Exhibit 10.1
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
AGREEMENT
This AGREEMENT dated as of the 31st day of March 1999 ("Effective Date")
BETWEEN:
PACIFIC FIBER LINK, LLC, a Washington limited liability
company, having a business office in Westminster Colorado,
hereinafter referred to as "Developer";
AND:
PATHNET, INC., a Delaware corporation having a business office
in Washington, DC hereinafter referred to as "Purchaser"
(DEVELOPER and Purchaser are referred to herein individually
as a Party and collectively as "Parties");
WHEREAS, DEVELOPER desires to design, engineer, construct, install and
maintain a [ * * * ] conduit fiber optic telecommunications system between
Aurora, Colorado and Chicago, Illinois, as more particularly identified in
Exhibit A (the "Segments"); and
WHEREAS, Purchaser carries on business as a telecommunications carrier
and desires to purchase from DEVELOPER and DEVELOPER agrees to sell to Purchaser
[ * * * ] and [ * * * ] of the total number of fibers pulled through the Primary
Conduit (as defined herein), and associated improvements within the [ * * * ]
conduit fiber optic telecommunication system being constructed by DEVELOPER;
NOW THEREFORE THIS AGREEMENT, witnesses that in consideration of the
mutual covenants herein contained, the receipt and sufficiency whereof are
hereby acknowledged, the Parties hereto agree as follows:
1. DEFINITIONS
In this Agreement, unless the subject matter or context otherwise
requires:
1.1 "Acceptance Date" means the date that the Purchaser has Accepted the
Purchaser System hereof pursuant to Article 10.
1.2 "Business Day" means a day other than a Saturday, Sunday or holiday.
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1.3 "Cable" means the fiber optic cable and the fibers contained therein,
and associated splicing connections, splice boxes and vaults and other
telecommunications and associated equipment to be installed as part of
the Project.
1.4 "Conduit" when used herein as a defined term means the conduit to be
installed as part of the Project, as more particularly described in
Exhibit C.
1.5 "Developer" means DEVELOPER, which shall have responsibility to
design, engineer, construct, install and maintain the Project as set
forth in this Agreement and in the maintenance agreement.
1.6 "Estimated Delivery Date" means the date set forth in Exhibit A hereto
as such date may be extended as provided in this Agreement.
1.7 "Force Majeure" means in relation to the performance of any
obligations under this Agreement, any cause, condition or event of any
nature whatsoever which is beyond the reasonable control of the Party
responsible for such obligation which prevents in whole or in part the
performance by such Party of its respective obligations including,
without limitation, acts of war, revolution, riot, sabotage,
vandalism, earthquakes, and other acts of God, local or national
emergencies, rail accidents, strikes, lockouts, work slowdowns and all
other labor disputes, whether lawful or unlawful, delays of unrelated
third parties and governmental agencies in granting Underlying Rights,
the adoption or amendment of government codes, ordinances, laws,
rules, regulations or restrictions, including without limitation a
material reduction in available track time, permitting and
construction delays in the System's urban locations beyond the
reasonable control of and arising without the negligence of the Party
claiming a delay resulting therefrom and any other event (whether or
not of the kind enumerated in this Section 1.7) which is not
reasonably in the control of and was not caused by the negligence or
willful misconduct of the Party claiming force majeure, and which
materially affects the ability of the Party claiming force majeure to
timely fulfill its obligations hereunder. Notwithstanding anything in
the preceding sentences, (i) any change in pricing in the
telecommunications market or lack of financing shall not be considered
events of Force Majeure and (ii) an event shall be treated as Force
Majeure as set forth above only if the delayed Party uses its
Reasonable Efforts to mitigate the situation and thereafter to resolve
the delay as expeditiously as possible.
1.8 "Franchise" means authority required under law by a Franchising
Authority as a precondition to providing telecommunications or
other services.
1.9 "Franchising Authority" means a city, county or other unit of
government authorized by law to grant Franchises.
1.10 "MW" or "Maintenance Window" shall mean a prearranged period of time
reserved for performing certain work on the System that may
potentially affect traffic, as more fully described in Exhibit H.
1.11 "Management Fee" shall have the meaning set forth in Section 11.2.2.
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
1.12 "Material Deviation" shall mean a deviation in the general route of
the Purchaser System (i) that modifies the System Route architecture
in a manner that breaks a ring, creates a spur or breaks the
contiguous nature of the Purchaser System; or (ii) that increases the
route mileage by more than [ * * * ] or (iii) that modifies the System
Route through any city identified in Exhibit A as being the location
of a Purchaser POP site in a manner that materially changes the
proximity of such POP site to the System Route.
1.13 "Non-Project Costs" means those costs which are expressly specified in
Exhibit B under the heading "Non-Project Costs", to be paid by
DEVELOPER out of the Management Fee.
1.14 "Notice of Completion" has the meaning provided in Section 10.2.1
hereof.
1.15 "Notice of Non-Acceptance" has the meaning provided in Section 10.2.2
hereof.
1.16 "Person" includes individuals, limited liability companies,
partnerships, associations, trusts, unincorporated organizations and
corporations.
1.17 "POP" shall mean the Purchaser's point of presence at locations along
the System route.
1.18 "Primary Conduit" is the first conduit owned by DEVELOPER to contain
dark fiber in an amount and of a type and specifications agreed to
herein by the Parties, of which [ * * * ] of the total number of
fibers pulled will be owned by Purchaser.
1.19 "Prime Rate" shall mean the prime rate of interest published by the
Wall Street Journal as the base rate on corporate loans posted by a
substantial percentage of the nation's largest banks on the date any
such payment is due. Unless otherwise provided in this Agreement,
interest shall be compounded annually in determining the amount of
interest due.
1.20 "Project" means all of the Cables, Conduits, equipment shelters,
utility connections and all appurtenances thereto installed on the
Underlying Rights between Aurora, Colorado and Chicago, Illinois, in
connection with DEVELOPER's engineering, design, installation,
maintenance and construction of the System. The Project shall be
constructed in Segments on a schedule to be agreed to by the Parties.
1.21 "Project Budget" means the detailed, Segment by Segment budget for the
Project agreed to by the Parties.
1.21 "Project Costs" shall mean all costs which are incurred by DEVELOPER
necessary for the purpose of design, engineering, construction,
installing and maintaining the
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
Project, including but not limited to, the Underlying Rights Costs
save and except the Non-Project Costs as set forth in Exhibit B.
1.23 "Project Schedule" means the schedule of tasks and deadlines agreed to
by the Parties to be attached as an exhibit hereto.
1.24 "Project Specifications" means the engineering, design and operational
specifications set forth in Exhibits C, E and F for the System and
Purchaser System.
1.25 "Purchase Price" means the total purchase price for the Purchaser
System as calculated pursuant to Article 11 and Exhibit B.
1.26 "Purchaser System" means [ * * * ] and [ * * * ] of the total number
of fibers pulled through the Primary Conduit, and the right to use,
install, own, operate and dispose of and perform the rights set forth
in the Marketing Agreement between the Parties dated on or about the
date hereof (the "Marketing Agreement") other auxiliary improvements
described in the Exhibits, constructed, engineered, designed and
installed as part of the Project and being purchased by Purchaser, all
of which fibers, Conduit and auxiliary improvements comply with the
Project Specifications or such other specifications agreed to by
Purchaser.
1.27 "Reasonable Efforts" shall mean efforts commercially and reasonably
designed to achieve the desired results, but shall not obligate a
Party to make unreimbursed expenditures that are excessive in amount,
in light of the circumstances to which the requirement to use
reasonable efforts applies.
1.28 "Segment" shall mean that portion of the Project installed on a
section of the right of way as designated in Exhibit A, attached
hereto and incorporated herein .
1.29 "System" shall mean the fiber optic communication system, consisting
of [ * * * ], Cables and all appurtenances thereto, between such pair
cities identified in Exhibit A.
1.30 "Underlying Rights" means all deeds, leases, easements, rights of way,
licenses, franchises, permits, authorizations, consents and approvals
(including without limitation, any necessary local, state, federal or
tribal authorizations and environmental permits) and other rights,
titles or interests as are necessary for the construction,
installation, operation, maintenance or repair of the System and
Purchaser System.
1.31 "Underlying Rights Costs" means the total costs expended by DEVELOPER
to obtain the Underlying Rights and any renewals thereof.
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1.32 "Underlying Rights Requirements" means the terms, conditions,
requirements, restrictions, and/or limitations upon Purchaser's right
to use or operate the Purchaser System imposed under the Underlying
Rights and the associated safety, operational and other rules and
regulations imposed in connection therewith or by applicable law.
2. HEADINGS
The division of this Agreement into Articles and Sections, and the
insertion of headings are for convenience of reference only and will
not affect the construction or interpretation of this Agreement. The
terms "hereof", "hereunder" and similar expressions refer to this
Agreement, not to any particular Article, Section or other portion
hereof, and include any agreement supplemental hereto. Unless the
subject matter or content otherwise requires, references herein to
Articles and Sections are to Articles and Sections of this Agreement.
3. EXTENDED MEANINGS
In this Agreement, the singular shall include the plural and vice
versa and references to any gender include all genders.
4. ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to a calculation to be
made or an action to be taken in accordance with generally accepted
accounting principles, such reference will be deemed to be to the
generally accepted accounting principles from time to time approved by
the Financial Accounting Standards Board, or any successor thereof,
applicable as of the date on which such calculation or action is made
or taken or required to be made or taken in accordance with generally
accepted accounting principles.
5. CURRENCY
All references to currency herein are to lawful money of the United
States of America.
6. EXHIBITS
The following are the Exhibits attached to and incorporated by
reference herein:
- Exhibit A - Project and Purchaser System;
- Exhibit B - Payment Method and Non-Project Costs;
- Exhibit C - Construction Specifications and Drawings;
- Exhibit D - Fiber Cable Splicing Testing and Acceptance
Procedures;
- Exhibit E - Fiber Optic Specifications
- Exhibit F - Specifications for Regeneration Facilities
- Exhibit G - As-Built Drawings Specifications;
- Exhibit H - Maintenance Specifications and Procedures;
- Exhibit I - Xxxx of Sale.
7. DEVELOPER TO ENGINEER, DESIGN, INSTALL AND CONSTRUCT
7.1 DEVELOPER shall engineer, design, install and construct the Project on
behalf of DEVELOPER and Purchaser, by carrying out the Project and the
Purchaser System
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in compliance with the Project Specifications set forth in the
Exhibits as they may be revised as agreed among the Parties in writing
from time to time, and in compliance with applicable laws and
governmental and regulatory requirements as well as in compliance with
all applicable Underlying Rights Requirements. DEVELOPER shall
competitively bid all subcontracts and shall select the lowest bid for
each subcontract (provided, however, that DEVELOPER shall not be
required to select a subcontractor to which it has a reasonable
objection, including but not limited to, the subcontractor's past
performance, availability, reputation, financial strength and
construction expertise), and Developer shall require that all
subcontractors use new materials only and operate at all times in
accordance with prevailing industry standards with properly trained
personnel. All contractors that are affiliated with PFL, and any
contractual arrangements with such entities, shall be subject to the
prior approval of Purchaser, which approval shall not be unreasonably
withheld or delayed. If Purchaser does not give written reasons for
withholding its approval within seven (7) days of receipt of written
notice from DEVELOPER, approval shall be deemed given. All Conduits
and fibers will be color-coded in order to identify their ownership.
DEVELOPER shall coordinate with governmental and regulatory agencies
the construction of the Project, obtain all requisite permits,
licenses and authorizations required to engineer, design, install and
construct the Project, and prepare monthly summary reports on the
status and scheduling of the Project. DEVELOPER shall keep the Project
free of debris following installation and shall comply at all times
with all applicable environmental and health and safety laws.
DEVELOPER shall ensure that any and all construction liens or other
liens on the Project are promptly vacated. DEVELOPER shall supply all
vehicles, tools, equipment, labor and similar items and services
necessary for DEVELOPER to perform and complete the Project, and
DEVELOPER shall be solely responsible for maintaining the security
thereof. Both Parties agree that the number of Conduits in the Project
will not increase without the prior written consent of the other
Party, which consent shall not be unreasonably, delayed or withheld,
and may be conditioned on the Parties' agreement on appropriate cost
and revenue sharing arrangements for the additional conduit(s) and
restrictions on the use and disposition of such conduits(s). In the
event either Party has not approved the increase in the number of
Conduits within fifteen (15) days after receipt of written notice from
the other Party, the withholding Party shall be deemed to have
declined to participate and share in the costs of adding the
additional conduit(s) to the System. In such event, the Party
proposing the inclusion of the additional conduit(s) shall be free to
complete the transaction at its sole cost and expense and all revenue
arising from or attributable to such additional conduit(s) shall
remain the personal property of that Party and such revenue shall not
be shared with the declining Party. In addition, the additional
conduit(s) and the fiber contained therein shall not be subject to the
Party's Marketing Agreement; provided however, that the Party
proposing the inclusion of the additional conduit(s) may not populate
the additional conduit(s), or sell, lease, license, swap or otherwise
dispose of the additional conduit(s), or permit any of the foregoing
in any manner whatsoever until the termination or expiration of the
Party's Marketing Agreement.
