1
EXHIBIT 10.11
Positions of this exhibit have been
omitted and filed separately with
the Securities and Exchange Commission.
These positions are designated
"[ * * * ]."
THIS AGREEMENT IS DELIVERED WITH THE EXPRESS UNDERSTANDING THAT
CSX TRANSPORTATION, INC.'S LEGAL COUNSEL WILL HAVE THE RIGHT OF FINAL
REVIEW AND APPROVAL PRIOR TO EXECUTION.
FIBER OPTIC ACCESS AND
LICENSE AGREEMENT
dated as of ________, 1999
between
CSX TRANSPORTATION, INC.
A VIRGINIA CORPORATION, FOR ITSELF AND
AS OPERATOR FOR NEW YORK CENTRAL LINES LLC, A DELAWARE LIMITED LIABILITY
COMPANY AND A WHOLLY-OWNED SUBSIDIARY OF CONSOLIDATED RAIL CORPORATION, A
PENNSYLVANIA CORPORATION
and
PATHNET TELECOMMUNICATIONS, INC.,
a Delaware corporation
2
TABLE OF CONTENTS
ARTICLE PAGE
1. Certain Definitions
2. License
3. Term
4. Exclusivity
5. Equity Consideration
6. Title Limits
7. Third Party Joint Facilities and Trackage Rights
8. Conduit (Innerduct); Fiber; and Capacity
9. Disclaimer
EXHIBIT SUMMARY
Exhibit 1 Form Build Supplement
Exhibit 2 Description of NYC and CSXT Corridor
Exhibit 3 Depiction of Radii Around Tier Cities
Exhibit 4 Designation of Tier Cities
Exhibit 5 Depiction of [* * *] and [* * *] Builds
Exhibit 6 Initial Designation of NYC Corridor
Exhibit 7 [* * *]
3
FIBER OPTIC ACCESS AND LICENSE AGREEMENT
THIS FIBER OPTIC ACCESS AND LICENSE AGREEMENT (this "License Agreement")
is made as of ___________, 1999 ("Effective Date"), by and between CSX
TRANSPORTATION, INC., a Virginia corporation ("CSXT"), for itself and as
operator for New York Central Lines LLC, a Delaware limited liability company
("NYC Lines") and a wholly owned subsidiary of Consolidated Rail Corporation, a
Pennsylvania corporation (CSXT and NYC Lines, collectively, the "Railroad"),
whose mailing address is 000 Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, and
PATHNET TELECOMMUNICATIONS, INC., a Delaware corporation ("Pathnet"), whose
mailing address is 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
R E C I T A L S:
A. Railroad is the owner or operator of a continuous right-of way (by fee,
easement, license, operating agreement, joint use agreement or other interest)
within certain real property upon which it operates an interstate rail
transportation system, as shown on Railroad's current System Map (hereinafter
referred to as the "Rail Corridor").
B. Pursuant to the Contribution Agreement and Stockholder Agreement being
executed in connection herewith, Pathnet desires to enter into an agreement with
Railroad to permit Pathnet to install, market, sell and/or maintain a Fiber
Optic Communication System, including Conduit (Innerduct), Cable, Optical Fibers
and related equipment and structures, along, in and on up to [ * * * ] miles of
Rail Corridor, along Segments of the Rail Corridor to be selected in accordance
herewith.
C. Pursuant to the Contribution Agreement and Stockholder Agreement being
executed in connection herewith, Railroad is willing to transfer certain
property interests to Pathnet in exchange for stock in Pathnet, provided that
Pathnet accepts a license to use the selected Segments of the Rail Corridor
subject to all of the terms and conditions of this License Agreements and the
Right of Way Operating Agreement being entered into by and between Railroad and
Pathnet concurrently herewith (hereinafter, the "Operating Agreement" and,
together with this License Agreement, the "Agreements"), which Agreements
provide, among other things, that (i) the license granted thereby shall be
subject to the existing rights and interests of other parties, including,
without limitation, [ * * * ] and [ * * * ], and (ii) Railroad makes no
representation or warranty with respect to its right, title or interest, if any,
in and to any portion of the Rail Corridor or its right to grant any type of
license or other right for any party, including Pathnet, to use or occupy the
same.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Railroad and Pathnet hereby agree as
follows:
2
4
1. CERTAIN DEFINITIONS.
1.1 General Interpretive Principles. For purposes of this License Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
(i) the terms defined in this Section have the meanings assigned to them in this
Section and include the plural as well as the singular, and the use of any
gender in this License Agreement shall be deemed to include the other gender;
(ii) the word "including" means "including, but not limited to," and (iii) the
article, section and paragraph headings in this License Agreement are for
convenience only and are not intended to describe, interpret, define or limit
the scope, extent, or intent of any of the provisions of this License Agreement.
1.2 Incorporation of Recitals. The Recitals set forth above are
incorporated herein by this reference.
1.3 Definitions. As used in this License Agreement, the following terms
shall have the following respective meanings (unless otherwise expressly
provided):
"Affiliate" shall mean any Person that, directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, another Person. The term "control," for this purpose, shall mean
the ability, whether by the ownership of shares or other equity interest, by
contract or otherwise, to elect a majority of the directors of a corporation,
independently to select the managing partner of a partnership or the managing
member of a limited liability company, or otherwise to have the power
independently to remove and then select a majority of those Persons exercising
governing authority over an entity. Control shall be conclusively presumed in
the case of the direct or indirect ownership of fifty percent (50%) or more of
the equity interests in an entity.
"Agreements" shall be as defined in Recital C.
"Broadform Telecommunications Rights" shall mean, exclusive of the Limited
Telecommunications Rights granted hereunder, the right of owners of and other
parties with interests in the land underlying the Rail Corridor to license
generally, for telecommunications purposes, any and all portions of Rail
Corridor.
"Build Supplement" shall have the meaning set forth in Section 2.6 below
"Cable" shall mean a single cable containing Optical Fiber, and any
support material and protective casing, capable of transmitting data or voice
communications in a Fiber Optic Communication System.
