SETTLEMENT AND RESTRUCTURING AGREEMENT
THIS
SETTLEMENT AND RESTRUCTURING AGREEMENT (“Agreement”) is entered into by and
between Qwest Communications Corporation, a Delaware corporation (“QCC”), Qwest
Corporation, a Colorado corporation (“QC”) (collectively “Qwest”), and Pac-West
Telecomm, Inc., a California corporation (“Pac-West”) (each being referred to
herein as a “Party,” and collectively as, the “Parties”).
RECITALS
WHEREAS,
QCC and Pac-West are parties to a Wholesale Services Agreement dated July 5,
2001, as amended (“WSA”) pursuant to which Qwest provides certain services to
Pac-West, including voice, private line, and dedicated internet access service;
and
WHEREAS,
QCC and Pac-West are parties to a Dial Access Services Agreement, dated
effective January 31, 2002, as amended (the “Dial Access Agreement”), pursuant
to which Qwest agreed to purchase from Pac-West certain modem ports in various
locations for the purpose of terminating local or long distance
end-user-originated modem or ISDN calls to effect connectivity to the Internet;
and
WHEREAS,
QC and Pac-West are parties to an interconnection agreement in Arizona, pursuant
to which Qwest provides certain interconnection services to Pac-West (“AZ
Interconnection Agreement”); and
WHEREAS,
under the Dial Access Agreement, QCC agreed to purchase from Pac-West a certain
volume of ports through July 30, 2008, the remaining billing for which would
amount to approximately [**] (“Minimum Service Commitment”), as outlined in
Section 4 of the Dial Access Agreement; and
WHEREAS,
due to changes in QCC’s business plan with respect to the services purchased
under the Dial Access Agreement, QCC’s purchases will likely fall below the
Minimum Service Commitment; and
WHEREAS,
due to its current cash requirements in connection with implementation of its
business plan, Pac-West believes it would benefit from a discounted one-time
lump sum payment versus a series of payments from QCC under its remaining
Minimum Service Commitment through July 30, 2008; and
WHEREAS,
the Dial Access Agreement provides that QCC has the right to terminate the
Dial
Access Agreement and its obligations thereunder if, among other reasons,
Pac-West is insolvent as defined therein; and
WHEREAS,
Pac-West has filed a complaint against QC with the Arizona PUC in docket
T-03693A-05-0875, concerning facilities charges under the AZ Interconnection
Agreement (“Pac-West AZ Complaint”), and QC has asserted certain counterclaims
against Pac-West in that same proceeding pertaining to the claims underlying
the
Pac-West AZ Complaint, specifically: those counterclaims identified as Count
I,
Count II, and Count III at pages 4-5 of “Qwest Corporation’s Amended Answer To
Pac-West Telecomm’s First Amended Complaint For Declaratory Judgment; Qwest’s
Second Amended Counterclaim” filed July 12, 2006, in the Pac-West AZ Complaint
proceeding (“QC AZ Counterclaims”); and
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WHEREAS,
in response to the Pac-West AZ Complaint, Qwest also filed counterclaims
identified as Count IV that address issues related to VNXX and other non-local
calls (“Count IV”), and there are currently pending the following additional
actions to which Qwest is a party: Qwest
Corporation, et. al v. Arizona Corporation Commission, et. al,
No.
05-15148 and No. 00-00000 (0xx
Xxx.),
and .Qwest
Corporation v. Arizona Corporation Commission, et. al,
No.
CV 06-02130-PHX-NVW (Dist. Ariz.).
All
these claims and counterclaims are collectively referred to in this Agreement
as
the “Reserved Claims.” Nothing in the Agreement is intended to affect and/or
release any of the Reserved Claims.
