Exhibit 10.5
MASTER RIGHT-OF-WAY LEASE AGREEMENT
BETWEEN
COLONIAL PIPELINE COMPANY,
A DELAWARE CORPORATION
AND
PATHNET TELECOMMUNICATIONS, INC.,
A DELAWARE CORPORATION
DATED: March 30, 2000
-i-
TABLE OF CONTENTS
ARTICLE I. AGREEMENT TO LICENSE.......................................... 2
1.1 LEASEHOLD INTERESTS............................................... 2
1.2 PERMITS; SEGMENT LEASES........................................... 2
1.3 TERM.............................................................. 4
1.4 REVERSION TO COLONIAL............................................. 4
1.5 USE............................................................... 5
ARTICLE II. CONSIDERATION; RENEWAL PAYMENTS; OTHER FEES AND EXPENSES...... 5
2.1 CONSIDERATION..................................................... 5
2.2 RENEWAL PAYMENT................................................... 5
2.3 EXPENSES.......................................................... 7
2.4 PAYMENTS.......................................................... 8
2.5 DEFAULT INTEREST.................................................. 8
ARTICLE III. INSTALLATION OF TELECOMMUNICATIONS NETWORK.................... 8
3.1 PERFECTION; PRE-INSTALLATION DETERMINATIONS....................... 8
3.2 REQUIREMENTS FOR INSTALLATION OF THE TELECOMMUNICATIONS
NETWORK AND THE PTI WORK.......................................... 10
3.3 SERVICES AGREEMENT WITH COLONIAL.................................. 12
3.4 COMPLETION OF PTI WORK............................................ 13
3.5 UNAUTHORIZED WORK................................................. 13
ARTICLE IV. OPERATION, MAINTENANCE AND REPAIR............................. 14
4.1 PTI OPERATION, MAINTENANCE AND REPAIR............................. 14
4.2 WARRANTIES........................................................ 14
4.3 SUBCONTRACTORS.................................................... 14
4.4 COLONIAL INSPECTIONS.............................................. 14
ARTICLE V. PIPELINE MAINTENANCE AND REPAIR............................... 15
5.1 PIPELINE MAINTENANCE AND REPAIR................................... 15
ARTICLE VI. INSURANCE..................................................... 15
6.1 ACQUISITION OF INSURANCE POLICIES................................. 15
6.2 TYPES OF REQUIRED INSURANCE FOR PTI............................... 15
6.3 TYPES OF REQUIRED INSURANCE FOR COLONIAL.......................... 16
6.4 TERMS OF INSURANCE................................................ 16
6.5 FAILURE TO MAINTAIN INSURANCE..................................... 17
6.6 BLANKET POLICIES; SELF-INSURANCE.................................. 17
ARTICLE VII. INTENTIONALLY OMITTED......................................... 18
ARTICLE VIII. CONDEMNATION.................................................. 18
8.1 MATERIAL TAKING................................................... 18
8.2 CONTINUATION OF AGREEMENT......................................... 18
8.3 APPORTIONMENT OF AWARD(S)......................................... 18
ARTICLE IX. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PTI.............. 19
9.1 PTI'S REPRESENTATIONS, WARRANTIES AND COVENANTS................... 19
ARTICLE X. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLONIAL......... 21
10.1 COLONIAL'S REPRESENTATIONS, WARRANTIES AND COVENANTS.............. 21
ARTICLE XI. INDEMNIFICATION; LIMITATION OF LIABILITY...................... 22
11.1 INDEMNIFICATION BY PTI............................................ 22
11.2 INDEMNIFICATION BY COLONIAL....................................... 22
11.3 LIMITATION OF LIABILITY........................................... 23
11.4 NO CONSEQUENTIAL OR SPECIAL DAMAGES............................... 23
11.5 LEGAL PROCEEDINGS................................................. 23
ARTICLE XII. DEFAULT....................................................... 24
12.1 EVENT OF DEFAULT BY PTI........................................... 24
12.2 EFFECT OF ARBITRATION............................................. 25
12.3 REMEDIES OF COLONIAL.............................................. 25
12.4 EFFECT OF TERMINATION............................................. 25
12.5 EVENT OF DEFAULT BY COLONIAL...................................... 26
12.6 NO WAIVERS........................................................ 26
12.7 NO REMEDY EXCLUSIVE............................................... 27
12.8 FORCE MAJEURE..................................................... 27
12.9 NO PERSONAL LIABILITY............................................. 27
ARTICLE XIII. VOLUNTARY REMOVAL OF TELECOMMUNICATIONS NETWORK............... 27
13.1 REMOVAL OF TELECOMMUNICATIONS NETWORK BY PTI...................... 27
ARTICLE XIV. ARBITRATION................................................... 28
14.1 ARBITRATION....................................................... 28
14.2 SELECTION OF ARBITRATORS.......................................... 28
14.3 QUALIFIED ARBITRATORS............................................. 28
14.4 ARBITRATION HEARING; DISCOVERY VENUE.............................. 28
14.5 DECISION.......................................................... 29
14.6 NON-BINDING IN CERTAIN EVENTS..................................... 29
ARTICLE XV. ASSIGNMENT.................................................... 29
15.1 ASSIGNMENT BY PTI................................................. 29
15.2 ASSIGNMENT BY COLONIAL............................................ 30
15.3 BINDING UPON SUCCESSORS AND ASSIGNS............................... 30
ARTICLE XVI. CONFIDENTIALITY............................................... 30
16.1 CONFIDENTIALITY................................................... 30
ARTICLE XVII. MISCELLANEOUS................................................. 30
17.1 NOTICES.......................................................... 30
17.2 NO PARTNERSHIP................................................... 31
17.3 TIME OF THE ESSENCE.............................................. 31
17.4 ENTIRE AGREEMENT................................................. 31
17.5 CAPTIONS......................................................... 32
17.6 MEANING OF TERMS................................................. 32
17.7 AGREEMENT CONSTRUED AS A WHOLE................................... 32
17.8 SEVERABILITY..................................................... 32
17.9 SURVIVAL......................................................... 32
17.10 AMENDMENT.................................................... 32
17.11 ATTORNEYS' FEES.............................................. 32
17.12 INTEREST..................................................... 32
17.13 GOVERNING LAW................................................ 33
17.14 BUSINESS DAYS................................................ 33
17.15 REFERENCE DATE OF AGREEMENT.................................. 33
17.16 COUNTERPARTS................................................. 33
17.17 EXHIBITS..................................................... 33
-2-
LIST OF EXHIBITS:
Exhibit A System Map
Exhibit B Form of Right-of-Way Permit
Exhibit C Form of Segment Lease
Exhibit D Currently Perfected Segments
Exhibit E General Colonial Construction Standards
-3-
LIST OF DEFINED TERMS:
- ----------------------
Agreement Recitals
Applicable Laws Subsection 3.2(b)
Colonial Recitals
Colonial Conduit Defined in the Fiber Optic
Access and Purchase Agreement
Colonial Construction Standards Subsection 3.2(c) Colonial Engineering Notice
Subsection 3.1(c) Colonial Indemnified Parties Section 11.1 Colonial Parties
Subsection 10.1(f) Colonial Pipeline Recitals Colonial Rights-of-Way Recitals
Colonial System Recitals Colonial System Map Recitals Conduit(s) Section 1.5
Construction Management Work Subsection 3.1(b) Currently Perfected Segments
Subsection 2.3(b) Default Rate Section 17.12 Designation Notice Subsection
1.2(a) Event of Default Section 12.1 Fiber Optic Access and Purchase Agreement
Subsection 1.1(a) Governmental Authorities Subsection 2.3(a) Impositions
Subsection 9.1(l) Initial Term Section 1.3 Insurance Requirements Subsection
3.2(e) Landowners Subsection 2.3(a) Leasehold Interest Subsection 1.1(a)
Material Taking Section 8.1 Notice of Arbitration Section 14.1 Perfection and
Construction Management Contractor Subsection 3.1(a) Perfection and Construction
Management Work Subsection 3.1(a) Perfection Expenses Subsection 2.3(a)
Perfection Process Subsection 1.2(b) Perfection Rights Subsection 1.2(b)
Permit(s) Subsection 1.2(c) PTI Recitals PTI Indemnified Parties Section 11.2
PTI Operation and Maintenance Services Section 4.1 PTI Parties Subsection 9.1(i)
PTI Stock Section 2.1 PTI Work Section 3.2 Related Facility(ies) Recitals Regen
Facilities Subsection 1.2(a) Renewal Payment Subsection 2.2(a) Renewal Term
Section 1.3 Required Permits Subsection 9.1(f) Rerouted Portion Subsection
3.1(f) Reversion Date Subsection 1.4(a) Revised Designation Notice Subsection
1.2(c) Right-of-Way Agents Subsection 2.3(a) Route Engineering Work Subsection
3.1(b)
Segment(s) Subsection 1.2(a)
Segment Lease Subsection 1.2(c)
Services Agreement Section 3.3
Sub-Segment(s) Subsection 1.2(a)
Sub-Segment Lease Subsection 1.2(c)
Taking Section 8.1
Telecommunications Network Section 1.5
Telecommunications Network Contractors Subsection 3.2(f)
Term Section 1.3
Trade Standards Subsection 3.2(e)
Undeployed Segments and Stations Subsection 1.4(b)
MASTER RIGHT-OF-WAY LEASE AGREEMENT
THIS MASTER RIGHT-OF-WAY LEASE AGREEMENT (the "Agreement"), made and
entered into as of this 30th_ day of March, 2000, 1999, by and between COLONIAL
PIPELINE COMPANY, a Delaware corporation ("Colonial") and PATHNET
TELECOMMUNICATIONS, INC., a Delaware corporation ("PTI").
W I T N E S S E T H:
WHEREAS, Colonial transports refined liquid petroleum products in
interstate commerce as a common carrier and maintains a system of pipelines and
related facilities across fourteen states and the District of Columbia for such
purposes (the "Colonial System");
WHEREAS, the Colonial System consists of (a) pipelines (collectively,
the "Colonial Pipeline") located on certain interests in land (e.g.,
rights-of-way, easements, licenses, permits, leases, etc. [collectively, the
"Colonial Rights-of-Way"]), and (b) injection stations, booster stations, tank
farms, delivery locations and terminals (collectively, the "Related Facilities")
located on certain other tracts of land owned in fee or leased by Colonial, all
of which Colonial Rights-of-Way and Related Facilities are located approximately
as shown on that certain system map of the Colonial System, attached hereto as
Exhibit A and made a part hereof (the "Colonial System Map");
WHEREAS, PTI desires the right to use designated portions of the currently
existing Colonial System for the purpose of installing and operating
communications facilities, including, but not limited to, fiber optic conduits,
regeneration stations and related machinery and equipment for the operation of a
telecommunications network;
WHEREAS, Colonial desires to lease to PTI designated portions of the
Colonial Rights-of-Way and Related Facilities to use for the aforesaid purposes,
subject to applicable title restrictions and encumbrances, and upon the terms
and conditions hereinafter set forth; and
WHEREAS, Colonial and PTI desire to enter into this Agreement in order to
set forth the terms and conditions of the foregoing.
NOW, THEREFORE, for and in consideration of the premises hereof, the
covenants contained herein, the sum of Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Colonial and PTI hereby agree as follows:
ARTICLE I
AGREEMENT TO LEASE
1.1 Leasehold Interests.
(a) Subject to all of the terms and conditions of this Agreement, and
that certain Fiber Optic Access and Purchase Agreement entered into by Colonial
and PTI contemporaneously herewith (the "Fiber Optic Access and Purchase
Agreement"), Colonial agrees to lease to PTI the right to use portions of the
currently existing Colonial Rights-of-Way and Related Facilities for the uses
and purposes described herein (each such portion leased to PTI pursuant to the
terms hereof being a "Leasehold Interest"). The Leasehold Interests to be
granted hereby include the non-exclusive use of a strip of land five (5) feet on
either side of the centerline of the telecommunication conduits and
appurtenances to be installed hereunder within the designated Colonial
Rights-of-Way, or such larger area as may be reasonably necessary for the
construction and operation of the "Telecommunications Network" (as defined in
Section 1.5 hereof), as approved by Colonial in accordance with Article III
hereof; provided that, if necessary along a particular "Segment" (as hereinafter
defined), PTI may request that Colonial attempt to acquire additional
right-of-way at PTI's expense, to be included as part of the Colonial
Rights-of-Way for the purposes hereof.
(b) In the event that Colonial expands the Colonial System beyond its
current boundaries as of the date hereof, and should PTI desire to utilize such
expansion, then Colonial and PTI will negotiate in good faith to extend the
Leasehold Interests to be granted hereunder to include the additional Colonial
Rights-of-Way applicable to such extensions of the Colonial System and to
determine the compensation to be received by Colonial therefor.
(c) PTI's rights in the Colonial Rights-of-Way and Related Facilities
hereunder consist solely of Leasehold Interests subject to the terms of this
Agreement and PTI does not acquire hereby any other or additional rights in or
to any portion of the Colonial Rights-of-Way or any Related Facilities. PTI
further acknowledges that Colonial hereby reserves such access and other rights
as are necessary to enable Colonial to reasonably commercialize the "Colonial
Conduit" (as defined in the Fiber Optic Access and Purchase Agreement),
including, without limitation, full rights of access with respect to any portion
of the Colonial Rights-of-Way otherwise leased to PTI in order to allow Colonial
(or its assignee(s) or licensee(s) to maintain, operate, repair, replace and
upgrade the Colonial Conduit as necessary or appropriate.
1.2 Permits; Segment Leases.
(a) From time to time, PTI shall designate, by written notice to
Colonial (each, a "Designation Notice"), specified segments of the Colonial
System with respect to which PTI desires to acquire Leasehold Interests. Each
such Designation Notice shall identify or describe, as applicable: (i) a segment
or segments of the Colonial Rights-of-Way within the Colonial System (the
"Segment(s)"), using Colonial's location number references as beginning points
and ending points, and shall describe the approximate distance of the applicable
Segment(s); (ii) one or more of the Related Facilities along the Colonial
System; (iii) the types of
-2-
facilities PTI intends to install (i.e., regeneration facilities ("Regen
Facilities"), junctions, terminals, etc.); and (iv) the number of conduits PTI
plans to install within the Segment(s).
