EXHIBIT 10.1
Contract No. 96MS-95240
03/29/96
LICENSE AGREEMENT
executed by the
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
acting by and through the
BONNEVILLE POWER ADMINISTRATION
and
ELECTRIC LIGHTWAVE, INC.
[Asterisks herein denote confidential material which has been omitted pursuant
to a request for confidential treatment. Such material has been filed
separately with the Securities and Exchange Commission.]
TABLE OF CONTENTS
INDEX TO SECTIONS
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SECTION PAGE
1. DEFINITIONS........................................ 2
2. TERM............................................... 6
3. EXHIBITS........................................... 7
4. AMENDMENTS......................................... 7
5. MILESTONE SCHEDULE................................. 7
6. OWNERSHIP.......................................... 7
7. LICENSE............................................ 8
8. PERFORMANCE CRITERIA............................... 9
9. BUSINESS PLAN...................................... 11
10. MARKET PRICE ASSESSMENT............................ 11
11. PAYMENT............................................ 12
12. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE.. 13
13. REGENERATOR BUILDING(S)............................ 18
14. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE........ 19
15. RELOCATION OF THE CABLE............................ 21
16. REPRESENTATIONS AND WARRANTIES..................... 22
17. AUDIT PROCEDURES................................... 24
18. INSURANCE.......................................... 26
19. DEFAULT............................................ 29
20. TERMINATION........................................ 31
21. INDEMNIFICATION; WAIVER OF DAMAGES................. 32
22. DISPUTE RESOLUTION................................. 34
23. GENERAL............................................ 36
Exhibit A (Route)
Exhibit B (Payment Specifications)
Exhibit C (Milestone Schedule)
Exhibit D (Fiber Specifications)
This LICENSE AGREEMENT (Agreement), executed March 29, 1996, by the UNITED
STATES OF AMERICA (Government), Department of Energy, acting by and through the
BONNEVILLE POWER ADMINISTRATION (Bonneville), and Electric Lightwave,
Incorporated (▇▇▇), a corporation organized and existing under the laws of the
State of Delaware. Both Bonneville and ▇▇▇ may be referred to herein
individually as a "Party" and collectively as the "Parties."
W I T N E S S E T H :
WHEREAS Bonneville owns the Cable and Cable accessories; and
WHEREAS Bonneville shall retain 12 of the 72 fibers in the Cable for its
own use, which will give Bonneville fiber optic cable capacity in excess of that
which is needed to operate its transmission communications along the Route; and
WHEREAS Bonneville is the licensor and ▇▇▇ is the licensee for 56 of the 72
fibers in the Cable; and
WHEREAS Bonneville constructs and installs the Cable; and
WHEREAS Bonneville shall direct and oversee the design and installation of
the Cable upon the Route; and
WHEREAS Bonneville desires to grant a license for a period of time to ▇▇▇
(as hereinafter defined) respecting the ▇▇▇ Fiber as defined below, along the
Route under the terms and conditions contained herein, including payment by ▇▇▇
of the Guaranteed Fee Value (hereafter defined), which payment is an essential
part of this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
obligations and agreements herein contained, the Parties hereby agree as
follows:
1. DEFINITIONS
The following terms, when used in this Agreement, shall have the meanings
set forth in this section:
(a) "Bonneville Facilities" means all Bonneville-owned and/or leased
structures, buildings, land, access roads, and equipment along the
Route.
(b) "Bonneville Fiber" means 12 dark optical fibers within the Cable
designated for Bonneville's use as defined in section 7(b) of this
Agreement.
(c) "Cable" means a Bonneville-owned cable, containing 72 optical fibers,
single-mode, nondispersion shifted, to be installed along the Route.
(d) "Cable Accessories" means the equipment necessary for the attachment
of the Cable to the Bonneville Facilities.
(e) "Cable Specifications" means the drawings and specifications regarding
the Cable hardware and materials incorporated into the construction
project.
(f) "Commercial Fiber" means the 56 dark optical fibers within the Cable
designated for commercial purposes.
(g) "Dark Fiber Lease Value" means the sum of all dark fiber lease
payments received by ▇▇▇ for Commercial Fiber.
(h) "Diverse Fibers" means 4 dark optical fibers within the Cable reserved
for diverse switching paths for a SONET ring in order to achieve
optimum network robustness and reliability.
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(i) "▇▇▇ Transport Service(s)" means Transport Service(s) used by ▇▇▇ in
the delivery of End-User Service(s).
(j) "▇▇▇ Transport Service Value(s)" means the sum of the values for all
the ▇▇▇ Transport Service(s) within the Commercial Fiber as described
in Exhibit B.
(k) "End-User" means the customers of ▇▇▇.
(l) "End-User Service(s)" means services provided to the End-User, other
than Transport Service(s) and Other Service(s).
(m) "End-User Transport Service Value(s)" means the sum of all payments
received by ▇▇▇ from End-User(s) for Transport Service sales.
(n) "Energization" means the time when the Cable is fully installed and
the fiber meets testing criteria agreed to by the Parties.
(o) "Fiber Specifications" means the performance attributes of the fiber
within the Cable as described in Exhibit B.
(p) "Guaranteed Fee Value" means the dollar value of 75 percent of all of
ELI's monthly leased traffic between the Originating and Terminating
Markets measured at Energization or [*], whichever is greater, as
specified in Exhibit B.
(q) "Gross Revenue Value(s) (GRV)" means the sum of ELI's Transport
Service Value(s) plus End-User Transport Service Value(s) plus Dark
Fiber Lease Value(s) plus Other Service Value(s).
------------------------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with
the Securities and Exchange Commission.
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(r) "Interest Rate" means .05 per day (18.25 percent per annum) to be
compounded daily to the unpaid balance.
(s) "License" means the License granted to ▇▇▇ in section 7(a).
(t) "Originating and Terminating Markets" means the areas in and around
the cities of Portland, Oregon; Seattle, Washington; Tacoma,
Washington; Olympia, Washington; as well as other cities adjacent to
the Route.
(u) "Other Transport Service(s)" means services sold over the Commercial
Fiber at the Optical Carrier level (e.g. ▇▇▇, ▇▇▇, ▇▇▇▇, OC48).
(v) "Other Transport Service Value(s)" means the sum of all payments
received by ▇▇▇ for Other Transport Services.
(w) "Regenerator Building(s)" means the building(s) along the Route, owned
and operated by ▇▇▇, that house the terminal and regenerator equipment
including any optronics or electronics required by ▇▇▇ to make use of
the ▇▇▇ Fibers. For the purpose of this Agreement, the Regenerator
Building(s) include conduit and fiber optic cable, from the
Regenerator Building(s) up to the nearest fiber optic splice box or
the nearest substation fence, at Bonneville's discretion.
(x) "Route" means the Cable path as described in Exhibit A.
(y) "Transport Services" means individual ▇▇-▇, ▇▇-▇, and DS-3 circuits
used or sold as bulk transport by ▇▇▇ for long haul traffic on the
Commercial Fiber as described below:
(1) "Digital Signal Zero (DSO)" means: one (1) 64 Kilobits per
second (Kbps) or 56 Kbps digital, pulse coded modulated voice
channel;
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(2) "Digital Signal One (DS 1)" means: (i) in the U.S. Digital
hierarchy, digital signal level 1 indicates a 1.544 megabytes per
second (Mbps) data signal. Also referred to as a T-1; (ii) in
the U.S. time-division multiplexing hierarchy, digital signal
level 1 (DS-1) indicates the first level of multiplexing. It is
defined as 24 DS-0 (64Kbps) circuits multiplexed into a 1.544
Mbps data signal; and
(3) "Digital Signal Level Three (DS3)" means: (i) in the U.S.
Digital hierarchy, digital signal level 3 indicates a 44.736 Mbps
data signal, often delivered to customers via optical fiber
systems, also referred to as T-3; (ii) in the U.S. time-division
multiplexing hierarchy, digital signal level 3 (DS-3) indicates
the third level of multiplexing. It is defined as 28 DS 1 (1.544
Mbps) signals, with added overhead bits, multiplexed onto a
44.736 Mpbs data signal; (iii) high capacity access service that
provides capacity equivalent to 28 DS-1 circuits, 7 DS2 channels,
or 672 voice grade special access circuits; also used generically
to describe digital data transmission services operating over
fiber optic lines at transmission speed of 44.6 Mbps.
