Exhibit 10.5
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement"), dated as of February
4, 2003, is entered into by and among Genuity Inc., a Delaware corporation
("Genuity"), the subsidiaries of Genuity listed on the signature pages hereto
(each a "Seller" and together with Genuity, including their successors, the
"Sellers"); and Level 3 Communications, LLC, a Delaware limited liability
company ("Level 3 LLC"), and Greenland Managed Services, LLC, a Delaware limited
liability company (and, together with Level 3 LLC, "Purchaser").
WHEREAS, Sellers, Level 3 LLC and Level 3 Communications, Inc. have entered
into an Asset Purchase Agreement, dated as of November 27, 2002, as amended (the
"Purchase Agreement"), relating to the purchase and sale of the certain assets
and the assumption of certain liabilities relating to the Business;
WHEREAS, the Business uses certain services provided to Sellers by third
parties under contract to Sellers and Purchaser desires to obtain the temporary
use of such services after the Closing for the purpose of enabling Purchaser to
manage an orderly transition in its operation of the Business;
WHEREAS, after the Closing, Sellers will require for a limited time period
certain administrative services and assistance in connection with Sellers'
collection of Receivables and the wind-up of Sellers' business and affairs, and
may require certain Transition Services or similar services to the extent
necessary to enable Sellers to provide, for a limited transition period,
continued service to certain of Sellers' customers under Excluded Customer
Contracts;
WHEREAS, the Purchase Agreement provides that, as a condition to the
obligations of Sellers and Purchaser to consummate the transactions contemplated
by the Purchase Agreement, Sellers and Purchaser shall execute and deliver this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings specified in the Purchase Agreement.
ARTICLE II.
PROVISION OF TRANSITION SERVICES BY SELLER
Section 2.1. Transition Services. Sellers shall provide to Purchaser the
following goods and services (together with the services provided pursuant to
Section 5.4, the "Transition Services"):
(a) with respect to any Underlying Service Agreement or Undesignated
Agreement, the goods and services provided to Sellers (or which Sellers
have the right to obtain) under the terms of such Underlying Service
Agreement or Undesignated Agreement in connection with the Business as of
the date of the Purchase Agreement during the period (the "Service Period")
from the Closing Date until:
(i) with respect to any Underlying Service Agreement or
Undesignated Agreement that Purchaser elects to assume, the Assumption
Date; and
(ii) with respect to any Underlying Service Agreement or
Undesignated Agreement that Purchaser elects not to assume, the first
date on which the effectiveness of Sellers rejecting such Underlying
Service Agreement or Undesignated Agreement would not constitute a
violation of Section 2.11(b) of the Purchase Agreement (the "End
Date").
(b) such additional goods and services from the Excluded Matters with
respect to the conduct of the Business after the Closing as Purchaser may
reasonably request, in a manner consistent with past practices of Sellers
(the "Excluded Matters Services"). Purchaser shall pay Sellers' incremental
costs incurred in the provision of the Excluded Matters Services.
Section 2.2. Pass Through Services. The Transition Services shall be
provided in substantially the same manner and on substantially the same basis
(including as to policies, procedures, practices and timeliness) as the goods
and services provided to Sellers under the Underlying Services Agreements, the
Undesignated Agreements and the Excluded Matters are provided to Sellers.
Sellers shall be required to provide the Transition Services only to the extent
and only at the locations and in the manner such goods and services are provided
to Sellers pursuant to the applicable Underlying Service Agreements,
Undesignated Agreements and Excluded Matters.
Section 2.3. Actions with Respect to Certain Agreements. Except as
otherwise consented to in writing by Purchaser, which consent may be withheld or
granted in Purchaser's sole discretion, during the applicable Service Period:
(a) With respect to each Underlying Service Agreement or Undesignated
Agreement that either (i) expires upon the conclusion of its stated term
prior to three months following the Election Date and contains a renewal
option, (ii) that contains a right of Sellers which if timely exercised
will prevent automatic renewal of such
Underlying Service Agreement or Undesignated Agreement and which right will
expire prior to the three months following the Election Date, then Sellers
shall follow the written direction of Purchaser with respect to whether to
renew or to exercise the right to prevent automatic renewal of such
Underlying Service Agreement or Undesignated Agreement; provided, however
that if Purchaser directs Sellers to renew an Underlying Service Agreement
or Undesignated Agreement, any consideration payable to the counterparty of
such Underlying Service Agreement or Undesignated Agreement and all
reasonable out-of-pocket expenses (including reasonable attorneys fees and
expenses) of Sellers payable to other third parties incurred in connection
with such renewal (or allowing such automatic renewal) shall be borne and,
promptly upon demand by Sellers, paid by Purchaser. Sellers shall not agree
to pay any such consideration or incur any such out-of-pocket expenses
without the prior written consent of Purchaser; provided, however, that if
Purchaser withholds such consent, Sellers shall not be obligated to take
any action to renew such Underlying Service Agreement or Undesignated
Agreement.
(b) With respect to each Underlying Service Agreement or Undesignated
Agreement that expires upon the conclusion of its stated term prior to
three months following the Election Date and does not contain a renewal
option, Purchaser shall have the right, in the name an on behalf of
Sellers, and at Purchaser's expense, to seek to renew such Underlying
Service Agreement or Undesignated Agreement.