(b) Subject to Section 3.3 below, within thirty (30) days after
receipt of a Designation Notice, Colonial shall prepare, execute and deliver to
PTI a segment lease for the applicable Segment or Related Facility in
substantially the form set forth on Exhibit B attached hereto and made a part
hereof (each, a "Segment Lease"). Upon the execution by Colonial of a Segment
Lease, Colonial also shall notify PTI of the exact number of Conduits that
Colonial determines, in its reasonable discretion, may be installed along the
applicable Segment in question without material interference with the use,
operation and maintenance of the Colonial Pipeline in the applicable portion of
the Colonial Rights-of-Way and/or without compromising the safety of the
Colonial Pipeline. If Colonial does not own the applicable Segment or Related
Facility in fee, each such Segment Lease shall have attached as an exhibit
thereto a description of the applicable leases, easements, licenses or other
similar agreements (together with all amendments or modifications thereto),
pursuant to which Colonial has the right to use such portion of the Colonial
Rights-of-Way or Related Facility. Colonial also shall provide or otherwise make
available to PTI such documents, agreements and information pertaining to the
Colonial System, the Colonial Rights-of-Way and or Related Facilities as PTI may
reasonably request. Upon execution and delivery of a completed Segment Lease by
Colonial and PTI, the terms of such Segment Lease will be incorporated into this
Agreement and become subject to its terms and conditions, subject, however, to
modification in accordance with the terms of applicable "Permits" (as described
in Subsection 1.2(c) below issued hereunder). A Segment Lease shall signify
Colonial's authority for PTI to proceed with the modification of such existing
leases, easements, licenses and other agreements to which Colonial is a party in
order to obtain the rights (the "Perfection Rights") for PTI to install, operate
and maintain the Telecommunications Network and the Colonial Conduit through the
designated Segments of the Colonial Rights-of-Way (collectively, the "Perfection
Process"). Each such Segment Lease shall confirm, however, that PTI shall not
have the right to commence any "PTI Work" (as defined in Section 3.2 hereof)
until compliance by PTI with the applicable provisions of Sections 3.1 and 3.2
hereof.
(c) PTI shall notify Colonial in writing upon completion of the
Perfection Process with respect to a particular Segment or Related Facility,
such Perfection Process to be performed in accordance with the terms of Section
3.1 below. After completion of the pre-installation determinations described in
Subsections 3.1(b)-(d) hereof, Colonial shall prepare, execute and deliver to
PTI a Permit for the applicable Segment Lease, in substantially the form set
forth on Exhibit C attached hereto and made a part hereof (each, a "Permit").
PTI's right to use the Leasehold Interests described herein for the installation
and operation of the "Telecommunications Network" (as described in Section 1.5
hereof) shall become effective with respect to a particular Segment and/or a
particular Related Facility only upon the execution and delivery of the
applicable Permit for such Segment or Related Facility; provided, however, that
PTI may request that a Segment Lease be divided into sub-segments for "mini
construction spreads" (hereinafter defined as "Sub-Segment(s)") of no less than
fifteen (15) miles in length. In such event, PTI shall establish the applicable
Sub-Segment by delivering to Colonial a modification to a previously delivered
Designation Notice (a "Revised Designation Notice").
-3-
Receipt of same by Colonial shall authorize Colonial, upon completion of the
Perfection Process with respect to such Sub-Segment, to deliver to PTI a
"Sub-Segment Lease" for the applicable Sub-Segment that conforms to the Revised
Designation Notice.
(d) The books and records of Colonial shall be prima facie evidence of
the location and legal description of any applicable portion of the Colonial
Rights-of-Way or Related Facility in any dispute between Colonial and PTI
relating to this Agreement.
1.3 Term. The initial term of this Agreement shall be for a period of
thirty (30) years from and after the date hereof (the "Initial Term"). Provided
that PTI is not in default hereunder, PTI shall have the right to renew the
Initial Term for one (1) ten (10) year period (the "Renewal Term"), by giving
written notice to Colonial of the exercise of such right not later than twelve
(12) months prior to the expiration of the Initial Term and by paying to
Colonial, upon the termination of the Initial Term, the renewal payment
described in Article II hereof. PTI's use of its rights hereunder during the
Renewal Term shall be on the same terms and conditions as provided in this
Agreement. Whenever the word "Term" is used in this Agreement, it shall be
deemed to mean the Initial Term together with, if applicable, the Renewal Term.
1.4 Reversion to Colonial.
(a) In the event that, as of the fifth (5th) anniversary of the date
of this Agreement (the "Reversion Date"), PTI has not installed its
Telecommunications Network with respect to at least 2,200 miles of Colonial
Rights-of-Way throughout the Colonial System, then PTI shall have the right to
issue a Designation Notice, within ten (10) days after said Reversion Date,
designating additional Segments of the Colonial Rights-of-Way (and Related
Facilities) which, when added to the Segments for which Permits previously have
been granted to PTI, will equal 2,200 miles or less. In such event, upon the
execution and delivery of appropriate Segment Leases for such additional
designated portions of the Colonial Rights-of-Way and Related Facilities, then
PTI shall have the right to use such Segments and Related Facilities in
accordance with the terms of this Agreement.
(b) All other portions of the Colonial Rights-of-Way or Related
Facilities (i) in which PTI has not then installed its Telecommunications
Network; and (ii) that are not then the subject of Designation Notices as
described in Subsection 1.4(a) above will revert to Colonial as of the thirtieth
(30th) day after the Reversion Date. If any such reversion occurs, (aa) PTI will
have no further rights with respect to such portions of the Colonial
Rights-of-Way or Related Facilities (collectively, the "Undeployed Segments and
Stations") and (bb) the Undeployed Segments and Stations will no longer be
subject to the terms and conditions of this Agreement or the Fiber Optic Access
and Purchase Agreement. Additionally, at the end of the second (2nd) year after
the Reversion Date, any Segment of the Colonial Rights-of-Way or Related
Facilities that is the subject of Designation Notices as described in Subsection
1.4(a) above will be released from the exclusivity restrictions set forth in
Section 3 of the Fiber Optic Access and Purchase Agreement from and after such
date unless (x) PTI has then installed its Telecommunications Network within
such Segment, or (y) PTI is then proceeding with such installation process in
good faith and with diligent efforts. Upon the release of any such
-4-
Segments or Related Facilities from said exclusivity restrictions as described
in the immediately preceding sentence, PTI shall continue to have the right to
install its Telecommunications Network within the applicable Segments and/or at
such Related Facilities; provided that PTI's rights under this Agreement with
respect to such Segments or Related Facilities then shall be subject to the
rights of other parties, if any, claiming by, through or under Colonial;
provided, however, that although Colonial acknowledges that it shall not grant
"exclusive rights" to any such other parties, PTI acknowledges that there are
space limitations within the Colonial Rights-of-Way and that any granting by
Colonial of rights to other parties for the last remaining available space
within a Segment or portion thereof shall not constitute the granting of
"exclusive rights" for the purposes hereof.
1.5 Use. PTI acknowledges and agrees that the property to be leased to PTI
hereunder may be used only for the purpose of installing, constructing, using,
operating, maintaining, repairing and replacing a fiber optic telecommunications
network consisting of not more than ten (10) telecommunications conduits (the
"Conduit(s)") within a given Segment (together with appurtenant and necessarily
related Regen Facilities and other telecommunications machinery and equipment
(collectively, the "Telecommunications Network")), the exact number and location
of Conduits to be located within a given Segment to be determined in accordance
with the terms and conditions of Subsection 1.2(b) and Article III hereof.
ARTICLE II
CONSIDERATION; RENEWAL PAYMENT; OTHER FEES AND EXPENSES
2.1 Consideration. The parties hereto acknowledge that, pursuant to that
certain Contribution Agreement, by and between Colonial and PTI, dated as of
November 2, 1999, Colonial and PTI have agreed that, in consideration of
Colonial's permission to allow PTI to use designated portions of the Colonial
Rights-of-Way as described herein for the Initial Term, Colonial has received,
simultaneously with the execution of this Agreement ONE MILLION SIX HUNDRED
EIGHTY FOUR THOUSAND ONE HUNDRED FIFTEEN (1,684,115) shares of Series D
convertible preferred stock of PTI (collectively, the "PTI Stock").
2.2 Renewal Payment.
(a) In the event that PTI exercises its right to extend the Term of
this Agreement for the Renewal Term, PTI shall pay to Colonial, on or before the
expiration of the Initial Term, a renewal payment equal to the then-current
"fair market value" of the Leasehold Interests to be granted herein (the
"Renewal Payment").
(b) Within the thirty (30) day period commencing upon Colonial's
receipt of PTI's written notice of renewal as described in Section 1.3 above,
Colonial and PTI shall negotiate in good faith in order to determine a mutually
satisfactory amount for the Renewal Payment. If Colonial and PTI fail to agree
upon the amount of such Renewal Payment within such thirty (30) day period, then
the renewal payment will be determined by the following third party independent
appraisal procedure:
-5-
(i) The parties shall attempt to agree upon a single appraiser;
however, if the parties are unable to agree upon an appraiser within
fifteen (15) days after the expiration of the thirty (30) day negotiation
period described in the first sentence of this Subsection 2.2(b), then each
party shall appoint an appraiser within five (5) days after the expiration
of the initial fifteen (15) day period. Upon the appointment of the two (2)
appraisers, said appraisers, within five (5) Business Days after the
appointment of the second appraiser, and before exchanging views as to the
question at issue, shall appoint in writing a third appraiser and give
written notice of such appointment to the parties. If any appraiser shall
not be appointed or agreed upon within the time herein provided, then
either of the parties may apply to the United States District Court for the
Northern District of Georgia for such appointment. The appraisers shall
have thirty (30) days from the date of the appointment of the last
appraiser to provide a determination under this Section 2.2.
(ii) Any appraiser appointed hereunder shall be a member of the
MAI and shall have no less than five (5) years experience in the appraisal
of comparable assets or rights.
(iii) In the event any appraiser appointed as aforesaid
thereafter shall die or become unable or unwilling to act, such appraiser's
successor shall be appointed in the same manner provided in this Section
2.2 for the appointment of the appraiser so dying or becoming unable or
unwilling to act.
(iv) The question to be determined by the appraisers shall be:
"What is the then fair market value of the renewal of the rights leased
under the Segment Leases?"
(v) For the purposes of this Section 2.2, the term "fair market
value" shall mean the highest price for cash that the rights leased under
the Segment Leases would bring in a competitive and open market under all
conditions requisite to a fair transaction with the lessor and lessee each
acting prudently and knowledgeably, and subtracting therefrom the costs and
expenses of such a transaction, including, without limitation, commissions
and legal fees and assuming further that (aa) such price is not affected by
undue stimulus; (bb) lessor and lessee are typically motivated; (cc) both
parties are well-informed or well-advised and are each acting in what it
considers its own best interest; (dd) a reasonable time is allowed for
exposure on the open market; (ee) payment is made in cash or its
equivalent; and (ff) to the extent applicable, that the Telecommunications
Facilities to be installed and operated on the Colonial Rights-of-Way in
connection with such renewal already have been installed.
(vi) As applicable, the determination of (aa) the single
agreed-upon appraiser, or (bb) the concurring determination of any two of
the three appraisers shall be binding upon Colonial and PTI; provided that,
in the event no two of the appraisers shall render a concurring
determination, then the average of the two appraised values that are
closest in amount shall be binding upon Colonial and PTI.
-6-
(vii) The fees and expenses of the appraiser(s) shall be divided
equally between the two parties to the transaction.
(viii) Wherever the determination of "fair market value" of the
rights licensed hereunder is at issue, the procedure established in this
Section 2.2 shall be binding upon Colonial and PTI and shall be a condition
precedent to the filing of any action at law or in equity by any party
hereto.
(c) PTI will not be entitled to any return or refund of all or any
portion of either the PTI Stock or any Renewal Payment in the event of any
termination of this Agreement "for cause" by Colonial or in the event that
PTI elects not to use or is prohibited from using any portion of the
Colonial Rights-of-Way or Related Facilities for the purposes described
herein, including, without limitation, any portions of the Colonial
Rights-of-Way that become Undeployed Segments and Stations pursuant to
Section 1.4 hereof.
2.3 Expenses.
(a) Except to the extent that Colonial is obligated for same pursuant
to the "Services Agreement" described in Section 3.3 hereof, PTI will be solely
responsible for all costs and expenses of any nature whatsoever in connection
with:
(i) all aspects of the Perfection Process (including, without
limitation, any payments to the fee owners, ground lessors or lessees of
applicable land (collectively, the "Landowners") or to contractors,
right-of-way agents and other brokers, agents, consultants or other third
parties (collectively, "Right-of-Way Agents") for the purposes of assisting
in such Perfection Process (all of the foregoing being collectively
referred to as the "Perfection Expenses");
(ii) the construction, installation, use, operation, maintenance,
repair, replacement and/or removal of the Telecommunications Network or any
portion thereof in accordance with the requirements of Articles III, IV and
IX hereof; and
(iii) any construction, grading or other work of any nature
whatsoever required by any state, county, municipal and/or tribal
governments, and/or the appropriate agencies, offices, departments, boards,
bureaus, authorities or commissions thereof with jurisdiction over the
matter in question (collectively, the "Governmental Authorities") in order
to allow the use of applicable portions of the Colonial Rights-of-Way
and/or Related Facilities for the deployment of the Telecommunications
Network;
(b) PTI acknowledges that, as of the date hereof, Colonial has not
completed the Perfection Process with respect to the Colonial Rights-of-Way, but
has substantially completed the Perfection Process with respect to certain
segments of the Colonial Rights-of-Way described on Exhibit D attached hereto
and made a part hereof (collectively, the "Currently Perfected Segments"). Upon
the issuance of a Designation Notice by PTI with respect to a Currently
Perfected Segment, PTI will reimburse Colonial for all actual and reasonable
-7-
Perfection Expenses for such Currently Perfected Segments, such reimbursement to
be made within thirty (30) days of receipt of an invoice from Colonial, and to
be calculated in accordance with the methods and procedures described in the
Services Agreement.