2. TERM
(a) This Agreement shall be effective at 2400 hours on the date of
execution by both Parties (Effective Date) and shall continue in
effect for a period of 15 years after Energization, unless sooner
terminated or extended in accordance with the terms of this Agreement.
(b) The term of this Agreement shall be extended only by mutual agreement
of the Parties. The Agreement may be extended for two separate 5-year
renewal periods. Either Party, shall notify the other Party at least
90 days prior to the expiration date of this Agreement if the
notifying Party decides to exercise its renewal option in its
discretion. The other Party shall have 45 calendar days to
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accept or reject the renewal option. The terms and conditions of this
Agreement applicable to the initial 15-year period may be modified or
renegotiated during the Renewal Period(s) upon mutual agreement by the
Parties.
(c) All obligations incurred and outstanding including Indemnification,
under section 21 shall survive the expiration or termination of this
Agreement; provided that sections 22 and 23(h) shall survive
expiration or termination for 3 years.
3. EXHIBITS
Exhibit A (Route); Exhibit B (Payment Specifications); Exhibit C (Milestone
Schedule); and Exhibit D (Fiber Specifications); are incorporated into and
made a part of this Agreement.
4. AMENDMENTS
This Agreement may be amended upon the written agreement of both Parties.
5. MILESTONE SCHEDULE
Energization of the Cable is currently scheduled for February 15, 1997. On
or before July 15, 1996, Bonneville and ▇▇▇ agree to complete an evaluation
of the milestones, described in Exhibit C, required to complete
construction and Energization of the Cable. The evaluation shall determine
if Exhibit C can be revised to reflect an earlier Energization date.
6. OWNERSHIP
(a) The Cable shall be owned by Bonneville. Simultaneous with completion
of installation of the Cable on the Route, and Energization Bonneville
shall ▇▇▇▇▇ ▇▇▇ an exclusive license pursuant to section 7 of this
Agreement. Bonneville shall retain sole control of the Bonneville
Fiber.
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(b) Subject to section 6(a), each Party shall own its own electronic and
optronic devices necessary to transmit signals over the fibers each
Party controls as specified in this Agreement.
(c) Bonneville shall own all Bonneville electric transmission facilities,
rights-of-way, structures, improvements, and components obtained for
or installed on Bonneville Facilities and the Route in accordance with
this Agreement.
(d) Title and ownership of the Cable Accessories, Regenerator Building(s)
and related equipment within the Regenerator Building(s) furnished by
▇▇▇ shall be and remain the property of ▇▇▇, except that Bonneville
shall gain title to and ownership of such equipment which cannot be
removed without damage to Bonneville Facilities.
7. LICENSE (a) Exclusivity
Bonneville hereby grants to ▇▇▇ an exclusive License to use the
Commercial Fiber and to manage the Diverse Fibers. This right shall
remain exclusive as long as ▇▇▇ meets or exceeds the Performance
Criteria described in section 8.
(b) Access to the Route
▇▇▇ shall have access to the Route for the purposes of performing its
rights and obligations under this Agreement. Bonneville shall have
the right to use the Route, Bonneville Fiber, or any portion thereof,
together with the right to enter upon the Route, or any portion
thereof, at all times, for any and all purposes. Bonneville shall
retain the right to use the Bonneville Fiber for its own internal
electric system network and utility business purposes.
(c) No Property Interest
This Agreement shall not confer upon ▇▇▇ any ownership or possessory
interest in the Route or other property owned by Bonneville except as
provided herein, and
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▇▇▇ agrees that it shall never make any claim of such interest based
upon this Agreement.
8. PERFORMANCE CRITERIA
(a) Pursuant to section 7(a), ELI's Annual Performance must be equal to or
greater than the Performance Criteria associated with the subject year
listed in Table A below.
ANNUAL PERFORMANCE equals the sum of the monthly payments made to
Bonneville by ▇▇▇ for the given 12-month period. Unless otherwise
agreed to by the Parties, Year 1 shall commence 30 calendar days
following Energization.
TABLE A
YEAR[*] PERFORMANCE CRITERIA[*]
-----------------------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
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(b) Bonneville Rights
(1) If at any time following an audit of performance within 60 days
of the conclusion of each annual period, ▇▇▇ fails to meet the
Performance Criteria, Bonneville, at its discretion, may
determine the License to be nonexclusive and Bonneville shall
have the right to use any unused portion of the Commercial Fiber
for any purpose.
(2) In the event ELI's rights to use the Commercial Fiber
becomes nonexclusive, ▇▇▇ shall cooperate with Bonneville
to allow co-location of other users of the Commercial Fiber
in ELI's Regenerator Buildings, based on available space.
The Parties shall agree to reasonable compensation.
9. BUSINESS PLAN
▇▇▇ shall develop a Business Plan that describes ELI's proposal for
marketing, managing, and utilizing the Cable along the Route. The Business
Plan shall include but is not limited to, ELI's marketing strategy for
telecommunications service(s) along the Route, customer service, sales
strategy for all Transport Services, accounting, billing and collections
standards, strategy for maintaining ▇▇▇ fibers, and plan for maintaining
compliance with all regulatory requirements or relevant State regulatory
authorities and the Federal Communications Commission. Unless otherwise
agreed to by the Parties, ▇▇▇ shall complete the Business Plan 6 months
from the date of execution of this Agreement. Prior to finalization of the
Business Plan, Bonneville shall have the right to review ELI's Business
Plan for consistency with this Agreement, however, Bonneville shall not be
involved in ELI's decisions regarding the marketing, pricing, managing, and
use of the Commercial Fiber. ▇▇▇ shall use its best efforts, consistent
with reasonable commercial practices, to maximize the Gross Revenue Value
generated pursuant to the License.
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10. MARKET PRICE ASSESSMENT
(a) Bonneville shall procure under separate agreement, the services of a
market assessment consultant to assess market prices of bulk transport
services and provide reports to Bonneville.
(b) Bonneville and ▇▇▇ agree to equally share in the costs of procuring
the services described above.
(c) The market assessment consultant shall be responsible for acquiring
quotes, calculating an average, and delivering the market assessment
report to Bonneville using the methodology agreed to by Bonneville and
▇▇▇. Bonneville and ▇▇▇ shall within one hundred twenty (120)
calendar days from execution of this Agreement, make their best effort
to agree to the methodology.
(d) Bonneville agrees to allow ▇▇▇ to participate in the development of
the methodology for assessing market price(s) to be used under this
Agreement.
(e) ▇▇▇ agrees to use the current data provided to Bonneville by the
market assessment consultant as a basis for setting ▇▇▇ Transport
Service Value(s) for each ▇▇▇ Transport Service depending on when the
▇▇▇ Transport Service is placed in service by ▇▇▇. The ▇▇▇ Transport
Service for any specific ▇▇▇ Transport Service will remain in effect
for a period of 36 months, after which the ▇▇▇ Transport Service must
be re-valued based on the current market assessment data.
(f) The agreed-to methodology may be changed by mutual agreement of
Bonneville and ▇▇▇.
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11. PAYMENT
(a) ▇▇▇ agrees to pay Bonneville under the terms of this Agreement,
according to the Payment Specifications described in Exhibit B. In
addition to ELI's monthly payment to ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ shall include a
monthly report of all transactions. The report will allow Bonneville
to account for the Gross Revenue Value (GRV) generated each month.
Both Parties shall agree on a reporting format to be used, prior to
ELI's first payment to Bonneville.
(b) Unless otherwise agreed to by the Parties, accounting of the GRV shall
begin 30 calendar days following Energization. Payment shall be
received by Bonneville from ▇▇▇ by the 20th of each month for GRV
calculated on the previous calendar months' transactions. Payments
shall be sent to the address identified in (c) below.
