Exhibit 10.10
Revised ICTC
Docket 02-0502
SERVICES AND FACILITIES AGREEMENT
Dated as of December 31, 2002
Among
Consolidated Communications, Inc.
Illinois Consolidated Telephone Company
and
Each of the Other Subsidiaries of Consolidated Communications, Inc.
Identified on Exhibit A Hereto
SERVICES AND FACILITIES AGREEMENT
THIS SERVICES AND FACILITIES AGREEMENT (this "Agreement") is made and
entered into as of the 31st day of December, 2002, among Consolidated
Communications, Inc., a Delaware corporation ("CCI"), Illinois Consolidated
Telephone Company, an Illinois corporation ("ICTC"), and each of the other
subsidiaries of CCI identified on Exhibit A hereto, as such Exhibit A may be
amended from time to time in accordance with the provisions of this Agreement.
WITNESSETH:
WHEREAS, the Parties are related by virtue of common ownership, directly
or indirectly, of their equity securities by CCI; and
WHEREAS, the Parties believe that the central management of certain
services and the provision to each other of certain services and facilities are
or may be efficient and cost-effective, and the Parties desire to make provision
for these and other transactions as between ICTC and a CCI Entity or Entities;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the Parties hereby agree as follows:
ARTICLE I
Definitions; Scope of Agreement; Interpretation
Section 1.1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below unless the context otherwise
requires:
"CCI Entity" means any of CCI and the entities identified on Exhibit A,
including any current or future subsidiaries of such entities, but excluding
ICTC.
"ICC" means the Illinois Commerce Commission.
"Party" means each, and "Parties" means all of the entities who are from
time to time a party to this Agreement.
"Provider" means a Party who has been requested to, and who is able and
willing to, furnish facilities, provide services or both to a Requestor under
the terms of this Agreement.
"Requestor" means a Party who desires to use facilities, receive services
or both, and has requested another Party to furnish such facilities, provide
such services or both.
Section 1.2. Scope of Agreement. The purpose of this Agreement is to set
forth procedures and policies to govern (a) transactions between a CCI Entity
and ICTC, whether such transactions occur directly or indirectly as the end
result of a series of related transactions, and (b) the allocation of certain
costs. This Agreement is not intended to govern transactions between CCI
Entities except to the extent required by the ICC's rules regarding transactions
between carriers and their affiliates, as amended from time to time.
Furthermore, notwithstanding anything else in this Agreement, any Party may
participate in a transaction (which would otherwise be subject to this Agreement
but without regard to otherwise following
this Agreement) if such transaction is permitted by any law or regulation
provided the transaction meets the requirements of the applicable law or
regulation.
Section 1.3. Interpretation. The headings of Articles and Sections
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. References to
Articles, Sections and Exhibits refer to articles, sections and exhibits of this
Agreement unless otherwise stated. Words such as "herein", "hereinafter",
"hereof", "hereto", "hereby" and "hereunder", and words of like import, unless
the context requires otherwise, refer to this Agreement (including Exhibit A
hereto).
ARTICLE II
Use of Facilities and Services
Section 2.1. Facilities. Upon the terms and subject to the conditions of
this Agreement, a Requestor may request a Provider or Providers to make
available or provide, and, subject to the provisos at the end of this Section,
such Provider or Providers shall make available or provide to such Requestor,
the use of facilities, which include, but are not limited to, the following:
(a) facilities, including, without limitation, office space,
warehouse and storage space, transportation facilities, repair facilities,
production facilities, fixtures and office furniture and equipment;
(b) computer equipment (both stand-alone and mainframe),
peripheral devices, storage media, and software;
(c) voice and data network equipment including, without
limitation, dedicated circuits and private lines, network switching
equipment, voice response and call routing equipment, and various network
connectivity equipment;
(d) communications equipment, including, without limitation, audio
and video equipment, radio equipment, pagers, modems and telephones,
telephone switching equipment and telecommunications equipment;
(e) vehicles, including, without limitation, automobiles, trucks,
vans, trailers, transport equipment, material handling equipment and
construction equipment;
(f) machinery, equipment, tools, parts and supplies;
provided, however, that a Provider shall have no obligation to provide any of
the foregoing to the extent that such item or items are not available (either
because such Provider does not possess the item or the item is otherwise being
used); and provided further, it is understood that a Provider has sole
discretion in scheduling the use by a Requestor of facilities so as to avoid
interference with such Provider's operations, subject to the Provider meeting
all agreed commitments to the Requestor; and provided further that it is
understood that if the provider is ICTC, sufficient prudent and necessary review
has been undertaken to assure that making available or providing the use of the
facilities will not impair the ability of ICTC to provide its services to its
customers.
