Opinion
Case No. 08-11877.
July 15, 2008
ARNALL GOLDEN GREGORY LLP, Darryl S. Laddin (GA Bar No. 460793), Frank N. White (GA Bar No. 753377), Atlanta, Georgia.
ANDERSON QUINN, LLC, Alice Kelley Scanlon (Federal Bar No. 22582), Curtis B. Hane (Federal Bar No. 12479), Rockville, MD, ATTORNEYS FOR VERIZON.
WHITEFORD, TAYLOR PRESTON, L.L.P., Dennis J. Shaffer (Federal Bar No. 25680), John F. Carlton, Baltimore, Maryland.
WILLKIE FARR GALLAGHER LLP, Robin Spigel, New York, New York, ATTORNEYS FOR BV.
LINOWES AND BLOCHER LLP, Bradford F. Englander (Federal Bar No. 11951), Jennifer Larkin Kneeland (Federal Bar No. 14916), Brian M. Nestor (Federal Bar No. 27121), Bethesda, Maryland, ATTORNEYS FOR LWV.
Verizon Services Corp. and each of the affiliated Incumbent Local Exchange Carriers listed in Attachment 1 of the WASA (as defined below) (collectively, "Verizon"), Lightwave Communications, LLC ("LWV"), and Broadview Networks, Inc. ("BNI") and Broadview Networks of Virginia, Inc. ("BNVI") (BNI and BNVI collectively, "BV"), by and through their respective attorneys, represent as follows:
WHEREAS, Verizon provides services and facilities to Lightwave pursuant to (i) a Wholesale Advantage Services Agreement ("WASA") between the parties dated July 1, 2005, (ii) Interconnection Agreements for the states of Virginia, Maryland and the District of Columbia, and (iii) certain tariffs (all such contractual arrangements, the "Verizon/LWV Contracts");
WHEREAS, on September 29, 2006, LWV filed an Arbitration Demand with the American Arbitration Association, initiating Case Number 13 494 Y 02243 06 (the "Arbitration");
WHEREAS, on April 27, 2007, the Arbitrator issued the Award of Arbitrator in the Arbitration (the "Award");
WHEREAS, on October 5, 2007, the Circuit Court of Fairfax County, Virginia (the "Virginia Court") issued its Order confirming the Award;
WHEREAS, on January 28, 2008, the Virginia Court issued its Writ of Fieri Facias, in favor of Verizon, and against LWV, in the principal amount of $1,846,386.75 (the "Verizon Judgment");
WHEREAS, on January 28, 2008, the Virginia Court issued a Garnishment Summons, in favor of Verizon, and against LWV, in the principal amount of $1,846,386.75, plus interest in the amount of $313,228.13, which Garnishment Summons was served on Wachovia Bank NA (the "Garnishment");
WHEREAS, on February 7, 2008, the Virginia Court docketed a Judgment against Verizon, in the total amount of $1,080,760.12 with interest (the "LWV Judgment");
WHEREAS, on or about February 11, 2008 ("Petition Date"), LWV filed its voluntary petition for relief under chapter 11 of title 11 of the United States Code. LWV continues to operate its business as a debtor-in-possession pursuant to sections 1107 and 1108 of the United States Bankruptcy Code (the "Bankruptcy Code");
WHEREAS, pursuant to that certain Consent Order entered March 17, 2008, LWV posted an adequate assurance deposit with Verizon pursuant to section 366(c) of the Bankruptcy Code, in the amount of $510,000 (the "Adequate Assurance Deposit");
WHEREAS, on May 5, 2008, LWV, BV and Adera, LLC, among other parties, entered into that certain Asset Purchase Agreement, as amended and restated by that Amended and Restated Asset Purchase Agreement dated as of June 12, 2008 (the "APA");
WHEREAS, after significant negotiation and discussion, LWV, Verizon and BV have agreed, subject to the terms and conditions contained herein, to the assumption and assignment of the Verizon/LWV Contracts on the terms and conditions contained in this Order;
NOW, THEREFORE, in consideration of the foregoing and subject to approval of the Court, LW, Verizon and BV stipulate and agree:
1. Upon receipt by Verizon of the Cure Payment (as defined below), and pursuant to section 365 of the Bankruptcy Code, effective as of the "Closing" under the APA, and subject to the occurrence of the Closing, each of the Verizon/LWV Contracts shall be deemed assumed by LWV and (i) for the WASA and any other contract that is associated with the provision of services and facilities inside and outside the Commonwealth of Virginia, assigned to BNI and BNVI, (ii) for any contract that is associated solely with the provision of services and facilities outside the Commonwealth of Virginia, assigned to BNI, and (iii) for any contract that is associated solely with the provision of services and facilities inside the Commonwealth of Virginia, assigned to BNVI (the date of such assignment, the "Assignment Date").