(c) Subject to Purchaser's compliance with the terms of this
Agreement, Sellers shall (i) perform in all material respects their
obligations under each Underlying Service Agreement or Undesignated
Agreement, and (ii) not settle, release or forgive any claim or litigation
or waive any right thereunder; provided that Sellers shall be deemed to
have fully complied with clause (i) of this Section 2.3(c) (A) if Purchaser
is acting as Administrator with respect to such Underlying Service
Agreement or Undesignated Agreement, so long as Sellers shall have made
payments from the Designated Account as directed by the Administrator (as
defined herein) pursuant to Section 3.1(b)(iii) and have not taken actions
reserved to the Administrator pursuant to Section 3.1(b), (B) if Purchaser
is not acting as Administrator with respect to such Underlying Service
Agreement or Undesignated Agreement, so long as Sellers shall have complied
with Section 3.1(c) with respect to such Underlying Service Agreement or
Undesignated Agreement and (C) whether or not Purchaser is acting as
Administrator with respect to such Underlying Service Agreement or
Undesignated Agreement, so long as Sellers shall have timely (1) delivered
the reports required by Section 4.2(b), and (2) forwarded to Purchaser all
notices received by Sellers with respect to such Underlying Service
Agreement or Undesignated Agreement.
(d) If the term of any Underlying Service Agreement is renewed in
accordance with this Section 2.3, but Purchaser does not elect to assume
such Underlying Service Agreement pursuant to Section 2.9(a) of the
Purchase Agreement, then, in addition to any Rejection Claim with respect
to any remaining term of such Underlying Service Agreement (prior to the
commencement of the renewal term) at the time of the rejection of such
Underlying Service Agreement in the Bankruptcy Cases, any incremental
increase in the amount of the rejection claim allowed under Section 365 of
the Bankruptcy Code relating to such Underlying Service Agreement that
results from such renewal shall be deemed to be a Rejection Claim.
Section 2.4. No Violations of Law. Sellers shall not be required to provide
any Transition Service to the extent that the performance of such Transition
Service would require Sellers to violate any applicable laws, rules or
regulations. Sellers will give Purchaser prompt written notice of the occurrence
of any event which would cause Sellers to curtail or cease providing any
Transition Service pursuant to this Section 2.4.
Section 2.5. Additional Resources. In providing the Transition Services,
Sellers shall not be obligated to:
(a) maintain the employment of any specific employee;
(b) purchase, lease or license any additional equipment;
(c) pay any costs related to the conversion or transfer of the
Business' data to Purchaser or any alternate supplier of services similar
to the Transition Services; or
(d) with respect to any Underlying Service Agreement or Undesignated
Agreement as to which Purchaser has been engaged as Administrator in
accordance with Section 3.1(a) or as to which Sellers are following the
direction of Purchaser pursuant to Section 3.1(c) with respect to such
Underlying Service Agreement or Undesignated Agreement, pay any amount to
any counterparty to an Underlying Service Agreement or Undesignated
Agreement except as directed by the Administrator in accordance with
Section 3.1(b)(iii) or (c).
Section 2.6. Excluded Transition Services; Limitations Regarding Excluded
Matters Services.
(a) Notwithstanding anything to the contrary contained herein, Sellers
shall not be required to provide legal, regulatory or tax advice or
counsel.
(b) Notwithstanding any term or provisions hereof to the contrary (i)
Sellers obligation hereunder with respect to the Excluded Matters Services
shall only be to use commercially reasonable efforts to provide such
services, such obligation is solely between Sellers and Purchaser and
Sellers shall have no Liability for any claims by, or on behalf of, any
customer of Parent or Purchaser or their respective Affiliates or other
Person arising out of or in connection with the provision of services by
Parent, Purchaser or their respective Affiliates to such customer or other
Person which constitute a "pass through" of, or which otherwise utilize or
incorporate, any Excluded Matters Services and (ii) nothing in this
Agreement shall limit or restrict Sellers' ability or right to terminate
any or all of the Excluded Matters Services or take any other action with
respect to the Excluded Matters; provided that Sellers will use
commercially reasonable efforts to notify Purchaser a reasonable period in
advance of such termination, or of such disposition or other action which
would result in the cessation of such Excluded Matters
Services, with a view to affording Purchaser the opportunity to timely make
alternative service arrangements substantially consistent with the Excluded
Matter Services.
Section 2.7. Certain Obligations of Purchaser. In exchange for the
Transition Services:
(a) Purchaser shall make the payments at the times and in the amounts
set forth in Article IV. Purchaser acknowledges and agrees that any failure
by the Purchaser to timely make payment to the Designated Account (as
defined herein) of amounts due pursuant to the terms of this Agreement, or
of the Administrator to timely direct payment of outstanding bills and
invoices from the Designated Account, to enable Sellers to timely pay
amounts which are due and payable under any Underlying Service Agreement
during or in respect of the applicable Service Period or under any
Undesignated Agreement during or in respect of the period from the
applicable Obligation Date (as defined herein) to the conclusion of the
applicable Service Period, shall constitute a Purchaser Transition Breach
with respect to such Underlying Service Agreement or Undesignated
Agreement, as applicable.
(b) Purchaser shall perform for the benefit of Sellers and the other
party or parties thereto (to the extent performed by Sellers prior to the
Closing Date and with the same care and skill with which Purchaser performs
its own similar contracts) the non-monetary obligations arising under
(i) each Underlying Service Agreement during its Service Period and
(ii) each Undesignated Agreement from the date (the "Obligation Date") that
is ten (10) Business Days after both (A) such Contract or Lease is
identified in writing as an Undesignated Agreement and (B) a true, correct
and complete copy of such Undesignated Agreement is delivered to Purchaser,
until the conclusion of its Service Period.
