviewed this
Agreement, including all schedules and exhibits hereto and the PSINet
Disclosure Schedule, and has had the opportunity to review the PSINet Filings,
the Certificate of Incorporation, as amended, and By-laws of PSINet, PSINet's
preferred stock purchase rights plan and the proposed Certificate of
Incorporation and By-laws of Newco which are proposed to be in effect on the
Closing Date and (ii) has had the opportunity to ask questions of, and has
received answers from,
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PSINet concerning the transactions contemplated hereby and to obtain additional
information which PSINet possesses or could acquire without unreasonable effort
or expense.
(b) IXC is acquiring or will acquire, as the case
may be, the IXC Shares (collectively the "Acquired Shares") for its own
account, for investment, and not with a view to any resale or "distribution"
thereof within the meaning of the Securities Act. IXC was not formed or
organized for the purpose of acquiring the Acquired Shares.
(c) IXC understands that because the Acquired
Shares have not been and will not be at the time of issuance registered under
the Securities Act, it cannot dispose of any or all of the Acquired Shares
unless the Acquired Shares are subsequently registered under the Securities Act
or exemptions from such registration are available. IXC understands that each
certificate representing the Acquired Shares will bear the following legend or
one substantially similar thereto:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN IRU AND STOCK PURCHASE AGREEMENT, DATED AS OF JULY 22,
1997, A COPY OF WHICH IS AVAILABLE FOR INSPECTION, IN RELEVANT
PART, AT THE PRINCIPAL OFFICES OF THE ISSUER.
(d) IXC is sufficiently knowledgeable and
experienced in financial and business matters and in the making of investments
so as to be able to evaluate the risks and merits of its investment in PSINet
and the Acquired Shares and is able to bear the economic risk of loss of its
entire investment in the Acquired Shares. IXC is an "accredited investor" as
such term is defined in Rule 501 promulgated under the Securities Act.
(e) IXC has been advised that the Acquired Shares
have not been, will not be at the time of issuance and are not being registered
under the Securities Act or under the "blue sky" laws of any jurisdiction and
that PSINet in issuing the Acquired Shares is and will be relying upon, among
other things, the representations and warranties of IXC contained in this
Section 14.6.
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14.7 Disclosure; No Material Adverse Change. Neither
IXC's parent's Annual Report on Form 10-K for the year ended December 31, 1996
nor any of IXC's parent's periodic reports filed with the Commission pursuant
to the 1934 Act on or after March 31, 1997 (each, a "IXC Filing"), taken as a
whole, as of the date of filing thereof, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances
under which such statements were made. IXC's parent used reasonable efforts,
in good faith, to comply in all material respects with the requirements of the
Commission as to the contents of such filings. Such filings, when they were
filed with the Commission, conformed as to form in all material respects to the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder. IXC and IXC Carrier have sufficient net worth and capital
resources and expect to have sufficient cash flow from their businesses in
order for IXC to be able to perform its obligations under this Agreement, the
other Transaction Documents and the Contribution Agreement and for IXC Carrier
to be able to perform its obligations under the Contribution Agreement. Except
as disclosed by IXC in public announcements or otherwise set forth in the IXC
Disclosure Schedule, there has been no material and adverse change to the
business, financial condition or results of operation of IXC and its
subsidiaries taken as a whole since the date of the most recent IXC Filing.
14.8 IRUs: At the Closing and throughout the Term, IXC
will have good and valid title to the Base IRU free and clear of all liens and
encumbrances, and rights of third parties, except as created hereunder and
those created after the date hereof and to an indefeasible right to use related
facilities and equipment. In the case of the Long-Term Indivisible IRU and
Short-Term Indivisible IRU, IXC, at the Closing and throughout the Term, will
have, good and valid title free and clear of all liens and encumbrances, and
rights of third parties, except as created hereunder. Pursuant to the Security
Agreement, at Closing, IXC shall grant to PSINet a continuing, first priority
perfected and exclusive security interest in the Collateral.
14.9 Available System. IXC Carrier has completed the
fiber construction of, and has installed electronics (which may not include the
electronics to be used to furnish the IRU Capacity) on, the portions of the
Available System insofar as indicated on Exhibit A hereto. The Available
System will have sufficient fiber capacity to satisfy IXC's obligations
hereunder.
14.10 Stock Ownership. From the date hereof through and
including the Closing Date and simultaneously with the Closing, neither IXC
Communications, Inc. nor any of its controlled Affiliates nor any "group"
(within the meaning of Section 13(d)(3) of the 0000 Xxx) of which IXC
Communications, Inc. or any of its controlled Affiliates is a member nor, to
IXC's knowledge, any of its Associates, is or will directly or indirectly be
the "beneficial owner" (within the meaning of Rule 13d-3 under the 0000 Xxx) of
any Voting Securities of PSINet or the "Beneficial Owner" of any PSINet
securities within the meaning of PSINet's preferred stock purchase rights plan.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET
FORTH IN THIS SECTION 14, IXC MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND IXC EXPRESSLY
DISCLAIMS AND
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EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, IXC MAKES NO WARRANTY TO PSINET OR
ANY OTHER PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO THE
DESCRIPTION, QUALITY, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF ANY CABLE OR FIBERS OR ANY SERVICE OR BANDWIDTH PROVIDED
HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.
SECTION 15. COVENANTS
15.1 Xxxx-Xxxxx-Xxxxxx. As soon as possible after the
date hereof, each of PSINet and IXC shall cause its ultimate parent to prepare
and file all documents with the Federal Trade Commission and the United States
Department of Justice as is required to comply with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 ("Xxxx-Xxxxx-Xxxxxx Act") and thereafter
shall cause its ultimate parent to promptly furnish all materials thereafter
requested by any of the regulatory agencies having jurisdiction over such
filings.
15.2 Consents. Each of PSINet and IXC shall use its
reasonable best efforts to obtain at the earliest practicable date all consents
and approvals required to consummate the transactions contemplated by this
Agreement, including, without limitation, the consents and approvals referred
to in Sections 13.2, 13.6, 14.2 and 14.3 hereof; provided, however, that,
except for filing fees required in connection with the parties' obligations
under Section 15.1, above, neither PSINet nor IXC shall be obligated to pay any
consideration therefor to any third party from whom consent or approval is
requested.
15.3 Other Actions. Each of PSINet and IXC shall use its
reasonable best efforts to (i) take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.
15.4 Board Seat. So long as IXC owns 95% of all IXC
Common Shares issued to IXC hereunder, on the Closing Date, PSINet's Chairman
shall recommend that (i) PSINet's Board of Directors elect Xxxxx X. Xxxxx to
PSINet's Board of Directors effective as of the Closing Date, for a term
expiring in 1998 or later and (ii) subject to the next sentence, such person be
nominated to stand for election with the other nominated Board members at the
1998 Annual Meeting of PSINet (or, later annual meeting associated with the
expiration of his term) for a term expiring no earlier than 2000 and for
reelection thereafter at the applicable Annual Meetings of PSINet. At such
time as IXC shall cease to own the requisite amount of IXC Common Shares, a
resignation letter will be executed by Xxxxx X. Xxxxx immediately and he shall
immediately cease to serve as a member of PSINet's Board of Directors.
15.5 Restriction on Resale. PSINet shall not sell, swap,
lease or otherwise transfer (including, without limitation, by way of a pledge,
hypothecation or security interest)
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any Bandwidth obtained from IXC to any third party ("Transferee") except (i) to
an Affiliate, or (ii) in connection with the offering of Internet connectivity
services, as such services shall evolve and mature, or (iii) in connection with
a bona fide financing arrangement with an unaffiliated third party and any
foreclosure or similar sale in connection therewith; provided that in any such
case, the Transferee shall agree to be subject to the terms of this Section
15.5. PSINet and each Transferee shall not use the Bandwidth acquired from IXC
pursuant to this Agreement to provide any party (other than PSINet and its
controlled U.S. affiliates for purpose of the aggregation of the customer
traffic of PSINet and its controlled U.S. affiliates) any form of non-Internet
telecommunications transport at a rate greater than DS-3 (45mbps) without the
specific written approval of IXC. PSINet is specifically restricted from using
the Bandwidth to deliver any analog or digitized long- distance switched
telephone service or any substantially similar service, based on non-Internet
telephone switching technologies, and only on such technologies, or private
line service (such as XX-0, XX-0, XX-0, T-1, T-3, E-1, E-3, OC-3, OC- 12,
OC-48, or any OC-N private line service), to any third party. Any pledge,
hypothecation or security interest of or in the Bandwidth will be subject to
the terms and conditions of this Agreement, including, without limitation, this
section. PSINet will not compete during 1997 against IXC for * business, or
for such other business opportunities introduced to PSINet by IXC as may be
reduced to writing and acknowledged by PSINet, for services to be rendered in
1997 or thereafter, provided, however, that this sentence will not restrict
PSINet from providing services contracted for prior to the date hereof.
Notwithstanding the foregoing, the restrictions set forth in
this Section 15.5 will not apply to any Transferee which acquires any Bandwidth
in connection with a Bankruptcy Proceeding filed or initiated by or against
PSINet.
15.6 No Solicitation.
(a) From the date hereof until three years after the
Closing Date, neither IXC nor any of its Affiliates will, directly or
indirectly, either alone or in association with others in any part of the world
induce, request, encourage or assist any employee of PSINet or its Affiliates
to terminate his or her employment with PSINet, or to join with or become
employed by, render services to or otherwise be engaged by IXC or any of its
Affiliates in any direct or indirect capacity.
(b) From the date hereof until three years after the
Closing Date, neither PSINet nor any of its Affiliates will, directly or
indirectly, either alone or in association with others in any part of the world
induce, request, encourage or assist any employee of IXC or its Affiliates to
terminate his or her employment with IXC, or to join with or become employed
by, render services to or otherwise be engaged by PSINet or any of its
Affiliates in any direct or indirect capacity.
(c) If, at the time of enforcement of Section
15.6, a court shall hold that the duration, scope, geographic area or other
restrictions stated herein are unreasonable under circumstances then existing,
the parties agree that the maximum duration, scope, geographic area or other
restrictions deemed reasonable under such circumstances by such court shall be
substituted for the stated duration, scope, geographic area or other
restrictions.
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* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
30
15.7 Transfer Matters. (a) If IXC or any controlled
Affiliate of IXC that beneficially owns IXC Shares (collectively, the "Selling
Shareholder") shall desire to sell or otherwise dispose of any or all of the
IXC Shares beneficially owned by it (the "Offered Shares"), other than to IXC
Carrier, after IXC Carrier has agreed in writing to be bound by the terms of
this Section 15.7 and by Section 15.8, or pursuant to a pledge to an
unaffiliated third-party lender ("Lender") in connection with a bona fide
lending transaction or a foreclosure or similar sale in connection therewith
(each, a "Pledge Transaction"), such Selling Shareholder shall first give
written notice (the "Notice of Sale") to PSINet.
Upon the giving of any Notice of Sale, PSINet shall have a
non-assignable, one-time, first option to purchase all (but not less than all)
of the Offered Shares for cash at the Current Market Price at the date the
Notice of Sale is given, which option must be exercised by giving notice of
such exercise to the Selling Shareholder within 48 hours (excluding hours on
Saturdays, Sundays or national holidays) after the receipt by PSINet of the
Notice of Sale (the "Offer Acceptance Date"). Such notice of exercise shall
constitute PSINet's binding, non-cancelable agreement to purchase the Offered
Shares.
The closing of the purchase by PSINet of the Offered Shares
shall take place within 30 days after the Offer Acceptance Date. PSINet shall
designate the time and date of the closing which shall be held at the principal
office of PSINet or such other place as may be mutually agreed upon between
PSINet and the Selling Shareholder. At the closing, the Selling Shareholder
shall duly assign and deliver to PSINet certificates representing the Offered
Shares, with required transfer stamps attached, and PSINet shall pay the
Selling Shareholder the purchase price (plus one-half the cost of all transfer
stamps required) by wire transfer of same-day funds to an account designated by
the Selling Shareholder.
If the right given to PSINet in this section shall not have
been exercised as to the Offered Shares as set forth above, the Selling
Shareholder shall have the right, at any time within three months after the
expiration of such 48- hour period, to dispose of all of the Offered Shares.
If by the end of such three-month period, the Selling Shareholder has not sold
or otherwise disposed of all of the Offered Shares, the remaining Offered
Shares shall not be sold by the Selling Shareholder except after compliance
again with the provisions of this Section 15.7.
(b) Notwithstanding any provision of this
Agreement to the contrary, during the six month period preceding or following
the Additional Shares Determination Date and during the six month period
following the Additional Shares Acceleration Date, neither IXC, IXC
Communications, Inc. nor any controlled Affiliate of IXC Communications, Inc.
shall sell, transfer, convey or otherwise dispose of any Common Stock of PSINet
or any securities convertible into or exchangeable or exercisable for any
shares of Common Stock of PSINet (each, an "Untimely Transfer"). PSINet's sole
remedy with respect to an Untimely Transfer occurring during the six-month
period prior to the Additional Shares Determination Date, shall be to delay
payment to IXC and suspend PSINet's obligations to IXC under Section 3.5 as set
forth in Section 15.7(c). This Section 15.7(b) shall not apply to a Pledge
Transaction, so long as neither IXC nor any of its Affiliates do not
intentionally breach the terms of the applicable pledge or any related
financing agreement with the purpose of avoiding this Section 15.7(b).
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(c) Notwithstanding any provision of this
Agreement to the contrary, PSINet's obligations to pay or deliver any
Additional Shares and/or cash, other securities or property pursuant to Section
3.5 to IXC shall be suspended in the event of, and for so long as there shall
be continuing (i) a breach by IXC of a Material Provision, or a breach of
Section 15.8(a) or the Standstill Agreement claimed by PSINet to be material
and which PSINet actively seeks to resolve through the dispute resolution
procedures set forth in this Agreement or the Standstill Agreement, as
applicable, or (ii) a breach by IXC or any of its Affiliates of the provisions
of Section 15.7(a) or 15.7(b), until such breach has been cured (in the case of
a breach of Section 15.7(b), until such breach has been cured for a period of
at least fifty (50) consecutive trading days without an Untimely Transfer after
the transaction giving rise to such breach).
15.8 Standstill Agreement.
(a) IXC covenants and agrees that each of it and IXC
Communications, Inc. shall not and shall not permit any controlled Affiliate of
IXC Communications, Inc. and/or IXC to, without the prior approval of the Board
of Directors of PSINet or as otherwise provided in this Agreement, (i) in any
manner acquire, agree to acquire or make any proposal to acquire, directly or
indirectly, any securities or property of PSINet or any of its subsidiaries
(except pursuant to Section 3 of this Agreement or by way of stock dividends,
stock splits or other distributions by PSINet made available to holders of
Voting Securities generally, including without limitation pursuant to a PSINet
preferred stock purchase rights plan or pursuant to any similar plan or
distribution, or as permitted pursuant to clause (ii)(C) of this Section 15.8),
(ii) propose (by itself or by or through any of its directors, executive
officers, attorneys, investment bankers or other Person duly authorized to make
such a proposal) or induce any other Person to propose, directly or indirectly,
(A) any merger or business combination involving PSINet or any of its
subsidiaries, (B) the purchase or sale of any assets of PSINet or any of its
subsidiaries or (C) the purchase of any Voting Securities, by tender offer or
otherwise (except pursuant to the exercise of rights, warrants, options or
similar securities distributed by PSINet to holders of Voting Securities
generally, including without limitation pursuant to the exercise of rights
pursuant to PSINet's preferred stock purchase rights plan), (iii) directly or
indirectly solicit "proxies" or "consents" or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the 1934
Act), or seek to advise or influence any Person with respect to the voting of
any Voting Securities of PSINet or any of its subsidiaries, (iv) form, join or
in any way participate in a "group" (within the meaning of Section 13(d)(3) of
the 0000 Xxx) with respect to any Voting Securities of PSINet or any of its
subsidiaries, (v) deposit any Voting Securities in a voting trust or subject
any Voting Securities to any arrangement or agreement with respect to the
voting of Voting Securities, (vi) otherwise act, alone or in concert with
others, to seek to control or influence (except as a customer or supplier in
the ordinary course of business) the management, Board of Directors or policies
of PSINet (provided, however, that so long as he is a director of PSINet, this
clause (vi) shall not prohibit Xxxxx X. Xxxxx from taking action and serving in
his capacity as a director of PSINet in a manner consistent with the proper
exercise of his fiduciary and other duties as a director of PSINet), (vii)
disclose any intention, plan or arrangement inconsistent with the foregoing or
(viii) advise, assist or encourage any other Person in connection with any of
the foregoing. Notwithstanding anything in this Section 15.8 to the contrary,
so long as there shall not have occurred an IXC Change of Control, IXC shall be
permitted to approach the Board of Directors of PSINet, directly or
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indirectly through its executive officers or its investment bankers for
purposes of obtaining a waiver of its liabilities, obligations and commitments
under clause (ii) of this Section 15.8(a). IXC agrees that the provisions of
this Section 15.8 shall be binding upon its successors and assigns (other than
resulting from a Pledge Transaction) and any permitted transferees of the IXC
Shares who are controlled Affiliates of IXC Communications, Inc.
(b) IXC shall be entitled to acquire such number
of shares of Common Stock of PSINet which, when added to the number of shares
of Common Stock beneficially owned (excluding any rights IXC has hereunder to
receive Additional Shares) by IXC, its Affiliates and their respective
successors and assigns, would not exceed one share less than 20% of the then
issued and outstanding shares of Common Stock of PSINet and such acquisition of
Common Stock of PSINet under this Section 15.8(b) shall not, in and of itself,
constitute a violation of Section 15.8(a).
(c) Upon the request of IXC at any time, or from
time to time, PSINet shall issue and sell to IXC up to 100 shares of Common
Stock at the then Current Market Price so long as such purchase does not cause
IXC's beneficial stock ownership to exceed 20% of the then issued and
outstanding shares of Common Stock of PSINet (it being understood that this
Agreement and any action taken in connection herewith shall not constitute a
waiver under any provision of PSINet's preferred stock purchase rights plan).
Such issuance and sale of Common Stock under this Section 15.8(c) shall not, in
and of itself, constitute a violation of Section 15.8(a).
15.9 Registration Rights Agreement. PSINet and IXC shall
each execute and deliver to the other the Registration Rights Agreement
attached hereto as Exhibit N at the Closing.
15.10 Non-Interference. IXC shall respect and not disturb
PSINet's right to its use and quiet enjoyment of the Bandwidth and shall take
all reasonable precautions against (and shall not knowingly use its Available
System in a manner which could reasonably be expected to result in) any
interference by IXC with respect to such use and quiet enjoyment. IXC shall
have no right to use any of the Bandwidth during the Term. Neither IXC nor
PSINet shall knowingly use any electronics or technologies which could
reasonably be expected to subject risk of damage to the other party's fibers,
electronics or optronics. IXC shall use such care in performing its
obligations under this Agreement that equal or exceed that which is normal and
customary in the telecommunications industry.
15.11 Use of Marks. Except as provided herein or by
advance written consent of the other Party, each of IXC and PSINet agrees not
to (i) display or use, in advertising or otherwise, any of the other's Marks,
(ii) permit any Affiliate to display or use any of the other's Marks, or (iii)
give permission to display or use any of the other's Marks to any Third Party.
Any use by one Party of any of the other's Marks shall be subject to such other
Party's advance approval in writing, in its discretion, subject to compliance
with guidelines provided by it. Neither Party shall claim ownership or any
other rights in any of the other's Marks. Upon termination or expiration of
this Agreement, any and all rights or privileges granted by IXC or PSINet to
use any Marks shall immediately expire and each Party shall immediately
discontinue the use of such Marks. Nothing herein shall preclude
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either Party from making factual references to the other in government filings,
disclosure documents and other public statements, except as otherwise set forth
in the IRU Agreement.