WHEREAS,
the Parties desire to resolve the claims raised by Pac-West in the Pac-West
AZ
Complaint and QC in the QC AZ Counterclaims to avoid the uncertainty and cost
of
potentially lengthy litigation; and
WHEREAS,
the Parties desire to amend and restructure the Dial Access Agreement and the
WSA in order to avoid any dispute regarding QCC’s right to terminate the Dial
Access Agreement, and to provide for a discounted lump sum payment from QCC
to
satisfy its remaining Minimum Service Commitment in exchange for modifying
the
Minimum Service Commitment and establishing a minimum revenue commitment by
Pac-West for its purchases from QCC under the WSA (the “Restructuring”); and
WHEREAS,
in connection with the Restructuring, the Parties desire that the WSA and the
Dial Access Agreement constitute, in all respects, a single agreement and to
make clear that the obligations and rights set forth in each agreement
constitute consideration for the obligations and rights set forth in the other
agreement, and that neither party would have entered into this Agreement without
the right and obligations of the parties under the WSA and the Dial Access
Agreement constituting a single agreement, and that therefore any termination
or
default under either agreement constitutes a default under the other agreement,
NOW,
THEREFORE, in consideration of the mutual agreements, undertakings, releases
and
representations contained herein, the payment and crediting of the amounts
set
forth below, and other good and valuable consideration, the sufficiency of
which
is hereby acknowledged, the Parties agree as follows:
AGREEMENT
1. Incorporation
of Recitals.
Each of
the Recitals set forth above is hereby incorporated into and made a part of
this
Agreement and the Parties acknowledge and agree that each Recital is a
substantive provision hereof and shall be given full force and
effect.
2. -
Withdrawal
of Pac-West AZ Complaint by Pac-West, Withdrawal of the QC AZ Counterclaims
by
QC, and AZ Interconnection Amendment.
Pac-West shall file, with copy to QC, a motion to withdraw the Pac-West AZ
Complaint with prejudice, within two (2) business days of the Effective Date.
QC
shall file, within two (2) business days of the Effective Date, with copy to
Pac-West, a motion to withdraw with prejudice the QC AZ Counterclaims.
Concurrently with the execution of this Agreement, the Parties shall enter
into
an amendment to the Relative Use Factor Amendment to the AZ Interconnection
Agreement in the form attached as Exhibit A hereto (“Interconnection
Amendment”).
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| 3. |
Payments
and Credits.
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(a)
Payment
to be Issued by QCC.
QCC
shall issue a payment to Pac-West in the aggregate amount of
six
million, five hundred thirty-three thousand, one-hundred eighty-one dollars
($6,533,181.00)
within
two (2) business days of execution hereof (“Settlement Payment”). The Settlement
Payment shall be by wire transfer to Bank of Stockton routing #000000000, a/c
#2138033315 of immediately available funds. The issuance of the Settlement
Payment by QCC (1) is the only lump sum payment that will be issued to Pac-West
in connection with the Minimum Service Commitment, (2) does not obligate QCC
to
issue any such lump sum payments to Pac-West in the future; provided, however,
that QCC shall satisfy its monthly Minimum Service Commitment obligations as
revised herein to the extent required.
(b)
Credit
to be Issued by QC.
As of
the Effective Date, QC has issued invoices to Pac-West for Direct Trunk
Termination services in Arizona (“AZ DTT”) which remain unpaid in the total
amount of approximately [**]. QC will issue a credit to Pac-West with respect
to
these AZ DTT invoices of [**] prior to the rendering of Pac-West’s first invoice
following the Effective Date, leaving a remaining balance payable of
approximately [**], which shall appear on Pac-West’s first invoice following the
Effective Date (“AZ DTT Payable”).
(c) Payment
to be Issued by Pac-West.
Pac-West shall pay the AZ DTT Payable in accordance with the terms and
conditions applicable to the invoice on which it appears. Commencing on the
first day of the next full billing cycle following the Effective Date, AZ DTT
services provided by QC shall be provided and billed for, pursuant to the
Interconnection Amendment.
4. WSA
Amendment.
