(1) Redacted portions have been marked with asterisks (***). The redacted
portions are subject to a request for confidential treatment that has been
filed with the Securities and Exchange Commission.
Exhibit 10.1
CONFIDENTIAL TREATMENT(1)
COST SHARING AND IRU AGREEMENT
between
LEVEL 3 COMMUNICATIONS, LLC
and
INTERNEXT, LLC
Dated July 18, 1998
COST SHARING AND IRU AGREEMENT
THIS COST SHARING AND IRU AGREEMENT ("Agreement") is made and entered into
as of the 18th day of July, 1998, by and between LEVEL 3 COMMUNICATIONS, LLC, a
Delaware limited liability company ("Grantor") and INTERNEXT, LLC, a Delaware
limited liability a company ("Grantee").
RECITALS
A. Grantor intends to construct a nationwide multiconduit (currently
estimated at eight 1 1/4" conduits, taking into account this Agreement) fiber
optic communications system, including certain Opamp Facilities and Regeneration
Facilities (as such terms are defined herein) as generally depicted on Exhibit
"A-1" attached hereto and which will connect the cities described on Exhibit
"A-2" attached hereto (the "Grantor System").
B. Grantor further intends to install within one of the conduits of the
Grantor System a high fiber count (currently estimated at 96 fibers, taking into
account this Agreement) fiber optic cable (as more fully described in Exhibit
"H", the "Cable").
C. Grantee desires to own or to possess an indefeasible right to use and
control a network consisting of 24 conduit-protected fibers and one spare
conduit connecting the cities described on Exhibit "A-2" attached hereto. D.
Grantor and Grantee can complete their desired networks less expensively if such
networks are constructed as part of a single project than if each network were
constructed independently. E. Grantor and Grantee therefore desire to share the
costs of constructing the Grantor System, and, pursuant to such sharing of
costs, Grantor desires to grant to Grantee ownership of and/or an indefeasible
right to use certain facilities in the Grantor System, all upon and subject to
the terms and conditions set forth below.
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ARTICLE 1.
DEFINITIONS
1.01 "Acceptance Date" shall mean the date when Grantee delivers (or is
deemed to have delivered) notice of acceptance of a Completion Notice with
respect to a Segment in accordance with Article 9.
1.02 "Acceptance Testing" shall have the meaning set forth in Section 9.01.
1.03 "Access Points" shall have the meaning set forth in Section 10.01.
1.04 "Actual Operating Expenses" shall mean, without duplication, the
actual out-of-pocket costs and expenses reasonably and necessarily incurred by
Grantor in connection with the operation of the Grantor System, as more fully
described in Exhibit "L" hereto.
1.05 "Additional Grantee Fibers" shall have the meaning set forth in
Section 3.01.
1.06 "Affiliate" shall mean, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. "Control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or credit arrangement, as
trustee or executor, or otherwise, provided that, with respect to Grantor and
for the purpose of Sections 3.04(i), 6.04 and 7.02 only, the term "Affiliates"
shall not include the following Persons if they would otherwise be Affiliates:
(A) Cable Michigan, Inc., RCN Corporation and Commonwealth Telephone
Enterprises, Inc. (and any intermediate holding companies or other entities
formed solely for the purpose of owning stock in such Persons), unless Grantor
or its other Affiliates shall acquire more than fifty percent of the voting
control of such Persons, and (B) California Private Transportation Company,
L.P., to the extent California Private Transportation Company, L.P. has been
required to construct or install fibers or conduits pursuant to the requirement
of any Governmental Authority.
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1.07 "Associated Property" shall mean the tangible and intangible property
needed for the use of the Grantee Fibers and Grantee Conduit as permitted by
this Agreement, including the Regeneration Facilities and Opamp Facilities, but
excluding in any and all events any electronic and/or optronic equipment.
1.08 "Authorization" shall mean any consent, registration, filing,
agreement, notarization, certificate, license, approval, permit, authority or
exemption from, by or with any Governmental Authority or other Person.
1.09 "Canadian Person" shall mean any Person which is permitted under
applicable Canadian telecommunications laws to own or operate a
telecommunications system located in Canada.
1.10 "CBD" shall mean the commonly referred to central business district of
a city.
1.11 "Commencement Date" shall mean the date on which Grantor commences
construction of the Grantor System, provided that if Grantor has not commenced
such construction on or prior to December 31, 1998, then the "Commencement Date"
shall mean December 31, 1998.
1.12 "Commencement Contribution" shall have the meaning set forth in
Section 4.01.
1.13 "Completion Date" shall mean (i) in the case of all Segments within
Phase One and Phase Two, the (***) anniversary of the Commencement Date and (ii)
in the case of all Segments within Phase Three, the earlier to occur of (a)
(***) months from the date that Grantor commences construction of Phase Three
and (b) the (***) anniversary of the Commencement Date, subject in each case to
any Force Majeure Event or Grantee Delay Event.
1.14 "Completion Contribution" shall have the meaning set forth in Section
4.01.
1.15 "Completion Notice" shall have the meaning set forth in Section 9.02.