SECTION 16. CONDITIONS PRECEDENT TO CLOSING
Each party shall not be obligated to proceed with the Closing,
unless and until the following conditions shall have been fulfilled or waived
by the applicable party:
16.1 Approvals. Unless waived by each party, each of
PSINet and IXC shall have obtained all consents and approvals by (a)
governmental authorities that are necessary for the consummation of the
transactions contemplated hereby (including, without limitation, expiration or
termination of all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act, and the effectiveness of any registration
statement under the Securities Act of 1933 required prior to the Closing in
connection with the reincorporation of PSINet in the State of Delaware; and (b)
any other Person necessary for the consummation of the transactions
contemplated by this Agreement. Each party shall work with the other to
acquire any permits or licenses required to be obtained by the other party;
provided, however, except as may be required pursuant to Section 15.1, above,
neither party shall be required to make any payment or assume any liability in
connection therewith.
16.2 Reincorporation. PSINet shall have reincorporated
in the State of Delaware by merging into Newco pursuant to documents
satisfactory to IXC and PSINet.
16.3 Shareholder Approval. Unless waived by each party,
PSINet shall have obtained all approvals of its shareholders which are required
in connection with the execution, delivery and performance of this Agreement,
including, without limitation, approval of the reincorporation of PSINet in the
State of Delaware and the issuance of the IXC Shares to IXC as provided in this
Agreement.
16.4 Appraisal Rights. Unless waived by PSINet, the
reincorporation of PSINet in the State of Delaware shall not give rise to the
exercise of statutory appraisal rights involving an aggregate amount greater
than $2,000,000.
16.5 Fairness Opinions.
(a) Unless waived by PSINet, there shall have
been delivered to PSINet an opinion of independent investment bankers selected
by PSINet, in form and substance satisfactory to PSINet, (i) as to the fairness
to PSINet and its stockholders from a financial point of view of the issuance
of the IXC Shares and the consummation of the transactions contemplated by, and
in connection with, this Agreement and (ii) as to the value of the IRUs being
granted by IXC to PSINet and the securities being issued or issuable by PSINet
to IXC pursuant to this Agreement.
(b) Unless waived by IXC, there shall have been
delivered to IXC an opinion of independent investment bankers selected by IXC,
in form and substance satisfactory to IXC, as to the fairness to IXC from a
financial point of view of the transactions contemplated by, and in connection
with, this Agreement.
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16.6 Consent of Bondholders. Unless waived by IXC, IXC
shall have obtained, upon terms acceptable to IXC, all approvals of its
bondholders which are required in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated by, and in
connection with, this Agreement.
16.7 Contribution Agreement. The Contribution
Agreement, in form and substance satisfactory to PSINet and IXC, shall have
been executed and delivered by each of Carrier and IXC.
16.8 Material Adverse Effect. Unless waived by each
party, no Material Adverse Effect shall have occurred with respect to either
party, Carrier or IXC Communications Inc. from the date hereof through the
Closing.
16.9 Acquisition of PSINet. Unless waived by IXC, prior
to the Closing, no Person shall have acquired or agreed to acquire more than
50% of the outstanding common stock of PSINet.
16.10 Preferred Stock Purchase Plan Amendment. Unless
waived by each party, PSINet shall have entered into an amendment to its
preferred stock purchase rights plan on or before August 1, 1997, satisfactory
to IXC and PSINet, providing, among other things, for purposes: (i) of the
definitions of "Acquiring Person", "Beneficial Owner" and "Beneficial
Ownership"; and (ii) of the definitions of "Associate" and Affiliate" of an
Acquiring Person:
(i) no Person shall be deemed to be an "Affiliate" or
"Associate" (as such terms are used in the preferred stock purchase rights
plan) of IXC, IXC Communications, Inc. or any controlled Affiliate of IXC or
IXC Communications, Inc. (collectively, the "IXC Parties") except for other IXC
Parties and no IXC Party will be deemed to be an "Affiliate" or "Associate" of
any Person except for other IXC Parties; and
(ii) no Person (except for other IXC Parties) shall be
deemed to be the Beneficial Owner (as such term is used in the preferred stock
purchase rights plan) of shares of Common Stock owned by any IXC Party and no
IXC Party shall be deemed to be the Beneficial Owner of shares of Common Stock
owned by any Person (other than other IXC Parties);
unless, in any such case, any IXC Party and such Person: (A) are members of a
"group" within the meaning of Rule 13d-5 under the 1934 Act for or in
furtherance of the purpose of (x) acquiring, holding, voting or disposing of
securities of PSINet, (y) seeking to control the management, Board of Directors
or policies of PSINet, or (z) effecting or seeking to effect any action,
transaction, change or matter referred to in any one or more of clauses (a)
through (j) of Item 4 of Securities and Exchange Commission Schedule 13D as in
effect on May 8, 1996, or (B) otherwise are, or shall be deemed to be, acting
in concert for or in furtherance of any such purpose.
Furthermore, such amendment shall provide that such amended
provisions of the preferred stock purchase rights plan cannot be further
amended without the written consent of IXC, in a way that materially adversely
affects any IXC Party (it being agreed that PSINet and its Board of Directors
generally have the right to amend, modify or waive provisions of
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the preferred stock purchase rights plan insofar as they may relate to the
approval of transactions with and other matters involving parties other than
IXC regardless of whether such transaction or matter could result in a change
of ownership or control of PSINet or its businesses or operations or any of its
controlled Affiliates, the composition of the Board of Directors of PSINet or
similar fundamental corporate change or change of relative ownership of Common
Stock).
As promptly as practicable upon fulfillment or waiver of the
conditions set forth in this Section 16, PSINet and IXC agree to execute a
certificate certifying that such conditions have been satisfied or waived and
that the Closing Date has occurred.
SECTION 17. THE CLOSING. On the terms and subject to the satisfaction of
the conditions contained in this Agreement, the closing of the grant of the
PSINet Fiber IRU and the IRU in the IRU Capacity and the sale and purchase of
the IXC Shares hereunder (the "Closing") shall take place at the offices of
PSINet or such other place, time and date as may be mutually agreed to by the
parties as soon as possible after the conditions of Section 16 have been
fulfilled.
17.1 Deliveries by PSINet. At the Closing, PSINet shall
deliver the following:
(a) The certificates representing the IXC Initial
Common Shares;
(b) A legal opinion of Nixon, Hargrave, Devans &
Xxxxx LLP, counsel to PSINet, as may be reasonably requested by IXC and
mutually agreed to by the parties;
(c) An Officer's Certificate as may be reasonably
requested by IXC and mutually agreed to by the parties; and
(d) The executed Registration Rights Agreement
contemplated by Section 15.9, above.
17.2 Deliveries by IXC. At the Closing, IXC shall
deliver the following:
(a) An Officer's Certificate as may be reasonably
requested by PSINet and mutually agreed to by the parties;
(b) The executed Registration Rights Agreement
contemplated by Section 15.9, above;
(c) A legal opinion of Xxxxxxx & XxXxxxxx,
counsel to IXC, as may reasonably requested by PSINet and mutually agreed to by
the parties;
(d) The Security Agreement and such UCC
statements and other instruments as may be deemed reasonably necessary by
PSINet to effect the grant of security interests pursuant to Section 1; and
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(e) Such other instruments, documents and
certificates as are reasonably requested by PSINet to effect the grant of the
indefeasible rights of use hereunder.
17.3 Survival of Representations and Warranties.
Regardless of any investigation at any time made by or on behalf of any party,
or of any information any party may have in respect thereof, all
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing
for a period of two years from the Closing; provided, however, that each party
hereby represents and warrants to the other party that it has no actual
knowledge as of the date hereof or as of the Closing of any breach of any
representation or warranty by such other party (as contrasted with knowledge
solely of a fact which may give rise to any such breach).
SECTION 18. TERMINATION
18.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by the written agreement of PSINet and IXC;
or
(b) by PSINet or IXC if the conditions set forth
in Section 16 of this Agreement, through no fault of the terminating party,
have not been satisfied on or prior to November 25, 1997 (as such date may be
extended by mutual agreement of the parties); or
(c) by PSINet or IXC if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any governmental authority preventing or prohibiting
consummation of the transactions contemplated by this Agreement shall have
become final and nonappealable.
18.2 Effect of Termination. Upon termination of this
Agreement pursuant to Section 18.1, above, this Agreement shall thereafter
become void and have no effect, and neither party hereto shall have any
liability to the other party in respect thereof, except that nothing herein
shall relieve either party from liability for any material breach of this
Agreement, including a breach covering the failure to use reasonable efforts to
satisfy the conditions set forth in Section 16; provided, however, neither
party shall have any liability arising out of any termination by reason of the
failure of the conditions set forth in Section 16 to have been satisfied.
SECTION 19. GENERAL PROVISIONS
19.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Accepted": means that PSINet has tested Bandwidth and found
it to satisfy the specifications contained in Exhibit F hereto and thereafter,
accepted it in accordance with Exhibit F hereto.
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"Access Right": as defined in Section 7.4(b).
"Additional Shares Value": means, as of the applicable date of
calculation, an amount equal to the difference, if greater than zero, between
(A) $240,000,000 and (B) the IXC Common Shares Value determined as of the
applicable date of calculation.
"Affiliate": of a Person means any Person which directly or
indirectly controls, is under common control with, or is controlled by, such
Person, where "control" means the power and ability to direct the management
and policies of the controlled Person through the ownership of voting shares of
the controlled Person or by contract or otherwise. Notwithstanding the
foregoing, Trustees of General Electric Pension Trust and Grumman Hill
Investments, L.P. and Grumman Hill Associates, Inc. shall not be deemed to
"control" or be "under common control" with, or to be Affiliates of IXC and
PSINet shall not be deemed to be "controlled by" or "under common control with"
IXC.
"Aggregate Fair Market Value": with respect to a combination
of cash and Additional Shares as of a date of determination, means the sum of
(i) such cash and (ii) the product of the Common Stock Price as of such date
and the number of such Additional Shares.
"Approved Subcontractor": shall mean (i) any person so
approved by IXC (which approval shall not be unreasonably withheld, conditioned
or delayed), (ii) the relevant equipment manufacturer or (iii) any authorized
service agent of the relevant equipment manufacturer.
"Associates" shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended, but shall
exclude Trustees of General Electric Pension Trust, Grumman Hill Investments,
L.P. and Grumman Hill Associates, Inc.
"Authorized Representative": as defined in Section 10.1 of
this Agreement.
"Available": of a Bandwidth Unit, means that IXC has tested
the Bandwidth Unit in accordance with Exhibit F hereto, the Bandwidth Unit
performed in accordance with the specifications set forth thereon, and the
Bandwidth Unit is thereafter made available for use by PSINet in accordance
with such specifications.
"Available System": as defined in Section 1.2 of this
Agreement.
"Bandwidth": one or more Bandwidth Units.
"Bandwidth Unit": a particular DS-3, OC-3, OC-12 or OC-48.
"Bankruptcy Proceeding": as defined in Section 7.4(a) of this
Agreement.
"Barter Capacity": DS-3 capacity IXC has received from other
carriers through barter or swap arrangements.
"Carrier": as defined in the recitals to this Agreement.
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"Closing": as defined in Section 17 of this Agreement.
"Closing Date": the date of the Closing.
"Collateral": as defined in Section 1.3 of this Agreement.
"Collocation Agreement": the agreement in the form attached
hereto as Exhibit C which is to be executed and delivered by IXC and PSINet at
the Closing.
"Commission": as defined in Section 13.5 of this Agreement.
"Common Stock": Common Stock, par value $.01 per share, of
PSINet or par value $.0001 per share of Newco, as applicable.
"Common Stock Price": means (i) the average closing market
price per share of the Common Stock or, if applicable, the Successor Stock, as
reported by The Nasdaq Stock Market or the principal securities exchange on
which the Common Stock or, if applicable, the Successor Stock, shall then be
listed over the 20 trading day period immediately preceding the applicable date
of calculation, weighted by the average trading volume of the Common Stock or,
if applicable, the Successor Stock, as reported by The Nasdaq Stock Market or
the principal securities exchange on which the Common Stock or, if applicable,
the Successor Stock, shall then be listed on each day of such 20 trading day
period, or (ii) if the Common Stock, or, if applicable, the Successor Stock, is
not as of the applicable date of calculation listed on The Nasdaq Stock Market
or any securities exchange, the price per share of the Common Stock or, if
applicable, the Successor Stock, on the applicable date of calculation as
determined by mutual agreement of PSINet and IXC or, in the case of the
Successor Stock, by mutual agreement of the issuer of such Successor Stock and
IXC.
"complete": with respect to a fiber route, means the fiber,
optronics and electronics in the route have been installed and tested and are
ready for commercial use ("completed" and "completion" have correlative
meanings.)
"Cure Period": as defined in Section 7.4(a) of this Agreement.
"Current Market Price": as of a date means the closing price
as publicly reported on the Nasdaq Stock Market (or, if not available on such
market, on the principal trading market) of the Common Shares of PSINet as of
4:00 p.m. Eastern Time on such date.
"Deemed Accepted": means Bandwidth on the Available System
made Available to PSINet which meets the specifications for acceptance thereof
by PSINet set forth in Exhibit F to this Agreement and which has not been
Accepted by PSINet after the receipt by PSINet of a notice, given by IXC to
PSINet in accordance with the terms of Section 19.5 of this Agreement, that IXC
has made such Bandwidth so Available.
"Delivery Completion Date": the date by which IXC has
delivered to PSINet and PSINet has Accepted 10,000 OC- 48 Equivalent Miles of
Bandwidth.
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"DS-3": means a circuit meeting the specifications set forth
in AT&T Technical Reference Pub. 54014 Addendum 1, November 1992 and Bellcore
TB-NWT-608499, Issue 5, December 1993.
"DS-3 Equivalent Mile": means one-forty eighth of an OC-48
Equivalent Mile.
"Excess Miles": as defined in Section 2.2 of this Agreement.
"Xxxx-Xxxxx-Xxxxxx Act": as defined in Section 15.1 of this
Agreement.
"Indemnifying Party": as defined in Section 9 of this
Agreement.
"Internet": The global network of interconnected commercial,
educational and governmental computer networks that utilize a protocol that
allow computers with different architectures and operating system software to
communicate thereon, as the same may evolve and mature.
"Internet Services Agreement": as defined in the recitals to
this Agreement.
"IRU Capacity": as defined in Section 1.2 of this Agreement.
"IXC Bankruptcy Proceeding": a Bankruptcy Proceeding filed or
initiated by or against IXC.
"IXC Change of Control": (i) the shareholders of IXC approve
an agreement for the sale of all or substantially all of the assets of IXC; or
(ii) the shareholders of IXC approve a merger or consolidation of IXC with any
other corporation, other than (A) a merger for consideration which would result
in the voting securities of IXC outstanding immediately prior thereto
continuing to represent more than 80% of the combined voting power of the
voting securities of IXC, or such surviving entity, outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation effected
to implement a recapitalization of IXC (or similar transaction) in which no
"person" (as defined below) acquires more than 20% of the combined voting power
of IXC's then-outstanding securities; or (iii) any "person," as such term is
used in Sections 13(d) and 14(d) of the 1934 Act (other than (A) IXC or (B) the
shareholders of IXC, or any corporation owned by the shareholders of IXC, in
substantially the same proportions as their ownership of stock of IXC) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of securities of IXC representing more of than 50% of
the combined voting power of IXC's then outstanding securities.
"IXC Common Shares": means such number of shares of Common
Stock (as adjusted for any stock splits, stock dividends, recapitalizations or
similar events after the Closing Date) issued and sold by PSINet to IXC on the
Closing Date pursuant to this Agreement.
"IXC Common Shares Value": means the aggregate fair market
value of the IXC Common Shares determined as of the applicable date of
calculation, based on the Common Stock Price as of such date, including, if
applicable, for purposes of such
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calculation, in the event a Merger or Other Reorganization Event shall have
occurred on or prior to such date in connection with which there shall have
been issued or delivered to the holders of the Common Stock, in addition to or
in lieu of any Successor Stock, other securities or property, the fair market
value as of the applicable date of calculation of such other securities or
property received by IXC and/or any of its Affiliates and Associates in
consideration for the IXC Common Shares then owned by them (such fair market
value to be initially determined by the board of directors, general partners or
board members, as applicable of the successor Person resulting from such Merger
or Other Reorganization Event). In the event IXC disagrees with such
determination of fair market value, such fair market value shall be determined
by arbitration pursuant to Section 19.14.
"IXC Initial Common Shares": as defined in Section 3.2 of this
Agreement.
"IXC Fibers": as defined in Section 1.1 of this Agreement.
"IXC Filing": as defined in Section 14.7 of this Agreement.
"Long-Term Indefeasible IRU": as defined in Section 1.3 of
this Agreement.
"Maintainable Equipment" shall mean the electrical, electronic
and optronic equipment which is utilized in delivering the PSINet Fiber IRU and
the IRU in the IRU Capacity to PSINet (a) including regeneration, op/amp, and
fiber terminating equipment, and multiplexing equipment but (b) excluding fiber
in any fiber optic cable.
"Material Adverse Effect": a material adverse effect on the
condition, financial or otherwise, or operating results of a Person and its
subsidiaries taken as whole.
"Material Provision": any provision of this Agreement or of
any of the Transaction Documents (including, without limitation, payment
provisions but excluding, in and of itself, any Bankruptcy Proceeding) the
breach of which by one party is determined by an arbitration pursuant to
Section 19.14 to constitute a material adverse effect on the use and enjoyment
by the other party of the benefits of such agreement.
"Marks": shall mean trade names, logos, trademarks, trade
devices, trade dress, service marks, symbols, abbreviations or registered
marks, or contractions or simulations thereof, or any other indicia or origin.
"Merger or Other Reorganization Event": means a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares) or a merger or consolidation of PSINet
with or into another Person or the sale of all or substantially all of PSINet's
properties and assets to any other Person.
"Monetary Default": as defined in Section 7.4 (a) of this
Agreement.
"Newco": as defined in the recitals to this Agreement.
"1934 Act": means the U.S. Securities Exchange of 1934, as
amended, and the rules and regulations thereunder.
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"Notice of Default": as defined in Section 7.4(a) of this
Agreement.
"Notice of Sale": as defined in Section 15.7 of this
Agreement.
"OC-3": means OC-3 SONET optical transmission capacity
meeting the applicable specifications set forth in Exhibit F hereto.
"OC-12": means OC-12 SONET optical transmission capacity
meeting the applicable specifications set forth in Exhibit F hereto.
"OC-12 Equivalent Mile": one-quarter of an OC-48 Equivalent
Mile.
"OC-48": means OC-48 SONET optical transmission capacity
meeting the applicable specifications set forth in Exhibit F.
"OC-48 Equivalent": 1 OC-48, 4 OC-12s, 16 OC-3s or 48 DS-3s.
"OC-48 Equivalent Mile": 0 Xxxxx Xxxx of OC-48 capacity, 4
Route Miles of OC-12 capacity, 16 Route Miles of OC-3 capacity or 00 Xxxxx
Xxxxx xx XX-0 capacity.
"Offer Acceptance Date": as defined in Section 15.7 of this
Agreement.
"Offered Shares": as defined in Section 15.7 of this
Agreement.
"On-net": refers to any circuit which IXC is able to deliver
on the Available System as then completed.
"Original Services Activation Date": the Service Activation
Date of a Bandwidth Unit, or, in the event the Bandwidth Unit is the result of
the Reconfiguring of one or more other Bandwidth Units, the earliest Service
Activation Date of any such Bandwidth Units.
"Person": any individual, corporation, partnership, firm,
joint venture, association, limited liability company, trust, unincorporated
organization or other entity.
"POPs": those IXC locations listed in Exhibit K hereto (as
expanded by IXC from time to time.)