"Conduit (Innerduct)" shall mean a single duct or pipe, not exceeding two
inches (2") inside diameter (or similar cross sectional equivalent), except
where specifically required or approved by Railroad, suitable for housing a
Fiber Optic Cable.
"Construction Exclusivity" shall have the meaning set forth in Section 4.2
below.
"Construction Plans" shall mean the drawings, plans and specifications for
the construction and installation of Pathnet's System and Facilities, showing
the proposed location of all Pathnet's System and Facilities, in sufficient
detail, with distance shown from nearest track, with separate detailed drawings
of all junction, Repeater (Regen) Sites, bridge and tunnel occupancies, showing
depth of installation, details and methods
3
5
of the proposed construction, with numbers and size of Conduit(s) (Innerduct(s))
to be placed, including Optical Fiber count and total mileage for each Segment.
Construction Plans shall clearly note Railroad Valuation Map references,
Railroad Survey Station and Milepost references for all beginning and ending
points and all alignment transition points. Each set of Construction Plans for
each Segment shall have an overview map showing all of the required information.
"Construction Schedule" shall have the meaning set forth in Section 2.6
below
"Contribution Agreement" shall mean that certain Contribution Agreement
dated as of _____________, 1999 by and between, among others, Railroad and
Pathnet.
"CSX Conduits" shall have the meaning set forth in Section 8.5 below.
"CSXT Corridor" shall mean, subject to Section 2.1 of this Agreement, all
of the Rail Corridor exclusive of the NYC Corridor, as described in Exhibit 2,
attached hereto and incorporated herein.
"Designated Rail Corridor" shall mean a Segment of the Rail Corridor
selected by Pathnet and approved by Railroad in accordance with the terms of the
Agreements.
"Designation Period" shall have the meaning set forth in Section 2.6
below.
"Exclusivity Period" shall have the meaning set forth in Section 4.2
below.
"Facilities", when applied to property of or installed by Pathnet, shall
mean Conduit (Innerduct), Cable, carrier pipes, Pathnet wires and poles, Optical
Fibers, junctions, Repeaters (Regens), Handholds, terminals, power sources,
fault alarm system(s), emergency equipment storage shelters, attachments, and
all other structures and articles of personal property connected with, necessary
for, appurtenant to, or useful to the installation, operation, maintenance,
repair, re-installation, replacement, relocation or removal of Pathnet's Fiber
Optic Communication System.
"Fiber Optic" or "Optical Fiber" shall mean a strand of optical waveguide
permitting the transmission of communications signals.
"Fiber Optic Communication System" or "System" shall mean the system
utilizing Optical Fiber as the medium for communications and transmission to be
installed by Pathnet in the Designated Rail Corridor, which may contain
Conduit(s) (Innerducts(s)), Cable(s) and Optical Fiber(s). Such terms shall
include all Conduit (Innerduct), Cable, Optical Fiber, Handholds, manholes,
marker tape, signs, coupler, structure attachment, pull rope, other necessary
ancillary hardware, and bridge, tunnel and trestle attachments, and shall also
include such communications technologies as may hereafter evolve from or
relating to Optical Fiber but which utilize Pathnet's Facilities and/or System
as initially installed or as thereafter modified pursuant to the Agreements.
"Handholds" shall include Cable loops, or boxes or vaults placed in or
above ground at junctions, Repeaters (Regens) or at areas of Cable splicing and
connection, for storage of slack Cable.
"Interest Notice" shall have the meaning set forth in Section 4.2 below.
"License" shall have the meaning set forth in Section 2.1 below.
"Limited Telecommunications Rights" shall mean Pathnet's right to
construct, install, operate, repair and maintain the Facilities and System as
more particularly described in, and subject to the terms and conditions of, the
Agreements, including, without limitation, those contained in Article 6 of the
License Agreement.
"Negotiation Exclusivity" shall have the meaning set forth in Section 4.2
below.
"NYC Corridor" shall mean that certain portion of the Rail Corridor
operated by CSXT pursuant to that certain Operating Agreement dated as of June
1, 1999 by and
4
6
between NYC Lines, as owner, and CSXT, as operator, as described in Exhibit 2,
attached hereto and incorporated herein.
"Operating Agreement" shall have the meaning set forth in Recital C above.
"Optical Fiber" shall mean Fiber Optic.
"Person" shall mean any individual, association, partnership, limited
liability company, corporation, joint stock company, trust, joint venture,
unincorporated organization or governmental entity or any department, agency or
political subdivision thereof.
"[ * * * ] Obligations" shall mean that Railroad, in accordance with that
certain Agreement, dated as of [ * * * ], between Railroad and [ * * * ], now
known as [ * * * ], shall refer Pathnet's Route Plan on CSXT Corridor to
[ * * * ], in writing, and [ * * * ] shall have ten (10) business days from
receipt to confirm its intent to negotiate with Pathnet for the installation of
a proposed portion of the Pathnet System. If [ * * * ] declines to negotiate
with Pathnet or fails to advise Railroad of its intent to negotiate within ten
(10) business days following its receipt of notification, the terms of this
Agreement shall become operative as to the Build Supplement evidenced by the
Route Plan, except in those areas subject to the following exclusivity
provisions. In addition, [ * * * ] has exclusivity on those segments of CSXT
Corridor on which [ * * * ] has commenced installation of its fiber optic
communications system. Such exclusivity does not apply: (i) to any segment in
which all conduit or fiber optic capacity has been sold or utilized; and (ii)
to third party installations of ten (10) miles or less.
"Rail Corridor" shall have the meaning set forth in Recital A above.
"Railroad Duct" shall have the meaning set forth in Section 8.1 below.
"Repeater (Regen)" shall mean a device which regenerates, amplifies or
extends optical signals, used to send the light impulse through Optical Fiber,
and includes attendant equipment, facilities, power source, and technological
changes.
"Repeater (Regen) Sites" shall mean those permitted portions of the Rail
Corridor on which Repeaters (Regens) are located, and shall be limited to an
area of five hundred (500) square feet or less, and located beyond the
Restricted Working Area, unless otherwise specifically permitted in writing by
Railroad.