As of
the Effective Date (as defined in Section 10 below), the Parties shall enter
into an amendment to the WSA in substantially the form attached as Exhibit
B
hereto,
pursuant to which Pac-West shall commit to [**] monthly revenue commitment
through July 2008 (the “WSA Amendment”).
5. Dial
Access Amendment.
As of
the Effective Date hereof, the Parties shall enter into an Amendment to the
Dial
Access Agreement in substantially the form attached as Exhibit
C
hereto,
pursuant to which QCC’s monthly Minimum Service Commitment will be modified from
a port purchase commitment to a dollar purchase commitment in the amount of
[**]
through July 2008 (“Dial Access Amendment”).
6. Restructuring.
As of
the Effective Date hereof, the WSA and the Dial Access Agreement shall be
treated as, in all respects, a single agreement, and the obligations and rights
set forth in each agreement constitute consideration for the obligations and
rights set forth in the other agreement. For the avoidance of doubt, any
termination or default under either agreement, including, but not limited to,
a
default resulting from insolvency, or bankruptcy, shall constitute a default
under the other agreement, and the non-defaulting Party may exercise any and
all
rights and remedies available to it under either agreement as a result the
default of the other Party. In addition, neither Party shall be entitled to
assume one agreement without assuming the other agreement nor shall either
party
be entitled to reject one agreement without rejecting the other agreement.
Nothing herein constitutes consent to assumption or rejection.
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7. Release.
(a) As
of the
Effective Date, Pac-West, for itself and its subsidiaries, affiliates,
predecessors, successors and assigns, does hereby voluntarily and knowingly,
unconditionally and absolutely release and forever discharge Qwest and its
subsidiaries, affiliates, predecessors, principals, officers, directors,
employees, successors and assigns from any and all claims of any kind or
character arising, in whole or part, prior to the Effective Date, whether known
or unknown, whether liability be direct or indirect, liquidated or unliquidated,
contingent, foreseen or unforeseen, suspected or unsuspected, and whether or
not
heretofore asserted, and which in any way relate to or arise out of (i) that
certain IRU Agreement dated June 30, 2000 (“IRU Agreement”); (ii) the Dial
Access Agreement, including but not limited to, QCC’s obligations under the
Minimum Service Commitment; and (iii) the Pac-West AZ Complaint. Nothing in
this
Section relieves QCC from liability for any of its obligations under the Dial
Access Agreement, as amended by the Dial Access Amendment or any other agreement
between the parties,
or precludes Pac-West from opposing the Reserved Claims.
(b) As
of the
Effective Date, Qwest, for itself and its subsidiaries, affiliates,
predecessors, successors and assigns, does hereby voluntarily and knowingly,
unconditionally and absolutely release and forever discharge Pac-West and its
subsidiaries, affiliates, predecessors, principals, officers, directors,
employees, successors and assigns from any and all claims of any kind or
character arising, in whole or part, prior to the Effective Date, whether known
or unknown, whether liability be direct or indirect, liquidated or unliquidated,
contingent, foreseen or unforeseen, suspected or unsuspected, and whether or
not
heretofore asserted, and which in any way relates to or arises out of (i) the
IRU Agreement; (ii) the Dial Access Agreement; and (iii) the QC AZ
Counterclaims. Nothing in this Section relieves Pac-West from liability for
any
of its obligations under the WSA, as amended by the WSA Amendment or any other
agreement between the parties and or their affiliates, or the Reserved
Claims.
(c) The
claims referenced in this Section, include, but are not limited to, any and
all
demands, lawsuits, debts, accounts, covenants, agreements, rights of recovery,
liabilities, liens, obligations, losses, costs, expenses, remedies,
indemnification responsibilities, and causes of action of any nature, whether
in
contract or in tort, whether based upon fraud or misrepresentation, breach
of
duty, or common law, or arising or by virtue of any judicial decision, federal,
state or regulatory statute or regulation, for past, present and future harm,
property or economic damage, and for all other losses and damages of any kind,
including, but not limited to, the following: all actual damages; all exemplary,
punitive and statutory damages; all penalties of any kind; damage to business
reputation; lost profits or good will; consequential damages; damages ensuing
from loss of credit; costs of mobilization and demobilization, and pre-judgment
and post-judgment interest, costs and attorneys' fees; provided, however, that
the term “claim” referenced in this Section does not include and shall not be
construed to include any claim for breach of any warranty or obligation created
by or arising under this Agreement, the IRU Agreement, the Dial Access Agreement
or the AZ Interconnection Agreement. The claims do not, however, include the
Reserved Claims.