1.16 "Costs" shall mean actual, direct costs paid or payable in accordance
with the established accounting procedures generally used by Grantor and which
it utilizes in billing third parties for reimbursable projects which costs shall
be limited to the following: (i) internal labor costs, including wages and
salaries, and benefits and
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overhead (provided that the costs of such benefits and overhead do not exceed
thirty percent (30%) of such wages and salary), and (ii) other direct costs and
out-of-pocket expenses on a pass-through basis (e.g., equipment, materials,
supplies, contract services, etc.).
1.17 "Dark Fiber" shall have the meaning set forth in Section 15.03.
1.18 "Designated Party" shall mean (i) Eagle River, Inc., Teledesic Corp.,
Nextel Communications, Inc., (***).
1.19 "Dispute Notice" shall have the meaning set forth in Article 24.
1.20 "Effective Date" shall have the meaning set forth in Section 5.01.
1.21 "Execution Contribution" shall have the meaning set forth in Section
4.01.
1.22 "Final Contribution" shall have the meaning set forth in Section 4.01.
1.23 "Force Majeure Event" shall have the meaning set forth in Article 19.
1.24 "Governmental Authority" shall mean any federal, state, regional,
county, city, municipal, local, territorial or tribal government, whether
foreign or domestic, or any department, agency, bureau or other administrative
or regulatory body obtaining authority from any of the foregoing, including,
without limitation, courts, public utilities and sewer authorities.
1.25 "Grantee Conduit" shall have the meaning set forth in Section 3.01.
1.26 "Grantee Delay Event" shall mean the failure of Grantee to timely
observe and perform its obligations and agreements hereunder, which failure
delays the construction and installation of the Grantor System with respect to
one or more segments.
1.27 "Grantee Fibers" shall have the meaning set forth in Section 3.01.
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1.28 "Grantor System" shall have the meaning set forth in the Recitals.
1.29 "Grantor Termination Point" shall have the meaning set forth in
Section 2.02.
1.30 "Hotel" shall mean a building in which points of presence of
interexchange carriers are found.
1.31 "Impositions" shall mean all taxes, fees, levies, imposed duties
charges or withholdings of any nature (including without limitation gross
receipts, taxes and franchise, license and permit fees), together with any
penalties, fines or interest thereon arising out of the transactions
contemplated by this Agreement and/or imposed upon the Grantor System, or any
part thereof, by any Governmental Authority.
1.32 "Incremental Costs" shall mean, with respect to Sections 7.02 and
7.06, the Costs of construction and installation of the Additional Grantee
Fibers but shall not include the cost of constructing and installing the conduit
in which such fibers are installed, the cost of constructing and installing the
Initial Grantee Fibers or any other costs associated with the Grantor System.
1.33 "Initial Grantee Fibers" shall have the meaning set forth in Section
3.01.
1.34 "IRU" shall have the meaning set forth in Section 3.01.
1.35 "IRU Contribution" shall have the meaning set forth in Section 4.01.
1.36 "Lien" shall mean any mortgage, pledge, hypothecation, claim,
assessment, security interest, lease, sublease, license, lien, conditional sale
contract, title retention contract, adverse or infringing claim or interest,
easement, encroachment, voting trust agreement, option, charge, right of first
refusal or other encumbrance or restriction of any kind, or rights of others or
other contract to give any of the foregoing, excluding any of the foregoing (i)
in favor of the grantor of any Required Right, or granted by the grantor of a
Required Right independent of the transactions contemplated by such Required
Right, (ii) arising under or resulting from the terms and provisions of, and the
execution by, Grantor of the instrument evidencing such Required Right, and
(iii) which are customary for agreements of that type.
1.37 "Major Cities" shall mean the cities designated as Major Cities listed
on Exhibit A-2.
1.38 "Minimum Period" shall mean, with respect to each Segment, a period of
(***) years from the Acceptance Date for such Segment.
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1.39 "Node Site" shall mean the facilities (other than long-distance
backbone Regeneration Facilities and Opamp Facilities) which accommodate or
house switch equipment, fiber optic transmission and associated ancillary
equipment to serve as a switch terminal, transport concentrator, hub terminal,
junction or end user pop location.
1.40 "Operating Expense Charge" shall have the meaning set forth in Section
13.02.
1.41 "Operating Expense Estimate" shall have the meaning set forth in
Section 13.05.
1.42 "Opamp Facilities" shall mean facilities to optically amplify lit
fibers as more particularly described on Exhibit "I".
1.43 "Option Right" shall have the meaning set forth in Section 6.01.
1.44 "Person" shall mean any natural person, corporation, partnership,
limited liability company, business trust, joint venture, association, company
or government, or any agency or political subdivision thereof.
1.45 "Phase" shall mean Phase One, Phase Two or Phase Three.
1.46 "Phase One" shall have the meaning set forth in Section 2.04.
1.47 "Phase Two" shall have the meaning set forth in Section 2.04.
1.48 "Phase Three" shall have the meaning set forth in Section 2.04.
1.49 "Pinch Event" shall have the meaning set forth in Section 7.02.