"Restricted Working Area" shall mean the area parallel to and located
thirty feet (30') (or the top of any ditch slope if that distance is greater
than thirty feet (30')) from the centerline of the outermost track (on each
side) in the Rail Corridor.
"Segment" shall mean either a longitudinal section of Rail Corridor or a
longitudinal section of Conduit (Innerduct) or Cable installed by Pathnet, as
applicable.
"Stockholder Agreement" shall mean that certain Stockholder Agreement
dated as of ____________, 1999 by and between, among others, Railroad and
Pathnet.
"Substitution Notice" shall have the meaning set forth in Section 4.2
below.
"System" shall mean Fiber Optic Communication System.
"System Map" shall mean Railroad's line map, published periodically,
designating the general location of the Railroad's operating lines.
5
7
"Term" shall have the meaning set forth in Section 3.1 below.
"Title Deficient Areas" shall mean those portions of the Rail Corridor, if
any, for which Railroad holds title in less than fee simple absolute and for
which Railroad may not otherwise have the right to grant to Pathnet the license
for use and occupancy as contemplated by this License Agreement.
"Trackage Rights" shall mean the rights arising by agreement of one
railroad to use the tracks or right-of-way of another railroad for the carriage
of rail traffic; said agreement ordinarily imparting no ownership interest in
the burdening carrier relating to the tracks or rights-of-way of the burdened
carrier.
"[* * *] Obligations" shall mean that in CSXT Corridor occupied by a
fiber optic communications system installed by [* * *] (or any predecessor
entity) (collectively "[* * *]") or, in any CSXT Corridor over which [* * *]
has exercised its option to install its system within the preceding [* * *]
prior to the date of the applicable Build Supplement, Pathnet's System shall not
be installed in any length longer than [* * *] contiguous miles and no
closer than [* * *] from any existing [* * *] facility. For the purposes
of this limitation only, any two (2) Segments of Pathnet's Fiber Optic
Communications System of which the respective ends are less than [* * *] apart
shall be deemed a single Segment and the aggregate length of such two (2)
Segments (but not the length between the respective ends of such Segments) shall
be considered in determining contiguous mileage.
2. LICENSE
2.1 Grant of License. (a) Subject to the terms and conditions contained in
the Agreements, including, without limitation, Article 6 of this Agreement,
Railroad hereby grants to Pathnet a license of Limited Telecommunications
Rights, for the Term and upon the conditions, covenants and agreements set forth
in the Agreements, to select up to [* * *] miles of Rail Corridor (including
up to 2,000 miles of NYC Corridor) to be designated (as provided herein and
subject to Railroad's approval rights as set forth in the Agreements) as
Designated Rail Corridor and to use such Designated Rail Corridor for the
purpose of constructing, installing, operating, maintaining, repairing,
replacing and removing (and including rights of access subject to the
conditions, covenants and agreements set forth in the Agreements) a Fiber Optic
Communications Systems containing no more than eight (8) Conduits (Innerducts)
and an unlimited number of Optical Fibers therein, together with necessary
appurtenant equipment and structures (the "License"). Subject to Railroad's
prior consent, which may be withheld in Railroad's sole discretion, Pathnet may
install additional Conduits (Innerducts), if Railroad and Pathnet can reach
agreement on how to share in the revenue resulting from sales of such Conduits
(Innerducts) or the Optical Fiber contained therein.
(b) With respect to CSXT Corridor located within the State of
[* * *], Pathnet acknowledges the pendancy of certain class action litiga-
tion concerning the use of railroad rights of way by telecommunications
companies. During the pendancy of this or any related litigation, Pathnet shall
not have any right under this Agreement to install its System or Facilities upon
CSXT Corridor in the State of [* * *] without the prior written consent of
Railroad, which shall not be unreasonably withheld, provided however, that if
the court rules that telecommunications companies (such as Pathnet), cannot
install their systems and facilities on such rights of way, Pathnet shall have
the obligation, prior to the installation of any portion of its System or
Facilities on the CSXT Corridor in the State of [* * *], to acquire Broad-
form Telecommunications Rights sufficient in Railroad's reasonable discretion to
authorize such installation. Pathnet understands and agrees that any Broadform
Telecommunications Rights acquired by Pathnet are subject to the terms and
conditions of this License Agreement.
2.2 Acknowledgement of Condition of Title. Pathnet understands,
acknowledges and agrees that (a) portions of the Designated Rail Corridor may be
in Title Deficient Areas, and (b) Pathnet accepts the License in any Title
Deficient Areas
6
8
subject to the terms and conditions of the Agreements. Subject to the
provisions of this Article 2, with respect to any Segment of the Designated Rail
Corridor in Title Deficient Areas, the License herein granted Pathnet shall
include the additional right in favor of Pathnet to procure all Broadform
Telecommunications Rights from third parties as Pathnet determines are necessary
to enable it to construct, install, operate, maintain, repair, replace and
remove Pathnet's Facilities and System in such Title Deficient Areas provided
that Pathnet shall not acquire exclusive Broadform Telecommunications Rights
(such that the underlying fee owner no longer has the right to grant such rights
to third parties) without the prior written consent of Railroad, which may be
withheld in Railroad's sole discretion. All provisions of the Agreements,
including, but not limited to, Pathnet's obligations for the payment or other
delivery of the consideration described in this License Agreement, shall apply
as between Railroad and Pathnet with respect to any Title Deficient Areas,
notwithstanding that Pathnet's right to occupy the Title Deficient Areas is or
may be derived, in whole or in part, from Broadform Telecommunications Rights
obtained by Pathnet from third parties. The License is made and given subject to
the [* * *] Obligations, the [* * *] Obligations and the rights and
interests of all other third parties, existing as of the Effective Date or the
date of any Build Supplement.
