EXHIBIT 10.7
SECOND AMENDED AND RESTATED AGREEMENT FOR THE PROVISION
OF FIBER OPTIC FACILITIES AND SERVICES
BETWEEN
NORTHEAST UTILITIES SERVICE COMPANY,
THE CONNECTICUT LIGHT AND POWER COMPANY,
WESTERN MASSACHUSETTS ELECTRIC COMPANY,
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
AND
NEON OPTICA, INC.
AS SUCCESSOR IN INTEREST TO
NECOM LLC
AS OF
DECEMBER 23, 2002
AMENDING AND RESTATING AGREEMENT DATED AS OF FEBRUARY 27, 1998
PHASE TWO
CONFIDENTIAL
1
SECOND AMENDED AND RESTATED AGREEMENT FOR THE PROVISION
OF
FIBER OPTIC FACILITIES AND SERVICES
1. PREAMBLE
This Second Amended and Restated Agreement for the Provision of Fiber Optic
Facilities and Services - Phase 2 (this "Agreement") is entered into as of
December 23, 2002 between Northeast Utilities Service Company, a specially
chartered Connecticut corporation, The Connecticut Light and Power Company, a
Connecticut corporation, Western Massachusetts Electric Company, a Massachusetts
corporation, and Public Service Company of New Hampshire, a New Hampshire
corporation, (collectively, "NU") and NEON Optica, Inc., a Delaware corporation,
as successors in interest to NECOM LLC ("NECOM" and as succeeded in interest by
NEON Optica, Inc., referred to herein as "NEON Optica").
2. RECITALS
2.1 WHEREAS, the parties have entered into an Agreement for the Provision of
Fiber Optic Facilities and Services - Phase Two dated as of February 27, 1998
(the "Phase 2 Agreement") and wish to amend and restate it for the purposes set
forth herein; and
2.2 WHEREAS, NU is the owner of transmission structures, subtransmission
structures, conduits, and associated civil works ("Structures") and has certain
rights to use easements and/or rights of way within which the Structures are
located in the State of Connecticut, the Commonwealth of Massachusetts, the
State of Maine and the State of New Hampshire as part of NU's electric
transmission system; and
2.2 WHEREAS, NEON Optica seeks to use certain of the Structures to install a
fiber optic cable which will consist of not less than 48 and not more than 144
singlemode fiber optic filaments, at least 36 of which will be used by NEON
Optica for its communication system and 12 of which will be used by NU for its
communication system or otherwise as permitted by this Agreement; and
2.3 WHEREAS, NU is willing to permit the use of certain of its Structures for
the purposes described in clause 2.2 in exchange for title to the Cable as and
to the extent set forth in Sections 15.1 and 15.2, and the ownership and use of
12 singlemode fiber optic filaments and the payment of certain annual fees; and
2.4 WHEREAS, NU and FiveCom, Inc., a Massachusetts corporation ("FiveCom")
entered into an Agreement for the Provision of Fiber Optic Facilities and
Services dated September 27, 1994 (the "1994 Agreement"); and
2.5 WHEREAS, the 1994 Agreement was amended pursuant to letter agreement among
NU and FiveCom dated February 23, 1996 (the 1994 Agreement as so amended is
herein called the "Prior Agreement"); and
1
2.6 WHEREAS, the rights and obligations of FiveCom under the Prior Agreement
were assigned to NECOM by an Assignment and Assumption Agreement dated as of May
23, 1996; and
2.7 WHEREAS, NECOM and NU amended the Prior Agreement by entering into an
Amended and Restated Agreement for the Provision of Fiber Optic Facilities and
Services - Phase One, dated as of February 27, 1998 (the "1998 Amended
Agreement" or "Phase 1 Agreement"); that governs the installation of Cable,
hereinafter defined, that occurs before the date of execution of the Phase 2
Agreement); and
2.8 WHEREAS, in order for NECOM to obtain financing for continued development of
NEON on the Route, NECOM's lenders required that NECOM have not only the
indefeasible right of use for NEON but also hold legal title to the portions of
NEON in Cable that is installed on or after the date of the 1998 Amended
Agreement; and
2.9 WHEREAS, the parties agreed to an arrangement by which it is not detrimental
to NU that legal title to the portions of NEON in Cable that is installed on or
after the date of the 1998 Amended Agreement and not reflected on Exhibit 2.7 to
the 1998 Amended Agreement be vested in NECOM, and entered into the Phase 2
Agreement that governs the installation of Cable, as hereinafter defined, that
occurs after the date of execution of such agreement; and
2.10 WHEREAS, the continued effectiveness of the Phase 2 Agreement and
installation of the Cable is advantageous to the parties, and that one of the
benefits to NU is the expansion of NUNet at the expense of NEON Optica; and
2.11 WHEREAS, pursuant to a corporate reorganization, NEON Optica, Inc. has
become the successor in interest to NECOM; and
2.12 WHEREAS, NEON Optica filed voluntary Chapter 11 bankruptcy petitions for
reorganization pursuant to title 11, Chapter 11 of the United States Code, in
which the parties have entered into a letter agreement dated June 5, 2002 (the
"June 2002 Letter Agreement") agreeing to further amend the Phase 1 Agreement
and the Phase 2 Agreement; and
2.13 WHEREAS, NU and NEON Optica have entered into an Amendment and Restatement
of the Phase 1 Agreement dated the date hereof (the "2002 Phase 1 Agreement");
and
2.14 WHEREAS, NU and NEON Communications, Inc. have entered into a Common Stock
Purchase Agreement as of the date hereof (the "Common Stock Purchase
Agreement"); and
2.15 WHEREAS, NU and NEON Optica wish to amend and restate the Phase 2 Agreement
to incorporate the terms and conditions contained in the June 2002 Letter
Agreement;
NOW THEREFORE, in consideration of the mutual covenants, terms, and conditions
contained in this Agreement, the parties agree as follows:
2
3. DEFINITIONS
3.1 Activation Date - The date on which the Cable on a Route Segment is accepted
by the parties as operational in accordance with the acceptance specifications
set forth in Exhibit 3.31.
3.2 Actual Cost - Reasonable direct cost plus appropriate overhead cost but
without other xxxx-up or profit.
3.3 Annual Fee - See Section 22.1.
3.4 Cable - Fiber optic filaments consisting of either NUNet, NEON, or both, and
any suitable core, jacketing or sheath.
3.5 Cable Accessories - The attachment and suspension hardware, splice closures
and other components necessary either for the placement of the Cable or for the
continuity of the fiber filaments within the Cable but excluding antennas or
other communication devices whether or not attached to the Structures or to the
Cable.
3.6 Claims -See Section 33.1.
3.7 Demarcation Point -See Section 9.1.
3.8 Ending Date -See Section 21.1.
3.9 Equipment - The power equipment, electronic and optronic equipment,
including, without limitation, repeaters, junctions, patch panels, alarm
monitoring equipment and other equipment necessary to provide a network of fiber
optic transmission capacity located on the network side of the Demarcation
Point. The word "equipment" when not capitalized, refers to equipment of any
type.
3.10 Favored Customer Rates - See Section 16.3.
3.11 Force Majeure Events -See Section 23.1.
3.12 Indefeasible Right of Use (or IRU) - An indefeasible right of use, for the
use of NEON in accordance with the purposes described herein, in NU's
Structures, Space and the Route, as set forth in Section 4.1, including without
limitation, all of the rights and privileges of an Indefeasible Right of Use as
generally understood and interpreted in the communications industry as an
exclusive ownership right relating to communication transmission capacities and
facilities.
3.12 IRU Option- See Section 4.1B
3.13 IRU ROFR - See Section 4.1C
3.14 NEON Optica - See Section 1.
3
3.15 NEON Optica's Space - Floor space to be provided to NEON Optica by NU, as
available in the sole judgment of NU, in existing facilities or in New Buildings
of NU along the Route for the placement of Equipment to be used solely in
connection with NEON.
3.16 "NEON Optica's Total Route Miles" - The sum of all miles traversed by one
or more fibers owned, leased, controlled through indefeasible rights of use, or
otherwise under the control of NEON Optica for normal, commercial operating
purposes.
3.17 NU - See Section 1.
3.18 NU's Space - Floor space to be provided to NU by NEON Optica in New
Buildings or facilities of NEON Optica for the placement of Equipment to be used
solely in connection with NUNet.
3.19 NU's Territory - The geographical areas where NU provides retail or
wholesale electric service; owns or operates electric transmission facilities
or, has obtained rights, interests or permissions which would allow the Cable to
be installed in such areas.
3.20 In Service Date - A date after the Activation Date when the NEON fibers are
transmitting light from a revenue producing customer including, without
limitation, NU.
3.21 Make Ready Work - See Section 7.1.
3.22 NEON Network - The fiber optic filaments in the Cable (other than the 12
fiber optic filaments to be used by NU as NUNet), NEON Optica's Equipment and
NEON Optica's Space.
3.23 Network Addition - Any subsequent NU designated Route Segment not initially
included in the Route.
3.24 New Buildings - Buildings and shelters, including repeater housings that
are to be constructed, erected or positioned on real property to house NEON
Optica's and/or NU's Equipment of which either NU or NEON Optica is the fee
simple owner or lessee.
3.25 NUNet - Twelve fiber optic filaments in one or more single color-coded
tubes within the Cable, NU's Equipment and NU's Space.
3.26 Periodic Inspection - The inspections conducted at irregular intervals by
NU on all or portions of the Route for the sole purpose of determining that NEON
Optica's occupancies of NU's property is as authorized and is maintained in
conformance with the terms and conditions contained in this Agreement.
3.27 Program Managers -See Section 14.1.
3.28 Proprietary Information - See Section 24.1.
3.29 Route - That portion of NU's transmission route designated in Exhibit 3.30
to this Agreement, as it may be amended from time to time by written agreement
of the parties.
4
3.30 Route Segment - A portion of the Route between any two of the numbered
points set forth in EXHIBIT 3.30.
3.31 Specifications - The acceptance and performance specifications for the
Cable set forth in EXHIBIT 3.31.
3.32 Structures - See Section 2.1.
3.33 Term - See Section 21.1.
3.34 Third Party - Any party, person or entity that is not a signatory to this
Agreement or an affiliate (as that term is defined under the Securities Act of
1933, as amended) of a signatory and any party, person, or entity that is not a
successor or permitted assignee of the signatories hereto.
4. NEON Optica's RIGHT OF USE; OBLIGATION TO BUILD
4.1 RIGHT OF USE. The parties will install, or cause to be installed, the Cable
in accordance with the provisions of this Agreement. Upon installation on or
after February 27, 1998 with respect to the Cable on a Route Segment or
alternate path, NEON Optica shall have an Indefeasible Right of Use, for the
purposes described herein, in that Route Segment or alternate path and in NU's
Structures and Space for the operation of the NEON Network, for the Term defined
in Section 21.1 and on the terms and subject to the conditions set forth herein.