Section 2.8. Changes. The parties acknowledge that to the extent changes
are made by the counterparties to applicable Underlying Service Agreements or
Undesignated Agreements in providing goods or services to Sellers thereunder in
accordance with the terms thereof, Sellers may make the same changes in the
Transition Services, provided that Sellers shall provide Purchaser with prior
written notice regarding such changes.
Section 2.9. Consents. Sellers and Purchaser will reasonably cooperate with
each other in seeking to obtain all third party consents, licenses, sublicenses
or approvals to the extent, if any, necessary to permit or facilitate the
provision of Transition Services and Contract Administration Services as
provided herein; provided, however, that Sellers shall not be required to pay
any amounts to any third parties or to grant any accommodation, financial or
otherwise, to secure the same, except to the extent reimbursed by Purchaser.
Sellers shall not agree to pay any such amounts without the prior written
consent of Purchaser.
Section 2.10. Subcontractors. Sellers may engage, at Sellers' expense, a
subcontractor to perform all or any portion of Sellers' duties under this
Agreement, provided that Sellers shall remain responsible hereunder for the
performance of such subcontractor.
Section 2.11. Audit Assistance. Sellers shall conduct such audits as
Purchaser requests of the financial statements of the Business required in
connection with Purchaser's or its Affiliates' reporting obligations under
applicable Legal Requirements. Purchaser shall promptly pay Sellers' third party
costs incurred in connection with any such audit, including without limitation
all audit fees and expenses of independent auditors retained in connection with
such audit. Notwithstanding any provision of this Agreement, Sellers shall not
be required to conduct an audit on more than one occasion to the extent Sellers
determine there is not a sufficient number of Sellers' employees to conduct an
additional audit, in which case Sellers shall make available to Purchaser any
books and records held by Sellers and reasonably necessary for the audit.
ARTICLE III.
PROVISION OF CONTRACT ADMINISTRATION
AND OTHER SERVICES BY PURCHASER
Section 3.1. Contract Administration Services.
(a) Subject to the continued general oversight of Sellers and subject
to Section 3.1(d), Sellers hereby engage Purchaser (in such capacity, the
"Administrator") to exclusively manage the day-to-day administration of the
Underlying Service Agreements and the Undesignated Agreements during the
applicable Service Period, in the name of and on behalf of the applicable
Sellers (the "Contract Administration Services"), except to the extent that
such engagement is prohibited by the terms of any such Underlying Service
Agreement or Undesignated Agreement.
(b) Without limiting the generality of the foregoing, the Contract
Administration Services shall include:
(i) responding to all inquiries from the counterparty to each
Underlying Service Agreement or Undesignated Agreement;
(ii) analyzing and evaluating all bills and invoices with respect
to each Underlying Service Agreement or Undesignated Agreement and
determining the appropriate payment;
(iii) directing payment of outstanding bills and invoices from
the Designated Account;
(iv) subject to Section 5.3, resolving disputes with the
counterparties to each Underlying Service Agreement and Undesignated
Agreement;
(v) making and accepting new orders, or moves and changes to
existing services provided or received pursuant to Underlying Service
Agreements and Undesignated Agreements;
(vi) disconnecting services pursuant to Underlying Service
Agreements and Undesignated Agreements;
(vii) giving notices pursuant to Underlying Service Agreements
and Undesignated Agreements, including termination notices; and
(viii) all other matters incident to the day to day
administration of each Underlying Service Agreement or Undesignated
Agreement.
(c) To the extent that the Administrator is not able to perform the
Contract Administrative Services by virtue of the provisions of the
Underlying Service Agreement or Undesignated Agreement, then, Sellers shall
perform the contract administration with respect to such Underlying Service
Agreement or Undesignated Agreement; provided, however, that before taking
any action specified in Section 3.1(b), Sellers shall consult with, and
follow the directions of Purchaser with respect to such actions.
(d) Notwithstanding the foregoing provisions of this Section 3.1 or
any other term or provision of this Agreement (other than Section 2.3) or
the Purchase Agreement, without the express prior written consent of
Sellers, Purchaser, in its capacity as Administrator or otherwise, shall
not take any action which would, directly or indirectly, modify, increase
Sellers' financial or other obligations under, or terminate, any Underlying
Service Agreement or Undesignated Agreement (or any circuits or other
services thereunder) unless the Assumption Date has occurred with respect
to such Underlying Service Agreement or Undesignated Agreement, as
applicable.
Section 3.2. Collection of Receivables and Other Wind-Up Activities. In
addition to and without limitation of Purchaser's obligations under Article VIII
of the Purchase Agreement, from and after the Closing Date through the
termination of this Agreement pursuant to Section 6.1 (such period, the "Wind-Up
Period"):
(a) Purchaser shall allow Sellers to occupy and use contiguous office
space on the same floor in the Building designated by Purchaser (so long as
Purchaser or any Affiliate of Purchaser owns the Building or leases space
therein) reasonably necessary to accommodate Sellers' employees in Woburn
and consistent with Sellers' past office space allocation practices.