2.3 Operating Agreement. The parties acknowledge and agree that the
License shall be exercised in accordance with the terms and provisions of this
License Agreement and the Operating Agreement, the terms of which are
incorporated herein by this reference. In the event of any conflict between the
Operating Agreement and this License Agreement with respect to any rights or
obligations under this License Agreement, the terms of this License Agreement
shall control. Notwithstanding any contrary provision in the Agreements, the
parties agree that (i) any dispute relating to this License Agreement, except a
dispute arising under Section 8.5 hereof, shall not be subject to Article 25
(Liaison; Coordination and Dispute Resolution) of the Operating Agreement, it
being the specific intention of the parties to litigate any and all disputes
hereunder, without resort to arbitration or mediation, and (ii) the
indemnification provisions contained in this License Agreement shall not be
governed or affected by Article 17 (Liability; Indemnity) of the Operating
Agreement.
2.4 Transfer of Broadform Telecommunications Rights. In the event that
Pathnet obtains Broadform Telecommunications Rights with respect to any Title
Deficient Areas that provide use and occupancy rights in excess of the Limited
Telecommunications Rights granted by Railroad to Pathnet pursuant to the
Agreements, then Pathnet shall immediately offer, by way of assignment, to
convey such Broadform Telecommunications Rights to Railroad. Upon receipt of
Pathnet's offer of assignment, Railroad shall promptly determine, in its sole
and absolute discretion, to accept such assignment or reject the same. In the
event Railroad accepts such assignment, Railroad shall pay to Pathnet, fifty
percent (50%) of the actual direct out of pocket costs (exclusive of Pathnet's
internal overhead) incurred by Pathnet in connection with the acquisition of
such rights together with the actual direct costs including overhead of any
Pathnet field personnel to the extent dedicated to such acquisition.
7
9
2.5 Sublicenses. Pathnet may sell, lease, license, or otherwise grant
rights in and to Optical Fibers, telecommunications capacity, Conduit
(Innerduct) or other portions of Pathnet's System on such terms as Pathnet may
determine in its sole discretion. Pathnet may also involve customers or
co-development or strategic partners in the installation of Pathnet's System on
Designated Rail Corridors on such terms as Pathnet determines, in its sole
discretion. Any such arrangements shall be expressly subject and subordinate to
the terms and conditions of the Agreements, Pathnet shall remain fully liable
for its obligations under the Agreements, Pathnet shall remain the sole point of
contact with Railroad in connection with such arrangements, and Pathnet shall be
responsible for and shall supervise any and all activities on or affecting the
Designated Rail Corridor. Pathnet shall have no right to sell, sublicense or
otherwise transfer the right to access any portion of the Designated Rail
Corridor to a third party without the prior written consent of Railroad, which
consent may be withheld in Railroad's sole discretion.
2.6 Selection and Development of Rail Corridor. Pursuant to one or more
supplements to this License Agreement, the form of which is attached hereto as
Exhibit 1 (each a "Build Supplement"), Pathnet shall, except as otherwise
provided herein, designate as Designated Rail Corridor for its System and
Facilities up to the maximum number of miles of Rail Corridor authorized
hereunder. Pathnet may designate such Designated Rail Corridor at any time
during the first [* * *] years after the Effective Date (the "Designation
Period"). Railroad shall approve each Build Supplement within thirty (30) days
of submission thereof unless such approval cannot be granted due to existing
contractual or other legal limitations, safety concerns, operational or
engineering conflicts or interference with existing or foreseeable future
development of the Rail Corridor for railroad purposes. Designation of the Rail
Corridor pursuant to an approved Build Supplement shall remove the designated
mileage from the mileage bank granted under this License Agreement. Together
with each Build Supplement, Pathnet shall also submit a proposed schedule of
construction (the "Construction Schedule") of its System and Facilities over the
Segment designated in the Build Supplement. Railroad shall have the right, to be
exercised in its reasonable discretion within thirty (30) days after submission,
to approve or reject any proposed Construction Schedule (giving the reasons for
any such rejection and leave for Pathnet to resubmit such Construction Schedule
within the Designation Period), provided that Pathnet shall commence physical
installation of Conduit (Innerduct) in the ground no sooner than sixty (60) days
after Railroad's approval of the Build Supplement and Construction Schedule, but
no later than three (3) years of Pathnet's submission of the applicable Build
Supplement, unless otherwise provided herein. If Pathnet fails to timely
commence such physical installation, Pathnet shall be prohibited from installing
any portion of its Facilities or System within such Segment and shall not be
entitled to any refund of the miles deducted (from the mileage bank granted
hereunder) as a result of such Build Supplement, provided that Pathnet may
submit a second Build Supplement and Construction Schedule for such Segment
during the Designation Period (which second submission shall be treated as an
initial submission hereunder).
8
10
3. TERM
3.1 Term. Unless sooner terminated in accordance with the provisions of
the Agreements, the License, the Agreements and the rights granted under any
Build Supplement shall be for a term commencing as of the Effective Date and
ending thirty (30) years hence (the "Term").
4. EXCLUSIVITY
4.1 Exclusive Rights. Except as set forth below in this Article 4,
Pathnet's rights and interests under the License and with respect to the
Designated Rail Corridor (including those portions of the Designated Rail
Corridor for which Pathnet obtains Broadform Telecommunication Rights) shall be
non-exclusive.