Section 2.2. Services. Upon the terms and subject to the conditions of
this Agreement, a Requestor may request a Provider or Providers to provide, and,
subject to the provisos at the end
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of this Section, such Provider or Providers shall provide to such Requestor
services, which include, but are not limited to the following:
(a) financial, regulatory and legal services, including, without
limitation, accounting (including, without limitation, bookkeeping,
billing, accounts receivable administration, accounts payable
administration, and financial reporting); auditing; executive; finance;
insurance; investment advisory services; corporate forecasting; corporate
budgeting; claims administration; regulatory services; corporate credit
and risk administration; tax; treasury; and other similar services;
(b) personnel services, including, without limitation, recruiting;
staffing, training and evaluation services; payroll processing; fitness
for duty testing; compensation policy and administration; employee
benefits administration and processing; labor negotiations and management;
employee safety and health program administration; employee development
and training; employee program development and administration; and related
personnel services;
(c) purchasing services, including, without limitation,
preparation and analysis of product specifications; requests for proposals
and similar solicitations; vendor and vendor-product evaluations; purchase
order and invoice processing; processing and support of employee expense
accounts; investment recovery processing; receipt, handling, warehousing
and distribution of equipment and purchased items; contract negotiation
and administration; inventory management and disbursement; and other
similar services;
(d) information technology services, including, without
limitation, application development and support; data center operation and
technical support; disaster recovery testing and support; customer xxxx
processing; information technology problem resolution; PC and local server
support; centralized server operation and support; wide area network
operations and support; local area network operation and support;
telephone switch and central equipment operation and support; voice usage;
billing and equipment operation and support; and other similar services;
(e) administrative services, including, without limitation,
mailing and mail deliveries; corporate records, archives, microfilm and
library operation and support; printing services; graphic arts; building
maintenance; vehicle and fleet maintenance and support; building security
administration; furniture moves and changes; secretarial and general
office support; and other similar services;
(f) technical, engineering, research and consulting services,
including, without limitation, drafting, technical specification
development, construction, design, project management, testing and
maintenance of equipment; information request processing; corporate
environmental issues management; environmental consulting; environmental
compliance management; marketing research; regulatory consulting;
competitive analysis; and other similar services; and
(g) public affairs services, including, without limitation,
corporate advertising; government relations; legislative affairs;
corporate communication; corporate advertising; video and graphic products
services; and other similar services;
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provided, however, that a Provider shall have no obligation to provide any of
the foregoing to the extent that it is not capable of providing such service
(either because such provider does not have personnel capable of providing the
requested service or the service is otherwise being used); and provided further,
it is understood that a Provider has sole discretion in scheduling the use by a
Requestor of services so as to avoid interference with such Provider's
operations, subject to the Provider meeting all agreed commitments to the
Requestor; and provided further that it is understood that if the provider is
ICTC, sufficient prudent and necessary review has been undertaken to assure that
the provision of the services will not impair the ability of ICTC to provide its
services to its customers.
Section 2.3. Joint Purchasing. A Party may also request that another Party
or Parties enter into arrangements to effect the joint purchase of goods or
services from third parties; provided, however, that if ICTC is so requested to
enter into or to participate in such arrangements, it shall do so only if its
fully distributed cost for such goods or services is not thereby increased; and
provided further, that no Party shall be required to purchase a service which it
is otherwise capable of providing or obtaining. In the event that any such
arrangements are established, one Party may be designated as, or serve as, agent
for the other Parties to the arrangement and may administer the arrangement
(including billing and collecting amounts due the vendor(s)) for the other
Parties.
Section 2.4. Agreements, Etc. A Provider and Requestor may evidence their
agreement with respect to the availability, provision or use of the facilities,
services and activities described in this Article II by entering into an
agreement, lease, license or other written memorandum or evidence; provided such
agreement, lease, license or other written memorandum or evidence shall not
contain terms inconsistent with this Agreement; and further provided that this
Section 2.4 shall not be deemed to require any such agreement, lease, license or
other written memorandum or evidence.
ARTICLE III
Charges; Payment
Section 3.1. Charges.
(a) Charges for the use of facilities or services under Sections 2.1 and
2.2 shall be determined in accordance with Section 4.1.
(b) Any applicable sales or use tax payable on a joint purchase shall be
allocated to the purchasers by applying the statutory basis to the joint
purchasers' shares of the purchase cost.
Section 3.2. Accounting. Each Party shall maintain adequate books and
records with respect to the transactions subject to this Agreement and shall
establish unique account numbers in its general ledger system which shall be
used to record the costs to be apportioned to the other Parties. Each Party
shall be responsible for maintaining internal controls to ensure the costs
associated with transactions covered by this Agreement are properly allocated
and billed in accordance with the terms and provisions of this Agreement.