Purchaser upon reasonable notice and at its expense may move Sellers'
employees to other space in the Building consistent with the criteria set
forth in the immediately preceding sentence. Purchaser shall allow Sellers
to occupy and use the space in the locations set forth on Schedule 3.2(a)
designated by Purchaser (so long as Purchaser or an Affiliate of Purchaser
owns such locations or leases space therein), provided that Sellers shall
reimburse Purchaser for any incremental cost or expense associated with
Sellers' occupancy of such space and shall hold Purchaser harmless from any
Damages arising out of or resulting from such occupancy; and provided
further that if Purchaser or any Affiliate of Purchaser transfers the
Building or such other locations or surrenders occupancy thereof (in the
case of leased property), as applicable, to a Third Party and neither
Purchaser nor an Affiliate of Purchaser thereafter leases space therein,
Purchaser shall, in connection with such transfer or surrender of the
Building or such other locations, as applicable, make a request that such
Third Party allow Sellers to occupy and use such amount of office space in
the Building or such other locations, as applicable, during the Wind-Up
Period on such terms as Sellers and such Third Party may agree.
(b) Purchaser shall make available to Sellers for use in Wind-Up
Activities (as defined in Section 5.4 hereof) office furniture, phones, and
other relevant items of Personal Property acquired by Purchaser pursuant to
the Purchase Agreement in connection with Sellers' use and occupancy of
office space as described in Section 3.2(a) (so long as Purchaser or any
Affiliate of Purchaser owns the Building or other locations set forth in
Exhibit 3.2(a) or leases space therein). During the Wind-Up Period,
Sellers' employees shall retain the use of personal computers used by them
prior to the Closing; such personal computers shall constitute Purchased
Assets, and shall be returned to Purchaser upon the termination of the
respective employee's employment with Sellers and their successors. All
information and data contained on such personal computers that would
otherwise constitute Purchased Assets shall continue to constitute
Purchased Assets and shall be subject to the same protection as all other
proprietary information of Purchaser, including, without limitation,
Section 5.2 of this Agreement.
(c) Purchaser shall reasonably cooperate with Sellers in implementing
or continuing invoicing, tracking and collection systems with respect to
the Receivables to extent reasonably requested by Sellers solely to enable
Sellers to diligently seek to collect Receivables outstanding on the
Closing Date. Sellers shall not be responsible for paying any charges or
costs in respect of such services (other than incremental third party
costs).
(d) Purchaser shall, on Sellers' behalf, examine and verify, in a
manner consistent with such examination and verification prior to the
Closing, Sellers' circuit invoices. Purchaser shall provide documentation
and reasonable access to its personnel to allow Sellers to monitor and
audit Purchaser's performance of such examination and verification. Sellers
shall reimburse Purchaser for its incremental costs incurred in performing
such examination and verification.
(e) Purchaser shall operate, support and maintain a new email domain
for Sellers' use following the Closing. Purchaser shall use commercially
reasonable efforts to undertake reasonable backups and security measures,
such that only Sellers' authorized users have access to the information in
such system. Purchaser shall operate the domain on a server used only for
this purpose. Sellers shall be responsible for both (i) licensing the
necessary software (including email server software, operating system
software and backup software) and (ii) Purchaser's incremental costs
associated with the operation, support and maintenance of such domain.
(f) With respect to Excluded Customer Contracts, during the Excluded
Customer Contract Period (as defined in Section 3.3 below), Purchaser
shall: (i) grant to Sellers' read-only access to the Arbor system, Circuit
Tracking System (CTS), Magma system, TBS system and the other systems
listed on Schedule 5.4(b) (the "Schedule 5.4(b) Systems"); (ii) with
respect to such systems (other than the Schedule 5.4(b) Systems), gather,
input, process and update usage data in a manner consistent with the
Sellers' historical practice, (iii) provide Sellers with soft and hard
copies of data extracts equivalent to Cost of Access (COA) from equivalent
systems of Purchaser, and (iv) assist Sellers in the generation of the
final invoice. Such services shall be deemed to be Extension Services for
purpose of Section 3.3(a). Except as set forth in Section 3.3,
Sellers shall not be responsible for paying any charges or costs in respect
of such services (other than incremental third party costs).
(g) With respect to Contracts for Circuit Service that are not Assumed
Contracts, Purchaser shall: (i) grant to Sellers' read-only access to the
Circuit Tracking System (CTS), Magma system, TBS system and the Schedule
5.4(b) Systems; (ii) with respect to such systems (other than Schedule
5.4(b) Systems), gather, input, process and update circuit status data in a
manner consistent with the Sellers' historical practice, and (iii) provide
Sellers with soft and hard copies of data extracts equivalent to Cost of
Access (COA) from equivalent systems of Purchaser. Except as set forth in
Section 5.4, Sellers shall not be responsible for paying any charges or
costs in respect of such services (other than incremental third party
costs).
(h) Purchaser shall provide to Sellers such additional services from
the Purchased Assets and the Transition Services (in the case of the
Transition Services only to the extent such Transition Services are
provided to Purchaser) in connection with Wind-Up Activities as Sellers may
reasonably request, in a manner consistent with past practices of Sellers.
Sellers shall pay Purchaser's incremental costs incurred in the provision
of such additional services.
Section 3.3. Services Under Excluded Customer Contracts.