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7.2 DEVELOPER shall endeavor to convene periodic meetings of the
representatives of DEVELOPER and Purchaser to review the progress of
the work relating to the Project and Purchaser System, such meetings
to be held at the principal office of the Project (1333 W. 120th
Avenue, Westminster, Colorado) or at such other place as may be
mutually agreed upon between DEVELOPER and Purchaser. Both Parties
agree that such meetings may be convened by means of a telephone
conference or any other communication facility whereby all
representatives participating in the meeting can hear each other and
make themselves heard.
7.3 DEVELOPER shall on the Acceptance Date for each Segment obtain all
warranties and guarantees from material suppliers, equipment makers or
contractors for such Segment. DEVELOPER shall cause all such
warranties and guarantees attributable to the Purchaser's System to be
assigned directly to Purchaser wherever legally permissible, and shall
furnish to Purchaser written evidence of such assignment, or otherwise
assist Purchaser in enforcing same. Where the assignment is not
legally permissible or would materially, adversely affect DEVELOPER's
retained interest in the Project from time to time, DEVELOPER shall
then hold in trust for the benefit of Purchaser said warranties and
guarantees.
7.4 Either Purchaser or DEVELOPER may request a change to the System and
Purchaser System or the Specifications set forth in the Exhibits in
writing. If either Party makes such request, the requesting Party
shall accompany such request with a detailed statement of the
additional costs and savings, if any, within fifteen (15) Business
Days. Any additional costs and/or savings resulting from agreed upon
changes will modify the Maximum Budget accordingly.
7.5 Purchaser shall at all times have the right to observe and inspect
DEVELOPER's performance of the Project. Inspection or lack thereof by
Purchaser shall not act as a waiver of any rights of Purchaser.
8. DEVELOPER TO PROCURE UNDERLYING RIGHTS
8.1 DEVELOPER covenants and agrees that it shall obtain any and all
Underlying Rights to the extent reasonably necessary in order to (i)
permit DEVELOPER to construct, install, maintain and convey to
Purchaser the Purchaser System hereunder, (ii) permit Purchaser to
use, own, operate, access and maintain the Purchaser System as
provided and permitted hereunder and as provided in the Marketing
Agreement, and (iii) permit Purchaser to grant sub-easements or
sub-licenses, as the case may be, to third parties all in accordance
with the terms and conditions hereof, subject to restrictions imposed
by the grantor of the Underlying Rights, provided such restrictions do
not unreasonably interfere with the activities described in the
preceding clauses (i) through (iii). In the event the grantor of the
Underlying Rights does not permit DEVELOPER to grant sub-easements or
sub-licenses to third parties, DEVELOPER agrees that Purchaser shall
have the right, but not the obligation, to participate in the
acquisition of such Underlying Rights.
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
8.2 Subject to the consent of the party granting the Underlying Rights,
DEVELOPER shall use Reasonable Efforts to provide to Purchaser a
non-disturbance provision during the term of such Underlying Rights
and any renewal thereof, to include the right of Purchaser to obtain
notice of any default on the part of DEVELOPER and to permit Purchaser
to cure, on behalf of DEVELOPER, any such default by DEVELOPER and,
thereafter, to continue the use of such Underlying Rights in
accordance with DEVELOPER's rights and interests thereunder; provided
that DEVELOPER's failure to obtain such notice and a right to cure
shall not be considered a breach of this Agreement by DEVELOPER. If
Purchaser at any time cures such default by DEVELOPER, DEVELOPER shall
reimburse Purchaser for any and all amounts reasonably paid by
Purchaser promptly upon demand.
8.3 DEVELOPER shall use Reasonable Efforts to require that the initial
stated term of any Underlying Rights shall be for a period that does
not expire in accordance with its ordinary terms within [ * * * ]
years of the Effective Date. If the initial stated term of any such
Underlying Rights expires in accordance with its ordinary terms prior
to [ * * * ] years after the Effective Date, DEVELOPER shall exercise
any renewal rights thereunder, or otherwise use its Reasonable Efforts
to acquire such extensions, additions and/or replacements as may be
necessary in order to cause the stated term thereof to be continued
until a date that is not earlier than the [ * * * ] years after the
Effective Date. Purchaser shall pay DEVELOPER [ * * * ] of the total
costs incurred by DEVELOPER in renewing or replacing the Underlying
Rights upon the expiration or termination thereof. If, after use of
Reasonable Efforts DEVELOPER does not obtain such renewal or
extension, nothing in this Agreement shall prevent Purchaser from
seeking to obtain or obtaining any renewal or extension of any such
Underlying Rights from the grantor of such Underlying Rights, and
DEVELOPER shall pay Purchaser [ * * * ] of the total costs incurred by
Purchaser in obtaining any such renewal or extensions thereof.
Notwithstanding the foregoing, DEVELOPER will obtain Purchaser's
prior, written consent before agreeing to any Underlying Rights that
are for terms of less than [ * * * ] years, or would not permit the
rights and activities described in Section 8.1 (i) through (iii). In
the event DEVELOPER is delayed in procuring and obtaining any
Underlying Rights as a result of Purchaser's failure to timely consent
and approve the same, which consent shall be deemed to be given if no
written objection is raised within ten (10) days of written notice of
such an event to Purchaser, DEVELOPER shall be entitled to an
equitable extension of time in the Project Schedule and any applicable
Segment Completion Date.
8.4 Both DEVELOPER and Purchaser further covenant and agree with respect
to such Underlying Rights to observe and perform its duties,
obligations and responsibilities under such Underlying Rights or under
this Agreement, if the failure to observe and perform any such
obligation or obligations would permit the grantor of such Underlying
Rights to terminate such Underlying Rights prior to
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
their stated expiration date, would result in a material amount of
cost, loss, damage or expense, or would otherwise materially adversely
impair or affect either Party's ability to use the System or the
Purchaser System or exercise each Party's rights with respect thereto,
as provided and permitted hereunder. Each Party hereby agrees to
indemnify and hold the other Party harmless from and against any loss,
cost, damage or expense, including reasonable attorneys' fees and
costs of suit, resulting from the indemnifying Party's breach of this
Section.
8.5 Throughout the term of each such Underlying Rights, DEVELOPER shall
defend and protect DEVELOPER's rights in and interests under the
Underlying Rights and Purchaser's right to use the Purchaser System as
provided and permitted hereunder against interfering or infringing
rights, interests or claims of third parties. Purchaser shall
reimburse DEVELOPER for [ * * * ] of the total costs, including legal
and direct administrative costs of DEVELOPER and of any third party
costs incurred in defending and protecting the rights and interests of
the Parties.
8.6 Notwithstanding anything to the contrary contained in this Article 8,
so long as a Party shall have observed and performed its obligations
with respect thereto, upon the expiration, termination or failure to
renew or extend any Underlying Rights necessary in order for the
Parties to use the System or any portion thereof, each Party shall not
be liable to Purchaser for any direct, indirect, special, incidental,
punitive, consequential or other damages including without limitation
loss of profits or revenue, cost of capital, cost of removal of the
Purchaser System, or claims of customers, resulting from the
expiration or termination of any Underlying Rights.
8.7 DEVELOPER and Purchaser shall designate employees of each Party as
members of a Project team to facilitate and coordinate activities
under this Agreement. In addition, DEVELOPER and Purchaser shall
designate one or more individuals from the Parties as onsite
inspectors to monitor construction progress.
9. SUBSTITUTIONS; RELOCATIONS
9.1 If, after the Acceptance Date with respect to a Segment, (i) DEVELOPER
is required by a Party with legal authority to so require (including,
without limitation, a grantor of Underlying Rights if such relocation
is not being required as a result of DEVELOPER's failure to observe
and perform its obligations under such Underlying Rights or this
Agreement), to relocate any portion of a Segment, including any
condemnation or taking under the power of eminent domain of all or any
portion of a Segment, or (ii) with Purchaser's concurrence upon
DEVELOPER's request, DEVELOPER may relocate such Segment. In any such
event, (i) the route of any such relocation shall be subject to the
good faith agreement between DEVELOPER and Purchaser in such Segment,
or in any other Conduit or Cables included in the System which is
affected by such relocation; (ii) Purchaser shall be kept fully
informed of all
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
material determinations made by DEVELOPER in connection with such
relocation; and (iii) the portions of any Segment affected by such
relocation shall be constructed in accordance with the specifications
and drawings set forth in this Agreement. If such relocation occurs,
Purchaser shall reimburse DEVELOPER for either [ * * * ] of the costs
of such relocation attributable to the portion of the Segment so
relocated (reduced by such amount, if any, of the portion of such
costs as are reimbursed to DEVELOPER by the Party requiring such
relocation), or an amount adjusted to reflect any additional Cable or
facilities installed by either Party in excess of the original System.
9.2 Purchaser shall have the right to review and audit all costs incurred
in connection with such relocation. DEVELOPER shall deliver to
Purchaser updated As-built drawings with respect to the relocated
segment not later than ninety (90) days following the completion of
such relocation.
10. ACCEPTANCE DATE
10.1 Scheduled Available Date
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(i) Time shall be of the essence with respect to completion of each
Segment of the Project by the dates set forth in the Project
Schedule agreed to by the Parties, and the entire Project shall
be completed on or before [ * * * ] (the "Project Completion
Date"), as extended by Force Majeure events, or any extension of
time expressly provided for in this Agreement.
10.1.1 If the portion of the Project from Chicago, Illinois to
Omaha, Nebraska is not Substantially Completed (as
hereinafter defined) on or before [ * * * ] or that portion
of the Project from Omaha, Nebraska to Aurora, Colorado is
not Substantially Completed on or before [ * * * ] (as
extended by Force Majeure events, or any extension of time
expressly provided for under this Agreement), DEVELOPER
shall pay (or allow Purchaser to a setoff as the case may
be) to Purchaser by way of liquidated damages and not as a
penalty, a pre-estimated amount equal to [ * * * ] per day
for each day thereafter until the date on which that portion
of the Project is completed or deemed completed in
accordance with Section 10.2; provided however, that the
total amount of liquidated damages payable for late
completion hereunder shall not exceed in the aggregate [ * *
* ] Purchaser may deduct or set-off from the Purchase Price
any liquidated damages due Purchaser under this Section
10.1.
10.1.2 Assessment and payment of liquidated damages pursuant to
Section 10.1.1 shall be the maximum liability of DEVELOPER
for monetary damages in connection with any late completion
under this
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NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
Agreement.
10.1.3 The Project Schedule shall contain agreed upon Segment
Completion Dates as set forth in Exhibit A, by which
DEVELOPER will have completed certain Segments. Subject to
Force Majeure events or any extensions of time provided for
under this Agreement, in the event that DEVELOPER fails to
complete the work required by a specific Segment Completion
Date; provided, however, that such failure is not
attributable to Purchaser or its contractors, Purchaser
shall have the right to (i) require DEVELOPER to provide an
accelerated Project Schedule demonstrating that DEVELOPER
can complete the remaining Segments by the scheduled Segment
Completion Dates, and the Project by the scheduled Project
Completion Date; and (ii) require that DEVELOPER provide
reasonable additional assurances that DEVELOPER can complete
the Project on Schedule and on or under the approved Project
budget. DEVELOPER's failure to satisfy four or more Segment
Completion Dates by more than [ * * * ] days each shall
constitute a Default under this Agreement.
10.1.4 In the event the cause of a work delay is attributable to
Purchaser or its contractors, Purchaser shall pay the costs
of implementing the accelerated Project Schedule, and, to
the extent necessary, adjust the appropriate Segment
Completion Dates, with the delay costs incurred by
DEVELOPER, if any, to be reimbursed by Purchaser in
connection therewith.
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10.2 Title to the Purchaser System
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Upon Substantial Completion and full payment of the Purchase Price for
each Segment of the Purchaser System to DEVELOPER, title to each
Segment of the Purchaser System shall be fully vested in, transferred,
and conveyed to Purchaser by a xxxx of sale, substantially in the form
set forth in Exhibit I, or without further action upon an event of
bankruptcy. Notwithstanding the foregoing, title to all work in
progress and all materials that DEVELOPER purchases or furnishes for
the Purchaser System as part of the Purchaser System, including but
not limited to, Cable, Conduit and facilities shall pass to Purchaser
when such items have been paid for by Purchaser as provided in Exhibit
B. DEVELOPER shall bear all risk of loss with respect to the Purchaser
System until title is transferred; provided, however, that DEVELOPER
shall not be liable to Purchaser for any direct, indirect, special,
incidental, punitive, consequential or other damages including without
limitation loss of profits or revenue, cost of capital or claims of
customers, resulting from any loss to the Purchaser System before
title is transferred and conveyed to Purchaser, provided that
DEVELOPER shall repair and restore any damage resulting from such loss
at no cost to Purchaser.
10.2.1 Following Substantial Completion of each Segment of the
System, DEVELOPER shall provide a written notice ("Notice of
Completion"). Substantial Completion shall mean completion
of a Segment in accordance with the Project Specifications
such that Purchaser may upon its receipt of title operate
the Segment in accordance with this Agreement and the
Marketing Agreement, except for non-material punch-list
items that can reasonably be corrected within thirty (30)
days. DEVELOPER shall promptly provide Purchaser with a copy
of all test results concerning a completed Segment.