(c) Payment shall be sent to:
Bonneville Power Administration
Client Support - FCC
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(d) Payments not received by Bonneville when due shall bear interest at
the Interest Rate from the date payment was due until the date payment
is made to Bonneville. Late payments shall be collected pursuant to
the Debt Collection Act, 1982, 5 U.S.C. 5514, with the exception of
section 23(a)(2) of this Agreement.
12. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE
(a) Maintenance of the Cable
(1) During the term of this Agreement, Bonneville shall be
responsible for the physical routine maintenance of the Cable and
the Cable Accessories.
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Bonneville shall maintain the Cable and the Route at all times in
good working order and in a safe condition, in conformity with
the Cable Specifications and all applicable laws and regulations.
(2) Bonneville shall pay all costs associated with the routine
maintenance of the Cable.
(3) ▇▇▇ shall be responsible for maintenance of its property,
including the Regenerator Building(s) along the Route.
(b) Detailed Restoration Plan
(1) Restoration activities will be integral to ensuring successful
implementation of this Agreement. Timely restoration is
dependent upon the timely coordination and cooperation between
Bonneville and ▇▇▇. The Parties agree to jointly develop a
Detailed Restoration Plan which shall, upon its completion,
become part of this Agreement.
(2) The Parties agree to, within one hundred-twenty (120) days of the
execution of this Agreement by both Parties, develop a Detailed
Restoration Plan, the specifics of which will be based upon the
provisions of this section 12.
(3) The following provisions described in sections (c) and (d) below
shall form the principles and basis for the development of such a
plan.
(c) Restoration Priorities and General Requirements
(1) Bonneville's obligation to maintain and repair the Cable and any
activities incidental thereto shall be subordinate to, and shall
not conflict with, Bonneville's rightful use and operation of its
transmission facilities. In the
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event both Bonneville's transmission facilities and the Cable
require maintenance or repair, the restoration of the Cable shall
be at all times subordinate to the restoration of Bonneville's
transmission facilities, unless otherwise agreed to by Bonneville
in advance. The restoration of Bonneville's telecommunications
system shall take priority over restoration activities related
with the Commercial Fiber. In the event that ELI's License
becomes nonexclusive pursuant to section 8, the Commercial Fiber
used by ▇▇▇ shall take priority over restoration activities
related to any fibers used by any other users of the Commercial
Fiber.
(2) Any and all ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ representatives, or other users of
the Commercial Fiber that construct, install, repair, replace, or
otherwise handle the Cable, Cable Accessories, Commercial Fiber,
Bonneville Fiber, or any related materials and equipment shall be
properly trained and equipped to meet all current industry
standards.
(3) A Bonneville representative must be on-site during all repair and
restoration work to perform functions such as safety watch,
protection of Bonneville's transmission facilities, obtain line
clearances. Bonneville shall make its best efforts to have a
representative arrive at the site requiring an emergency
maintenance activity pursuant to 12(d)(1) of this section.
(4) The Party performing the repair and restoration shall use prudent
business methods to acquire the most cost-effective restoration
procedures and materials available given the Cable
Specifications, Fiber Specifications, and current industry
standard.
(5) Bonneville shall require all employees or agents of ▇▇▇ or any
other users of the Commercial Fiber who work near Bonneville's
transmission
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facilities to demonstrate that they have been properly trained
and equipped to perform the work. The Parties shall agree in
advance what constitutes proper training and reasonable costs.
The costs of agreed-upon training of ▇▇▇ employees, agents of
▇▇▇, or other users of the Commercial Fiber shall be borne by
▇▇▇.
(6) A Bonneville representative shall have the authority to stop any
work activities or equipment functions for reasons that he or she
determines in good faith to involve potential health hazards,
safety concerns, and potential disruption to Bonneville's
operating system. Bonneville will make reasonable efforts to
coordinate with ▇▇▇ in case of such events.
(d) Restoration of the Cable
(1) Bonneville shall immediately, upon notification from ▇▇▇ of
interruption in service, failure, disrepair, impairment, or other
need for repair or restoration of the Commercial Fiber, begin to
mobilize Bonneville crews and make its continuous best effort to
achieve such necessary repair or restoration, including making
its best effort to have maintenance personnel at the affected
site within 4 hours after receipt of such notice, PROVIDED,
HOWEVER, subject to section 12(c)(1), that in the event any of
ELI's rights are interrupted pursuant to section 23(a), repairs
and restoration shall be made as expeditiously as possible. ▇▇▇
recognizes that the 4-hour response time represents optimal
conditions, and may be impossible to achieve when responding to
certain remote locations. Actual response times will be
influenced by factors such as the terrain, weather conditions
present at the time the request is made, and the actual mileage
from Bonneville's dispatch station to the fault site.
(2) For purposes of this section, best efforts means activities and
performance consistent with prudent utility practice, existing
contract provisions for
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Bonneville's hourly employees ("Collective Agreement between
Bonneville and Columbia Power Trades Council"), and response
times that do not jeopardize the health and safety of Bonneville
employees, agents of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ employees, or agents of ▇▇▇.
(3) The Detailed Restoration Plan shall set forth the roles and
responsibilities of the respective Parties, and shall address
issues regarding logistical considerations, response interval
factors, communication between the Parties, sequential activity
requirements, and other related items which would impact response
time and restoration intervals. The aforementioned issues will
be taken into consideration in the determination of whether
Bonneville has used its best efforts in such restoration or
repair activities. The Detailed Restoration Plan will also set
forth financial penalties, if any, to be paid to ▇▇▇ by
Bonneville for failure to use its best efforts on any repair or
restoration, including the mobilization effort as set forth
above.
13. REGENERATOR BUILDING(S)
(a) ▇▇▇ shall have sole responsibility for the expense and acquisition of
any property necessary for its equipment along the Route. If space is
available at Bonneville substations, such space shall be provided to
▇▇▇ at Bonneville's "bare land" lease rate under a separate agreement.
(b) ▇▇▇ shall provide and own, except as provided in section 6(d), Cable
Accessories splice boxes, and other components necessary for the
operation of the Commercial Fiber.
(c) ▇▇▇ shall have sole responsibility for obtaining electric power and
any land rights for Regenerator Building(s).
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(d) ▇▇▇ shall have sole responsibility for the physical maintenance and
environmental compliance associated with the Regenerator Building(s)
and the grounds around the Regenerator Building(s).
14. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE
(a) General
-------
In the event that ▇▇▇ requires capacity (other than Transport
Service(s)) along the Route, Bonneville and ▇▇▇ shall agree in writing
on how those transactions shall be valued.
▇▇▇ shall not use dark fiber from the Cable for commercial activities
not accounted for in this Agreement.
▇▇▇ agrees to utilize the Cable for all ▇▇▇ capacity needs, existing
or arising along the Route and between the Originating and Terminating
Markets, except for diversity needs.
(b) Permits
-------
Bonneville shall acquire all necessary regulatory or governmental
permits and approvals required for construction of the Cable along the
Route, and ▇▇▇ shall, at its cost, cooperate and provide Bonneville
with such information as Bonneville may reasonably request from ▇▇▇ in
connection with such permits and approvals. ▇▇▇ shall acquire all
necessary regulatory or governmental permits and approvals necessary
for ELI's use of the Commercial Fiber for telecommunications services,
including Transport Service(s) and Dark Fiber Leases, and any permits
and/or approvals that may be required for the Regenerator Building(s).
▇▇▇ shall not rely upon Bonneville to acquire from any other Federal
agency any necessary regulatory or governmental permits and approvals.
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When feasible, Bonneville shall, at its cost, cooperate and provide
▇▇▇ with such information as ▇▇▇ may reasonably request form
Bonneville in connection with acquiring permits, easements, or
additional rights-of-way for the Regenerator Building(s); provided
that ▇▇▇ indemnifies and hold harmless Bonneville from any future
liability resulting from such actions.