"PSINet Fiber IRU": as defined in Section 1.1 of this
Agreement.
"PSINet Filing": as defined in Section 13.5 of this Agreement.
"Reconfigure": to swap Bandwidth between two points for
lesser, equal or greater amount of Bandwidth between such points or elsewhere.
"Reduction Mile": as defined in Section 1.4 of this Agreement.
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"Requested Delivery Date": as to Bandwidth, the date requested
by PSINet that IXC make such Bandwidth Available, as set forth in the
applicable Bandwidth Order and as applicable as modified by IXC pursuant to
Section 4.2.
"Rights-of-Way": all rights, licenses, authorizations
(including, without limitation, any sate, local, tribal or federal
authorizations or permits (including, without limitation, environmental
permits)), rights-of-way, easements, landlord consents and other agreements now
existing or hereafter arising which are necessary for (i) the use of poles,
conduit, cable, wire or other physical plant facilities relating to or used in
connection with the PSINet Fiber IRU and the capacity IRU granted to PSINet
hereunder and (ii) the installation, use and quiet enjoyment of the PSINet
Fiber IRU and the capacity IRU granted to PSINet hereunder.
"Route Mile": one mile of the actual geographic length of the
fiber route.
"Securities Act": the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Selling Shareholder": as defined in Section 15.7 of this
Agreement.
"Service Activation Date": with respect to a Bandwidth Unit,
the date the Bandwidth Unit is first Accepted by PSINet.
"Shortfall Mileage": the amount of Route Miles by which the
length of the Available System is less than 10,000 miles.
"Short-Term Indefeasible IRU": as defined in Section 2.3 of
this Agreement.
"Six-Month Period": any six-month period starting October 1 or
April 1 of any year.
"Standstill Agreement": the Standstill Agreement of even date
hereof from IXC Communications, Inc. to PSINet.
"Successor Stock": means the capital stock or other equity
securities of any Person issuable to the holders of the Common Stock in
connection with any Merger or Other Reorganization Event.
"Term": as defined in Section 6.1 of this Agreement.
"Total Bandwidth": means 10,000 OC-48 Equivalent Miles of
Bandwidth on the Available System to be made Available to PSINet pursuant to
the terms of this Agreement.
"Transaction Documents": this Agreement, the Registration
Rights Agreement, the Security Agreement, the Standstill Agreement, the
Internet Services Agreement and each of the agreements, instruments and
documents executed and delivered by PSINet or IXC pursuant to this Agreement,
but not including the Newco Certificate of Incorporation and Xx-
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laws, the amendment to PSINet's preferred stock purchase rights plan or the
Contribution Agreement.
"Voting Securities" the Common Shares and any other
securities of PSINet as may from time to time be entitled to vote for the
election of directors of PSINet without regard to any event or occurrence.
19.2 Amendments, Waivers and Consents. For purposes of
this Agreement and the Transaction Documents, except as otherwise specifically
set forth herein or therein, no course of dealing between PSINet and IXC and no
delay on the part of either party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. No
covenant or other provision hereof or thereof may be waived or amended other
than by a written instrument signed by the party so waiving or amending such
covenant or other provision.
19.3 Section Headings. The table of contents and
section headings in this Agreement have been inserted for reference purposes
only and shall not be deemed to limit or otherwise affect the construction of
any provision thereof or hereof.
19.4 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed
and delivered shall be taken to be an original, but such counterparts shall
together constitute but one and the same document.
19.5 Notices. All notices, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally, the next business day after delivered to a
nationally recognized overnight courier for next business day delivery, when
transmitted by facsimile or five (5) days after sent by registered or certified
mail, return receipt requested, to the parties (and to the Persons receiving
copies thereof) at the following addresses or facsimile numbers (or to such
other address or facsimile number as a party may have specified by notice given
to the other party pursuant to this provision):
If to IXC to:
IXC Internet Services, Inc.
0000 Xxxxx xx xxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Chairman
Facsimile: (000) 000-0000
With copies to:
IXC Communications, Inc.
5000 Plaza on the Lake, Suite 200
Austin, IXC 78746
Attention: General Counsel
Facsimile: (000) 000-0000
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Xxxxxxx & XxXxxxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to PSINet to:
PSINet Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Facsimile: (000) 000-0000
With a copy to:
PSINet Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and to:
Nixon, Hargrave, Devans & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
19.6 Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either party
without the prior written consent of the other party hereto and any attempted
assignment without the required consent shall be void; provided, however, that
notwithstanding the foregoing, (i) as permitted by, and subject to the
provisions of, Section 15.5 hereof, PSINet shall have the right to sell, swap,
lease, assign or otherwise transfer all or a portion of its rights in any of
the IRU's to any person who agrees in writing with IXC to be bound by Section
15.5 and this Section 19.6, (ii) each party shall have the right to pledge,
assign or otherwise transfer this Agreement and its rights hereunder, in whole
or in part, as collateral security to any lender, and (iii) each party shall
have the right to assign or transfer this Agreement and its rights hereunder,
in whole or in part, to its parent or to any direct or indirect wholly-owned
subsidiary of that party or to any Person into which that party may be merged
or consolidated or which purchases all or substantially all of the assets of
that party; provided, however, that (a) such parent, subsidiary or Person
agrees to be bound by the terms
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of this Agreement (including, without limitation, all provisions binding upon
the assigning or transferring party) and (b) any such assignment or transfer
shall not relieve that party from any liability or obligation under this
Agreement.
19.7 Severability; Specific Performance.
(a) Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
(b) Each of PSINet and IXC recognizes and affirms
that in the event of breach by it or any controlled Affiliate of any of the
provisions of Section 15.6, 15.7, or 15.8 money damages would be inadequate and
the other party would have no adequate remedy at law. Accordingly, each party
shall have the right, in addition to any other rights and remedies existing in
its favor, to enforce its rights and the other parties' obligations under
Section 15.6, 15.7 or 15.8 not only by an action or actions for damages, but
also by an action or actions for specific performance, injunction and/or other
equitable relief in order to enforce or prevent any violations (whether
anticipatory, continuing or future) of the provisions thereof (including, in
the case of Section 15.6, the extension of the 3-year period by a period equal
to (i) the length of the violation of Section 15.6 plus (ii) the length of any
court proceedings necessary to stop such violation). In the event of a breach
or violation by a party of any of the provisions of Section 15.6, the running
of the 3-year period (but not of the party's obligations under Section 15.6)
shall be tolled during the continuance of any actual breach or violation.
19.8 Expenses. Except as otherwise provided in this
Agreement, each party shall bear its own costs and expenses (including
attorney's fees), and all taxes imposed upon it under applicable law, in
connection with the negotiation, execution and performance of this Agreement
and each other agreement, document and instrument contemplated by this
Agreement and in connection with the consummation of the transactions
contemplated hereby and thereby and all obligations required to be performed by
each of them hereunder and thereunder.
PSINet shall pay all sales, use and excise taxes related to
the Bandwidth and services provided by IXC under this Agreement and any other
taxes related to the Bandwidth and services under this Agreement which are by
the terms of the relevant statute or ordinance imposed upon PSINet; provided
that, where permitted, PSINet may provide sale or resale exemption certificates
to IXC. In no event shall PSINet be obligated to pay income taxes levied upon
IXC's income or any real or personal property taxes assessed against IXC or
IXC's property, including any gross receipts taxes assessed in lieu of income
or property taxes, provided that, if the terms of the relevant statute or
ordinance imposes such gross receipts tax upon PSINet, then PSINet shall be
liable for such tax. PSINet shall pay IXC said gross receipts taxes when they
become due provided that the taxes are invoiced and included
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as a separate line item on the same invoice that is subject to such tax. IXC
shall pay any such tax not invoiced to PSINet at the time such tax is incurred.
19.9 Integration. This Agreement, including the
exhibits, documents and instruments referred to herein constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement between the parties dated as of May
14, 1997.
19.10 Schedules. The disclosure of information in the
PSINet Disclosure Schedule, the IXC Disclosure Schedule, in any other Schedule
or any Exhibit hereto shall be deemed to be disclosure in each other Schedule
hereto. The inclusion of any information in the PSINet Disclosure Schedule,
the IXC Disclosure Schedule, or any Schedule hereto shall not be deemed to be
an admission by PSINet or IXC that such information is material or outside the
ordinary course of business.
19.11 Public Announcements. Neither party shall publish
or use any advertising, sales, promotions, or other publicity materials that
use the other party's name, logo, trademarks or service marks without the prior
written approval of the other party. Each party shall have the right to
review, comment upon and approve any publicity materials, press releases or
other public statements by the other that refer to, or that describe any aspect
of, this Agreement made prior to, or within 90 days after, the Closing;
provided, however, that with respect to IXC's consent solicitation and to
disclosure documents required under the 1934 Act, subject to the last sentence
of this Section 19.11, each party shall only have the right to prior review and
to comment upon the other party's documents. Each party agrees that it will
not issue any such publicity materials, press releases or public statements
without the prior written approval of the other party. Nothing in this
Agreement establishes a license for either party to use any of the other
party's brands, marks, or logos without the prior written approval of the other
party. The provisions of this section shall survive termination of this
Agreement for a period of two years, except for the last sentence hereof which
shall survive for the Term. IXC and PSINet shall cooperate to request
confidential treatment as may be mutually agreed by them with respect to
certain terms of this Agreement, the Transaction Documents and transactions
contemplated hereby and thereby in any filing with the Commission, any other
governmental authority or any securities exchange or stock market.
19.12 Interpretation. The parties acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; (ii) the
rule of construction to the effect that any ambiguities are resolved against
the drafting party shall not be employed in the interpretation of this
Agreement; and (iii) the terms and provisions of this Agreement shall be
construed fairly as to both parties hereto, regardless of which party was
generally responsible for the preparation of this Agreement or any provision
hereof.
19.13 Governing Law. This Agreement shall be deemed to
be a contract made under, and shall be construed in accordance with, the laws
of the State of Delaware without reference to its principles of conflicts of
law.
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19.14 Dispute Resolution.
(a) If any controversy or claim arises out of or
relates to this Agreement or with respect to an alleged breach of the terms
hereof, subject to Section 19.7, above, PSINet and IXC shall seek to resolve
the matter amicably through discussions between themselves. The parties shall
attempt to resolve all controversies, claims or breaches at the operational
level, and in the event a resolution cannot be reached, such controversy, claim
or breach will be referred progressively to higher levels within each party, to
their respective chairpersons. If the parties fail to resolve such
controversy, claim or breach within thirty (30) days by amicable arrangement
and compromise, either party may seek arbitration as set forth below but only
within four years of the occurrence of the events giving rise to, or the
accrual of, such controversy, claim or breach.
(b) Except as provided in Section 19.7, above,
any controversy or claim arising out of or in relating to this Agreement, or a
breach of this Agreement, shall be finally settled by binding arbitration in
Chicago, Illinois in accordance with the J.A.M.S./ENDISPUTE Arbitration Rules
and Procedures ("Endispute Rules"), as amended by this Agreement. If possible,
the parties shall appoint by mutual agreement, as the arbitrator, an attorney
experienced in telecommunications, securities law and transactional matters.
If such agreement cannot be reached, the arbitrator shall be such type of
attorney and shall be chosen under the Endispute Rules. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the parties unless the arbitration award provides otherwise or
except as provided in Section 7.2. Each party shall bear the cost of preparing
and presenting its case. The parties agree that this provision and the
arbitrator's authority to grant relief shall be subject to the United States
Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this
Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The parties agree that the arbitrator shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrator have the
authority to make any award that provides for punitive or exemplary damages.
The arbitrator's decision shall follow the plain meaning of relevant documents,
and shall be final and binding. The award may be confirmed and enforced in any
court of competent jurisdiction. All post-award proceedings shall be governed
by the USAA.
19.15 Relationship of the Parties. This Agreement and
the Transaction Documents shall not be deemed to cause either party hereto to
be deemed the agent or partner of the other party and neither party shall have
the right to bind the other. This Agreement shall not be interpreted to impose
any limitation or restriction on IXC's ability to enter the Internet business
or to acquire Internet-related companies or to enter into agreements with other
Internet companies.
19.16 Laws and Licenses. This Agreement is subject to
all applicable federal, state and local laws, regulations, rulings and orders
of governmental agencies, including, but not limited to, the Communications Act
of 1934 as amended by the Telecommunications Act of 1996, and the rules and
regulations of the FCC.
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19.17 Facsimile Delivery. This Agreement may be
delivered by facsimile transmission of an executed counterpart signature page
hereof, and after attachment of such transmitted signature page to a copy of
this Agreement, such copy shall have the same effect and evidentiary value as
copies delivered with original signatures. Any party delivering this Agreement
by facsimile transmission shall deliver to the other party, as soon as
practicable after such delivery, an original executed counterpart signature
page of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
IXC Internet Services, Inc.
By: /s/ XXXXX X. XXXXX
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman, President and CEO
PSINet Inc.
By: /s/ XXXXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President and CEO
49
PSINet
Exhibit List
Exhibit A Available System
Exhibit B Security Agreement
Exhibit C Collocation and Interconnection Agreement
Exhibit D Newco Common Stock Percentage Determination
Exhibit E Associated Services
Exhibit F OC-N Specifications and Testing Standards
Exhibit G PSINet's Bandwidth Forecast
Exhibit G-1 Initial Order
Exhibit H Multiplexing Fees
Exhibit I Reconfiguration Fees
Exhibit J Newco Certificate of Incorporation
Exhibit K POP Space
Exhibit L PSINet Disclosure Schedule
Exhibit M IXC Disclosure Schedule
Exhibit N Registration Rights Agreement
50
EXHIBIT A
Available System
[MAP]
51
EXHIBIT B
52
EXHIBIT B
TO
IRU AND STOCK PURCHASE AGREEMENT
SECURITY AGREEMENT AND ASSIGNMENT
THIS SECURITY AGREEMENT AND ASSIGNMENT, dated as of __________, 1997, is
made by and between IXC Internet Services, Inc. a Delaware corporation
(hereinafter, together with its successors and assigns, "IXC"), and PSINet Inc.,
a New York corporation (hereinafter, together with its successors and assigns,
"PSINet" or the "Secured Party"). All capitalized terms used but not otherwise
defined herein shall have the meanings set forth in that certain IRU and Stock
Purchase Agreement entered into as of July 22, 1997 (as amended, supplemented or
modified, the "Purchase Agreement").
PRELIMINARY STATEMENTS:
A. IXC and PSINet are parties to the Purchase Agreement pursuant to
which, among other things, PSINet has acquired the PSINet Fiber IRU and the IRU
Capacity from IXC and IXC has acquired from PSINet 19.99999% of the total
outstanding shares of Common Stock of PSINet.
B. Pursuant to the Purchase Agreement, IXC has agreed to execute and
deliver this Security Agreement and to grant to PSINet a security interest in
the Collateral (as hereinafter defined) as security for IXC's obligation to
provide the PSINet Fiber IRU and IRU in the IRU Capacity.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
A G R E E M E N T
1. Defined Terms. As used in this Security Agreement the following terms
have the following meanings, unless the context otherwise requires:
"Collateral" has the meaning assigned to it in Section 2 of this
Security Agreement.
"Default" means a default under the Purchase Agreement that remains
uncured following the expiration of any applicable cure period and that
materially and adversely affects the use and enjoyment of the PSINet
Fiber IRU or the IRU in the IRU Capacity by PSINet.
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"GAAP" means generally accepted accounting principles in the United
States of America from time to time in effect as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements
and pronouncements of the Financial Accounting Standards Board, or in
such other statements by any successor entity as may be in general use
by significant segments of the accounting profession that are applicable
to the circumstances as of the date of determination.
"hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Security Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word
appears.
"Lien" means any mortgage, pledge, charge, security interest or other
encumbrance.
"Permitted Liens" means (i) any Liens for taxes not yet delinquent or
Liens for taxes being contested in good faith and by appropriate
proceedings promptly instituted and diligently concluded, and (ii)
materialmen's and mechanic's Liens and other similar Liens arising in
the ordinary course of business, which are being contested in good faith
by appropriate proceedings or are paid within 60 days from the creation
thereof, and which do not impair the use and enjoyment by PSINet of the
PSINet Fiber IRU and/or the IRU in the IRU Capacity.
"Proceeds" means "proceeds," as such term is defined in section
9-306(1) of the UCC and, in any event, shall include, without
limitation, (i) any and all payments (in any form whatsoever) made or
due and payable to IXC from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or
any part of the Collateral by any governmental body, authority, bureau
or agency (or any person acting under color of governmental authority),
and (ii) any and all other amounts from time to time paid or payable to
IXC under or in connection with any of the Collateral, excluding from
such other amounts, amounts paid to IXC by PSINet.
"Secured Obligations" means IXC's obligation to provide the PSINet
Fiber IRU and the IRU in the IRU Capacity pursuant to the Purchase
Agreement.
"Security Agreement" means this Security Agreement and Assignment, as
the same may from time to time be amended or supplemented.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Delaware; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority or exercise of remedies of either
Secured Party's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the
State of Delaware, the term "UCC" means the Uniform Commercial Code, as
in effect in such other
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jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection, priority or exercise of remedies and for
purposes of definitions related to such provisions.
2. Grant of Security Interest; Collateral Assignment.
2.1 Collateral. (a) As collateral security for the prompt and
complete performance when due of the Secured Obligations, IXC hereby grants to
the Secured Party a continuing security interest in, all IXC' right, title and
interest in, to and under the following, whether now owned or hereafter acquired
and wherever located (all of which, together with the Collateral as further
defined in this Section 2.1(a) and in Section 2.1(b), being hereinafter
collectively called the "Collateral"):
(i) the Long-Term Indivisible IRU;
(ii) the Short-Term Indivisible IRU;
(iii) the Access Right; and
(iv) to the extent not otherwise included, all Proceeds
of the foregoing.
As set forth in Section 1.4 of the Purchase Agreement, the PSINet Fiber
IRU and the Base IRU in the IXC Fibers shall be extended to cover additional
completed portions of the Available System effective immediately upon completion
without any further action on the part of IXC and the Long-Term Indivisible IRU
and the Short-Term Indivisible IRU shall include such completed portions of the
Available System. IXC hereby grants, without further action on its part, and
will execute the necessary documents to evidence such grant of a continuing
security interest in (i) the Long-Term Indivisible IRU (with such defined phrase
being extended to cover such completed portions of the Available System) and the
products and proceeds thereof, (ii) the Short- Term Indivisible IRU, and (iii)
the Access Right (with each such defined phrase being extended to cover such
completed portion of the Available System) and the products and proceeds
thereof, and the Long-Term Indivisible IRU, the Short-Term Indivisible IRU, and
the Access Right, as so extended, will thereupon become part of the Collateral.
Notwithstanding the foregoing, however, commencing in respect of any completed
portion of the Available System, after the date on which such completed portion
of the Available System shall have been completed, the length of the Short-Term
Indivisible IRU shall not exceed the excess, if any, of 10,000 Route Miles over
the number of completed Route Miles on the Available System Accepted by the
Secured Party. To the extent completion of additional portions of the Available
System requires shortening the length of the Short-Term Indivisible IRU (which
is subject to the security interest pursuant to the preceding sentence) by a
certain number of Route Miles (the "Reduction Miles"), the Short-Term
Indivisible IRU shall be deemed to be shortened 30 days after the date on which
such completed portion of the Available System shall have been completed by
changing its definition to exclude a number of Route Miles equal to the number
of Reduction Miles. The specific Route Miles excluded shall be determined by
excluding that number of Route Miles of the Available System
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most recently completed beginning with the eastern most portion along the
applicable route, all as set forth in a written notice from IXC to the Secured
Party.