(a) Purchaser shall use commercially reasonable efforts to use the
Purchased Assets and the Transition Services (in the case of the Transition
Services only to the extent such Transition Services are provided to
Purchaser) to provide to Sellers such services (the "Extension Services")
as are necessary for Sellers to provide services to customers under
Excluded Customer Contracts ("Excluded Customer Contract Services"). The
obligation to provide the Extension Services is solely between Purchaser
and Sellers and, without limitation of Section 2.5(d) of the Purchase
Agreement, Purchaser shall have no Liability for any claims by, or on
behalf of, any counterparty to an Excluded Customer Contract arising out of
any Excluded Customer Contract Services; without limitation of Section
2.5(d) of the Purchase Agreement, any and all such claims shall be deemed
to be Excluded Liabilities.
(b) Subject to the provisions of this Section 3.3, Purchaser shall
provide the Extension Services for so long as requested by Sellers, for the
period (the "Excluded Customer Contract Period") up to the date, (i) with
respect to each Excluded Customer Contract, that is the later of (A) the
thirtieth day after the Closing, and (B) such time as Sellers are no longer
required pursuant to any applicable Legal Requirement (other than solely
the Bankruptcy Code, as applied to the Bankruptcy Cases) to provide the
Excluded Customer Contract Services to such customer, or (ii) with respect
to each Excluded Customer Contract relating to voice termination services,
such time as is the earliest date that Sellers may, under any applicable
Legal Requirement, reject such Excluded Customer Contract in the Bankruptcy
Cases.
(c) With respect to any Excluded Customer Contract, Sellers shall pay
Purchaser for the Extension Services an amount equal to the monthly
recurring charges
(appropriately pro rated for the period during which Extension Services are
provided in respect of such Excluded Customer Contract) payable by
customers receiving the Excluded Customer Contract Services (as provided in
the applicable Excluded Customer Contracts and without regard for whether
such charges are invoiced by Sellers or paid by customers).
(d) Nothing in this Section 3.3 shall limit or restrict Purchaser's
ability or right to terminate any or all of the Extension Services to
Sellers, to dispose of or alter any or all of the Purchased Assets or take
any other action with respect to its business; provided that Purchaser will
notify Sellers a reasonable period in advance of such termination, or of
such disposition or other action which would result in the cessation of
such Extension Services, with a view to affording Sellers the opportunity
to timely make alternative service arrangements substantially consistent
with those contemplated by this Section 3.3. Notwithstanding the foregoing,
Sellers acknowledge that Purchaser's obligation to provide Extension
Services pursuant to this Section 3.3 shall terminate without notice on the
Election Date.
Section 3.4. Limitation on Purchaser Obligations. The obligations of
Purchaser under Sections 3.2, 3.3 and 5.4 (the "Purchaser Services") are subject
to the following additional limitations:
(a) Purchaser shall not be required to take any action in violation of
applicable Legal Requirement. Purchaser will give Sellers prompt written
notice of the occurrence of any event which would cause Purchaser to
curtail or cease providing any Purchaser Services pursuant to this Section
3.4(a).
(b) In providing the Purchaser Services, Purchaser shall not be
obligated to: (i) maintain the employment of any specific employee; or (ii)
purchase, lease or license any additional equipment the cost of which is
not reimbursed by Sellers.
(c) The Purchaser Services shall not include any legal, regulatory or
tax advice or counsel.
(d) The parties acknowledge that to the extent changes are made by the
counterparties to applicable Assumed Contracts or Assumed Leases in
providing goods or services to Purchaser thereunder in accordance with the
terms thereof, Purchaser may make the same changes in the Purchaser
Services, provided that Purchaser shall provide Sellers with prior written
notice regarding such changes.
(e) Sellers and Purchaser will reasonably cooperate with each other in
seeking to obtain all third party consents, licenses, sublicenses or
approvals to the extent, if any, necessary to permit or facilitate the
provision of Purchaser Services as provided herein; provided, however, that
Purchaser shall not be required to pay any amounts to any third parties or
to grant any accommodation, financial or otherwise, to secure the same,
except to the extent reimbursed by Sellers. Purchaser shall not agree to
pay any such amounts without the prior written consent of Sellers.
ARTICLE IV.
PRICING, BILLING AND PAYMENT
Section 4.1. Payments.
(a) Purchaser shall pay for the Transition Services as follows:
(i) Purchaser shall pay Sellers for amounts due and payable by
Sellers under each Underlying Service Agreement during or in respect
of the applicable Service Period, as determined by Administrator (any
prepayments by Sellers of amounts due under any Underlying Service
Agreement or Undesignated Agreement shall not reduce Purchaser's
obligations hereunder); and
(ii) Purchaser shall pay Sellers for amounts due and payable by
Sellers under each Undesignated Agreement during or in respect of the
period from the applicable Obligation Date to the conclusion of the
applicable Service Period, as determined by Administrator (any
prepayments by Sellers of amounts due under any Underlying Service
Agreement or Undesignated Agreement shall not reduce Purchaser's
obligations hereunder).
(b) In addition to the foregoing, for each calendar month between the
date of this Agreement and the last End Date, Purchaser shall pay to
Sellers $50,000 as a fee for the provision of the Transition Services, such
amount to be pro rated for any portion of a month in which the date of this
Agreement and such last End Date occurs.
Section 4.2. Payment.
