Standstill Agreement among Genuity Inc., JP Morgan Chase Bank, and Lenders (July 29, 2002)

Summary

This agreement is between Genuity Inc., its lenders, and JP Morgan Chase Bank as agent. It temporarily prevents the lenders from taking action or enforcing remedies related to certain existing defaults under a prior credit agreement, and a specific loan advance, until August 12, 2002, or earlier if certain conditions are not met. During this period, Genuity must limit its cash outflows and comply with specific financial restrictions. The agreement can be rescinded if Genuity breaches its obligations or other specified events occur.

EX-10.2 6 a2093244zex-10_2.txt EXHIBIT 10.2 Exhibit 10.2 EXECUTION COPY STANDSTILL AGREEMENT Dated as of July 29, 2002 STANDSTILL AGREEMENT (this "AGREEMENT") in respect of the Amended and Restated Credit Agreement, dated as of September 24, 2001 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Genuity Inc. (the "BORROWER"), the lenders and agents party thereto, and JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank), as Administrative Agent (the "AGENT"). Capitalized terms not otherwise defined herein shall have the same meanings as specified therefor in the Credit Agreement. PRELIMINARY STATEMENTS (1) Certain Events of Default have occurred and are continuing under Section 6.01(g) of the Credit Agreement as a result of the conversion by Verizon of all but one of its Class B common shares of the Borrower into Class A Shares (such Events of Default, the "EXISTING DEFAULTS"). (2) The Borrower has requested that the Lenders agree not to exercise any of their rights and remedies under the Credit Agreement based upon the occurrence and continuance of the Existing Defaults or in respect of the Revolving Credit Advance in the amount of $722,500,000 made by certain Lenders to the Borrower on July 22, 2002 (the "ADVANCE"), in each case during the Standstill Period (as hereinafter defined). (3) The Required Lenders have indicated their willingness to agree to the standstill described above in these Preliminary Statements on the terms and subject to the satisfaction of the conditions set forth herein. NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: SECTION 1. STANDSTILL; FUNDS TRANSFER PROCESSING. During the period (the "STANDSTILL PERIOD") commencing upon the occurrence of the Effective Date (as defined below) and ending on the earlier to occur of (a) 5:00 pm (New York time) on August 12, 2002 and (b) the rescission of the standstill described in this Section 1 pursuant to Section 3 (such earlier date being the "TERMINATION DATE"), each Lender and the Agent agrees (i) with respect to the Existing Defaults that it will not exercise any of its rights or remedies under or with respect to the Credit Agreement or any Note, including, without limitation, any right to declare the Notes, all interest thereon and all other amounts payable under the Credit Agreement to be forthwith due and payable, any Guaranty or any other agreement, document or instrument executed and delivered in connection with the Credit Agreement or a Guaranty (collectively with the Credit Agreement, the Notes and the Guaranty, the "CREDIT DOCUMENTS") and (ii) that it will not commence or file any suit, proceeding or litigation in any court, governmental agency or arbitrator against or affecting the Borrower in any way relating to the Credit Documents or the Advance. On the Termination Date, without any further action by the Agent or any Lender, all of the terms and provisions set forth in the Credit Agreement with respect to the Existing Defaults shall have the same force and effect as if this Agreement had not been entered into by the parties hereto, and the Agent and each of the Lenders shall 2 have all of the rights and remedies afforded to them under the Credit Agreement and applicable law with respect to the Existing Defaults as though no standstill had been granted by them hereunder. Nothing in this Section 1 shall affect the rights and remedies of the Agent and the Lenders under or in connection with the Credit Agreement with respect to any Event of Default, other than the Existing Defaults, or any other event or occurrence. Further, the Lenders and the Agent undertake hereby to process all transfers of funds to or for the benefit of the Borrower or any of its Subsidiaries during the course of each Business Day in a time frame consistent with commercially reasonable, normal banking practices applicable to funds transfers generally. SECTION 2. AGREEMENTS BY BORROWER. During the Standstill