2.4 Payments. All rentals, license fees, Renewal Payments, expenses and
other payments or reimbursements to be paid by PTI to Colonial hereunder shall
be payable in lawful money of the United States of America. All payments shall
be made by PTI to Colonial without notice or demand, deduction or offset at the
address provided in Section 17.1 hereof.
2.5 Default Interest. In the event that any payment or reimbursement is not
paid within ten (10) days after written notice of such nonpayment is given
pursuant to Section 12.1 hereof, then interest shall accrue on such unpaid
payment or reimbursement at the "Default Rate" described in Section 17.12 hereof
from the date such payment or reimbursement was due until finally paid.
ARTICLE III
INSTALLATION OF TELECOMMUNICATIONS NETWORK
3.1 Perfection; Pre-Installation Determinations.
(a) The parties hereto agree that PTI shall be obligated to complete
the Perfection Process for the right to install the Telecommunications Network
and the Colonial Conduit within any discrete portion of a Segment before
commencing any "PTI Work" (as defined in Section 3.2 hereof) within such
portion, unless PTI receives Colonial's express written permission not to do so,
which permission will be based, among other matters, upon PTI's agreement to
indemnify Colonial for any liabilities described in Subsection 11.1(c) hereof.
PTI will use good faith efforts to obtain Perfection Rights in a manner that
provides authority generally to install and operate telecommunications
facilities along the Colonial Rights-of-Way, such good faith efforts to be as
follows: Prior to and during the Perfection Process, Colonial and PTI will work
together to create and modify Perfection Process methodologies that balance (i)
Colonial's interest in maximizing "broad form" perfection and (ii) PTI's
interest in controlling perfection costs and minimizing delays. If it is
determined that there is an incremental cost difference between (aa) broad form
perfection and (bb) the minimum Perfection Rights that are necessary in order to
install PTI's Telecommunications Network and the Colonial Conduit along the
applicable property, then Colonial shall have the option of paying such
difference.
(b) Within thirty (30) days after PTI's designation of a Segment or
Related Facility pursuant to Section 1.2 hereof, Colonial, at its own cost and
expense, (along with any other potential contractor that PTI may consider for
such work) shall prepare a proposal for completion of the Perfection Process,
route engineering that may be necessary prior to the installation of the
Telecommunications Network ("Route Engineering Work") and the performance of
construction management services in connection with installation of the
Telecommunications Network ("Construction Management Work"; the Perfection
Process, Route Engineering Work and Construction Management Work sometimes
collectively referred to as "Perfection and Construction Management Work").
Colonial acknowledges that PTI shall
-8-
have no obligation to select Colonial for the performance of such Perfection and
Construction Management Work; provided, however, that in the event Colonial is
not selected to perform such Perfection and Construction Management Work,
Colonial nevertheless shall have the right to approve the contractor that will
perform such Perfection and Construction Management Work (the "Perfection and
Construction Management Contractor") in accordance with the provisions of
Subsection 3.2(f) hereof. Colonial also shall have the right to review,
supervise and approve, jointly with PTI, the performance of all such Perfection
and Construction Management Work and to receive periodic progress reports from
the Perfection and Construction Management Contractor (if not Colonial) during
the course of performance of the Perfection and Construction Management Work.
(c) PTI shall notify Colonial in writing upon completion of the
Perfection Process as to a Segment of the Colonial Rights-of-Way or a discrete
portion of such Segment. Within thirty (30) days after receipt of such notice,
Colonial shall notify PTI in writing (the "Colonial Engineering Notice") of:
(i) the exact location in which PTI may install the Conduits
within such Segment of the Colonial Rights-of-Way or the applicable portion
thereof (such location to be, whenever possible, running along a centerline
located not less than five (5) feet from an outer right-of-way boundary of
the Segment in question, but no closer than ten (10) feet from the closest
pipeline within the Segment in question); and
(ii) any special conditions regarding any construction,
installation, use or operation that must be conducted within such Segment
or the applicable portion thereof or Related Facility and not otherwise
generally described herein (including, without limitation, the timing
deadlines for the completion of the applicable work on any given
Landowner's property) that are necessary, in Colonial's reasonable
determination, to prevent or limit material interference with the use,
operation and maintenance of Colonial's Pipeline in the applicable portion
of the Colonial Rights-of-Way, to prevent any compromising of the safety of
the Colonial Pipeline and/or, in the case of construction schedules, to
maintain good relations with Landowners on the Colonial Rights-of-Way.
Colonial will attempt to develop general guidelines for such determinations to
the extent reasonably feasible in order to provide PTI with appropriate
flexibility so long as development is consistent with such guidelines. If PTI's
concerns cannot be resolved without re-routing or obtaining additional
Perfection Rights, the cost of same shall be borne by PTI.
(d) If PTI objects to any of the determinations made by Colonial pursuant
to Subsection 3.1(c) above or to the determination of the exact number of
Conduits to be allowed, as described in the second sentence of Subsection 1.2(b)
above, then, upon PTI's written request to Colonial within fifteen (15) days
after receipt of the Colonial Engineering Notice (or other notice provided
pursuant to Subsection 1.2(b), as applicable), representatives of each party's
appropriate departments will meet to discuss the concerns of both parties and
possible resolutions. If the parties are not able to resolve the dispute within
ten (10) days after the first
-9-
meeting, then either party may elect to escalate the issue to the senior vice
president level and/or any comparable executive-level officer of each party for
good faith discussions to resolve the matter. It is the intent of such
discussions to find a resolution that protects the safety and integrity of the
Colonial System, while minimizing to the extent reasonably possible the harm to
PTI that may result from a limitation on the permitted number of Conduits to be
developed or other restrictions imposed by Colonial. If, after such discussions,
the parties are unable to reach agreement, then the decision of Colonial's
applicable executive-level officer shall be final as to the matter in question.
(e) As referenced in Subsection 1.2(b), Permits shall be prepared and
executed upon completion of the Perfection Process and the other
pre-installation determinations described in Subsections 3.1(b)-(d) above. Among
other matters, said Permits shall have the effect of modifying the applicable
Segment Leases by limiting the areas leased to PTI within the Colonial
Rights-of-Way to the areas specifically described in the Permits.
(f) In circumstances in which PTI elects not to install its facilities
within a portion of the Colonial Rights-of-Way and instead installs its
facilities on land that is adjacent to or within five (5) miles of such portion
(the "Rerouted Portion"), PTI agrees (i) to comply with the Perfection Process
and other requirements of this Section 3.1 with respect to all parcels of land
which are within the Rerouted Portion and which are not owned by, or subject to
leases, easements or other right-of-way grants in favor of, utilities or
government authorities (including, without limitation, railroad, power
companies, pipeline companies, and federal, state or local governments or
agencies) and (ii) to provide contemporaneous written notice to Colonial of such
reroute, identifying the Rerouted Portion in reasonable detail.
3.2 Requirements for Installation of the Telecommunications Network and the
PTI Work. All work to be performed by or on behalf of PTI in connection with the
development, construction, installation, operation, maintenance and repair of
PTI's Telecommunications Network within any applicable Segments of Colonial
Rights-of-Way or at any Related Facility (collectively, "PTI Work") shall be
subject in all events to the following terms and conditions, the satisfaction of
which shall be at the sole cost and expense of PTI:
(a) The plans and specifications for all PTI Work and any
modifications thereto must be approved in advance by Colonial and no PTI
Work may commence until receipt of such approval, which approval will not
be unreasonably withheld. PTI shall deliver to Colonial, for its approval,
complete detailed engineering and design plans and specifications for the
performance of the PTI Work on the applicable Segment or at the applicable
Related Facility, including, without limitation, all construction methods
and staging areas to be used in connection with the same. Colonial shall
approve, or propose modifications, within thirty (30) days of its receipt
of such plans and specifications or revised plans and specifications, as
applicable. In the event of any dispute between Colonial and PTI regarding
such approval, the matter shall be referred to the Head Engineer of each of
PTI and Colonial for resolution.
-10-
(b) All PTI Work shall be performed in a good and workmanlike manner,
free and clear of all mechanics' and materialmen's liens and encumbrances
related thereto and in accordance with all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
concessions, franchises and similar items of or from all applicable
Governmental Authorities with jurisdiction over the applicable portions of
the Colonial Rights-of-Way and/or the Related Facilities and the use and
operation thereof (including, without limitation, any rules or regulations
issued by the Department of Transportation or the Occupational Safety and
Health Administration, and all applicable judicial, administrative and
regulatory decrees, judgments and orders relating thereto (collectively,
"Applicable Laws").
(c) All PTI Work shall be performed in accordance with the general
construction requirements and specifications for work within the Colonial
Rights-of-Way or at the applicable Related Facility attached hereto as
Exhibit E and made a part hereof (the "Colonial Construction Standards").
(d) All PTI Work with respect to the initial development, construction
and installation of any portion of the Telecommunications Network within
any applicable Segments of Colonial Rights-of-Way or at any Related
Facilities must be performed in accordance with all general or special
conditions or requirements noted on the applicable Permits.
(e) All PTI Work shall be performed in accordance with all standards
or requirements, whether now or hereafter in force, issued by (i) any
insurer or insurance carrier, board of fire underwriters or any other
company, bureau, organization or entity performing the same or similar
functions applicable to the Telecommunications Network, the Colonial
Pipeline and/or the Related Facilities (collectively, the "Insurance
Requirements"); and (ii) the American Society of Mechanical Engineers, the
American Petroleum Institute, the National Electrical Safety Code, and the
National Association of Corrosion Engineers (collectively, the "Trade
Standards").
(f) All contractors, materialmen, mechanics and any other parties who
may perform work in, on or about the Colonial Rights-of-Way or at the
applicable Related Facilities for the benefit of the Telecommunications
Network pursuant to agreements with PTI (collectively, "Telecommunications
Network Contractors") (i) must be approved in advance by Colonial; (ii)
must submit for review and approval by Colonial satisfactory evidence of
contractor's liability and worker's compensation insurance; and (iii) must
acknowledge receipt and review of the Colonial Construction Standards and
the potential liability arising out of any breach of the integrity of the
adjacent Colonial Pipeline. Colonial and PTI will establish a list of
pre-approved contractors and suppliers, and a mechanism to provide for
approval by Colonial of parties performing work on the Colonial
Rights-of-Way or at the applicable Related Facility in a manner that does
not materially delay or interfere with work to be performed on the Colonial
Rights-of-Way or at the applicable Related Facility.
-11-
(g) During all phases of the construction and installation of any
portion of the Telecommunications Network within any applicable Segments of
Colonial Rights-of-Way or at the applicable Related Facility, Colonial
shall assign one or more inspectors to work with each PTI construction crew
in order to provide construction inspection services with respect to such
PTI Work. PTI shall reimburse Colonial for the costs of such inspections
within thirty (30) days of receipt of an invoice from Colonial, such
reimbursement payment to be calculated in accordance with the methods and
procedures described in the Services Agreement. In connection with such
inspections, PTI will make available to Colonial and its inspectors, upon
Colonial's reasonable request, the PTI personnel and all Telecommunications
Network contractors and other agents working for or on behalf of PTI in the
performance of the PTI Work.
(h) All PTI Work must be done in such a manner as will not interfere
with in any way whatsoever the use, maintenance, operation, repair and
replacement of the adjacent Colonial Pipeline.
(i) PTI shall provide monthly engineering progress reports and weekly
construction progress reports advising Colonial of the status and progress
of all PTI Work and any issues of concern arising therefrom.
(j) PTI shall perform a complete locations survey of the applicable
Segment or Related Facility in question, including the staking and marking
of the existing Colonial Pipeline and the route of the Telecommunications
Network and any applicable Regen Facilities that are a part hereof) in
accordance with the Colonial Construction Standards and standard
telecommunications industry practices.
(k) PTI shall prepare field alignment maps showing the route along the
Segment in question as well as the property ownership, terrain description,
materials and other pertinent information.
(l) PTI shall prepare railroad, highway, waterway or wetlands crossing
permit drawings sufficient for approval by the applicable Governmental
Authorities or railroads and obtain any and all other permits necessary for
such crossings.
(m) All PTI Work shall be performed at such a standard of care that
equals the Colonial Construction Standards or that which is normal and
customary in the telecommunications industry, whichever standard is higher.
(n) In the event that PTI fails to comply with Colonial safety or
operational regulations, and such failure interferes or is likely to
interfere with Colonial's operations, Colonial may require that PTI
immediately suspend all affected operations on the applicable Segment.
Promptly after such suspension, and if such suspension materially and
adversely affects PTI's Telecommunications network, within two (2) hours
after such suspension, Colonial and PTI each will make available by
telephone a representative of upper management, as designated on the
escalation list agreed to by the parties, to discuss
-12-
prompt resolution of the situation. If the parties are unable to resolve
the issue by telephone, then Colonial and PTI will escalate the issue to
the next higher individual on the escalation list for a face to face
meeting at a mutually agreeable location within twenty-four (24) hours of
the suspension. The parties thereafter will negotiate in good faith to
resolve the issue and prevent the occurrence of similar situations in the
future.
3.3 Services Agreement with Colonial. Notwithstanding the other provisions
of this Article III or of Subsection 1.2(b) or Section 4.1 below, the parties
hereto acknowledge that Colonial shall not be obligated to execute and deliver
to PTI any Segment Lease hereunder prior to the execution by Colonial and PTI of
that certain Master Services Agreement (the "Services Agreement"). Such Services
Agreement shall set forth, among other matters, the designation by Colonial of
specified employees to work within PTI's organization, Perfection Process
methodologies, the scope of work for Colonial's performance, if any, of any
Perfection and Construction Management Work and inspections with respect to the
Colonial Rights-of-Way and Related Facilities (or portions thereof) to be
deployed by PTI hereunder and the compensation to be paid to Colonial for such
services; however, PTI shall continue to have sole responsibility for all PTI
Work hereunder for any applicable Segment to the extent that Colonial has not
expressly assumed such responsibility within such Segment pursuant to the terms
of the Services Agreement.