1.50 "Proprietary Information" shall have the meaning set forth in Section
23.01.
1.51 "Recurring Charges" shall mean the ROW Charge and the Operating
Expense Charge.
1.52 "Regeneration Facilities" shall mean facilities to regenerate the
signal of lit fibers as more particularly described on Exhibit "I".
1.53 "Required Rights" shall have the meaning set forth in Section 6.01.
1.54 "Required Right Payment" shall mean any payment which Grantor is
required to make to the grantor or provider of a Required Right pursuant to the
terms of the instrument governing such Required Right.
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1.55 "Route Miles" shall mean, for each Segment, the actual number of route
miles for such Segment as constructed, provided that, if the Grantor System
follows more than one route for all or any portion of a Segment, only the actual
route miles for the route containing the Initial Grantee Fibers shall be
included.
1.56 "ROW Charge" shall have the meaning set forth in Section 13.02.
1.57 "RRG" shall have the meaning set forth in Section 2.02.
1.58 "Segments" shall have the meaning set forth in Section 2.01.
1.59 "Segment End Points" shall have the meaning set forth in Section 2.01,
as the same may be extended and terminated pursuant to Section 2.02.
1.60 "System Route" shall have the meaning set forth in Section 2.01.
1.61 "Term" shall have the meaning set forth in Section 5.01.
ARTICLE 2.
SYSTEM ROUTE
2.01 Grantor shall cause the Grantor System to connect the city pairs
identified on Exhibit "B" attached hereto (each city identified on Exhibit "B"
is herein called a "Segment End Point", the route between the applicable Segment
End Points is herein called a "Segment", and all of the Segments together are
herein called the "System Route").
2.02 In the case of the Major Cities, Grantor shall cause the Grantor
System, or at a minimum the portion thereof in which Grantee shall receive the
IRU, to extend to (***) the serving manholes or access points located adjacent
to the building containing Grantee's Node Site as specified by Grantee in each
such Major City, in accordance with Exhibit "M" attached hereto, provided that
Grantee shall obtain all necessary permits or waivers for such extension from
the owner of such building and/or the owner of the real property on which such
building is located, and provided further that all end-point locations with
respect to the Major Cities will have diverse routing from the main backbone of
the Grantor System. In the event that, for any Major City, Exhibit "M" does not
contain the address of the building in which Grantee's Node Site will be
located,
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Grantee shall provide Grantor with such address, which will be within (***)
miles of the center point of the CBD, no later than (***) months prior to the
targeted completion date for such Major City set forth in Exhibits "B", "D" and
"E", except that Grantee shall have a 30-day grace period in circumstances where
Grantee has made substantial efforts to locate real estate to house its Node
Site. For all Segment End Points which are not Major Cities, the Grantor System,
or at a minimum the portion thereof in which Grantee shall have received the
IRU, shall connect to and terminate at a splice point contained in any of the
following, in Grantor's sole discretion: (i) a Node Site of Grantee or one of
its Affiliates in the CBD of such city, (ii) the primary or secondary Hotel for
such city, or (iii) a Regeneration Facility, Opamp Facility or a Node Site of
Grantor or one of its Affiliates in such city (each such Regeneration Facility,
Opamp Facility or Node Site of Grantor or one of its Affiliates, a "Grantor
Termination Point"), provided that (A) such Grantor Termination Point is located
within (***) miles of the center point of such city's CBD and (B) Grantor shall
return the Grantor System or such portion thereof in which Grantee shall receive
the IRU to a publicly dedicated street adjacent to such Grantor Termination
Point, provided that all end-point locations for cities other than Major Cities
will have diverse routing from the main backbone of the Grantor System to the
extent the Grantor System provides such diverse routing to Grantor or its
Affiliates. (***).
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The Grantor Termination Point in any Segment End Point shall be the same for all
Segments ending at such Segment End Point. 2.03 The specific location of the
System Route between Segment End Points is subject to Grantor obtaining the
Required Rights, provided that in any event Grantor shall cause the System Route
to connect the Segment End Points for each Segment. The Grantor System will be
constructed and installed in three phases (the "Phases"). The first Phase of the
Grantor System ("Phase One"), estimated at approximately 11,411 route miles,
shall include the Segments described on Exhibit "C"; the second Phase of the
Grantor System ("Phase Two"), estimated at approximately 3,714 route miles,
shall include the Segments described on Exhibit "D"; and the third Phase of the
Grantor System ("Phase Three"), estimated at approximately 910 route miles,
shall include the Segments described on Exhibit "E" provided that (i)
construction of each of (A) the Seattle to Vancouver Segment in Phase Three and
(B) the aggregate of the Albany to Montreal, Montreal to Toronto and Toronto to
Buffalo Segments in Phase Three, shall be optional in the sole discretion of
Grantor, and (ii) in the event Grantor elects to not construct the Seattle to
Vancouver Segment, the Final Contribution shall be reduced by the sum of (***)
and Grantee will not be required to pay the Completion Contribution set forth in
Exhibit "F" for the Seattle to Vancouver Segment, and (iii) in the event Grantor
elects not to construct the Albany to Montreal, Montreal to Toronto and Toronto
to Buffalo Segments in Phase Three, (A) the Final Contribution shall be reduced
by the sum of (***), and (B) an Albany to Buffalo Segment shall be added to
Phase One with a Completion Contribution equal to the aggregate amount set forth
in Exhibit "F" for the Albany to Montreal, Montreal to Toronto and Toronto to
Buffalo Segments less the sum of (***). Grantor shall provide Grantee with
written notice of the commencement of construction of each Phase promptly upon
commencement thereof and of any determination not to construct Phase Three. 2.05
Notwithstanding anything to the contrary contained herein, Grantor may elect, at
its option, to acquire any portions of the Grantor System from third parties
(whether under a lease, sublease, indefeasible right of use, or otherwise) in
lieu of constructing and installing the Grantor System respecting such portions;
(***).