(a) Purchaser shall make the payments required by Section 4.1(a)(i)
and Section 4.1(a)(ii) by wire transfer in immediately available funds to a
deposit account designated by Sellers that shall, except as otherwise
provided in this Section 4.2(a), be dedicated solely to holding funds for
the payment of amounts due under Underlying Service Agreements and
Undesignated Agreements (the "Designated Account"). Purchaser shall make
such payments to the Dedicated Account on a weekly basis, with the amount
of each weekly payment being the amount reasonably expected to enable
Sellers to make the payments due under the Underlying Service Agreements
and Undesignated Agreements during the following week; provided that such
weekly payments shall be calculated as if any prepayments by Sellers under
an Underlying Service Agreement or Undesignated Agreement (to the extent
such prepayments are not required to be maintained under the terms of such
Underlying Service Agreement or Undesignated Agreement) had not been made,
and Sellers shall be entitled to withdraw from the Designated Account
amounts therein that, by operation of this proviso, exceed the amounts
required for Sellers to make aforesaid payments due under such Underlying
Service Agreement or Undesignated Agreement. Each weekly payment made by
Purchaser will be accompanied by a written notice from Administrator to
Sellers indicating the amount of, and the date on which, each payment
should be made pursuant
to the applicable Underlying Service Agreements and Undesignated Agreements
during the following week.
(b) On the 15th day of each month, Sellers shall provide Purchaser
with a written report detailing payments made by Sellers pursuant to this
Section 4.2 during the previous month. Sellers shall provide Purchaser with
reasonable access to the information necessary for Purchaser to verify the
accuracy of such report. Purchaser shall promptly make any additional
payments required with respect to the prior calendar month as set forth on
such report, except to the extent disputed by Purchaser, in which event
Purchaser and Sellers shall negotiate to resolve any such dispute. The
parties acknowledge and agree that if any such dispute is not resolved
within ten (10) Business Days of it first arising, Sellers may seek
determination of the matter by the Bankruptcy Court.
(c) Purchaser shall pay Sellers for amounts due and payable by Sellers
for modifications to eQuote systems prior to and following the date of this
Agreement, provided Purchaser has consented to such modifications.
Section 4.3. Taxes. Purchaser shall reimburse Sellers for any and all taxes
and governmental charges accruing during any applicable Service Period,
including, without limitation, sales or use taxes, imposed on Sellers or which
Sellers shall have any obligation to collect with respect to or relating to this
Agreement, the Transition Services or the performance by Sellers of their
obligations hereunder that would not have been assessed in the absence of this
Agreement, other than employment taxes with respect to Sellers' employees and
income taxes, gross receipt taxes or similar taxes imposed on net income or
taxes imposed on or relating to Sellers' property.
Section 4.4. Software. Purchaser hereby grants Sellers a non-exclusive
license to use during the Wind-Up Period any of the Software, or rights with
respect thereto, conveyed to Purchaser pursuant to the Purchase Agreement solely
to the extent necessary in connection with Wind-Up Activities.
ARTICLE V.
CERTAIN COVENANTS
Section 5.1. Indemnification. The covenants and agreements contained in
this Agreement shall be deemed to be covenants contained in the Purchase
Agreement for purposes of the rights to indemnification set forth in Article X
thereof.
Section 5.2. Proprietary Information And Rights. Each party acknowledges
that the other possesses, and will continue to possess, information that has
been created, discovered or developed by them and/or in which property rights
have been assigned or otherwise conveyed to them, which information has
commercial value and is not in the public domain. The proprietary information of
each party will be and remain the sole property of such party and its assigns.
Each party shall use the same degree of care that it normally uses to protect
its own proprietary information to prevent the disclosure to third parties of
information that has been identified as proprietary by written notice to such
party from the other party. Neither party shall make any use of the information
of the other that has been
identified as proprietary except as contemplated or required by the terms of
this Agreement. Notwithstanding the foregoing, this Section shall not apply to
any information that a party can demonstrate: (a) was, at the time of disclosure
to it, in the public domain through no fault of such party; (b) was received
after disclosure to it from a third party who had a lawful right to disclose
such information to it; or (c) was independently developed by the receiving
party.
Section 5.3. Control of Disputes. Other than claims or disputes (a) with
respect to any Cure Amount, (b) with respect to rejection damages pursuant to
Section 365 of the Bankruptcy Code that would not give rise to Rejection Claims,
and (c) that Purchaser concludes in its good faith judgment would not be
expected to be to Purchaser's detriment, as to each of which Sellers shall have
the sole and exclusive right to defend, settle or compromise (the "Seller
Controlled Claims"), Purchaser shall have the right to direct Sellers in the
defense of, and to settle and compromise, any claim in the Bankruptcy Cases
arising out of Sellers' assumption and assignment of an Underlying Service
Agreement or Undesignated Agreement and/or to prosecute any objection to any
claim (other than any Seller Controlled Claims) arising from any Underlying
Service Agreement or Undesignated Agreement. Sellers shall not settle any claim
(other than any Seller Controlled Claim) in the Bankruptcy Cases arising out of
an Underlying Service Agreement or Undesignated Agreement, without Purchaser's
prior written consent.
Section 5.4. Continued Access and Use of Systems.
(a) Each party grants to the other party's personnel, access to
locations, systems, personnel and information (subject to the provisions of
confidentiality in Section 5.2 above, and with respect to those systems
specifically identified in Section 3.2(f) and (g), subject to the
limitations set forth therein) as may be: (i) necessary for the other party
to perform its obligations hereunder; (ii) reasonably requested by Sellers
in connection with Sellers' efforts to collect Receivables outstanding as
of the Closing Date, Sellers' circuit finance activities, activities in
connection with the provision of or billing for Excluded Customer Contract
Services, performance of Sellers' tax and accounting functions, or
otherwise in connection with the wind-up of Sellers' business and affairs
(such efforts, activities, performance and other wind-up activities being
referred to collectively as the "Wind-Up Activities"); and (iii) reasonably
requested by Purchaser in connection with the conduct of the Business after
the Closing Date. Purchaser grants to Sellers the ability to use and access
the systems listed on Schedule 5.4 in connection with Wind-Up Activities.