4.2 NYC Corridor Development. For a period of three (3) years from the
Effective Date hereof (the "Exclusivity Period"), with respect to the Segments
of the NYC Corridor (up to a maximum of 2,000 miles) designated by Pathnet upon
execution of this License Agreement as set forth in Exhibit 6 hereof, Pathnet
shall have the exclusive right to place and operate its System and Facilities
within such Segment(s) (the "Construction Exclusivity"); provided, however, that
the foregoing exclusivity right will not apply to any Segment of less that [*
* *] unless either (i) the Segment connects two cities in which Pathnet
establishes a point of presence; or (ii) the Segment connects Pathnet's network
on property that is not within the NYC Corridor to a city on the NYC Corridor in
which Pathnet establishes a point of presence. Notwithstanding the foregoing,
Pathnet will not have exclusivity rights within the radii around the cities
designated on Exhibits 3 and 4, attached hereto and incorporated herein. For the
four (4) years following the expiration of the Exclusivity Period (although the
foregoing exclusivity shall no longer apply), Railroad shall promptly notify
(the "Interest Notice") Pathnet in writing of any serious inquiries from third
parties who wish access to a Segment of the NYC Corridor which Pathnet and
Railroad have executed a Build Supplement for construction and installation of
Pathnet's System and/or Facilities. Within ten (10) days after its receipt of
the Interest Notice, Pathnet shall notify Railroad if it has a good faith
interest in pursuing negotiations with the interested third party. If Pathnet
fails to notify Railroad that it has an interest within such ten (10) day
period, then Pathnet shall be deemed to have conclusively waived its right to
negotiate with such third party. If Pathnet notifies Railroad that it is
interested in such negotiations within such ten (10) day period, Pathnet shall,
for a period of [* * *] after Pathnet's receipt of such Interest Notice,
have the exclusive right to negotiate with such third party with respect to
9
11
such third party's access, construction, installation and/or use of a fiber
optic communications system along such Segment (the foregoing rights,
collectively "Negotiation Exclusivity"). If Pathnet and such third party have
not executed a definitive agreement within such [* * *] period, Railroad
shall be free to negotiate and enter into an agreement with such third party for
the development of the referenced Segments of the NYC Corridor. Upon written
notice to Railroad (the "Substitution Notice"), Pathnet may substitute
additional Segments of NYC Corridor for Segments of NYC Corridor previously
designated in Exhibit 6, provided that (i) any such substitute NYC Corridor
shall be subject to the rights of third parties in such NYC Corridor as of the
date of the Substitution Notice; (ii) the aggregate mileage of Pathnet's
designation of NYC Corridor (after deducting the mileage of the originally
designated Segment(s) and adding the mileage of the substitute Segment(s)) does
not exceed 2,000 miles; (iii) the Construction Exclusivity which initially
attached to the originally designated Segment(s) shall no longer apply to such
Segment(s) after the Substitution Notice; (iv) no Construction Exclusivity shall
attach to the substitute Segment(s); and (v) with respect to such substitute
Segment(s), the Negotiation Exclusivity shall commence upon the date of
completion of such substitute Segment(s) and shall continue for a period of four
(4) years following the expiration of the Exclusivity Period (even though the
Construction Exclusivity shall not apply).
4.3 Third Party Non-Exclusive Grants. Except as provided in Section 4.2
above, Railroad may grant development rights for fiber optic and other
communication systems in the Rail Corridor (including the Designated Rail
Corridor) to any third party on a non-exclusive basis.
4.4 Third Party Exclusive Grants. Except as provided in Section 4.2 above,
Railroad may grant development rights for fiber optic and other communication
systems in the Rail Corridor (including the Designated Rail Corridor) to any
third party on an exclusive basis; provided, however, that Pathnet shall not be
subject to such exclusivity provisions.
4.5 Additional Restrictions. In addition to the foregoing restrictions,
Pathnet represents that (i) Pathnet will commence and diligently pursue to
completion the installation of its System and Facilities over five hundred (500)
miles of NYC Corridor in each of the first three (3) years after the Effective
Date hereof; and (ii) in all stages of its development of the NYC Corridor,
seventy five percent (75%) of the Designated Rail Corridor miles completed and
under development (in accordance with the applicable Construction Schedule(s))
will be in contiguous segments of at least two hundred (200) miles each. In the
event Pathnet breaches either of these representations, then as Railroad's sole
and exclusive remedy, Pathnet will automatically lose Construction Exclusivity
as to the entirety of the NYC Corridor except as to those Segments of NYC
Corridor which Pathnet has completed in accordance with this Section 4.5,
provided that Pathnet shall be entitled to Negotiation Exclusivity commencing on
the date of completion of any Segment(s) for which Construction Exclusivity was
lost hereunder and continuing for a period of four (4) years following the
expiration of the Exclusivity Period (even though the Construction Exclusivity
shall not apply).
5. EQUITY CONSIDERATION
5.1 Consideration. As consideration for the License, Railroad shall
receive an equity interest in Pathnet pursuant to the Contribution Agreement.
6. TITLE LIMITS.
6.1 General. Pathnet understands and acknowledges that Railroad occupies,
uses and possesses lands, rights-of-way and rail corridors under all forms and
qualities of ownership rights or facts, from fee simple absolute to bare
occupation. Accordingly, nothing in the Agreements shall act as or be deemed to
act as any warranty, guaranty or
10
12
representation of the quality or quantity of Railroad's title in and to any
particular Segment occupied, used or enjoyed in any manner by Pathnet under any
rights created in the Agreements. It is expressly understood that Railroad does
not warrant title to any portion of the Rail Corridor, and Pathnet hereby
accepts the grants and privileges contained herein, subject to all lawful
outstanding existing liens, mortgages and superior rights or interests in and to
the Rail Corridor, and all leases, licenses and easements or other interests
previously granted to or reserved by others therein.
6.2 Limitations of License. The term "License" herein shall mean: (a) with
regard to any portion of Rail Corridor which is owned by Railroad in fee simple
absolute or in which the uses contemplated hereunder are otherwise statutorily
authorized or approved by the state in which such Rail Corridor is located,
merely a "license"; (b) with regard to any portion of Rail Corridor owned,
occupied, used or controlled by Railroad in less than fee simple absolute (e.g.,
fee simple determinable, fee simple conditional, lease or rail easement or other
occupancy right), where the applicable law permits such grants by Railroad to
Pathnet, merely "a right of occupancy" commensurate with the term and extent of
Railroad's ownership, occupancy, etc; and (c)with regard to any portion of Rail
Corridor for which Railroad does not possess the right to license the same to
third parties for telecommunications purposes, the Agreements shall not convey
any rights to Pathnet except that Railroad merely waives its exclusive rights to
occupy, use and/or control the Rail Corridor commensurate with the term and
extent of such Railroad rights.