3.4 Completion of PTI Work. Upon the completion of any PTI Work within a
designated Segment or Related Facility, PTI shall do the following:
(a) Perform an as-built survey of the Segment or Related Facility in
question and cause any applicable system maps and drawings of Colonial for
such particular Segment or Related Facility to be revised and updated as
appropriate so that each of PTI and Colonial have at least one full set of
revised and updated maps and drawings.
(b) Deliver to Colonial complete technical specifications for the
Telecommunications Network, including all Regen Facilities and any other
machinery or equipment placed within the Colonial Rights-of-Way or at a
Related Facility, as the case may be.
(c) Deliver to Colonial equipment manuals for the proper use,
operation, maintenance and repair of any portion of the Telecommunications
Network, including all Regen Facilities and any other machinery or
equipment that is to be or may be maintained by Colonial.
(d) Deliver to Colonial a certificate from PTI's general
contractor(s), certifying that all PTI Work within the applicable Segment
or Related Facility has been completed in accordance with the plans and
specifications previously approved by Colonial, that all such PTI Work has
been paid for, that all Telecommunications Network Contractors have been
paid and that no party has any lien rights or claims of lien with respect
to any portion of the completed PTI Work for such Segment or Related
Facility.
-13-
(e) Obtain any certificates, permits, licenses or approvals required
to be obtained by any applicable Governmental Authorities under any
Applicable Laws or Trade Standards upon completion of the PTI Work in
question including, without limitation, such of the foregoing as may be
required for the operation of the Telecommunications Network.
3.5 Unauthorized Work. In the event that PTI performs any PTI Work along
any portion of the Colonial Rights-of-Way or at a Related Facility without
obtaining Colonial's approval therefor or completing the Perfection Process with
respect to the applicable Segment, or if Colonial determines that any such PTI
Work or portion thereof is prohibited by applicable Governmental Authorities or
Applicable Laws, then Colonial may require PTI to remove the PTI Work (including
any Conduits, Regen Facilities or other improvements installed therein)
immediately and to restore the subject property to its original condition, wear
and tear and casualty excepted, provided that Colonial will not require such
removal for so long as PTI is in good faith contesting or otherwise attempting
to resolve such prohibitions. In the event that PTI fails to do so, then
Colonial may perform such removal and restoration at PTI's sole cost and
expense, without any liability to Colonial.
ARTICLE IV
OPERATION, MAINTENANCE AND REPAIR
4.1 PTI Operation, Maintenance and Repair. Upon completion of any
applicable portion of the Telecommunications Network, and during the Term hereof
PTI shall be responsible, at its sole expense, for all costs and expenses of the
operation of the Telecommunications Network (except only as expressly described
in the Fiber Optic Access and Purchase Agreement), and all ordinary and
extraordinary maintenance and repair (including, without limitation, the
performance of continual monitoring and routine or special inspections) of all
aspects of the Telecommunications Network (including, without limitation, any
fibers, conduits, Regen Facilities or junctions, line amplifiers and other
equipment and machinery that are a part thereof) (collectively, the "PTI
Operation and Maintenance Services"), all pursuant to and in accordance with the
provisions of Section 3.2 and in compliance with the plans and specifications
for the Telecommunications Network approved by Colonial as provided in Section
3.2. PTI shall have no responsibility for, or authorization to perform
maintenance or repairs on any portion of the Colonial Pipeline or any other
Colonial equipment or machinery located along the Colonial Rights-of-Way or at
the Related Facilities.
4.2 Warranties. In the event any maintenance or repairs to the
Telecommunications Network are required as a result of any breach of any
warranty made by any of PTI's manufacturers, contractors or vendors, PTI shall
pursue any remedies it may have against such manufacturers, contractors or
vendors, and PTI shall reimburse Colonial for any expenses that Colonial has
incurred as a result of any such breach of warranty.
-14-
4.3 Subcontractors. PTI may subcontract its obligations under this Article
IV; however, in any such event, PTI shall require the subcontractors to meet
operations, maintenance and repair standards for the Telecommunications Network
that are at least as high as those standards set forth in Section 3.2 of this
Agreement. The use of any such subcontractor shall not relieve PTI of any of its
obligations hereunder.
4.4 Colonial Inspections . In addition to the matters described in the
Services Agreement, after installation of the Telecommunications Network within
any Segment, Colonial shall have the right, but not the obligation, to inspect
all or any portion of the PTI Work, including, without limitation, the
Telecommunications Network, as Colonial may deem appropriate, such additional
inspections to be performed at Colonial's expense. Notwithstanding the
foregoing, in the event that Colonial considers special, non-periodic
inspections of the PTI Work to be reasonably necessary because of perceived
interference with or threats to the use and operation of the adjacent Colonial
Pipeline and/or the safety and integrity of such Colonial Pipeline, PTI will pay
Colonial for the cost of such special inspections in accordance with the
provisions of the Services Agreement.
ARTICLE V
PIPELINE MAINTENANCE AND REPAIR
5.1 Pipeline Maintenance and Repair. Colonial will perform, at its sole
expense, all emergency, routine and necessary maintenance, replacements and
repair on the Colonial Pipeline and other Colonial equipment located along the
Colonial Rights-of-Way and at the Related Facilities, excluding, however, any
portion of the Telecommunications Network located at any Related Facility.
ARTICLE VI
INSURANCE
6.1 Acquisition of Insurance Policies. During the entire Term, Colonial and
PTI shall procure and maintain the insurance described in this Article VI (or
its then available equivalent). Policy limits shall be reviewed annually and may
be adjusted if prudent, considering levels of inflation, risk of loss, premium
expenses and other relevant factors.
6.2 Types of Required Insurance for PTI. PTI shall procure and maintain
the following:
(a) commercial general public liability insurance covering loss or
damage resulting from accidents or occurrences on, about or arising out of
or in connection with the Telecommunications Network (or the attempted
installation thereof) and/or the Segments that may be leased to PTI
hereunder, with personal injury, death and property damage combined single
limit liability of not less than One Million Dollars ($1,000,000.00)] for
each accident or occurrence and in the aggregate. Coverage under
-15-
such policies shall be broad form and shall include, but shall not be
limited to, operations, contractual, owner's and contractor's protective,
products and completed operations, environmental pollution, and the use of
all owned, non-owned and hired vehicles;
(b) umbrella liability insurance in an amount not less than
Thirty-Five Million Dollars ($35,000,000.00);
(c) "all risk" or "special" physical damage insurance covering all
risks of physical loss or damage to all portions of the Telecommunications
Network installed by or on behalf of PTI, with liability limits of not less
than one hundred percent (100%) of the then full replacement cost of all
such property;
(d) contractor's liability and builder's risk insurance during
performance of all PTI Work and during any subsequent maintenance, repair,
modification, or replacement thereof;
(e) worker's compensation and employer's liability insurance as
required by Applicable Laws; and
(f) such other insurance in amounts from time to time reasonably
required by Colonial against other insurable risks if, at the time, such
coverage is available at commercially reasonable rates and is commonly
obtained with respect to similar improvements or systems.
6.3 Types of Required Insurance for Colonial. Colonial shall procure and
maintain the following:
(a) commercial general public liability insurance covering loss or
damage resulting from accidents or occurrences on or about or arising out
of or in connection with the Colonial Pipeline and/or the portions of the
Colonial Rights-of-Way not leased to PTI hereunder with personal injury,
death and property damage combined single limit liability of not less than
One Million Dollars ($1,000,000.00) for each occurrence and in the
aggregate. Coverage under such policies shall be broad form and shall
include, but shall not be limited to, operations, contractual, owner's and
contractor's protective, products and completed operations, environmental
pollution, and the use of all owned, non-owned and hired vehicles;
(b) umbrella liability insurance in an amount not less than
Thirty-Five Million Dollars ($35,000,000.00); and
(c) worker's compensation and employer's liability insurance as
required by Applicable Laws.
6.4 Terms of Insurance. The policies required under Sections 6.2 and 6.3
shall name Colonial or PTI, as applicable, as additional insured(s). Each party
shall provide to the other
-16-
party certificates of insurance and copies of policies obtained by the insuring
party hereunder promptly upon the request of the other party. All policies of
insurance obtained by a party pursuant to Sections 6.2 or 6.3, as applicable,
also:
(a) shall be written by responsible insurance companies reasonably
acceptable to the other party having a Best's rating of "A-VIII" or better;
(b) shall be written as primary policies with respect to losses
arising out of the acts or omissions of the named insured not contributing
with and not in excess of any coverage that the other party may carry;
(c) shall contain an endorsement providing that the amount of coverage
will not be reduced with respect to any party except after thirty (30)
days' prior written notice from the insurance company to the other party
and such coverage may not be cancelled with respect to any party
(including, without limitation, for non-payment of premium) except after
thirty (30) days' prior written notice from the insurance company to the
other party;
(d) shall contain, if obtainable, a statement that the insurance shall
not be invalidated should any insured waive in writing prior to a loss any
or all right of recovery against any party for loss accruing to the
property described in the insurance policy; and
(e) shall contain, if obtainable, a provision that no act or omission
of the party procuring such insurance shall affect or limit the obligation
of the insurance carrier to pay the amount of any loss sustained.
6.5 Failure to Maintain Insurance. If either party at any time during the
Term fails to procure or maintain any insurance required hereunder or to pay the
premiums therefor, the other party shall have the right to procure the same on
behalf of the defaulting party and to pay any and all premiums thereon. In such
event, any amounts paid by such other party in connection with the acquisition
of such insurance shall be immediately due and payable by the defaulting party
and interest on the amount so paid shall accrue at the Default Rate.
6.6 Blanket Policies; Self-Insurance.
(a) Any insurance required to be carried pursuant to this Article VI
may be carried under a "blanket" policy or policies covering other liabilities
and locations of Colonial or PTI, as applicable; provided, however, that such
policy or policies: (i) shall apply to the property required to be insured by
this Article VI and in an amount not less than the amount of insurance required
to be carried by Colonial or PTI with respect thereto; and (ii) shall provide
that no payment of insurance proceeds under any such policy with respect to any
location other than the Telecommunications Network (with respect to PTI) or
other than the Colonial Rights-of-Way and/or Related Facilities (with respect to
Colonial), shall reduce the amount of insurance available with respect to the
Telecommunications Network or to the Colonial Rights-of-Way
-17-
and/or Related Facilities, as applicable, to an amount below the limits of
liability required to be maintained herein.
(b) The insurance requirements described in this Article VI may be
satisfied with respect to the initial One Million Dollars ($1,000,000.00) of
liability by any plan of self-insurance from time to time maintained by Colonial
or PTI on condition that: (i) the party so self-insuring has and maintains an
aggregate net worth of One Million Dollars ($1,000,000.00) or more; and (ii) any
party so self-insuring shall furnish to the other party, upon request, evidence
of the adequacy of its net worth. The annual report of such party that is
audited by an independent certified public accountant shall be sufficient
evidence of its net worth. If either Colonial or PTI elects to self-insure
pursuant to the provisions set forth herein, or thereafter elects to terminate
such self-insurance program, it shall give at least ten (10) days' prior written
notice thereof to the other party.
ARTICLE VII
INTENTIONALLY OMITTED
ARTICLE VIII
CONDEMNATION
8.1 Material Taking. If (a) all or any portion of a Segment (or a Related
Facility, as applicable) shall be acquired for any public or quasi-public use
through taking by condemnation, eminent domain or any similar proceeding, or
purchase in lieu thereof (each, a "Taking"); and (b) PTI and Colonial reasonably
determine, as applicable, that (i) the Segment or portion thereof cannot, at
reasonable cost, continue to be operated for both the existing Pipeline and the
operation of the Telecommunications Network, or (ii) the Related Facility or
portion thereof cannot, at reasonable cost, continue to be operated for both the
existing Colonial Related Facility and the operation of PTI's Regen Facilities
thereon (in either such case, a "Material Taking"), then any Permits or Segment
Leases applicable to the portion of the Colonial Rights-of-Way or Related
Facility so taken shall cease and terminate as of the date the condemning
authority takes title or possession, whichever first occurs and only to the
extent that such Permits or Segment Leases apply to the property so taken.
8.2 Continuation of Agreement. If there is a Taking that is not a Material
Taking and this Agreement is not partially terminated as provided in Section
8.1, this Agreement shall remain in full force and effect and any award(s)
received thereby shall be apportioned pursuant to Section 8.3 hereof.
8.3 Apportionment of Award(s) .
(a) If there is a Taking, whether a Material Taking or otherwise,
Colonial and PTI shall be entitled to receive and retain such separate awards
and portions of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings, or as may be otherwise agreed, taking
into consideration the nature of the respective interests of Colonial and PTI in
the subject property, as subject to this Agreement.
-18-
(b) If the condemning authority does not make separate awards and the
parties are unable to agree as to amounts that are to be allocated to the
respective interests of Colonial and PTI, the award shall be allocated as
follows: (i) first, if the Taking is not a Material Taking and Colonial and/or
PTI elect(s) to restore the property and improvements so taken, then to such
party(ies) in the amount(s) equal to the costs and expenses incurred by Colonial
and/or PTI in performing any such restoration; (ii) second, to Colonial and PTI
in proportional amounts reflecting the respective unamortized cost of any
portion of the Colonial Pipeline, Related Facilities and/or Telecommunications
Network so taken; and (iii) the balance, if any, shall be distributed in
proportion to the amounts of the award allocated to Colonial and PTI pursuant to
clause (ii) above.
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PTI
9.1 PTI's Representations, Warranties and Covenants. PTI represents,
warrants and covenants that:
(a) PTI is a corporation existing and in good standing under the laws
of the State of Delaware,
(b) PTI has the power and authority to enter into this Agreement and
to consummate the transactions provided for herein. This Agreement and all of
the documents executed and delivered by PTI constitute the legal, valid, binding
and enforceable obligations of PTI and there are no claims or defenses, personal
or otherwise, or offsets whatsoever to the enforceability or validity of this
Agreement.