(b) The providing party ("Providing Party") will provide the other
party ("Receiving Party") a reasonable amount of support and maintenance
with respect to such systems consistent with past practices of Sellers,
including, with respect to systems maintained by Purchaser, a level of
support and maintenance with respect to such application listed on Schedule
5.4(a) or (b) (if so listed). The Receiving Party's use and access to the
Providing Party's systems shall be limited to read-only access and use;
provided, that the Providing Party shall input data and implement changes
to systems and databases upon the Receiving Party's reasonable request, in
a timely manner. Nothing in this Section 5.4 shall require the Providing
Party to undertake, or perform any
development, modification or upgrades of any system, or to maintain or
enter any data, in each case except as required pursuant to Section 3.2(f)
and (g). Each Receiving Party shall bear any incremental cost associated
with its access and use of the Providing Party's systems. If a Providing
Party seeks to terminate a software license that is necessary for the
provision to a Receiving Party of use of and access to a system, the
Providing Party shall not terminate such license unless and until it has
given the Receiving Party thirty (30) days' prior notice. If the Providing
Party provides such notice, the Receiving Party shall be free to negotiate
its own replacement license with the software vendor and shall have no
obligation hereunder to provide access to or use of such replaced system to
the Providing Party.
Section 5.5. Employees.
(a) It is anticipated that the employees of the Sellers described in
Schedule 5.5(a) hereto will remain employees of the Sellers following the
Closing.
(b) Except as set forth in Schedule 5.5(b) hereto, Sellers and their
Affiliates on the one hand, and Purchaser and its Affiliates on the other
hand, shall not solicit the employment of employees of the other party
while they remain employees of such other party.
Section 5.6. Removal of Equipment. With respect to any Lease which is or
becomes an Excluded Agreement, Purchaser shall either (i) remove, at Purchaser's
sole cost and expense, any and all Purchased Assets from the leased premises, or
(ii) abandon any and all Purchased Assets at the leased premises, and indemnify
and hold harmless Sellers from and against any and all Damages arising out of or
in connection with such abandonment: (A) in the case of Leases that have been
designated as Excluded Agreements on or prior to the date hereof, within ten
days after the date hereof and (B) in the case of any Lease that is or becomes
an Excluded Agreement after the date hereof, the date which is five (5) Business
Days prior to the End Date with respect to such Lease.
ARTICLE VI.
TERMINATION
Section 6.1. Term. This Agreement shall be effective on the date hereof,
and shall continue in full force and effect for its term, which shall expire on
the later of (i) three months after the Election Date, or (ii) the effective
date of Sellers' plan of reorganization. This Agreement shall be terminated
prior to the expiration of its stated term on the first to occur of the
following events and in no other manner:
(a) thirty (30) days after notice by one party (the "Terminating
Party") to the other party (the "Breaching Party) that the Breaching Party
is in material breach of the terms of this Agreement, unless prior to the
expiration of such thirty (30) day period, the Breaching Party cures such
material breach; provided, however, that the Terminating Party may not
terminate this Agreement pursuant to this subparagraph (a) if it is at the
time of proposed termination itself in material breach of this Agreement
and has previously received notice thereof from the Breaching Party;
(b) the date on which Purchaser and Sellers consent in writing to the
termination of this Agreement; or
(c) upon notice of termination delivered by Purchaser to Sellers, such
termination to be effective on the later of (i) the date that is forty-five
(45) days after Purchaser delivers to Sellers such notice and (ii)
September 30, 2003.
Section 6.2. Effect of Termination.
(a) In the event this Agreement expires, or is terminated pursuant to
Section 6.1, all further obligations of the parties set forth in
Article II, Article III and Article IV and Sections 5.4, 5.5, and 5.6
hereof shall terminate, except (i) any liability for breach of any of the
covenants or any of the representations or warranties contained in this
Agreement prior to such expiration or termination and (ii) that in the
event of such expiration or termination, Purchaser shall promptly make, and
shall continue to be liable to Sellers to make, payment to the Designated
Account pursuant to Section 4.2 of all amounts which are or may become due
under any Underlying Service Agreement or Undesignated Agreement in respect
of any applicable Service Period (or portion thereof) with respect thereto
prior to such expiration or termination.
(b) Upon expiration of this Agreement or termination of this Agreement
pursuant to Section 6.1, (i) the Service Period with respect to each
Underlying Service Agreement and Undesignated Agreement, and, except as
provided in Section 6.2(a), the obligations of Purchaser with respect
thereto under Section 2.7, shall automatically terminate and (ii) with
respect to each Underlying Service Agreement and Undesignated Agreement as
to which Purchaser has not theretofore made an election pursuant to Section
2.9(a) of the Purchase Agreement (and notwithstanding the last sentence of
Section 2.11(a) of the Purchase Agreement), Purchaser shall be deemed to
have given a notice, or subsequent notice, pursuant to Section 2.11(a) of
the Purchase Agreement that Sellers may reject each such Underlying Service
Agreement and Undesignated Agreement effective on the effective date of
expiration or termination of this Agreement.
Section 6.3. Termination of Particular Transition Services.