Section 3.3. Invoicing, Payment. Invoicing and payment for the facilities
and services specified in Article II or the joint services costs specified in
Section 4.3 shall be as follows:
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(a) for the use of facilities specified in Section 2.1 or the
provision of services specified in Section 2.2, a Provider shall invoice
the Requestor on a monthly basis;
(b) for joint purchasing arrangements specified in Section 2.3,
invoices will be payable according to the terms set by the vendor(s)
providing the purchased goods or services, or if a Party has been selected
to administer such arrangement, pursuant to invoices rendered by such
Party; and
(c) for joint service costs under Section 4.3, CCI shall invoice
ICTC for such costs as allocated to it using the methodology in Section
4.3.
ARTICLE IV
Cost Apportionment Methodology
Section 4.1. General Principles. The following general principles shall be
used in setting charges for transactions between ICTC and CCI Entities, as
required by the ICC's rules regarding transactions between carriers and their
affiliates (83 Ill. Admin. Code Part 711), as amended from time to time:
(a) Facilities or services provided by ICTC to a CCI Entity shall
be charged at the higher of: (i) market price, if market price can be
determined from a price list or tariff, or (ii) the fully distributed cost
(determined as provided in Section 4.2) incurred by ICTC in providing such
facility or service, where a market price does not exist.
(b) Facilities or services provided by a CCI Entity to ICTC shall
be charged at the lower of: (i) market price, if market price can be
determined from a price list or tariff, or (ii) the fully distributed cost
(determined as provided in Section 4.2) incurred by such CCI Entity in
providing such facility or service, where a market price does not exist.
Costs shall be charged to a Party in accordance with these general principles
using either a direct charge or an allocation methodology consistent with 83
Ill. Admin. Code Part 711 and ICTC's Cost Allocation Manual. Costs of assets or
services specifically attributable to a Party shall be charged directly to such
Party. Joint and common costs not specifically attributable to a Party shall be
charged to the appropriate Parties based on specific allocation methodologies in
accordance with ICTC's Cost Allocation Manual and 83 Ill. Admin. Code Part 711.
Section 4.2. Fully Distributed Costs. Costs charged on a fully distributed
cost basis shall reflect the amounts of direct labor, direct materials and
direct purchased services associated with the related asset or service. These
amounts shall be increased by a portion of indirect costs to reflect labor,
administrative and general and other overhead amounts in accordance with
specific allocation methodologies contained in ICTC's Cost Allocation Manual and
83 Ill. Admin. Code Part 711.
Section 4.3. CCI Administrative and General Costs. Costs which are
applicable to CCI because they jointly benefit all subsidiaries will be
accumulated on the books of CCI as Administrative and General costs. These costs
will then be calculated for and charged to all CCI Entities and ICTC based on
specified allocation methodologies in accordance with ICTC's Cost Allocation
Manual and 83 Ill. Admin. Code Part 711. To the extent they pertain to CCI, the
costs to be allocated will include, but are not necessarily limited to:
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Tax Compliance
Board of Directors
Corporate Secretary
Accounting and Audit
Corporate finance expenses for managing CCI's debt and cash
Public Affairs Services
Legal expenses
Other professional/consulting services
ARTICLE V
Limitations of Liability
Section 5.1. No Warranties For Facilities or Services. Each Party
acknowledges and agrees that any facilities made available, and any services
provided, by a Provider to a Requester hereunder, are so made available or
provided WITHOUT ANY WARRANTY (WHETHER EXPRESS, IMPLIED OR STATUTORY AND
NOTWITHSTANDING ANY ORAL OR WRITTEN STATEMENT BY A PARTY'S EMPLOYEES,
REPRESENTATIVES OR AGENTS TO THE CONTRARY) WHATSOEVER. ALL SUCH WARRANTIES
(INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS
FORA PARTICULAR PURPOSE) ARE HEREBY DISCLAIMED AND EXCLUDED.
Section 5.2. No Partnership. The Parties acknowledge and agree that this
Agreement does not create a partnership between, or a joint venture of, a Party
and any other Party. Each Party is an independent contractor and nothing
contained in this Agreement shall be construed to constitute any Party as the
agent of any other Party except as expressly set forth in Section 2.3.
Section 5.3. No Third Party Beneficiaries. This Agreement is intended for
the exclusive benefit of the Parties hereto and is not intended, and shall not
be deemed or construed, to create any rights in, or responsibilities or
obligations to, third parties.
ARTICLE VI
Termination
This Agreement shall automatically terminate as to a Party upon the date
that CCI ceases, directly or indirectly, to own equity securities in such Party.
Any such termination shall not affect the terminating Party's accrued rights and
obligations under this Agreement arising prior to the effective date of
termination or its obligations under Section 8.4.