(b) IXC does hereby assign, transfer and set over unto Secured Party, as
collateral security for the prompt and complete performance of the Secured
Obligations, all of IXC's rights and interests in and to the Contribution
Agreement to the extent necessary to deliver and provide PSINet with the IRU in
the IRU Capacity and the PSINet Fiber IRU (such necessary rights and interests
in and to the Contribution Agreement being referred to as the "PSINet Rights"),
including without limitation: (i) the right to receive, use and accept the
PSINet Rights, (ii) all claims for damages in respect of the PSINet Rights
arising as a result of any default under the Contribution Agreement, (iii) any
and all rights of IXC to compel performance of the terms of the Contribution
Agreement relating to the PSINet Rights, and (iv) all rights, benefits and
claims under all warranty and indemnity provisions, if any, contained in the
Contribution Agreement relating to the PSINet Rights. Notwithstanding the
foregoing, so long as no Default shall have occurred and be continuing, Secured
Party authorizes IXC, without affecting the terms of this Agreement, to exercise
in its own name the PSINet Rights under the Contribution Agreement. The defined
term "Collateral" under this Agreement shall include the PSINet Rights.
2.2 Non-Disturbance and Restrictions. The Secured Party and each
transferee of any Collateral pursuant to this Agreement shall not disturb the
exercise of the rights of any third party or IXC to use fibers, appurtenances or
equipment in the Available System so long as the exercise of such rights does
not interfere with the exercise by PSINet of its rights to use the PSINet Fiber
IRU, the IRU in the IRU Capacity or to enjoy the benefits thereof. The rights of
PSINet and each such transferee hereunder are subject to the obligation to
comply with Section 8, Section 15.5 and the other obligations of PSINet under
the Purchase Agreement.
3. Representations and Warranties. IXC hereby represents and warrants
that:
3.1 Ownership, Liens. Except for the security interest granted to the
Secured Party pursuant to this Security Agreement, IXC is the owner of each item
of the Collateral, having good title thereto, free and clear of any and all
Liens other than Permitted Liens.
3.2 Business Locations. IXC' principal place of business and the
place where its records concerning the Collateral are kept are at the locations
listed in Schedule I hereto, and IXC will not change such principal place of
business or remove such records without at least thirty (30) days prior written
notice to each Secured Party and providing to Secured Party such documents and
taking such action as is necessary to ensure PSINet has a first priority
perfected security interest in the Collateral.
3.3 Trade Names. Neither IXC nor any of its predecessors in interest
has, at any time within the five-year period ending on the date hereof,
conducted any business under any name other than "IXC Internet Services, Inc."
except as set forth on Schedule IV hereto.
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3.4 Identification Number. The Federal Employer Identification Number
of IXC is _________.
4. Covenants. IXC covenants and agrees with the Secured Party that from
and after the date of this Security Agreement and until the Secured Obligations
are fully satisfied:
4.1 Compliance with Laws. IXC will comply, in all material respects,
with all acts, rules, regulations, orders, decrees and directions of any
governmental authority, applicable to the Collateral or any part thereof;
provided, however, that IXC may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not in the sole opinion of the
Secured Party adversely affect the Secured Party's right or the priority of its
security interest in the Collateral; and provided further, that nothing
contained herein shall be deemed to prohibit IXC from contesting any Lien
arising by operation of law where IXC is contesting in good faith and by
appropriate proceedings the obligations which gave rise to such Lien, provided
that such contest does not involve the material danger of the sale, forfeiture
or loss, or material restriction of, use or enjoyment of any of the Collateral.
4.2 Payment of Obligations. IXC will pay promptly when due, all
taxes, assessments, franchises, fees and governmental charges or levies imposed
upon or payable in respect of the Collateral or in respect of its income or
profits therefrom, as well as all claims and demands of any kind (including
claims for labor, materials and supplies), except that no such charge need be
paid if (i) the validity thereof is being contested in good faith in an
appropriate manner, and (ii) such contest does not involve any material danger
of the sale, forfeiture or loss, or material restriction of, use or enjoyment of
any of the Collateral or any interest therein.
4.3 Limitations on Liens on Collateral; Lien Waivers. IXC will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien, claim or right, in
or to the Collateral, other than Permitted Liens, and will defend the right,
title and interest of the Secured Party in and to any of IXC's rights to the
Collateral and in and to the Proceeds and products thereof against the claims
and demands of all persons whomsoever.
4.4 Continuous Perfection. IXC will not change its name, identity or
corporate structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the meaning
of section 9-402(7) of the UCC (or any other then applicable provision of the
UCC) unless IXC shall have given each Secured Party at least thirty (30) days'
prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by each Secured Party to amend such financing statement or
continuation statement so that it is not seriously misleading.
4.5 Further Identification of Collateral. IXC will furnish to the
Secured Party from time to time statements and schedules further identifying and
describing the Collateral and
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such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail.
4.6 Notices. IXC will advise each Secured Party promptly, in
reasonable detail, (i) within 30 days of IXC gaining knowledge of any lien,
security interest, encumbrance or claim, other than Permitted Liens for taxes
not yet due and payable, made or asserted against any of the Collateral, (ii) of
any material change in the composition of the Collateral, and (iii) of the
occurrence of any other event which would have a material effect on the security
interests created hereunder.
4.7 Contribution Agreement. (a) IXC agrees that, so long as this
Agreement is in effect, it will not, without the prior written consent of
Secured Party, do any of the following if such act would have a material adverse
effect on the Collateral; (i) amend, modify or permit to be amended or modified
the Contribution Agreement, (ii) waive or permit to be waived any material
provisions of the Contribution Agreement, or (iii) exercise any right to
terminate or cancel any material provision of the Contribution Agreement or
consent or agree to, or suffer or permit, the termination thereof whether or not
on account of any default therein specified.
(b) It is expressly agreed that anything herein to the contrary
notwithstanding, IXC shall remain liable under the Contribution Agreement to
perform all of its obligations thereunder and Secured Party shall have no
obligation or liability under the Contribution Agreement by reason of, or
arising out of, this Security Agreement nor shall the Secured Party be required
or obligated in any manner to perform or fulfill any obligations of IXC under or
pursuant to any of the Contribution Agreement, or to make any payment or to make
any inquiry, as to the nature or sufficiency of any payment received by it, or
to present or file any claim or to take any other action to collect or enforce
the payment of any amounts which may have been assigned to it or to which it may
be entitled hereunder at any time or times.
5. Remedies, Rights Upon Default. If any Default shall occur and be
continuing, the Secured Party may exercise (in addition to all other rights and
remedies granted to it in this Security Agreement) after thirty (30) days notice
to IXC (and the notice specified below of time and place of public or private
sale), may forthwith collect, receive, appropriate and realize upon the
Collateral or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or sell and deliver said Collateral (or contract
to do so), as the case may be, or any part thereof, in one or more parcels at
public sale or sales, at any exchange broker's board or at the Secured Party's
offices or elsewhere at such prices as it may deem best (subject to Section 2.2
and the last sentence of this Section 5), for cash or on credit or for future
delivery without assumption of any credit risk. The Secured Party shall have the
right upon any such public sale or sales to purchase the whole or any part of
said Collateral so sold. The Secured Party shall pay over the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses incurred therein or incidental
to the care, safekeeping or otherwise of any or all of the Collateral or in any
way relating to the rights of the Secured Party hereunder, for application on an
equal basis to the payment in whole or in part of
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the Secured Obligations, and only after such net proceeds need the Secured Party
account for the surplus, if any, to IXC. IXC agrees that neither Secured Party
needs to give more than thirty (30) days' notice (which notification shall be
deemed given when mailed, postage prepaid, addressed to IXC at its address
provided pursuant to this Security Agreement) of the time and place of any
public sale may take place and that such notice is reasonable notification of
such matters. The Secured Party's exercise of the foregoing rights and remedies
is subject to the provisions of Section 2.2 and any transferee (including the
Secured Party) of any of the Collateral must agree to be bound by such
provisions.
6. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
IXC for liquidation or reorganization, should IXC become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of IXC's assets, and shall continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
7. Notices. Unless otherwise provided herein, all notices and
communications concerning this Security Agreement shall be addressed to the
other party as follows:
If to IXC: IXC Internet Services, Inc.
Attn: Chief Financial Officer
0000 Xxxxx xx xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
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with copies to: IXC Communications, Inc.
Attention: General Counsel
0000 Xxxxx xx xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx & XxXxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
If to PSINet: PSINet Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Facsimile: (000) 000-0000
With a copy to:
PSINet Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and to: Nixon, Hargrave, Devans & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
Unless otherwise provided herein, notices shall be sent by registered or
certified U.S. Mail, postage prepaid, or by commercial overnight deliver
service, or by facsimile, and shall be deemed served or delivered to the address
or its office on the date of receipt acknowledgement or, if postal claim notices
are given, on the date of this return marked "unclaimed," provided, however,
that upon receipt of a returned notice marked "unclaimed," the sending party
shall make a reasonable effort to contact and notify the other party by
facsimile.
8. Severability. Any provision of this Security 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
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prohibition or unenforceability in any jurisdiction shall not invalidate or
render enforceable such provision in any other jurisdiction.
9. No Waiver; Cumulative Remedies. The Secured Party shall by any act,
delay, omission or otherwise be deemed to have waived any of its or their rights
or remedies hereunder and no waiver shall be valid unless in writing, signed by
the Secured Party, and then only to the extent therein set forth. A waiver by
the Secured Party of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Secured Party would
otherwise have had on any future occasion. No failure to exercise nor any delay
in exercising on the part of the Secured Party any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Security Agreement may
be waived, altered, modified or amended except by an instrument in writing, duly
executed by the party against which enforcement of such waiver, alteration,
modification or amendment is sought.
10. Successors and Assigns; Governing Law. This Security Agreement and
all obligations of IXC hereunder shall be binding upon the successors and
assigns of IXC, and shall, together with the rights, obligations and remedies of
the Secured Party hereunder inure to the benefit of and be binding upon the
successors and assigns of the Secured Party. This Security Agreement shall be
governed by, and be construed and interpreted in accordance with, the laws of
the State of Delaware.
11. Termination.
11.1 Short Term Indivisible IRU. Subject to Section 6 hereof, the
Secured Party's security interest in the Short Term Indivisible IRU shall
terminate upon the Secured Party's Acceptance of 10,000 Route Miles along the
Available System.
11.2 Agreement. Subject to Section 6 hereof, upon expiration of the
Purchase Agreement and the payment or performance of the Secured Obligations,
this Security Agreement shall terminate and PSINet will, at the request and
expense of IXC, execute and deliver to IXC a proper instrument or instruments
evidencing such termination.
12. Dispute Resolution. Any controversy or claim between or among the
Secured Party, IXC or IXC Carrier, Inc. arising out of or relating to this
Agreement or with respect to an alleged breach of the terms hereof shall be
resolved in accordance with the provisions of Section 19.14 of the Purchase
Agreement; provided that the foregoing shall not be applicable with respect to
any matters which arise in connection with any Bankruptcy Proceeding involving
IXC or IXC Carrier, Inc., as debtor.
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13. Counterparts. This Security Agreement may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
agreement.
14. No Conflict. Nothing contained in this Security Agreement shall be
deemed to alter, modify, affect or limit any of Secured Party's rights under the
Purchase Agreement.
IN WITNESS WHEREOF, IXC and PSINet have each caused this Security
Agreement to be executed by a duly authorized officer as of the date first set
forth above.
IXC Internet Services, Inc.
By:
------------------------------------
Name:
Title:
PSINet Inc.
By:
------------------------------------
Name:
Title:
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ACKNOWLEDGEMENT AND CONSENT
The undersigned, IXC Carrier, Inc. ("Carrier"), hereby acknowledges and
consents to the foregoing Security Agreement and Assignment and agrees not to
interfere with the rights or quiet enjoyment of the Secured Party under the
Purchase Agreement in accordance with its terms, except that IXC will have the
rights under Section 7.4(a) of the Purchase Agreement with respect to a
continuing breach (as determined by an arbitration) by Secured Party of a
Material Provision and in such event Carrier shall not be obligated to perform
any obligation which IXC is allowed pursuant to Section 7.4(a) to withhold or
suspend. Carrier hereby consents to the collateral assignment by IXC to the
Secured Party of the PSINet Rights under the Contribution Agreement as provided
in the Security Agreement and Assignment and recognizes the Secured Party as the
permitted assignee with respect to the PSINet Rights and agrees to allow the
Secured Party to exercise and obtain the benefit of such PSINet Rights. Carrier
hereby agrees to be bound by the provisions of Section 4.7 of the Security
Agreement and Assignment to the same extent as IXC and as if Carrier were a
party thereto. If Carrier gives any notices of the occurrence of a default or
event of default under the Contribution Agreement to IXC, Carrier shall
simultaneously give such notice to the Secured Party. Secured Party shall be
entitled to exercise the rights granted to IXC with respect to the PSINet Rights
and to obtain the benefits of the PSINet Rights under the Contribution Agreement
without being required or obligated to cure any default or event of default on
the part of IXC or to perform or fulfill any obligations of or make any payments
which were required to be made by IXC [except that at such time as Secured Party
exercises the PSINet Rights under the Contribution Agreement, Secured Party
shall be bound by the provisions of Sections _____ thereof].* Notwithstanding
the foregoing, upon and after the exercise by Secured Party of the PSINet Rights
under the Contribution Agreement, the Secured Party will have the same rights
and opportunity to cure the default or event of default as are given to IXC
under the Contribution Agreement. In no event shall Secured Party's obligations
with respect to the PSINet Rights under the Contribution Agreement exceed,
duplicate or be in addition to any obligation of Secured Party under the
Purchase Agreement. Carrier agrees that, with respect to the PSINet Rights, upon
a default or event of default on the part of IXC under the Contribution
Agreement, the Contribution Agreement will continue in full force and effect
between Carrier and the Secured Party in respect of the PSINet Rights to the
same extent as if Secured Party were a party thereto, subject to the fifth and
seventh sentences of this paragraph.
In the event of a Default under the foregoing Security Agreement and
Assignment, notwithstanding Section 5 thereof, Secured Party shall not be
entitled to foreclose, collect, receive, appropriate, sell, lease, assign, give
option or options to purchase, or sell or deliver, or contract to do any of the
foregoing or otherwise realize upon the PSINet Rights under the Contribution
Agreement (except that Secured Party may deal with its IRU capacity and shall
have the rights to the PSINet Rights and use thereof as provided and permitted
under the Purchase
---------------
* Such sections are subject to approval by Secured Party and shall not include
any payment obligations.
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Agreement with respect to the PSINet Fiber IRU and/or the IRU in the IRU
Capacity, including without limitation Section 15.5 of the Purchase Agreement).
Nothing contained herein shall (i) be deemed to modify, affect or limit any of
Secured Party's rights under the Purchase Agreement or (ii) prevent Secured
Party from taking any action necessary to preserve, protect, perfect or continue
its security interest in the PSINet Rights or (iii) prevent Secured Party from
using or obtaining the benefits of the PSINet Rights.
Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings ascribed thereto in the foregoing Security
Agreement and Assignment.
IXC Carrier, Inc.
By:
-------------------------------
Name:
Title:
The foregoing Acknowledgment and Consent is acknowledged and agreed to
by the undersigned.
PSINet Inc.
By:
-------------------------------
Name:
Title:
IXC Internet Services, Inc. hereby acknowledges receipt of notice of,
consents to and agrees to be bound by the terms and provisions of the foregoing
Acknowledgment and Consent as they relate to the relative rights of PSINet Inc.
and IXC Carrier, Inc.
IXC Internet Services, Inc.
By:
---------------------------------
Name:
Title:
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EXHIBIT C
[COLLOCATION AND INTERCONNECTION AGREEMENT]
65
EXHIBIT C
TO
IRU AND STOCK PURCHASE AGREEMENT
COLLOCATION AND INTERCONNECTION AGREEMENT
This Collocation and Interconnection Agreement (this "Agreement") is
entered into as of the _________ day of _______________, 199_, by and between
IXC Internet Services, Inc., a Delaware corporation ("IXC"), and PSINet Inc., a
New York corporation ("PSINet"). All capitalized terms used but not otherwise
defined herein shall have the meanings set forth in that certain IRU and Stock
Purchase Agreement entered into as of July 22, 1997 by and between IXC and
PSINet (as amended, supplemented or modified, the "Purchase Agreement"). In the
event of any conflict between the terms of this Agreement and those of the
Purchase Agreement, the terms of the Purchase Agreement shall control.
BACKGROUND AND PURPOSE
This Agreement is made with reference to the following facts:
A. IXC and PSINet have entered into the Purchase Agreement pursuant to
which, among other things, PSINet has acquired from IXC the PSINet Fiber IRU,
the IRU Capacity and the option to order Bandwidth on the Available System and
IXC has acquired from PSINet shares of PSINet's common stock.
B. In connection with the Purchase Agreement, PSINet may wish to
collocate its telecommunications equipment ("Equipment") at IXC's premises or
points-of-presence ("POPs") and, or may wish to interconnect its Equipment to
IXC's or third party's equipment. This Agreement sets forth the terms and
conditions on which PSINet may collocate and, or interconnect its Equipment on
IXC's premises.
TERMS OF AGREEMENT
Accordingly, in consideration of the foregoing and of the mutual
covenants contained herein and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. IXC Premises. IXC's premises available for the collocation of
PSINet's Equipment or interconnection of PSINet's facilities are listed on
Exhibit K to the Purchase Agreement as it may be expanded from time to time (the
"IXC Premises" or "IXC POPs").
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2. Collocation Rights.
2.1 Collocation. IXC hereby grants to PSINet the right to locate,
install, maintain and operate Equipment at the IXC Premises for the duration of
the term of the Purchase Agreement. No use of the IXC Premises required or
permitted under this Agreement shall create or vest in PSINet any easements or
other ownership or property rights of any nature in IXC's real or personal
property or the IXC Premises.
2.2 Basic Services. In consideration of the maintenance fee that
PSINet is required to pay IXC under the section entitled System Maintenance and
POPs - Consideration set forth in the Purchase Agreement, IXC shall supply HVAC
(Heating, Ventilation and Air Conditioning) for standard components, non-UPS AC
power and space for PSINet Equipment at the IXC POPs as follows:
Sites # of Spaces* Power Per Space
----- ------------ ---------------
As listed on Exhibit K * *
* A space adequate to contain a cabinet (measuring 2 feet (width) x 3 feet
(depth) x 70 inches (height)). PSINet shall supply its own cabinets. If PSINet
has more, or desires more, than six Spaces in the IXC POPs, PSINet shall be
required to pay for those Spaces at IXC's standard rates.
2.3 Interface. Interface points for PSINet's IRU Capacity
provided by IXC under the Purchase Agreement shall be at fiber patch panels
("Connect Panels") located in the IXC Premises. The Connect Panel located in the
IXC Premises shall be the demarcation to establish PSINet's operational and
maintenance responsibilities. Subject to the space limitations set forth in this
Agreement, PSINet shall provide, install and maintain at its expense the
electronic equipment at the IXC Premises it desires. PSINet will pay IXC time
and materials agreed upon on a case by case basis for equipment installation,
tech-assists and build-outs for power, cabling and HVAC.
2.4 Additional Services. In the event PSINet desires installation
services (including, but not limited to cross connect facilities needed to
access local exchange carriers' or competitive access providers' entrance
facilities), DC power, or additional space, AC power or HVAC (collectively
referred to as the "Services") at any of the IXC Premises, it shall make a
written request for such Services to IXC. Within fifteen (15) business days
after receiving such written request, IXC shall provide PSINet with the
availability of the Services and IXC's standard rates for the Services. In the
event upgrades or expansions to the IXC Premises or its facilities are necessary
to accommodate PSINet's request, IXC may include the entire cost of such
upgrades or expansions in the cost to PSINet. In the event IXC provides the
Services to PSINet by replacing its existing equipment at PSINet's expense, IXC
shall give the old, replaced equipment to PSINet. In the event PSINet chooses to
receive additional Services at the IXC Premises, PSINet shall pay any and all
(initial and continuing) costs reasonably determined by
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* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
67
IXC to be necessary to provide Services to PSINet. If IXC makes available and
PSINet utilizes more than 20 amps of AC power per Space during any particular
month during the term of this Agreement, PSINet shall pay IXC its standard rate
for each additional amp. IXC shall provide PSINet with an invoice setting forth
the costs for additional Services within sixty (60) days of the later of: (a)
IXC receiving its invoices for such Services from subcontractors and vendors or
(b) delivering the Services to PSINet. PSINet shall pay IXC the amounts due
within thirty (30) days of receipt of an invoice from IXC.