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ARTICLE 3.
GRANT OF IRU
3.01 Subject to the terms of Article 7 below, as of the Effective Date for
each Segment delivered by Grantor to Grantee hereunder, Grantor hereby grants to
Grantee, and Grantee hereby acquires from Grantor for the purposes described
herein (i) an exclusive indefeasible right of use in (or, if and to the extent
provided in Section 3.02 hereof, ownership of), twenty-four (24) fibers (the
"Initial Grantee Fibers") plus (a) to the extent Grantee exercises its option
pursuant to Section 7.06, the fibers acquired by Grantee pursuant to such
option, (b) the fibers in excess of 24 delivered to Grantee pursuant to Section
7.02 and (c) fibers installed in the Grantee Conduit (the fibers described in
clauses (a), (b) and (c) are herein referred to as the "Additional Grantee
Fibers"), in each case to be specifically identified in the Cable or cables
between the Segment End Points for such Segment (the "Initial Grantee Fibers"
and the "Additional Grantee Fibers", together with all substitutions and
replacements thereof, are herein referred to as the "Grantee Fibers"), (ii) an
exclusive indefeasible right of use in (or, if and to the extent provided in
Section 3.02 hereof, ownership of) one specifically identified unoccupied
conduit in the Grantor System between the Segment End Points for
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each Segment (the "Grantee Conduit"), and (iii) an associated and non-exclusive
indefeasible right of use in the Associated Property with respect to such
Segment, all upon and subject to the terms and conditions set forth herein
(collectively the "IRU").
3.02 Notwithstanding anything contained herein to the contrary: (a) if and
to the extent not prohibited by the Required Right(s)for a particular Segment,
and (b) if the Required Right(s) with respect to such Segment do not and will
not impose upon Grantor any additional fees, costs or charges as a result
thereof (unless Grantee shall pay the same or make arangements satisfactory to
Grantor to assure such payment), Grantor shall, upon the request of Grantee and
on a Segment-by-Segment basis on the Acceptance Date with respect to such
Segment and without the need for any further action or execution of documents by
Grantor to Grantee: (i) transfer title to the Grantee Fibers and the Grantee
Conduit to Grantee free and clear of all Liens attributable to Grantor;
(ii)grant to Grantee a lease, subeasement or similar agreement providing
rights (at no additional cost to or monetary obligations of Grantee, except to
the extent provided in clause (b) above) to Grantee substantially identical to
the rights held by Grantor under the relevant Required Right(s) (a
"Sublease"); and (iii) continue the grant of the IRU in the Associated
Property. Nothing in this Section 3.02 or in any such Sublease shall
relieve Grantor or Grantee of its rights, duties and obligations set forth
in this Agreement or diminish, enlarge or otherwise affect such rights,
duties and obligations (except that, to the extent applicable under this
Section 3.02, Grantee's property interest will consist of title in the Grantee
Fibers and the Grantee Conduit and a grant of a Sublease) and if any Sublease
shall terminate or Grantee shall be otherwise subsequently prohibited from
owning title to the Grantee Fibers and the Grantee Conduit, Grantor shall
maintain the Required Rights in accordance with and pursuant to Article 6, title
to such Grantee fibers and Grantee Conduit shall revert and be reconveyed to
Grantor and Grantee shall have and retain the IRU in such Grantee Fibers and
Grantee Conduit under and subject to the terms and conditions of this Agreement.
3.03 Except to the extent not permitted by any Required Right, Grantor
hereby grants to Grantee a security interest and lien in all of Grantor's right,
title and interest in
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the Grantee Fibers and the Grantee Conduit, whether now or hereafter acquired,
in order to secure performance of Grantor's obligations to Grantee in this
Agreement.
