EXECUTION COPY
GUARANTY INDEMNIFICATION AGREEMENT
THIS GUARANTY INDEMNIFICATION AGREEMENT (this "Agreement") is made and
entered into this 26th day of July, 2002, but shall not become effective until
the Effective Date (as such term is defined in the Plan) , by and between The
Xxxxxxxx Companies, Inc., a Delaware corporation ("Xxxxxxxx"), and Xxxxxxxx
Communications Group, Inc., a Delaware corporation ("Communications"). The
parties to this Agreement are collectively referred to as the "Parties", and
singularly as a "Party".
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement, in addition to
the terms defined in the Preamble hereof, the following terms shall have the
following meanings, applicable to both the singular and plural forms of the
terms described:
"BUSINESS DAY" means any calendar day which is not a Saturday, Sunday
or public holiday under the laws of the State of New York.
"COMMUNICATIONS GROUP" means Communications and its direct and indirect
subsidiaries.
"INDEMNIFIABLE LOSSES" shall have the meaning ascribed to it in Section
2.01.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in Section
2.02(a).
"INDEMNITEE" shall have the meaning ascribed to it in Section 2.02(a).
"INDEMNITY PAYMENT" shall have the meaning ascribed to it in Section
3.01(a).
"INSURANCE PROCEEDS" means those monies: (a) received by an insured
from an insurance carrier, or (b) paid by an insurance carrier on behalf of the
insured in the case of (a) or (b), net of any applicable premium adjustments
(including reserves and retrospectively rated premium adjustments) and net of
any costs or expenses (including allocated costs of in-house counsel and other
personnel) incurred in collection thereof.
"LIABILITIES" means all liabilities and obligations of a party, actual
or contingent, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever and however arising, including all costs and expenses
(including reasonable fees and disbursements of counsel) relating thereto, and
including, without limitation, liabilities and obligations arising in connection
with any actual or threatened claim, action, suit or proceeding by or before any
court or regulatory or administrative agency or commission or any arbitration
panel.
"PLAN" means the First Amended Joint Chapter 11 Plan of Reorganization
of Communications and CG Austria, Inc. filed as of July 26, 2002 in the chapter
11 case No. 02-11957 (BRL)
pending in the United States Bankruptcy Court for the Southern District of New
York.
"TAX ASSESSMENT" shall have the meaning ascribed to it in Section
8.01(a).
"TAXES" means all taxes, assessments, charges, duties, fees, levies or
other governmental charges, including, without limitation, all Federal, state,
local, foreign and other income, franchise, profits, capital gains, capital
stock, transfer, sales, use, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a return), all estimated taxes, deficiency assessments,
additions to tax, penalties and interest and shall include any liability for
such amounts as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
person or other entity.
"THIRD-PARTY CLAIM" shall have the meaning ascribed to it in Section
3.01(a).
"XXXXXXXX GROUP" means Xxxxxxxx and each of its direct and indirect
subsidiaries other than members of the Communications Group.
"XXXXXXXX GUARANTEE" means the guarantees listed on Exhibit A attached
hereto and made a part hereof.
SECTION 1.02. INTERNAL REFERENCES. Unless the context indicates
otherwise, references to Articles, Sections and Paragraphs shall refer to the
corresponding Articles, Sections and Paragraphs in this Agreement, and
references to the parties shall mean the parties to this Agreement.
ARTICLE II
GUARANTEE
SECTION 2.01. GUARANTEE. The Communications Group shall indemnify,
defend and hold harmless each member of the Xxxxxxxx Group, and their respective
directors, officers, employees, agents and representatives, from and against any
and all losses, claims, damages, liabilities, demands, suits and actions,
including all reasonable attorneys' fees and disbursements and other costs and
expenses incurred in connection therewith (collectively, "Indemnifiable Losses")
relating to, resulting from, or arising out of any Xxxxxxxx Guarantee. Each
member of the Xxxxxxxx Group shall not terminate unilaterally or withdraw any
Xxxxxxxx Guarantee and shall abide by the terms of any such Xxxxxxxx Guarantee.
The Communications Group shall reimburse each member of the Xxxxxxxx Group for
any direct fees (such as letter of credit maintenance fees) incurred by such
member in connection with maintaining any Xxxxxxxx Guarantee.