2. As a condition precedent to the assumption by LWV and the assignment to BV of the Verizon/LW Contracts and to any obligations of Verizon under this Order, at the Closing under the APA, LWV and BV jointly shall instruct the Escrow Agent (as defined in the APA) to deliver to Verizon by wire transfer the sum of $3,250,000 (the "Cure Payment"), pursuant to wire transfer instructions to be provided by Verizon; such Cure Payment shall be deducted from the Purchase Price (as defined in the APA). Subject solely to the occurrence of the Closing, the obligation of LWV to make the Cure Payment and of LWV and BV to jointly instruct the Escrow Agent as set forth in the preceding sentence is absolute, and is not subject to setoff, reduction or counterclaim for any reason whatsoever.
3. Effective upon the Closing, and conditioned on receipt by Verizon of the Cure Payment, Verizon and LWV, on behalf of themselves and any persons or entities claiming through them, shall be deemed to have fully and forever waived, released, extinguished and forever discharged each other from any and all claims, actions, complaints, causes of action, liens and security interests (including without limitation liens arising under the Garnishment Summons and/or the Writ of Fieri Facias), debts, credits, costs and expenses (including attorneys' fees), demands or suits, at law or in equity or in bankruptcy (including, without limitation, any avoidance actions under Chapter 5 of the Bankruptcy Code) or otherwise, known or unknown, present or future, fixed or contingent, which each party may have or claim to have against the other from the beginning of time through March 31, 2008, and Verizon also shall be deemed to have released that certain volume shortfall charge found on the invoice billed on April 25, 2008 for the months of February and March 2008 (the "April 25 Volume Shortfall Charge"). This release shall not be deemed to include any portion of the Verizon Post-Release Period Charges (as hereafter defined), or Verizon's rights or obligations with respect to the Adequate Assurance Deposit. Upon this release becoming effective, LWV shall cause the LWV Judgment to be marked satisfied, Verizon shall cause the Verizon Judgment to be marked satisfied, and Verizon shall be deemed to have released all claims with respect to the Garnishment.
4. BV shall not be liable for charges or costs associated with facilities or services provided by Verizon to LWV prior to the Assignment Date, and Verizon shall not bill BV for any such charges or costs. Verizon further shall not assess any charges or costs on BV in conjunction with the assignment to and assumption by BV of the Verizon/LWV Contracts. BV shall be liable for all charges and costs associated with facilities or services provided to BV from and after the Assignment Date, including, without limitation, any costs for re-stenciling of collocation cages (but only to the extent such re-stenciling is requested by BV). For the avoidance of doubt, nothing set forth herein shall limit BV's ability to dispute in good faith any such charges and costs associated with facilities or services provided to BV after the Closing in the ordinary course of business or otherwise pursuant to the Verizon/LWV Contracts.
5. LWV shall not be liable for charges or costs associated with facilities or services provided to BV by Verizon after the Assignment Date, and Verizon shall not bill LWV for any such charges or costs.
6. Upon the release contained in paragraph 3 of this Stipulation becoming effective, Verizon and LWV agree that LWV has fully paid all pre-petition and post-petition Verizon charges billed by Verizon to LWV through March 31, 2008, and Verizon shall promptly (but in any case within three business days of the release becoming effective) issue any and all credits to LWV for the March 31, 2008 invoice and all other prior applicable invoices necessary to reflect such payment in full, as well as the April 25 Volume Shortfall Charge.
7. For all post-petition charges billed on or after April 1, 2008 (including, without limitation, charges for usage that are billed on or after April 1, 2008 but that relate to usage during the period prior to April 1, 2008) and that relate to the period through and including the Assignment Date (whether billed by Verizon to LWV before or after the Assignment Date) (the "Verizon Post-Release Period Charges"), LWV shall continue to pay the undisputed portion of such charges when due. Provided that such charges by Verizon are consistent with Verizon's past LWV billing practices and do not include any charges outside of the normal course of LWV's business, LWV shall not increase its level of disputes materially beyond the level of disputes submitted for resolution in the February and March 2008 billing periods. LWV shall not be responsible for any charges incurred by BV after the Assignment Date.