10.2.2 Purchaser shall have fourteen (14) days from the day
Purchaser receives the Notice of Completion to determine
whether the completed Segment is constructed according to
the Project Specifications (the "Acceptance Period"). If
Purchaser determines that the Segment is, in fact,
Substantially Complete, Purchaser shall Accept such Segment,
subject to such punch-list items that Purchaser identifies
in writing to DEVELOPER. Unless Purchaser gives notice in
writing to DEVELOPER that the completed Segment is not
constructed according to the Project Specifications, clearly
identifying the nature of the failure by cross reference to
such Project Specifications (hereinafter referred to as the
"Notice of Non-Acceptance"), within fourteen (14) days of
receiving the Notice of Completion as aforesaid, Purchaser
shall be deemed constructively to accept the Segment and the
Acceptance Date with respect thereto shall be deemed to have
occurred on the last day of the Acceptance Period. The date
of such acceptance (or deemed acceptance) of the Segment
shall be the "Acceptance Date" for such Segment. On the
12
Acceptance Date, and upon full payment of the Purchase Price
for each Segment of the Purchaser System to DEVELOPER, title
to each Segment of the Purchaser System shall be transferred
according to this Section.
10.2.3 If Purchaser gives a Notice of Non-Acceptance, DEVELOPER
shall remedy the defect and cause the completed Segment to
be constructed according to the Project Specifications. The
Parties shall work together in good faith to promptly
identify those items that require correction.
10.2.4 Upon notice from DEVELOPER that the conditions identified
in the Notice of Non-Acceptance have been corrected,
Purchaser shall have an additional fourteen (14) days to
determine whether the completed Segment is constructed
according to the Project Specifications.
10.2.5 In the event DEVELOPER fails to remedy the defect and
cause the completed Segment to be constructed according to
the Project Specifications, and which failure remains
unresolved at the end of the fourteen (14) day period
referred to in Section 10.2.4, the Parties shall submit such
dispute to be resolved in accordance with Article 35
(Dispute Resolution) hereof.
10.2.6 Prior to the Acceptance Date and following the delivery of
the Notice of Completion, Purchaser shall be entitled to
inspect the System for the purpose of conducting tests
without any additional expense to DEVELOPER.
10.3 Simultaneously, with the payment by Purchaser of the total Purchase
Price in connection with a Segment, DEVELOPER shall take any and all
steps necessary to convey the Segment to Purchaser.
11. PURCHASE PRICE/PAYMENT
11.1 The Purchaser hereby agrees to pay DEVELOPER the Purchase Price set
forth herein for the purchase of:
11.1.1 the Purchaser System; and
11.1.2 the occupancy right of Purchaser's fibers in DEVELOPER's
conduit (i.e. the Primary Conduit); and
11.1.3 the right to use the regeneration facilities as described
in Article 20 and Exhibit A; and
11.1.4 the right to use all appurtenances constructed pursuant to
this Agreement and relating to Purchaser System;
13
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
11.1.5 the right to use, access and occupy the Purchaser System
in accordance with the terms and conditions of this
Agreement
11.1.6 the right to exercise the rights and privileges set forth
in the Marketing Agreement.
11.2 The Purchase Price shall be the aggregate sum of the following:
11.2.1 [ * * * ] of the Project Costs; and
11.2.2 a Management Fee equal to [ * * * ] of the Purchase Price.
In no event to exceed [ * * * ] of the payment cap as set
forth in Section 11.4(a). When calculating the Management
Fee, the portion of Project Costs attributable to an
increase in the number of fibers in the Primary Conduit
beyond [ * * * ] fibers, if any, shall not be considered;
and
11.2.3 [ * * * ] of the total actual costs for the design,
engineering and construction of any additional work, if any,
in excess of those described in this Agreement and at the
written request of Purchaser, plus [ * * * ] for supervision
and management, provided that DEVELOPER shall not be
required to perform any additional work that would
materially delay the Project or extend beyond the scheduled
Project Completion Date without the mutual agreement of the
Parties.
11.2.4 the taxes set forth in Section 11.9.
11.3 The Purchase Price shall be paid by the Purchaser to DEVELOPER in the
manner and at the time as set forth in Exhibit B. The Maximum Budget
(as set forth below) and the Purchase Price set forth herein, is based
on an assumed route mileage of one thousand one hundred one (1,101)
miles for the System (the "Assumed Mileage"). In the event the actual
route mileage is not equal to the Assumed Mileage upon completion of
the Project, the Maximum Budget shall be adjusted based on [ * * * ]
per route mile, multiplied by the actual route miles constructed
(based on the cost of purchasing of a [ * * * ]).
11.4 The Purchaser and DEVELOPER hereby agree that the maximum budget for
the Project (excluding the Management Fee) is [ * * * ] subject to
modification due to agreed upon changes, and pursuant to Section 7.4
(the "Maximum Budget"). In the event the actual Project Costs are not
equal to the Maximum Budget upon completion of the Project, the
Purchase Price shall be adjusted as follows:
14
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
(a) Subject to cost overruns due to events of Force Majeure as set
forth in Section 1.7, if the actual Project Costs upon completion
of the Project exceed the Maximum Budget, Purchaser's share of
Project Costs, as set forth in Section 11.2.1, shall be capped at
[ * * * ] of the Maximum Budget.
(b) If the actual Project Costs upon completion of the Project are
less than the Maximum Budget, each Party shall pay [ * * * ] of
the actual Project Costs as set forth herein. In addition, the
DEVELOPER shall be entitled to an increase in the Management Fee
equal to [ * * * ] of the amount by which the final Project Costs
upon completion are less than [ * * * ] of the Maximum Budget.
(c) If the actual Project Costs upon completion of the Project equal
the Maximum Budget, as set forth above, Purchaser and DEVELOPER
shall each pay [ * * * ] of the actual Project Costs as
contemplated in Section 11 of this Agreement.
11.5 Each month DEVELOPER shall provide to the Purchaser an up-to-date
costs report of the Project on a percentage of completion basis and
forecast reports prepared in accordance with generally accepted
accounting principles. In the event DEVELOPER's revised estimate of
the total costs of the Project exceeds the initial estimated budget or
any revised estimate of timing that materially varies from the Project
Schedule, DEVELOPER shall notify the Purchaser immediately and provide
the documentation necessary to substantiate the increased costs and/or
change in timing.
11.6 A complete set of books of account and records of the Project, truly
and accurately documenting the Project Costs of the Project shall be
maintained at DEVELOPER's office. The Purchaser or its designated
representatives shall have access to and right to inspect, copy and
audit such books and records during the business hours with prior
notice reasonably given to DEVELOPER. In the event that the Purchaser
disputes any amount, the Purchaser shall provide written notice
describing in detail the basis for any such dispute and promptly
forward such notice to DEVELOPER. To the extent DEVELOPER and the
Purchaser are otherwise unable to resolve such dispute through their
respective operating and administrative personnel within thirty (30)
days after notice thereof from the Purchaser, the matter shall be
submitted for dispute resolution as provided in Article 35 herein.
11.7 In addition to the Purchase Price, the Purchaser further agrees that
it shall pay [ * * * ] of the total maintenance costs pursuant to the
provisions of the maintenance agreement to be entered into between
DEVELOPER and the Purchaser.
15
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
11.8 Subject to the provisions of Article 13, in the event that either
Party fails to make any payment under this Agreement when due, such
amounts shall accrue interest, from the date five (5) days after such
payment is due until paid, compounded monthly, at an annual rate equal
to the Prime Rate, plus [ * * * ]; provided that if the highest
percentage rate allowed by law is lower than such rate, then the rate
shall be such highest rate allowed by law. In addition to the interest
payment set forth in this Section 11.8, if the Purchaser fails to make
timely payments when due, the Project Completion Date for the
Purchaser System shall be automatically extended by a number of days
equal to the number of days that elapse from the date such payment is
due until paid.
11.9 The Purchaser shall be responsible for and pay all sales and/or
purchase taxes levied or assessed by any governmental agency in
connection with the purchase by Purchaser from DEVELOPER of the
Purchaser System.
11.10 Mutual Guaranties. Each Party agrees to provide the other with
financial assurances, in form and substance commercially reasonable
and acceptable to the other Party on or before sixty (60) days after
the date hereof to guarantee its payment obligations, including
without limitation, the payment of liquidated damages in the case of
DEVELOPER, pursuant to the terms and conditions of this Agreement.
12. DEFAULT
12.1 The following events shall be deemed to be events of default (each, a
"Default") under this Agreement:
12.1.1 Excluding any occurrence caused by any of the Force
Majeure events as set forth in Section 1.7, either Party's
violation of any applicable laws, statutes, ordinances,
codes, Underlying Rights Requirements, or other legal
requirements which substantially affects the progress of the
Project, or endangers the completion of a Segment, the
Project or the Purchaser System, if such violation(s) is not
remedied within ten (10) Business Days after receipt of
notice thereof from the non-defaulting Party, or, if such
default cannot with reasonable diligence be remedied within
such period, a Party's failure to remedy such default within
an additional period reasonably required to remedy such
default if a longer period is permitted at law (provided
that the defaulting Party promptly commences the remedy
within such ten (10) day period and diligently pursues
appropriate efforts to remedy such default until
completion);
12.1.2 Purchaser's failure to make any payment of money required
under this Agreement within thirty (30) Business Days after
receipt of written notice
16
thereof from DEVELOPER;
12.1.3 Subject to DEVELOPER's right to temporarily withhold
payment to a subcontractor or supplier due to a bona fide
dispute between DEVELOPER and such third party, DEVELOPER's
failure to timely make any payment due under this Agreement,
or in connection with the Project, whether to Purchaser or
to third parties, which failure is not remedied within ten
(10) Business Days after receipt by DEVELOPER of written
notice of such failure or, if such default cannot be
remedied within such period, DEVELOPER's failure to make
such payment within an additional sixty (60) days (provided
that DEVELOPER promptly commences the remedy within such ten
(10) day period and diligently pursues appropriate efforts
to remedy such default until completion within said
additional sixty (60) day period);
12.1.4 DEVELOPER's failure to make any payment required under
this Agreement within thirty (30) Business Days after
receipt of written notice thereof from Purchaser;
12.1.5 Except as otherwise caused by an event of Force Majeure,
if DEVELOPER abandons the Project and DEVELOPER does not
resume construction of the Project within ten (10) days
after receipt of written notice from Purchaser;
12.1.6 Either Party becomes insolvent, liquidates, is adjudicated
as bankrupt, makes an assignment for the benefit of
creditors, invokes any provision of law for the relief of
debtors or initiates any proceeding seeking protection from
its creditors.
12.1.7 A material breach of this Agreement by either Party which
is not cured within thirty (30) days after receipt of
written notice from the non-breaching Party, or, if the
default cannot be remedied within such period, the breaching
Party's failure to remedy such default within an additional
sixty (60) days (provided that the breaching Party promptly
commences the remedy within such thirty (30) day period and
diligently pursues appropriate efforts to remedy such
default until completion). The Segment from Chicago to
Omaha, or the Segment from Omaha to Aurora, is not
substantially completed within sixty (60) days from the
scheduled completion date for such Segment, as extended by
Force Majeure events, or any extension of time expressly
provided for under this Agreement, as applicable;
13. TERMINATION
13.1 Purchaser's Default. In the event of a Default by Purchaser pursuant
to Article 12 hereof that is not cured within any applicable notice
and cure period, DEVELOPER shall, without prejudice to any other right
or remedy available at law or in equity, have the right to elect any
or all of the remedies set forth below. In any case, (i)
17
DEVELOPER will be entitled to full payment for services provided up to
the time of said Default pursuant to this Agreement; (ii) any Segments
that have been conveyed to Purchaser shall be retained by Purchaser,
and the Marketing Agreement shall remain in effect as to such
Segments.
A. DEVELOPER may temporarily suspend construction of the Project or
the Purchaser System, which suspension shall delay the affected
Segment Completion Date and the Project Completion Date for the
suspension period; or
B. DEVELOPER may require additional security to ensure that
Purchaser retains the financial and other ability to timely
fulfill its obligations under this Agreement. Such security shall
be as determined by DEVELOPER in its sole discretion, and may
include, without limitation, additional financial guarantees by a
Purchaser affiliate or other third party; escrowed funds; letters
of credit; or a payment bond.
C. DEVELOPER may keep this Agreement in full force and effect,
complete any or all of the Segments that have not yet been
Accepted and paid for by Purchaser, and retain all title and
other rights in such Segments, including the right to all revenue
earned from such Segments under the Marketing Agreement.
DEVELOPER shall notify Purchaser, in writing, when such Segments
have been Substantially Completed, and Purchaser shall have the
right to purchase such Segments by paying within thirty (30) days
thereafter (i) all sums owing hereunder in connection with such
Segments; and (ii) any loss, cost, damage or expense incurred by
DEVELOPER and arising from Purchaser's Default. Upon such
payment, such Segments shall be conveyed to Purchaser as provided
herein;
D. IF Purchaser fails to provide additional security as contemplated
in Section 13.1B above, DEVELOPER may terminate this Agreement,
and thereafter complete any or all of the remaining Segments
which Purchaser has not already Accepted, on such terms as it
determines in its sole discretion, and Purchaser shall have no
further right, title or interest in such Segments.