2.5 Back-up Power. In the event that PSINet desires back-up power
at the IXC POPs, PSINet shall submit its back-up power requirements to IXC. IXC
shall within thirty days of receipt of PSINet's request provide PSINet with a
quote as to IXC's costs for providing such back-up power; provided however, that
IXC shall only be obligated to provide such quote and the back-up power if IXC,
in its sole discretion, determines that providing such back-up power is feasible
considering available space, environmental factors, required consents from third
parties and other relevant factors. In the event IXC does provide back-up power
to PSINet: (a) IXC shall provide PSINet with invoices setting forth the costs
for such back-up power within sixty (60) days of the later of: (i) IXC receiving
its invoices from subcontractors and vendors for installing and providing such
back-up power or (ii) delivering the back-up power to PSINet; and (b) IXC will
have no liability whatsoever to PSINet with regard to any delay, failure or
defect in such back-up power and Section 18 shall apply to such power. IXC's
initial and ongoing costs for providing such back-up power to PSINet may be
included in IXC's invoices to PSINet. PSINet shall pay IXC the amounts due
within thirty (30) days of receipt of an invoice from IXC.
2.6 Delivery and Installation. PSINet shall, at its own expense,
deliver, install and maintain its collocated Equipment in a safe condition and
meeting or exceeding the standards set forth in Section 7.2. At no additional
charge, IXC shall provide to PSINet Spaces that are reasonably proximate to each
other in light of the type of Equipment that PSINet is installing; provided,
however, that if PSINet or its Equipment requires a specific geometric
arrangement, and IXC determines that in order to accommodate PSINet or its
Equipment, rearrangement of the existing facilities at the IXC Premises is
required, PSINet agrees to reimburse IXC for any such make-ready costs. IXC will
advise PSINet in writing of any estimated make-ready charges (including
investigation, design and engineering fees) for such rearrangement work and
PSINet shall make payment to IXC within thirty (30) days from its receipt of
IXC's invoice therefor.
3. Interconnection with PSINet POPs.
3.1 Construction and Installation. In the event PSINet desires to
connect any of its POPs to any IXC POP, PSINet may construct, install, operate
and maintain a connection facility (the "POP-to-POP Interconnect Facility")
between the PSINet premises and the IXC Premises so long as PSINet meets or
exceeds the standards set forth in Section 7.2. PSINet shall provide at its
expense all necessary rights-of-way, permits, equipment and IXC-approved
materials to construct and install each POP-to-POP Interconnect Facility,
including, but not limited to, cables and conduit and any labor charges
associated therewith. If necessary, and where applicable, IXC shall use
commercially reasonable efforts to provide PSINet, at PSINet's
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expense, access to existing building entrance facilities, if available, to
access and exit IXC POPs. The demarcation point for PSINet shall be in the IXC
POPs at the Connect Panel or the DSX panel, as appropriate.
3.2 Ownership. PSINet shall retain ownership of any portion of
the POP-to- POP Interconnect Facility that is located on the IXC Premises during
the term of this Agreement; provided, however, that title to any part of the
POP-to-POP Interconnect Facility within the IXC Premises shall be transferred to
IXC upon expiration or termination of this Agreement.
3.3 Maintenance and Changes. PSINet shall be responsible for
maintenance and repair of the POP-to-POP Interconnect Facility on PSINet's side
of the point of demarcation. Any improvement, modification, addition to,
relocation, or removal of, the POP-to-POP Interconnect Facility by PSINet at the
IXC Premises is subject to prior review and written approval by IXC Transmission
Engineering Department and the cost of such improvement, modification, addition
to, relocation, or removal of, the POP-to-POP Interconnect Facility will be the
sole responsibility of PSINet. IXC's approval will not be unreasonably withheld
and in the event IXC fails to respond to PSINet's written request within thirty
(30) days of receiving PSINet's request for such changes, IXC's shall be deemed
to have approved PSINet's request.
4. Interconnection to Third Parties. Interconnect facilities to
interconnect PSINet's equipment to other parties within IXC's POPs shall be
installed and maintained subject to available space at the IXC POPs and under
the following terms and conditions:
(a) *
Should subsequent interconnections become necessary after
initial installation, up to the aggregate bandwidth capacity of
the circuits PSINet has ordered at the POP, realignment of the
interconnections shall be subject to the preceding and to the
reconfiguration charges as indicated in Exhibit E. All such
interconnections shall be subject to the provisions of Section
15.5 of the Purchase Agreement.
(b) PSINet shall reimburse IXC for the capital cost to establish a
point of demarcation for Additional Interconnects that PSINet
requests IXC to provide. This demarcation shall be in the IXC
equipment room and shall be either the IXC standard DSX
termination or fiber distribution frame as is applicable for the
interconnects required.
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* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
69
(c) IXC shall charge PSINet a one time charge and a monthly
recurring charge for each Additional Interconnect in the IXC
POP. These charges shall be an amount equal to the then standard
ancillary pricing for such service set forth on Exhibit E to the
Purchase Agreement. Nothing in this Agreement shall prevent or
in any way limit IXC's ability to charge third parties for
interconnection.
(d) In the event IXC chooses to cross-connect with an Additional
Interconnect party for which PSINet has paid a charge to IXC
under Section 4(b), IXC shall at IXC's option: (i) refund to
PSINet such charge or (ii) shall pay PSINet a monthly
cross-connect fee negotiated by the parties at such time.
(e) IXC's maintenance responsibility shall be limited to the
demarcation point and the associated cross connect at that
point.
(f) PSINet shall not use any interconnect facility to allow third
parties collocated in any POP to interconnect with each other at
that POP.
5. Notice to Interconnect or Collocate. No later than forty-five (45)
days prior to PSINet's planned installation of its Equipment or POP-to-POP
Interconnect Facilities at any IXC Premises, PSINet shall provide to IXC notice
of its desire to interconnect/locate in a particular IXC Premise, a copy of
PSINet's construction design drawings and installation schedule for IXC's review
and approval (collectively referred to hereon as the "Interconnect/Collocation
Notice"). The Interconnect/Collocation Notice shall (at a minimum) include: (a)
PSINet's installation date(s); (b) any excess cable storage requirements; (c)
identification of all POP-to- POP Interconnect Facilities and Equipment to be
installed; (d) a diagram of the desired location of the POP-to-POP Interconnect
Facilities and Equipment; (e) the space, power, environmental and other
requirements for the POP-to-POP Interconnect Facilities and Equipment; (f) the
estimated commencement and termination dates for the
interconnection/collocation; (g) all other information reasonably required by
IXC. PSINet's Equipment shall be placed and maintained in accordance with IXC's
requirements and specifications. Within two weeks of receiving the
Interconnection/Collocation Notice, IXC shall respond to PSINet's
Interconnection/Collocation Notice with its acceptance or objections.
6. Required Authorizations. PSINet shall obtain, at its sole cost and
expense, from any appropriate public and/or private authority, any required
permission, authorization, permit, license or easement (collectively, the
"Authorizations") to bring fiber to the IXC Premises and, or needed to
construct, install, operate and maintain the POP-to-POP Interconnect Facility
and to use the property over which the POP-to-POP Interconnect Facility will be
operated and maintained. PSINet represents and warrants that such Authorizations
shall be in effect for the entire Term of this Agreement. IXC shall cooperate
with PSINet in its efforts to obtain such authorizations.
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7. Use of Equipment and POP-to-POP Interconnect Facilities.
7.1 No Interference. PSINet shall not use its fibers, Equipment
or POP-to- POP Interconnect Facilities, and IXC shall not use its fiber,
equipment or interconnect facilities in any way which interferes with the other
party's use of its fibers or equipment or in any manner which violates any of
the terms or conditions of this Agreement or the Purchase Agreement. PSINet
shall not install any electrical or other equipment that overloads any
electrical paneling, circuitry or wiring.
7.2 Standards. PSINet shall ensure that its equipment and any
POP-to-POP Interconnect Facilities (as defined) are installed to meet or exceed
any reasonable requirements of IXC, any requirements of IXC's building
management, and any applicable local, state and federal codes and public health
and safety laws and regulations (including fire regulations and the National
Electric Code). In the event IXC's building management or any local, state or
federal body determines the POP-to-POP Interconnect Facility is not in
compliance with the applicable laws and regulations, PSINet shall immediately
make any changes necessary such that the POP-to-POP Interconnect Facility no
longer conflicts with such law or regulations. PSINet further agrees to comply
with the requirements of IXC's or IXC's building management's insurance
underwriter(s).
7.3 Intervention. If any part of PSINet's fiber, POP-to-POP
Interconnect Facilities or Equipment is not placed and maintained in accordance
with the terms and conditions of this Agreement and PSINet fails to correct the
violation within thirty days from receipt of written notice thereof from IXC,
then IXC may, at its option, without further notice to PSINet, correct the
deficiency at PSINet's expense without liability for damages to the fiber,
POP-to-POP Interconnect Facilities or Equipment or for any interruption of
PSINet's services. As soon as practicable thereafter, IXC shall advise PSINet in
writing of the work performed or the action taken. PSINet shall reimburse IXC
for all expenses incurred by IXC associated with any work or action performed by
IXC pursuant hereto. PSINet shall remit payment to IXC within thirty days from
its receipt of IXC's invoice therefor.
7.4 Threat to Persons or Property. In the event, and in IXC's
sole determination, if PSINet's fiber, POP-to-POP Interconnect Facilities or
Equipment poses an immediate threat to the safety of IXC employees or the
public, interferes with the performance of IXC's service obligations, or poses
and immediate threat to the physical integrity of IXC's facilities, IXC may
perform such work and/or take such action that it deems necessary without notice
to PSINet and without subjecting itself to any liability for damage to the
fiber, POP-to- POP Interconnect Facilities or the Equipment or for any
interruption of PSINet's services. As soon as practicable thereafter, IXC shall
advise PSINet in writing of the work performed or the action taken. PSINet shall
reimburse IXC for all expenses incurred by IXC associated with any work or
action performed by IXC pursuant hereto. PSINet shall remit payment to IXC
within thirty days from its receipt of IXC's invoice therefor.
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8. Access to IXC Premises.
8.1 Notice. Except as specifically set forth in the Purchase
Agreement, the terms in this Section 8 shall govern PSINet's access to the IXC
Premises. In the event PSINet's Equipment or POP-to-POP Interconnect Facilities
are located in the IXC Premises Customer Interface Facility ("CIF"), PSINet may
perform routine preventative maintenance or emergency maintenance and repairs on
its Equipment or POP-to-POP Interconnect Facilities during normal business hours
(7 am - 6 pm local time) without advance notice to IXC. In the event PSINet
desires to: (a) perform routine preventative maintenance or emergency
maintenance and repairs during non-business hours; (b) perform any procedures
other than routine preventative maintenance (such as installation, removal or
relocation of its Equipment or POP-to-POP Interconnect Facilities); (c) perform
any function outside of the CIF or (d) access (on PSINet's side of the
demarcation point) the fibers leading from the IXC electronics which provide the
IRU Capacity, PSINet may do so if: (x) it provides reasonable advance notice to
IXC; and (y) a IXC employee or representative is present on the IXC Premises at
the time. Notice provided as follows shall be deemed "reasonable advance notice"
for the purposes of this section: (i) twenty-four (24) hours for routine
preventative maintenance during non-business hours or outside the CIF; (ii) two
(2) hours for repairs of network malfunction causing loss of service or degraded
conditions (during non-business hours or outside the CIF), provided that such
period shall be reasonably tolled to permit IXC to dispatch personnel to an
un-manned IXC Premise upon receipt of a request for access thereto; (iii) two
(2) weeks notice for removing POP-to-POP Interconnect Facilities and, or
Equipment (regardless of location or time) and (iv) forty-five (45) days (as set
forth in Section 5) for installing Equipment or POP-to-POP Interconnect
Facilities (regardless or location or time). The presence of a IXC employee or
representative shall not relieve PSINet of its responsibility to conduct all of
its work operations in the IXC Premises in a safe and workmanlike manner. Under
no circumstances shall PSINet have access to any fibers on the IXC side of the
demarcation point.
8.2 Security. PSINet shall abide by IXC's reasonable security
requirements. When deemed appropriate by IXC, PSINet employees or
representatives shall be issued passes or visitor identification cards which
must be presented upon request before entry to the IXC Premises and surrendered
upon demand or upon termination of this Agreement. Such passes or other
identification shall be issued only to persons meeting any reasonable security
criteria applicable at the IXC Premise for such purpose. Notwithstanding any
other provision of this Agreement, IXC shall, without threat of liability, have
the right to immediately terminate the right of access of any PSINet personnel
or representative should it determine in its sole discretion for any lawful
reason that such termination is in its best interest. IXC shall promptly notify
PSINet of any such termination, and PSINet shall have a reasonable opportunity
to demonstrate that the terminated rights of access should be reinstated. Any
termination of access shall remain in effect pending such demonstration and
IXC's final determination as to the advisability of such reinstatement.
9. Relocation. PSINet shall, at its own expense, relocate its fiber,
POP-to-POP Interconnect Facilities and Equipment upon IXC's written request and
in the reasonable (under
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72
the circumstances) time frame required by IXC. Such relocations could be within
the IXC POP or in the event the entire IXC POP is relocated. In any such event,
IXC shall provide the following services at no cost to PSINet: (i) site
make-ready; (ii) the intra-site cabling functionally equivalent to that which
existed in the prior IXC POP; (iii) relocation of IXC's IRU circuits and
equipment used by PSINet; and (iv) re-establishing competitive access provider
and local exchange carrier interconnects common to both IXC and PSINet.
10. No Restrictions. Except as specifically set forth in the Purchase
Agreement, nothing contained in this Agreement shall be construed as a
limitation, restriction or prohibition against IXC with respect to any agreement
or arrangement which IXC has heretofore entered into, or may in the future enter
into, with others not parties to this Agreement regarding the IXC Premises.
IXC's right to maintain and operate its facilities in such a manner as will best
enable it to fulfill its own service requirements is in no manner limited by
this Agreement.
11. Inspections. IXC reserves the right to make periodic inspections of
any part of the fiber, POP-to-POP Interconnect Facilities and Equipment located
within or physically attached to the IXC Premises; provided that PSINet shall
have the right to have one or more of its employees or representatives present
during the time of any such inspection. IXC shall give PSINet advance notice of
such inspections, except in those instances where, in the sole judgement of IXC,
safety considerations justify the need for such an inspection without the delay
of providing notice. The making of periodic inspections or the failure to do so
shall not operate to impose upon IXC any liability of any kind whatsoever nor
relieve PSINet of any responsibility, obligation, or liability assumed under
this Agreement.
12. Emergencies. In the event of an emergency:
(a) IXC's work shall take precedence over any and all operations
of PSINet in the IXC Premises and IXC may rearrange PSINet's
Equipment or POP-to-POP Interconnect Facilities.
(b) IXC shall use reasonable efforts to provide PSINet with
advance notice of any such work.
(c) IXC shall use reasonable care given the circumstances when
handling PSINet Equipment.
13. Liens and Encumbrances. PSINet shall not have the power, authority
or right to create and shall not permit any lien or encumbrance, including,
without limitation, tax liens, mechanics' liens, or other liens or encumbrances
with respect to work performed, in connection with the installation, repair,
maintenance or operation of its Equipment, POP-to-POP Interconnect Facilities or
other property installed within the IXC Premises.
14. Term. This Agreement shall become effective as of its execution by
both parties and shall continue in effect until such time as it is terminated on
the earlier of (a) the expiration
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73
or termination of the Purchase Agreement or (b) such time as it is terminated as
provided herein or by operation of law.
15. Subordination. PSINet agrees that its rights under this Agreement
shall be totally subordinate to any mortgages, loans, deeds of trust or any
other borrowing upon the real or personal property which may be incurred by IXC.
PSINet shall sign any such reasonable documents as are necessary to satisfy any
lender, private or institutional, to reflect said subordination.
16. Release; Indemnification. Each party (each party in such capacity
being referred to as the "Releasing Party") releases, assumes and agrees to
indemnify, defend, protect and save the other party harmless from and against
any claim, damage, loss, liability, cost and expense (including reasonable
attorneys' fees) in connection with any loss or damage to any physical property
or facilities of the Releasing Party or any injury to or death of any person
arising out of or resulting in any way from the negligence or misconduct of the
Releasing Party or its employees, servants, contractors and/or agents.
17. Limitation of Liability.
17.1 Equipment and Facilities. IXC, its employees or
subcontractors shall not be liable for any damages to PSINet's fiber, POP-to-POP
Interconnect Facilities and Equipment collocated on the IXC Premises, except to
the extent that such damages are caused by the gross negligence or intentional
acts of IXC, its agents or employees; provided that the maximum liability of IXC
for any damage to PSINet's fiber, POP-to-POP Interconnect Facilities and
Equipment shall not exceed the replacement value of the fiber, POP-to-POP
Interconnect Facilities and Equipment, or in the event that the fiber,
POP-to-POP Interconnect Facilities and the Equipment is repairable, the costs to
restore the fiber, POP-to-POP Interconnect Facilities and the Equipment to its
original condition. IXC shall not be liable for any damages of whatever nature,
including, but not limited to actual or consequential damages, arising from any
interruption or failure in the supply of utilities to the IXC Premises.
17.2 No Consequential Damages. Except as specifically provided
for in the Purchase Agreement, in no event shall IXC or PSINet be liable for any
special, incidental, direct, indirect, punitive, reliance or consequential
damages, whether foreseeable or not, arising under this Agreement or from any
breach or partial breach of the provisions of this Agreement or occasioned by
any defect in the Bandwidth or other service provided hereunder, delay in
availability of the Bandwidth or any service provided hereunder, failure of the
Bandwidth or other service provided hereunder, interruptions or outages of the
Available System or any other cause whatsoever or arising out of any act or
omission by IXC or PSINet, as applicable, its employees, servants and/or agents,
including but not limited to, damage or loss of property or equipment, loss of
profits or revenue, cost of capital, cost of replacement services, or claims of
customers for service interruptions or transmission problems.
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18. Disclaimer of Warranty. IXC MAKES NO WARRANTY TO PSINet OR ANY OTHER
PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED, OR STATUTORY, AS TO THE DESCRIPTION,
QUALITY, MERCHANTABILITY, COMPLETENESS OR FITNESS FOR ANY PARTICULAR PURPOSE OF
ANY PREMISES, FACILITIES, SERVICES, EQUIPMENT, POWER, CABLE OR FIBERS PROVIDED
HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED. NO OTHER WARRANTIES ARE EXPRESSED
OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
19. Default/Termination.
19.1 Default. A party may deliver to the other party a written
"Notice of Default" for: (i) failing to make any payment owed hereunder, when no
bona fide dispute exists (a "Monetary Default"); or (ii) the breaching by either
party or its agents, assigns or affiliates of any Material Provision; or (iii)
the filing or initiating of proceedings by or against a party seeking
liquidation, reorganization or other such relief under any federal or state
bankruptcy or insolvency law (a "Bankruptcy Proceeding"). Such Notice of Default
must prominently contain the following sentences in capital letters: "THIS IS A
FORMAL NOTICE OF A BREACH OF CONTRACT. FAILURE TO CURE SUCH BREACH WILL HAVE
SIGNIFICANT LEGAL CONSEQUENCES." A party that has received a Notice of Default
shall have five (5) business days to cure a Monetary Default, thirty (30) days
to cure the alleged breach of any Material Provision (and, if the defaulting
party shall have commenced actions in good faith to cure such defaults which are
not susceptible of being cured during such 30-day period, such period shall be
extended (but not in excess of 90 additional days) while such party continues
such actions to cure), and shall be given ninety (90) days to remove, have
dismissed or stay any involuntary Bankruptcy Proceeding (each such period, a
"Cure Period"). If such party fails to cure the breach within the Cure Period,
as long as such default shall be continuing, the non-defaulting party shall have
the right to either (a) suspend its performance or payment obligations under
this Agreement, (b) seek an order of specific performance, and/or (c) seek the
award of compensatory damages.