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8. Acknowledgement
of Set-Off and Recoupment.
Each
Party acknowledges that payments due by one Party to the other Party under
the
WSA and the Dial Access Agreement arise under a single agreement and, in the
event of either Party’s breaching its payment obligations, the non-breaching
Party is entitled to set off and recoup payments to the breaching
Party.
9. Confidentiality.
Neither
of the Parties hereto shall disclose the terms of this Agreement, without the
express written consent of the other Party hereto, except as expressly required
by law or in response to an order of a court of competent jurisdiction or a
subpoena issued under the authority thereof, which order or subpoena requires
such disclosure, provided however, that the disclosing party shall promptly
notify the other party prior to making any such disclosure so that the other
party may seek an appropriate protective order and/or waive compliance with
the
terms of this Agreement.
10. Effective
Date.
The
Parties acknowledge that they are entering into the WSA Amendment, the Dial
Access Amendment and the Interconnection Amendment concurrently herewith. The
terms and conditions of this Agreement shall only take effect upon Pac-West
and
QCC entering into the WSA Amendment, the Dial Access Amendment and the
Interconnection Amendment. This Agreement shall be effective as of the later
of:
(i) the date that this Agreement is fully executed by the Parties; (ii) the
date
the WSA Amendment is fully executed by the Parties; (iii) the date the Dial
Access Amendment is fully executed by the Parties or (iv) the date the
Interconnection Amendment is fully executed by the Parties and the payment
of
the amount called for by section 2 of the Dial Access Amendment has been
received by Pac-West (the “Effective Date”).
11. Representations
and Warranties.
Each
party represents and warrants to the other that:
(a) It
has
the full power and authority to enter into this Agreement, including the power
to enter into the release set forth in Section 7 above;
(b) It
has
not sold, assigned, transferred, conveyed, hypothecated, encumbered or otherwise
disposed of an interest in any of the claims or demands relating to any subject
matter covered by this Agreement and is the sole owner of the claims or demands,
unless otherwise set forth herein or disclosed publicly;
(c) Prior
to
and in connection with the execution of this Agreement, it has been apprised
of
sufficient relevant data from sources selected by it so as to exercise its
judgment intelligently in deciding whether to execute this document and further
declares that its decision is not predicated on or influenced by any
declarations or representations not expressly incorporated into this Agreement.
This Agreement is executed voluntarily by it with full knowledge of its
significance and legal effect;
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CONFIDENTIAL
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(d) It
has
entered into this Agreement after conferring with legal counsel. Any drafting
errors or ambiguities contained in this Agreement are to be construed as mutual
mistakes, rather than against the drafter;
(e)
It
has
carefully reviewed the Agreement and the covenants contemplated herein, and
has
determined that such covenants, including, but not limited to those relating
to
the Settlement Payment, represent reasonable and sufficient compensation for
the
consideration given by the other Party in exchange for such covenants.
12. No
Admissions.
This
Agreement is part of the compromise and settlement of contested claims. No
action taken by the parties hereto, either previously or in connection with
the
compromise reflected in this Agreement, shall be deemed or construed to be
an
admission of the truth or falsity of any matter pertaining to any claim, demand,
or cause of action referred to herein or relating to the subject matter of
this
Agreement, or any acknowledgment by them, or any of them, of any fault or
liability to any Party or to any other person in connection with any matter
or
thing.