4.1A [Intentionally Omitted]
4.1B IRU OPTION. NU hereby grants to NEON Optica an option, through June 30,
2005, for an IRU ("IRU Option") in up to 8 fibers on NUNet, where available in
light of NU's reasonably foreseeable service needs and the rights of third
parties in existence at the time or times such IRU Option is exercised. Until
NEON Optica exercises its IRU Option with respect to any portion of NUNet, NU
will, subject to the IRU ROFR described in the next paragraph below, be able to
grant rights therein, including IRUs for any duration and subject to any terms,
to third parties without restriction as may be permissible hereunder. If the
parties cannot agree on the terms or price for such IRU's, such open issues
shall be resolved pursuant to Section 38 hereof.
4.1C IRU RIGHT OF FIRST REFUSAL. NU also grants to NEON Optica a right of first
refusal ("IRU ROFR"), through June 30, 2010, to obtain IRUs in all fiber optic
filament which it owns or otherwise controls or subsequently builds, obtains or
otherwise controls. In the event that NU receives a bona fide offer for any such
fibers, then NU shall provide written notice to NEON Optica of such offer
providing reasonable details thereof. To exercise its IRU ROFR, NEON Optica must
provide written notice to NU within 30 days of receipt of the written notice
from NU indicating that NEON Optica is willing to (a) provide comparable or
better terms, and (b) pay not less than 105% of the alternative offer.
4.1D IRU NOT EXERCISED. Should NEON Optica not consummate the acquisition of
fiber optic filaments through either an exercised IRU Option or an IRU ROFR
within 30 days after providing notice to NU of NEON Optica's desire to exercise
such option or right, the affected fibers will thereafter be free from such
rights of NEON Optica.
5
4.1E NON-NUNET FIBERS. IRUs obtained by NEON Optica through exercise of either
the IRU Option or the IRU ROFR shall, (a) to the extent they relate to NUNet, be
subject to the terms of this Agreement in all respects, and (b) to the extent
they relate to non-NLTNet fibers, be subject to the terms of such separate
agreement as the parties may develop in accordance with the general IRU ROFR
described above and standard commercial terms for such transactions as they
exist at the time. IRUs granted to NEON Optica by NU under the Agreement for the
Swap of Fiber Optic Facilities and Services between the parties hereto, dated
the date hereof, shall be subject to the terms and conditions of this Agreement
or the 2002 Phase 1 Agreement, as applicable, except for Section 32 "Taxes and
Governmental Charges" of each of this Agreement and the 2002 Phase 1 Agreement.
4.2 GRANT SUBJECT TO SECURITY INTERESTS. NU has granted to Third Parties
security interests in certain of its real and personal property and releases,
approvals and waivers may therefore be required from the Third Parties as a
result of the provisions of Section 4.1. NU agrees to use its best efforts to
secure nondefeasance agreements or other releases, approvals and waivers from
these Third Parties as may be required or permitted under the terms of the
applicable security agreements within nine months from February 27, 1998;
provided, however, that if such releases, approvals or waivers cannot be
obtained because the Cable has not been installed on the Structures then the
nine month period shall commence upon such installation.
4.3 LIMITATION ON USE. The grants in Sections 4.1 through 4.1 E are solely for
NEON Optica's use in providing telecommunications services. NEON Optica shall
exercise the right of use of the NEON Network solely to serve its customers and
internal business purposes in accordance with the applicable state and federal
regulations.
4.4 OBLIGATION TO BUILD. Both parties agree to use their best efforts to install
the Cable on the Route according to a schedule to be subsequently agreed upon by
the parties but in any case by September 27, 1999. The parties' obligations
under this Section 4.4 shall be subject to manufacturing or supplier delays,
governmental regulatory delays and delays caused by NU as a supplier of services
or layout equipment under the terms of this Agreement or as a result of NU's
obligation to maintain reliable electric service.
4.5 CABLE MEASUREMENT. All of the Cable upon the Route Segments shall be
measured on a linear footage basis, using the right-of-way monumented
line-of-location stationing, when available.
4.6 OTHER CABLES/FACILITIES. This Agreement shall not be construed as limiting
or restricting NU in any manner from using its structures, easements and/or
rights of way for the installation of its fiber optic cables or
telecommunication facilities for its own use or that of Third Parties.
4.7 WARRANTY. Subject to the terms and conditions of this Agreement, NU warrants
that it shall not interfere with nor disturb NEON Optica in its use and full
enjoyment of NEON Optica's Indefeasible Right of Use set forth in Sections 4.1
through 4.1 E.
4.8 RESERVATION OF SECURITY INTEREST. NEON Optica reserves a security interest
in NUNet, and all products and proceeds thereof, as security for NU's
performance of its obligations under Section 4.7 of this Agreement, and NU shall
confirm such reservation by executing and delivering to NEON Optica a security
6
agreement in the form attached as Exhibit 4.8. NEON Optica, or any assignee or
purchaser from NEON Optica, shall have an Indefeasible Right of Use in NU's
Structures, Space and Route for the operation of NUNet in the event NUNet is
acquired by NEON Optica, or any assignee or purchaser from NEON Optica, pursuant
to such security agreement.
5. MODIFICATIONS TO THE ROUTE
5.1 ADDITIONAL ROUTE SEGMENTS DESIGNATED BY NU. If NU shall determine the need
for any Network Additions from Third Parties, NEON Optica shall have the first
right to provide such Network Additions. If, for any reason, NEON Optica is
unwilling or unable to provide such Network Additions on the terms requested by
NU, NU shall be free to obtain such Network Additions from Third Parties. If NU
shall obtain such Network Additions other than from NEON Optica, NU shall use
its best efforts to provide NEON Optica with the unimpeded use of not less than
12 usable singlemode fibers in such Network Addition on terms no less favorable
than those provided to NU. NEON Optica shall pay the incremental cost of
material necessary to provide such fibers. If NU does not designate an addition
to its fiber optic communications system as a Network Addition to a Route
Segment, NU shall have no obligations to NEON Optica under this Section 5.1 with
respect to such Addition.
5.2 Intentionally Omitted.
5.3 ADDITIONAL ROUTE SEGMENTS DESIGNATED BY NEON OPTICA. If NEON Optica wishes
to extend the Route by installing Cable on transmission facilities marked in red
on Exhibit 5.3 (Network Expansion) or if any Route Segment requires material
modifications or unusual expense to make it available for the Cable or if NU
withdraws Route Segments pursuant to Section 5.2 or Section 21.4, then NEON
Optica shall have the right, subject to NU's approval, to designate additional
Route Segments, or an alternative path, for the Cable on Structures or property
of NU by submitting a request in the form of Exhibit 11.1. NU shall not withhold
its approval of such additional Route Segments unless such additional Segments
would materially adversely affect NU's ability to provide reliable electric
service, cause or create safety problems or not be feasible for structural
reasons.
5.4 COST AND MEANS OF RIGHT OF WAY ACQUISITIONS. NEON Optica shall be
responsible for, and NU shall cooperate in, the acquisition of any easement or
right-of-way rights that may be required in order to permit (i) the
installation, operation and maintenance of the Cable on the Route or (ii) the
ownership and use of the NEON Network fibers by NEON Optica. New easements
obtained by NEON Optica shall be assignable to NU, if possible. If the use of
the power of eminent domain is necessary in order to acquire any additional
right-of-way rights required for the use of the NEON Network fibers by NEON
Optica, then any required condemnation action shall be brought by NEON Optica in
its own behalf, if such action is available to NEON Optica. Any easement or
right obtained by NEON Optica by using the power of eminent domain shall be
subsequent and subordinate to any existing rights of NU. Except in the case of
condemnation by NEON Optica, NU shall exert its best efforts to minimize the
cost of such additional land or rights in land. In the event that additional
rights are required by both parties the cost of the acquisition of such
7
additional rights shall be shared by the parties pro rata based on the number of
fibers controlled by each party. This Section is not intended as an
acknowledgment by either party that any such acquisition of additional rights is
required but only to allocate the responsibility for such acquisition if
required.
5.5 NEON OPTICA'S RIGHT TO BUILD AND CONNECT THIRD PARTY SEGMENTS. In the event
that NU (i) does not have Structures available to replace Route Segments not
available for any reason to NEON Optica or (ii) does not provide such Structures
at the request of NEON Optica, NEON Optica shall have the right to build or
otherwise obtain such Structures from Third Parties, at NEON Optica's sole cost
and expense. NEON Optica may connect such Third Party facilities to the Route
Segments and Cable subject to the approval by NU of NEON Optica's connection
plans. The work to connect such Third Party facilities located on NU's property
shall be performed by NU. The provisions of the last two sentences of Section
6.1 shall apply to this work to be performed by NU. NEON Optica shall pay all of
NU's Actual Costs to review these connection plans and to oversee the
construction of such connections. If the NEON Optica interconnects Third Party
facilities to the Cable or Structures, NEON Optica shall, upon NU's request, use
its best efforts to provide the right to use up to 12 singlemode fibers on such
Third Party's facilities to maintain the continuity of NUNet within NU's
Territory and up to eight singlemode fibers outside NU's Territory on terms no
less favorable than those provided NEON Optica for the NEON Network.
5.6 THIRD PARTY CONNECTIONS. In the event of use of connections to the Cable
from public and private property, NEON Optica shall designate the location and
manner in which the Cable will enter and exit NU's property and connect to the
Cable and shall provide such specifications as needed unless so provided in the
engineering plans of NU's property. Such specifications will be subject to
change from time to time by the written consent of the parties hereto. NU shall
have the right to review and approve (which shall not be unreasonably withheld)
connections made pursuant to this Section 5.6.
5.7 CONNECTION GRANTS. NU hereby grants NEON Optica the right to install,
maintain, and operate the connections to the Cable as described in this Section
5.
6. ENGINEERING AND DESIGN
6.1 NU'S OBLIGATIONS. In consultation with NEON Optica, and in accordance with
the Specifications, NU and/or its consultants shall engineer, provide detailed
specifications, construction working prints and other data necessary to permit
the construction and installation of the Cable on the Route. NU shall also
design all alternating current power sources, New Buildings and other necessary
and related articles of property which, together with the articles of property
to be designed by NEON Optica, are required to provide usable fiber optic
transmission capacity throughout NU's system over the Route Segments. All such
detailed specifications, construction working prints and other information shall
be subject to NEON Optica's approval which approval shall not be unreasonably
withheld or delayed. NEON Optica shall reimburse NU for NU's Actual Costs
incurred pursuant to this Section 6.1. NU shall use its best efforts to perform
the work called for by this Section 6.1 at the lowest possible cost to NEON
Optica. The services provided by NU in this Section 6.1 shall be performed in a
professional and workmanlike manner.