(c) The execution, delivery and performance by PTI of its obligations
under this Agreement will not conflict with or result in a breach of any
Applicable Law by which PTI is bound or by any of the provisions of any contract
to which PTI is a party or by which PTI is bound, or PTI's articles of
incorporation or by-laws. There is no action, suit, proceeding or investigation
pending or, to PTI's knowledge, threatened, before any agency, court or other
Governmental Authority that relates to PTI, this Agreement or the installation
of the Telecommunications Network contemplated herein that would materially
interfere with PTI's ability to perform its rights and obligations hereunder.
(d) PTI has not made a general assignment for the benefit of
creditors, filed any voluntary petition of bankruptcy or suffered the filing of
an involuntary petition by its creditors, suffered the appointment of a receiver
to take possession of substantially all of its assets, suffered the attachment
or other judicial seizure of substantially all of its assets, admitted its
inability to pay its debts as they come due, or made an offer of settlement,
extension or compromise to its creditors generally.
-19-
(e) PTI warrants and covenants that the installation, use and
operation of the Telecommunications Network (and any related maintenance, repair
or replacement thereof) shall comply with all Applicable Laws.
(f) PTI shall obtain (and cause to remain effective for the Term of
this Agreement) all rights, licenses, authorizations, permits, consents and
other agreements or approvals required by Governmental Authorities
(collectively, the "Required Permits") necessary for the installation, use and
operation of the Telecommunications Network (including, without limitation, all
Conduits, Regen Facilities, cables, fibers or other physical plant facilities or
machinery or equipment related thereto). Colonial shall have the right to review
and approve all documents evidencing or reflecting the Required Permits.
(g) PTI will comply with all requirements, conditions and stipulations
set forth in any of the Required Permits and in any easements, licenses or other
agreements evidencing the rights of Colonial in and to the Colonial
Rights-of-Way that have been disclosed to PTI.
(h) PTI shall notify promptly Colonial of any matters pertaining to
any damage or threatened damage to or loss of any portion of the
Telecommunications Network, the Colonial Pipeline or any Related Facilities of
which it becomes aware.
(i) PTI shall respect Colonial's right to use the Colonial Pipeline
and the Related Facilities. PTI shall not use the Telecommunications Network in
a manner that interferes in any way with or adversely affects the Colonial
Pipeline or any Related Facility, and PTI shall take all reasonable precautions
against, and shall assume liability for, subject to the terms herein, any damage
to the Colonial Pipeline or any Related Facility caused by PTI or any of PTI's
employees, officers, directors, contractors, agents, licensees and/or
concessionaires, as applicable (collectively, the "PTI Parties").
(j) PTI agrees to cooperate with and support Colonial in connection
with the compliance with any government requirements issued by any Governmental
Authority applicable to the Telecommunications Network.
(k) PTI shall pay when due all charges for public or private utility
services to or for any portion of the Telecommunications Network during the
Term, including, without limitation, all charges for electricity, water, sewer,
storm water drainage, gas, telephone and/or garbage collection.
(l) PTI shall pay when due the following, as they arise during the
Term (collectively, the "Impositions"): (i) all real property taxes,
assessments, fees or payments in lieu thereof due with respect to the
Telecommunications Network, or any portion thereof, or any personal property or
intangibles located in or used in connection with the Telecommunications
Network; (ii) any and all sales, use, income, gross receipts or other taxes
assessed on the basis of revenues received or accrued by PTI arising out of its
use of the Telecommunications Network; and (iii) all other taxes, assessments,
excises, levies, license fees, permit fees, franchise fees,
-20-
inspection fees and similar charges assessed, levied, or imposed on any
occupancy, use or possession of the Telecommunications Network, including those
based upon the physical location of the Telecommunications Network and/or the
construction thereof in, on or along any public road, highways, waterways or
rights-of-way, or any part thereof. Notwithstanding the foregoing, PTI shall
have no responsibility for (x) any tax based in whole or in part on Colonial's
income from this Agreement or the Fiber Optic Access and Purchase Agreement; (y)
any taxes that are the responsibility of Colonial pursuant to Subsection 7(g) of
the Fiber Optic Access and Purchase Agreement; or (z) any other real property
taxes or assessments with respect to the Colonial Rights-of-Way other than those
set out in clause (i) of this Subsection 9.1(l) above. PTI shall have the right
to make a claim, and Colonial shall cooperate reasonably with PTI, for refund,
rebate, reduction or abatement of any such Impositions.
ARTICLE X
REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLONIAL
10.1 Colonial's Representations, Warranties and Covenants. Colonial
represents, warrants and covenants that:
(a) Colonial is a corporation existing and in good standing under the
laws of the State of Delaware,
(b) Colonial has the power and authority to enter into this Agreement
and to consummate the transactions provided for herein. This Agreement and all
of the documents executed and delivered by Colonial constitute the legal, valid,
binding and enforceable obligations of Colonial and there are no claims or
defenses, personal or otherwise, or offsets whatsoever to the enforceability or
validity of this Agreement.
(c) The execution, delivery and performance by Colonial of its
obligations under this Agreement will not conflict with or result in a breach of
any Applicable Law by which Colonial is bound or by any of the provisions of any
contract to which Colonial is a party or by which Colonial is bound, or
Colonial's articles of incorporation or by-laws. There is no action, suit,
proceeding or investigation pending or, to Colonial's knowledge, threatened,
before any agency, court or other Governmental Authority that relates to
Colonial, this Agreement, the Colonial Pipeline or any Related Facility.
(d) Colonial has not made a general assignment for the benefit of
creditors, filed any voluntary petition of bankruptcy or suffered the filing of
an involuntary petition by its creditors, suffered the appointment of a receiver
to take possession of substantially all of its assets, suffered the attachment
or other judicial seizure of substantially all of its assets, admitted its
inability to pay its debts as they come due, or made an offer of settlement,
extension or compromise to its creditors generally.
(e) Colonial shall promptly notify PTI of any matters pertaining to
any damage or threatened damage to or loss of any part of the Telecommunications
Network of which Colonial becomes aware.
-21-
(f) Colonial shall respect PTI's right to use the Telecommunications
Network. Colonial shall take all reasonable precautions against, and shall
assume liability for, subject to the terms herein, any damage to the
Telecommunications Network caused by Colonial or any of Colonial's employees,
officers, directors, contractors, agents, licensees and/or concessionaires, as
applicable (collectively, the "Colonial Parties").
(g) Colonial agrees to cooperate with and support PTI in connection
with the compliance with any government requirements issued by any Governmental
Authority and applicable to the Telecommunications Network.
(h) Except as expressly stated in Subsections 10.1(a)-(g) above,
Colonial makes no warranty to PTI or any other person or entity, whether
express, implied or statutory, as to the description, quality, merchantability,
completeness or fitness for any purpose of the Colonial Rights-of-Way
(including, without limitation, for the purposes for which PTI may use the
Colonial Rights-of-Way hereunder), or as to any other matter, all of which
warranties are hereby excluded and disclaimed.
ARTICLE XI
INDEMNIFICATION; LIMITATION OF LIABILITY
11.1 Indemnification by PTI. PTI hereby indemnifies and holds harmless
Colonial, the Colonial Parties and Colonial's affiliates and shareholders and
their respective employees, officers, directors, contractors, agents, licensees
and concessionaires (collectively, the "Colonial Indemnified Parties") from and
against any liability, loss, damage, claim or cause of action of any kind or
nature (including damage to property and injury to or death of persons) whether
actual or alleged, or payments to any person in compromise of settlement
thereof, whether or not liability has been shown or can be known, and any costs
or expenses in connection therewith (including, without limitation, reasonable
court costs, costs of litigation and attorneys' fees and expenses incurred in
enforcing same) arising out of or in connection with PTI's use of the leasehold
rights granted herein (but only to the extent such claims do not arise from the
negligence, gross negligence or willful misconduct of a Colonial Indemnified
Party), including, without limitation:
(a) third party claims, or any death or personal injury to, or loss or
damage to any property of, a Colonial Indemnified Party, to the extent any
of the foregoing is caused in whole or in part by the presence of the
Telecommunications Network on any portion of the Colonial Rights-of-Way or
at any Related Facility or the performance of any PTI Work or PTI Operation
and Maintenance Services by PTI or any PTI Parties on or along the Colonial
Rights-of-Way or at any Related Facility;
(b) penalties, fines or forfeitures imposed by any Governmental
Authority arising out of any failure or refusal by any PTI Party to comply
with Applicable Laws applicable to the installation, operation, use,
maintenance or repair of the
-22-
Telecommunications Network (including, without limitation, any inadvertent
effect the same may have on the Colonial Pipeline or any Related Facility);
and
(c) any other liability arising out of or resulting from the acts or
omissions, negligent or otherwise, of any PTI Party or in connection with a
breach by PTI of any of its obligations under this Agreement, including,
without limitation, liabilities arising out of PTI's failure to obtain
easement, license, lease or other Perfection Rights from any Landowner so
as to allow PTI to install, operate and maintain the Telecommunications
Network through designated Segments of the Colonial Rights-of-Way, it being
acknowledged, however, that nothing in this Subsection 11.1(c) shall limit
or restrict in any manner the obligations and restrictions contained in
Subsection 3.1(a) hereof.
11.2 Indemnification by Colonial. Colonial hereby indemnifies and holds
harmless PTI, the PTI Parties and PTI's affiliates and shareholders and their
respective employees, officers, directors, contractors, agents, licensees and
concessionaires (collectively, the "PTI Indemnified Parties") from and against
any liability, loss, damage, claim or cause of action of any kind or nature
(including damage to property and injury to or death of persons) whether actual
or alleged, or payments to any person in compromise of settlement thereof,
whether or not liability has been shown or can be known, and any costs or
expenses in connection therewith (including, without limitation, reasonable
court costs, costs of litigation and attorneys' fees and expenses incurred in
enforcing same) arising out of or in connection with Colonial's operation of the
Colonial Pipeline and the Related Facilities (but only to the extent such claims
do not arise from the negligence, gross negligence or willful misconduct of a
PTI Indemnified Party, including, without limitation:
(a) third party claims, or any death or personal injury to, or loss or
damage to any property of, a PTI Indemnified Party, to the extent any of
the foregoing is caused in whole or in part by the presence of the Colonial
Pipeline or the Related Facilities;
(b) penalties, fines or forfeitures imposed by any Governmental
Authority arising out of any failure or refusal by any PTI Party to comply
with Applicable Laws applicable to the installation, operation, use,
maintenance or repair of the Colonial Pipeline or any Related Facility
(including, without limitation, any inadvertent effect the same may have on
the Telecommunications Network; and
(c) any other liability arising out of or resulting from the acts or
omissions, negligent or otherwise, of any Colonial Party or in connection
with a breach by Colonial of any of its obligations under this Agreement.
11.3 Limitation of Liability. In no event will Colonial be liable to PTI
for any interruption of or interference with the Telecommunications Network
arising out of any cause whatsoever, except to the extent caused by Colonial's
gross negligence or willful misconduct.
-23-
11.4 No Consequential or Special Damages. Neither party hereto will be
liable to the other for any incidental, punitive, indirect, consequential or
special damages suffered by the other, including lost profits, lost savings or
loss of use.
11.5 Legal Proceedings. If any action, suit or proceeding is brought
against a party to which any indemnity is described in Sections 11.1 or 11.2,
the indemnifying party, upon the request of the indemnified party, and at the
indemnifying party's expense, shall resist and defend such action, suit or
proceeding, or cause the same to be resisted and defended by counsel designated
by the indemnifying party and approved by the indemnified party. The obligations
of the indemnifying party under this Section 11.5 relating to any matter subject
to indemnification under this Agreement that occurs, arises, or accrues during
the Term shall survive the expiration or earlier termination of this Agreement.
The indemnified party, at its sole expense, also shall be entitled to appear,
defend or otherwise take part in the matter involved, at its election, by
separate counsel of its own choosing. The indemnifying party will not settle any
claim without the prior written approval of the indemnified party, which
approval shall not be unreasonably withheld or delayed. The indemnified party
will be entitled to settle any claim on terms it deems appropriate. The parties
will treat any settlement of any claim and the terms of the settlement as
confidential information.
ARTICLE XII
DEFAULT
12.1 Event of Default by PTI. Subject to the other provisions of this
Article XII, the occurrence of any of the following shall constitute an "Event
of Default" by PTI hereunder:
(a) Failure by PTI to make any payment owed to Colonial hereunder
within ten (10) days after written notice thereof is given to PTI by
Colonial;
(b) Failure by PTI to maintain any of the insurance coverage required
hereunder, or to pay any of the premiums to be paid with respect thereto,
and such failure continues for a period of fifteen (15) days after written
notice thereof is given to PTI by Colonial;
(c) PTI breaches or fails to perform, comply with or observe any other
term, covenant, warranty, condition, agreement or undertaking contained in
or arising under this Agreement other than those referred to in Subsections
12.1(a) and (b) above, and such occurrence or failure continues for a
period of thirty (30) days after written notice thereof is given by
Colonial to PTI; provided, however, that if such default is a non-monetary
default and is not susceptible of being cured within said thirty (30) day
period, then no Event of Default shall occur hereunder if PTI commences
commercially reasonable efforts to cure such default within such thirty
(30) day period and diligently pursues the same to completion within a
reasonable time thereafter, not to exceed a total of one hundred fifty
(150) days;
-24-
(d) The subjection of any right or interest of PTI under this
Agreement to attachment, execution or other levy, or to seizure under legal
process, if not released within sixty (60) days;
(e) PTI shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, petition or apply to any tribunal for the
appointment of a custodian, receiver or any trustee for it or a substantial
part of its assets, or commence any proceedings under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or if there shall have been filed against PTI any such petition or
application, or any such proceeding shall have been commenced against it,
in which an order for relief is entered or which remains undismissed for a
period of ninety (90) days of more; or PTI, by any act or omission,
indicates its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial part of any of
its properties, or suffers any such custodianship, receivership or
trusteeship to continue undischarged for a period of ninety (90) days or
more; or
(f) PTI generally is unable to pay its debts as such debts become
due.