13.2 DEVELOPER'S Default. In the event of a Default by DEVELOPER pursuant
to Article 12 hereof that continues beyond any notice and cure period,
Purchaser shall, without prejudice to any other right or remedy
available at law or equity, have the right to elect any of the
remedies set forth below. In any case, (i) DEVELOPER shall be entitled
to retain any payments earned hereunder up to the date of Default, and
(ii) DEVELOPER shall retain its interest in any Segments on which the
Purchaser System has been Accepted by Purchaser, and as to which
DEVELOPER is not in Default hereunder, and the Marketing Agreement
shall remain in effect with regard to such Segments.
A. Purchaser may temporarily suspend payment of any sums owing
hereunder until such Default is cured, provided that such
suspension shall not delay the Segment Completion Date for any
Segment or the Project Completion Date;
18
B. Purchaser may require additional security to ensure that
DEVELOPER retains the financial and other ability to timely
fulfill its obligations under this Agreement. Such security shall
be as determined by Purchaser in its sole discretion, and may
include, without limitation, additional financial guarantees by a
DEVELOPER affiliate or other third party; escrowed funds; letters
of credit; or a performance bond.
C. Purchaser may keep this Agreement in full force and effect, take
over construction of the Project as Developer and complete the
Project in accordance with the terms and conditions of this
Agreement and the Project Budget, and retain all title and other
rights in any Segments constructed by Purchaser, including the
right to all revenue earned from such Segments under the
Marketing Agreement. In that event, DEVELOPER is hereby deemed to
have transferred and assigned to Purchaser any and all Project
documents, information, supplies and materials, including all
permits, licenses, authorizations, contracts, construction
documents, engineering studies and reports, designs, maps,
surveys and installation information relating to the Project, to
enable Purchaser to complete the Project, and DEVELOPER shall
undertake such other steps as are necessary to effectuate such
assignment and transfer. Purchaser shall notify DEVELOPER, in
writing, when such Segments have been Substantially Completed,
and DEVELOPER shall have the right to redeem such Segments by
paying within thirty (30) days thereafter (i) all sums owing
hereunder in connection with such Segments; (ii) that portion of
the Management Fee that would otherwise be payable to DEVELOPER
for such Segments; and (iii) any loss, cost, damage or expense
incurred by Purchaser in connection with DEVELOPER's Default.
Upon such payments, the title in such Segments that would
otherwise have been owned by DEVELOPER hereunder shall be
conveyed to DEVELOPER;
D. If DEVELOPER fails to provide additional security as contemplated
in Section 13.2B above, Purchaser may terminate this Agreement,
and thereafter take over construction of the Project on such
terms as it determines in its sole discretion, and DEVELOPER
shall have no further right, title or interest in any portion of
the Project constructed from and after the date of Default. In
that event, DEVELOPER shall transfer, and hereby is deemed to
have transferred, to Purchaser all Project documents,
information, supplies and materials as provided above.
19
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
14. LIMITED WARRANTY
14.1 For a period of [ * * * ] following the Acceptance Date for the
Purchaser System, DEVELOPER warrants that the engineering,
design, construction and installation of the Purchaser System is
in compliance with the Project Specifications and the terms of
this Agreement, and DEVELOPER shall, at its sole cost and
expense, take such steps as are necessary to promptly cure
failure of the Purchaser System to comply with the foregoing.
Upon termination of the [ * * * ] warranty period, Purchaser
shall have no further recourse whatsoever against DEVELOPER with
respect to the engineering, design, construction and installation
of the Purchaser System except for claims made during such
warranty period, for which DEVELOPER shall remain responsible.
14.2 EXCEPT AS SET FORTH IN THIS ARTICLE 14 OR AS MAY BE SET FORTH
SPECIFICALLY AND EXPRESSLY ELSEWHERE IN THIS AGREEMENT, DEVELOPER
MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PURCHASER SYSTEM HEREUNDER, OR ANY SERVICES PROVIDED TO PURCHASER
PURSUANT HERETO, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE, AND ALL SUCH WARRANTIES
ARE HEREBY EXPRESSLY DISCLAIMED. THE WARRANTIES SET FORTH IN THIS
AGREEMENT CONSTITUTE THE ONLY WARRANTIES MADE BY DEVELOPER TO
PURCHASER WITH RESPECT TO THIS AGREEMENT AND ARE MADE IN LIEU OF
ALL OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR
IMPLIED.
15. MAINTENANCE
Upon the mutual execution of this Agreement, and prior to the
completion of the Project, both Parties agree to negotiate in good
faith to enter into a maintenance agreement to maintain the System,
including Purchaser's System, pursuant to the Maintenance
Specifications set forth in Exhibit H. The maintenance agreement shall
be decided on a competitive cost basis reasonably acceptable to
Purchaser, and Purchaser shall have the right to veto any such
maintenance provider based on Purchaser's reasonable objections,
including cost or past experience with any such proposed maintenance
provider.
16. LEGAL REQUIREMENTS
16.1 Regulatory Compliance by DEVELOPER
----------------------------------
16.1.1 Except as may appear to the contrary in this Agreement,
DEVELOPER shall be fully responsible for obtaining and
maintaining all required regulatory permits, franchises,
authorizations, licenses, consents or approvals required
20
for the construction of the Project (the "Permits").
Purchaser shall provide such assistance to DEVELOPER in
fulfilling its obligations hereunder as DEVELOPER may from
time to time reasonably request.
16.1.2 Any Permits (i) having a duration (including any renewals
required in order to continue to operate the Project or any
part thereof) of greater than 12 months, (ii) which impose
any ongoing fees or royalties, or (iii) which impose any
ongoing covenants (other than covenants having a duration,
including any renewals required in order to continue to
operate the Project or any part thereof, of twelve months or
less), shall be subject to the prior approval of Purchaser,
not to be unreasonably withheld or delayed, and, if
requested by Purchaser, such Permits may be required to be
obtained in the name of Purchaser or such other person or
entity as Purchaser may specify or jointly in such name and
DEVELOPER's name. DEVELOPER shall be responsible for
maintaining a comprehensive registry of all permits obtained
in connection with the Project, and shall provide a copy
thereof upon request to Purchaser.
16.2 Compliance with Laws
--------------------
16.2.1 DEVELOPER shall fully comply with all provisions of
applicable law in carrying out its obligations hereunder but
shall not be obliged under any circumstances whatsoever to
obtain any of the permits, authorizations, licenses,
consents or approvals to be obtained by Purchaser in the
conduct of its business, or the use and operation of the
Purchaser System by Purchaser.
16.2.2 Purchaser shall be solely responsible for compliance with
all legal and regulatory requirements associated with its
business or with ownership or operation of the Purchaser
System, including without limitation obtaining, maintaining
and paying for any and all required regulatory permits,
franchises, authorizations, licenses, consents or approvals
which are required for Purchaser's use, ownership and
operation of the Purchaser System, and DEVELOPER shall have
no responsibility or liability whatsoever in connection
therewith.
16.3 Compliance with Underlying Rights.
----------------------------------
Purchaser and DEVELOPER shall comply with all terms and
conditions of the Underlying Rights Requirements. DEVELOPER shall
provide Purchaser with a copy of all Underlying Rights.
17. INDEMNIFICATION AND LIABILITY
17.1 Indemnities
-----------
17.1.1 DEVELOPER hereby releases and agrees to indemnify, defend,
protect and hold harmless Purchaser, its directors,
officers, stockholders, agents, and employees, and its
respective successors or permitted assigns from and
21
against, and assumes liability for: (i) any and all causes
of action, demands, claims, suits, losses, judgments or
costs, including without limitation legal costs and
reasonable attorney fees (collectively "Damages") which may
be brought by or asserted by any of DEVELOPER's or its
affiliates' subscribers, any person or entity providing
labor, services or materials to DEVELOPER, or any other
action or matter of any nature arising out of, connected to,
or related to DEVELOPER's design, construction, maintenance,
operation or use of the System, including any Segment, and
(ii) each and every breach, or material default by DEVELOPER
of any of its covenants, agreements, duties or obligations
hereunder, and (iii) any violation by DEVELOPER of any
Underlying Rights Requirements, regulation, rule, statute or
court order of any local, state or federal governmental
agency, court or body in connection with DEVELOPER's
performance of its obligations under this Agreement, and
(iv) each and every breach or default of any of DEVELOPER's
representations or warranties contained herein; and (v) any
of the acts, omissions, negligence or willful misconduct of
DEVELOPER or its directors, officers, stockholders,
affiliates, employees, contractors or agents in connection
with the performance of this Agreement, unless the claim
results from the actions or omissions of DEVELOPER at the
direction or on the request of Purchaser, or from the
actions or omissions of Purchaser, or unless liability is
otherwise disclaimed in this Agreement . The provisions of
this Section shall survive termination or expiration of this
Agreement, and shall apply to circumstances arising before,
during and after Acceptance of any Segment.
17.1.2 Purchaser hereby releases and agrees to indemnify, defend,
protect and hold harmless DEVELOPER, its directors,
officers, stockholders, agents, and employees, and its
respective successors or permitted assigns from and against,
and assumes liability for: (i) any and all causes of action,
demands, claims, suits, losses, judgments or costs,
including without limitation legal costs and reasonable
attorney fees (collectively "Damages") which may be brought
by or asserted by any of Purchaser or its affiliates'
subscribers, any person or entity providing labor, services
or materials to Purchaser, or any other action or matter of
any nature arising out of, connected to, or related to
Purchaser's, construction, maintenance, operation or use of
the System, and (ii) each and every breach, or material
default by Purchaser of any of its covenants, agreements,
duties or obligations hereunder, and (iii) any violation by
Purchaser of any Underlying Rights Requirements, regulation,
rule, statute or court order of any local, state or federal
governmental agency, court or body in connection with
Purchaser's performance of its obligations under this
Agreement, and (iv) each and every breach or default of any
of Purchaser's representations or warranties contained
herein; and (v) any of the acts, omissions, negligence or
willful misconduct of Purchaser or its directors, officers,
stockholders, affiliates, employees, contractors or agents
in connection with the performance of this Agreement, unless
the claim results from the actions or omissions of Purchaser
at the direction or on the request of DEVELOPER, or from the
actions or omissions of DEVELOPER,
22
or unless liability is otherwise disclaimed in this
Agreement. The provisions of this Section shall survive
termination or expiration of this Agreement, and shall apply
to circumstances arising before, during and after Acceptance
of any Segment.
17.1.3 The Parties agree to promptly provide each other with
notice of any lawsuit, judicial, administrative or other
dispute resolution, action, proceeding or claim of which it
becomes aware and which it believes may result in an
indemnification obligation hereunder (each, an "Action");
provided that the failure to provide any such notice shall
not affect the indemnifying Party's indemnification
obligation unless the indemnifying Party is actually
prejudiced by the failure to receive such notice and then
only to the extent of such prejudice. After receipt of any
such notice, if the indemnifying Party shall acknowledge in
writing to the indemnified Party that the indemnifying Party
shall be obligated under the terms of this indemnity
hereunder in connection with such Action, then the
indemnifying Party shall be entitled, if it so elects (i) to
take control of the defense and investigation of such
Action, (ii) to employ and engage attorneys of its own
choice, which are reasonably acceptable to the indemnified
Party, to handle and defend the same, at the indemnifying
Party's cost, risk and expense, unless the named Parties to
such action or proceeding include both the indemnifying
Party and the indemnified Party and the indemnified Party
has been advised in writing by counsel that there may be one
or more legal defenses available to such indemnified Party
that are different from or additional to those available to
the indemnifying Party, in which case the indemnified Party
shall also have the right to employ its own counsel in any
such case with the reasonable fees and expenses of such
counsel being borne by the indemnifying Party, and (iii) to
compromise or settle such Action, which compromise or
settlement shall be made only with the written consent of
the indemnified Party, such consent not to be unreasonably
withheld or delayed, provided, however, such consent of the
indemnified Party is not required if such settlement,
compromise or consent includes as an unconditional term
thereof given by the claimant or the plaintiff to the
indemnified Party a full release from all liability in
respect of such indemnifiable claim. Notwithstanding
anything in this Section 17.1.3 to the contrary, (i) if
there is a reasonable probability that an indemnifiable
claim may materially adversely affect the indemnified Party,
other than as a result of money damages or other money
payments, the indemnified Party shall have the right to
participate in such defense, compromise or settlement and
the indemnifying Party shall not, without the indemnified
Party's written consent (which consent shall not be
unreasonably withheld or delayed), settle or compromise any
indemnifiable claim or consent to entry of any judgment in
respect thereof unless such settlement, compromise or
consent includes as an unconditional term thereof giving by
the claimant or the plaintiff to the indemnified Party a
full release from all liability in respect of such
indemnifiable claim. In all such cases, the indemnified
Party shall cooperate in the defense of the Action.
23
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
17.2 Force Majeure
-------------
In no event shall either Party be liable to the other for any
non-performance or breach of contract, or for any costs, losses or
damages, including without limitation loss of profit or consequential
damages of any type whatsoever under this Agreement, which arise by
reason of or under conditions of Force Majeure.
17.3 Loss of Profit, Indirect and Consequential Damages
--------------------------------------------------
Notwithstanding any other provision in this Agreement, neither Party
shall be liable to the other for any loss of profit or revenues, cost
of capital, nor indirect, incidental, consequential, punitive, special
or exemplary damages of any type whatsoever arising under this
Agreement.