3.04 Grantor shall use commercially reasonable best efforts to cause
construction and Acceptance Testing for all Segments to be successfully
completed no later than (***) (or in the case of Phase Three, the earlier of
(***) and (***) months after the commencement of construction thereof) and, if
not so completed by such date, then as soon as practicable thereafter. Grantor
acknowledges that time is of the essence in this Agreement and that Grantee is
relying on delivery of all Segments by such date. In light of the fact that it
would be impossible to calculate the reduction in the value of the IRU that
Grantee bargained for in the event that construction or Acceptance Testing for
any Segment is not completed by such date, or if Grantor fails to deliver any
Segment altogether, Grantor and Grantee hereby agree to the following payments
and/or reductions (which constitute adjustments to the IRU Contribution), which
except as otherwise specifically provided for in paragraph (i) below, shall be
the sole remedy of Grantee in the event of the late delivery or non-delivery of
any Segment:
(a) At any time that Grantor determines, in its best judgment, that the
Acceptance Date for any Segment will be delayed past (***), it shall deliver to
Grantee a notice in writing (a "Delay Notice"), specifying the Segment or
Segments affected, stating that the Acceptance Date(s) for such Segments will be
delayed past (***), and setting forth a new firm delivery date(s) for such
Segments. Grantor may not deliver more than two Delay Notices in respect of any
segment, and may only deliver a second Delay Notice in respect of any Segment if
the second Delay Notice sets forth an earlier firm delivery date for such
Segment Date. Such firm delivery date, as it may be revised in a second Delay
Notice, is hereinafter referred to as the "Revised Delivery Date" for such
Segment.
(b) If Grantor delivers to Grantee a Delay Notice for any Segment, then the
following provisions shall apply: (i) Grantee may terminate this Agreement as to
such Segment at any time on or prior to (x) the date which is the later of (A)
ninety (90) days following the date of delivery of such Delay Notice and (B) six
(6) months prior to the Revised Delivery Date
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for such Segment or (y) the Acceptance Date with respect to such Segment, if the
Acceptance Date for such Segment does not occur on or prior to its Revised
Delivery Date. Upon any such termination pursuant to this paragraph (b), Grantor
shall pay Grantee, in respect of the non-delivery of such Segment, an amount
equal to the Total Contribution for such Segment multiplied, in the case of
termination pursuant to clause (x) above, by the First Adjustment Factor, and in
the case of termination pursuant to clause (y) above, by the Second Adjustment
Factor.
(ii) If Grantee does not terminate this Agreement as to such
Segment, the Completion Contribution for such Segment shall be reduced by an
amount equal to the sum of (x) the Total Contribution for such Segment
multiplied by the sum of (A) either (1) if the Revised Delivery Date for such
Segment is on or prior to (***) multiplied by the number of whole or partial
months occurring during the period from and including (***) and to and including
the month in which the Revised Delivery Date occurs, or (2) if the Revised
Delivery Date for such Segment is on or after (***), the sum of (***) multiplied
by the number of whole or partial months occurring during the period from and
including (***) and to and including the month in which the Revised Delivery
Date occurs plus (***), plus (B) (***) multiplied by the number of whole or
partial months during the period from and including the Revised Delivery Date
and to and including the month in which the Acceptance Date occurs, plus (C) the
Additional Percentage, if any, based on the date of delivery of the Delay Notice
as to such Segment, plus (y) the Second Notice Amount, if any, arising out of
the delivery of a second Delay Notice as to such Segment. Grantee shall notify
Grantor of the Second Notice Amount at the time of payment of such Completion
Contribution.
(c) If Grantor fails to deliver a Delay Notice as to any Segment, then the
following provisions shall apply: (i) If the Acceptance Date for such Segment
occurs after (***), and on or prior to (***), the Completion Contribution for
such Segment shall be reduced by an amount equal to the Total Contribution for
such Segment multiplied by (***) multiplied by the number of whole or partial
months occurring during
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the period from and including (***) and to and including the month in which such
Acceptance Date occurs.
(ii) If the Acceptance Date for such Segment has not occurred
on or prior to (***), Grantee may terminate this Agreement with respect to such
Segment at any time on or prior to such Acceptance Date, in which case Grantor
shall pay Grantee, in respect of the non-delivery of such Segment, an amount
equal to the Total Contribution for such Segment multiplied by (x) if Grantee
has sent Grantor a Reminder with respect to such Segment at least 10 days prior
to the date of such termination, (***) or (y) if Grantee has not sent Grantor a
Reminder with respect to such Segment at least 10 days prior to the date of such
termination, the amount that would have been payable in respect of such
termination under paragraph (b)(i)(x) above as if Grantor had sent a Delay
Notice on (***) specifying a Revised Delivery Date the same as the date of
termination.
(iii) If the Acceptance Date for such Segment has not occurred
on or prior to (***), and if Grantee does not terminate this Agreement as to
such Segment, the Completion Contribution for such Segment shall be reduced by
an amount equal to the Total Contribution for such Segment multiplied by (x) if
Grantee has sent Grantor a Reminder with respect to such Segment at least 10
days prior to the Acceptance Date, (***) or (y) if Grantee has not sent Grantor
a Reminder with respect to such Segment at least 10 days prior to the Acceptance
Date, the amount of such reduction that would have been applicable in respect of
such Completion Contribution under paragraph (b) above as if Grantor had sent a
Delay Notice on (***) specifying a Revised Delivery Date the same as the
Acceptance Date.