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SECTION 2.02. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND
OTHER AMOUNTS. (a) The amount which any party (an "Indemnifying Party") is
required to pay to any person entitled to indemnification hereunder (an
"Indemnitee") will be reduced by any Insurance Proceeds theretofore actually
recovered by or on behalf of the Indemnitee in reduction of the related
Liability. If an Indemnitee receives a payment (an "Indemnity Payment") required
by this Agreement from an Indemnifying Party in respect of any Liability and
subsequently receives Insurance Proceeds, then the Indemnitee will pay to the
Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds recovery had been received, realized or recovered before
the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, or have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification provisions) by virtue
of the indemnification provisions hereof. Notwithstanding the foregoing, each
member of the Xxxxxxxx Group and Communications Group shall be required to use
commercially reasonable efforts to collect or recover any available Insurance
Proceeds.
ARTICLE III
CLAIMS
SECTION 3.01. THIRD-PARTY CLAIMS. (a) If Indemnitee receives notice of
the assertion of any claim or of the commencement of any action or proceeding by
any person that is not a party to this Agreement or a subsidiary of any such
party against Indemnitee (a "Third-Party Claim"), Indemnitee shall promptly
provide written notice thereof (including a description of the Third-Party Claim
and an estimate of any Indemnifiable Losses, which estimate shall not be
conclusive as to the final amount of such Indemnifiable Losses) to the
Indemnifying Party. Any delay by the Indemnitee in providing such written notice
shall not relieve the Indemnifying Party of any liability for indemnification
hereunder except to the extent that the rights of the Indemnifying Party are
materially prejudiced by such delay.
(b) The Indemnifying Party shall have the right to participate in or,
by giving written notice to the Indemnitee, to assume the defense of any
Third-Party Claim at such Indemnifying Party's expense and by such Indemnifying
Party's own counsel (which shall be reasonably satisfactory to the Indemnitee),
and the Indemnitee will cooperate in good faith in such defense. The
Indemnifying Party shall not be liable for any legal expenses incurred by the
Indemnitee after the Indemnitee has received notice of (i) the Indemnifying
Party's intent to assume the defense of a Third-Party Claim and (ii) the date
upon which such defense shall be assumed by the Indemnifying Party; provided,
however, that if, under applicable standards of professional conduct a conflict
on any significant issue between the Indemnifying Party and any Indemnified
Party exists in respect of such Third-Party Claim, then the Indemnifying Party
shall reimburse the Indemnified Party for the reasonable fees and expenses of
one additional counsel (who shall be reasonably acceptable to the Indemnifying
Party); provided, further, that if the Indemnifying
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Party fails to take steps reasonably necessary to diligently pursue the defense
of such Third-Party Claim within twenty (20) Business Days of receipt of notice
from the Indemnitee that such steps are not being taken, the Indemnitee may
assume its own defense and the Indemnifying Party shall be liable for the
reasonable costs thereof.
(c) The Indemnifying Party may settle any Third-Party Claim which it
has elected to defend so long as the written consent of the Indemnitee to such
settlement is first obtained (which consent shall not be unreasonably withheld).
The Indemnitee shall not settle any Third-Party Claim without the written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld).
(d) In the event that a Third-Party Claim involves a proceeding as to
which both Xxxxxxxx and Communications may be Indemnifying Parties, the parties
hereto agree to cooperate in good faith in a joint defense of such Third-Party
Claim.
(e) In the event of payment by or on behalf of any Indemnifying Party
to any Indemnitee in connection with any Third-Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right, defense or claim relating to such Third-Party Claim against any claimant
or plaintiff asserting such Third-Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
SECTION 3.02. NON THIRD-PARTY CLAIMS. In the event that an Indemnified
Party should have a claim against the Indemnifying Party hereunder that does not
involve a claim or demand being asserted against or sought to be collected from
it by a third party, the Indemnified Party shall send a notice with respect to
such claim to the Indemnifying Party. The Indemnifying Party shall have sixty
(60) days from the date such notice is delivered during which to notify the
Indemnified Party in writing of any good faith objections it has to the
Indemnified Party's notice or claims for indemnification, setting forth in
reasonable detail each of the Indemnifying Party's objections thereto. If the
Indemnifying Party does not deliver such written notice of objection within such
sixty-day period, the Indemnifying Party shall be deemed to not have any
objections to such claim. If the Indemnifying Party does deliver such written
notice of objection within such sixty (60) day period, the Indemnifying Party
and the Indemnified Party shall attempt in good faith to resolve any such
dispute within sixty (60) days of the delivery by the Indemnifying Party of such
written notice of objection. If the Indemnifying Party and the Indemnified Party
are unable to resolve any such dispute within such sixty (60) day period, such
dispute shall be resolved in accordance with the Dispute Resolution Procedures
set forth in the Amended and Restated Separation Agreement between Xxxxxxxx and
Communications dated April 23, 2001.