17.4 Limitation on Damages
---------------------
Notwithstanding any other provision of this Agreement, neither Party
shall be liable to the other for any breach hereof or for any claim of
any nature whatsoever in the aggregate in excess of [ * * * ] This
Section 17.4 shall not form the basis of any claim against DEVELOPER
in and of itself, and shall not increase or enlarge the liability of
DEVELOPER established pursuant to the other terms of this Agreement or
otherwise. This Section 17.4 shall not limit any claim by Purchaser
against an insurer under any insurance policy specified and provided
hereunder. This Section shall not apply to claims under Article 14
(Limited Warranty), Section 10.1.1 (Liquidated Damages), or Article 13
(Termination).
18. TAXES
18.1 Each Party shall bear [ * * * ] share of any and all taxes levied
by any authority in respect of the construction of the Project,
provided that this shall not apply to any taxes on the income or
capital of the other Party. Without limiting the foregoing, taxes
shall include all sales taxes, municipal taxes, levies or
assessments, and goods and services taxes, fees or other charges.
18.2 The Parties agree to negotiate in good faith with a view to
minimizing any taxes that may be due in connection with the
Project. The Parties acknowledge that this may involve
amendments, among other things, to the terms of this Agreement or
any maintenance agreements.
18.3 Notwithstanding the foregoing, all taxes, assessments or other
fees associated with Purchaser's purchase, lease, ownership, use
or operation of the Purchaser System shall be the sole
responsibility of the Purchaser, including but not limited to all
sales taxes and all taxes, other than taxes measured by net
income, imposed on
24
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
DEVELOPER with respect to the sale, lease, ownership, use or
operation of the Purchaser System. All such taxes required by
applicable law to be paid or remitted by DEVELOPER shall be
separately stated on invoices or statements to Purchaser to the
extent permitted by applicable law.
18.4 Notwithstanding any provision to the contrary herein, either
DEVELOPER or Purchaser shall have the right to protest by
appropriate proceedings the imposition and/or amount of any taxes
or franchise, license or permit fees, interest or penalties
imposed or assessed against it due to its use of the System
and/or based on the physical location of the System and/or the
construction thereof ("Additional Taxes"). In such event, the
protesting Party shall protect, indemnify, hold harmless and
defend, at the protesting Party's sole cost and expense, the
other from and against any costs, expenses, damages or losses
incurred by the non-protesting Party, or other reasonable charges
or expenses, including reasonable attorney fees, which are
incurred by the non-protesting Party as a result of the
protesting Party's protest, including, without limitation, any
Additional Taxes or any deficiency asserted by any taxing
authority.
19. REGENERATION FACILITES
19.1 Subject to the terms and conditions of the maintenance agreement,
DEVELOPER grants to Purchaser the following rights for the use of
the regeneration facilities constructed pursuant to Exhibit F.
19.1.1 The right of access and entry under the same terms and
conditions as DEVELOPER.
19.1.2 The right to utilize an equal amount of collocation space
with DEVELOPER, or [ * * * ] whichever is greater.
19.1.3 The right to utilize on an equal basis with DEVELOPER,
common amenities such as power and fire suppression.
19.1.4 All rights and privileges that DEVELOPER has in each
regeneration facility (including the right to sub-lease
the space allocated for Purchaser's use).
19.2 Both Parties agree that upon either Party's receipt of
payment (monthly, quarterly or yearly as the case may be)
from a third party to lease collocation space in any
regeneration facilities constructed by DEVELOPER in
accordance with this Agreement, the contracting Party shall
remit to the non-contracting Party a sum equal to [ * * * ]
received from the third party for the right to use the
regeneration facilities. Each Party shall have the right to
review and approve all agreements
25
associated with the use of collocation space in the
regeneration facilities by either Party prior to execution,
which consent shall not be unreasonably conditioned, delayed
or withheld.
20. REPRESENTATIONS AND WARRANTIES
20.1 Each Party represents and warrants to the other that:
----------------------------------------------------
20.1.1 it has been duly created, is validly existing and has the
company or partnership power and authority to enter into and
perform its obligations under this Agreement and otherwise
to carry on its business as presently conducted;
20.1.2 the entry into and performance of this Agreement will not
violate or constitute a default or breach under its Articles
of Incorporation and Bylaws, any laws or orders binding upon
it or any agreement to which it is a party;
20.1.3 there is no litigation or administrative proceeding
pending or, to its knowledge, threatened against it which
could reasonably be expected to have a material adverse
effect on its financial condition or business;
20.1.4 this Agreement has been duly authorized, executed and
delivered and is binding on it and enforceable against it in
accordance with its terms; and
20.1.5 it shall, at all times, use equipment and operate in a
manner which will not damage or cause injury or impairment
to the Project.
20.2 Except as specifically set forth in this Agreement, DEVELOPER
makes no representations or warranties with respect to the
engineering, design, capacity, construction, installation or
functions of the Purchaser System.
21. COVENANTS OF DEVELOPER
21.1 DEVELOPER shall provide Purchaser with a copy of a corporate
resolution approving entering into this Agreement;
21.2 At the time DEVELOPER transfers the ownership and title to each
Segment of the Purchaser's System to the Purchaser, such Segment
of the Purchaser System shall be free and clear of all liens,
mortgages, security interests and encumbrances, as more fully set
forth in the xxxx of sale attached hereto as Exhibit I;
21.3 To the best of DEVELOPER's knowledge, there are no existing
claims or facts which give rise to any claims, which could
interfere with the construction or operation of the Project in
any way;
21.4 DEVELOPER has complied in all material respects with laws,
regulations and orders; and
26
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
21.5 Within seven (7) days of the time Purchaser makes any payment
hereunder, DEVELOPER shall have paid to its contractors and
suppliers all amounts owing to them in connection with the work
for which Purchaser's payment is made (provided that DEVELOPER
may use Purchaser's payment for such purpose). Subject to the
foregoing, in the event a lien is filed against the title to the
Project by any of DEVELOPER's contractors, material suppliers or
any other person providing services to the Project, DEVELOPER
shall within thirty (30) days obtain a bond as security to remove
such lien from the title to the Project. If DEVELOPER fails to
release and discharge any such claim of lien against the title to
the Project, Purchaser may, at its option, discharge or release
the claim of lien or otherwise deal with the lien claimant, and
DEVELOPER shall pay Purchaser any and all costs and expenses of
Purchaser in so doing, including reasonable attorney's fees
incurred by Purchaser.
21.6 DEVELOPER shall give Purchaser copies of any written notices it
receives concerning the Project that allege failure to make any
payment due or allege facts which, if true, would materially and
adversely delay completion of any portion of the Project, or
result in any material increase in cost to Purchaser.
22. COVENANTS OF PURCHASER
22.1 Purchaser shall at all times following the Acceptance Date of the
Purchaser System be responsible for maintaining in good standing
all licenses, authorizations, consents and approvals which shall,
from time to time, be required for Purchaser to use and operate
each Segment of the Purchaser System.
22.2 Purchaser shall provide DEVELOPER with a copy of the Resolution
of its Board of Directors approving entering into this Agreement.
23. DEVELOPER TO INSURE PRIOR TO FINAL ACCEPTANCE DATE
23.1 DEVELOPER agrees to consult with Purchaser to obtain and maintain
at all times during the construction of the Project the following
insurance coverage as part of the Project Costs with terms and
conditions acceptable to Purchaser:
23.1.1 Professional Liability Insurance in the amount of
[ * * * ]
23.1.2 Comprehensive General Liability Insurance in the
amount of [ * * * ], or such higher amounts as
determined by DEVELOPER, with a cross liability and
severability of interest clause endorsement;
23.1.3 Workers Compensation Insurance and Employer's
Liability Insurance in the amount of [ * * * ] or as
required by law;
23.1.4 Course of Construction Insurance for the full
replacement value of the
27
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
Project with the deductible amount not to exceed
[ * * * ];
23.1.5 Railroad Liability Insurance, where and to the extent
required by the owners of any rights of ways;
23.1.6 Builders Risk Insurance in the amount of [ * * * ] or
as required by law;
23.1.7 Umbrella Excess Liability with limits of not less
than [ * * * ] combined single limit in excess of the
above-referenced Comprehensive General Liability
Insurance.
The Purchaser shall be added as an additional insured in the
Comprehensive General Liability Insurance policy referred to in
Section 23.1.2. DEVELOPER shall obtain policies with financially
reputable insurer(s) with at least an A.M. Best rating of "A" or
better, which are lawfully approved to do business in all
jurisdictions where any work is performed and that are reasonably
acceptable to Purchaser. A certified copy of such policies shall be
provided to the Purchaser, which will provide for thirty (30) days
written notice to the Purchaser prior to any cancellation or
modification to the policy. In addition, all policies referred to
above, except Workers Compensation, shall contain a waiver of
subrogation clause in favor of all insureds, their respective
employees, agents, representatives, directors or officers.
23.1.8 All Risks Construction Equipment Insurance to cover
all of the equipment engaging in the construction
activity.
23.1.9 Automobile Liability Insurance in the amount of
[ * * * ] for all DEVELOPER owned vehicles.
23.2 The insurance policies referred to in Sections 23.1.5 and 23.1.6
shall terminate when the ownership and title of the entire
Purchaser System transfers to the Purchaser. Thereafter, the
Purchaser shall obtain and maintain property and liability
insurance coverage pursuant to the provisions of Article 24.
24. PARTIES TO INSURE FOLLOWING ACCEPTANCE DATE
24.1 As of and following the Acceptance Date of each Segment,
DEVELOPER and the Purchaser shall each cooperate with each other
to obtain and maintain the following insurance coverage:
24.1.1 Insurance coverage as set forth in the maintenance
agreement; and
24.1.2 Any insurance coverage that is required by law; and
24.1.3 Any insurance coverage that either Party reasonably
considers necessary.
28
25. FURTHER ASSURANCES
Each of DEVELOPER and Purchaser shall, from time to time, execute and
deliver all such further documents and instruments and do all acts and
things as the other Party may reasonably require to effectively carry out
or better evidence or perfect the full intent and meaning of this
Agreement.
26. FEES
Each Party hereto will pay their respective legal and accounting costs and
expenses incurred in connection with the preparation, execution and
delivery of this Agreement and all documents and instruments executed
pursuant hereto and any other costs and expenses whatsoever and howsoever
incurred.
27. PUBLIC ANNOUNCEMENTS
No public announcement or press release concerning this Agreement may be
made by DEVELOPER or Purchaser without the prior consent and joint
approval of DEVELOPER and Purchaser, not to be unreasonably withheld or
delayed, except as required under applicable law or in connection with the
obligations of a public company.
28. BENEFIT OF THE AGREEMENT
This Agreement will enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and permitted
assigns of the Parties hereto.
29. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties hereto
with respect to the subject matter hereof and cancels and supersedes any
prior understandings and agreements between the Parties with respect
thereto.
29
30. AMENDMENTS AND WAIVERS
No amendment to this Agreement will be valid or binding unless set forth
in writing and duly executed by both of the Parties hereto. No waiver of
any breach of any provision of this Agreement will be effective or binding
unless made in writing and signed by the Party purporting to give the same
and, unless otherwise provided, will be limited to the specific breach
waived.
31. ASSIGNMENT
31.1 This Agreement may not be assigned by Purchaser without the prior
written consent of DEVELOPER not to be unreasonably withheld
provided, however, that this Agreement may be assigned by
Purchaser without the consent of DEVELOPER to an affiliate of
Purchaser, as set forth in Rule 405 of the Securities Act of
1933, as amended (or another entity, directly or indirectly,
controlling, controlled by or under common control with
Purchaser, or the successor to Purchaser by merger or purchase of
all or substantially all of Purchaser's equity or assets) (each,
an "Affiliate"), provided that such Affiliate enters into a
written agreement with DEVELOPER to be bound by the provisions of
this Agreement in all respects and to the same extent as
Purchaser is bound and provided further that Purchaser will
continue to be bound by all the obligations hereunder as if such
assignment had not occurred and perform such obligations to the
extent that such Affiliate fails so to do.
31.2 This Agreement may not be assigned by DEVELOPER without the prior
written consent of Purchaser, which consent shall not be
unreasonably withheld, provided, however, that this Agreement may
be assigned by DEVELOPER without the consent of Purchaser to an
Affiliate of DEVELOPER, provided that such Affiliate enters into
a written agreement with Purchaser to be bound by the provisions
of this Agreement in all respects and to the same extent as
DEVELOPER is bound and provided further that DEVELOPER will
continue to be bound by all of the obligations hereunder as if
such assignment had not occurred and perform such obligations to
the extent that such Affiliate fails so to do.
31.3 Notwithstanding any other provision of this Agreement, any and
all amounts payable to DEVELOPER arising from or relating to this
Agreement may be assigned by DEVELOPER by way of absolute
assignment or by way of security or otherwise without the consent
of Purchaser for the purpose of securing project or other
financing by DEVELOPER in respect of its obligations hereunder;
provided that the assignee agrees to take any funds subject to
Purchaser's rights under this Agreement and be fully responsible
to Purchaser for any monies received from DEVELOPER.