8
6.2 NEON OPTICA'S OBLIGATIONS. NEON Optica, at its sole cost and expense, shall
design, in cooperation with NU, all electronic and optronic equipment and
provide detailed specifications, construction working prints and other necessary
data for NUNet and the NEON Network including, without limitation, the Cable and
repeaters, patch panels, terminations, terminals, splice cases and closures,
alarm monitoring equipment and all Equipment and all other necessary and related
articles of property which, together with the articles of property to be
designed by NU pursuant to Section 6.1 are required to provide fiber optic
transmission capacity throughout the Route Segments. All Equipment and other
equipment utilized solely in connection with NUNet shall be paid for solely by
NU.
7. MAKE READY WORK
7.1 RESPONSIBILITY FOR PERFORMANCE. In the event NU and NEON Optica determine
that any work is required or desirable to install intermediate or supplementary
Structures, make existing Structures capable of supporting the Cable, define the
Route more clearly or provide for alternative Route Segments (collectively "Make
Ready Work"), NU will either perform such Make Ready Work or permit NEON Optica
or its contractor to perform such Make Ready Work. Any charges for Make Ready
Work performed by NU (other than to satisfy the representation made in Section
18.3) will be paid at NU's Actual Costs 30 days after presentation of an invoice
for such work. If NU elects to perform any Make Ready Work, NU will either (i)
endeavor to include such work in its normal work load schedule, or (ii) at the
request of NEON Optica, based on the availability of NU's manpower, shall
perform such Make Ready Work after normal hours and at prevailing overtime
rates, but not less than straight-time rates.
7.2 CONDITION OF STRUCTURES. NU shall make available its Structures and other
facilities owned or controlled by NU as required to provide for continuous
locations on which the Cable can be placed. NU shall perform such work, if any,
at its expense, as may be required to satisfy the representation made in Section
18.3. Any additional improvements necessary to permit the Structures to support
the Cable shall be made at the expense of NEON Optica. Work required which is
common to both Sections 7.2 and 18.3 shall be performed at the sole cost of NEON
Optica.
7.3 COSTS. NEON Optica shall reimburse NU for NU's Actual Cost incurred in
connection with any Make Ready Work done pursuant to Section 7.1, or in
connection with engineering, construction and installation of the Cable,
including without limitation the labor and equipment cost of removal of existing
shield wire, and any New Building and the Equipment. NEON Optica shall reimburse
NU its Actual Cost of any upgrading or replacement of Structures or facilities
that is necessary in order to make such Structures or facilities capable of
supporting the able (other than to satisfy the representation made in Section
18.3). NU shall use its best efforts to perform the work called for by Section
7.1 at the lowest possible cost to NEON Optica. The services provided by NU in
Section 7.1 shall be performed in a professional and workmanlike manner.
8. INSTALLATION
9
8.1 NEON OPTICA'S RIGHT TO SELECT CONTRACTORS. NU shall provide NEON Optica with
an estimate of NU's Actual Cost for the installation of the Cable and Cable
Accessories. NEON Optica may then request that NU seek bids from qualified
contractors and NU's Actual Cost shall then be based on the lowest qualified
bid. If an outside contractor is selected, NU may, however, act as general
contractor on the work done under this Section 8. The provisions of the last two
sentences of Section 7.3 shall apply to any work done under this Section 8.1 by
NU.
8.2 NEON OPTICA'S RIGHT TO ISSUE SPECIFICATIONS. NEON Optica shall have the
right but not the obligation to participate in NU's issuance of contracts
containing general provisions, technical specifications, conditions of
installation, work schedules, and construction documentation which may include
design prints, engineering plans, installation procedures and manuals,
construction methods and practices, material handling properties, safety
procedures, performance standards, payment schedules, testing and acceptance
requirements and other contractual terms and conditions which may be issued
prior to the commencement of any work.
8.3 NU'S INSTALLATION OBLIGATIONS. NU shall supervise and, in consultation with
NEON Optica, be responsible for the construction or oversight of the
construction and installation as necessary to install the Cable and Cable
Accessories, including without limitation installation hardware, required for
the NEON Network and NUNet, in accordance with the engineering and design
requirements finalized pursuant to Section 6, and Exhibit 3.31, Cable and
Performance Specifications.
8.4 NEW BUILDINGS. In NU's sole discretion, NU shall provide all electric power
service to all New Buildings and to all NEON Optica's Space in NU's retail
service territory. NU shall perform and be responsible for site preparation and
shall prepare foundations and fencing for all New Buildings on NU's property.
NEON Optica shall install all New Buildings and Equipment used in equipping the
NEON Network and in cooperation with NU when such installation is on NU's
property. NEON Optica shall reimburse NU for its Actual Costs incurred pursuant
to this Section 8.4. The parties shall, by subsequent agreement, apportion the
costs of service and maintenance and space in any New Buildings containing both
NEON Optica and NU Equipment.
8.5 STATE FEES. NEON Optica shall either pay directly or reimburse NU for any
fees payable to any State agency for the use of any public rights-of-way as a
result of NEON Optica's use of or right to use the NEON Network. NU will
cooperate with NEON Optica in obtaining such legal and regulatory permits and
authorizations as are needed in order to allow NEON Optica to be an authorized
condemnation party in each applicable state. NEON Optica shall reimburse NU for
its Actual Costs incurred pursuant to this Section 8.5.
8.6 PUBLIC RIGHTS OF WAY. NEON Optica shall at its sole cost and expense obtain
all federal, state and municipal occupancies and other rights that may be
required for the installation of the NEON Network in public rights-of-way or the
use thereof.
9. POINT OF DEMARCATION; BUILDING EXTENSIONS
9.1 MARKING. The point of demarcation (the "Demarcation Point") for the purpose
of this Agreement shall be indicated by a visible, indelible xxxx or tag of
long-lasting durability, at a point on one side of which is NEON Optica's
responsibility, termed network side, on the other side of the Demarcation Point,
termed premise side, both NU and NEON Optica shall be responsible for their
respective Equipment and any Cable extensions. The color coding of the tube(s)
and fibers dedicated for NU's use shall remain consistent throughout the Route.
10
9.2 BUILDING EXTENSIONS. The NEON Network will be extended by NEON Optica for
use by NEON Optica within buildings as required. In such extensions the entire
Cable beyond the building patch panel shall remain the property of NEON Optica
and NU shall receive an indefeasible right to use 12 fibers for NUNet to the
point of the building patch panel. NEON Optica or its customer shall obtain
approval from the owners of the property for all such use and as to the physical
location of Cable and, as to installation, maintenance and operation of NEON
Optica's facilities on said property.
10. MAINTENANCE
10.1 NEON OPTICA'S OBLIGATIONS. Provided that NEON Optica has been given the
permission referred to below in this Section 10, NEON Optica shall maintain and
repair the Cable, including emergency repairs and splices, pursuant to the terms
and conditions outlined in EXHIBIT 10.1 - Maintenance Specifications. In the
event NEON Optica fails to perform any necessary splicing or maintenance in
accordance with the procedures and time frames set forth therein, NU shall have
the right, but not the obligation, to undertake such splicing or maintenance of
the Cable, at NEON Optica's sole cost and expense, as provided for in EXHIBIT
10.1. In no event shall NEON Optica be permitted access to NU's property without
NU's prior permission unless NEON Optica is acting pursuant to Section 39.2. NU
reserves the right, but not the obligation, to perform such maintenance with its
own crews or contractor when required by the need to insure the safe and
reliable operation of its electric system. The provisions of the last two
sentences of Section 7.3 shall apply to any work done under this Section 10.1.
NEON Optica shall be solely responsible for all aspects of the operation of the
NEON Network and the operation and maintenance of Equipment thereon. NEON Optica
shall perform routine inspections of the Cable including, without limitation,
once a year ride-outs of Route Segments, in accordance with its standard
maintenance procedures and with NU's approval. NEON Optica shall provide notice
to NU at least 10 working days in advance of any maintenance upon any Route
Segment upon which any repair is to be conducted as a result of such maintenance
procedures in accordance with Section 37. NU shall have 10 working days to
confirm the availability of any Route Segment for maintenance.
10.2 NU'S OBLIGATIONS. NU shall be solely responsible for all aspects of the
operation of NUNet and the operation and maintenance of Equipment thereon. NU
shall at its own expense, perform routine inspections of the Cable in
conjunction with the periodic inspection of its electric facilities and
Structures and routine rights of way maintenance. NU shall provide notice to
NEON Optica at least 10 working days in advance of any maintenance upon any
Route Segment upon which any repair is to be conducted on the Cable as a result
of such maintenance procedures.
11. RELOCATION, REPLACEMENT, REBUILDS OF THE CABLE
11.1 BY NEON OPTICA. In the event that NEON Optica requests relocation,
replacement, or rebuild of the Cable during the term of this Agreement, the cost
of any such work shall be paid by NEON Optica, and NEON Optica shall submit to
NU a completed copy of EXHIBIT 11.1 to request an acceptable new location. No
relocation or replacement shall be performed on NU's property by NEON Optica
without the prior written approval of NU.
11
11.2 BY NU. In the event that during the Term of this Agreement NU is required
by public authorities or by lawful order or decree of a regulatory agency or
court to relocate or modify any or all Structures upon which the NEON Network or
any part thereof is located, NU and NEON Optica shall cooperate in performing
such relocation or modifications so as to minimize any interference with the use
of the NEON Network or NUNet by either party and to avoid unreasonably impairing
the ability of each to provide communications services of the type, quality and
reliability contemplated by this Agreement. Any such relocation shall be
accomplished in accordance with the provisions of EXHIBIT 3.31 Cable
Specifications. Unless otherwise agreed by the Parties, all costs directly
associated with the relocation of the Cable, Equipment and New Buildings located
on the subject property shall be shared by the Parties on a pro rata basis based
on the number of fiber optic filaments each Party controls.
11.3 EMERGENCY RELOCATIONS; THIRD PARTY RELOCATIONS. In the event of an
emergency affecting NU's Structures, transmission facilities or public safety,
NU shall be permitted to replace, remove and relocate the Cable or any portion
thereof without prior notice to NEON Optica when such notice is not practicable.
NU shall incur no liability for service interruptions in connection with any
such removal or relocation and NEON Optica shall incur no liability for service
interruptions pertaining to NU's services, if so affected. If the relocation or
replacement of the Cable is requested or caused by a Third Party, NU shall
attempt to obtain reimbursement of NU's costs from said Third Party. Any costs
not recovered from said Third Party shall be shared by the Parties on a pro rata
basis based on the number of fiber optic filaments each Party controls.
11.4 CABLE FAILURE; NUNET EQUIPMENT. NU makes no representations with respect to
the Cable. Should the Cable fail to function according to its design
specifications, NU shall assign its warranty enforcement rights to NEON Optica.