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ARTICLE IV
COOPERATION
SECTION 4.01. COOPERATION. So long as any books, records and files
retained after the Effective Date by any member of the Xxxxxxxx Group, on the
one hand, or any member of the Communications Group on the other hand, relating
to the Xxxxxxxx Guarantees (including any books, records and files retained by
any member of the Communications Group relating to the Xxxxxxxx Guarantees)
remain in existence and are available, such other party shall have the right
upon prior written notice to inspect and copy the same at any time during
business hours for any proper purpose; provided that such right will not extend
to any books, records or files the disclosure of which in accordance herewith
would result in a waiver of the attorney-client, work-product or other
privileges which permit non-disclosure of otherwise relevant material in
litigation or other proceedings, or which are subject on the date hereof and at
the time inspection is requested to a non-disclosure agreement with a third
party and a waiver cannot reasonably be obtained. Xxxxxxxx and Communications
agree that neither they nor any member of the Xxxxxxxx Group or the
Communications Group, as the case may be, shall destroy such books, records or
files without reasonable notice to the other party or if such party receives
within ten (10) Business Days of such notice any reasonable objection from the
other party to such destruction. Except in the case of dispute between the
parties hereto, each member of the Xxxxxxxx Group and each member of the
Communications Group shall cooperate with one another in a timely manner in any
administrative or judicial proceeding involving any matter affecting the actual
or potential liability of either party hereunder. Such cooperation shall
include, without limitation, making available to the other party during normal
business hours all books, records and information, and officers and employees
(without substantial disruption of operations or employment) necessary or useful
in connection with any inquiry, audit, investigation or dispute, any litigation
or any other matter requiring any such books, records, information, officers or
employees for any reasonable business purpose. The party requesting or otherwise
entitled to any books, records, information, officers or employees pursuant to
this Article IV shall bear all reasonable out-of-pocket costs and expenses
(except for salaries, employee benefits and general overhead) incurred in
connection with providing such books, records, information, officers or
employees.
ARTICLE V
EFFECTIVENESS
SECTION 5.01. EFFECTIVENESS. This Agreement is effective as of the
Effective Date.
ARTICLE VI
SUCCESSORS AND ASSIGNS
SECTION 6.01. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and permitted assigns
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by either
party hereto to any other person without the prior written consent of the other
party hereto.
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ARTICLE VII
NO THIRD-PARTY BENEFICIARIES
SECTION 7.01. NO THIRD-PARTY BENEFICIARIES. Nothing expressed or
implied in this Agreement shall be construed to give any person or entity other
than the parties hereto any legal or equitable rights hereunder.
ARTICLE VIII
TAXATION OF PAYMENTS
SECTION 8.01. TAXATION OF PAYMENTS. (a) All sums payable by the
Indemnifying Party to the Indemnified Party under this Agreement shall be paid
free and clear of all deductions, withholdings, set-offs or counterclaims
whatsoever save only as may be required by law. If any deductions or
withholdings are required by law, the Indemnifying Party shall be obliged to pay
to the Indemnified Party such sum as will, after such deduction or withholding
has been made, leave the Indemnified Party with the same amount as it would have
been entitled to receive in the absence of any such requirement to make a
deduction or withholding. If any authority imposes any Taxes on any sum paid to
the Indemnified Party under this Agreement (a "Tax Assessment"), then the amount
so payable shall be grossed up by such amount as will ensure that after payment
of the Tax Assessment there shall be left a sum equal to the amount that would
otherwise be payable under this Agreement.
(b) The Indemnified Party shall take any action and institute any
proceedings, and give any information and assistance, as the Indemnifying Party
may reasonably request, to dispute, resist, appeal, compromise, defend, remedy
or mitigate any Tax Assessment, in each case on the basis that the Indemnifying
Party shall indemnify the Indemnified Party for all reasonable costs incurred as
a result of a request by the Indemnifying Party.