Period, the Borrower agrees that: (a) it shall not permit the aggregate amount of cash expended or paid in excess of cash received, in each case in an aggregate amount by the Borrower and its Subsidiaries, on a consolidated basis during the Standstill Period, to exceed $40,000,000; PROVIDED that such amount shall be reduced to $13,000,000 if at any time during the Standstill Period the Borrower or any of its Subsidiaries receives the $27,000,000 cash payment which is due from AOL Time Warner; PROVIDED further that notwithstanding the foregoing limitations, the payments listed on Schedule II may also be made during the Standstill Period (which payments the Borrower represents and warrants will be made in the ordinary course of business and in a manner that is no sooner than is consistent with past practice); (b) subject to Section 2(d) and 4(a) hereof, it shall, at all times during the Standstill Period, with respect to the proceeds of the Advance, (i) maintain all such proceeds in the deposit or security accounts in which such proceeds are currently deposited and (ii) not use or expend the amounts in such accounts for any purpose (it being understood that such amounts are and may continue to be invested in short-term money market funds during such period); (c) amounts repaid pursuant to Section 2(d) and 4(a) hereof may not be reborrowed; and (d) if, at any time during the Standstill Period, Deutsche Bank AG New York Branch ("DEUTSCHE BANK") makes available for the account of the Borrower, in readily available funds at such account as may be designated by the Borrower, an amount equal to $127,500,000 (the "DEUTSCHE BANK FUNDING"; such amount representing Deutsche Bank's ratable share of the $850,000,000 Revolving Credit Advance requested by the Borrower to be made on July 22, 2002, and constituting for all purposes hereunder when made a portion of the Advance), the Borrower shall by no later than the next Business Day thereafter repay to the Agent, for the benefit of Deutsche Bank, an aggregate principal amount of $17,647,058; such amount being a voluntary repayment of an equivalent portion of the Deutsche Bank Funding (it being understood that the Deutsche Bank Funding may alternatively be made by Deutsche Bank net of $17,647,058). SECTION 3. RESCISSION. The standstill provisions of Section 1 may upon notice to the Borrower be rescinded by the Required Lenders or by the Agent (acting with the consent or at the direction of the Required Lenders) on, and effective as of: (a) the date on which any Event of Default (other than an Existing Default) occurs; (b) the date on which the Borrower has not complied with any of the requirements set forth in Section 2 hereof; 3 (c) the date on which (i) the Borrower or any of its Subsidiaries pays any sum in excess of $100,000,000 pursuant to any judgment or order for the payment of money which has been rendered against the Borrower or such Subsidiary or (ii) any lien or attachment (other than in favor of the Agent or any Lender) on any material portion of any material assets or property of the Borrower or any of its Material Subsidiaries has occurred pursuant to any foreclosure proceeding or otherwise; or (d) the date on which Verizon or any of its Subsidiaries or affiliates commences or files any suit, proceeding or litigation in any court, governmental agency or arbitrator against or affecting the Borrower in any way relating to the lending arrangements between Verizon and the Borrower. SECTION 4. CONDITIONS OF EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall become effective as of the first date (the "EFFECTIVE DATE") that (i) the Agent and the Borrower shall have received counterparts of this Agreement executed by the Borrower, each Guarantor, the Agent and the Required Lenders and (ii) each of the following conditions precedent shall have been satisfied: (a) The Borrower shall have paid to the Agent, for the benefit of each of the Lenders listed in Schedule I hereto, an aggregate principal amount of $100,000,000; such amount being a voluntary repayment of an aggregate principal amount of $100,000,000 of the Advance. (b) No event shall have occurred and be continuing that constitutes a Default, other than the Existing Defaults. SECTION 5. RESERVATION OF RIGHTS. On and after the Termination Date, the Agent and each of the Lenders reserve the right to exercise any and all available rights and remedies under the Credit Documents, applicable law and general principles of equity at any time and from time to time arising from or in any way related to the Advance, the