6.3 Broadform Telecommunications Rights. Pathnet understands and agrees
that the rights conveyed hereunder may not be sufficient to permit installation
of its System and Facilities at all desired locations throughout the Designated
Rail Corridor. Accordingly, except as otherwise provided herein, Pathnet may, as
Pathnet reasonably deems necessary, obtain Broadform Telecommunication Rights in
accordance herewith before commencing construction on any Segment, provided,
however, that Pathnet understands and agrees that any such Broadform
Telecommunications Rights acquired by Pathnet within the Designated Rail
Corridor are subject to the terms and conditions of this License Agreement.
6.4 Waiver of Claims. Pathnet agrees it shall not have and hereby
completely and absolutely waives its right to any claim against Railroad for
damages or any other legal or equitable relief on account of any deficiencies in
title to the Designated Rail Corridor.
6.5 Indemnity. In addition to the indemnities contained in the Operating
Agreement, Pathnet shall indemnify, defend (at Pathnet's sole cost and expense,
with counsel selected and controlled by Railroad, if Railroad so requests) and
hold Railroad and its Affiliates, officers, directors, employees and agents
harmless from and against all claims or litigation for trespass, slander of
title, overburden of easement, or any other claims arising out of or based upon
(i) Pathnet's Conduit (Innerduct), Cable or Optical Fiber placement, or (ii) the
presence of Pathnet's Conduit (Innerduct), Cable or Optical
11
13
Fiber or other Facilities in, on or along the Designated Rail Corridor, or (iii)
Pathnet's failure to obtain sufficient Broadform Telecommunications Rights, or
(iv) the presence of Pathnet's purchasers, sublicensees, customers,
co-development or strategic partners, agents, invitees, their respective
employees or any other third party acting for the benefit or at the direction of
Pathnet or any such third party, on the Designated Rail Corridor, or their
individual or collective use of Pathnet's Conduit (Innerduct), Cable or Optical
Fiber or other Facilities in, on or along the Designated Rail Corridor, or (v)
the title related claims of Pathnet's purchasers, sublicensees, customers,
co-development or strategic partners, agents, invitees, their respective
employees or any other third party acting for the benefit or at the direction of
Pathnet or any such third party, including all claims for damages, including,
but not limited to, civil, criminal, compensatory, consequential, direct,
indirect, treble, exemplary, special, punitive and all other damages or
penalties of any kind available at law or in equity.. This indemnity shall
survive the expiration or termination of the Agreements. The foregoing indemnity
shall not be deemed to apply to any of the foregoing claims, liabilities, costs
or expenses to the extent attributable to Railroad's own operations or to
Railroad's grant of rights of way for fiber optic, utility or other uses to any
parties other than Pathnet.
6.6 [* * *] Obligations and [* * *] Obligations. The License and
all other rights and interests granted pursuant to the Agreements and all of the
terms and provisions of the Agreements are made expressly subject to the [* * *]
Obligations and the [* * *] Obligations. The parties acknowledge that the
[* * *] Obligations and the [* * *] Obligations affect all or part of
the CSXT Corridor. The portions of the CSXT Corridor over which [* * *] and
[* * *] have installed conduit are depicted on Exhibit 5, attached hereto
and incorporated herein. Railroad shall promptly give written notice to Pathnet
of all future installations and/or designations of CSXT Corridor by Pathnet and
[* * *]. Nothing in this paragraph will be deemed to expand the [* * *]
or [* * *] Obligations beyond the scope of such obligations arising pursuant
to the agreements between Railroad and [* * *] and [* * *],
respectively.
7. THIRD PARTY JOINT FACILITIES AND TRACKAGE RIGHTS.
7.1 This Agreement does not pertain to any occupancies over or
structures upon rights-of-way owned jointly by Railroad with another Person
which is not an Affiliate of Railroad or upon any Rail Corridor on which
Railroad has only Trackage Rights. Railroad, however, agrees to reasonably
cooperate with and assist Pathnet in obtaining any approvals of third parties
necessary to permit Pathnet to use any such jointly owned rights-of-way, and
agrees not to block Pathnet's application to use any portion of the Rail
Corridor on which Railroad only has Trackage Rights; provided, however, that
Pathnet shall reimburse Railroad, upon demand, for any costs, including
reasonable attorneys' fees, incurred by Railroad in connection with such
cooperation. The portion of the Rail Corridor over which Railroad possesses only
Trackage Rights are depicted on the Railroad System Map which has been made
available to Pathnet.
8. CONDUIT (INNERDUCT); FIBER; AND CAPACITY.
12
14
8.1 Railroad Ducts and Signal Cable. Pathnet, at its sole cost and
expense, shall install one (1) two-inch (2.0") SDR-11 or equivalent single duct
or pipe, of not less than one and nine-tenths inches (1.9") inside diameter for
Railroad (the "Railroad Duct"). The Railroad Duct shall be installed by Pathnet
along the entire length of Designated Rail Corridors in which Pathnet installs
the Pathnet System and where installation of such Railroad Duct in addition to
the Conduits (Innerducts) to be installed by Pathnet, is physically feasible,
with such installation to be concurrent with Pathnet's Conduit (Innerduct)
installation. The Railroad Duct shall become the sole property of Railroad upon
installation, and Railroad, its successors and/or assigns, shall have the
exclusive right of use of such Railroad Duct. To the extent assignable, Pathnet
shall assign to Railroad, without charge, any service and product warranties
relating to such Railroad Duct that it obtains from its manufacturer and/or
installation contractor(s). The Railroad Duct may be used only for Railroad's
internal communications needs, and neither the Railroad Duct, nor Optical Fiber
therein, nor telecommunications capacity thereon, may be sold, assigned, leased,
licensed, or otherwise made available to third-parties, or used in connection
with any telecommunications business, until the earlier of (a) five (5) years
after completion of construction of the relevant Segment containing the Railroad
Duct, (b) the sale, option to purchase, or use by Pathnet of all installed
Conduits (Innerducts) or Optical Fibers on such Segment other than those held in
reserve by Pathnet, or (c) ten (10) years from the Effective Date hereof.
8.2 Fiber Optic Capacity.
A. Pathnet will provide up to [* * *] at no charge to Railroad, provided
that the maximum number of [* * *] miles shall not exceed [* * *] miles.