31.4 Notwithstanding any other provision of this Agreement, either
Party may assign this Agreement as collateral security to a
lender.
32. NOTICES
Any demand, notice or other communication to be given in connection
with this Agreement will be given in writing and will be given by
personal delivery, by certified or registered mail or by facsimile
addressed to the recipient as follows:
30
To DEVELOPER: Pacific Fiber Link, LLC.
0000 X. 000xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: President
Attention: General Counsel
Facsimile Number: (000) 000-0000
To Purchaser: Pathnet, Inc.
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Vice President, Corporate Development
Attn: General Counsel
Facsimile Number: (000) 000-0000
or to such other address, individual or facsimile number as may be
designated by notice given by either Party to the other. Any demand,
notice or other communication given by personal delivery or by
certified or registered mail will conclusively be deemed to have been
given on the day of actual delivery thereof and, if given by facsimile,
on the day of transmittal thereof if given during the normal business
hours of the recipient and on the Business Day during which such normal
business hours next occur if not given during such hours on any day,
provided that the sender of the facsimile receives confirmation of
delivery of the facsimile transmission by personal delivery, certified
or registered mail. If the Party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties
with the postal system that might affect the delivery of mail, any such
demand, notice or other communication may not be mailed but must be
given by personal delivery or by facsimile.
33. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of New York, without reference to its
choice of law principles.
34. DISPUTE RESOLUTION
If the Parties are unable to resolve any disagreement or dispute
arising under or related to this Agreement, including without
limitation, the failure to agree upon any item requiring a mutual
agreement of the Parties hereunder, they shall resolve the disagreement
or dispute as follows:
34.1 Attempt to settle such dispute by mutual discussion between Xxx
Xxxxxxxxx and Xxxxx Xxxxx, acting on behalf of DEVELOPER, and
Xxxx Xxxxxxxx and Xxxx Xxxxxx, acting on behalf of Purchaser, or
such other persons as may nominated by the Parties.
34.2 If the matter has not been resolved by the mutual discussion
required by paragraph 34.1 within thirty (30) business days after
the date on which the dispute arose, then, the Parties shall
endeavor to settle the dispute by mediation under the
Construction Industry Mediation Rules of the American Arbitration
Association.
31
34.3 If such dispute cannot be settled within thirty (30) business
days after submission to mediation pursuant to paragraph 34.2
hereof, such dispute shall finally be resolved by an arbitral
tribunal consisting of three (3) independent and impartial
arbitrators (the "Tribunal"), under the Construction Industry
Arbitration Rules of the American Arbitration Association (the
"Arbitration Rules"). Each Party shall appoint one (1) arbitrator
within fifteen (15) days after initiation of arbitration and the
two (2) arbitrators so appointed shall select a third (3rd)
arbitrator as the chairman of the Tribunal within fifteen (15)
days of the appointment of the second arbitrator. In the event
that the Parties or the arbitrators fail to select arbitrators as
required above, the AAA shall select such arbitrators. The AAA
shall have the authority to disqualify any arbitrator who it
determines not to be independent and impartial. The arbitrators
shall be entitled to a fee commensurate with their fees for
professional services requiring similar time and effort. Venue
for the arbitration shall be Denver, Colorado.
34.4 Arbitration discovery shall be conducted in accordance with the
Federal Rules of Civil Procedure, with any disputes over the
scope of discovery to be determined by the arbitrators, it being
intended that the arbitrators shall allow limited, reasonable
discovery prior to any hearing on the merits. The arbitrators
shall conduct a hearing no later than sixty (60) days after
initiation of the matter to arbitration, and a decision shall be
rendered by the arbitrators within thirty (30) days after the
hearing. At the hearing, the Parties shall present such evidence
and witnesses as they may choose, with or without counsel.
Adherence to formal rules of evidence shall not be required but
the arbitration panel shall consider any evidence and testimony
that it determines to be relevant, in accordance with procedures
that it determines to be appropriate. The arbitration
determination shall be in writing and shall specify the factual
and legal bases for the determination. The arbitrators may award
legal or equitable relief, including but not limited to specific
performance, and any award of damages shall be limited as
provided in this Agreement. The arbitrators' fees and other costs
of the arbitration shall be borne by the Party against whom the
award is rendered, except as the arbitration panel may otherwise
provide in its written opinion. Notwithstanding anything herein
to the contrary, DEVELOPER or Purchaser may, prior to the final
decision rendered by a mediator or arbitrator, petition a state
or federal court for a temporary restraining order or a
preliminary injunction upon a showing of the requisites therefor
in such court. The foregoing provision for court proceedings is
intended to be limited to those cases in which emergency access
to the court is necessary to prevent immediate and irreparable
harm in the interim period until mediation or arbitration can be
completed.
34.5 The Parties agree that this submission and agreement to arbitrate
shall be governed by and specifically enforceable in accordance
with the laws of the State of New York. The Parties agree to
abide by all decisions and determinations rendered in such
proceedings. Such decisions and determinations shall be final and
binding on all Parties. All decisions and determinations may be
filed with the clerk of one or more courts, state, federal or
foreign having jurisdiction over the Party against whom it is
rendered or its property, as a basis of judgment.
32
34.6 Pending the resolution or settlement of a dispute between the
Parties as set forth in this Article 34, the Parties hereby
expressly agree that the performance of its obligations under
this Agreement shall not be delayed, suspended, impeded or
hindered.
35. CONFIDENTIAL INFORMATION
35.1 As used in this Agreement, "Confidential Information" means all
information of either Party that is not generally known to the public,
whether of a technical, business or other nature (including, without
limitation, trade secrets, know-how and information relating to the
technology, customers, business plans, promotional and marketing
activities, finances and other business affairs of such Party). The
Parties understand and agree that this Agreement and all materials,
maps, engineering designs and documents, construction techniques,
pricing and other information as may be necessarily exchanged between
them in fulfilling the provisions and intents of this Agreement, are
and shall be Confidential Information. Each Party shall disclose
Confidential Information only to its affiliates, directors, officers
and employees with a need to know and shall keep secret all
Confidential Information of the other Party except as authorized by
the respective owners. This obligation shall continue to bind any
Party after it shall cease to be a Party for whatever reason and shall
survive termination of this Agreement but such obligation of
confidentiality shall not apply:
35.1.1 to a disclosure to a person who knew the confidential
information prior to its being disclosed;
35.1.2 to information which comes into the public domain without
any breach of the provisions of this Article;
35.1.3 to disclosure of information which is disclosed on a
confidential basis to consultants or advisers of a Party who
have a bona fide need to know to assist that Party in the
carrying out of the terms of this Agreement;
35.1.4 to a disclosure of information required by a governmental
or judicial law, order, rule or regulation;
35.1.5 to a disclosure of information which is disclosed in
proceedings taken by either Party for the enforcement of any
of its rights and remedies under this Agreement;
35.1.6 in connection with one's obligations as a public company;
35.1.7 to third parties in connection with financing or
investments on a need to know basis, provided such
recipients agree to be bound by the confidentiality terms
hereof;.
33
35.1.8 such information that is reasonably necessary (and
specifically excluding any Confidential Information
concerning another Party's business plans, goals, strategies
or other proprietary information) in connection with sales
and marketing efforts.
If any Confidential Information is required to be disclosed under
this Section, disclosure shall be limited only to persons with a
need to know, and the disclosing Party shall provide prior notice
of such disclosure to the other Party to give such other Party an
opportunity, at its own expense, to oppose or seek to limit
disclosure.
35.2 The provisions of this Article shall survive expiration or termination
of this Agreement.
36. PATENTS AND COPYRIGHTS
Each Party acknowledges the rights of the other Party in certain
patents and copyrighted material the other Party may possess or
develop in the performance of this Agreement or in the operation of
the System. Each Party further acknowledges that any such rights shall
remain the exclusive property of the owning Party, and the non-owning
Party shall have no interest in such rights by virtue of the existence
of this Agreement between the Parties. Each Party agrees to use its
reasonable efforts to protect such rights in dealings with third
parties.
37. TIME
Time shall be of the essence of this Agreement.
38. LANGUAGE
The Parties have expressly requested that this agreement and its
ancillary documents be drafted in English.
39. SEVERABILITY
If any term, covenant or condition contained herein shall, to any
extent, be invalid or unenforceable in any respect under the laws
governing this Agreement, so long as such invalidity does not
materially impair the benefit of this Agreement to either Party, the
remainder of this Agreement shall not be affected thereby, and each
term, covenant or condition of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
40. RELATIONSHIP
The Parties acknowledge and agree that this Agreement does not create
a partnership or joint venture relationship between them. The
performance by the Parties of all duties and obligations hereunder
shall be as independent contractors and not as agents or trustees of
the other Party. No Party shall owe any fiduciary obligations to any
other Party. Neither Party has any authority or capacity whatsoever to
contract for or on behalf of or bind the other in respect
34
of any matter related to these presents or otherwise. None of the
employees of DEVELOPER shall be considered to be servants, employees
or agents of Purchaser, and none of the employees of Purchaser shall
be considered to be servants, employees or agents of DEVELOPER.
41. SURVIVAL
Any provision and paragraph of this Agreement which by its nature
extends beyond the term hereof or which is required to ensure that the
Party fully exercise their rights and perform their obligations
hereunder, shall survive the expiration or termination of this
Agreement for any cause whatsoever.
42. BOARD APPROVAL
This Agreement shall be subject to the approval of each Party's Board
of Directors.
43. DUE DILIGENCE
For a period of fourteen (14) days after the date hereof, either Party
may conduct such due diligence on the other Party and on the proposed
Project to determine that the other Party has the financial ability
and internal systems and processes to perform its obligations
hereunder and that the proposed Project Specifications are achievable
within the Project Budget and will be sufficient to permit the
completed system to be used as intended. If, in the exercise of its
good faith, reasonable judgment, the evaluating Party materially
determines that either Party will be unable to complete the Project
within the Project Budget and in accordance with the Project
Specifications, or meet the payment obligations under this Agreement,
such Party may, upon written notice to the other Party at any time
during such fourteen (14) day period, terminate this Agreement, in
which event neither Party shall have any further right or obligations
to the other hereunder.
44. CHICAGO TO NEW ORLEANS
DEVELOPER or its Affiliate, is currently evaluating a potential
fiber-optic telecommunications network between Chicago and New Orleans
(the "Chicago/New Orleans Segment"). If DEVELOPER, or an Affiliate of
DEVELOPER, elects to develop that segment, the Parties will use their
best efforts to enter into an agreement for the development of the
segment on substantially the same terms and conditions as set forth
herein. Notwithstanding the foregoing, in the event that DEVELOPER, or
an Affiliate of DEVELOPER, is required to jointly develop that segment
with the provider of the right of way such that Purchaser's
participation in the development, on the terms provided for in this
Agreement, is not possible under the circumstances, then the Parties
will instead negotiate in good faith to permit Purchaser to
participate in the deal in as material a fashion as is reasonable
under the circumstances.
45. FUTURE PURCHASER ROUTES
Purchaser or its Affiliate, is currently evaluating a potential
fiber-optic telecommunications network between Denver and Dallas (the
"Denver/Dallas Segment"). If Purchaser, or an Affiliate of Purchaser,
elects to develop that segment, the Parties will use their best
efforts
35
to enter into an agreement for the development of the segment on
substantially the same terms and conditions as set forth herein.
Notwithstanding the foregoing, in the event that Purchaser, or an
Affiliate of Purchaser, is required to jointly develop that segment
with the provider of the right of way such that DEVELOPER's
participation in the development, on the terms provided for in this
Agreement, is not possible under the circumstances, then the Parties
will instead negotiate in good faith to permit DEVELOPER to
participate in the deal in as material a fashion as is reasonable
under the circumstances.
45. SOLICITATION OF EMPLOYMENT
Neither Party shall, during the life of this Agreement and for a
period of two (2) years thereafter, directly or indirectly for itself
or on behalf of, or in conjunction with, any other person,
partnership, corporation, business or organization, solicit employment
of an employee of the other with whom that Party or its personnel have
had contact during the course of the Project under this Agreement,
unless that Party has obtained the written consent of the other to
such solicitation.
46. COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which shall be deemed an original, but all of which together shall
constitute the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
36
IN WITNESS WHEREOF the Parties have executed this Agreement.
PACIFIC FIBER LINK, LLC, a Washington limited
liability company
By: /s/ [name illegible]
--------------------------------
Its: Executive V.P.
--------------------------------
Date: March 31/99
--------------------------------
PATHNET, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Its: President and CEO
--------------------------------
Date: 3/31/99
--------------------------------
37
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
EXHIBIT A
---------
PROJECT AND PURCHASER SYSTEM
----------------------------
1. The Project
-----------
A. The Project will consist of [ * * * ] (as set forth below) and
shall include designing, engineering, permitting and
constructing a long-haul conduit/fiber optic cable system
between Aurora, Colorado and Chicago, Illinois.
B. The Project will consist of [ * * * ] conduits that are a
minimum of [ * * * ] diameter and [ * * * ] count fiber optic
cable (to include [ * * * ] fibers and [ * * * ] fibers)placed
in one (1) of the designated conduits (i.e. the Primary
Conduit). The Parties may agree to increase or decrease the
amount of fibers in the cable, and/or modify the type and
specifications of fiber within the cable, across the
Project as a whole, or on specific portions of the Project,
all as agreed to by the Parties. Any incremental cabling costs
attributable to cabling the two different types of fiber will
be borne by Purchaser.