12.2 Effect of Arbitration. Notwithstanding the provisions of Section 12.1
hereof, if the Event of Default or the asserted default giving rise to same is
subject to arbitration pursuant hereto, and the existence of such Event of
Default or asserted default is being contested by the party assertedly in
default, then, if and so long as such party is cooperating and acting in good
faith to complete the arbitration proceeding with respect thereto as
expeditiously as possible, the time for curing such asserted default shall
commence upon the rendering of the arbitration decision with respect thereto, or
other resolution thereof, whichever occurs first.
12.3 Remedies of Colonial.
(a) In addition to all of the rights and remedies available to
Colonial by law or equity (other than termination of this Agreement which shall
be available as a remedy for an Event of Default only as provided in this
Section 12.3), at any time after the occurrence of any Event of Default on the
part of PTI:
(i) in the event that such Event of Default is a recurring and/or
flagrant breach of this Agreement and materially and adversely affects the
safety or operation of the Colonial Pipeline, Colonial shall have the right
to terminate this Agreement immediately upon written notice to PTI; and
(ii) in the event that such Event of Default is not of the type
and nature described in clause (i) of this Subsection 12.3(a), but
constitutes a material breach of a material covenant of PTI under this
Agreement, Colonial shall have the right, upon written notice to PTI, to
suspend immediately all then pending and future installation, construction
and/or deployment of the Telecommunications Network on or about any
-25-
Segment or applicable portion thereof with respect to which the Event of
Default has occurred until such time as the applicable Event of Default is
cured or PTI demonstrates to Colonial's reasonable satisfaction that PTI
has taken such steps and/or implemented such procedures so that the
particular Event of Default in question will not recur.
(b) In the event of any failure on the part of PTI to pay any sum of
money, or to do any act or to satisfy any of the obligations or covenants that
it is required to pay, do or perform under the provisions of this Agreement,
Colonial, at its option, after notice to PTI, may pay any or all of such sums,
or perform any or all of such acts, obligations or covenants or incur any other
expense whatsoever in order to remedy such failure on the part of PTI. In such
event, PTI shall reimburse Colonial for all costs and expenses of any nature
whatsoever incurred by Colonial in connection therewith, together with interest
at the Default Rate provided in Section 17.12 hereof, such interest to be
calculated from and after the date payment is made by Colonial or the expense is
incurred.
12.4 Effect of Termination. At the expiration of the Term or any earlier
termination of this Agreement, whether pursuant to this Article XII or
otherwise, all rights and privileges of PTI and all duties and obligations of
Colonial hereunder shall terminate. Within one hundred eighty (180) days
thereafter, PTI shall remove all above-ground facilities of the
Telecommunications Network and only such underground facilities that Colonial
reasonably requests be removed so as to avoid future interference with Colonial
pipeline operations; provided, however, that PTI may remove fiber optic cables
from within any Conduits (but not the actual Conduits) if such removal of fiber
optic cables may be performed without the use of heavy machinery in and about
the Colonial Rights-of-Way and without the need to dig or excavate within any
portion of the Colonial Rights-of-Way. Any facilities not removed within the
foregoing time period shall become the sole property of Colonial, free and clear
of any and all claims of PTI, without the payment of compensation or
consideration of any kind to PTI. Immediately upon such termination of the
Agreement, and without further notice to any other party, Colonial shall have
the right to assert, perfect, establish or confirm all rights reverting to
Colonial by reason of such termination by any means permitted by law. Subject
only to the rights and obligations of PTI to remove certain facilities as
described in the second sentence of this Section 12,4, and the continuing rights
of any bona fide third party purchasers or assignees who have complied with the
provisions of Subsections 15.1(c) or (d) hereof, as applicable, such rights
shall include, without limitation, the right to take possession of the property
leased to PTI hereunder, together with all improvements thereto, fixtures
therein and any other alterations or improvements that may have been made to the
property leased hereunder (including, without limitation, the Telecommunications
Network), with or without process of law, and to remove, at the option of
Colonial, any such items from the property licensed to PTI hereby, thereby
wholly terminating any right, title, interest or claim of or through PTI as to
such property. If Colonial exercises any such rights, it shall not incur any
liability to PTI for any damage caused or sustained by reason of such entry or
removal, except for damage resulting from Colonial's gross negligence or willful
misconduct in effecting such removal.
-26-
12.5 Event of Default by Colonial.
(a) Subject to the other provisions of this Article XII, it shall be
an Event of Default by Colonial hereunder if Colonial shall be in breach of, or
Colonial shall fail to perform, comply with or observe any term, covenant,
warranty, condition, agreement or undertaking contained in or arising under this
Agreement and such failure continues for a period of thirty (30) days after
written notice thereof is given by PTI to Colonial; provided, however, if such
default is a non-monetary default and is not susceptible of being cured within
thirty (30) days, no Event of Default shall have occurred hereunder by Colonial
if it commences commercially reasonable efforts to cure such default within such
thirty (30) day period and diligently pursues the same to completion within a
reasonable time thereafter, not to exceed a total of one hundred fifty (150)
days.
(b) At any time after the occurrence of an Event of Default on the
part of Colonial, PTI may exercise any and all rights or remedies available to
PTI at law or in equity, subject only to any limitations expressly set forth in
this Agreement.
12.6 No Waivers. No failure by any party hereto to insist upon the strict
performance of any provisions of this Agreement or to exercise any right, power
or remedy consequent to any breach thereof, and no waiver of any such breach,
during the continuance thereof, shall constitute a waiver of any such breach or
of any such provision or otherwise be deemed to affect or alter this Agreement.
In any such event, this Agreement shall continue in full force and effect, and
the rights of any party hereto with respect to any other then-existing breach or
subsequent breach shall remain unaffected thereby.
12.7 No Remedy Exclusive. Except as expressly provided in this Article 12,
no remedy herein conferred or reserved to Colonial or PTI is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative, and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in equity or by
statute. The exercise of any right or remedy should not be construed as an
election of remedies and shall not preclude the right to exercise any other
right or remedy. No delay or failure to exercise any right or power accruing
upon any default or Event of Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle Colonial or PTI to exercise any remedy reserved to Colonial or PTI in
this Article XII, it shall not be necessary to give any notice, other than such
notice as is herein expressly required by this Agreement.
12.8 Force Majeure. Neither party shall be in default under this Agreement
with respect to any delay in such party's performance, and all time periods
shall be deemed suspended, to the extent resulting from any of the following
conditions: act of God, fire, flood, material shortage or unavailability, lack
of transportation, compliance with Applicable Laws, war or civil disorder, or
any other cause beyond the reasonable control of such party, provided that the
party claiming relief under this Section 12.8 shall notify the other party
promptly in writing of the existence of the event upon which such relief is
claimed and further as to the cessation or
-27-
termination of said event. The party claiming relief under this Section 12.8
shall exercise reasonable efforts to minimize the time for any such delay.
12.9 No Personal Liability. Each action or claim against any party arising
under or relating to this Agreement shall be made only against such party as a
corporation, and any liability relating thereto shall be enforceable only
against the corporate assets of such party. No party shall seek to xxxxxx the
corporate veil or otherwise seek to impose any liability relating to, or arising
from, this Agreement against any shareholder, employee, officer or director of
the other party. Each of such persons is an intended beneficiary of the mutual
promises set forth in this Article XII and shall be entitled to enforce the
obligations of this Article XII.
ARTICLE XIII
VOLUNTARY REMOVAL OF TELECOMMUNICATIONS NETWORK
13.1 Removal of Telecommunications Network by PTI. Provided that an Event
of Default by PTI is not continuing to be in effect at such time, PTI may remove
any portion of the Telecommunications Network from any Segment (except for the
Colonial Conduit and any Regen Facility or other Related Facility that PTI has
made available for use by Colonial in connection with the Colonial Conduit, all
of which must remain in place and intact in all events) (it being acknowledged
herein that PTI has no obligation hereunder to provide any such Regen Facility
or Related Facility for Colonial's use), provided that as to underground
facilities, PTI will provide Colonial with written notice of its intention so to
remove, given (a) at least thirty (30) days prior to the date of such removal,
and (b) not less than one (1) year prior to the expiration of the Term. Such
notice also will state whether PTI intends to replace the underground portion of
the Telecommunications Network so removed. Upon the occurrence of an Event of
Default, PTI's rights of removal hereunder shall be suspended until such time as
such Event of Default has been cured.
ARTICLE XIV
ARBITRATION
14.1 Arbitration. In the event any dispute or disagreement arising between
Colonial and PTI in connection with this Agreement or the Fiber Optic Access and
Purchase Agreement is not settled to the mutual satisfaction of Colonial and PTI
within thirty (30) days from the date that either party informs the other in
writing that such dispute or disagreement exists, then either party may demand
arbitration by notifying the other party in writing (a "Notice of Arbitration")
in accordance with the notice provisions of Section 17.1. The Notice of
Arbitration shall describe the reasons for such demand, the amount involved, if
any, and the particular remedy sought.
14.2 Selection of Arbitrators. The parties shall attempt to agree upon a
single arbitrator; however, if the parties are unable to agree upon a single
arbitrator within fifteen (15) days after the Notice of Arbitration, then each
party shall select an arbitrator within five (5) Business Days of the expiration
of the initial fifteen (15) day period. Upon the appointment of the two
arbitrators, and before exchanging views as to the question at issue, said two
arbitrators
-28-
so selected shall appoint in writing a third arbitrator within ten (10) days of
the selection of both of the first two arbitrators and shall give written notice
of such appointment to the parties. If the two arbitrators fail to appoint a
third arbitrator in a timely manner, then either party may apply to the United
States District Court for the Northern District of Georgia for the appointment
of such third arbitrator.
14.3 Qualified Arbitrator. Any arbitrator selected in accordance with
Section 14.2 shall be a natural person not employed by either of the parties or
any parent or affiliated partnership, corporation or other enterprise thereof
and shall be knowledgeable and experienced in the matters sought to be
arbitrated. In the event that the matter to be arbitrated deals with
construction or engineering issues, the arbitrator so appointed shall be
experienced and knowledgeable in the construction and engineering industry as it
relates to the nature of the structure to which such arbitration applies. In the
event any arbitrator selected as aforesaid thereafter shall die or become unable
or unwilling to act, such arbitrator's successor shall be selected in the same
manner provided in Section 14.2.
14.4 Arbitration Hearing; Discovery; Venue. The arbitration hearing shall
commence within thirty (30) calendar days of appointment of the single or third
arbitrator, as applicable, as described in Section 14.2. There shall be no
dispositive motion practice (such as motions for summary judgment or to dismiss
or the like) except as may be permitted by the arbitrators. All arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association, except that discovery shall be permitted in accordance with the
Federal Rules of Civil Procedure. Venue of any arbitration hearing pursuant to
this Article XIV shall be in the metropolitan Atlanta, Georgia area. Each party
shall bear the cost of preparing and executing its own case.
14.5 Decision. The arbitrators' decision shall be made in no event later
than thirty (30) calendar days after the conclusion of the arbitration hearing
described in Section 14.4. The award shall be final and binding upon the parties
and shall include written findings of law and fact, and judgment may be entered
thereon by either party in any court having competent jurisdiction thereof. The
arbitrators may award specific performance of this Agreement. The arbitrators
may also require remedial measures as part of any award. The cost of the
arbitration, including the fees and expenses of the arbitrator(s), shall be
shared equally by the parties hereto unless the award otherwise provides.
14.6 Non-Binding in Certain Events. Notwithstanding any provision to the
contrary in this Article XIV, the obligation herein to arbitrate shall not be
binding upon any party with respect to requests for preliminary injunctions,
temporary restraining orders or other procedures in a court of competent
jurisdiction to obtain interim relief when deemed necessary by such court to
preserve the status quo or to prevent irreparable injury pending resolution by
arbitration of the actual dispute.
-29-
ARTICLE XV
ASSIGNMENT
15.1 Assignment by PTI.
(a) Except as expressly provided in this Section 15.1 below, PTI shall
not assign or otherwise transfer this Agreement or its rights, covenants,
liabilities or obligations hereunder, in whole or in part, to any other party
without the prior written consent of Colonial. Nothing herein shall prohibit PTI
from involving strategic or co-development partners or customers in connection
with its performance hereunder, on such terms as PTI may determine in its sole
discretion, provided (i) all such activities are conducted in accordance with
the terms of this Agreement; (ii) PTI shall not be released from, and shall
remain fully liable to Colonial for all of its covenants, liabilities and
obligations hereunder and the acts or omissions of all parties claiming by,
through or under PTI; (iii) PTI remains the sole point of contact with Colonial;
and (iv) all activities of parties claiming by, through or under PTI on Colonial
Rights-of-Way are conducted under PTI's supervision.
(b) PTI shall have the right, without Colonial's consent, to assign or
otherwise transfer this Agreement (i) to any entity that, indirectly or
directly, is controlled by, controls or is under common control with PTI, or to
any entity into which PTI may be merged or consolidated or which purchases all
or substantially all of the assets of PTI; or (ii) as collateral in connection
with any financings by any lender; provided, however, that (x) any such
assignment or transfer described in this Subsection 15.1(b) shall be subject and
subordinate in all respects to this Agreement and to Colonial's rights as the
owner of the Colonial Rights-of-Way; (y) any such assignee or transferee
described in clause (i) above shall continue to perform PTI's obligations to
Colonial under the terms and conditions of this Agreement; and (z) any lender
described in clause (ii) above shall have the right to assume all (but not part)
of PTI's rights and obligations under this Agreement. In the event of any
permitted partial assignment of any rights hereunder or in any portion of the
Telecommunications Network, PTI shall remain the sole point of contact with
Colonial.
15.2 Assignment by Colonial. Colonial shall have the right to assign,
license or otherwise transfer this Agreement and/or its rights or obligations
hereunder as it pertains to a particular Segment (or discrete portion thereof)
of the Colonial Rights-of-Way, in connection with a sale or other transfer of
Colonial's rights within such Segment (or discrete portion thereof), to any
third party; provided, however, that any such assignment or transfer shall be
made subject to the terms and conditions of this Agreement and any such assignee
or transferee shall continue to perform Colonial's obligations to PTI under the
terms and conditions of this Agreement. Colonial also shall have the right,
without PTI's consent, to assign or otherwise transfer this Agreement and/or its
rights or obligations hereunder: (i) to any entity that, indirectly or directly,
is controlled by, controls or is under common control with Colonial, or to any
entity into which Colonial may be merged or consolidated or which purchases all
or substantially all of the assets of Colonial; or (ii) as collateral in
connection with any financings by any lender.