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ARTICLE VII
Confidential Information
Each Party shall treat in confidence all information which it shall have
obtained regarding the other Parties and their respective businesses during the
course of the performance of this Agreement. Such information shall not be
communicated to any person other than the Parties to this Agreement, except to
the extent disclosure of such information is required by a governmental
authority. If a Party is required to disclose confidential information to a
governmental authority, such Party shall take reasonable steps to make such
disclosure confidential under the rules of such governmental authority.
Information provided hereunder shall remain the sole property of the Party
providing such information. The obligation of a Party to treat such information
in confidence shall not apply to any information which (a) is or becomes
available to such Party from a source other than the Party providing such
information, or (b) is or becomes available to the public other than as a result
of disclosure by such Party or its agents.
ARTICLE VIII
Miscellaneous
Section 8.1. Entire Agreement; Amendments. Upon its effectiveness, this
Agreement shall constitute the sole and entire agreement among the Parties with
respect to the subject matter hereof and shall supersede all previous
agreements, proposals, oral or written, negotiations, representations,
commitments and all other communications between some or all of the Parties.
Except as provided in Section 8.2 with respect to new Parties and except that
CCI may amend Exhibit A to this Agreement to delete any terminated Party, this
Agreement shall not be amended, modified or supplemented except by a written
instrument signed by an authorized representative of each of the Parties.
Section 8.2. New Parties. Any other entity which is or may become an
affiliate of CCI may become a Party to this Agreement by executing an agreement
adopting all of the terms and conditions of this Agreement. Such agreement must
be signed by CCI in order to become effective, but need not be signed by any
other Party to this Agreement. Upon such execution by CCI, such entity shall be
deemed to be a Party and shall be included within the definition of "Party" for
all purposes hereof, and Exhibit A shall be amended to add such entity.
Section 8.3. Assignment. This Agreement may not be assigned by any Party
without the prior written consent of CCI.
Section 8.4. Access to Records. During the term of this Agreement, each
Party shall have reasonable access to and the right to examine any and all
books, documents, papers and records which pertain to services and facilities
provided by the other Parties under this Agreement to such Party, and such Party
shall provide access to, and the opportunity to examine, all such records which
pertain to services and facilities provided to the other Parties under this
Agreement by such Party. Each Party shall maintain all such records relating to
a given transaction for a period of seven years after the transaction. In
addition, during the term of this Agreement and for the same seven year period,
the ICC shall have access to all accounts and records of such CCI Entity
relating to transactions with ICTC to the extent, and with the limitations, set
forth in Section 7-101 of the Public Utilities Act. Accordingly, each CCI entity
shall make available to ICTC for the ICC's review pursuant to Section 7-101 such
information as
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the ICC or its staff may deem necessary in order to review and verify both the
amounts charged to ICTC under this Agreement and the manner in which those
amounts were derived.
Section 8.5. Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable. In the event that it is determined that the charges for a
particular transaction covered by this Agreement were not determined properly
for any reason, such determination and/or finding shall not affect the validity
of such transaction; provided, however, that if the transaction involved ICTC
and a CCI Entity, CCI (or, if CCI so determines, such CCI Entity) shall pay to
or reimburse ICTC, or ICTC shall pay to or reimburse such CCI Entity, as the
case may be, for the difference between the amount that was charged in
connection with the transaction and the charge that is determined to be proper
under the provisions of Article IV.
Section 8.6. Waiver. Failure by any Party to insist upon strict
performance of any term or condition herein shall not be deemed a waiver of any
rights or remedies that such Party may have against any other Party nor in any
way to affect the validity of this Agreement or any part hereof or the right of
such Party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
Section 8.7. Governing Law. This Agreement shall be governed by, construed
and interpreted pursuant to the laws of the State of Illinois.
IN WITNESS WHEREOF, the Parties have each caused this Agreement to be
executed by a duly authorized representative as of the day and year first above
written.
CONSOLIDATED COMMUNICATIONS, ILLINOIS CONSOLIDATED TELEPHONE
INC. COMPANY
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx Name:Xxxxxx X. Xxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
CONSOLIDATED COMMUNICATIONS CONSOLIDATED COMMUNICATIONS
MARKET RESPONSE, INC. PUBLIC SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
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CONSOLIDATED COMMUNICATIONS CONSOLIDATED COMMUNICATIONS
OPERATOR SERVICES, INC. MOBILE SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
_________________________ __________________________________
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
CONSOLIDATED COMMUNICATIONS CONSOLIDATED COMMUNICATIONS
BUSINESS SYSTEMS, INC. NETWORK SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
_________________________ __________________________________
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
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EXHIBIT A
Other Subsidiaries of Consolidated Communications, Inc.
(In Addition to Illinois Consolidated Telephone Company)
Consolidated Communications Market Response, Inc.
Consolidated Communications Public Services, Inc.
Consolidated Communications Operator Services, Inc.
Consolidated Communications Mobile Services, Inc.
Consolidated Communications Business Systems, Inc.
Consolidated Communications Network Services, Inc.