(a) Purchaser shall have the right, upon ten (10) Business Days'
notice, to terminate the provision of any particular Transition Service
provided by Sellers hereunder, which are provided pursuant to any
individual Undesignated Agreement or Underlying Service Agreement. Upon any
such termination, (i) the Service Period with respect to such Undesignated
Agreement or Underlying Service Agreement and, except as provided in
Section 6.3(b), the obligations of Purchaser with respect thereto under
Section 2.7, shall terminate on the date specified in the notice of
termination of such Transition Service and (ii) unless Purchaser has
theretofore made an election pursuant to Section 2.9(a) of the Purchase
Agreement with respect to such Undesignated Agreement or Underlying Service
Agreement (and notwithstanding the last sentence of Section
2.11(a) of the Purchase Agreement), Purchaser shall be deemed to have given
a notice, or subsequent notice, pursuant to Section 2.11(a) of the Purchase
Agreement that Sellers may reject such Undesignated Agreement or Underlying
Service Agreement, effective on the effective date of termination of all
services under such Undesignated Agreement or Underlying Service Agreement.
(b) In the event of any termination of any particular Transition
Service provided by Sellers as contemplated by Section 6.3(a), Purchaser
shall promptly make payment to the Designated Account of all amounts which
are or may become due under the applicable Undesignated Agreement or
Underlying Service Agreement in respect of any applicable Service Period
with respect thereto prior to such termination.
(c) This is a master agreement and shall be construed as a separate
and independent agreement for each and every Transition Service provided
under this Agreement. Any termination of any particular Transition Service
shall not affect the obligations under this Agreement with respect to any
other Transition Service.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. Incorporation Of Article XIII. All terms and provisions
contained Article XIII of the Purchase Agreement (other than Sections 13.4,
13.5, 13.6 and 13.13 thereof), including all related definitions, are
incorporated herein by reference to the same extent as if expressly set forth
herein.
Section 7.2. Relationship Of Parties; No Beneficiaries or Assumption.
(a) Sellers shall provide the Transition Services, and Administrator
shall perform all Contract Administration Services, as independent
contractors, and nothing contained in this Agreement shall be deemed to
create any association, partnership, joint venture, or relationship of
principal and agent (other than Section 2.3(b)), or master and servant,
between the parties to this Agreement or any Affiliates or subsidiaries
thereof, or to provide either party with the right, power or authority,
whether express or implied, to create any such duty or obligation on behalf
of the other party.
(b) The Administrator's relationship with Sellers pursuant to
Article III shall be separate and distinct from the relationship of
Purchaser with Sellers pursuant to this Agreement and the Purchase
Agreement. Sellers shall have no right of setoff with respect to the
obligations of Administrator pursuant to Article III and the obligations of
Purchaser under this Agreement or the Purchase Agreement. Purchaser, in its
capacity as Administrator or otherwise, shall have no right of set off with
respect to the obligations of Sellers under this Agreement or the Purchase
Agreement.
(c) This Agreement shall not confer any rights or remedies upon any
person or entity other than the parties hereto and their respective
permitted successors and assigns. Nothing contained in this Agreement
constitutes, or should be deemed to
constitute, an assignment, assumption or rejection of any of the
Undesignated Agreements, Underlying Service Agreements or any other
Contract or Lease in connection with the Transition Services.
Section 7.3. Limitation on Liability. Notwithstanding any other term or
provision of this Agreement or Article X of the Purchase Agreement, in no event
shall (a) Purchaser have any Liability to Sellers for any special, indirect,
incidental or consequential damages resulting from or arising out of the
performance or breach of any Purchaser Services, except to the extent that such
damages are the result of the gross negligence, willful misconduct or bad faith
of Purchaser, or (b) Sellers have any Liability to Purchaser for any special,
indirect, incidental or consequential damages resulting from or arising out of
the performance or breach of any Transition Services, except to the extent that
such damages are the result of the gross negligence, willful misconduct or bad
faith of any Seller.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this
Agreement as of the day and year first written above.
GENUITY INC.
By: /s/ Daniel P. O'Brien
Name: Daniel P. O'Brien
Title: Executive Vice President and
Chief Financial Officer
GENUITY INTERNATIONAL INC.
By: /s/ Daniel P. O'Brien
Name: Daniel P. O'Brien
Title: Executive Vice President and
Chief Financial Officer
GENUITY INTERNATIONAL NETWORKS INC.
By: /s/ Daniel P. O'Brien
Name: Daniel P. O'Brien
Title: Executive Vice President and
Chief Financial Officer
GENUITY SOLUTIONS INC.
By: /s/ Daniel P. O'Brien
Name: Daniel P. O'Brien
Title: Executive Vice President and
Chief Financial Officer
GENUITY TELECOM INC.
By: /s/ Daniel P. O'Brien
Name: Daniel P. O'Brien
Title: Executive Vice President and
Chief Financial Officer
Transition Services Agreement
Signature Page 1
GENUITY EMPLOYEE HOLDINGS INC.
By: /s/ Daniel P. O'Brien
Name: Daniel P. O'Brien
Title: Executive Vice President and
Chief Financial Officer
Transition Services Agreement
Signature Page 2
LEVEL 3 COMMUNICATIONS, LLC
By: /s/ Robert M. Yates
Name: Robert M. Yates
Title: Vice President
GREENLAND MANAGED SERVICES, LLC
By: /s/ Robert M. Yates
Name: Robert M. Yates
Title: Vice President
Transition Services Agreement
Signature Page 3