(d) In the event the Acceptance Date for a Segment has not occurred by
(***) and Grantee has not terminated this Agreement as to such Segment prior to
such date, this Agreement shall be deemed terminated as to such Segment on
(***), in which case Grantor shall pay Grantee, in respect of the non-delivery
of such Segment, an amount equal to the Total Contribution for such Segment
multiplied by (***).
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(e) Grantor shall pay Grantee any amounts required by the foregoing
paragraphs to be paid within thirty (30) days after termination of this
Agreement as to any Segment. Any sums not paid by Grantor when due shall bear
interest at the rate of eighteen percent (18%) per annum. Grantee shall have the
right to set off against any other amounts payable to Grantor under this
Agreement the amount of any payment due Grantee pursuant to this Section 3.04.
All payments by Grantor pursuant to this Section 3.04, and all adjustments to
the Completion Contributions payable by Grantee on the Acceptance Date of
Segments, shall be treated by both Grantor and Grantee as adjustments to the IRU
Contribution payable hereunder. Grantor and Grantee shall file (and shall cause
their respective parents to file) their respective income tax returns and other
returns and reports for their respective businesses on such basis and, except as
otherwise required by law, not take any positions inconsistent therewith.
(f) In the event that Grantor breaches its obligations in the first
sentence of this Section 3.04 as to any Segment, Grantee may terminate this
Agreement as to such Segment. Upon any such termination pursuant to this
paragraph (f), Grantor shall pay Grantee, in respect of the non-delivery of such
Segment, an amount equal to the Total Contribution for such Segment multiplied
by (***).
(g) As used in this Section 3.04, the following terms shall have the
meanings set forth below:
(i) "Additional Percentage" shall be (***) and (***),
respectively, with respect to any Segment if the Delay Notice for such Segment
is delivered on or before (***) and at any time on or after (***), respectively.
(ii) "First Adjustment Factor" shall equal, as to any Segment,
(w) (***) multiplied by the number of whole or partial months in the period from
and including (***) and to and including the month in which the Revised Delivery
Date occurs, if the Revised Delivery Date is on or before (***), (x) (***), if
the Revised Delivery Date is on or after (***) and on or before (***), (y)
(***), if the Revised Delivery Date is on or after (***) and on or before (***),
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or (z) (***), if the Revised Delivery Date is on or after (***), in each case
plus the Additional Percentage, if any, based on the date of delivery of the
Delay Notice.
(iii) "Reminder" shall mean a written notice sent on or after
(***) by Grantee to Grantor reminding Grantor of Grantee's termination rights
under paragraph (d) of this Section 3.04 as to any Segments not for which the
Acceptance Date has not occurred and Grantor has not prior thereto delivered a
Delay Notice.
(iv) " Second Adjustment Factor" shall equal, as to any
Segment, (x) (***) plus (y) (***) multiplied by the number of whole or partial
months in the period from and including (***) and to and including the month in
which Grantee notifies Grantor in writing of the termination of this Agreement
as to such Segment.
(v) "Second Notice Amount" shall mean, as to any Segment
regarding which Grantor has delivered a second Delay Notice, an amount, not to
exceed the product of (***) multiplied by the number of whole or partial months
occurring during the period from and including the Acceptance Date for such
Segment and to and including the month in which the Revised Delivery Date set
forth in the original Delay Notice occurs, determined by Grantee, absent bad
faith, to be necessary to compensate it for costs incurred, business
opportunities foregone or damages otherwise suffered based upon the initial
notification of the Revised Delivery Date which are not fully compensated for by
the earlier delivery of such Segment.
(vi) "Total Contribution" for any Segment shall be deemed to
equal, for purposes of convenience in this Section 3.04 only, and for no other
purposes whatsoever, an amount equal to 70/60.375 multiplied by the Completion
Contribution due upon the Acceptance Date for such Segment as set forth in
Exhibit "F".
(h) Under circumstances where more than one of the foregoing paragraphs may
apply to the termination of this Agreement as to any Segment, Grantee shall not
be entitled to payment under more than one of the such paragraphs. Each of the
foregoing paragraphs shall be limited by the provision that in no event shall
the payments in respect of the non-delivery of any Segment, or the reductions in
the amount of the Completion Contribution with respect to any Segment, required
under this Section 3.04 exceed (***) of the Total Contribution for such
Segments.
16
(i) (i) (***).
(ii) If Grantee accepts such offer, the amount of the Completion
Contribution and/or Recurring Charges payable with respect to such Segment upon
acceptance of such fibers and/or conduit shall be reduced by an amount (not to
exceed (***) of 70/60.375 of the Completion Contribution), as Grantor and
Grantee shall agree, in good faith, to reflect the reduced value of the fibers
and/or conduit accepted as compared to what Grantee had bargained for hereunder,
taking into account, if this Agreement has been terminated as to such Segment
prior to the acceptance of such offer by Grantee, any amounts already paid by
Grantor in respect of the non-delivery of such Segment. The amounts of the
Execution Contribution, Commencement Contribution and Final Contribution shall
also all be reduced by an amount equal to, in each case, the original amount
thereof multiplied by the products of 17.5/700, 8.75/700 and 70/700,
respectively, multiplied by the percentage reduction in the Completion
Contribution for such Segment. If Grantor and Grantee shall be unable to agree
upon the appropriate reductions in the Completion Contribution and Recurring
Charges payable hereunder within the thirty (30) day period following acceptance
by Grantee of such offer, the amount of the reductions shall be determined
through an arbitration procedure in accordance with Section 24.01(iv).