(c) Taxes, Mechanic's Liens, and Encumbrances
▇▇▇ shall pay its own income taxes as well as all franchise fees and
other fees and taxes resulting from ELI's License or use of the
Commercial Fiber. ▇▇▇ shall keep the Route free and clear from all
liens and encumbrances resulting from ELI's use of the Commercial
Fiber. If ▇▇▇ does not pay the foregoing taxes and fees when such
become due, and such nonpayment results in the imposition of a lien
on, or encumbrance of, the Route, then Bonneville shall have the
right, but not the obligation, to pay all amounts due and discharge
such lien or encumbrance, upon 30 calendar days prior written notice
to ▇▇▇. In the event Bonneville causes such liens or encumbrances to
be discharged, ▇▇▇ shall reimburse Bonneville upon demand together
with interest thereon at the Interest Rate, accruing from the date
that Bonneville makes payment discharging such liens or encumbrances
until the date Bonneville receives full reimbursement from ▇▇▇. ▇▇▇
shall have the absolute right to dispute or challenge any tax or fee
assessed on its use of the Commercial Fiber.
(d) Access Roads
▇▇▇ may use Bonneville's access roads to access the Regenerator
Building(s), provided that heavy vehicles or other equipment being
used on the access road will not at any time impair the use of the
access road by Bonneville. Access to the roads shall be limited to
the times and frequency required for maintenance and operation of the
Regenerator Building(s) and equipment, and any repair and restoration
of the Cable pursuant to section 12. ▇▇▇ shall at ELI's expense
repair any damage to the access roads caused as a result of ELI's use
of the access roads.
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▇▇▇ shall acquire access easements to the Regenerator Building(s)
where Bonneville access roads are not available.
(e) Environmental Compliance Activities
Bonneville shall be responsible for compliance with the National
Environmental Policy Act (NEPA) and shall acquire all necessary
permits associated with the project operations, maintenance, and
construction of the Cable. ▇▇▇ shall at its expense, cooperate and
provide Bonneville with such information as it may reasonably request
in connection with such compliance and permits. The project
activities will be limited to construction and operation of cable,
hardware, Regenerator Building(s), access roads and distribution lines
if needed for Regenerator Building(s). If any mitigation measures are
required along the Route as part of the NEPA compliance activities,
these measures will be performed by Bonneville at the sole cost of
Bonneville. Contacts with the local landowners will be performed by
Bonneville-appointed representatives. Any landowner compensation
required as part of the NEPA and project activities will be made by
Bonneville. All of the compliance and permitting activities
undertaken by Bonneville pursuant to this subparagraph (e) shall be at
the cost and expense of Bonneville.
15. RELOCATION OF THE CABLE
In the event that the Cable may require relocation or replacement during
the term of this Agreement. The cost of such relocation or replacement
shall be allocated as follows:
(a) If requested by ELI, ELI shall pay all such costs;
(b) If requested by Bonneville due to requirements necessary to provide
economical and reliable electric power, Bonneville shall pay all such
costs;
(c) If the Cable must be relocated due to the order of any court,
governmental agency, or in conjunction with the operational needs of
Bonneville, Bonneville shall, in
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consultation with ▇▇▇, designate a new route for the Cable. The costs
associated with such required relocation that are not paid by a third
party, shall be paid by Bonneville. ▇▇▇ shall be responsible for any
relocation costs associated with ELI's Regenerator Building(s), ▇▇▇-
owned cable, and ▇▇▇-owned terminal equipment.
16. REPRESENTATIONS AND WARRANTIES
(a) ▇▇▇
▇▇▇ represents and warrants to Bonneville as follows:
(1) ▇▇▇ is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware. ▇▇▇ is
duly qualified to do business and is in good standing in the
States of Oregon and Washington. ▇▇▇ covenants that it will
maintain any necessary Federal, State, or local compliances
needed to continue to do business in the States of Oregon and
Washington. ▇▇▇ has full power and authority to execute,
deliver, and perform its obligations under this Agreement. The
execution of this Agreement by ▇▇▇ has been duly and validly
authorized by all necessary action on the part of ▇▇▇. This
Agreement is a legal, valid, and binding obligation of ▇▇▇,
enforceable against ▇▇▇ in accordance with its terms. The
execution and delivery of this Agreement by ▇▇▇ and the
performance of the terms, covenants, and conditions contained
herein will not violate the articles of the corporation, or
bylaws of ▇▇▇, or any applicable law or regulation or any order
of court or arbitrator, and will not conflict with and will not
constitute a material breach of, or default under, the provisions
of any contract by which ▇▇▇ is bound. Except as otherwise
stated herein, no approval, authorization, or other action by any
governmental authority or filing with any such authority which
has not been obtained or accomplished is required in connection
with the execution, delivery, and performance by ▇▇▇ of this
Agreement.
19
(2) ▇▇▇ or any assignee of the License or this Agreement shall remain
a majority controlled subsidiary of Citizens Utilities
(Citizens). Any assignment of the License of this Agreement to
parties not owned by Citizens shall be with the written consent
of Bonneville, such consent shall not be unreasonably withheld.
(3) There are no known actions, suits, or proceedings pending or
overtly threatened against ▇▇▇ before any court or administrative
agency that would materially impair ELI's performance of its
obligations under this Agreement.
(b) Bonneville
Bonneville represents and warrants to ▇▇▇ as follows:
(1) Bonneville is duly authorized to execute this Agreement. This
Agreement constitutes a legal and valid obligation of Bonneville
enforceable in accordance with its terms to the full extent
provided by law. The enforceability of this Agreement is
qualified as to:
Limitations imposed by bankruptcy laws of the United States,
insolvency, reorganization, arrangement, moratorium, or other
laws relating to or affecting the enforcement of creditors'
rights generally.
(2) Upon execution of this Agreement, Bonneville warrants that there
are no known conflicts with this Agreement and that this
Agreement does not constitute a material breach of or a default
under any constitutional provision, law, or administrative
regulation, or violate any judgment, decree, or other instrument,
or any other contract related to the Route to which Bonneville is
a Party or to which Bonneville or any of its property or assets
is subject.
20
(3) Bonneville has made no other representations or warranties
outside of this Agreement and ▇▇▇ acknowledges and agrees that it
is not relying on any other representations or warranties.
(c) No Bonneville Warranty Concerning Route
Bonneville makes no representation or warranty whatsoever concerning
the physical characteristics of the Route. ▇▇▇ acknowledges that
neither Bonneville nor any of Bonneville's officers, employees,
representatives, contractors, or subcontractors or agents have made
any such representation, nor is Bonneville or ▇▇▇ entering into this
Agreement in reliance upon any such representation or warranty.
17. AUDIT PROCEDURES
(a) Records
The Parties shall maintain true and correct sets of records in
connection with the performance of this Agreement. ▇▇▇ shall retain
records of all transactions with supporting documentation related
thereto for a period of not less than 3 years after the term of a
specific transaction has expired and receipt of final payment by ▇▇▇
to Bonneville. The records in connection with each financial
transaction shall include an accounting of gross revenues, revenue
shares, and billing and collection.
(b) Audit Rights
Notwithstanding anything in this Agreement to the contrary, Bonneville
or Bonneville's agent may at Bonneville's expense request and perform
a complete audit of ELI's financial records to verify the accur
acy of the Gross Revenue Value, and Bonneville revenue share, as
determined and accounted for by ▇▇▇ in connection with the terms of
this Agreement. In the event that the Parties agree that Bonneville's
audit is determined to be correct,
21
▇▇▇ shall reimburse Bonneville the agreed upon amount, including
interest owed. In the event that ▇▇▇ disagrees with the results of
Bonneville's audit and resolution is not reached between the Parties,
the Parties agree to resolve the dispute pursuant to section 22 of
this Agreement.
(c) Bonneville reserves the right to conduct technical audits, including
physical inspection of the number, type and use of circuits, including
Transport Service(s) sold, used, and administered by ▇▇▇ using the
Commercial Fiber.
22
18. INSURANCE
(a) General
At all times during the term of this Agreement and the License term,
▇▇▇, at its own cost and expense, shall provide the insurance
specified by this section.