19.2 Removal Upon Termination. Upon termination of this Agreement
for any reason other than a material default by IXC, PSINet shall remove, at its
sole expense, its fiber, POP-to-POP Interconnect Facilities and Equipment within
ten (10) days following such termination. In the event PSINet fails to remove
its fiber, POP-to-POP Interconnect Facilities and Equipment within such ten (10)
day period, the fiber, POP-to-POP Interconnect Facilities and Equipment shall be
deemed abandoned and IXC, at its sole discretion and without liability, may
remove the fiber, POP-to-POP Interconnect Facilities and Equipment and be
reimbursed by PSINet for all costs associated with such removal. PSINet shall
make payment to IXC for any such costs within thirty days of its receipt of an
invoice containing such costs. In the event this Agreement terminates due to a
material default by IXC, either PSINet or IXC may remove the PSINet Equipment or
POP-to-POP Interconnect Facilities at its own expense upon fifteen (15) working
days written notice to the other party.
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20. Insurance. PSINet shall, at its expense, obtain and keep in full
force and effect at all times for the duration of this Agreement, with a carrier
or carriers satisfactory to IXC, insurance policies of the following kinds and
in the following amounts:
(a) Worker's Compensation Insurance in accordance with all applicable
laws;
(b) Employer's liability insurance with limits for employer's
liability of $500,000 per accident;
(c) Comprehensive bodily injury and property damage liability
insurance, including automobile insurance and contractual liability insurance,
in at least the following amounts:
Bodily injury to any one person $ 1,000,000
Bodily injury aggregate per occurrence $ 1,000,000
Property damage in any one accident $ 500,000
Property damage aggregate per occurrence $ 1,000,000
Upon request of IXC, PSINet shall furnish IXC certificates of such insurance
and/or copies of the applicable policies, and each policy shall provide that no
change or cancellation shall become effective except upon twenty (20) days prior
written notice to IXC of such change or cancellation. In the event of any change
or cancellation not acceptable to IXC, IXC may demand that PSINet obtain
replacement coverage. If PSINet fails to obtain replacement coverage within
twenty (20) days after such demand by IXC, IXC may obtain replacement coverage
and invoice all premiums therefore to PSINet. PSINet shall make payment to IXC
for any amount of such invoices within thirty days of its receipt thereof.
21. Assignment. Except as provided below, this Agreement may not be
assigned in whole or in part without the prior written consent of IXC. PSINet
may assign this Agreement in whole, but not in part and only in connection with
a permitted assignment of all of PSINet's rights and obligations under the
Purchase Agreement to an entity that is both a permitted assignee under the
section entitled Binding Effect; Assignment in the Purchase Agreement and a
permitted transferee under the section entitled Restrictions on Resale in the
Purchase Agreement; provided, however, that any such assignment or transfer
shall be subject to IXC's rights under this Agreement and an assignee or
transferee shall continue to perform PSINet's obligations to IXC under the terms
and conditions of this Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
22. Notices. All notices, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally, the next business day after delivered to a nationally recognized
overnight courier for next business day delivery, when transmitted by facsimile
or five (5) days after sent by registered or certified mail, return receipt
requested, to the parties (and to the Persons receiving copies thereof) at the
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following addresses or facsimile numbers (or to such other address or facsimile
number as a party may have specified by notice given to the other party pursuant
to this provision):
If to IXC to:
IXC Internet Services, Inc.
5000 Plaza on the Lake, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With copies to:
IXC Communications, Inc.
5000 Plaza on the Lake, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Xxxxxxx & XxXxxxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to PSINet to:
PSINet Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Facsimile: (000) 000-0000
With copies to:
PSINet Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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Nixon, Hargrave, Devans & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile: (000) 000-0000
23. General Provisions.
23.1 Laws and Licenses. This Agreement is subject to all
applicable federal, state and local laws, regulations, rulings and orders of
governmental agencies, including, but not limited to, the Communications Act of
1934 as amended by the Telecommunications Act of 1996, and the rules and
regulations of the FCC. IXC and PSINet agree that, except as otherwise provided
herein, the statute of limitations set forth in the Communications Act of 1934,
47 U.S.C. section 415, as amended, shall govern all actions arising out of this
Agreement, including arbitrations.
23.2 Confidentiality. This Agreement shall be governed by the
terms of the Confidentiality Agreement entered into between the parties and
dated as of May 14, 1997.
23.3 Amendments, Waivers and Consents. For purposes of this
Agreement and the Transaction Documents, except as otherwise specifically set
forth herein or therein, no course of dealing between PSINet and IXC and no
delay on the part of either party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. No
covenant or other provision hereof or thereof may be waived or amended other
than by a written instrument signed by the party so waiving or amending such
covenant or other provision.
23.4 Section Headings. The table of contents and section headings
in this Agreement have been inserted for reference purposes only and shall not
be deemed to limit or otherwise affect the construction of any provision thereof
or hereof.
23.5 Governing Law. This Agreement shall be deemed to be a
contract made under, and shall be construed in accordance with, the laws of the
State of Delaware without reference to its principles of conflicts of law.
23.6 Dispute Resolution. Any controversies, claims or disputes
arising out of or relating to this Agreement shall be resolved in the manner set
forth in the section entitled Dispute Resolution in the Purchase Agreement.
23.7 Severability. In the event that any one or more of the
clauses, covenants or provisions contained in this Agreement should be held to
be unenforceable under any Federal, State or City law, statute, code,
administrative or regulatory rule, such invalidity or unenforceability shall not
affect the remainder of this Agreement, which shall remain in full force and
effect.
- 13 -
78
23.8 Interpretation. This Agreement shall be interpreted in a
manner so as to be consistent with the Purchase Agreement and under the same
rules of construction and interpretation set forth in the Purchase Agreement.
23.9 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original, but such counterparts shall together
constitute but one and the same document.
23.10 Facsimile Delivery. This Agreement may be delivered by
facsimile transmission of an executed counterpart signature page hereof, and
after attachment of such transmitted signature page to a copy of this Agreement,
such copy shall have the same effect and evidentiary value as copies delivered
with original signatures. Any party delivering this Agreement by facsimile
transmission shall deliver to the other party, as soon as practicable after such
delivery, an original executed counterpart signature page of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
IXC Internet Services, Inc.
By:
---------------------------------
Name:
Title:
PSINet Inc.
By:
---------------------------------
Name:
Title:
- 14 -
79
EXHIBIT D
NEWCO COMMON STOCK
PERCENTAGE DETERMINATION
80
Exhibit D to the IRU
and Stock Purchase Agreement
Newco Common Stock Percentage Determination
The exact number of IXC Initial Common Shares to be issued and
delivered by PSINet to IXC at the Closing shall be equal to 19.99999% of the
total number of issued and outstanding shares of Common Stock of PSINet as of
the Closing Date (after giving effect to the issuance of the IXC Initial Common
Shares pursuant to the Agreement), including, for this purpose, shares of Common
Stock of PSINet issuable upon exercise of all warrants issued and outstanding as
of the Closing Date, but without giving effect to any shares of Common Stock
issuable (i) upon exercise of any options issued to current and former
employees, officers, directors and consultants of PSINet and its subsidiaries
which are outstanding as of the Closing Date, and/or (ii) pursuant to such
rights, if any, that Chatterjee (as defined in Section 13.9 of the PSINet
Disclosure Schedule) and/or its designee may have as of the Closing Date under
the Joint Venture Agreement (as defined in Section 13.9 of the PSINet Disclosure
Schedule) (see Section 13.9 of the PSINet Disclosure Schedule); *
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
81
EXHIBIT E
ASSOCIATED SERVICES
82
EXHIBIT E
TO
IRU AND STOCK PURCHASE AGREEMENT
Associated Services
Ancillary Pricing Schedule for On-Net Service
Non-Recurring Charges DS-1 DS-3 OC-3 OC-12
--------------------------------------------- ---------- ---------- ---------- ---------
New Order Installation (On-Net) $ * $ * *
New Order Installation (Off-Net) * * * *
DS-1 Ramp-Up per DS-O $ * * * *
Order Change (less than 5 business days) $ * $ * $ * $ *
Order Cancellation (less than 5 business days) $ * $ * $ * $ *
ASR (new or disconnect) (Special Access Only) $ * $ * $ * $ *
ASR Supplement $ * $ * $ * $ *
Order Expedite $ * $ * $ * $ *
Reconfiguration ---------- Same as Install ----------
Monthly Recurring Charges DS-1 DS-3 OC-3 OC-12
--------------------------------------------- ---------- ---------- ---------- ---------
Minimum circuit charge (IXC portion) $ * $ *
Cross-connect charge $ * $ * $ * $ *
Other Interexchange Carrier to Lessor local
access or bypass facility (Lessor long haul
not involved)
Local bypass charge $ * $ * $ * $ *
Lessor POP to Lessor POP in same city,
with no Lessor long haul attached at either
Lessor POP
*Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
83
Miscellaneous Recurring Non-Recurring
----------------------------------------------- -------------------------- --------------------------
M13 1 yr Term * *
2+ yr Term * *
3+ yr Term * *
Echo Canceller (per circuit end) * *
Second End Loop (Ex: for ADPCM) * *
Demand Maintenance *
Rack Space *
Shelf Space * *
DC Power *
CIF AC/DC Power *
All other services *
--------------------
(1) All of the above charges are subject to change with a 30-day notice.
(2) Services not described above will be considered special handling and
charges will be assessed on an individual basis.
*Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
- 2 -
84
DSO Ancillary Pricing
DSO Ancillary Pricing
--------------------
New Order Installation $ *
Order Cancellation Prior to Turn up $ *
Order Expedite $ *
Reconfiguration (City pairs the same) $ *
DCS Charge (Switching Only) $ *
DSO DCS Port Charge (Xxxx access at DCS) $ *
DSI DCS Port $ *
Minimum Charge per DS-0 $ *
--------------------
(1) All of the above charges are subject to change with a 30-day notice.
(2) Services not described above will be considered special handling and
charges will be assessed on an individual basis.
*Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
- 3 -
85
IXC Policy Overview, Collocation Rack Space Cost
In reference to Rack Space Non Recurring Installation Charges (One time buildout
charges)
The cost for buildout of rack space is $* per rack space. This cost includes the
following:
- Rack 19', 23' or 26' Racks. Cabinets will be addressed on a case by case
basis.
- Termination of DC power to rack mounted fuse panels and AC power to a
dual outlet box. Note: AC power is NOT uninterruptable, generators are
available at most sites but UPS's are not. Check with IXC representative
for site specific power capabilities.
- Termination of up to 6 DS-3 signal cable pairs (coax) or 56 DS-1
circuits (ABAM) to DSX panels. Additional terminations will be charged
at the rate of $* per DS3, and $* per 28 DS1s or a fraction thereof.
Fiber termination is not included in this price and will be reviewed on
a case by case basis.
- Termination of two POTS lines for remote access to hardware will be
allowed, where LEC entrance facilities are available. Customer will be
responsible for ordering and billing of such service and providing
termination in customer racks.
- Only IXC approved materials will be installed, IXC Engineering contact
can provide details.
- IXC will sign off on the install verifying quality and test results.
- Customer installation equipment must meet all applicable National
Electric Code requirements and any other applicable safety/building code
requirements.
For crossconnect and monthly recurring charges, please refer to the Ancillary
Pricing Schedule as part of the customer Digital Service Agreement.
IXC installation standards are available, and any questions, with regards to
installs, should be addressed with the site technician, prior to installation.
Standard CIF time lines will be maintained for rack installations, contact the
IXC CIF Specialist to review these time frames once site CIF space availability
have been confirmed.
*Confidential material has been omitted and filed separately
with the Securities and Exchange Commission.
- 4 -
86
EXHIBIT F
OC-N SPECIFICATIONS AND TESTING STANDARDS
87
EXHIBIT F
TO
IRU AND STOCK PURCHASE AGREEMENT
OC-N Specifications and Testing Standards
OC-3: The ANSI SONET (Synchronous Optical Network) transmission
standard for high capacity optical telecommunications whose line rate is 155.52
Mbps. One OC-3 is comprised of 3 STS-1 Synchronous Transport Signal, Level 1
signals which, at 51.84 Mbps, is the lowest level SONET signal. The STS-1 is
defined at the electrical level prior to optical conversion. These SONET
standards and elements are further defined in the "Bellcore Synchronous Optical
Network (SONET) Transport Systems: Common Generic Criteria GR-253-CORE, Issue 2,
December, 1995."
OC-12: The ANSI SONET (Synchronous Optical Network) transmission
standard for high capacity optical telecommunications whose line rate is 622.08
Mbps. One OC-12 is comprised of 12 STS-1 Synchronous Transport Signal, Level 1
signals which, at 51.84 Mbps, is the lowest level SONET signal. The STS-1 is
defined at the electrical level prior to optical conversion. These SONET
standards and elements are further defined in the "Bellcore Synchronous Optical
Network (SONET) Transport Systems: Common Generic Criteria GR-253-CORE, Issue 2,
December, 1995."
OC-48: The ANSI SONET (Synchronous Optical Network) transmission
standard for high capacity optical telecommunications whose line rate is 2488.32
Mbps. One OC-48 is comprised of 48 STS-1 Synchronous Transport Signal, Level 1
signals which, at 51.84 Mbps, is the lowest level SONET signal. The STS-1 is
defined at the electrical level prior to optical conversion. These SONET
standards and elements are further defined in the "Bellcore Synchronous Optical
Network (SONET) Transport Systems: Common Generic Criteria GR-253-CORE, Issue 2,
December, 1995."
The optical interface/demarcation for the SONET OC-3, OC-12, and
OC-48 tributary signals will occur at the Texas optical interconnect panel. The
optical connector standardized for use at Texas locations is the Ultra Polished
FC/PC connector with a return loss greater than 45 dB. All optical signals at
this demarcation must equal or exceed the applicable Bellcore specifications,
referenced above.
Testing Standards
Texas will test and turn-up the OC-3, OC-12, and/or OC-48
circuits to the applicable demarcation point per this Agreement. The tests will
be performed per the applicable manufacturer's test specifications as it applies
to the specific type of traffic hand- off. The system will also be tested for a
long-term stability test running end-to-end for a period of 24 hours; Bit Error
Rate (BER) performance shall be no greater than 10-(1)(1).
Five (5) days prior to testing, Texas will notify Virginia
verbally and in writing of Texas' intent to complete testing of the applicable
circuit activation: Virginia will have the right but not the obligation to
witness the activation testing. Copies of test results
88
will be provided to Virginia upon completion of the activation tests. If
Virginia is not present at time of testing, a copy of the test results will be
forwarded to same.
After Texas delivers circuits to PSINet, PSINet shall test same
in accordance with the following criteria, and accept installation segments of
IRU Capacity only after it meets the following:
- Optical signal strength and other characteristics are within
industry standards at each termination point as measured with appropriate test
equipment.
- Backup path verified by testing fault switching hardware
applicable to the circuit being provided (test of 1:1 redundancy on the
optronics).
- Packet data passed with payload contents of 4500 bytes of all
zeros for twelve hours registering frame/code violations or other bit errors at
a rate not to exceed 10-(1)(1).
- Packet data passed with payload contents of 4500 bytes of
pseudo- random data patterns for twelve hours registering frame/code violations
or other bit errors at a rate not to exceed 10-(1)(1).
- Live production data passed for twelve hours registering
frame/code violation or other bit errors at a rate not to exceed 10-(1)(1).
- Each segment, regardless of capacity meets the applicable
Bellcore specification, and equipment manufacturer's specification to the
applicable demarcation point per this Agreement.
Virginia shall, within 5 business days of delivery either accept
or reject the IRU Capacity for each segment delivered. As soon as Virginia
discovers a problem in testing, Virginia shall notify Texas. If rejected,
Virginia shall specify, in good faith, the defect or failure in each segment
rejected within the applicable 5-business day period. In the event Virginia
rejects, Texas shall promptly, and at no cost to Virginia, commence to remedy
the defect or failure and, following such remedy, deliver the capacity to
Virginia. Virginia, shall provisionally be deemed to have accepted the IRU
Capacity for the applicable segment at the Final Delivery Date (as defined). The
"Final Delivery Date" shall mean the first date that Texas delivered the
relevant segment of the IRU Capacity to Virginia which was followed by either
acceptance by Virginia or a failure by Virginia to reject the IRU Capacity on
such segment within the required time.
The foregoing procedures shall apply again and successively
thereafter until the defects and/or failures have been remedied, and Virginia
accepts the applicable segment. The date when Virginia accepts the applicable
segments shall be the Acceptance Date.
-2-
89
EXHIBIT G
PSINET'S BANDWIDTH
FORECAST
Non-Binding Three-Year Forecast of Bandwidth Requirements
PSINet will order approximately an OC-12 along a route traversing the Available
continental US every six months during the Term. The actual route will depend
upon availability of Bandwidth on the Available System. Every six months during
the Term, PSINet will attempt to add an OC-12 among all needed routes, perhaps
with breaks in the route at different POPs each time, until each route has four
OC-12's. A likely schedule, again depending upon availability of Bandwidth on
the Available System, is as follows:
Six Month Interval OC-12 miles ordered
------------------ -------------------
1 5,000+
2 6,000
3 8,000
4 10,000
5 10,000
6 10,000
During the first interval, PSINet also anticipates ordering a system-wide DS-3,
which is likely to amount to the equivalent of approximately 700 OC-12 route
miles.
90
EXHIBIT G-1
TO
IRU AND STOCK PURCHASE AGREEMENT
INITIAL ORDER FOR BANDWIDTH
PSINet's initial order for Bandwidth consists of one OC-12 per segment along
each of the following routes, each such segment requested to be delivered by IXC
as of the respective dates provided below:
Group 1
-------
*
Group 2
-------
*
These orders are for express routes with no intermediate drops. The delivery
date for each route will be as set forth below:
Group 1 The later of January 1, 1998, or six (6) months after
Closing or 60 days after completion of the applicable
route.
Group 2 The later of June 1, 1998, or 60 days after completion of
the applicable route.
* PSINet acknowledges that IXC does not currently plan to complete this route by
July 1, 1998.
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
91
EXHIBIT H
MULTIPLEXING FEES
92
EXHIBIT H
TO
IRU AND STOCK PURCHASE AGREEMENT
MULTIPLEXING FEES
Cost Per On-net NEW Circuit Non-recurring Installation/Provisioning Costs
including Channelization equipment*
---------------------------------------------------------------------------------------------------------------
City A / City Z DS3 OC3 Tier A OC3 Tier B OC12 Tier A OC12 Tier B OC48
---------------------------------------------------------------------------------------------------------------
DS3 * x x x x x
---------------------------------------------------------------------------------------------------------------
OC3 Tier A x * * x x x
---------------------------------------------------------------------------------------------------------------
OC3 Tier B x * * x x x
---------------------------------------------------------------------------------------------------------------
OC12 Tier A x x x * * x
---------------------------------------------------------------------------------------------------------------
OC12 Tier B x x x * * x
---------------------------------------------------------------------------------------------------------------
OC48 x x x x x *
---------------------------------------------------------------------------------------------------------------
* Time and Materials Rates to be determined and applied for new interconnection
cabling/infrastructure required between PSINet and IXC demarcation. Rates/Costs
do not include any rates/costs of drops.