17
(iii) If Grantee rejects such offer, the preceding provisions
of this Section 3.04 shall continue to apply as to such Segment, provided that
this paragraph (i) shall continue to apply to other fibers and or conduits
constructed or acquired by Grantor or its Affiliates prior to (***).
(iv) If this Agreement has been terminated as to any Segment
prior to the time that the payments and/or reductions provided for in this
Section 3.04 no longer constitute the sole remedy of Grantee in respect of the
non-delivery of such Segment, then even if Grantor has prior thereto made a
payment to Grantee in respect of the non-delivery of such Segment, Grantee may
nevertheless bring an action for damages for the non-delivery of such Segment,
in which case the amount of any damages awarded shall be reduced by the amount
previously paid by Grantor to Grantee.
(j) The determination as to whether the delivery of any Segment is late
shall be made after taking into consideration the effect of any Grantee Delay
Events or Force Majeure Events applicable to such Segment.
(k) In the event that this Agreement has been terminated with respect to
one or more Segments, the amount of the Final Contribution shall be reduced by
an amount equal to (x) the original Final Contribution set forth on Exhibit "F"
multiplied by (y) a fraction, the number of which is the total of the amounts of
the Completion Contributions set forth on Exhibit "F" for all such terminated
Segments divided by the total original Completion Contribution set forth on
Exhibit "F" and Grantor shall reimburse Grantee in an amount equal to (A) the
sum of the original Execution Contribution and Commencement Contribution set
forth on Exhibit "F" multiplied by (B) the fraction set forth in clause (y)
above.
ARTICLE 4.
CONSIDERATION
4.01 Grantee agrees to make contributions to Grantor for the construction
of the Grantor System as set forth in Exhibit "F", as such amount may be
adjusted as provided herein (the "IRU Contribution"). The IRU Contribution shall
consist of a contribution to
18
be made upon execution of this Agreement (the "Execution Contribution"), a
contribution to be made upon Grantor's commencement of construction of the
Grantor System (the "Commencement Contribution"), a contribution to be made with
respect to each Segment on the Acceptance Date for such Segment (the "Completion
Contribution") and a contribution to be made upon final completion of the
Grantor System, excluding any Segments terminated by Grantee pursuant to Section
3.04 or otherwise undelivered by Grantor (the "Final Contribution"), all as more
particularly described in Exhibit "F".
4.02 In addition to the IRU Contribution, Grantee shall pay directly or
reimburse Grantor for all other sums, costs, fees and expenses which are
expressly provided to be paid by Grantee under this Agreement, including without
limitation, the Recurring Charges. Except as expressly set forth in this
Agreement, Grantee shall have no obligation to pay any amounts in respect of the
IRU granted hereunder.
4.03 Grantor will deliver to Grantee invoices for payments of the IRU
Contribution and all other sums, costs, fees and expenses owed by Grantee to
Grantor hereunder and Grantee shall pay such invoiced amounts, less any
reasonably disputed amounts, within thirty (30) days after receipt of such
invoice. Grantee shall provide Grantor with written notice by the payment due
date describing in reasonable detail the basis for any disputed amounts;
provided that any disputed amounts resolved in favor of Grantor shall thereafter
be paid promptly by Grantee. Any sums not paid by Grantee when due shall bear
interest at the rate of eighteen (18%) per annum, other than reasonably disputed
amounts, which shall bear interest at the rate of twelve percent (12%) per
annum.
4.04 Grantor agrees that it will not, for a period of (***) years after the
Acceptance Date of the last Segment delivered hereunder, sell, transfer or grant
rights of use or similar rights to use any facilities, in whole or in part, in
the Grantor System (other than to an Affiliate of Level 3 Communications, Inc.
or an RRG) upon economic or other material terms more beneficial than those
provided to Grantee hereunder. Prior to entering into any agreement or other
arrangement with any other Person (other than such a subsidiary or such an RRG)
regarding the use or transfer of all or part of the Grantor System, (i) Grantor
will provide Grantee with sufficient detail of the terms thereof (the
19
confidentiality of which information shall be maintained by Grantee as provided
in Article 23) in order to enable Grantee to compare such terms to those
provided to Grantee hereunder and (ii) at Grantee's option, this Agreement shall
be modified to give Grantee the benefits of the more beneficial economic or
other material terms contained in such other agreement or arrangement. In the
event that Grantor and Grantee are unable to agree whether such terms are more
beneficial or have been appropriately incorporated in this Agreement, if Grantee
so requests, the parties shall submit such disagreement to arbitration in
accordance with Section 24.01(iv). The provisions of this Section 4.04 shall
survive any modification of this Agreement pursuant to this Section 4.04. A
merger or consolidation of Grantor or a sale by Grantor of all or substantially
all of its assets shall not be considered a sale, transfer or grant of rights to
use the Grantor System covered by this Section 4.04.