8. LWV's Baseline Volume (as defined in the WASA) is hereby determined to be the number of lines set forth in Exhibit A attached hereto, and the Year 1 Monthly Average Charge (as defined in the WASA) is hereby determined to be the dollar amount per line set forth in Exhibit A. Such determinations shall be applicable to the WASA both prior to and subsequent to the Assignment Date. The parties shall seek an order authorizing the filing of Exhibit A under seal, under Bankruptcy Rule 9018, and unless and until such order has been entered, the parties shall not file Exhibit A in the public record. With respect to the WASA or any Wholesale Advantage Services Agreement to which BVN or any of its affiliates is a party (the "BVN WASAs"), (i) no commitment overage under the WASA may be used to satisfy a commitment shortfall under any BVN WASA and no commitment overage under a BVN WASA may be used to satisfy a commitment shortfall under the WASA and (ii) no Wholesale Advantage lines may be transferred (a) from the WASA to a BVN WASA or (b) from a BVN WASA to the WASA. Nothing contained in this Stipulation constitutes an admission or interpretation that any previous actions by BV or any of its affiliates constitutes a breach of any similar provision in any other Wholesale Advantage Services Agreement between Verizon and BV or its affiliates.
9. Except as provided in the following sentence, Verizon shall return to LWV the Adequate Assurance Deposit within three business days of the Assignment Date. Verizon may retain a portion of such Adequate Assurance Deposit in an amount not to exceed the aggregate amount of all unresolved post-March 31, 2008 disputes. Upon resolution of all post-March 31, 2008 disputes, Verizon shall promptly (but in any case, within three business days of such resolution) return to LWV any remaining portion of the Adequate Assurance Deposit in excess of the amounts finally determined to be owed to Verizon, if any. The parties shall endeavor in good faith to resolve all post-March 31, 2008 disputes within 45 days of the Assignment Date. If the parties fail to so resolve any post-March 31, 2008 dispute, the parties shall be deemed to have waived all rights under Section 18 (Dispute Resolution) and the venue and forum provisions of Section 8 (Applicable Law) of the WASA, and under similar provisions of each of the Interconnection Agreements, and this Court shall have the exclusive jurisdiction to resolve such disputes.
10. Unless and until this Stipulation is terminated as set forth below, Verizon shall not oppose LWV's pending or future requests for: (a) approval of the APA; (b) use of cash collateral (provided such use is for the payment of ordinary operating expenses and approved professional fees and expenses, and on terms substantially similar to those set forth in the currently pending cash collateral order); (c) extensions of exclusivity under Section 1121 of the Bankruptcy Code; (d) approval of a disclosure statement and confirmation of a Plan containing terms that are not inconsistent with the terms of this Stipulation; (e) continuation of the hearing on Verizon's Motion for a Declaration that the Automatic Stay Does Not Apply, or in the Alternative, for Relief from the Stay to Permit Verizon to Request that a State Judgment Recorded Against it by Debtor be Deemed Satisfied (Docket No. 87) (the "Lift Stay Motion"); or (f) any other matter that is not inconsistent with this Stipulation. Each party to this Stipulation shall exercise good faith efforts to consummate expeditiously the transactions that are the subject matter of this Stipulation.
11. In the event that the APA is terminated or the Closing under the APA for any reason has not occurred by September 15, 2008, or such later date on which each of the parties may agree in writing, any party hereto may terminate this Stipulation by providing written notice of termination to the other parties. Each party to this Stipulation reserves all rights and remedies, and shall be entitled to assert and enforce such rights and remedies, upon termination of this Stipulation. Nothing herein shall constitute an admission of the validity of any claim or defense.
12. In the event of any inconsistency between any plan of reorganization or liquidation or any provision of the Order confirming such plan, and this Order, the terms of this Order shall control.
13. This Court shall retain exclusive jurisdiction to enforce the terms of this Order.
14. This Order shall be binding upon any successors or assigns of the parties hereto, including, without limitation, any Chapter 7 trustee who may be appointed for the estate of LWV.
15. Notwithstanding Fed.R.Bankr.P. 6006(d), this Order shall be effective immediately upon its entry.
16. The parties acknowledge that this Order is the joint work product of the parties, and that, accordingly, in the event of ambiguities in this Order, no inferences shall be drawn against any party on the basis of authorship of this Order.
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17. This Order shall constitute the entire agreement by and among the parties hereto regarding the matters addressed herein. No extrinsic or parol evidence may be used to vary any of the terms contained herein.