NEON Optica shall be entitled to any recovery from a Third Party, and NEON
Optica shall have the right, where allowed by law, to recover directly from that
Third Party. Should the Cable fail to function for any reason, NEON Optica shall
have the right to expeditiously replace the Cable, subject to NU's review and
approval of NEON Optica's replacement plans. NEON Optica shall have no
responsibility for Equipment to be used solely in connection with NUNet,
including without limitation, any such equipment installed or located in NU's
Space in any New Building or at any of NEON Optica's facilities. To the extent
NEON Optica realizes any proceeds from NU's assignment of its warranty rights to
the Cable that are not expended in replacing Cable, such proceeds shall be
retained by NEON Optica.
12. CONSTRUCTION, MAINTENANCE AND REMOVAL OF THE CABLE
12.1 INTERFERENCE WITH OTHER JOINT USERS. The Parties shall design, engineer,
construct and maintain the Cable within the Route Segments in a manner so
intended not to physically conflict or interfere with NU's property and any
facilities attached thereon or placed therein by joint users or others.
12
12.2 NU'S APPROVAL OF THIRD PARTY WORK. Prior to NEON Optica engaging the
services of a Third Party to commence work to install, remove, reconfigure or
maintain the Cable in any section or part of the Route Segments, NEON Optica
will obtain NU's prior written consent of any Third Party chosen to perform such
work, and the date when such work is scheduled to commence, which consent shall
not be unreasonably withheld.
12.3 NU'S RIGHT TO MAINTAIN SERVICE. NU shall at all times have the right to
take all action necessary to maintain and repair NU's property and maintain NU's
services to its customers, unconstrained by this Agreement but shall take
reasonable precautions to protect the Cable against damage. In the event of any
service outage affecting the Cable, NU shall have the right to repair its
facilities first. If conditions permit, NEON Optica may repair its facilities
concurrently with NU. NEON Optica acknowledges that all or a portion of the
Cable will be placed on Structures that are part of NU's electric transmission
system and that at all times the safe and continuous operation of such system
and the provision of electric service is NU's foremost priority.
12.4 NOTICE. NEON Optica shall give NU 60 days prior written notice of any
removal(s) or material modification(s) of the Cable provided that no such
removal or modification will be permitted which adversely effects NU's use of
NUNet.
12.5 EMERGENCY USE OF NU'S PROPERTY. With NU's prior written consent and in its
sole discretion, NEON Optica may temporarily use any of NU's available property
for emergency restoration and maintenance purposes. Any such temporary use shall
be subject to such reasonable terms and conditions as may be imposed by NU and
shall be terminated within 90 days, or sooner, unless NEON Optica applies for
and NU grants permission for such temporary use to be extended.
12.6 RETURN OF REMOVED MATERIAL. In the event NU under the provisions of this
Agreement shall remove any portion of the Cable from NU's property, NU will
deliver to NEON Optica the Cable and Equipment so removed upon payment by NEON
Optica of the cost of removal, storage and delivery, and all other amounts due
NU.
13. PERIODIC INSPECTIONS
13.1 BY NU. NU shall have the right to make Periodic Inspections of any part of
NEON Optica's operations occupying NU's property. NU will give NEON Optica
reasonable advance written notice of any periodic inspections, except in those
instances where, in the sole judgment of NU, safety considerations justify the
need for a Periodic Inspection without the delay of waiting until a written
notice has been forwarded to NEON Optica. A representative of NEON Optica may
accompany NU's representative on all Periodic Inspections.
13.2 NEON OPTICA'S OBLIGATIONS. The making of Periodic Inspections or the
failure to do so shall not impose upon NU any liability of any kind whatsoever
nor relieve NEON Optica of any responsibility, obligations or liability assumed
under this Agreement.
13.3 COST. NEON Optica shall reimburse NU for its Actual Costs of Periodic
Inspections only if material violations are found. Charges for such inspections
shall be at NU's Actual Cost.
13
14. APPROVALS AND CONSULTATION
14.1 ROLE OF PROGRAM MANAGERS. Each party shall designate a Program Manager (a
"Program Manager"). Whenever either party is entitled to approve a matter, the
Program Manager for the party responsible for the matter shall notify the
Program Manager of the other party of the nature of such matter. The Program
Managers shall discuss such matter, and each Program Manager is authorized to
approve such a matter on behalf of his company.
14.2 DEFINITION OF CONSULTATION/COOPERATION AND APPROVAL. Whenever in this
Agreement it is provided that NU will take action "in consultation with NEON
Optica," it is intended that such consultation shall be thorough and meaningful,
and that the views of NEON Optica with regard to the matter under consultation
shall be given the weight appropriate to the experience and expertise of NEON
Optica in telecommunications. Whenever in this Agreement it is provided that
NEON Optica will take action "in cooperation with NU", it is intended that such
cooperation shall be thorough and meaningful, and that the views of NU with
regard to the matter under consultation shall be given the weight appropriate to
the experience and expertise of NU in telecommunications and in the transmission
and use of electric power. Whenever in this Agreement it is provided that the
approval of one party is required, it is intended that such approval will not be
unreasonably withheld or delayed.
15. OWNERSHIP OF THE CABLE
15.1 TITLE; TAX ACCOUNTING. Legal title to the Cable and to any item of
Equipment installed upon NU's Structures shall be held by NU, except as herein
set forth. With respect to the Cable and NUNet, but excluding the NEON Network,
NU shall have absolute legal and beneficial ownership, subject to the security
interest reserved in Section 4.8 and the provisions of Section 16.1. Legal title
to the portions of the NEON Network installed on or after February 27, 1998
shall be held by NEON Optica during the term of this Agreement and with respect
thereto, NEON Optica shall have absolute legal and beneficial ownership during
the term of this Agreement. NU agrees and acknowledges that, notwithstanding
installation of the NEON Network upon NU's Structures, the NEON Network shall
not become a fixture on any real estate or real estate interest of NU but rather
shall remain the personal property of NEON Optica. Accordingly, NEON Optica
shall for tax purposes account for the NEON Network as the owner thereof and, as
between the Parties, shall be entitled to any investment tax credits,
depreciation and any other tax attributes or liabilities with respect thereto.
NU agrees that it will not, for tax purposes, account for the property
associated with the NEON Network as though it were the tax owner thereof and
shall not attempt to claim any of the tax attributes or liabilities with respect
thereto. The parties agree they shall file all income tax returns and otherwise
take all actions with respect to taxes in a manner which is consistent with the
foregoing.
15.2 VESTING OF TITLE IN NU. Legal title to the NEON Network shall vest in NU
upon termination of this Agreement or of any applicable Route Segment. Upon such
termination, NEON Optica shall deliver to NU such deeds, bills of sale,
releases, or similar documents as NU may reasonably request to confirm said
vesting.
14
16. USE OF THE CABLE BY NU
16.1 FIBERS AND USE. NEON Optica shall provide not less than 12 usable
singlemode fiber optic filaments in the Cable for the unimpeded and unrestricted
use by NU, provided however that the requirement of usability shall not apply to
any fibers located upon a Route Segment as to which the Term has expired. NU
shall use these 12 singlemode fiber optic filaments exclusively for NU's own
business purpose and other uses permitted by this Section 16.1, which shall
include but not be limited to the right of NU to assign any number of the 12
fiber optic filaments, or resell capacity on any of the 12 fiber optic
filaments, provided however, that such right to assign or resell said capacity
is subject to NEON Optica's indefeasible right to use certain NUNet fibers, its
IRU Option and its IRU ROFR, as defined in Sections 4.1B through 4.1C and the
Non-Compete Section 26.3 hereof.
Notwithstanding the foregoing, in times of emergencies affecting NU's other
telecommunications networks, NU shall have the right to use the 12 singlemode
fibers not previously provided to NEON Optica under the IRU ROFR or IRU Option
or otherwise acquired by NEON Optica for any purpose until alternative
arrangements can be made. If NU violates the provisions of this Section 16.1 and
fails to cease such violation within 90 days following written notice of such
violation by NEON Optica, NU's right to use the fibers involved in such
violation shall cease and NEON Optica shall then have the right to use such
fibers for its own business purpose.
16.2 OPTION TO PURCHASE ADDITIONAL FIBERS. NU may purchase if mutually
acceptable terms can be agreed upon between NEON Optica and NU, additional
singlemode fiber optic filaments from NEON Optica at a price that is mutually
acceptable.
16.3 ADDITIONAL SERVICE. In addition to providing 12 singlemode fiber optic
filaments, NEON Optica shall, upon NU's request, so long as NU is not in breach
of this Agreement, provide NU with commercial telecommunication services into
all locations served by NEON Optica's networks in the service area at NEON
Optica's Actual Cost for any incremental labor and provisioning equipment
required for the service being requested and, if provided using fiber optic
filaments other than NU's 12, NU shall also pay, without duplication of such
actual cost, the then lowest commercial price for such service(s) that NEON
Optica offers the same or similar services to its largest customers ("Favored
Customer Rates").
16.4 SPACE IN NEON OPTICA'S LOCATIONS. Where available and requested by NU, NEON
Optica shall, so long as NU is not in breach of this Agreement, provide or cause
to be provided NU Space in NEON Optica offices and other common access areas of
NEON Optica facilities along the Route Segments in New Buildings or buildings
adjacent thereto, adequate in each case to permit NU to install racks of its
optronics, multiplex and associated equipment used to equip NUNet and to
interconnect NUNet with the NEON Network. Unless otherwise agreed, NU Space will
comply with power, ground, physical and environmental requirements of NEON
Optica technical publications Such NU Space shall be used by NU to house NU
Equipment necessary to permit the use of the NUNet and interconnection with NU's
networks. Unless otherwise agreed, NU Space in a NEON Optica facility other than
a New Building, or buildings adjacent thereto, shall be in a common access area
of such facility, and to the extent reasonably practicable, NU Space in a New
Building shall be separate from any area containing NEON Optica's(degree)
Equipment. NEON Optica shall provide NU Space in the common access areas of NEON
Optica facilities at the then prevailing rate for such space according to NEON
Optica's tariff.
15
17. CASUALTY
17.1 CABLE DAMAGE. If any portion of the Cable is damaged or destroyed by
casualty at any time during the Term each party shall pay a share of the cost of
repair, restoration or replacement based on the pro rata percentage of fibers,
NUNet and the NEON Network, contained in the Cable. With respect to the Route
Segment on which such portion of the Cable is installed, NEON Optica shall have
the option of having NU repair, restore, or replace such portion of the Cable
(and NEON Optica shall reimburse NU's Actual Cost of doing so) or terminating
that Route Segment. Unless NEON Optica notifies NU of its election to terminate
that Route Segment within 12 business days of the casualty, NEON Optica shall be
deemed to have elected repair, restoration and replacement of the Cable. If NEON
Optica elects to terminate such Route Segment as set forth in the preceding
sentence, the NEON Network fibers upon such portion of the Route Segment so
effected, shall be available for use by NU and NEON Optica shall assign, at no
cost to NU, all its rights and title to all New Buildings and Equipment on such
Route Segments so effected immediately thereafter.