Existing Defaults, any other Default or Event of Default which has occurred under or in respect of the Credit Documents or any other document or agreement to which the Agent or any Lender is a party, or any other event or occurrence. SECTION 6. ACKNOWLEDGMENT. The Lenders acknowledge that (i) Deutsche Bank shall not be entitled to receive any portion of the proceeds paid by the Borrower to the Agent for the benefit of the Lenders specified on Schedule I hereto pursuant to Section 4(a) hereof, and (ii) none of the Lenders specified on Schedule I hereto shall be entitled to receive any portion of the proceeds paid by the Borrower to the Agent for the benefit of Deutsche Bank pursuant to Section 2(d) hereof. SECTION 7. NO COMMITMENT. Neither this Agreement nor any action or inaction on the part of the Agent or any of the Lenders shall be construed to constitute or represent a commitment by the Agent or any Lender to restructure or refinance the Credit Agreement or any other Debt of the Borrower. SECTION 8. EFFECT ON THE CREDIT AGREEMENT; NOTICE. The Credit Agreement, the Notes, each Guaranty and all other Credit Documents, except to the extent of the modifications specifically provided above, (i) are and shall continue to be in full force and effect and (ii) are hereby in all respects ratified and confirmed. The Borrower agrees to give prompt notice to the Agent of the occurrence of any event specified in Section 3. SECTION 9. AMENDMENTS; ETC. No amendment or waiver of any provision of this Agreement, nor consent to any departure by any party hereto therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower, the Agent and the Required Lenders, and 4 then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 12. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION; ETC. Each of the Borrower, the Agent and the Lenders (i) irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement hereof and (ii) agree that Section 8.10 of the Credit Agreement shall apply to this Agreement to the same extent as specified therein. [remainder of this page intentionally left blank] 5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. GENUITY INC., as Borrower By /s/ Daniel P. O'Brien ---------------------------------------- Name: Daniel P. O'Brien Title: Executive Vice President and Chief Financial Officer GENUITY SOLUTIONS INC., as Guarantor By /s/ Daniel P. O'Brien ---------------------------------------- Name: Daniel P. O'Brien Title: Executive Vice President and Chief Financial Officer GENUITY TELECOM INC., as Guarantor By /s/ Daniel P. O'Brien ---------------------------------------- Name: Daniel P. O'Brien Title: Executive Vice President and Chief Financial Officer AGREED AND ACCEPTED JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank), as Administrative Agent and as Lender By /s/ David E. Oliver ---------------------------------------- Name: David E. Oliver Title: Vice President BNP PARIBAS ------------------------------------------ By /s/ Jean-Yves Fillion ---------------------------------------- Name: Jean-Yves Fillion Title: Managing Director By /s/ Barbara Eppolito ---------------------------------------- Name: Barbara Eppolito Title: Vice President THE BANK OF NEW YORK ------------------------------------------ By /s/ Brendan T. Nedzi ---------------------------------------- Name: Brendan T. Nedzi Title: Senior Vice President CITICORP USA INC. ------------------------------------------ By /s/ James J. Sheridan ---------------------------------------- Name: James J. Sheridan Title: Vice President and Managing Director CREDIT SUISSE FIRST BOSTON ------------------------------------------ By /s/ Marisa J. Harney ---------------------------------------- Name: Marisa J. Harney Title: Managing Director By /s/ Robert Hetu ---------------------------------------- Name: Robert Hetu Title: Director MIZUHO CORPORATE BANK, LTD. ------------------------------------------ By /s/ John D. Doyle ---------------------------------------- Name: John D. Doyle Title: Senior Vice President TORONTO DOMINION (TEXAS), INC. ------------------------------------------ By /s/ Jean K. Pettit ---------------------------------------- Name: Jean K. Pettit Title: Vice President WACHOVIA BANK, NATIONAL ASSOCIATION ------------------------------------------ By /s/ C. Mark Hedrick ---------------------------------------- Name: C. Mark Hedrick Title: Director 6 SCHEDULE I REPAYMENT AMOUNTS

7 SCHEDULE II CERTAIN PAYMENTS Qwest Communications Inc. - $25,000,000 SBC Communications Inc. - $12,571,402.61 WorldCom Inc. - $7,955,068.75