(b) Evidence Required
On the Effective Date of this Agreement, ▇▇▇ shall provide Bonneville
with a certificate of insurance (Certificate of Insurance) executed by
an authorized representative of the insurer(s) evidencing that ▇▇▇
insurance complies with this section. A copy of all required
endorsements shall be attached to and form a part of the Certificate
of Insurance.
(c) Notice of Cancellation, Reduction, or Material Change in Coverage
Policies shall be endorsed to provide Bonneville with 30 calendar
days' prior written notice of any cancellation, reduction, or material
change in coverage. If insurance coverage is due to be canceled,
reduced, or materially changed, ▇▇▇ shall, within 30 calendar days
before the effective date of such cancellation, reduction, or material
change, obtain the coverage required under this section 18 and provide
to Bonneville documentation evidencing such coverage. ▇▇▇ shall be
responsible for the costs of any damage, liability, or injury
occurring during any period of cancellation, reduction, or material
change in insurance coverage to the extent such costs are not
otherwise covered by insurance; provided that ▇▇▇ shall not be
responsible for the costs of any damage, liability, or injury
occurring during any such period if such damage, liability, or injury
was caused by Bonneville's gross negligence or willful misconduct.
(d) Qualifying Insurers
Policies shall be issued by companies which hold a current
policyholders alphabetic and financial size category rating of not
less than A:X according to Best's Insurance Reports.
23
(e) Insurance Required
(1) Liability
Commercial general liability insurance for bodily injury
(including death) and property damage shall provide limits of not
less than $ 10 million per occurrence.
(A) Coverages included shall be:
(i) premises and operations;
(ii) broad form property damage;
(iii) products and completed operations;
(iv) blanket contractual liability;
(v) personal injury liability;
(vi) cross-liability and severability of interests; and
(vii) independent contractors liability.
(B) Coverage shall be endorsed to include the following:
(i) inclusion of Bonneville, its officers, representatives,
agents, and employees as an additional insured as respects
services or operations in connection with this Agreement;
and
(ii) stipulation that the insurance is primary insurance and
that no insurance or self-insurance of Bonneville will be
called upon to contribute to a loss.
(2) BUSINESS AUTOMOBILE LIABILITY INSURANCE
Business Automobile Liability Insurance for bodily injury
(including death) and property damage shall provide total limits
of not less than $2
24
million combined single limit per occurrence to all owned,
nonowned, and hired vehicles.
(3) WORKERS' COMPENSATION/EMPLOYEES LIABILITY INSURANCE
Statutory Workers' Compensation and Employer's Liability
Insurance for not less than $1 million per occurrence shall apply
to employer's liability coverage for all employees engaged in
services or operations under this Agreement. The policy shall
include broad form all-States/other States coverage.
(f) Special Provisions
(1) The foregoing requirements as to the types and limits of
insurance coverage to be maintained by ▇▇▇, and any approval of
said insurance by Bonneville or ▇▇▇, are not intended to and
shall not in any manner limit or qualify the liabilities and
obligations otherwise assumed by ▇▇▇ pursuant to this Agreement,
including, but not limited to, the provisions concerning
indemnification.
(2) Bonneville acknowledges that some insurance requirements
contained in this section 18 may be fulfilled by a funded self-
insurance program of ▇▇▇ or it's parent company, Citizens
Utilities. However, this shall not in any way limit liabilities
assumed by ▇▇▇ under this Agreement. Any self-insurance program
must be first approved in writing by Bonneville.
19. DEFAULT
(a) Events of Default
If either Party is in material breach or default (Defaulting Party),
under this Agreement, the other Party (Non-Defaulting Party) may
notify in writing the Defaulting Party that it is in material breach
or default, such notice to be effective
25
upon its receipt by the Defaulting Party. Material breach or default
under this Agreement shall include, but is not limited to the
following:
(1) failure to make any payment when due hereunder; with the
exception of payments that become payable during periods of Force
Majeure as provided in section 23(a)(2).
(2) failure to perform any obligations required to be observed or
performed hereunder;
(3) any representation or warranty made by one Party to the other
herein proving incorrect in any material respect as of the date
of the making thereof;
(4) ▇▇▇ files a voluntary petition in bankruptcy, or a petition in
bankruptcy is filed against ▇▇▇ and not dismissed within 60 days,
or ▇▇▇ is adjudicated as bankrupt or insolvent, or files any
petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any present or future Federal, State, or
other statute, law, or regulation relating to bankruptcy,
insolvency, or other relief for debtors, or seeks or consents to
or acquiesces in the appointment of any trustee, receiver,
custodian, liquidator, or similar official of ▇▇▇, or makes any
general assignment for the benefit of creditors;
(5) material interference by a Party to the other Party's operations;
or
(6) failure to make restitution for any damage to a Party's real
property or equipment caused as a result of the negligent or
willful acts or omissions of the other Party when such damage
causes material interference to a Party's operations.
26
(b) Remedies
(1) DEFAULTING PARTY'S RIGHT TO CURE
The Defaulting Party shall have the right to cure any material
breach or default under this Agreement within 30 calendar days
after the receipt by the Defaulting Party of notification of such
material breach or default. In the case of any material breach
or default which may not reasonably be cured within 30 calendar
days, other than in the case of a breach of section 19(a)(1),
with such 30 calendar day period, the Defaulting Party shall have
the right to provide the Non-Defaulting Party with a plan for the
appropriate actions to cure such material breach or default,
which plan shall be subject to the approval of the Non-Defaulting
Party, which approval shall not be unreasonably withheld. Within
30 calendar days of submission of the plan, the Defaulting Party
must commence diligently pursuing appropriate action under the
plan to cure the material breach or default, and unless otherwise
agreed to by the Parties, such material breach or default shall
be cured within 90 calendar days of submission of the plan,
failing which the Non-Defaulting Party may forthwith and without
further notice terminate this Agreement.
(2) RIGHTS AND REMEDIES UPON TERMINATION
Any Party terminating this Agreement under section 20 shall have
the additional right to cure any material breach or default of
the Defaulting Party to preserve the Non-Defaulting Party's
rights that may be prejudiced as a result of such material breach
or default and exercise and pursue all other rights and remedies
available to it under applicable law.
(3) RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided in this Agreement, any right or
remedy afforded to either ▇▇▇ or Bonneville under any provision
of this
27
Agreement is in addition to, and not in lieu of, all rights or
remedies afforded either ▇▇▇ or Bonneville under any other
provision of this Agreement, by law or otherwise.
20. TERMINATION
(a) Termination of this Agreement may occur in the following instances:
(1) By the Non-Defaulting Party, after the time period for the
Defaulting Party to cure a material breach or default has
expired;
(2) By either Party, if the Party claiming Force Majeure has not
satisfactorily performed any obligations delayed due to the Force
Majeure within 1 year of the notice of the Force Majeure event;
or
(3) Pursuant to Partial Invalidity terms, section 23(d) of this
Agreement.
(b) Subject to section 19(b) the Terminating Party shall give the other
Party 30 calendar days advance written notice of Termination, which
Termination shall become effective 30 calendar days after the receipt
of such notice by the other Party.
21. INDEMNIFICATION; WAIVER OF DAMAGES
(a) Indemnification By ▇▇▇
(1) To the extent allowed by law, ▇▇▇ shall release and indemnify,
defend, and hold harmless Bonneville and each of its directors,
officers, agents, representatives, subcontractors, and employees
(the "Bonneville Indemnitees") from and against any and all
Claims, (i) for injury to or death of a person, including an
employee of Bonneville or an ▇▇▇ Indemnity, or (ii) for loss of
or damage to property resulting directly or
28
indirectly from ELI's performance or nonperformance of this
Agreement, or (iii) for any Claims against Bonneville by
customers of ▇▇▇ or others doing business with ▇▇▇, except in the
cases of clauses (i) and (ii) only, to the extent that such Claim
is the result of the gross negligence or willful misconduct of a
Bonneville Indemnity.
(2) If gross negligence or willful misconduct of a Bonneville
Indemnity has contributed to a Claim, ▇▇▇ shall not be obligated
to indemnify the Bonneville Indemnitees for the proportionate
share of such Claims caused by such negligence or willful
misconduct. Bonneville shall have the right, at its own cost, to
retain counsel, to monitor, or participate in the defense of any
Claim that is covered by ELI's indemnity hereunder.