** Applies to second channel overbuild on a spur or moving an OC-48.
*** OC-12 charges do not apply to initial installs
Tier A Cities: WASHDC, PHLAPA, NYCMNY, HDSNOH, CHCGIL, KSCYMO, JPLNMO, DLLSTX,
HSTNTX, PHNXAZ, LSANCA, ATLNGA, and as modified by IXC in future fiber builds.
Tier B Cities: All On-net cities listed on the Available System other than Tier
A cities.
*Confidential material has been omitted and filed separately
with the Securities and Exchange Commission.
93
EXHIBIT I
TO
IRU AND STOCK PURCHASE AGREEMENT
RECONFIGURATION FEES
(See Exhibits E and H)
94
EXHIBIT J
NEWCO CERTIFICATE OF INCORPORATION
95
EXHIBIT K
POPSPACE
96
EXHIBIT K
TO
IRU AND STOCK PURCHASE AGREEMENT
POP Space
"POP" shall mean any of IXC's junction or terminal locations
located on the fiber route that constitutes the completed portion of the
Available System, as selected by written notice from PSINet to IXC, provided
that (i) there shall be no more than * POP's so selected; (ii) a selection,
once made, cannot be changed, provided that if IXC moves a POP, the new
location will be considered the same as the old one for purposes of this clause
(ii); and (iii) in no event will PSINet have the right to select as POPs both a
terminal and a junction in or near the same metropolitan statistical area.
Notwithstanding the foregoing, PSINet and IXC may agree (separately from the
Collocation Agreement) that PSINet may rent cabinet space in other IXC
locations and PSINet shall be permitted to use its IRU fiber and IRU capacity
between IXC terminals and junctions on the Available System in or near the same
metropolitan statistical area.
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
97
EXHIBIT L
PSINET DISCLOSURE
SCHEDULE
98
Exhibit L to the
IRU and Stock Purchase
Agreement
----------------------
PSINet Disclosure Schedule
13.2 Material Governmental Authority Consents
13.4 Capitalization
13.5 Material Adverse Change
13.6 Other Consents
13.7 Litigation
13.9 Other Agreements
The following information constitutes the PSINet Disclosure Schedule to
that certain IRU and Stock Purchase Agreement dated as of July 21, 1997 between
PSINet Inc. and IXC Internet Services, Inc. (the "Agreement"). Capitalized terms
used in this PSINet Disclosure Schedule which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement. All
references herein to Sections are to Sections of the Agreement unless otherwise
noted. The representations and warranties in Section 13 of the Agreement are
made and given subject to the disclosures in this PSINet Disclosure Schedule and
the exceptions set forth herein. This PSINet Disclosure Schedule is incorporated
into the Agreement by reference and made a part thereof. This PSINet Disclosure
Schedule incorporates by reference all applicable information contained in the
PSINet Filings with the Securities and Exchange Commission. Disclosure of
information in any Section of the PSINet Disclosure Schedule, shall be deemed to
be disclosure in each other Section of the PSINet Disclosure Schedule.
Disclosure of any information in the PSINet Disclosure Schedule, whether or not
in response to a requirement contained in the Agreement to schedule material
matters or matters outside the ordinary course of business, shall not be deemed
to be an admission by PSINet that such information is material or outside the
ordinary course of business nor is it or shall it be deemed to be a
representation that such information must be set forth on this PSINet Disclosure
Schedule or otherwise in the Agreement. Nothing in this PSINet Disclosure
schedule shall constitute an admission of any liability or obligation of PSINet
or its affiliates to any third party nor an admission against PSINet or its
Affiliates' interests.
99
Section 13.2
Material Governmental Authority Consents
----------------------------------------
1. Filing of a Form D (if elected by PSINet), Form 8-A, Form 8-B, Forms
8- K, Forms S-8, Proxy Statement, registration statement(s) under the Securities
Act, request for confidential treatment and any related documents with the
Commission.
2. Such filings with the Commission as may be required under the
Registration Rights Agreement contemplated by Section 15.9.
3. Such consents, approvals, authorizations, designations, declarations
or filings as may be required under state securities laws in connection with the
issuance of any Acquired Shares or under federal or state law in connection with
the Registration Rights Agreement contemplated by Section 15.9 of the Agreement
or in connection with any transfer of Acquired Shares.
4. Filing with National Association of Securities Dealers, Inc. of one
or more listing applications and of documents filed with the Commission.
5. Such consents, approvals, authorizations, designations, declarations
or filings as may be required under state corporation and tax laws in connection
with the Reincorporation.
6. Such filings and notifications as may be required under the
Xxxx-Xxxxx-Xxxxxx Act.
7. Such filings as may be required with the U.S. Patent and Trademark
Office and of copyright amendments in connection with the Reincorporation.
8. Such filings of UCC financing statements and other documents and
instruments as may be required in connection with the Reincorporation.
100
Section 13.4
Capitalization
--------------
1. Upon the Closing Date, after giving effect to the Reincorporation
and assuming that PSINet does not designate any other series of Preferred Stock
prior to completion of the Closing, the authorized capital stock of PSINet will
consist of 200,000,000 shares of Common Stock, $.0001 par value per share,
29,000,000 shares of undesignated Preferred Stock, $.01 par value per share, and
1,000,000 shares of Series A Junior Participating Preferred Stock, $.01 par
value per share.
2. As of the date of this Agreement, there are no outstanding
subscriptions, options, warrants, call, rights or other agreements or
commitments to issue, sell, deliver or transfer any shares of Common Stock or
other shares of capital stock of PSINet except options to purchase
[7,557,065.49] shares of Common Stock (subject to adjustment as provided
therein) and warrants to purchase 224,274 shares of Common Stock (subject to
adjustment as provided therein).
3. See item 2 under Section 13.9 of the PSINet Disclosure Schedule.
101
Section 13.5
Material Adverse Change
-----------------------
1. Such changes as may have resulted from general economic or political
matters affecting the industries and markets in which PSINet's business operates
and/or the U.S. economy.
2. See item 1 under Section 13.9 of the PSINet Disclosure Schedule.
102
Section 13.6
Other Consents
1. Such consent as may be required by PSINet's bank lender, Fleet Bank
of Massachusetts, N.A. ("Fleet").
2. PSINet has a loan facility with Fleet pursuant to which it has
granted Fleet a lien on substantially all of its assets. Such lien would attach
to the IRUs and other rights and property conveyed to PSINet pursuant to the
Agreement.
103
Section 13.7
Litigation
----------
1. See item 1 under Section 13.9 of the PSINet Disclosure Schedule.
2. After the execution of the Joint Venture Agreement referred to in
Section 13.9 of the Disclosure Schedule, Institutional Trading Corporation
("ITC") commenced an action alleging that PSINet owed it an investment banking
finders fee or similar compensation in the amount of $1.5 million in connection
with the transactions contemplated by the Joint Venture Agreement and other
contractual claims. ITC has since withdrawn such action without prejudice. In
the event PSINet completes a transaction with Chatterjee (as defined in Section
13.9 of the PSINet Disclosure Schedule), PSINet believes it is likely that ITC
will commence a new action alleging similar claims with respect to such
transaction.
104
Section 13.9
Other Agreements
----------------
1. In September 1996, PSINet entered into a Joint Venture Agreement,
dated as of September 19, 1996 (the "Joint Venture Agreement") with Chatterjee
Management Company (doing business as The Chatterjee Group) ("Chatterjee")
pursuant to which PSINet and an investment group led by Chatterjee would
establish a joint venture for the purpose of building an Internet network across
Europe and providing Internet-related services in Europe and such investment
group would invest up to * in the joint venture. A copy of the
original Joint Venture Agreement with Chatterjee has been filed with the
Commission (portions of which are subject to a confidential treatment request
and a complete copy thereof is available for review by IXC). Under certain
circumstances, Chatterjee or its designee would have the right to require PSINet
to issue to Chatterjee or such designee such number of shares of PSINet Common
Stock as shall equal (i) the amount of investments made by Chatterjee or such
designee (none has been made to date) divided by (ii) $11.625, provided,
however, that this right is was not to be exercisable prior to October 1,1997
and under certain other circumstances. No monies have been invested by
Chatterjee or the investment group pursuant to the Joint Venture Agreement nor
were any other actions undertaken to implement it. For several months, PSINet
and Chatterjee have discussed a substantive change to the structure discussed in
the Joint Venture Agreement which, if entered into, would have resulted in a
* direct investment in PSINet by Chatterjee *
By letter dated July 14, 1997, a copy of which has previously been
furnished to IXC, Chatterjee made certain statements concerning the negotiations
between Chatterjee and PSINet, including, without limitation, (i) Chatterjee's
conclusion that PSINet does not intend to proceed with the Joint Venture
Agreement or the substantive change to the structure discussed in the Joint
Venture Agreement(which Chatterjee claims had been agreed upon by PSINet) and
(ii) Chatterjee's statement that it will proceed based upon that conclusion.
PSINet has not yet responded to that letter. In the event PSINet and Chatterjee
do not complete this transaction (and PSINet presently believes it is likely
that the parties will not reach such an agreement), the Joint Venture Agreement
may be abandoned or Chatterjee may seek to commence arbitration or other
adversarial proceedings against PSINet under the Joint
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
105
Venture Agreement and related documents (seeking, among other things, to enforce
the Joint Venture Agreement) or otherwise.
2. PSINet has issued options and warrants as described in Section 13.4
of the PSINet Disclosure Schedule and has stock option and similar plans, as
described in the PSINet Filings, pursuant to which PSINet may issue additional
options and share underlying such options.
106
EXHIBIT M
TO
IRU AND STOCK PURCHASE AGREEMENT
IXC Internet Services, Inc. ("IXC")
Disclosure Schedule
to the
IRU and Stock Purchase Agreement
dated as of July 22, 1997 by and between
PSINet and IXC
(the "Purchase Agreement")
The representations and warranties in Section 14 of the Purchase
Agreement are made and given subject to the disclosures in this Disclosure
Schedule and the exceptions set forth herein. Unless otherwise defined herein,
the capitalized terms used herein shall have the meanings assigned to such terms
in the Purchase Agreement. Section references herein correspond to section
references in the Purchase Agreement. This Disclosure Schedule incorporates by
reference all applicable information contained in the IXC Communications, Inc.
filings with the Securities and Exchange Commission. The inclusion of any
information on this Disclosure Schedule is not, and shall not be deemed to be, a
representation that such information must be set forth on this Disclosure
Schedule or otherwise in the Purchase Agreement. Nothing in this Disclosure
Schedule shall constitute an admission of any liability or obligation of IXC, or
its affiliates to any third party nor an admission against IXC's or its
affiliates interests.
SECTION 14.2
Governmental Authorizations
A filing by IXC's ultimate parent to the Federal Trade Commission and the United
States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
SECTION 14.3
Required Consents
Indenture dated as of October 5, 1995 by and among IXC Communications, Inc., the
Guarantors (as defined therein) and IBJ Xxxxxxxx Bank & Trust Company, as
Trustee with respect to the 12 1/2% Senior Notes due 2005.
107
SECTION 14.4
Pending Litigation
1. TEL CENTRAL COMMUNICATIONS, INC. VS IXC LONG DISTANCE, INC.
U.S. District Court, Western District of Missouri (Central Division) Civil
Action No. 97-4095-CV-C
On April 4, 1997, Tel-Central Communications, Inc.
("Tel-Central") filed a complaint against IXC-LD, one of IXC Communications,
Inc.'s subsidiaries, in the United States District Court in the Western District
of Missouri after IXC Communications, Inc. terminated service to Tel-Central for
failure to pay for services. Tel-Central's complaint makes various state and
federal law claims and seeks damages of over $100 million and asks for punitive
damages of $100 million. On May 23, 1997, Tel Central filed a voluntary Chapter
11 petition in bankruptcy. On May 30, 1997, IXC-LD filed a motion to dismiss the
complaint. The case is currently stayed as a result of the bankruptcy
proceedings.
2. XXXXXX BREED, ET AL., VS. IXC ADVANTAGE LONG DISTANCE, INC., IXC
LONG DISTANCE, INC., IXC COMMUNICATIONS, INC., ET AL. In the District Court of
Xxxxxx County, IXC, Cause No. 9705729
This action, filed May 27, 1997, was brought by a group of
investors in IXC Advantage Long Distance, Inc. ("IXC Advantage") who allege that
IXC Advantage and/or its Chief Executive Officer diverted funds from IXC
Advantage to form a new company named Free Plus Calling, Inc. A subsidiary of
IXC Communications, Inc. had invested in IXC Advantage, owned a 25% interest in
IXC Advantage, and one of such subsidiary's officers served on the board of
directors of IXC Advantage from its formation in mid-1994 until Mach of 1996.
The plaintiffs allege that as a result of the board seat, the defendants either
knew or should have known of the diversion of funds and hence became liable for
the conduct. The defendants currently have an extension of time to answer the
complaint.
3. XXXXXX XXXXXXXX ET AL., VS. XXXXXX COUNTY COMMISSIONERS, ET
AL., INCLUDING IXC LONG DISTANCE, INC. State of Indiana, Xxxxxx Superior Court
No. 55DO2-9701-CP-6
This action, filed on February 5, 1997, alleges the illegal
construction of fiber across plaintiffs' property. This portion of IXC Carrier,
Inc.'s network consists of an indefeasible right to use ("IRU") fibers from
WorldCom ("WorldCom, Inc."). IXC Carrier, Inc. acquired the IRU from WorldCom
pursuant to an IRU Agreement with WorldCom (the "IRU Agreement"). WorldCom has
accepted defendant's tender of defense and indemnity in this action pursuant to
the IRU Agreement.
4. IXC LONG DISTANCE, INC. VS. BUILDING FUTURES IN COMMUNICATIONS,
INC.
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This arbitration action was filed by IXC-LD on February 10, 1997
seeking $256,393 for past due services, plus additional amounts for accelerated
take-or-pay commitments under the terminated Telecommunications Services
Agreement between the parties dated April 19, 1996. Building Futures in
Communication, Inc. ("BFIC") had been terminated on IXC-LD's network on December
13, 1997 for non-payment. BFIC has counterclaims against IXC-LD for up to $1
million in actual damages plus punitive damages. Discovery is underway and no
arbitration date has yet been set.
5. IXC LONG DISTANCE, INC. VS. PRIME TELECOM, INC.
This arbitration action was filed by IXC-LD on January 14, 1997
seeking $134,187 for past due services, plus additional amounts for accelerated
take-or-pay commitments, under the terminated Telecommunications Services
Agreement between the parties dated May 25, 1995. Prime Telecom, Inc.'s services
had been terminated on IXC-LD's network on December 13, 1997 for non-payment.
Discovery is underway and no arbitration date has been set.
SECTION 14.7
Material Adverse Change
The facts or circumstances set forth in the IXC Communications, Inc.'s News
Release dated July 3, 1997 may cause a Material Adverse Change in IXC.
109
EXHIBIT N
REGISTRATION RIGHTS AGREEMENT
110
Exhibit N
EXHIBIT N
TO
IRU AND STOCK PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made as of the
day of July, 1997 by and between , PSINet Inc., a New York corporation (the
"Company"), and IXC Internet Services, Inc. , a Delaware corporation ("IXC").
WITNESSETH:
WHEREAS, the Company and IXC have entered into an IRU and Stock
Purchase Agreement dated as of July 21, 1997 (the "IRU Agreement"), pursuant to
which the Company, will issue shares of Common Stock.
WHEREAS, it is a condition precedent to the consummation of the
transactions under the IRU Agreement that this Agreement be entered into.
WHEREAS, the Company has previously granted registration rights to
certain other holders of the Company's securities pursuant to the Amended and
Restated Registration Rights Agreement, the 2/8/95 Registration Rights
Agreement, the 6/16/95 Registration Rights Agreement, the 7/11/95 Registration
Rights Agreement and the 9/19/96 Registration Rights Agreement.
WHEREAS, it is the intention of the parties to this Agreement that the
registration rights granted hereunder shall rank ratably with the registration
rights under the Amended and Restated Registration Rights Agreement, the 2/8/95
Registration Rights Agreement, the 6/16/95 Registration Rights Agreement, the
7/11/95 Registration Rights Agreement and the 9/19/96 Registration Rights
Agreement and with registration rights to be granted under other agreements as
more fully provided in Section 2.6 hereof.
WHEREAS, certain defined terms are set forth in Article I hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the mutual
covenants contained herein and for other good and available consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated below:
"Amended and Restated Registration Rights Agreement" shall mean the
Amended and Restated Registration Rights Agreement dated as of January 17, 1995
among the Company and the other parties thereto, as the same has been and
hereafter may be amended from time to time to add additional parties signatory
thereto.
"Closing" shall mean the closing of the transactions contemplated under
the IRU Agreement as more specifically defined therein.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value per share,
of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Registration Rights" shall have the meaning set forth in
Section 2.7 hereof.
"Other Registration Rights" shall have the meaning set forth in Section
2.7 hereof.
"Person" shall mean any individual, corporation, partnership, firm,
joint venture, association, limited liability company, trust, unincorporated
organization, or other entity.
"primary offering" shall have the meaning set forth in Section 2.1
hereof.
"Registrable Securities" shall have the meaning set forth in Section
2.4 hereof.
"secondary offering" shall have the meaning set forth in Section 2.1
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
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"2/8/95 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of February 8, 1995 among the Company and the other
parties thereto, as the same may be amended from time to time and, to the
extent, if any, the same shall be in effect on the date hereof and remain in
effect from time to time hereafter.
"6/16/95 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of June 16, 1995 among the Company and the other
parties thereto, as the same may be amended from time to time and, to the
extent, if any, the same shall be in effect on the date hereof and remain in
effect from time to time hereafter.
"7/11/95 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of July 11, 1995 among the Company and the other
parties thereto, as the same may be amended from time to time and, to the
extent, if any, the same shall be in effect on the date hereof and remain in
effect from time to time hereafter.
"9/19/96 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of September 19, 1996 between the Company and The
Chatterjee Management Company, as the same may be amended from time to time and,
to the extent, if any, the same shall be in effect on the date hereof and remain
in effect from time to time hereafter.
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ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 OPTIONAL REGISTRATIONS
If at any time or times after the date hereof (so long as IXC shall own
Registrable Securities which are not eligible for sale by IXC under Rule 144(k)
of the Securities Act), the Company shall determine to register any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
shares of the Common Stock under the Securities Act (whether in connection with
a public offering of securities by the Company (a "primary offering"), a public
offering of securities by shareholders (a "secondary offering"), or both, but
not in connection with a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable), the Company will promptly
give written notice thereof to IXC. In connection with any such registration, if
within 30 days after receipt of such notice IXC requests the inclusion of some
or all of the Registrable Securities in such registration, the Company, subject
to Section 2.7 hereof, will use its reasonable best efforts to effect the
registration under the Securities Act of all such Registrable Securities;
provided, that such registration is in connection with an underwritten public
offering; and provided, further, that, if the underwriter determines that the
registration of securities in excess of any amount to be registered by the
Company would adversely affect such offering then the Company may (subject to
the allocation priority set forth below) exclude from such registration and
underwriting some or all of the Registrable Securities which would otherwise be
underwritten pursuant to the notice described herein. The Company shall advise
IXC promptly after such determination by the underwriter, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: the securities to be
sold by the Company shall be included in such registration and underwriting,
and, subject to Section 2.7 hereof, the number of additional shares that may be
included in the registration and underwriting shall be allocated among IXC and
all holders of other securities having registration rights granted by the
Company requesting that such other securities be included in such registration
and underwriting in proportion, as nearly as practicable, to their respective
holdings of Registrable Securities and such other securities. All expenses of
the registration and offering shall be borne by the Company, except that IXC and
all holders of other securities having registration rights granted by the
Company shall bear underwriting and selling discounts and commissions
attributable to their Registrable Securities or such other securities, as the
case may be, being registered, transfer taxes on shares being sold by IXC or the
other holders, as the case may be, and all fees and expenses of counsel for IXC
and such holders, as the case may be. Without in any way limiting the types of
registrations to which this Section 2.1 shall apply, in the event that the
Company shall effect a "shelf registration" under Rule 415 of the Securities Act
or any other similar rule or regulation, the Company shall take all
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necessary action, including, without limitation, the filing of post-effective
amendments, to permit IXC to include its shares in such registration in
accordance with the terms of this Section 2.1.