Such mileage shall be calculated in straight line (i.e. airline) miles, not
route miles. Pathnet will make such capacity available to Railroad at Pathnet's
points of presence, including at any central office where Pathnet is co-located,
where Pathnet has equipment in place to offer [* * *] service. Notwithstanding
the foregoing, Pathnet agrees that if and when it offers services in the cities
listed on [* * *] Pathnet will install equipment to offer [* * *] service
and will provide such [* * *] service to Railroad pursuant to this Agreement.
Railroad will be responsible for any costs required to transport such capacity
from Pathnet's point of presence to Railroad's required point of termination,
including costs of interconnection, provisioning, co-location of additional
required equipment, and the cost of any local loop, leased lines, or other means
of transport. At Railroad's request, Pathnet will arrange such transport and
interconnection costs, provided Railroad reimburses Pathnet for all actual and
reasonable costs incurred by Pathnet in connection therewith, including internal
costs, but excluding any overhead, without xxxx-up for profit. Prior to
incurring any such costs, Pathnet will discuss such arrangements with Railroad
so that the parties may identify the most cost-effective solution.
B. The maximum cross-section of the capacity provided to Railroad
pursuant to this Section at any point shall not exceed [* * *] of the total
capacity of Pathnet's network at such point. In addition, the number of
[* * *] terminated at any point shall not exceed [* * *] of the capacity
terminated at such point.
C. The capacity described in this Section may be utilized by Railroad and
its Affiliates for its internal communications only, and may not be sold,
assigned, leased, licensed, or otherwise made available to third-parties.
8.3 Ability to Purchase Telecommunications Capacity. CSX shall also have
the right, subject to availability as determined by Pathnet in its reasonable
discretion, to purchase telecommunications capacity anywhere on Pathnet's entire
fiber optic communications system at prices at least as favorable as Pathnet is
then offering as its best rate to other unrelated parties for like amounts of
telecommunications capacity in like markets. The foregoing capacity may be used
only for Railroad's or any Railroad Affiliate's internal communications needs,
and may not be sold, assigned, leased, licensed, or otherwise
13
15
made available to third-parties.
8.4 Last Available Build in Segment. If, in any Segment of Designated Rail
Corridor, Railroad determines that it is likely that Pathnet's construction
will, due to engineering or construction limitations, be the last Conduit
(Innerduct) placed or constructed within such Segment, Railroad may require
Pathnet to build additional Conduits (Innerducts) for Railroad's benefit. In
such event Railroad will pay a sum equal to the ratio of the additional
Conduit(s) (Innerduct(s)) installed in such Segment to the total number of
Conduits (Innerducts) installed therein, multiplied by the total actual direct
out of pocket costs (exclusive of Pathnet's internal overhead) of the entire
installation together with the actual costs (including overhead) of any Pathnet
field personnel to the extent dedicated to such installation. The foregoing
additional Conduits (Innerducts) will be subject to the same restrictions as
apply to the Railroad Duct.
8.5 Boston to Framingham Conduits (Innerducts). On the Effective Date
hereof, Pathnet shall submit a Build Supplement and Construction Schedule for
the development of the Segment of Rail Corridor between Boston and Framingham,
provided that, notwithstanding any provision hereof to the contrary, Pathnet
shall commence physical installation of Conduit (Innerduct) in such Segment
within one (1) year of the Effective Date hereof. In connection with such
installation, Pathnet shall also install, at Pathnet's sole cost and expense,
four (4) two inch (2") Conduits (Innerducts) for Railroad's exclusive use and/or
for sale by Railroad to third parties (the "CSX Conduits"). The CSX Conduits
shall be in lieu of the Railroad Duct to be installed along such Segment by
Pathnet in accordance with Section 8.1. In the event that Pathnet determines
that the Boston to Framingham Segment is not commercially practicable (taking
into consideration Pathnet's obligation to install the CSX Conduits), Pathnet
shall not be obligated to install such Segment, provided that, in recognition of
the value of the CSX Conduits to Railroad, which constituted a material aspect
of the bargain achieved through the Agreements, Pathnet and Railroad shall
negotiate, in good faith, for Pathnet to deliver equivalent value to Railroad
pursuant to a mutually agreed alternative. If the parties are unable to agree
upon such mutually agreed alternative, the dispute shall be subject to Article
25 (Liaison; Coordination and Dispute Resolution) of the Operating Agreement.
9. DISCLAIMER
9.1 Disclaimer Relating to Certain Information. Railroad does not warrant
the accuracy of those maps, descriptions and depictions attached hereto as
Exhibits 2, 3 and 5, nor does it warrant the accuracy of the Railroad Valuation
Maps or the Railroad System Map. Railroad states that such items were prepared
and are utilized in the ordinary course of Railroad's business. With respect to
Exhibit 5 only, Railroad's Assistant Vice President, X. X. Xxxxxxx, represents
that such Exhibit accurately depicts the current status of the occupancies of
[* * *] and [* * *] on CSXT Corridor, to the best of his knowledge.
IN WITNESS WHEREOF, the undersigned have executed this License Agreement
as of the Effective Date.
14
16
CSX TRANSPORTATION, INC.,
a Virginia corporation, for itself and as Operator
for New York Central Lines, L.L.C.
By: ____________________________
Title: ___________________________
PATHNET TELECOMMUNICATIONS, INC.,
a Delaware corporation
By: _________________________
Title: ____________________________
15
17
EXHIBIT 1
NYC BUILD SUPPLEMENT NO. -------
Utility Project Name:______________________________________________________
Segment:___________________________________________________________________
Railroad Project Name:_____________________________________________________
THIS BUILD SUPPLEMENT NO._______ ("Build Supplement") is made as of this
_______ day of ____________________, _______ (the "Effective Date"), between CSX
TRANSPORTATION, INC., a Virginia corporation, as Operator for New York Central
Lines LLC, a Delaware limited liability company and a wholly owned subsidiary of
Consolidated Rail Corporation, a Pennsylvania corporation ("Railroad"), and
PATHNET TELECOMMUNICATIONS, INC., a Delaware corporation ("Utility").