18. REPRESENTATIONS AND WARRANTIES
18.1 COMMON REPRESENTATIONS. Each of the parties represents and warrants that it
has full authority to enter into and perform this Agreement, that this Agreement
does not conflict with any other document or agreement to which it is a party or
is bound, and that this Agreement is fully enforceable in accordance with its
terms.
18.2 REPRESENTATIONS BY NU. NU represents and warrants that NU is a corporation
duly organized, validly existing and in good standing under the laws of the
state under which it is incorporated. The execution and delivery of this
Agreement and performance thereunder will not conflict with or violate or
constitute a breach or default under NU's Articles or Certificate of
Incorporation and will not violate any law, rule or regulation applicable to NU.
No consents need to be obtained from any governmental agency or regulatory
agency to allow NU to execute, deliver and perform this Agreement except those
for which provision has been made in Section 21.4(iii).
18.3 REPRESENTATION BY NU AS TO STRUCTURES. NU represents and warrants that the
Structures are suitable for their current use and were designed and installed at
a minimum to meet the requirements of the National Electrical Safety Code and/or
other applicable standards then in effect.
18.4 REPRESENTATION BY NU AS TO RIGHT TO PLACE CABLE. NU represents and warrants
that it has the right to have the Cable placed on the Structures on the Route
and to have the Cable used by NU as contemplated by this Agreement, subject to
the governmental approvals for which provision has been made in Section
21.4(iii) and the approvals from certain lienholders referred to in Section 4.2,
but this representation and warranty shall not extend to the portions of the
NEON Network of which NEON Optica holds legal title.
16
18.5 WORK CLEARANCES AND RELATED DELAYS. NU represents and warrants that it
cannot guarantee line outages or special contingency line operating conditions
that may be necessary for the installation, maintenance and repair of the Cable
and that delays may be necessary. Such work clearances must be obtained from
regional dispatching organization(s) with authority over the lines. NEON Optica
shall be responsible for NU's Actual Costs associated with last minute delays
caused by these regional authorities which are reasonably beyond the control of
NU.
18.6 REPRESENTATIONS BY NEON OPTICS. NEON Optica represents and warrants that
(a) NEON Optica is duly organized and validly existing under the laws of its
state of organization and the execution and delivery of this Agreement and the
performance thereunder will not conflict with or violate or constitute a breach
or default under the constitutional documents of NEON Optica and will not
violate any law, rule or regulation applicable to NEON Optica. No consents need
to be obtained from any government agency or regulatory agency to allow NEON
Optica to execute, deliver and perform this Agreement; and
(b) NEON Optica represents and warrants that it is not entering into any
amendments to its fiber agreements with Energy East, nor Project Touchdown
Agreements with Exelon and Consolidated Edison, respectively, at the present
time.
19. INSURANCE
19.1 LIABILITY INSURANCE. NEON Optica, at its own expense, shall provide and
maintain in force during the term of this Agreement a policy or policies of
general liability insurance with an aggregate limit of no less than
$10,000,000.00. The policy or policies shall include contractual liability
coverage to insure the indemnification agreement and products completed
operations coverage. Any such policy(ies) shall be procured by NEON Optica from
a responsible insurance company with a "Best" rating of A or better,
satisfactory to NU. Certificates evidencing such policy(ies) shall be delivered
to NU within 30 days of February 27, 1998. Not less than 30 days prior to the
expiration date of such policies, certificates evidencing the renewal thereof
shall be delivered to NU. Such policies shall further provide that not less than
30 days' written notice shall be given to NU before such policy(ies) may be
cancelled, materially changed or undergo a reduction in Insurance limits
provided thereby. NU shall be named as an additional insured. The coverage
required herein shall not be deemed to limit NEON Optica's liability as set
forth elsewhere in this Agreement. Upon timely notice to NEON Optica, NU may
require reasonable increases in the amount of insurance coverage which will be
obtained by NEON Optica within 30 days after NU's request.
20. NEON OPTICA'S BOND
20.1 BOND. Within 120 days of February 27, 1998, NEON Optica shall provide NU
with either of the following at the option of NEON Optica: (i) a performance
bond in the amount of the $62,000 per mile of NUNet running from Millstone, CT
to Seabrook, NH as set forth in EXHIBIT 3.30 (the Route) in form and substance
reasonably satisfactory to NU and issued by a responsible and reputable
insurance company, or (ii) a letter of credit of equal value in form and
substance reasonably satisfactory to NU and issued by a responsible bank. This
bond or letter of credit shall be reduced by $62,000 for each mile of NUNet
installed on the Route.
17
20.2 EFFECT OF BOND. If a bond or letter of credit is issued and remains in
effect to the benefit of NU pursuant to Section 20.1, NEON Optica shall not be
found to be in default of any provision of this Agreement if such default is
based on the installation of NUNet or any other associated Cable relating
thereto.
21. TERM AND TERMINATION
21.1 PERIOD. The term of this Agreement shall be for a period of 40 years (the
"Term") commencing on February 27, 1998, and ending on September 27, 2034("the
Ending Date") and shall automatically renew on September 27, 2034 and thereafter
for five year periods until terminated by either party upon notice given one
year or more prior to September 27, 2034 or any renewal date thereafter.
21.2 PAYMENT TO NEON OPTICA. If NU elects to terminate this Agreement pursuant
to Section 21.1, NU shall, at its option, either: (i) pay NEON Optica the fair
market appraised value of the NEON Network (determined, if no agreement can be
reached between the parties on such value, pursuant to Section 38) or (ii) elect
to receive 10% of NEON Optica's gross revenue from the use of the Cable as
determined by an independent auditor selected by the mutual consent of the
Parties. If NU elects clause (ii), the payments provided for in that clause
shall be in addition to any Annual Fees due NU and this Agreement shall be
extended for another 30 years from the date it would have otherwise terminated.
21.3 EARLY TERMINATION OF AGREEMENT. This Agreement may be terminated prior to
the Ending Date upon any one of the following events:
(i) by NEON Optica upon 180 days prior notice to NU.
(ii) by NU upon 90 days prior notice to NEON Optica if (x) NEON Optica
has not provided a bond or letter of credit pursuant to Section 20, and (y) NEON
Optica has not completed NUNet according to Section 4.4.
(iii) by NU in the event of a default by NEON Optica under Section 34.
(iv) by NU upon 90 days prior notice in the event of a violation of
Section 36.1
NEON Optica shall have the right to cure or correct any default Specified under
clauses (ii) or (iv) above within the time period of the notices set forth
above.
21.4 TERMINATION OF ROUTE SEGMENT. Any Route Segment may be terminated:
(i) by NU upon reasonable notice for the purposes of providing safe and
economical electrical service; or
(ii) by NEON Optica upon five days prior written notice if two Cable
failures per month for three consecutive months occur on a Route Segment as a
result of NU's electric operations and NU fails to take steps to cure such
failure with due diligence, unless NU shall have cured such failure prior to the
expiration of said five day period, or where cure is not possible within said
five day period, NU is proceeding to cure with due diligence.
18
(iii) by NU at any time after consultation with NEON Optica if it
cannot obtain the regulatory approvals needed by it to perform its obligations
under this Agreement with respect to such Route Segment or can obtain them but
on terms that are unduly burdensome on NU.
21.5 COST REIMBURSEMENT. In the event of the termination of this Agreement or a
portion of the Route Segments thereof pursuant to Section 21.4, NU shall
reimburse NEON Optica a percentage of the cost of the Cable, for such terminated
portion according to the following schedule:
Year 1-5 (9/27/94-9/27/99) 100%
Year 6 80%
Year 7 60%
Year 8 40%
Year 9 20%
Year 10 10%
Year 11 and thereafter, 0%
The Annual Fee described below for the portion of the year following termination
of a Route Segment shall be refunded to NEON Optica. The amount of the refund
shall be determined by prorating the Annual Fee for the terminated Route Segment
equally over 365 days. In no event shall the amount of the refund exceed the
amounts collected on the terminated Route Segment during that period by NU.
22. ANNUAL FEE
22.1 AMOUNT. NEON Optica shall pay an annual fee ("Annual Fee") for the support
of the NEON Network in the Cable, which shall be, as of September 27, 1994 and
thereafter shall be adjusted pursuant to Section 22.2 hereof, calculated as
follows:
(a) As to NU's underground facilities: $4.00 per duct foot per annum;
and
(b) As to NU's aerial Structures, as follows:
(i) $2,000.00 per mile per annum where NU's Structures support
Cable containing NUNet. Said rate shall not be due for the period of 10 years
from September 27, 1994 for the Route shown in EXHIBIT 3.30.
(ii) $2,500.00 per mile per annum where NU's Structures support
Cable not containing NUNet.
(iii) $350.00 per mile per annum for solely owned utility
distribution poles located within the public right of ways, private ways,
ancient ways, or on private property or on easements.
(iv) $500 per mine one-time payment, $100 per mile per annum
during the term of any agreements between NEON Optica and any Third Party for
route segments containing NEON Optica's cable or the NEON Network's extensions
supported by any transmission structures, aerial plant, civil works, and
19
underground facilities owned by any utility operating in any of Connecticut,
Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont and certain
parts of Canada which share a border with any of those States if NU contributed
in a material way to NEON Optica's obtaining such route segments. The one-time
payment will be paid upon execution of an agreement with such Third Party but
the annual fee will not be due until the sooner of the Activation Date or the
In-Service Date of such route segments. (NEON Optica seeks route segments into
New York from Connecticut; into Rhode Island from Connecticut and Massachusetts;
into Vermont from Massachusetts, New Hampshire, New York, and Canada; and into
Maine from New Hampshire and Canada.)
PROVIDED, HOWEVER, that NU hereby agrees to accept from NEON Optica $3,432,657
(the "Fiber Payments") in full and complete satisfaction of any and all amounts
due and owing by NEON Optica to NU hereunder through June 25, 2002, with the
exception of any amounts owing pursuant to section 32.2 hereof and section 32.2
of the 2002 Phase 1 Agreement through June 25, 2002, and NU and NEON Optica
agree that the Fiber Payments shall be offset against the acquisition price of
the common stock of NEON Communications, Inc, pursuant to the terms of the
Common Stock Purchase Agreement.
22.2 CPI ADJUSTMENTS. The Annual Fee shall be adjusted annually from September
27, 1994 by an escalation factor equal to changes in the Consumer Price Index -
All Urban (CPI-U) published by the US Department of Labor, Bureau of Labor
Statistics, which shall be calculated each October based on changes in the CPI-U
from the previous October. In no instance shall the CPI-U change be applied if
it results in a smaller payment than the previous year's payment. As to any
period during which fees have been waived, the CPI-U shall accrue to the rate
during such waiver period.