-30-
15.3 Binding Upon Successors and Assigns. This Agreement and each of the
parties' respective rights and obligations under this Agreement, shall be
binding upon and shall inure to the benefit of the parties hereto and each of
their respective permitted successors and assigns.
ARTICLE XVI
CONFIDENTIALITY
16.1 Confidentiality. If either party provides confidential information to
the other in writing and it is identified as such, the receiving party shall
protect the confidential information from disclosure to third parties with the
same degree of care accorded its own confidential and proprietary information.
Neither party shall be required to hold confidential any information that (a)
becomes publicly available other than through the recipient; (b) is required to
be disclosed by a Governmental Authority or Applicable Law; provided, however,
that the information disclosed is limited to the existence and general nature of
the relationship between the parties, including, as required, the scope,
approximate revenues, purposes and expectations related to such relationship and
a description of any disputes relating thereto; (c) is independently developed
by the disclosing party; or (d) becomes available to the disclosing party
without restriction from a third party. These obligations shall survive any
expiration or termination of this Agreement.
ARTICLE XVII
MISCELLANEOUS
17.1 Notices. All notices, demands, requests, or other writings delivered
pursuant to this Agreement shall be in writing and may be given personally or
may be delivered by depositing the same in the United States mail, certified,
registered or equivalent, return receipt requested, postage prepaid, properly
addressed, and sent to the following addresses:
If to Colonial: Colonial Pipeline Company
000 X. Xxxxx Xxxxx Xx., X.X.
Xxxxxxx, XX 00000-0000
Attention: General Counsel
Fax: 000-000-0000
with a copy to: Arnall Golden & Xxxxxxx, LLP
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esquire
Fax: 000-000-0000
If to PTI: Pathnet Telecommunications, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Senior Vice President, Engineering
Fax: 000-000-0000
-31-
with a copy to: Pathnet Telecommunications, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: 000-000-0000
or to such other address as either party may from time to time designate by
written notice to the other party. Notices given by mail as aforesaid shall be
deemed received and effective as of the first Business Day following such
dispatch; provided, however, that if any such notice or other communication also
shall be sent by telecopy or fax machine, such notice shall be deemed given at
the time and on the date of machine transmittal if the sending party receives a
written send verification on its machines and forwards a copy thereof with its
mailed or courier delivered notice or communication.
17.2 No Partnership. Nothing contained herein or in any instrument relating
hereto shall be construed as creating a partnership or joint venture between
Colonial and PTI or between Colonial and any other party, or cause Colonial to
be responsible in any way for the debts or obligations of PTI or any other
party.
17.3 Time of the Essence. Time is hereby expressly declared to be of the
essence of this Agreement and of each and every term, covenant, agreement,
condition and provision hereof.
17.4 Entire Agreement. Except for the Services Agreement and the Fiber
Optic Access and Purchase Agreement, this Agreement constitutes the entire and
final agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements relating to the
subject matter hereof, which are of no further force or effect. The Exhibits
referred to herein are integral parts hereof and are hereby made a part of this
Agreement.
17.5 Captions. The captions of this Agreement and the table of contents
preceding this Agreement are for convenience and reference only, and are not a
part of this Agreement, and in no way amplify, define, limit or describe the
scope or intent of this Agreement, nor in any way affect this Agreement.
17.6 Meaning of Terms. Words of any gender in this Agreement shall be held
to include any other gender and words in the singular number shall be held to
include the plural when the sense requires.
17.7 Agreement Construed as a Whole. The language throughout this Agreement
shall be construed as a whole according to its fair meaning and neither strictly
for nor against Colonial or PTI.
17.8 Severability. If any provision of this Agreement or the application
thereof to any person or circumstances shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to
-32-
which it is invalid or unenforceable, shall not be affected thereby, and each
provision of this Agreement shall be valid and shall be enforced to the fullest
extent permitted by law.
17.9 Survival. Each provision of this Agreement that may require the
payment of money by, to or on behalf of Colonial or PTI or third parties after
the expiration of the Term hereof or its earlier termination shall survive such
expiration or earlier termination.
17.10 Amendment. This Agreement may be modified or amended only in writing,
signed by a duly authorized officer of both Colonial and PTI.
17.11 Attorneys' Fees. In any proceeding or controversy associated with or
arising out of this Agreement or a claimed or actual breach thereof, or in any
proceeding to recover the possession of the property leased hereunder, the
prevailing party shall be entitled to recover from the other party as a part of
the prevailing party's costs, reasonable attorney's fees, the amount of which
may be fixed by the court and may be made a part of any judgment rendered. For
the purposes of this Agreement, the term "reasonable attorneys' fees" shall mean
legal fees actually incurred by a party at the normal and customary hourly rates
of attorneys experienced in the area of law in dispute and shall not be based
upon a percentage of any amount of any judgment, notwithstanding any statutory
or other presumption to the contrary.
17.12 Interest. Except as otherwise specifically provided herein, any
amounts due from one party to the other pursuant to the terms of this Agreement,
including amounts to be reimbursed one to the other, shall bear interest from
the due date or the date the right to reimbursement accrues at (a) the rate
published or publicly announced most recently prior to such date as the lowest
rate charged by Citibank, N.A., or its successor, for commercial, short-term
unsecured loans, plus (b) two percent (2%) (such sum being referred to herein as
the "Default Rate"); provided, however, that such Default Rate shall not exceed,
in any event, the highest rate of interest which may be charged under Applicable
Law without the creation of liability for penalties or rights of offset or
creation of defenses. For purposes of interest calculations unless otherwise
provided herein, the due date of any amount or the date from which a right to
reimbursement accrues shall be deemed to be the date from which interest
accrues.
17.13 Governing Law. This Agreement shall be construed according to and
governed by the laws of the State of Georgia.
17.14 Business Days. For the purposes of this Agreement, a "Business Day"
shall mean a day on which banks are required to open for the conduct of banking
business at their principal offices under the laws of the State of Georgia. If
this Agreement provides for the performance of any obligation or the expiration
of any time period on or no later than a day that is not a Business Day, then
the applicable day of performance or expiration of the time period shall be
extended until the next succeeding Business Day.
17.15. Reference Date of Agreement. For reference purposes, the date of
this Agreement shall be the date on the first page hereof, irrespective of the
date Colonial or PTI actually executes this Agreement.
-33-
17.16 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, and all such counterparts
together shall constitute one and the same agreement.
17.17 Exhibits. The Exhibits to this Agreement are:
EXHIBIT DESCRIPTION
------- -----------
Exhibit A System Map
Exhibit B Form of Segment Lease
Exhibit C Form of Right-of-Way Permit
Exhibit D Currently Perfected Segments
Exhibit E General Colonial Construction Standards
-34-
IN WITNESS WHEREOF, Colonial and PTI have executed this Agreement as of the
day and year first above written.
COLONIAL:
COLONIAL PIPELINE COMPANY,
a Delaware corporation
By:/s/ X.X. Xxxxxx
----------------------------------
Name: X.X. Xxxxxx
----------------------------
Its: President and Chief Executive
Officer
----------------------------
[CORPORATE SEAL]
PTI:
PATHNET TELECOMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
----------------------------
Its: CEO
----------------------------
-35-
EXHIBIT A
SYSTEM MAP
(Map of Colonial System)
-35-
EXHIBIT B
FORM OF SEGMENT LEASE
- ------------------------------------------------------------------------------
SEGMENT LEASE
THIS SEGMENT LEASE (the "Segment Lease"), made this ____ day of
____________, ____, between COLONIAL PIPELINE COMPANY ("Lessor") and PATHNET
TELECOMMUNICATIONS, INC. ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Lessee heretofore have entered into that certain
Master Right-of-Way Lease Agreement (the "Master Lease Agreement"), dated as of
March 30, 2000;
WHEREAS, pursuant to the Master Lease Agreement, Lessee has executed
and delivered to Lessor a "Designation Notice", conforming in form and substance
to the requirements of said Master Lease Agreement;
WHEREAS, said Designation Notice describes a "Segment" of the "Colonial
Rights-of-Way", which Segment is more particularly described on Exhibit A
attached hereto and incorporated herein; and
WHEREAS, Lessor and Lessee desire to enter into this Segment Lease
Agreement, in accordance with the terms of the Master Lease Agreement, in order
to evidence the leasing of the Segment to Lessee, subject to all of the terms
and conditions hereof and in the Master Lease Agreement.
NOW, THEREFORE, for and in consideration of the covenants contained
herein, the sum of Ten and No/100 Dollars ($10.00), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lessor and Lessee hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined herein
shall have the same meaning as ascribed to such terms in the Master Lease
Agreement.
2. Subject to Section 4 hereof, Lessor hereby leases to Lessee the
Segment on the terms and conditions contained herein and in the Master Lease
Agreement.
3. The term of this Segment Lease shall commence on the date hereof
and, if not otherwise terminated in accordance herewith or in accordance with
the Master Lease Agreement, shall terminate at the expiration of the "Term".
4. The parties hereto acknowledge that, after completion of the
"Perfection Process" with respect to the Segment, Lessor shall execute and
deliver to Lessee a "Permit" for the Segment, in substantially the form set
forth on Exhibit C to the Master Lease Agreement. Notwithstanding any other
provision herein to the contrary, the parties hereto further acknowledge and
agree that, upon the issuance of such Permit with respect to the Segment
described herein, this Segment Lease shall terminate automatically, without the
requirement of any additional action or documentation on the part of either
party, with respect to all portions of the Segment for which Lessee is not
granted specific rights to use under the terms of the applicable Permit.
5. The Master Lease Agreement shall govern and control the use of the
Segment and, upon the issuance of the Permit, the applicable portion of the
Segment described therein. Lessor and Lessee shall comply with all obligations
contained in the Master Lease Agreement that apply to the Segment or the
applicable portion thereof and Lessor and Lessee shall have all rights and
remedies contained in the Master Lease Agreement with respect thereto. Without
limiting in any way the foregoing, Lessee shall not have the right to commence
any "PTI Work" until compliance by Lessee with the applicable provisions of
Sections 3.1 and 3.2 of the Master Lease Agreement.
6. In the event of any inconsistency between any of the terms hereof
and any of the terms of the Master Lease Agreement, the applicable terms of the
Master Lease Agreement shall govern and control.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
this ___ day of _______________, _______________.
LESSOR:
COLONIAL PIPELINE COMPANY
By: __________________________________
Its: __________________________________
[CORPORATE SEAL]
-2-
LESSEE:
PATHNET TELECOMMUNICATIONS, INC.
By: __________________________________
Its: __________________________________
[CORPORATE SEAL]
-3-
EXHIBIT A TO FORM OF SEGMENT LEASE
Description of Segment
[to be agreed to by the Parties]
-4-
EXHIBIT C
FORM OF RIGHT-OF-WAY PERMIT
LEGAL DESCRIPTION OF RIGHT-OF-WAY
Colonial right-of-way of ________________ (INSERT ACCURATE LEGAL DESCRIPTION)
referenced in Segment Lease dated __________ (the "Segment Lease"). Beginning
approximately at Colonial Location No. ___________ and ending approximately at
Colonial Location No. ___________ for a total distance of approximately ______
miles and as further described on attached as-built survey drawings provided by
PTI.
SPECIAL CONDITIONS ON USE OF RIGHT-OF-WAY
Notwithstanding the terms of the Segment Lease, PTI shall have the right to use
only such portions of the Segment that are the subject of the Segment Lease as
are specifically described hereinbelow. PTI telecommunication lines, cables,
conduits and other similar equipment and facilities shall be installed in
conformity with the plans mutually approved by the parties prior to
construction. In general, the specifications anticipate a minimum separation of
ten feet (10') between the telecommunications lines and the nearest Colonial
pipeline. Where the existing right-of-way provides more than fifteen feet (15')
between the Colonial right-of-way boundary and the nearest Colonial pipeline,
the telecommunication lines shall be built five feet (5') from the edge of the
Colonial right-of-way. Said routing is preliminarily depicted as shown on
attached construction drawings and as-built survey drawings provided by PTI. It
is understood that PTI will need as workspace a strip of land approximately ____
feet (____') in width in which to perform construction work and that, upon
completion of such work, PTI will restore the right-of-way in accordance with
the agreements between Colonial and the Landowners and in accordance with the
Colonial post-construction grassing specifications, but under no circumstances
shall restoration result in the condition of the subject land being less
favorable to the underlying Landowner than the condition existing prior to such
work. Depth of installation, which shall be at least thirty-six inches (36"),
and the determination as to the side of the Colonial right-of-way on which
installation shall occur must be addressed and PTI must give advance notice to
Colonial of the time and place of any construction. Colonial shall have the
right to observe and inspect all construction within any Colonial right-of-way.
All construction work shall be completed within _________ (____) days of the
date hereof and shall be performed lien free and upon completion of construction
PTI shall deliver a final affidavit and lien waivers from all contractors,
subcontractors and other persons performing work or supplying material or
equipment.
ACKNOWLEDGMENT
Colonial and PTI acknowledge that they intend for this Permit to be incorporated
into the Master Right-of-Way Lease Agreement between the parties dated
March 30, 2000 and that this Permit hereby modifies the aforesaid Segment Lease
by limiting the description of the right-of-way leased thereby to the specific
property described herein. The effective date of this Permit is the last date on
which this Permit was signed by either party, as indicated below.
COLONIAL PIPELINE COMPANY, PATHNET TELECOMMUNICATIONS,
a Delaware corporation INC., a Delaware corporation
By: By:
------------------------- -------------------------
Its: Its:
------------------------ ------------------------
Date: Date:
----------------------- -----------------------
-2-
EXHIBIT D
Currently Perfected Segments
Listed below are the segments of Colonial's right of way that have been
perfected(1) for telecommunications purposes:
1. Americus Delivery Facility to Bainbridge Deliver Facility (common name)
more particularily described as that segment of the Colonial System
referenced as Location Locations 0515:001 to 0515:098 in Sumter and
Xxxxxxxxx Counties, Georgia, and Locations 0516:001 to 0516:114 in
Dougherty, Mitchell, Xxxxx and Decatur County, Georgia.