RECITALS:
A. Railroad and Utility have previously entered into those certain Fiber
Optic License and Access Agreement and Right of Way Operating
Agreement both dated as of _____ ____________________, as amended and
supplemented from time to time by the parties (collectively, the "Base
Agreement").
B. The Base Agreement grants certain rights to Utility, including the
right to install a Fiber Optic Communications System pursuant to one
or more Build Supplements over certain Segments of Designated Rail
Corridor as more fully defined therein.
C. Utility wishes to expand its current Fiber Optic Communications System
in accordance with the Base Agreement and this Build Supplement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for the sum of Ten and No/100 Dollars ($10.00) in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Railroad and Utility agree as follows:
1. The above Recitals are true and correct and are incorporated herein by
this reference.
2. Unless otherwise specifically defined in this Build Supplement, all
capitalized terms used herein shall have the same meanings defined in the Base
Agreement.
3. In addition to the rights and obligations set forth in the Base
Agreement and any previously executed Build Supplements, and in accordance
therewith and herewith, Utility is hereby granted a non-exclusive License to
install the following additional Segment(s) of its Fiber Optic Communications
System as shown on Exhibit(s) _______________, attached hereto and by this
reference made a part hereof and described as follows:
Segment: from: to:
City, State _______________ _______________,
County _______________ _______________,
Township _______________ _______________,
Valuation Map No. _______________ _______________,
Milepost _______________ _______________,
1
18
Railroad Survey Station No. _______________ _______________,
Total distance: ___________________;
Aggregate Optical Fiber Count
(irrespective of number of Conduit/Innerduct or Cable) ___________________;
Number of Conduit/Innerduct ___________________;
Size of Conduit/Innerduct ___________________;
Number of Cable ___________________;
Size of Cable ___________________.
4. The non-exclusive license granted to Utility with respect to the
additional installation pursuant to this Build Supplement shall be for a term
concurrent with the Base Agreement.
5. The parties hereby ratify and affirm the Base Agreement, as
supplemented hereby, which shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Build Supplement as of
the Effective Date.
Witnesses: CSX TRANSPORTATION, INC.,
a Virginia corporation, as Operator for
New York Central Lines LLC,
a Delaware limited liability company
________________________________ By:_______________________________
Print Name:_______________________
________________________________ Print Title:______________________
Witnesses: PATHNET TELECOMMUNICATIONS, INC.,
a Delaware corporation
________________________________ By:_______________________________
Print Name:_______________________
________________________________ Print Title:______________________
2
19
EXHIBIT 1
CSXT BUILD SUPPLEMENT NO. -------
Utility Project Name:______________________________________________________
Segment:___________________________________________________________________
Railroad Project Name:_____________________________________________________
THIS BUILD SUPPLEMENT NO._______ ("Build Supplement") is made as of this
day of _____ _______________, _______ (the "Effective Date"), between CSX
TRANSPORTATION, INC., a Virginia corporation ("Railroad"), and PATHNET
TELECOMMUNICATIONS, INC., a Delaware corporation ("Utility").
RECITALS:
A. Railroad and Utility have previously entered into those certain Fiber
Optic License and Access Agreement and Right of Way Operating
Agreement both dated as of _____ _______________, as amended and
supplemented from time to time by the parties (collectively, the "Base
Agreement").
B. The Base Agreement grants certain rights to Utility, including the
right to install a Fiber Optic Communications System pursuant to one
or more Build Supplements over certain Segments of Designated Rail
Corridor as more fully defined therein.
C. Utility wishes to expand its current Fiber Optic Communications System
in accordance with the Base Agreement and this Build Supplement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for the sum of Ten and No/100 Dollars ($10.00) in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Railroad and Utility agree as follows:
1. The above Recitals are true and correct and are incorporated herein by
this reference.
2. Unless otherwise specifically defined in this Build Supplement, all
capitalized terms used herein shall have the same meanings defined in the Base
Agreement.
3. In addition to the rights and obligations set forth in the Base
Agreement and any previously executed Build Supplements, and in accordance
therewith and herewith, Utility is hereby granted a non-exclusive License to
install the following additional Segment(s) of its Fiber Optic Communications
System as shown on Exhibit(s) _______________, attached hereto and by this
reference made a part hereof and described as follows:
Segment: from: to:
City, State _______________ _______________,
County _______________ _______________,
Township _______________ _______________,
Valuation Map No. _______________ _______________,
Milepost _______________ _______________,
Railroad Survey Station No. _______________ _______________,
Total distance: ___________________;
1
20
Aggregate Optical Fiber Count
(irrespective of number of Conduit/Innerduct or Cable) ____________________;
Number of Conduit/Innerduct ____________________;
Size of Conduit/Innerduct ____________________;
Number of Cable ____________________;
Size of Cable ____________________.
4. The non-exclusive license granted to Utility with respect to the
additional installation pursuant to this Build Supplement shall be for a term
concurrent with the Base Agreement.
5. The parties hereby ratify and affirm the Base Agreement, as
supplemented hereby, which shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Build Supplement as of
the Effective Date.
Witnesses: CSX TRANSPORTATION, INC.,
a Virginia corporation
_______________________________ By:__________________________________
Print Name:__________________________
_______________________________ Print Title:_________________________
Witnesses: PATHNET TELECOMMUNICATIONS, INC.,
a Delaware corporation
_______________________________ By:__________________________________
Print Name:__________________________
_______________________________ Print Title:_________________________
2
21
EXHIBIT 2
CSX System Map
--------------
(Map of CSX Railway System)
22
Exhibit 3
Non-exclusivity around specific cities
--------------------------------------
[ * * * ]
23
EXHIBIT 4
TIER CITIES
[* * *] [* * *]
[* * *]
24
Exhibit 5
Map of [* * *] and [* * *] Builds
[* * *]
25
Exhibit 6
Pathnet's Initial Designation of Conrail Build
[Map of Conrail ROW]
26
EXHIBIT 7
[ * * * ]