C. The Project will be primarily constructed on public and
private right-of-way.
2. The Purchaser System
--------------------
The Purchaser System will consist of [ * * * ] that is a minimum
of [ * * * ] diameter (but in no event smaller than DEVELOPER's
conduit) and [ * * * ] of the total number of fibers pulled through
the Primary Conduit. The type, specifications and number of fibers in
the Purchaser System shall be as agreed to by the Parties and may vary
across the Project.
A. The Purchaser System will also include the right to use [ * * * ]
of the regeneration facilities and all other appurtenances
constructed by DEVELOPER as described in the Exhibits attached
hereto on behalf of the Project, and the right to add additional
regeneration facilities, splice boxes, interconnection facilities
and other appurtenances, all at Purchaser's sole cost and
expense. The Parties will agree on a detailed scope of work
describing the specific equipment and other facilities to be
installed as part of the System.
B. The regeneration facilities shall be located within the
right-of-way and spaced approximately forty-five (45) miles from
each other unless mutually agreed to between the Parties.
C. The fiber utilized in constructing the Purchaser System shall be
[ * * * ], or as mutually agreed to between the Parties.
38
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
3. Segment Completion Date Schedule:
Segment 1: [ * * * ]
----------
Segment 2: [ * * * ]
----------
Segment 3: [ * * * ]
----------
Segment 4: [ * * * ]
----------
Segment 5: [ * * * ]
----------
Segment 6: [ * * * ]
----------
Segment 7: [ * * * ]
----------
Segment 8: [ * * * ]
----------
Segment 9: [ * * * ]
----------
Segment 10: [ * * * ]
----------
** All POP Site locations for the Project shall be mutually agreed
to between the Parties.
39
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
EXHIBIT B
PAYMENT METHOD
1. Within thirty (30) days following the execution of this Agreement,
DEVELOPER shall provide to the Purchaser a cash flow projection of the
costs of the Project to be incurred during each month of the
development and construction of the Project. This projection shall be
updated monthly. The Parties shall also agree on the detailed Project
Budget, and a detailed Project Schedule that identifies the scheduled
Segment Completion Date of each Segment.
2. The Parties shall establish a Project escrow account (the "Project
Escrow") from which Project Costs will be paid. The Project Escrow
will initially be funded on a date agreed to by the Parties, and
thereafter, by periodic payments on a schedule to be agreed to by the
Parties. Each Party will contribute equal amounts to the Project
Escrow. Each Party's payment to the Project Escrow shall be [ * * * ]
projected to become due and payable in the succeeding 30 days.
3. Following the 1st of every month and no later than the 10th of the
month, DEVELOPER shall submit to the Purchaser a request for payment
from the Project Escrow (the "Draw Request"), accompanied by
reasonable supporting documentation describing work completed, Project
Costs incurred and lien waivers from all contractors and suppliers who
performed services or supplied materials in connection with the work
that is the subject of the Draw Request. Purchaser, within ten (10)
days after receipt of the foregoing documents, shall notify DEVELOPER
in writing of any items considered by the Purchaser to have been
improperly included as Project Costs. A full explanation of the
reasons for disputing such item or items shall be furnished to
DEVELOPER with the dispute note. To the extent DEVELOPER and the
Purchaser are otherwise unable to resolve such dispute through their
respective operating and administrative personnel within thirty (30)
days after notice thereof from the Purchaser, the matter shall be
submitted for dispute resolution as provided in Article 34 herein.
Within ten (10) days after Purchaser's receipt of the Draw Request and
foregoing documentation, Purchaser shall authorize the escrow agent to
release from the Project Escrow any amounts that Purchaser does not
dispute as set forth in the payment request.
4. Following the completion of each Segment, and of the Project as a
whole, and within sixty (60) days thereafter, DEVELOPER shall prepare
and submit to the Purchaser a costs report relating to such Segment or
the Project to reconcile all amounts incurred in connection with the
Segment or the Project and finalize the Purchase Price with the
Purchaser prior to the transfer of the ownership and title of the
Segment or the Purchaser System to the Purchaser. Any additional
payments to be made by the Purchaser to DEVELOPER or any refunds to be
40
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
made by DEVELOPER to the Purchaser, as the case may be, shall be made
at the same time when the ownership and title of the Segment or the
Purchaser System transfers to the Purchaser.
5. Non-Project Costs to be paid by DEVELOPER out of the Management Fee:
a) [ * * * ]
b) [ * * * ]
c) [ * * * ]
d) [ * * * ]
e) [ * * * ]
f) [ * * * ]
g) [ * * * ]
h) [ * * * ]
i) [ * * * ]
j) [ * * * ]
k) [ * * * ]
l) [ * * * ]
m) [ * * * ]
n) [ * * * ]
o) [ * * * ]
p) [ * * * ]
q) [ * * * ]
r) [ * * * ]
41
EXHIBIT C
CONSTRUCTION SPECIFICATIONS AND DRAWINGS
----------------------------------------
1. General
-------
The intent of this document is to outline the specifications for
construction of a fiber optic cable system. In all cases, the
standards contained in this document or the standards of the federal,
state, local or private agency having jurisdiction, whichever is
stricter, shall be followed. Aerial systems are not acceptable
alternatives and are not addressed in these specifications and
standards.
2. Compliance
----------
All work will be done in strict accordance with federal, state, local,
and applicable private rules and laws regarding safety and
environmental issues, including those set forth by OSHA and the EPA.
In addition, all work and the resulting fiber system will comply with
the current requirements of all governing entities (FCC, NEC, DEC, and
other national, state, and local codes).
3. Material
--------
The fiber optic cable shall be single armor in design. The cable may
be either loose tube or central core in construction. The central
strength member shall be dielectric. Each buffer tube or ribbon shall
contain no more than 12 fibers.
HDPE shall be a minimum of SDR-11. Steel or PVC conduit shall be
minimum Schedule 40 wall thickness. Steel conduit will be joined with
threaded collars or welding.
Any exposed steel conduit, brackets, or hardware shall be hot-dipped
galvanized after fabrication.
Handholes shall have a minimum load rating of H-20 with 18 to 24
inches of soil cover. Dimensions will typically be 30 by 60 by 30
inches (W by L by H), sufficient in size to hold cable slack. EMS
markers will be fabricated in the lids of handholes. All handholes
will have locking lids (pentahead or similar).
Manholes shall have a minimum H-20 loading rating. All manholes will
have locking lids (pentahead or similar).
Buried cable warning tape shall be 3 inches wide and display "Warning:
Buried Fiber Optic Cable" and emergency One Call "800" numbers printed
every 24 inches.
42
4. Minimum Depths
--------------
The minimum cover required in the placement of conduit shall be 42
inches. Additional depth will be required in ditches (48 inches) and
across streams, washes, culvert outfalls, and other waterways (60
inches).
At locations where conduit crosses other subsurface utilities or other
structures, the conduit shall be installed to provide a minimum of 12
inches vertical clearance and the applicable minimum depth can be
maintained; otherwise, the conduit will be installed under the
existing utility or other structure. If, however, adequate clearance
cannot be obtained and the conduit must be placed above, steel conduit
shall be used.
In rock, the conduit depth shall be 36 to 42 inches in HDPE, 24 to 36
inches in steel conduit, 18 to 24 inches in HDPE or PVC or steel
conduit and concrete encased. PVC or HDPE conduit will be backfilled
with 6 inches of select materials (padding) in rock areas.
Polyurethane channel (Fiber-Rockgard or equivalent) may be used as
protective cover in lieu of select material padding.
In the case of the use/conversion of existing steel pipelines or
existing conduit systems, the existing depth shall be considered
adequate.
5. Buried Cable Warning Tape
-------------------------
All conduits will be installed with buried cable warning tape except
where existing steel pipelines or existing conduit systems are used.
The warning tape shall be placed above the conduits with generally 18
to 24 inches of cover.
6. Conduit Construction
--------------------
Conduits may be placed by means of trenching, plowing, xxxx and bore,
or directional bore. Conduits will generally be placed on a level
grade parallel to the surface, with only gradual changes in grade
elevation.
Crossings of roads maintained by government bodies and railroad
crossings will be encased in steel conduit, except where the conduit
is placed with 10 feet or more of cover.
All galvanized steel conduits placed on bridges shall have expansion
joints placed at each structural (bridge) expansion joint or at least
every 300 feet, whichever is the shorter distance. For bridges under
100 feet, with no bridge expansion joint, no conduit expansion joint
is required. For bridges greater than 100 feet, at least one conduit
expansion joint will be placed, even if there is no bridge expansion
joint.
7. Innerduct Installation
----------------------
Innerduct(s) shall be installed in all steel or PVC conduits. No cable
will be placed directly in any split/solid steel or PVC conduit
without innerduct. Innerduct(s) shall extend beyond
43
the end of all conduits a minimum of 12 inches. Both the conduit and
innerducts shall be sealed with foam sealant and/or duct plugs after
installation.
8. Cable Installation
------------------
The fiber optic cable shall be installed using a powered pulling winch
and hydraulic-powered assist pulling wheels or by cable blowing
methods. The maximum pulling force to be applied to the fiber optic
cable shall be not exceed manufacturer's recommendations (typically
600 lbs). The cable shall be lubricated during placement and a
breakaway swivel utilized at all times.
A minimum of 20 meters of slack will be left in all intermediate
handholes/manholes. A minimum of 30 meters of slack (off each cable
end) will be left in all splice point handholes/manholes. Sufficient
slack will be left at facilities to reach the FDP and provide for 10
meters of slack at the site.
9. Handholes/Manholes
------------------
Handholes/manholes will be installed at intervals not to exceed one
mile. Manholes are to be installed in street builds.
10. Cable Markers (Warning Signs)
-----------------------------
Cable markers shall be installed at sufficient frequency to xxxx the
location of the cable. Markers shall be positioned so that they can be
seen from the location of the cable and generally set facing
perpendicular to the cable running line. In rural areas, markers shall
be placed a minimum of every 1,000 feet. In urban areas, markers shall
be placed a minimum of every 500 feet. Changes in running line,
handholes, both sides of government-maintained roads, railroads, and
major waterway crossings will be marked with warning signs.
44
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
EXHIBIT D
FIBER CABLE SPLICING TESTING AND ACCEPTANCE PROCEDURES
------------------------------------------------------
1. All splices will be performed with an industry-accepted fusion
splicing machine.
2. Splices will be qualified during initial construction with an Optical
Time Domain Reflectometer (OTDR) from only one direction. The profile
alignment system or light injection detection system on the fusion
splicer may be used to qualify splices in lieu of an OTDR, provided
both Parties agree a close correlation to the OTDR values can be
established. Connector (pigtail) splices will be qualified with a 1 km
launch reel.
3. After end-to-end (site-to-site) connectivity on the fibers,
bi-directional span testing will be done. These measurements must be
made after the splice manhole or handhole is closed in order to check
for macro-bending problems. Connectors will be cleaned as necessary to
ensure accurate measurements are taken.
3.1 Installed loss measurements at [ * * * ] nm will be recorded
using an industry-accepted laser source and power meter.
Continuity testing (checking for "frogging") will be done on all
fibers concurrently.
3.2 OTDR traces will be taken at [ * * * ] nm and splice loss
measurements will be analyzed. GN Nettest Laser Precision format
will be used on all traces, unless another OTDR format is agreed
to by both Parties. Launch reels will not be used for the span
OTDR traces.
3.3 All testing will be conducted at [ * * * ] nm only.
3.4 OTDR traces shall be saved in a standard file naming convention.
As an example, DENCOS15.014 will be used as the file name to
indicate the OTDR trace is taken from the Denver (DEN) site to
the Colorado Springs (COS) site at [ * * * ] nm on fiber number
14.
3.5 One set of diskettes with all traces and three copies of all
paper documentation will be submitted.
4. The splicing standards are as follows:
45
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
4.1 The objective loss value of the connector and its associated
splice will be [ * * * ] dB or less. This value does not include
the insertion loss from its connection to the FDP.
4.2 The objective for each fiber within a span shall be an average
bi-directional loss of [ * * * ] dB or less for each splice. For
example, if a given span has 10 splices, each fiber shall have a
total bi-directional loss (due to the 10 splices) of [ * * * ] dB
or less. Individual bi-directional loss values for each splice
will be reviewed for high losses, which may indicate splice
instability.
4.3 The aforementioned standards are objectives, not the basis for
acceptance. The acceptance standard for each fiber shall be an
average bi-directional installed loss of [ * * * ] dB/km or less
across each span.
5. All connector splices will be protected with heat shrinks. Backbone
splices may be stored in trays with bare fiber manifolds and RTV
silicone protection. In no cases will more than 24 fibers be stored in
any single tray. Buffer tubes/ribbons will not be split across more
than one splice tray. An industry-accepted non-encapsulated splice
enclosure will be used on all splices (like PLP Coyote, Lucent 2600,
or 3M 2178).
6. The entire fiber optic cable system shall be properly protected from
foreign voltage and grounded with an industry-accepted system.