13. Notices.
Any
notice or approval required or permitted under this Agreement or the Dial Access
Agreement shall be in writing and shall be sent by registered or certified
mail,
postage prepaid, or by facsimile (so long as duplicate notification is sent
via
regular U.S. Mail) to the following addresses or to any other address designated
by prior written notice:
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For
Pac-West:
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For
QWEST:
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Qwest
Communications Corporation
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0000
X. Xxxxx Xxxx Xxxxx 000
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0000
Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx
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Xxxxxxxx,
Xxxxxxxxxx 00000
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Xxxxxx,
Xxxxxxxx 00000
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Phone
#:(000) 000-0000
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Facsimile
#: (000) 000-0000
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Facsimile
#:(000) 000-0000
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Attn:
Legal Department - Wholesale
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Attention:
Chief Financial Officer
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With
a Copy to:
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With
copy to:
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Qwest
Communications Corporation
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0000
X. Xxxxx Xxxx Xxxxx 000
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0000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
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Xxxxxxxx,
Xxxxxxxxxx 00000
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Xxxxxx,
Xxxxxxxx 00000
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Phone
#:(000) 000-0000
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Phone
#: (000) 000-0000
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Facsimile
#:(000) 000-0000
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Facsimile
#: (000) 000-0000
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Attention:
Vice President & General Counsel
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E-mail:
xxxxxx.xxxxxx@xxxxx.xxx
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Attn:
Xxxxx Xxxxxx, Vice President, Carrier
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Relations
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14. Successors
and Assigns.
All
covenants and agreements herein shall bind and inure to the benefit of the
respective successors, assigns, representatives, employees, transferees,
directors, officers, attorneys, parent companies, subsidiaries, divisions,
partners and joint venturers of the Parties.
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15. Arbitration;
Governing Law.
Colorado state law, without regard to choice-of-law principles, governs all
matters arising out of, or relating to, this Agreement. Any legal proceeding
arising out of, or relating to this Agreement will be brought in a United States
District Court, or absent federal court jurisdiction, in a state court of
competent jurisdiction, in the location of the Party to the Agreement not
initiating the action.
16. No
Waiver.
The
failure of either Party hereto at any time to require performance of any
provisions hereof shall in no manner affect the future right to enforce the
same. No waiver by any Party hereto of any condition, or the breach of any
term,
provision, warranty, representation, agreement or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed or construed as a further or continuing waiver of any such condition
or breach or a waiver of any other condition or of the breach of any other
term,
provision, warranty, representation, agreement or covenant herein
contained.
17. Entire
Agreement.
All
amendments to this Agreement shall be in writing and signed by both Parties.
This Agreement, together with the WSA, (i) the Dial Access Agreement and (ii)
the AZ Interconnection Agreement, are intended by the Parties to be a complete
and final expression of their agreement, and may not be contradicted by evidence
of any prior or contemporaneous written or oral agreement concerning the subject
matter herein.
18. Counterparts.
This
Agreement may be executed in two or more counterparts and by facsimile, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. It shall not be necessary in making proof of this
Agreement or the terms of this Agreement to produce or account for more than
one
of such counterparts.
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IN
WITNESS THEREOF, the Parties have caused this Settlement and Restructuring
Agreement to be executed on the dates set forth below.
QWEST
COMMUNICATIONS CORPORATION PAC-WEST
TELECOMM, INC.
/s/
Xxxxxxx Notebaert_______________ /s/
Xxxx Carabelli____________________
Date:
_09/29/2006_________________ Date:
_09/29/2006___________________
QWEST
CORPORATION
/s/
Xxxx Shaffer_____________________
Date:
__09/29/2006__________________
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Exhibit
A
To
__________________________
Form
AZ
Interconnection Amendment
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CONFIDENTIAL
AND PROPRIETARY
Exhibit
B
To
__________________________
Form
WSA
Amendment
CONFIDENTIAL
AND PROPRIETARY
Exhibit
C
To
__________________________
Form
Dial
Access Amendment
CONFIDENTIAL
AND PROPRIETARY