(b) Indemnification By Bonneville
(1) To the extent allowed under the Federal Tort Claims Act,
Bonneville shall release and indemnify, defend, and hold harmless
▇▇▇ and each of its directors, officers, agents, representatives,
subcontractors, and employees (the "▇▇▇ Indemnitees") from and
against any and an Claims for injury to or death of a person,
including an employee of Bonneville or an ▇▇▇ Indemnity, or for
loss of or damage to property resulting directly or indirectly
from Bonneville's performance or nonperformance of this
Agreement, except to the extent that such Claim is the result of
the gross negligence or willful misconduct of an ▇▇▇ Indemnity.
In no event shall Bonneville be required to indemnify ▇▇▇
Indemnities against Claims against ▇▇▇ by customers of ▇▇▇ or
others doing business with ▇▇▇.
(2) If gross negligence or willful misconduct of an ▇▇▇ Indemnity has
contributed to a Claim, Bonneville shall not be obligated to
indemnify the ▇▇▇ Indemnitees for the proportionate share of such
Claims caused by such negligence or willful misconduct. ▇▇▇
shall have the right, at its own
29
cost, to retain counsel, to monitor, or participate in the
defense of any Claim that is covered by Bonneville's indemnity
hereunder.
(c) Waiver of Certain Damages
Each Party hereby waives any right to consequential, incidental,
special or indirect damages, or damages for lost profits or exemplary
damages with respect to any claim arising out of or related to this
Agreement. The Parties acknowledge that the foregoing waiver shall
not prejudice the right of indemnity respecting any Claim under this
section 21.
22. DISPUTE RESOLUTION
(a) Pending resolution of a disputed matter, the Parties shall continue
performance of their respective obligations hereunder, provided that
neither Party shall be required to take any action pending such
resolution which it has been advised by counsel, or which it
reasonably believes, is unlawful or not permitted pursuant to
applicable regulations or permit requirements. Any controversy
between the Parties rising out of this Agreement or breach thereof, or
out of performance under this Agreement, is subject to the mediation
process described below. If not resolved by mediation, then the
matter must be submitted to the American Arbitration Association
("AAA") for arbitration before a sole arbitrator.
(b) A meeting will be held promptly between the Parties to attempt in good
faith to negotiate a resolution of the dispute. The meeting will be
attended by individuals with decision making authority regarding the
dispute. If within 30 calendar days after such meeting the Parties
have not succeeded in resolving the dispute, within 30 calendar days
thereafter, upon the written notice from either Party to the other
Party, submit the dispute to a mutually acceptable third-party
mediator who is acquainted with dispute resolution methods. The
mediation shall be nonbinding. If the dispute is not resolved by
mediation either Party may initiate an arbitration
30
with the AAA, upon the written notice from either Party to the other
Party. The dispute shall be resolved by arbitration under the rules
and administration of the AAA, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof. Neither Party is entitled to seek or recover punitive damages
in considering or fixing any award under these proceedings.
(c) The costs of mediation and arbitration, including any mediator's fees,
AAA administration fee, the arbitrators fee, and costs for the use of
facilities during the hearings, shall be borne equally by the Parties.
Reasonable attorneys' fees may be awarded to the prevailing Party
(provided such a Party can clearly be determined from the proceedings)
at the discretion of the arbitrator. Each Party's other costs and
expenses will be borne by the Party incurring them.
31
23. GENERAL
(a) Force Majeure
(1) As used in this Agreement, the term "Force Majeure" means acts of
God (including, but not limited to, earthquakes, fires, floods,
windstorms, landslides, and ice storms); strikes, lockouts, or
other labor disputes; acts of public enemy; wars, riots, and
insurrection; epidemics; civil disturbances; explosions; train
derailments; breakdown or failure of machinery or facilities
(excluding the Cable and Cable Accessories); accidents to
machinery or equipment (excluding the Cable and Cable
Accessories), and delay in delivery of equipment to the extent
such occurrences are beyond the reasonable control of the
Parties; electrical disturbance originating in or transmitted
through such Party's electrical system or equipment or any
electrical system with which such Party's system or equipment is
interconnected; and any other event, cause, or condition beyond
the Party's reasonable control, which, by the exercise of
reasonable diligence, prevents the operation of the Cable and
prevents the Party claiming Force Majeure from performing its
obligations under this Agreement;
(2) If either Party is unable to carry out its obligations under this
Agreement as a result of an event, cause, or condition of Force
Majeure, the Party claiming Force Majeure shall give notice and
full particulars of such Force Majeure in writing to the other
Party within 5 calendar days after the occurrence of the Force
Majeure event, cause, or condition. Any obligations that such
Party claims it is unable to perform due to an event, cause, or
condition of Force Majeure shall be suspended during the
continuance of such event of Force Majeure. The Party claiming
Force Majeure shall use reasonable efforts to remedy and minimize
the effects of
32
such event of Force Majeure with all reasonable dispatch. For
purposes of this Agreement, the Parties are obligated to make
payments during periods of Force Majeure; PROVIDED, HOWEVER, ▇▇▇
shall not be obligated to make payments during periods of Force
Majeure when ▇▇▇ is unable to provide service under the terms of
the agreement with ELI's customers. Interest shall not accrue on
payments that become payable to either Party during the period of
any Force Majeure.
(3) Neither Party shall be liable under this Agreement for, or
considered to be in material breach or default under, this
Agreement on account of any delay in or failure of performance
due to Force Majeure unless specifically stated in this
Agreement. For the avoidance of doubt, events, causes and
conditions affecting the customers of ▇▇▇ shall not excuse ▇▇▇
from performing its payment obligations under this Agreement. In
the event that ▇▇▇ continues to receive revenue from End-Users
under this Agreement during a Force Majeure event, ▇▇▇ will not
be excused from performing its payment under this Agreement.
(b) Notices
All notices and other communications under this Agreement shall be
properly given only if made in writing; and
(1) mailed by certified mail, return receipt requested, postage
prepaid; or
(2) delivered by facsimile transmission followed by certified mail to
the Party's at the address or facsimile number set forth in this
section 23(b) or such other address or facsimile number as such
Party may designate by notice to the other Party. Such notices
and other communications shall be effective on the date of
receipt. If any such notice or communication is not received or
cannot be delivered due to a change in the address of the
33
receiving Party of which notice was not previously given to the
sending Party or due to a refusal to accept by the receiving
Party, such notice or other communication shall be effective on
the date delivery is attempted.
If to Bonneville: The Bonneville Power Administration
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: To be identified under separate letter
with a copy to: The Bonneville Power Administration
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: To be identified under separate letter
If to ▇▇▇: Electric Lightwave, Inc.
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
Attn: Legal Affairs
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Assignment
▇▇▇ shall not sell, assign, lease, sublease, sublicense or otherwise
allow use of ELI's License under this Agreement to any person or
entity without Bonneville's written approval; which approval shall not
be unreasonably withheld. Notwithstanding the foregoing, ▇▇▇ may
assign in writing its rights and responsibilities under this Agreement
to a corporate parent, subsidiary or commonly owned affiliate, upon
written notification to Bonneville, and a guarantee by its parent
company, Citizens Utilities to perform the obligation of ▇▇▇ under
this Agreement. Any permitted assignment or other transfer of rights
hereunder shall be in writing and shall specify that the assignee or
other transferee is bound by the terms and conditions of this
Agreement to the same extent as if it were the original named party
instead of ▇▇▇ hereunder. In the event that ▇▇▇ ▇▇▇▇▇, assigns,
leases, subleases, or otherwise allows use of ELI's License under this
Agreement, ▇▇▇ or its assigned entity, shall designate a single point-
of-
34
contact to Bonneville for all activities relating to this Agreement. A
sale, transfer or distribution (by way of a dividend or otherwise) in
one or a series of transactions of 50 percent or more of the capital
stock of the entity that holds the License shall be deemed to be an
assignment of the License.