SECTION 2.2 REQUIRED REGISTRATIONS
At any time or times after the date hereof (so long as IXC shall own
Registrable Securities which are not eligible for sale by IXC under Rule 144(k)
of the Securities Act), IXC may notify the Company in writing that it (i)
intends to offer or cause to be offered for public sale all or any portion of
its Registrable Securities (such requests shall be in writing and shall state
the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by IXC) and (ii) request that the
Company cause such Registrable Securities to be registered under the Securities
Act; provided, however, that IXC may make only three requests for registration
under this Section 2.2. Upon receipt of such notification, subject to Section
2.7 hereof, the Company will notify all of the Persons who would be entitled to
notice of a proposed registration under Existing Registration Rights or Other
Registration Rights of its receipt of such notification. Upon the written
request of any such Person delivered to the Company within 30 days after receipt
from the Company of such notification, the Company will use its reasonable best
efforts to cause such Registrable Securities as may be requested by IXC or such
securities as may be requested by any such Person to be registered under the
Securities Act within 125 days of the notification by IXC, in accordance with
the terms of this Section 2.2; provided, however, that unless such registration
becomes effective and remains in effect for 60 days, such registration shall not
be counted as one of the three requests for registration that may be made by IXC
under this Section 2.2. IXC shall have the right to select the investment
banker(s) and manager(s) (which shall be of national standing and reputation) to
administer any underwritten public offering under this Section 2.2, subject to
the execution and delivery by such investment banker(s) to the Company of a
confidentiality agreement in form and substance satisfactory to the Company. If
requested in writing by the Company, IXC and the other Persons participating in
a registration under this Section 2.2 shall negotiate in good faith with any
underwriters retained in connection with the underwriting of such registration.
In the case of the registration of Registrable Securities in connection with an
underwritten public offering under this Section 2.2, if the underwriter
determines that the registration of securities in excess of an amount determined
by such underwriter would adversely affect such offering, then the Company may
(subject to the allocation priority set forth below) exclude from such
registration and underwriting some or all of the Registrable Securities and
other securities which would otherwise be underwritten pursuant to this Section
2.2. The Company shall advise IXC and the other Persons who requested to
participate in such registration promptly after such determination by the
underwriter, and the number of securities that are entitled to be included in
the registration and underwriting shall be
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allocated in the following manner: subject to Section 2.7 hereof, the number of
securities that may be included in the registration and underwriting shall be
allocated among IXC and such other Persons requesting that Registrable
Securities or other securities be included in such registration and underwriting
in proportion, as nearly as practicable, to their respective holdings of
Registrable Securities and other securities; provided, however, that if the
number of Registrable Securities pursuant to such registration shall be reduced
to a number which is less than 80% of the number of Registrable Securities as to
which IXC requested registration pursuant to this Section 2.2, then such
registration shall not be counted as one of the three requests for registration
that may be made by IXC under this Section 2.2. All expenses of such
registration and offering and the reasonable fees and expenses of one
independent counsel for IXC and the other Persons who requested to participate
in such registration shall be borne by the Company; provided, however, that (i)
the Company shall have no liability for such expenses if such registration does
not become effective due solely to the action or failure to act of IXC and (ii)
IXC and other Persons who requested to participate in such registration shall
bear underwriting and selling discounts and commissions attributable to their
Registrable Securities or other securities being registered and transfer taxes
on shares being sold by them. The Company may postpone the filing of any
registration statement required hereunder for a reasonable period of time, not
to exceed 90 days during any 12 month period of time, if the Company has been
advised by legal counsel that such filing would require the disclosure of a
material transaction or other matter and the Company determines reasonably and
in good faith that such disclosure would have a material adverse effect on the
Company. Notwithstanding anything in this Section 2.2 to the contrary, the
Company shall not be required to effect a registration under this Section 2.2
more than 135 days following the end of the Company's fiscal year, if such
registration shall require the preparation of audited financial statements for
any interim period not otherwise prepared by the Company. If a demand
registration is requested during such period, subject to the second preceding
sentence, the Company will commence such registration promptly following the end
of the next fiscal year. The Company will enter into customary agreements
(including underwriting agreements) reasonably acceptable to the Company to
facilitate the demand registrations provided for above.
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SECTION 2.3 FORM S-3 SHELF REGISTRATION
IXC shall have the right to request and have effected up to one
registration every six months of Registrable Securities on Form S-3 or any
successor form or, if Form S-3 or any successor form is not available, any
appropriate form under the Act (the "Shelf Registration Statement") for an
offering to be made on a continuous basis covering all the Registrable
Securities (the "Shelf Registration") (such request shall be in writing and
shall state the number of shares of Registrable Securities to be disposed of and
the intended method of disposition of such shares by IXC) provided that the
Registrable Securities for which such registration is requested are not eligible
for sale by IXC under Rule 144(k) of the Securities Act. Subject to the
provisions of applicable law, the Company will use its reasonable best efforts
to (i) file the Shelf Registration Statement to effect the registration of all
shares of Registrable Securities within 30 days of such request and (ii) cause
the Shelf Registration Statement to become effective under the Act on or prior
to the date 45days from the date of filing and (iii) keep the Shelf Registration
Statement continuously effective for 60 days from the date the Registration
Statement becomes effective under the Act. All expenses in connection with a
registration requested pursuant to this Section 2.3 shall be borne by the
Company; provided, however, that (i) the Company shall have no liability for
such expenses if such registration does not become effective due solely to the
action or failure to act of IXC and (ii) IXC shall bear underwriting and selling
discounts and commissions, if any, attributable to its Registrable Securities
being registered, transfer taxes on shares being sold by it and all fees and
expenses of its counsel. The Company may postpone the filing of any registration
statement required hereunder for a reasonable period of time, not to exceed 90
days, if the Company has been advised by legal counsel that such filing would
require the disclosure of a material transaction or other factor which would not
otherwise be required to be disclosed at such time and the Company determines
reasonably and in good faith that such disclosure would have a material adverse
effect on the Company with respect to the registration of the Registrable
Securities. The shelf-registration statement may also include securities held or
to be held by other holders of the Company's securities.
SECTION 2.4 REGISTRABLE SECURITIES
For purposes of this Agreement, the term "Registrable Securities" shall
mean the Common Stock issued or issuable under the IRU Agreement and any Common
Stock issued or issuable with respect thereto by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization.
SECTION 2.5 FURTHER OBLIGATIONS OF THE COMPANY
Whenever the Company is required under this Article II to register any
Registrable Securities, it agrees that it shall also do the following:
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(a) Use its reasonable best efforts to diligently prepare and
file with the Commission a registration statement and such amendments and
supplements to said registration statement and the prospectus used in connection
therewith as may be necessary to keep said registration statement effective
(but, in the case of a registration under this Agreement, for no more than 60
days after the initial effective date of the registration statement) and to
comply with the provisions of the Securities Act with respect to the sale of
securities covered by said registration statement for the period necessary to
complete the proposed public offering; provided, however, the Company may
suspend the effectiveness of any registration statement filed hereunder for a
reasonable period of time, not to exceed 90 days, if the Company has been
advised by legal counsel that maintaining such effectiveness would require the
disclosure of a material transaction or other matter and the Company determines
reasonably and in good faith that such disclosure would have a material adverse
effect on the Company; provided, further, that in the event of any such
suspension of effectiveness, the 60 day period of effectiveness required above
shall be deemed tolled for the number of days the effectiveness of such
registration statement was suspended and, if any securities covered by such
registration statement remain unsold, the Company shall thereafter take all
necessary actions, including, without limitation, the filing of post-effective
amendments, to cause such registration statement to become effective for the
remainder of such 60 day period;
(b) Furnish to IXC such copies of each preliminary and final
prospectus and such other documents as IXC may reasonably request to facilitate
the public offering of its Registrable Securities;
(c) Use its reasonable best efforts to register or qualify
the securities covered by said registration statement at the Company's expense
under the securities or "blue-sky" laws of such jurisdiction as IXC may
reasonably request, provided that the Company shall not be required to register
or qualify the securities in any jurisdictions which require it to qualify to do
business or subject itself to taxation or general service of process therein;
(d) Immediately notify IXC, at any time when a prospectus
relating to its Registrable Securities is required to be delivered under the
Securities Act, of any stop order issued or threatened by the Commission or of
the happening of any event as a result of which such prospectus contains an
untrue statement of a material fact or omits any material fact necessary to make
the statements therein not misleading, and, at the request of IXC, prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(e) Cause all such Registrable Securities to be listed on
NASDAQ or included in each securities exchange or quotation system on which
similar securities issued by the Company are then listed;
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(f) Otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and make generally
available to its security holders, in each case as soon as practicable, but not
later than 30 days after the close of the period covered thereby, an earnings
statement of the Company which will satisfy the provisions of Section 11(a) of
the Securities Act; and
(g) Choose the underwriters (except as otherwise provided in
Section 2.2 hereof), auditors, Company legal counsel and financial printer to be
engaged by the Company in any such registration.
SECTION 2.6 NO TRANSFER OF REGISTRATION RIGHTS
The registration rights of IXC under this Agreement may not be
transferred or assigned except to IXC Communications, Inc. or a controlled
affiliate of IXC Communications, Inc.; provided that such transferee shall have
entered into an agreement substantially the same as that set forth in Section
15.8 of the IRU Agreement.
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SECTION 2.7 PRIOR AND OTHER REGISTRATION RIGHTS AGREEMENTS
Notwithstanding any provision hereof to the contrary, the provisions of
this Article II: (i) shall rank ratably with the registration rights granted
under the Amended and Restated Registration Rights Agreement (the "Amended
Registration Rights") and, to the extent the provisions of this Article II
conflict or are inconsistent with any such Amended Registration Rights, such
conflict or inconsistency shall be resolved in a manner which, to the greatest
extent reasonably feasible, affords IXC and the holders of such Amended
Registration Rights, the ratable benefits of this Article II and such Amended
Registration Rights; (ii) shall rank ratably with the registration rights
granted under the 2/8/95 Registration Rights Agreement (the "2/8/95 Registration
Rights") and, to the extent the provisions of this Article II conflict or are
inconsistent with any such 2/8/95 Registration Rights, such conflict or
inconsistency shall be resolved in a manner which, to the greatest extent
reasonably feasible, affords IXC and the holders of the 2/8/95 Registration
Rights, the ratable benefits of this Article II and such 2/8/95 Registration
Rights; (iii) shall rank ratably with the registration rights granted under the
6/16/95 Registration Rights Agreement (the "6/16/95 Registration Rights") and,
to the extent the provisions of this Article II conflict or are inconsistent
with any such 6/16/95 Registration Rights, such conflict or inconsistency shall
be resolved in a manner which, to the greatest extent reasonably feasible,
affords IXC and the holders of the 6/16/95 Registration Rights, the ratable
benefits of this Article II and such 6/16/95 Registration Rights; (iv) shall
rank ratably with the registration rights granted under the 7/11/95 Registration
Rights Agreement (the "7/11/95 Registration Rights") and, to the extent the
provisions of this Article II conflict or are inconsistent with any such 7/11/95
Registration Rights, such conflict or inconsistency shall be resolved in a
manner which, to the greatest extent reasonably feasible, affords IXC and the
holders of the 7/11/95 Registration Rights, the ratable benefits of this Article
II and such 7/11/95 Registration Rights; (v) shall rank ratably with the
registration rights granted under the 9/19/96 Registration Rights Agreement (the
"9/19/96 Registration Rights") and, to the extent the provisions of this Article
II conflict or are inconsistent with any such 9/19/96 Registration Rights, such
conflict or inconsistency shall be resolved in a manner which, to the greatest
extent reasonably feasible, affords IXC and the holders of the 9/19/96
Registration Rights, the ratable benefits of this Article II and such 9/19/96
Registration Rights; and (vi) shall rank ratably with the registration rights to
be granted under any other agreement in connection with the original issuance of
any other capital stock of the Company (the "Other Registration Rights") and, to
the extent the provisions of this Article II shall conflict with any such Other
Registration Rights, such conflict shall be resolved in a manner which, to the
greatest extent reasonably feasible, affords IXC and the holders of such Other
Registration Rights, the ratable benefits of the provisions of this Article II
and such Other Registration Rights.
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ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
SECTION 3.1 INDEMNIFICATION
Incident to any registration statement referred to in this Agreement,
and subject to applicable law, the Company will indemnify and hold harmless each
underwriter, IXC (including its directors, officers, employees and agents), and
each person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, expenses and liabilities, joint or several (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based on (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
(including any related preliminary or definitive prospectus, or any amendment or
supplement to such registration statement or prospectus), (ii) any omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or "blue
sky" laws or any rule or regulation thereunder in connection with such
registration; provided, however, that the Company will not be liable to the
extent that such loss, claim, damage, expense or liability (x) arises from and
is based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information furnished in
writing to the Company by or on behalf of such underwriter, IXC or controlling
person expressly for use in such registration statement or (y) provided that the
Company has theretofore timely prepared all necessary prospectus supplements or
amendments and provided them to IXC or its representative, arises from the
failure of IXC or any underwriter to comply with such prospectus delivery
requirements as are applicable to it. With respect to losses, claims, damages,
expenses and liabilities arising out of or based upon such untrue statement or
omission or alleged untrue statement or omission in the information furnished in
writing to the Company by or on behalf of IXC expressly for use in such
registration statement or such failure to comply with such prospectus delivery
requirements, IXC will indemnify and hold harmless each underwriter, the Company
(including its directors, officers, employees and agents), and each person who
controls any of them within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, expenses and liabilities, joint or several, to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise to the
same extent provided in the immediately preceding sentence. In no event,
however, shall the liability of IXC for indemnification under this Section 3.1
exceed the
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proceeds received by it from its sale of Registrable Securities under such
registration statement.
SECTION 3.2 CONTRIBUTION
If the indemnification provided for in Section 3.1 above for any reason
is held by a court of competent jurisdiction to be unavailable to an indemnified
party in respect of any losses, claims, damages, expenses or liabilities
referred to therein, then each indemnifying party under this Article III, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, expenses or liabilities in such proportion as is appropriate to
reflect the relative benefits received by the Company, IXC and the underwriters
from the offering of the Registrable Securities as well as the relative fault of
the Company, IXC and the underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, IXC and the underwriters shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and IXC and the
underwriting discount received by the underwriters, in each case as set forth in
the table on the cover page of the applicable prospectus, bear to the aggregate
public offering price of the Registrable Securities. The relative fault of the
Company, IXC and the underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, IXC or the underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and IXC agree that it would not
be just and equitable if contribution pursuant to this Section 3.2 were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. In no event, however, shall IXC be required to contribute
any amount under this Section 3.2 in excess of the proceeds received by it from
its sale of Registrable Securities under such registration statement. No person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
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SECTION 3.3 EXPENSES, ETC.
(a) The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in this
Article III shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. The
indemnification and contribution provided for in this Article III will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified parties or any officer, director, employee, agent or controlling
person of the indemnified parties.
(b) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with any registration statement referred to
in this Agreement are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
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ARTICLE IV
RULE 144
SECTION 4.1 RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to: (i) at all
times make and keep public information available as those terms are understood
and defined in Rule 144 under the Securities Act (and any successor rule to Rule
144); (ii) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and (iii) furnish to IXC as promptly as possible upon its request a written
statement by the Company confirming its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy
of the most recent annual or quarterly report of the Company, and any other
reports and documents so filed as IXC may reasonably request in availing itself
of any rule or regulation of the Commission allowing it to sell any such
securities without registration.
SECTION 4.2 USE OF RULE 144
IXC shall endeavor to sell its Registrable Securities whenever possible
in transactions pursuant to Rule 144 under the Securities Act (and any successor
rule to Rule 144) rather than pursuant to registrations effected under this
Agreement so long as such sales may be effected in compliance with the
requirements of Rule 144 (or any successor rule to Rule 144).
ARTICLE V
GENERAL
SECTION 5.1 GRANTING OF RIGHTS AGREEMENTS
The Company shall not grant any registration rights in respect of any
shares of capital stock of the Company or other securities of the Company if
such rights would be superior to the registration rights granted to IXC under
this Agreement; provided, however, that IXC hereby consents and agrees that the
Company may grant in other agreements to other holders of securities of the
Company registration rights which rank ratably with the registration rights
granted hereunder to IXC.
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SECTION 5.2 AMENDMENTS, WAIVERS AND CONSENTS
For purposes of this Agreement and all agreements, documents and
instruments executed pursuant hereto, except as otherwise specifically set forth
herein or therein, no course of dealing between the Company and IXC and no delay
on the part of any party hereto in exercising any rights hereunder or thereunder
shall operate as a waiver of the rights hereof or thereof. No covenant or other
provision hereof or thereof may be waived or amended other than by a written
instrument signed by the party so waiving or amending such covenant or other
provision. Any waiver or amendment affected in accordance with this Section 5.2
shall be binding upon IXC and the Company at the time such waiver or amendment
is effected.
SECTION 5.3 SURVIVAL OF COVENANTS; ASSIGNABILITY OF RIGHTS
All covenants and agreements of the Company or IXC made herein shall
survive until fully discharged; provided, however, that notwithstanding any
provision of this Agreement to the contrary, in no event shall IXC be entitled
to any registration rights hereunder to the extent that it could sell pursuant
to Rule 144(k) under the Securities Act Registrable Securities which it desires
to register under the Securities Act pursuant to Sections 2.1, 2.2 or 2.3 hereof
or at any time after one year following the date at which the IRU Agreement is
no longer in effect. This Agreement may not be assigned by IXC except as set
forth in Section 2.6. All covenants and agreements of the Company herein shall
bind the Company's successors and assigns, whether so expressed or not, and,
except as otherwise provided in this Agreement, all such covenants and
agreements shall inure to the benefit of IXC's successors and assigns.
SECTION 5.4 GOVERNING LAW
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without reference to its
principles of conflicts of law.
SECTION 5.5 HEADINGS
The headings used in this Agreement have been inserted for reference
purposes only and shall not control or affect in any manner the meaning or
interpretation of any provision of this Agreement.
SECTION 5.6 PRONOUNS
All pronouns and any variation thereof, shall be deemed to refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
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SECTION 5.7 NOTICES AND DEMANDS
Any notice or demand which, by any provision of this Agreement or any
agreement, document or instrument executed pursuant hereto or thereto, except as
otherwise provided therein, is required or provided to be given shall be deemed
to have been sufficiently given or served and received for all purposes when
delivered or 5 days after being sent by certified or registered mail, postage
and charges prepaid, return receipt requested, or by express delivery providing
receipt of delivery, to the following addresses: if to the Company, at 000
Xxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such other address designated
by the Company to IXC in writing; if to IXC, at its mailing address maintained
on the books and records of the Company, or at such other address designated by
IXC to the Company in writing.
SECTION 5.8 SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the remaining provisions of
this Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted. All provisions of this
Agreement shall be enforced to the full extent permitted by law.
SECTION 5.9 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes and cancels all other
prior agreements, understandings, negotiations and discussions, whether written
or oral, relating to the subject matter hereof.
SECTION 5.10 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PSINET INC.
By:
Name:
Title:
Accepted and Agreed as of the
date first above written.
IXC INTERNET SERVICES, INC.
By:
Name:
Title:
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