7. Connectors shall be Ultra FC-PC with conventional single mode glass.
46
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
EXHIBIT E
FIBER OPTIC SPECIFICATIONS
--------------------------
1. The fiber optic cable shall be single armor in design. The cable may
be either loose tube or central core in construction. The central
strength member shall be dielectric. Each buffer tube or ribbon shall
contain 12 fibers.
2. The glass within the fiber optic cable shall be either Standard
Single-Mode or Non-Zero Dispersion-Shifted, maximized for operation in
the broadest wavelength ranges.
3. All connectors shall be either Ultra FC-PC or SC-PC unless both
Parties agree to another type.
4. Additional manufacturers specifications for [ * * * ] and [ * * * ]
are attached.
47
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
EXHIBIT F
SPECIFICATIONS FOR REGENERATION FACILITIES
------------------------------------------
1. General.
--------
The sites will be designed to accommodate shared use and high
security. Sites have been selected that are secure from natural
disasters where possible. The intent of the span design is to
accommodate either Standard Single Mode Fiber, or Non-Zero Dispersion
Shifted Fiber.
2. Site Spacing.
------------
Span spacing will be the minimum to allow optical amplification,
regeneration, or wavelength division multiplexing. Spacing shall be at
approximately forty-five (45) mile intervals, except where geographic
factors require shorter spacing.
3. Site Power.
-----------
(a) Building shall be constructed of concrete (or similar) with steel
doors.
(b) Sites will be accessible with four-wheel drive vehicles, if not
paved.
(c) Site will be fenced and topped with wire for security.
(d) Sites will have "meet me" vault(s) that allow for the connection
of IRU fibers to other fibers outside the network.
(e) Typical compound measurements will be by mutual agreement of the
Parties on a case by case basis, but in no event shall the
Purchaser's floor space be less than [ * * * ]
48
EXHIBIT G
AS-BUILT DRAWING SPECIFICATIONS
-------------------------------
As-built drawings will contain a minimum of the following:
(i) Information showing the location of running line, relative to
permanent landmarks, including but not limited to, railroad
mileposts, boundary crossings and utility crossings.
(ii) Splice locations.
(iii) Manhole/handhole locations.
(iv) Conduit information (type, length, expansion joints, etc.).
(v) Cable information (manufacturer, type of cable, reel numbers,
sequentials at all handholes/manholes, amount of cable slack,
etc.).
(vi) Notation of all deviations from specifications (depth, etc.).
(vii) ROW detail (type, centerline distances, boundaries, waterways,
road crossings, known utilities and obstacles, etc.).
(viii) Cable marker locations and stationing.
(ix) Construction of facilities will be documented on the
sitework/facility as-builts and maintained on file at the
facility.
(x) As-builts will be provided in both hard copy and electronic
format (Auto-CAD Release 13.0 or later).
49
EXHIBIT H
MAINTENANCE SPECIFICATIONS AND PROCEDURES
-----------------------------------------
Any Party responsible for providing maintenance of the System including
Purchaser System (collectively the "System") hereunder shall be referred to
herein as the "Service Provider". The Party receiving maintenance services from
the Service Provider hereunder shall be referred to herein as the "Service
Recipient". All other capitalized terms not otherwise defined herein shall have
their respective meanings as set forth in the Agreement of which this Exhibit
forms a part.
1. Maintenance.
------------
(a) Routine maintenance and repair of the System described in this
Section ("Scheduled Maintenance") shall be performed by or under
the direction of Service Provider, at Service Provider's
reasonable discretion or at Service Recipient's request.
Scheduled Maintenance shall commence upon the Effective Date of
the Agreement. Scheduled Maintenance shall include the following
activities:
(i) Patrol of System route on a regularly scheduled basis, which
will be weekly unless hyrail access is necessary, in which
case, it will be quarterly;
(ii) Maintenance of a "Call-Before-You-Dig" program and all
required and related cable locates;
(iii)Maintenance of sign posts along the System right-of-way
with the number of the local "Call-Before-You-Dig"
organization; and
(iv) Assignment of fiber maintenance employees to locations along
the System at intervals dependent upon terrain,
accessibility, locate ticket volume, etc. Service Provider
shall decide the staffing of fiber maintenance employees for
the System.
(b) Non-routine maintenance and repair of the System which is not
included as Scheduled Maintenance ("Unscheduled Maintenance"),
shall be performed by or under the direction of Service Provider.
Unscheduled Maintenance shall commence upon the Effective Date of
the Agreement. Unscheduled Maintenance shall consist of:
(i) "Emergency Unscheduled Maintenance" in response to an alarm
identification by Service Provider's Operations Center,
notification by Service Recipient or notification by any
third party of any failure, interruption or impairment in
the operation of the System, or any
50
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
event imminently likely to cause the failure, interruption
or impairment in the operation of the System.
(ii) "Non-Emergency Unscheduled Maintenance" in response to any
potential service-affecting situation to prevent any
failure, interruption or impairment in the operation of the
System.
Service Recipient shall immediately report the need for Unscheduled
Maintenance to Service Provider in accordance with procedures
promulgated by Service Provider from time to time. Service Provider
will log the time of Service Recipient's report, verify the problem
and dispatch personnel immediately to take corrective action.
2. Operations Center.
------------------
Service Provider shall operate and maintain an Operations Center
("OC") capable of receiving System alarms twenty-four (24) hours a
day, seven (7) days a week. Service Provider's maintenance employees
shall be available for dispatch twenty-four (24) hours a day, seven
(7) days a week. Service Provider shall have its first maintenance
employee at the site requiring Emergency Unscheduled Maintenance
activity within [ * * * ] after the time Service Provider becomes
aware of an event requiring Emergency Unscheduled Maintenance, unless
delayed by circumstances beyond the reasonable control of Service
Provider. Service Provider shall maintain a toll-free telephone number
to contact personnel at the OC. Service Provider's OC personnel shall
dispatch maintenance and repair personnel to handle and repair
problems detected in the System.
(i) Through the Service Recipient's remote surveillance
equipment and upon notification by Service Recipient to
Service Provider; or
(ii) Upon notification by a third party.
3. Cooperation and Coordination.
-----------------------------
(a) Service Recipient and Service Provider shall utilize an
Escalation List, as updated from time to time, to report and
seek immediate initial redress of exceptions noted in the
performance of Service Provider in meeting maintenance
service objectives.
(b) Service Provider will, as necessary, arrange for unescorted
access for Service Provider to all sites of the System,
subject to applicable contractual, underlying real property
and other third party limitations and restrictions.
(c) In performing its services hereunder, Service Provider shall
take workmanlike care to prevent impairment to the signal
continuity and
51
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
performance of the System. The precautions to be taken by
Service Provider shall include notifications to Service
Recipient. In addition, Service Provider shall reasonably
cooperate with Service Recipient in sharing information and
analyzing the disturbances regarding the cable and/or
fibers. In the event that any Scheduled or Unscheduled
Maintenance hereunder requires a traffic roll or
reconfiguration involving cable, fiber, electronic
equipment, or regeneration or other facilities of the
Service Recipient, then Service Recipient shall, at Service
Provider's reasonable request, make such personnel of
Service Recipient available as may be necessary in order to
accomplish such maintenance, which personnel shall
coordinate and cooperate with Service Provider in performing
such maintenance as required of Service Provider hereunder.
(d) Service Provider shall notify Service Recipient at least
five (5) business days prior to the date in connection with
any Maintenance Window (MW) of any Scheduled Maintenance and
as soon as possible after becoming aware of the need for
Unscheduled Maintenance. Service Recipient shall have the
right to be present during the performance of any Scheduled
Maintenance or Unscheduled Maintenance so long as this
requirement does not interfere with Service Provider's
ability to perform its obligations under this Agreement. In
the event that Scheduled Maintenance is canceled or delayed
for whatever reason as previously notified, Service Provider
shall notify Service Recipient at Service Provider's
earliest opportunity, and will comply with the provisions of
this Section.
4. Facilities.
-----------
(a) Service Provider shall maintain the System in a manner,
which will permit Service Recipient's use in accordance with
the Marketing Agreement. All common systems within
facilities along the System shall be maintained in
accordance with manufacturer's specifications, to include
battery plants, generators, and HVAC units.
(b) Except to the extent otherwise expressly provided in the
Agreement, Service Recipient will be solely responsible for
providing and paying for any and all maintenance of [ * * *
] none of which is included in the maintenance services to
be provided hereunder.
52
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
5. Fiber Optic Cable/Fibers.
-------------------------
(a) Service Provider shall perform appropriate Scheduled
Maintenance on the fiber optic cable contained in the System
in accordance with Service Provider's then current
preventative maintenance procedures as agreed to by Service
Recipient, which shall not substantially deviate from
standard industry practice.
(b) Service Provider shall have qualified representatives on
site any time Service Provider has reasonable advance
knowledge that another person or entity is engaging in
construction activities or otherwise digging within five (5)
feet of the System.
(c) Service Provider shall maintain sufficient capability to
teleconference with Service Recipient during an Emergency
Unscheduled Maintenance in order to provide regular
communications during the restoration process. When
correcting or repairing fiber optic cable discontinuity or
damage, including but not limited to in the event of
Emergency Unscheduled Maintenance, Service Provider shall
use best efforts to repair traffic-affecting discontinuity
within [ * * * ] after the Service Provider maintenance
employee's arrival at the problem site. In order to
accomplish such objective, it is acknowledged that the
repairs so effected may be temporary in nature. In such
event, within twenty-four (24) hours after completion of any
such Emergency Unscheduled Maintenance, Service Provider
shall commence its planning for permanent repair, and
thereafter promptly shall notify Service Recipient of such
plans, and shall implement such permanent repair within an
appropriate time thereafter. Restoration of open fibers on
fiber strands not immediately required for service shall be
completed on a mutually agreed-upon schedule. If the fiber
is required for immediate service, the repair shall be
scheduled for the next available Maintenance Window (MW).
(d) In performing repairs, Service Provider shall comply with
the splicing specifications as set forth in Exhibit H.
Service Provider shall provide to Service Recipient any
modifications to these specifications as may be necessary or
appropriate in any particular instance for Service
Recipient's approval, which approval shall not be
unreasonably withheld.
(e) Service Provider's representatives that are responsible for
initial restoration of a cut fiber optic cable shall carry
on their vehicles the typical appropriate equipment that
would enable a temporary splice, with the objective of
restoring operating capability in as little time as
possible. Service Provider shall maintain and supply an
inventory of spare fiber optic cable in storage
53
NOTE: CERTAIN MATERIAL HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SEC. NOTATIONS
OF [ * * * ] HAVE BEEN USED TO INDICATE SUCH AN OMISSION.
facilities supplied and maintained by Service Provider at
strategic locations to facilitate timely restoration.
6. Maintenance Window (MW).
------------------------
Scheduled Maintenance, which is reasonably expected to produce
any signal discontinuity, must be coordinated between the
Parties. Generally, this work should be scheduled after 6:00 p.m.
and before 6:00 a.m. local time. Major system work, such as fiber
rolls and hot cuts, will be scheduled for MW weekends and shall
allow work during daylight hours if on a Saturday or Sunday.
Service Provider and Service Recipient will agree upon a MW
calendar. The intent is to avoid jeopardy work on high-traffic
holidays.
7. Subcontracting.
---------------
Service Provider may subcontract any of the maintenance services
hereunder; provided that Service Provider shall require the
subcontractor (s) to perform in accordance with the requirements
and procedures set forth herein. The use of any such
subcontractor shall not relieve Service Provider of any of its
obligations hereunder.
8. Fees and Costs.
---------------
Each Party agrees to pay [ * * * ] of the total maintenance
costs, including without limitation, taxes required under the
Agreement.
54
EXHIBIT I
XXXX OF SALE
------------
KNOW ALL PERSONS BY THESE PRESENTS that, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
upon acceptance of the Purchaser System pursuant to Section 10.2 by PATHNET,
INC., a Delaware corporation, ("Buyer"), PACIFIC FIBER LINK, LLC, a Washington
limited liability company ("Seller") does hereby grant, bargain, sell, assign,
transfer, convey and set over unto Buyer all right, title and interest in
_____________ (___) _____ inch (__") inside diameter HDPE conduit and
_____________________ (__) _________________ fibers, together with the right to
use all handholes and other associated improvements as related to the Purchaser
System, installed as described in Schedule A (the "Purchaser System"). The title
to all handholes and other associated improvements shall remain with the Seller.
Seller hereby warrants to Buyer that immediately prior to the delivery
of this Xxxx of Sale, Seller was the owner of the full legal and beneficial
title to the Purchaser System and that Seller had the good and lawful right to
sell the same and that good and marketable title to the Purchaser System is
hereby vested in Buyer free and clear of all taxes (except all sales/purchase
taxes incurred or assessed by any governmental agency in connection with the
purchase of the Purchaser System), liens, claims, mortgages, security interests,
encumbrances and right of others. Seller agrees to warrant and defend such title
forever, at its expense, against the claims of third parties, including the
manufacturers, vendors, contractors and subcontractors from which Seller
acquired the Purchaser System or components thereof, but excluding those
manufacturers and vendors of material supplied by Purchaser, if any and
installed in the Purchaser System.
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be executed
and delivered in its name this _____ day of ______. 199___, at Westminster,
Colorado.
PACIFIC FIBER LINK, LLC, a Washington limited liability
company
By: ______________________________________
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