(d) Partial Invalidity
If any provision of this Agreement is determined by a proper court to
be invalid, illegal or unenforceable, such invalidity, illegality, or
unenforceability shall not affect the performance of other provisions
of this Agreement and this Agreement shall remain in full force and
effect without such invalid, illegal or unenforceable provision;
provided that if any such invalid, illegal, or unenforceable provision
results in frustration of this Agreement, such that ▇▇▇ cannot perform
under section 12, Bonneville shall have the right to terminate in
accordance with section 20.
(e) Governing Law
This Agreement shall be governed by and construed in accordance with
Federal law.
(f) Terms Generally
The defined terms in this Agreement shall apply equally to both the
singular and the plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine, and neuter forms. The term "person" includes
individuals, corporations, partnerships, trusts, other legal entities,
organizations, and associations, and any Government or governmental
agency or authority. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation."
The words "approval," "consent" and "notice" shall be deemed to be
preceded by the word "written."
35
(g) Relationship of the Parties
Nothing in this Agreement is intended or shall be deemed to constitute
a partnership, agency or joint venture relationship between or among
the Parties hereto. The performance by the Parties of all duties and
obligations hereunder shall be as independent contractors and not as
agents of the other Party, and no persons employed or utilized by a
performing Party shall be considered employees or agents or the other.
(h) Waivers
No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the waiving
Party and any such waiver shall not be deemed a waiver of any other
provision of this Agreement or any other breach of this Agreement.
(i) Confidentiality
If and to the extent any information or documents furnished by one
Party to the other under this Agreement is confidential or proprietary
to the furnishing Party, the receiving Party shall treat such
information or documents as confidential and proprietary and shall
take reasonable steps to protect against the unauthorized use or
disclosure of such information or documents; provided, that such
information and documents are conspicuously marked or otherwise
clearly identified as confidential or proprietary when furnished; and
provided, further, that this section 23(i) shall not apply to
information or documents in the public domain or to information or
documents required to be disclosed by any law, rule, regulation,
order, or other requirement of any governmental authority having
jurisdiction. If a Freedom of Information Act request is received by
Bonneville for such written information or documents, Bonneville must
promptly notify ▇▇▇ of such request and will, further, notify ▇▇▇ if
Bonneville is required to disclose such written information or
documents.
36
(j) No Third-Party Beneficiaries
This Agreement creates rights and obligations only between the Parties
hereto. The Parties hereto expressly do not intend to create any
obligations or promise of performance to any other third person or
entity nor have the Parties conferred any rights or remedy upon any
third person or entity other than the Parties hereto, their respective
successors or assigns to enforce this Agreement.
(k) Miscellaneous
Neither Party shall make public announcement of this Agreement or the
transactions contemplated by this Agreement without the prior consent
of the other Party, unless such public announcement is necessary to
comply with applicable law. This Agreement shall benefit and bind ▇▇▇
and Bonneville and their respective permitted successors and assigns.
Time is of the essence of this Agreement. This Agreement may be
executed in counterparts, each of which shall be an original, but all
of which shall constitute one and the same Agreement.
37
This Agreement may not be amended or modified except by a written
instrument signed by ▇▇▇ and Bonneville.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in two
counterparts.
UNITED STATES OF AMERICA
Department of Energy
Bonneville Power Administration
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Group Vice President, Marketing,
Conservation and Production
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
(Print/Type)
Date 3/29/96
-------------------------------
ELECTRIC LIGHTWAVE, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
(Print/Type)
Title President
------------------------
Date 3/29/96
-----------------------
Exhibit A, Page 1 of 1
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
Exhibit A
ROUTE DESCRIPTION
The following Route description is a best estimate of how the Route will be laid
out. Difficulties may arise along the Route that will require Bonneville to
make adjustments that could alter the final Route.
The southern terminus of the route begins at Bonneville's ▇▇▇▇▇▇ Substation
located 8 miles west of Portland. The cable is attached to the St. ▇▇▇▇▇-▇▇▇▇▇▇
No. 2 ▇▇▇▇ pole line and deadends at St. ▇▇▇▇▇ Substation located 10 miles
northwest of Portland. The cable is then attached to the ▇▇▇▇-St. ▇▇▇▇▇ No. 1
steel tower line, crosses the Columbia river and deadends at ▇▇▇▇ Substation
located 12 miles north of Portland. Going north out of ▇▇▇▇ Substation the
cable is attached to the ▇▇▇▇-Lexington No. 1 steel tower line and deadends at
Lexington substation located a few miles north of Longview. The cable is then
attached to the Lexington-Longview No. 1 wood pole line that deadends at
Longview substation located in the west part of Longview. The cable then is
attached from a point 2 miles north of Lexington out of Longview on the
Longview-Chehalis No. 1 steel tower line and deadends at Chehalis substation
located 4 miles south of Chehalis. The cable then goes north out of Chehalis
for 11 miles on the Chehalis-▇▇▇▇▇▇▇▇▇ steel tower line and then is attached to
the Paul-Allston No. 2 for the last 3 miles going into ▇▇▇▇ substation located 3
miles northeast of Chehalis. The cable goes north out of ▇▇▇▇ on the ▇▇▇▇-
Satsop No. 1 steel tower line and deadends on the wood pole lines south of
Olympia substation located in the southwest part of Olympia. The cable then
goes west and north on the Olympia-Grand Coulee No. 1, the Olympia-White River
No. 1 and the Chehalis-▇▇▇▇▇▇▇▇▇ No. 1 steel tower lines until it terminates at
▇▇▇▇▇▇▇▇▇ substation. The total length of the route is approximately 192 miles
and will require 5 regeneration stations located near Bonneville facilities
along the way. For the majority of the length we plan to use ADSS single-mode
cable but where necessary will switch to an OPGW cable.
Exhibit B, Page 1 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
Exhibit B
PAYMENT SPECIFICATIONS
ELI's monthly payment to Bonneville is equal to the MONTHLY PAYMENT
---------------
corresponding to the
GROSS REVENUE VALUE found in the left column of TABLE 1 or the GFV, whichever is
-------------------
greater.
TABLE 1[*]
The GROSS REVENUE VALUE (GRV) will be determined using the following formula:
GRV = ELITSV + EUTRSV + DFLV + OSV
Where:
GRV = GROSS REVENUE VALUE
GFV = GUARANTEED FEE VALUE
ELITSV = ▇▇▇ TRANSPORT SERVICE VALUE(S)
EUTSV = END-USER TRANSPORT SERVICE VALUE(S)
DFLV = DARK FIBER LEASE VALUE(S)
OSV = OTHER SERVICE VALUE(S)
--------------------------
* Confidential material has been omitted pursuant to a request for confidential
treatment. Such material has been filed separately with the Securities and
Exchange Commission.
Exhibit B, Page 2 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
SAMPLES OF REPORTING SUMMARY
AND PAYMENT CALCULATION
The samples below are not based on actual data generated but are to be used for
sample purposes only. The Payment Calculation demonstrates how the payment
calculation is to be applied and the Summary Report specifies the information
and format ▇▇▇ shall use for reporting information to Bonneville.