(c) The Indemnified Party shall not admit liability in respect of, or
compromise or settle, a Tax Assessment without the prior written consent of the
Indemnifying party (such consent not to be unreasonably withheld or delayed).
ARTICLE IX
ADDITIONAL MATTERS
SECTION 9.01. REMEDIES CUMULATIVE. The remedies provided in this
Agreement shall be cumulative and shall not preclude assertion by any Indemnitee
of any other rights or the seeking of any and all other remedies against any
Indemnifying Party.
SECTION 9.02. LIMITATION ON LIABILITY. No Indemnifying Party shall be
liable to an Indemnified Party under this Agreement in respect of consequential,
exemplary, special or punitive damages, or lost profits, except to the extent
such consequential, exemplary, special or punitive damages, or lost profits are
actually paid to a third party.
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ARTICLE X
ENTIRE AGREEMENT
SECTION 10.01. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior or contemporaneous agreement or understanding between the
Parties.
ARTICLE XI
AMENDMENT
SECTION 11.01. AMENDMENT. This Agreement may not be amended except by
an instrument signed by the parties hereto.
ARTICLE XII
REMEDIES AND WAIVERS
SECTION 12.01. REMEDIES AND WAIVERS. No waiver of any term shall be
construed as a subsequent waiver of the same term, or a waiver of any other
term, of this Agreement. The failure of any party to assert any of its rights
hereunder will not constitute a waiver of any such rights. The single or partial
exercise of any right, power or remedy provided by law or under this Agreement
shall not preclude any other or further exercise thereof or the exercise of any
right, power or remedy. Except as provided in this Agreement, the rights, powers
and remedies provided in this Agreement are cumulative and not exclusive of any
rights, powers and remedies provided by law.
ARTICLE XIII
SEVERABILITY
SECTION 13.01. SEVERABILITY. If any provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, such provision shall be deemed severable and all other provisions of
this Agreement shall nevertheless remain in full force and effect.
ARTICLE XIV
HEADINGS
SECTION 14.01. HEADINGS. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
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ARTICLE XV
NOTICES
SECTION 15.01. NOTICES. All notices given in connection with this
Agreement shall be in writing. Service of such notices shall be deemed complete:
(i) if hand delivered, on the date of delivery; (ii) if by mail, on the fourth
Business Day following the day of deposit in the United States mail, by
certified or registered mail, first-class postage prepaid; (iii) if sent by
Federal Express or equivalent courier service, on the next Business Day; or (iv)
if by telecopier, upon receipt by sender of confirmation of successful
transmission. Such notices shall be addressed to the parties at the following
address or at such other address for a party as shall be specified by like
notice (except that notices of change of address shall be effective upon
receipt):
If to Xxxxxxxx:
The Xxxxxxxx Companies, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax No.: 918/000-0000
If to Communications:
Xxxxxxxx Communications Group, Inc.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax No.: 918/000-0000
ARTICLE XVI
GOVERNING LAW
SECTION 16.01. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with, the laws of the State of New York, without giving
effect to the principles of conflict of laws of such state or any other
jurisdiction.
ARTICLE XVII
COUNTERPARTS
SECTION 17.01. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
THE XXXXXXXX COMPANIES, INC.
BY: /s/ Xxxx X. XxXxxxxx
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NAME: Xxxx X. XxXxxxxx
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TITLE: Senior Vice President-Finance,
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Chief Financial Officer
-------------------------------------
XXXXXXXX COMMUNICATIONS GROUP, INC.
BY: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
NAME: Xxxxxx X. Xxxxxx
--------------------------------------
TITLE: President & CEO
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EXHIBIT A
GUARANTY INDEMNIFICATION AGREEMENT
XXXXXXXX GUARANTEES
1. LCI Guaranty: Guaranty of performance under a Construction, IRU and Joint Use
Agreement dated Sept. 26, 1997.
2. Massachusetts Turnpike Authority Guaranty: Guaranty of obligations under an
Easement Agreement dated May 25, 1999.
3. RREEF USA Funding II Guaranty: Guaranty of obligations under a Lease
Agreement effective as of March 1, 1997.
4. Xxxxxxxx XxXxxxxx Associates, Incorporated Guaranty: Guaranty of obligations
under the Master Lease Agreement Number WIS001 dated February 2, 1995.
5. Spectrum Shareholders Agreement dated June 19, 1998.
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