2. Xxxxxx Junction to:
(a) South Baltimore Delivery Facility - Location 1007:001 to 1007:176;
Location 1008:001 to 1008:069; and Location 1010:070 to 1010:176,
Xxxxxxx, Xxxxxx, Xxxx Arundel and Baltimore Counties, Maryland;
(b) Xxxxxx Bay Delivery Facility - Location 1007:001 to 1007:171, Xxxxxxx,
Xxxxxx and Xxxx Arundel Counties;
(c) Baltimore-Washington Airport Delivery Facility - Location 1008:001 to
1008:069 and Location 1012:001 to 1012:011, Xxxxxxx, Xxxxxx and
Xxxx Arundel Counties;
(d) Washington Delivery Facility - Location 1009:001 to 1009:026 and
Locations 1501:026A to 1501:163, Xxxxxxx, Xxxxxx, Xxxxxxxxxx and
Prince George's Counties, Maryland and in the District of Columbia;
and
(e) Finksburg Delivery Facility - Location 1009:001 to 1009:052, Xxxxxx
and Xxxxxxx Counties, Maryland.
3. Atlanta Junction to Chattanoogo Delivery Facility - l=Locations 504, 505,
506, 507 & 508. Project was halted 2 1/2 weeks after start of perfection
acquisition. During this 2 1/2 period, 21 easement perfections were
acquired (16 in Xxxx County, Georgia - Location 504; and 5 in Xxxxxxx
County, Georgia - Location 505).
- -----------------
(1) The "perfected segments" in segment 1 above are substantially perfected. In
some cases, parcels were omitted because of unreasonable difficulties that
suggested alternate routing within road rights-of-way that were left unpermitted
until construction was scheduled. In segment 2, 140 out of 257 parcels contained
telecommunications provisions.
EXHIBIT E
GENERAL COLONIAL CONSTRUCTION STANDARDS
A. GENERAL DESCRIPTION OF PROJECT - PROTECTION OF UNDERGROUND PIPELINES
FROM FIBER OPTICS INSTALLATION
This project consists of the protection of underground petroleum pipelines from
a third party's installation of fiber optics cables and related facilities
within the pipeline right of way. These specifications govern all such
installations regardless of their location, rural or urban, regardless of the
width of the right of way, the depth or size of the pipelines, or the size of
the proposed fiber optic conduits.
These specifications are designed to be made a part of any agreement between
Colonial and the fiber optic party encroaching on the pipeline right of way, its
construction contractor and any entity contracted to perform utility location or
inspection services for the benefit of either party (collectively, the
"Company").
B. THE PARTIES ARE CAUTIONED AS FOLLOWS
B.1. The underground pipeline which is the subject of the protective
measures described herein is a carrier of a hazardous and highly volatile liquid
under high pressure. Damage to the pipeline must be avoided in all circumstances
and at any cost. Personal injury and loss of life are not unlikely if fiber
optic construction equipment comes in contact with the pipeline. Serious damage
to property and the environment in the magnitude of the highest order are a
certainty if a leak results from damage to the pipeline. Damage to the pipelines
from such third party installation might result in an immediate rupture or are
likely to weaken the pipeline to the extent that a leak is inevitable. In either
event the resulting damage to the property and the environment is usually
catastrophic.
B.2. The Company, its contractors, agents and subcontractors shall
indemnify, defend and hold Colonial harmless for all injury to all persons or
property, loss and damage resulting from a leak caused directly or indirectly
from installation of the fiber optic facilities contemplated hereunder, and any
direct or indirect consequences therefrom, whether such injury to the pipeline
was caused by negligence, recklessness, or willful misconduct or by a failure to
protect the pipeline as described in these specifications.
B.3. The herein obligations of the Company shall continue for so long
as a pipeline remains within the right of way easement, and shall not be
extinguished upon the sale, assignment or removal of the fiber optic facilities,
and such obligations shall be binding upon up the successors and assigns of the
Company
-i-
C. PRE-CONSTRUCTION REQUIREMENTS
C.1. Subsequent to Colonial providing data regarding its easements,
title, pipeline location and survey, the Company shall coordinate with
Colonial's Right of Way and Engineering departments throughout its title
confirmation, route survey and rights acquisition activities.
C.2. Upon completion of work in C.1, the Company shall prepare
alignment sheets, ownership and construction line lists, and work plans
necessary to prosecute the work described below.
C.3. Among other things, the line lists shall include landowner names,
tenants, special construction provisions, and Colonial shall preview all
instrument forms used to perfect the rights required to install the fiber optic
facilities.
C.4. Among other things, the alignment sheets shall include: the width
of Colonial's easement, the location of Colonial's pipelines, the proposed
location of the Company's facilities and the proposed construction work space
limits and distances of separation of same with pipelines and easement
boundaries.
C.5. Among other things, the work plans shall include a detailed list
of construction procedures, contractors and equipment. Colonial shall be given
the opportunity to preview the Company's proposed construction contracts,
provide comments and recommendations, whereupon the Company shall cooperate with
Colonial to remove all items denoted as "in conflict" with the safety of
Colonial's pipelines, as determined in Colonial's sole and absolute discretion.
Colonial shall inspect and approve all final installations, specifications and
route maps prior to commencing fiber optic installation within its right of way
easements.
C.7. Prior to commencement of construction activities, the Company
shall provide Colonial with a list of all successful bidders contracted to
perform any and all work in prosecution of its construction, as well as the
names of employees and personnel in supervisory positions assigned to such
activity.
C.8. Upon approval of the specifications, Colonial shall furnish a copy
of its detailed encroachment requirements for all phases of fiber optic line
co-location within Colonial's easements. These requirements shall include but
not be limited to: ditching; placement of backfill, replacement of backfill;
tamping and compaction; rock excavation; blasting; road, railroad or water
crossings by trenching, boring, jacking and/or directional drilling; soil
erosion and sedimentation control; equipment traffic paralleling and crossing
the pipeline(s), including requirements for earthen padding, when and how much
is needed; notification; inter-Company communication and landowner relations. A
guided boring head shall be used when boring, jacking or directional drilling is
performed.
-ii-
C.9. Colonial and the Company shall compare operating and maintenance
manuals, and revisions shall be made to include the presence of each other's
facilities and what measures shall be taken to protect the other's facilities,
including emergency response procedures and notification instructions.
C.10. All inspectors used to ensure that the installation is performed
to Colonial's standards as expressed herein shall be chosen and trained by
Colonial. Colonial shall provide the Company with a list of its inspection
personnel, and the Company shall submit any objections or suggestions about the
deployment of such personnel and their roles as described below.
D. COMPANY EQUIPMENT EMPLOYED TO INSTALL THE FIBER OPTIC FACILITIES
D.1. The Company shall list and describe all equipment and machinery
which shall be used to construct and install the fiber optic facilities.
D.2. Colonial shall be given the opportunity to review the impact of
the proposed equipment and machinery and amend these specifications to account
for any equipment not anticipated at the time of this Agreement.
D.3. The Company shall make its best efforts to comply with any
Colonial suggestions regarding the use of said equipment and suggested safety
procedures, and cooperate with Colonial to resolve any conflicts ensuing
therefrom.
E. LANDOWNER RELATIONS
E.1. The Company shall include the following landowner relations
activities in prosecution of its construction activities:
(a) Provide personnel to conduct courtesy notifications
to landowners of impending construction activities;
(b) Make arrangements to protect and contain livestock
and other landowner animals and pets;
(c) Take down fences and replace same, repairing any
damage resulting therefrom;
(d) Conduct post construction cleanup activities,
including the reseeding of the construction work
space area with ground cover and erosion control
devices;
(e) Settlement of all off right of way damages, and the
payment of all construction damages not paid in
advance of construction.
-iii-
F. SURVEYS AND MAPPING
F.1. The Company shall provide as-built survey personnel during
construction to document actual placement of all underground and above-ground
facilities.
F.2. Alignment sheets of the proposed routing shall be updated monthly
during construction and distributed to designated Colonial offices.
G. APPROVAL OF INSPECTOR
G.1. No fiber optic installation will be allowed to commence in any
Colonial right of way easement without the presence of a Colonial inspector and
such inspector's approval to proceed. Daily work permits shall be obtained from
Colonial for all crews performing excavation or installation within the
easement.
G.2. The inspector is charged with the responsibility of protecting the
pipelines, and any construction activity observed in violation of this Agreement
shall be communicated to the offending equipment operator or other person acting
in violation of this Agreement, whereupon the person performing the offending
activity shall immediately refrain from such activity.
G.3. Failure to refrain from the activity in violation of the terms of
this Agreement shall result in an immediate shut down of such activity until the
Company provides adequate reassurances that corrections have been made to avoid
further occurrence of said activity.
G.4. Failure to observe a shut down order by an inspector shall result
in a breach of this Agreement and subject the Company to the penalties
described in this Agreement under Article XII.
H. LOCATING AND FLAGGING THE FACILITIES, AND MARKING THE CONSTRUCTION
LIMITS
No fiber optic installation will be allowed to commence in any Colonial right of
way easement without the marking of the centerlines of all of Colonial's
existing pipelines and appurtenances, as well as the flagging of the route of
the fiber optics lines and the limits of the construction work space.
H.1. Locating the pipelines shall be accomplished by utilizing a
Metrotech model 810 inductive type finders or equivalent, in the conductive
mode, supported by metal rods probing at the placement of every stake, and then
confirming the location by finding the top of the pipe with a probe rod. Probing
shall only be performed by Colonial personnel, unless approved and inspected by
Colonial's inspector.
-iv-
H.2. Flagging stakes on the centerline of the nearest pipeline shall be
made of three-foot (3') wood lathing with red ribbon flagging and shall be
placed at intervals not exceeding fifty feet (50') separation and at all
pipeline P.I. all fence crossing, road and railroad right of way limits and at
all waterway high water marks, along with spray painting of the ground where the
stake enters the earth's surface. Pipeline centerline stakes and fiber optic
line stakes shall be labeled with station numbers at foreign line crossings,
property lines, and the limits of all crossing easements and flagged with a
contrasting color from interval stakes. If pipeline station numbers do not
correspond with Colonial alignment sheets, the route surveyor shall notify
Colonial's inspector and make note of discrepancies on a set of Colonial
alignment sheets designated for changes in surface observations. The pipeline
right of way shall be clear cut or mowed to allow visibility of staking.
Replacement of all stakes is mandatory should they disappear prior to fiber
optic installation.
H.3. The boundary of the work space closest to the pipelines shall be
staked with optic yellow, continuous police-type ribbon draped from stake to
stake, each stake exceeding three feet (3') above ground.
H.4. The centerline of the fiber optic lines shall be staked at
intervals not exceeding fifty feet (50') separation and shall be marked with
optic orange flagging.
H.5. All pipelines must be located to ensure that the pipeline closest
to the proposed installation is identified, however, the Company is required to
flag only the closest pipeline.
I. CONSTRUCTION AND SAFETY
I.1. Placement - All linear fiber optic lines shall be installed near
the outer limits of Colonial's easements, and under no circumstances will
Colonial approve the installation of linear fiber optic lines within ten feet
(10') of the centerline of any of its pipelines.
I.2. If the existing width of Colonial's easement is insufficient to
provide a 10-foot separation, then an easement modification or an new easement
must be acquired.
I.3. Copies of any easement modification or new easements shall be
provided to Colonial prior to commencing installation of the fiber optic lines.
I.4. Machinery and equipment shall only be allowed to cross or travel
across Colonial's pipelines within designated crossing lanes that have been
built up with extra earth padding and/or other protection as approved by
Colonial's inspector. No other work shall be permitted on top of or above
Colonial's pipelines without a written work variance authorization executed by
Colonial's chief engineer, and accompanied by a written description of the work
to be performed.
-v-
I.5. No longitudinal vehicle and equipment traffic over Colonial's
pipelines will be permitted.
I.6. Colonial does not require the installation of fiber optic lines be
at a certain depth, provided, however, that where a crossover is necessary (a
crossover meaning the need to move the fiber optic lines from one side of
Colonial's easement to the other) the fiber optic lines shall be encased in
steel the entire distance of the crossover, and they shall always cross below
Colonial's lines at a minimum clearance of 24 inches. When crossing any Colonial
pipeline, the pipeline crossing location shall be excavated to the extent that
the crossing can be observed without obstruction, and all excavation within five
feet (5') of the outer wall of a pipeline shall be performed by hand tools,
unless authorized by the Colonial inspector. All crossovers shall be made as
near as practical to the perpendicular (90 degrees). The number of crossovers
shall be held to an absolute minimum.
I.7. Any surface altering equipment necessary for the installation of
the communication facilities will only be permitted subsequent to the approval
of individual site plans. All installations within Colonial facility property
shall be permitted subsequent to locating all underground pipeline facilities by
Metrotech pipe finders, probing and hand digging to visually spot the
facilities. Any clearing and grading within the easement area shall only be
performed in the presence of a Colonial inspector.
I.8. The installation of cables, conduits, fibers, equipment,
appurtenances and all other facilities, whether above or below ground, shall be
located no less than ten feet (10') from the centerline of any Colonial pipeline
in its right of way, which shall be extended to a minimum distance of no less
than twenty feet (20') at all road and water crossings or in any other
circumstance where installation requires boring or drilling or where soil
conditions dictate.
I.9. No installation shall proceed without the presence of a Colonial
inspector on site and in a position to observe the installation activity.
I.10. No installation shall proceed without the presence of staking
and flagging as described in Section H above.
J. POST-CONSTRUCTION DELIVERABLES
J.1. Within six months of completion of the installation contemplated
herein the Company shall provide Colonial:
(a) "as built" alignment sheets and survey, indicating the
location of fiber optic installations, the depth of the fiber optic facilities
were buried, the distances to the nearest Colonial pipelines, Colonial
stationing and reference to Colonial's alignment sheets; and
(b) updated title information and line lists.
-vi-