22.3 ADDITIONAL AMOUNTS. In addition to the amounts due and payable pursuant to
Section 22.1, as adjusted pursuant to Section 22.2, NEON Optica shall pay NU an
amount equivalent to 2% of NEON Optica's gross revenues realized from the NEON
Network on NU's Structures. The payment shall be made each and every year that
NEON Optica's gross revenues realized from the NEON Network on NU's Structures
exceed $15 million. For purposes of this section NEON Optica's gross revenues
realized from the NEON Network on NU's Structures shall be the ratio of Route
miles of the NEON Network on NU's Structures to NEON Optica's Total Route Miles
applied to NEON Optica's annual gross revenues, as of, in each case, December 31
of each year. This calculation is set forth in the following formula: "If
((route mile of the NEON Network on NU Structures divided by NEON Optica's Total
Route Miles) times NEON Optica's annual gross revenues) is more than
$15,000,000, then Payment equals ((Route miles of the NEON Network on NU
Structures divided by NEON Optica's Total Route Miles) times NEON Optica's
annual gross revenues) times 0.02". Payment will be due no later than July 1 of
the year following the computation year. The parties will agree to revisit this
methodology in the event NEON Optica acquires the ability to track revenues by
fiber route or combines with another telecommunications company.
22.4 WHEN DUE. All Annual Fees shall be paid on January 1st of each year. All
pro-rata payments made during the year shall be based on this date. All payments
shall be paid within 30 days of invoicing.
20
22.5 INITIAL ANNUAL FEE. Unless otherwise waived according to the provisions of
22.1(b)(i), 22.1(b)(iv) or otherwise, the initial Annual Fee payment will be due
and payable within 30 days after preliminary engineering work has been accepted
by both parties and shall be based upon the estimated number of duct feet and
aerial feet to be utilized by NEON Optica over the remainder of the calendar
year.
22.6 RIGHT TO WITHHOLD. In the event NU shall be unable or unwilling to perform
its maintenance obligations hereunder, NEON Optica may, at its option, withhold
any Annual Fees related to such nonperformance on any Segment and obtain
substituted performance or exercise self-help in accordance with Section 39.2,
and in either case NEON Optica may apply or set-off such fees against any costs
NEON Optica may incur for such substituted performance or self-help, up to the
actual amount of such costs.
23. FORCE MAJEURE
23.1 OPTIONAL TERMINATION. Should any of the Force Majeure Events defined below
occur and should NU determine that as a direct or indirect result thereof, the
parties continued performance hereunder or with respect to any portion of the
Structures and the Cable will be irreparably impaired or prevented, the parties
may mutually agree to terminate this Agreement, in whole or in part as to any
portion of the Route Segments and the Cable so affected with no further
obligation or liability. The parties will attempt to provide a date of
termination such that the parties will have a reasonable time to obtain
alternative means of providing service to customers, but neither party shall
have an obligation to do so. A Force Majeure Event shall include fire, flood,
strike or other labor difficulty, natural disasters, acts of God or public
enemy, (restraint or hindrance by any-governmental authority), war,
insurrection, not, action of any regulating authorities; or institution of
litigation by any Third Party, or any other causes of any nature reasonably
beyond the control of either party which would have a material adverse effect on
the subject matter of this Agreement. Financial difficulties, or events
resulting from financial difficulties, shall not be considered a Force Majeure
Event.
23.2 SUSPENSION PENDING FORCE MAJEURE. If a Force Majeure Event should occur
then, and for a reasonable time thereafter, the parties' performance of this
Agreement shall be suspended. At the conclusion of a Force Majeure Event the
period of time so suspended shall be added to the dates, schedules and other
performance related matters under this Agreement.
24. PROPRIETARY INFORMATION
24.1 OBLIGATION TO MAINTAIN AS CONFIDENTIAL. Each party acknowledges that in the
course of the performance of this Agreement it may have access to privileged and
proprietary information claimed to be unique, secret, and confidential, and
which constitutes the exclusive property and trade secrets of the other
("Proprietary Information"). This information may be presented in documents
marked with a restrictive notice or otherwise tangibly designated as proprietary
or during oral discussions, at which time representatives of the disclosing
party will specify that the information is proprietary and shall subsequently
confirm said specification in writing within five days. Each party agrees to
maintain the confidentiality of the Proprietary Information and to use the same
degree of care as it uses with regard to its own proprietary information to
prevent the disclosure, publication or unauthorized use of the Proprietary
Information. Neither party may duplicate, copy or use Proprietary Information of
21
the other party other than to the extent necessary to perform this Agreement.
Either party shall be excused from these nondisclosure provisions if the
Proprietary Information received from the other party has been or is
subsequently made public by the other party, is independently developed by such
party, disclosed pursuant to order by a court or government agency, or if the
other party gives its express, prior written consent to the disclosure of the
Proprietary Information.
24.2 ROUTE CONSTITUTES PROPRIETARY INFORMATION. The routing of the NEON Network
and the conditions of NEON Optica's contracts with customers and customer names
are deemed Proprietary Information without further notice and will not be
disclosed by NU absent an order by a court or regulatory body with jurisdiction
over NU.
25. ACCESS AND SECURITY
25.1 ACCESS BY NU. NEON Optica agrees, upon reasonable request, to allow NU
direct ingress and egress to all NU Space to be provided to NU as described
above, and to permit NU to be on NEON Optica's premises at such times as may be
required for NU to perform any appropriate maintenance and repair of equipment
in such NU Space. NEON Optica may require that a representative of NEON Optica
accompany any representatives of NU having access to NU Space except in New
Buildings having separate entrances providing access only to NU Space therein.
Employees and agents of NU shall, while on the premises of NEON Optica, comply
with all rules and regulations, including without limitation security
requirements, and, where required by government regulations, receipt of
satisfactory governmental clearances. NU shall provide to NEON Optica a list of
NU's employees or authorized NU designee's employees who are performing work on,
or who have access to, NU's Space. NECOM shall have the right to notify NU that
certain NU or authorized NU designee employees are excluded if, in the
reasonable judgment of NEON Optica, the exclusion of such employees is necessary
for the proper security and maintenance of NEON Optica facilities.
25.2 ACCESS BY NEON OPTICS. NU agrees, upon reasonable request, to allow NEON
Optics direct ingress and egress to all NEON Optics Space to be provided to NEON
Optics as described above, and to permit NECOM to be on NU's premises at such
times as may be required for NEON Optics to perform any appropriate maintenance
and repair of Equipment located at such NEON Optics Space. NU may require that a
representative of NU accompany any representatives of NEON Optics having access
to NEON Optics Space. Employees and agents of NEON Optics shall, while on the
premises of NU, comply with all rules and regulations, including without
limitation security requirements, and, where required by government regulations,
receipt of satisfactory governmental clearances. NEON Optics shall provide to NU
a list of NEON Optica's employees or authorized NEON Optics designee's employees
who are performing work on, or who have access to, NECOM Space. NU shall have
the right to notify NEON Optics that certain NEON Optics or authorized NEON
Optics designee employees are excluded if, in the reasonable judgment of NU, the
exclusion of such employees is necessary for the proper security and maintenance
of NU's facilities.
25.3 ACCESS BY NECOM TO NEON SPACE. Except as provided in Section 25.2 above,
with respect to NEON Optics Space, NEON Optics and authorized NEON Optics
designees shall have the right to visit any facilities of NU utilized in
providing the NEON Network upon reasonable prior written notice to NU; provided,
however, that NU may require that a representative of NU accompany any
22
representation of NEON Optics or of an authorized NEON Optics designee making
such visit. Such visitation right shall include the right to inspect the NEON
Network and to review worksheets, to review performance or service data, and to
review other documents used in conjunction with this Agreement. Employees and
agents of NEON Optica or of an authorized NEON Optica designee shall, while on
the premises of NU, comply with all rules and regulations, including without
limitation security requirements and, where required by government regulations,
receipt of satisfactory governmental clearances. NU shall have the right to
notify NEON Optica that certain NEON Optica or authorized NEON Optica designee
employees are excluded if, in the reasonable judgment of NU, the exclusion of
such employees is necessary for the proper security and maintenance of NU's
facilities.
25.4 NEON OPTICA'S WORK. NEON Optica shall at all times perform its work in
accordance with NU's safety and work procedures and in accordance with the
applicable provisions of OSHA. NU shall have the authority to suspend NEON
Optica's work operations in and around NU's property if, in the sole judgment of
NU at any-time hazardous conditions arise or any unsafe practices are being
followed by NEON Optica's employees, agents, or contractors. NEON Optica agrees
to pay NU for having NU's employee or agent present when NEON Optica's work is
being done in and around NU's property. Such charges shall be at NU's Actual
Cost. The presence of NU's authorized employee or agent(s) shall not relieve
NEON Optica of its responsibility to conduct all of its work operations in and
around NU's property in a safe and workmanlike manner, and in accordance with
the terms and conditions of this Agreement.
26. NO JOINT VENTURE; COSTS; NON-COMPETE
26.1 RELATIONSHIP. In all matters pertaining to this Agreement, the relationship
of NU and NEON Optica shall be that of independent contractors, and neither NU
nor NEON Optica shall make any representations or warranties that their
relationship is other than that of independent contractors. This Agreement is
not intended to create nor shall it be construed to create any partnership,
joint venture, employment or agency relationship between NEON Optica and NU, and
no party hereto shall be liable for the payment or performance of any debts,
obligations, or liabilities of the other party, unless expressly assumed in
writing herein or otherwise. Each party retains full control over the
employment, direction, compensation and discharge of its employees, and will be
solely responsible for all compensation of such employees, including social
security, withholding and worker's compensation responsibilities.
26.2 COSTS. Except for costs and expenses specifically assumed by a party under
this Agreement each party shall pay its own expenses incident to this Agreement,
including without limitation amendments hereto, and the transactions
contemplated hereunder, including all legal and accounting fees and
disbursements.
26.3 NON-COMPETE. NU shall not, and none of its affiliates shall, compete with
NEON Optica in the provision of wholesale telecommunications transport services
until after June 30, 2005, provided that NU and its affiliates shall be entitled
to fulfill all contractual obligations for service it was providing as of June
1, 2002, including but not limited to, Hartford Education and Library Private
Network (HelpNet), Rocket Science (Xxxxx Air Force Base) and Gunver
Manufacturing; and further provided that the granting of rights in any fiber
that NU owns, builds, obtains or otherwise controls for any duration, subject to
the IRU Option and the IRU ROFR specified in Section 413 and 4.1C hereof shall
not constitute competition as contemplated in this section.
23
27. PUBLICITY AND ADVERTISING
27.1 LIMITATIONS. In connection with this Agreement, neither party shall publish
or use any advertising, sales promotions, or other publicity materials that use
the other party's logo, trademarks, or service marks or employee name without
the prior written approval of the other party. Except as provided in Section
27.2 below, each party shall have the right to review and approve any publicity
materials, press releases or other public statements by the other party. In
connection with this Agreement, each party agrees not to issue any such
publicity materials, press releases or material produced by the public relations
department for the other party without written consent. Unless otherwise agreed,
neither party shall release the existence of the text of this Agreement or any
material portion thereof, other than in the form modified to remove all
references to the identity of the other party, to any person or entity other
than the parties hereto for any purpose other than those specified in Section
27.2.