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
GRV GRV GRV GRV GRV GRV GRV GRV GRV GRV GRV GRV
If monthly %
GRV is multiply of
between result by GRV Plus Adder [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
------- ------ -- --- ---- ----- --- --- --- --- --- --- --- --- --- --- --- ---
[*] [*] x [*] + [*] [*]
[*] [*] x [*] + [*] [*]
[*] [*] x [*] + [*] [*]
[*] [*] x [*] + [*] [*]
[*] [*] x [*] + [*] [*]
[*] [*] x [*] + [*] [*] [*]
[*] [*] x [*] + [*] [*] [*] [*] [*] [*]
*Calculated Value: [*]
Monthly Payment to BPA by ▇▇▇: [*]
------------------------------
(the greater of GFV or Calculated Value)
*GFV (Guaranteed Fee Value):[*]
[*] Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
Exhibit B, Page 3 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
TABLE X
MONTH 6
ACCOUNT SUMMARY
VALUE FOR
ACCOUNT NAME SERVICE TYPE UNIT PRICE # OF UNITS THE MONTH
▇▇▇ DS3 $ 3,000 8 $ 24,000
▇▇▇ DS3 $ 3,000 1 $ 3,500
▇▇▇ DS3 $ 3,700 1 $ 3,500
▇▇▇ DS3 $ 3,300 6 $ 19,800
▇▇▇ DS3 $ 3,200 1 $ 3,200
A DS1 $ 1,020 2 $ 2,040
A DS3 $ 3,100 1 $ 3,100
B dark fiber $ 50 6* $ 60,000
C dark fiber $ 43 4* $ 34,400
D OC3 $100,000 1 $ 100,000
D DS1 $ 1,020 1 $ 1,020
D DS3 $ 3,200 1 $ 3,200
E dark fiber $ 51 4* $ 41,000
F DS1 $ 940 5 $ 4,700
MONTHLY GROSS REVENUE VALUE (GRV): $ 303,660
*@ 200 miles per fiber
Exhibit B, Page 4 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
GUARANTEED FEE VALUE
▇▇▇ shall transfer to the Cable all of ELI's Transport Services traffic and
transport traffic associated with ELI's provisioning of Value-Added Services
between the Originating and Terminating Markets on the date of energization of
the Cable, or as soon thereafter as is practicable.
[*]
-----------------------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
Exhibit C, Page 1 of 1
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
EXHIBIT C
MILESTONE SCHEDULE
See attached Exhibit C.
EXHIBIT C
Install Fiber between ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ Substations
72 Single Mode Fiber Count
Preliminary Schedule
1996 1997
ID TASK NAME DURATION START J F M A M J J A S O N D J F M A M J J A S O N D J F
1 Project Design 131d 1/15/96 X X X X X X
2 Environmental Study 45d 1/15/96 X X X
3 Establish Substation and Slice configurations 30d 1/15/96 X X
4 Establish Order of construction and outage 19d 1/15/96 X X
5 Cable and Slice Locations Designed 32d 2/1/96 X X
6 Stringing and Sagging Charts Complete 0d 7/15/96 *7/15
7 Prepare Construction Solicitation 32d 3/1/96 X X
8 Check Land rights 47d 2/1/96 X X X
9 Obtain Missing Permits 66d 3/1/96 X X X
10 Surveys 23d 4/1/96 X
11 Materials 65d 4/1/96 X X X
12 Construction 155d 7/1/96 X X X X X X X
13 Test and Energize 11d 1/31/97 X
----------------------------------------------------
Task Summary Rolled Up
Progress
Progress Rolled Up Task
Milestone Rolled Up
Milestone
----------------------------------------------------
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Fiber 1/8/96
Exhibit D, Page 1 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
EXHIBIT D
COMMERCIAL FIBER SPECIFICATIONS
Bonneville shall meet or exceed these specifications. In the event that
Bonneville's performance requirements for its communication system requires
Bonneville to exceed the standards and requirements specified in this Exhibit E,
Bonneville shall apply the higher standard.
▇▇▇ Network Span and Final Acceptance Requirements:
1.0 Design Criteria:
---------------
The number of cable splices at the time of original construction must be
designed to an average of 4 km between splices. Due to cable cuts, and cable
relocation, additional splices are allowed. The number of splices must be
closely monitored to insure attenuation and reflection tolerances are
maintained.
Construction:
------------
Cable must be constructed in accordance with sound commercial practices. The
National Electrical Code shall be followed in every case except where local
regulations are more stringent, in which case local regulations shall govern.
2.0 Typical Fiber Cable Information:
-------------------------------
Single mode fiber specifications may vary, depending on the fiber manufacturer.
Typical concatenated levels of 0.35 dB per km @ 1310nm and 0.25 per km @ 1550nm
are expected.
3.0 Span Requirements:
-----------------
Span documentation must be performed using the two following methods: OTDR
(optical time domain reflectometer) and insertion loss (stabilized light source
and power meter) measurement in each direction at 1550nm wavelength.
o Maximum total span loss must not exceed 35.0 dB at 1550nm.
----------
o Maximum dB/Km loss must not exceed 0.35 dB/Km at 1550nm.
-----
Exhibit D, Page 2 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
o In no case shall a fiber show a point discontinuity greater than 0.1dB.
Discontinuities (know as steps, splices or attenuation non uniformities)
shall be measured with an optical time domain reflectometer (OTDR) to
determine the loss of the localized attenuation. The lease squares fit
method of measurement must be used to determine the magnitude of the loss
of a point discontinuity.
o Typical span scenario 30.0 dB = 120 Km X .25 dB/Km.
o Maximum fiber loss scenario 35.0 dB = 100 Km X .85 dB/Km. (depends on
regeneration huts)
o Maximum span dispersion = 2250 ps/mn/Km.
o Performance levels must be maintained as accepted during the entire
duration of the agreement.
o Test data including OTDR hard copies or electronic data must be submitted
to Common System Engineering before Final Acceptance. ▇▇▇, at its
discretion, may choose to physically monitor any or all testing associated
with Final Acceptance of the ▇▇▇ Fibers.
In the event the measured span measured values exceeds the calculated values,
Bonneville will perform corrective maintenance as required to restore the ▇▇▇
Fibers to the calculated values.
4.0 Splice Loss:
-----------
the splice loss will average 0.10dB. All splicing will be performed by
proprietor pursuant to fibers leased agreement. Further, no individual splice
will exceed 0.50dB. Splices shall be measured using bi-directional methods to
average absolute splice loss. All fiber splicing must be fusion type:
--------------------------------------
Exhibit D, Page 3 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
6.0 Compliance:
----------
Customer, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of Fibers. Test data including OTDR hard copies or
electronic data must be submitted to the customer for review. Customer has the
option to ▇▇▇▇▇▇ any specifications and/or requirements listed in the technical
specification criteria. (Limited to ▇▇▇ receiving a hard copy of their fiber
only.)
8.1 Waivers:
-------
The proprietor must provide Fibers with attenuation of not greater than 0.35
loss per. km@ 1550nm and will not be required to perform corrective maintenance
under .25 dB to reduce span attenuation.
9.0 Key optical performance Characteristics Required For Single-Mode Optical
------------------------------------------------------------------------
Cables:
------
9.1 Attenuation Single Mode Non-Shifted:
-----------------------------------
o The attenuation must not exceed 0.30 dB/Km when measured at a wavelength of
1.55 microns (1550nm) using the two point measurement.
o The attenuation must not exceed 0.40 dB/Km when measured at a wavelength of
1.30 microns (1310nm) using the two point measurement.
9.2 Attenuation Single Mode Dispersion Shifted:
------------------------------------------
o The attenuation must not exceed 0.25 dB/Km when measured at a wavelength of
1.55 microns (1550nm) using the two joint measurement.
9.3 Attenuation Versus Wavelength Single-Mode and Dispersion Shifted:
-----------------------------------------------------------------
o The attenuation for the wavelength region form 1525 nm to 1575 nm must not
exceed the attenuation at 1550 nm by more than 0.05 dB/Km.
9.4 Chromatic Dimension Non-Dispersion Shifted (ps/nm-km):
------------------------------------------------------
o For conventional single mode fibers, the zero dispersion wavelength must be
1301.5 to 1321.5nm. The maximum dispersion slope (SoMAX) must be no
greater than 0.092 ps/(km-nm2). The nominal zero dispersion wavelength
must be near 1310nm.
Exhibit D, Page 4 of 4
Contract No. 96MS-95240
▇▇▇ Telecommunications Corporation
Effective on the Effective Date
o zero dispersion range. The dispersion between 1530 and 1570 nm must be
less than or equal to 18 ps/(nm-km).
9.6 Cutoff Wavelength:
-----------------
o The cutoff wavelength of cabled fiber must be less than 1260 nm.
9.7 Core Diameter:
--------------
o The core diameter must be typically 8.3+0.13.
-
9.8 Temperature:
------------
o Operating Temperature Range -60 C to +85 C.
Bonneville will insure that the Cable and related appurtenances meet all of the
above optical performance characteristics operating systems power level.
