Opinion
Case No. 02-13533 (AJG) (Jointly Administered)
May 20, 2003
Bradley A. MacLean, Counsel for SUNTRUST BANK.
Brian H. Benjet, Associate Litigation Counsel for INTERMEDIA COMMUNICATIONS, INC., and WORLDCOM, INC., as Debtors and Debtors in Possession.
WorldCom, Inc. and certain of its direct and indirect subsidiaries, including Intermedia Communications, Inc. ("Intermedia"), as debtors and debtors in possession (collectively, "WorldCom" or the "Debtors") and SunTrust Bank ("SunTrust," and together with the Debtors, the "Parties"), hereby stipulate and agree, subject to approval of the Bankruptcy Court (as defined below), as follows:
Recitals
A. On July 21, 2002 (the "Commencement Date") and November 8, 2002, the Debtors filed voluntary petitions for relief under chapter 11, title 11 of the United States Code, in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").
B. Prior to the Commencement Date, SunTrust issued for the account of Intermedia the letters of credit identified on Schedule 1 annexed hereto (the "Letters of Credit"). As of the date hereof, Letters of Credit amounting to approximately $11 million had expired or were terminated. In addition, with respect to Letter of Credit #50193 issued in the amount of $500,000, prior to the Commencement Date the beneficiary drew upon such Letter of Credit in full. As of the date hereof, all other Letters of Credit either have expired by their terms or were terminated undrawn.
C. The Parties acknowledge that Intermedia's reimbursement obligation to SunTrust with respect to each Letter of Credit was secured by SunTrust's properly perfected non-avoidable first priority security interest in certain deposit accounts pledged by Intermedia and held by SunTrust each in an amount equal to or greater than the amount of each Letter of Credit (the "Collateral"). Each deposit account constituting the Collateral was cross-collateralized with respect to Intermedia's reimbursement obligations to SunTrust under each outstanding Letter of Credit. The Collateral constitutes cash collateral within the meaning of section 363 of the Bankruptcy Code.
D. As of the date hereof, SunTrust holds the Collateral in the aggregate amount of approximately $11.5 million to secure Intermedia's reimbursement obligations with respect to the Letter of Credit #50193.
E. The Parties wish to resolve all matters relating to the Letters of Credit pursuant to the terms set forth below, such that SunTrust will recover from the Collateral amounts equal to Intermedia's matured reimbursement obligations to SunTrust with respect to Letter of Credit #50193 that was drawn upon, and all remaining Collateral will be returned to Intermedia.
F. The terms of this Stipulation and Order are in the best interests of the Debtors, their estates, and their creditors, as implementation of the terms of this Stipulation and Order will enable Intermedia to recover the unused portions of the Collateral that Intermedia has pledged to SunTrust.
Agreement
1. This Stipulation and Order (and Intermedia's obligations hereunder) shall be of no force or effect unless and until it is approved by the Bankruptcy Court and entered on the docket thereof.
2. The automatic stay of section 362 of the Bankruptcy Code shall be deemed modified for the limited purpose of permitting SunTrust, within three (3) business days of entry of this Stipulation and Order, to recover from the Collateral relating specifically to Letter of Credit #50193, previously drawn upon in the aggregate amount of $500,000, the full amount of the matured reimbursement obligations of Intermedia to SunTrust with respect to the Letters of Credit, plus interest of 4.76% per annum and reasonable attorneys' fees and legal expenses incurred in connection therewith in the aggregate amount of approximately $26,000.00.
3. Within three (3) business days of entry of this Stipulation and Order, SunTrust shall release to Intermedia all remaining Collateral, including any interest previously accrued thereon. SunTrust is deemed to have waived any and all prepayment penalties and fees relating to such released Collateral.
4. Effective upon Intermedia's receipt of the Collateral to which it is entitled pursuant to the terms and conditions of this Stipulation and Order (a) any and all claims by SunTrust against any of the Debtors and their respective estates related to any act, omission, transaction or occurrence relating to or arising from the Letters of Credit and/or the Collateral shall be deemed satisfied in full and (b) the Parties shall be deemed to release and discharge each other and their respective present and former officers, directors, shareholders, policyholders, administrators, agents, employees, representatives, predecessors, successors and assigns (the "Released Parties") from all actions, causes of action, claims, liabilities and demands of every kind or nature whether known or unknown, asserted or unasserted, that the Parties and their representatives, successors and assigns ever had, now have or may have, against the Released Parties or any of them by any act, omission, transaction or occurrence relating to or arising from the Letters of Credit, the Collateral, and/or the subject matter of this Stipulation and Order; provided, however, that nothing herein shall constitute a release of any obligations under this Stipulation and Order.
5. This Stipulation and Order shall not be modified, altered, amended or vacated without the prior written consent of the Parties.
6. The Parties represent and warrant to each other that, subject to Bankruptcy Court approval, they are authorized to execute this Stipulation and Order, that each has full power and authority to enter and perform in accordance with the terms of this Stipulation and Order, and that this Stipulation and Order is duly executed and delivered and constitutes a valid and binding agreement in accordance with its terms.
7. This Court shall retain jurisdiction over the Parties and this Stipulation and Order for the purposes of interpreting, implementing, and enforcing its terms and conditions.
8. This Stipulation and Order is the entire agreement between the parties with respect to the subject matter hereof.
9. This Stipulation and Order may be executed in one or more counterparts which, when taken together, shall constitute a single instrument.
SCHEDULE 1
SunTrust Bank Letters of Credit ________________________________________________________________________
Letters of Credit Previously Drawn Upon ________________________________________________________________________
Letter of Credit Amount Status ________________________________________________________________________
#50193 $500,000.00 drawn upon in full 8/14/02 ________________________________________________________________________
Expired or Terminated Letters of Credit ________________________________________________________________________
Letter of Credit Amount Expiration or Termination Date ________________________________________________________________________
#50207 100,000.00 8/02/01 ________________________________________________________________________
#50309 1,500,000.00 1/10/02 ________________________________________________________________________
#50273 100,000.00 3/27/02 ________________________________________________________________________
#50344 97,500.00 3/27/02 ________________________________________________________________________
#50291 100,000.00 3/27/02 ________________________________________________________________________
#50363 97,500.00 3/27/02 ________________________________________________________________________
#50375 838,000.00 3/27/02 ________________________________________________________________________
#50310 97,500.00 3/27/02 ________________________________________________________________________
#P010049 525,000.00 4/29/02 ________________________________________________________________________
#50323 22,570.00 5/31/02 ________________________________________________________________________
#50104 50,000.00 6/23/02 ________________________________________________________________________
#50149 5,000,000.00 6/30/02 ________________________________________________________________________
#50230 399,578.00 7/31/02 ________________________________________________________________________
#50403 100,000.00 8/08/02 ________________________________________________________________________
#50283 33,475.00 8/12/02 ________________________________________________________________________
#50180 50,000.00 8/20/02 ________________________________________________________________________
#50322 21,691.00 8/23/02 ________________________________________________________________________
#50371 123,000.00 8/23/02 ________________________________________________________________________
#50338 542,000.00 3/04/03 ________________________________________________________________________
#50339 1,158,000.00 3/04/03 ________________________________________________________________________
Total $10,955,814.00 ________________________________________________________________________
Total Amount of Letters of Credit ________________________________________________________________________
Grand Total $11,455,814.00 ________________________________________________________________________