27.2 EXCEPTIONS. The provisions of Section 27.1 shall not apply to reasonably
necessary disclosures in or in connection with regulatory filings or
proceedings, financial disclosures which in the good faith judgment of the
disclosing party are required by law, or disclosures that may be reasonably
necessary in connection with the performance of this Agreement.
28. MARKETING RELATIONSHIP
28.1 NU Referrals. Upon the written approval of NU, except for the exemption of
customer prospects and customers of NEON Optica as listed in Exhibit 8, Sales
Order Customer Exclusion List, in the event that communication service orders
are received by NEON Optica, as a result of NEON Optica issuing sales literature
or promotion material in which the name of NU is mentioned or by NU introducing
NEON Optica to customer prospects not listed in Exhibit 28, or by NU undertaking
any joint marketing effort with NEON Optica including joint sales calls, NEON
Optica shall pay to NU compensation equal to the first month that there is
recurring revenue charged by NEON Optica to those customers receiving such sales
literature, promotional material or joint sales calls.
28.2 NEON OPTICA REFERRALS. In addition, in the event that communications
service orders are received by NU as a result of NU issuing sales or promotional
literature or information in which the name of NEON Optica or the NEON Network
is mentioned, by NEON Optica introducing NU to customer prospects, or by NEON
Optica undertaking any joint marketing effort with NU, including joint sales
calls, NU shall pay to NEON Optica compensation equal to the first month that
there is recurring revenue charged by NU to those customers.
29. SEVERABILITY
29.1 SEVERABILITY. If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of said provision or the remaining provisions of
said agreement; provided, however, that if any such ineffectiveness or
24
enforcement of any provision of this Agreement, in the good faith judgment of
either party, renders the benefits to such party of this Agreement as a whole
uneconomical in light of the obligations of such party under this Agreement as a
whole, then the other party shall negotiate in good faith in an effort to
restore insofar as possible the economic benefits of this Agreement to such
party.
30. LABOR RELATIONS
30.1 NOTICE BY NU. NU agrees to notify NEON Optics immediately whenever NU has
knowledge that a labor dispute concerning its employees is delaying or threatens
to delay NU's timely performance of its obligations under this Agreement. NU
shall endeavor to minimize impairment of its obligations to NEON Optics (by
using NU's management personnel to perform work, or by other means) in event of
a labor dispute.
30.2 NOTICE BY NEON OPTICS. NEON Optics agrees to notify NU immediately whenever
NEON Optics has knowledge that a labor dispute concerning its employees is
delaying or threatens to delay NEON Optica's timely performance of its
obligations under this Agreement. NEON Optics shall endeavor to minimize
impairment of its obligations to NU (by using NEON Optica's management personnel
to perform work, or by other means) in the event of labor dispute.
30.3 DETERMINATION BY NEON OPTICS. If NEON Optics determines that NU's
activities pursuant to this Agreement in any NEON Optics facility are causing or
will cause labor difficulties for NEON Optics, NU agrees to discontinue those
activities until the labor difficulties have been resolved; provided, however,
that in any such event and notwithstanding any other provision of this
Agreement, NEON Optics shall during the period of such labor difficulties
perform at its own expense any such activities that may be reasonably necessary
to the operation and maintenance of NU's system or any portion thereof.
30.4 DETERMINATION BY NU. If NU determines that NEON Optica's activities
pursuant to this Agreement in any NU facility are causing or will cause labor
difficulties for NU, NEON Optics agrees to discontinue those activities until
the labor difficulties have been resolved; provided, however, that in any such
event and notwithstanding any other provision of this Agreement, NU shall during
the period of such labor difficulties perform at its own expense any such
activities that may be reasonably necessary to the operation and maintenance of
NEON Optica's system or any portion thereof.
31. CONSENTS AND WAIVERS
31.1 CONSENT AND WAIVER. Whenever any party hereto is asked to consent or waive
any action or matter provided herein or whenever any party has the right to do
or refuse to do any act in its sole judgment or discretion provided herein, said
party agrees to act reasonably and in good faith in making or refusing to
consent, in waiving or refusing to waive, or in making any such judgments.
32. TAXES AND GOVERNMENTAL CHARGES
25
32.1 TAXES. NEON Optica shall pay NU the pro rata amount based on the number of
fiber optic filaments under each Party's control, of all taxes assessed on NU
which are attributable to NEON Optica's portion of the Cable, New Buildings and
Equipment. NEON Optica shall pay NU said taxes when they become due, which shall
include all taxes, assessments and governmental charges of any kind whatsoever
lawfully levied or assessed and attributable against NEON Optica's installation,
maintenance or operation of the connections to the Cable or against NEON
Optica's business with regards to the Cable or the connection thereof, including
without limitation, all franchise and other fees to any Federal, State, City or
other jurisdiction having the authority to tax or assess other governmental
charges. Upon said payment to NU, NU shall indemnify NEON Optica against any and
all actions which may be brought against NU and NEON Optica with regard to NU's
remittance of said payments to any taxing authority or governmental agency. NEON
Optica shall have the right to pay the tax or charge under protest without being
subjected to a default notice under Section 34. NU shall pay, when they become
due, the pro rata amount based on the number of fiber optic filaments under each
Party's control, all taxes, assessments and governmental charges of any kind
whatsoever lawfully levied or assessed against the Cable, installation,
maintenance or operation of the connections to the Cable or against NU's
business with regards to the Cable or the connection thereto, including without
limitation, all franchise and other fees to any Federal, State, City or other
jurisdiction having the authority to tax and assess other governmental charges.
NU shall have the right to pay the tax or charge under protest without being
subjected to a default notice under Section 34. NU warrants that it shall remit
all tax payments to taxing authorities and governmental agencies and shall not
cause the Cable to be levied, attached, or otherwise encumbered by any taxing
authority by not having done so. Each party shall pay without apportionment any
taxes levied on it based on its business profits.
32.2 INCOME TAX LIABILITY. NEON Optica shall also reimburse NU for any income
tax liability incurred by NU as a result of its acquisition of NUNet. NEON
Optica will supply NU, on request and no more frequently than quarterly, with
the costs and other details of any additions to NUNet such that each separate
party hereto can calculate its individual income tax liability. NU shall take
reasonable efforts suggested by NEON Optica to minimize the amount of said
income tax liability on its return(s), in accordance with applicable laws and
regulations. The parties agree that Grantor's tax liability to be reimbursed
hereunder and under the 2002 Phase 2 Agreement through June 25, 2002 is in the
amount of $1,425,439. This amount shall be deemed to be billed in full on July
1, 2004 and be due and payable by NEON Optica no later than December 31, 2004.
NU shall, from time to time, calculate any additional income tax liability for
NUNet acquired after June 25, 2002 and invoice NEON Optica. NEON Optica shall
pay such amount within sixty (60) days of receiving such invoice. NEON Optica
shall hold harmless, indemnify and defend NU in the event NU's tax position with
respect to NUNet is challenged by the IRS. In lieu of cash, NEON Optica shall
provide said reimbursement in the form of additional fiber segments, engineering
services, or other telecommunication services that NU may request from NEON
Optica from time to time and which NEON Optica agrees to provide, which segments
and/or services shall have a value (grossed up to take account of the time value
of money and the timing of any actual tax payments) equivalent to NU's tax
liability described in this paragraph. In a given year, NEON Optica shall only
be obligated to provide reimbursement valued up to an amount equal to the actual
tax liability incurred by NU for the prior tax year, plus any unused
reimbursement amounts from earlier years.
26
33. INDEMNIFICATION
33.1 BY NEON OPTICS. NEON Optica agrees to indemnify and hold harmless NU, its
employees, contractors, subcontractors, agents, directors, officers, affiliates,
and subsidiaries and their respective employees, subcontractors, agents,
directors and officers from and against any and all liabilities, damages,
losses, claims, demands, judgments, costs, and expenses (including, subject to
Section 33.2, the cost of defense thereof and attorney's fees) based on NEON
Optica's use of the Cable including, without limitation, any claim for
infringement of patent or trade secret, made by Third Parties (collectively,
"Claims").
33.2 INDEMNIFICATION PROCEDURES. NU shall give prompt notice of any Claim for
which indemnification is or will be sought under this Section and shall
cooperate and assist NEON Optica in the defense of the Claim. NEON Optica shall
bear the cost of and have the right to control the defense and shall have the
right to select counsel after consulting with NU. The obligation to indemnify
shall be net of any tax or insurance benefit obtained by NU.
33.3 LIMITATION OF NU LIABILITY. In no event shall NU be liable to NEON Optica
or to its customers, whether in contract, tort, or otherwise, including strict
liability, for any special, indirect, incidental or consequential damages or any
lost business damages in the nature of lost revenues or profits, and any such
claims by Third Parties against NU shall invoke the obligations under, but
subject to the provisions of, Section 33.1 above.
33.4 LIMITATION OF NEON OPTICS LIABILITY. In no event shall NEON Optica be
liable to NU or to its customers, whether in contract, tort, or otherwise,
including strict liability, for any special, indirect, incidental or
consequential damages or any lost business damages in the nature of lost
revenues or profits.
34. DEFAULT
34.1 DEFAULT. If either party shall allow any payment due hereunder to be in
arrears more than 60 days after notice from the other party, shall allow any
policy of insurance provided by Section 19 hereof to expire without renewal, or
shall remain in default under any other provision of this Agreement other than
those referred to in Section 21 for a period of 30 days after notice by the
other party of such default, the party so notifying the other party may, at its
option, terminate this Agreement pursuant to Section 21, or avail itself of any
other available remedy provided at law or equity, including without limitation,
the remedy of specific performance or, in the case of NEON Optica, exercising
its rights under the security agreement referred to in Section 4.8 provided,
however, that, in the case of a default for other than failure of payment or
failure to maintain insurance, where the party in default proceeds with all due
diligence to cure such default and cure is not possible within said 30 days,
then the party then in default shall have such time to cure the default as the
other party agrees is reasonably necessary. The parties agree that NEON Optica's
remedies at law for a breach by NU of the warranty set forth in Section 4.7 may
be inadequate and that, for such a breach where NEON Optica's remedies at law
are inadequate, NEON Optica shall be entitled to equitable relief.
27
35. ASSIGNMENT
35.1 BY NEON OPTICS. Subject to Section 35.4, NEON Optica may not assign or
otherwise allow use of its rights under this Agreement to any person or entity
other than an affiliate (as defined in Section 16.1) without the prior written
approval of NU. NU's approval will be granted provided the new person or entity
demonstrates to the reasonable satisfaction of NU that the proposed assignee is
financially and operationally fit, willing and able to discharge its obligations
under this Agreement, acquires substantially all of NEON Optica's business
within the geographic area of such assignment including substantially all of the
assets used in such business, and agrees to be bound directly and fully by all
of the terms and conditions of this Agreement.
35.2 CHANGE OF CONTROL. Any change of control of NEON Optica shall be deemed an
assignment if a new person or entity other than an affiliate (as defined in
Section 16.1), directly or indirectly, acquires 50% or more of the voting stock
of NEON Optica in one or more connected transactions, except that this Section
35.2 shall not apply to (i) any transaction consummated within 30 days of
February 27, 1998 involving Applied Telecommunications Technologies, Inc. or
(ii) any other acquiror of any equity interest in NEON Optica, if such other
acquiror was introduced to NEON Optica by Applied Telecommunications
Technologies, Inc., or if Applied Telecommunications Technologies, Inc. was
acting as an advisor for such other acquiror.
35.3 NU'S RIGHT TO PLEDGE AGREEMENT AND TRANSFER PROPERTY. NU shall be free to
mortgage, pledge, or otherwise assign its interests under this Agreement to any
Third Party in connection with any borrowing or other financing activity of NU
provided that such assignment shall not limit or otherwise affect NU's
obligations under this Agreement. Any transfer of property of NU included in or
subject to this Agreement may be made by NU provided the person acquiring such
property takes it subject to this Agreement.
35.4 NEON OPTICA'S RIGHT TO PLEDGE AGREEMENT AND LEASE FIBERS. NEON Optica shall
be free to mortgage, pledge or otherwise assign its interest under this
Agreement to any Third Party in connection with any borrowing or other financing
activity (including that contemplated by Section 20) of NEON Optica provided
that such assignment shall not limit or otherwise affect NEON Optica's
obligations under this Agreement. Nothing in this Section 35 shall limit or
apply to NEON Optica's right to IRU, lease or sublease fibers of which it has
the use under this Agreement to Third Parties in the normal course of NEON
Optica's business.
35.5 RIGHT TO ASSIGN. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns where
permitted by this Agreement or where an assignment occurs by operation of law.
36. APPROVALS, PERMITS, AND CONSENTS
36.1 NEON OPTICA'S OBLIGATIONS. During the term of this Agreement, NEON Optica
at its sole cost and expense shall obtain and maintain any and all necessary
permits, licenses, franchises and approvals that may be required by federal,
state or local law, regulation or ordinance, and shall continuously comply with
all such laws, regulations or ordinances as may now or in the future be
28
applicable to NEON Optica's use and operation of the Cable. If NEON Optica or
any permitted assignee shall at any time fail to maintain such approvals, NU may
terminate this Agreement without any liability or obligation to NEON Optica
pursuant to Section 21.3(iv).
36.2 OPINION. Within 90 days of February 27,1998, NEON Optica shall provide NU
with an opinion of counsel, in form and substance satisfactory to NU, stating
NEON Optica's compliance with the provisions of law applicable to NEON Optica's
use of the Cable and its obligations under this Agreement.
36.3 NU'S OBLIGATIONS. During the term of this Agreement, NU shall, at its
Actual Cost to be paid by NEON Optica, obtain all approvals and consents that
may be required from all federal, state, and local authorities regarding all or
any portion of the Cable installation or replacement upon the Route Segments
subject to such jurisdiction. Legal counsel used for this purpose shall be
selected by NU following consultation with NEON Optica.
37. NOTICES
37.1 FORM AND ADDRESS. All notices authorized or required by this Agreement
shall be given in writing and delivered to the following addresses, which may
change from time to time by such notice to either party, which addresses shall
also serve as the addresses for the delivery of any amounts due and payable
hereunder:
If to NU:
Manager - Real Estate & Land Planning Northeast Utilities
Service Company 000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
With a copy to:
Director - Transmission Engineering Northeast Utilities
Service Company 000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
And a copy to:
General Counsel
Northeast Utilities Service Company
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
If to NEON Optica:
NEON Optica, Inc.
0000 Xxxx Xxxx Xxxxx Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Contract Administration
29
With a copy to:
NEON Optica, Inc.
0000 Xxxx Xxxx Xxxxx Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
37.2 HOW SENT. Each notice, demand, request, report approval or communication
which shall be mailed in the manner described above, or delivered by hand or an
insured overnight courier, shall be deemed sufficiently given, served, sent or
received for all purposes at such time as it is delivered to the addressee, with
the return receipt or the delivery receipt being deemed conclusive evidence of
such delivery, or at such time as delivery is refused by the addressee upon
presentation.
37.3 DAMAGE NOTIFICATION. In the event that the Cable is damaged for any reason,
the party discovering such damage shall notify the other party of said damage by
telephone at:
for NU (000) 000-0000 or (000) 000-0000 extension 6000 for
NEON Optica (000) 000-0000.
These are 24 hour, 7 day per week emergency notification numbers. Calls shall be
directed to the Supervisor on Duty, and the caller should be able to provide the
following information:
1. Name of company making report;
2. Location reporting problem;
3. Name of contact person reporting problem;
4. Telephone number to call back with progress report;
5. Description of the problem in as much detail as
possible;
6. Time and date the problem occurred or began; and
7. If appropriate, a statement that "This is an
emergency" and that a problem presents a jeopardy
situation to the physical plant of NU or NEON Optica,
as the case may be.
38. DISPUTE RESOLUTION
38.1 ARBITRATION. If any question shall arise in regard to the interpretation of
any provision of this Agreement or as to the rights or obligations of the
parties hereunder, the question shall be referred to the respective Program
Managers who shall deliberate such questions for not more than 15 days. If a
resolution is not forthcoming within said period the matter will be referred to
a senior executive designated by each party who shall, within 30 days of the
request of the party invoking these dispute resolution procedures, meet with
each other to negotiate and attempt to resolve such question in good faith. Such
senior executives may, if they so desire, consult outside experts for assistance
in arriving at such a resolution. In the event that the resolution is not
achieved within 30 days after such a request, then the question shall be finally
resolved by the award of arbitrators (all of whom shall be arbitrators certified
by the American Arbitration Association) named as follows:
30
(i) the party sharing one side of the dispute shall name an
arbitrator and give written notice thereof to the party sharing the other side
of the dispute;
(ii) the party sharing the other side of the dispute shall, within
14 days of receipt of such written notice, name an arbitrator; and
(iii) the arbitrator so named shall within 15 days after the
naming the latter of them, select an additional arbitrator. If such additional
arbitrator is not selected within fifteen (15) days of the appointment of the
latter of the arbitrators the party sharing either side of the dispute may seek
to appoint such third arbitrator by applying to the American Arbitration
Association. The arbitrators shall proceed promptly to hear and determine the
matter in controversy. The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitrators shall be instructed that their decision must be made within 45 days
after the appointment of the third arbitrator, subject to any reasonable delay
due to unforeseen circumstances.
38.2 AWARD; COSTS. The decision of the arbitrators shall be in writing and
signed by the arbitrators or a majority of them and shall be final and binding
on the parties, and the parties shall abide by the decision and perform the
terms and conditions thereof. Unless otherwise determined by the arbitrators,
the fees and expenses of the arbitration shall be borne by the party losing in
these dispute resolution procedures, or if no party prevails in full, as
allocated by the arbitrators based on the relative merits of the parties
positions. Judgment upon the award rendered may be in any court having
jurisdiction or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be. All arbitration
shall be conducted in Worchester, Massachusetts.
39. EXERCISE OF RIGHTS
39.1 NO WAIVER. No failure or delay on the part of either party hereto in
exercising any right, power or privilege hereunder and no course of dealing
between the parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
39.2 NEON OPTICA'S SELF HELP RIGHTS. In the event NU shall default or in any
manner fail to perform any of its maintenance obligations hereunder and such
failure shall continue for twenty (20) days after written notice from NEON
Optica, then, unless such failure is the result of a Force Majeure Event, NEON
Optica shall have the right, but not the obligation, so long as such failure
continues, to perform such obligations of NU in accordance with the relevant
provisions of this Agreement, provided that NEON Optica shall only use properly
qualified and licensed personnel to perform such maintenance, shall proceed in
accordance with all applicable laws, codes and regulations, and shall provide
advance written notice prior to entering NU's property.
40. ADDITIONAL ACTIONS AND DOCUMENTS
31
40.1 FURTHER ACTIONS. Each of the parties hereto hereby agrees to take or cause
to be taken such further actions, to execute, acknowledge, deliver and file or
cause to be executed, acknowledged, delivered and filed such further documents
and instruments, and to use its best effort to obtain such consents, as may be
necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement, whether at or after the
execution of this Agreement.
41. SURVIVAL
41.1 SURVIVAL. It is the express intention and agreement of the parties hereto
that all covenants, agreements, statements, representations, warranties and
indemnities made in this Agreement shall survive the execution and delivery of
this Agreement.
42. HEADINGS
42.1 HEADINGS. Article headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
43. INCORPORATION OF EXHIBITS
43.1 EXHIBITS. The Exhibits referenced in and attached to this Agreement shall
be deemed an integral part hereof to the same extent as if written at length
herein.
44. COUNTERPARTS
44.1 COUNTERPARTS. To facilitate execution, this Agreement may be executed in as
many counterparts as may be required; and it shall not be necessary that the
signatures of or on behalf of each party appear on each counterpart; but it
shall be sufficient that the signature of or on behalf of each party appear on
one or more of the counterparts. All counterparts shall collectively constitute
a single agreement. It shall not be necessary in any proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of or on behalf of all of the parties.
45. APPLICABLE LAW
45.1 JURISDICTION. This Agreement shall be construed under and in accordance
with the laws of the State of Connecticut.
46. PRIOR AGREEMENTS
46.1 ENTIRE AGREEMENT. This Agreement supersedes all prior or contemporaneous
proposals, communications and negotiations, either oral or written, relating to
the rights, obligations, or performance of this Agreement, the 1994 Agreement,
Prior Agreement, Phase 2 Agreement by the parties hereto, and, as such,
constitutes the complete and entire agreement of the parties.
32
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
Witnessed by: Northeast Utilities Service Company
By:
---------------------------------- -----------------------------------
Name:
Title:
The Connecticut Light and Power Company
By:
---------------------------------- -----------------------------------
Name:
Title:
Western Massachusetts Electric Company
By:
---------------------------------- -----------------------------------
Name:
Title:
Public Service Company of New Hampshire
By:
---------------------------------- -----------------------------------
Name:
Title:
NEON Optica, Inc., as Successor
in Interest to NECOM LLC
By:
---------------------------------- -----------------------------------
Name:
Title:
33
EXHIBIT 3.30
FIBER ROUTE LISTING
-------------------
34
EXHIBIT 3.31
SPECIFICATIONS
--------------
35
EXHIBIT 5.3
NETWORK EXPANSION
-----------------
36
EXHIBIT 10.1
MAINTENANCE
-----------
37
EXHIBIT 11.1
REQUEST FOR RELOCATION
----------------------
38
EXHIBIT 28
EXEMPT PROSPECTS
----------------
39