ARTICLE 5.
TERM
5.01 The IRU with respect to each Segment shall become effective (and the
transfer of title to the Grantee Fibers and the Grantee Conduit for each
Segment, if applicable, shall occur) on the first day when both (i) the
Acceptance Date with respect to the Segment has occurred and (ii) Grantor has
received payment of all of the IRU Contribution then due to Grantor for such
Segment (as to such Segment, its "Effective Date"). Subject to the provisions of
Article 6 and Article 7, the IRU with respect to each Segment shall terminate at
the end of the economically useful life of both the Grantee Fibers and Grantee
Conduit within such Segment, as determined pursuant to Section 5.03 (the
"Term").
5.02 Notwithstanding anything in this Agreement to the contrary, the Term
with respect to each Segment shall not be less than the Minimum Period. Grantor
shall take all such actions as may be necessary to cause each Required Right to
remain in effect so that the Term for each Segment shall be not less than the
Minimum Period (including, without limitation, exercising any renewal rights
under any Required Right, or otherwise
20
acquiring at no cost to Grantee such extensions or additions of any Required
Right and/or obtaining replacements or substitutions of any Required Right (and
relocating such Segment or portions thereof at Grantor's sole cost under Section
6.05) as may be necessary, in order to cause the term of each such Required
Right, or such replacement or substitution thereof, to be continued until a date
that is not earlier than the last day of the Minimum Period for such Segment).
5.03 Grantee shall determine, in its sole discretion, when the Grantee
Fibers and/or Grantee Conduit with respect to any Segment shall have reached the
end of their economically useful life and shall give written notice of such
determination to Grantor. Upon any such determination by Grantee after the
Minimum Period, the Term shall expire with respect to such Grantee Fibers and/or
Grantee Conduit in such Segment and all title to and/or rights to the use
thereof shall revert to Grantor without reimbursement of any of the IRU
Contribution or other sums, costs, fees or expenses previously made with respect
thereto, and from and after such time Grantee shall have no further rights,
obligations or liabilities hereunder or any other liability with respect thereto
unless such rights, obligations or liabilities are specifically provided herein
to survive the Term.
5.04 Absent a determination by Grantee under Section 5.03, at the end of
the Term for each Segment, at Grantee's option, (i) Grantor shall transfer all
of Grantor's right, title and interest to the Grantee Fibers and the Grantee
Conduit within such Segment not then owned by Grantee to Grantee for $1.00
(except if Grantee has given written notice as to such Segment described in
Section 5.03), in which case Grantee shall assume, and Grantor shall be relieved
of, all obligations in connection therewith, or (ii) Grantee shall transfer all
of Grantee's right, title and interest to the Grantee Fibers and the Grantee
Conduit within such Segment not then owned by Grantor to Grantor for $1.00.
5.05 Grantor and Grantee acknowledge and agree that Grantee shall be
treated for accounting and federal and all applicable state tax purposes as the
exclusive beneficial owner of all Grantee Fibers and Grantee Conduit (each of
which constitutes an interest in real property) with respect to which it has
received an IRU hereunder, and as the holder of an associated non-exclusive
indefeasible right of use in the Associated Property (which constitutes a
leasehold interest in real property). Grantor and Grantee further agree that
21
the transactions contemplated in this Agreement constitute, for accounting and
federal and applicable state tax purposes, a joint undertaking to share and
minimize the expenses of constructing of each party's respective
telecommunications network, and not as a separate entity or as a sale or lease
(except with respect to lease of the Associated Property). Grantor and Grantee
shall file (and shall cause their respective Parents to file) their respective
income tax returns and other returns and reports for their respective
Impositions on such basis and, except as otherwise required by law, not take any
positions inconsistent therewith.
5.06 This Agreement shall become effective on the date hereof, subject to
Section 20.04 hereof, and shall terminate on the date when, after completion and
delivery of the Segments all the Terms of all such Segments shall have expired
or terminated, except that Articles 16, 24 and those provisions of this
Agreement which are expressly provided herein to survive such termination shall
remain binding on the parties hereto.
5.07 If (i) Grantee or an entity which directly or indirectly controls
Grantee (each a "Grantee Parent") makes a general assignment for the benefit of
its creditors, files a voluntary petition in bankruptcy or any petition or
answer seeking, consenting to, or acquiescing in reorganization, arrangement,
adjustment, composition, liquidation, dissolution, or similar relief, (ii) an
involuntary petition in bankruptcy or other insolvency protection against
Grantee or any Grantee Parent is filed and not dismissed within one hundred
twenty (120) days, (iii) Grantee or any Grantee Parent defaults with respect to
any borrowed money indebtedness of Grantee or such Grantee Parent having a
principal amount in excess of (***), which indebtedness is already due and
payable in full or which default has resulted in, or would permit, the
acceleration of the maturity of such indebtedness, (iv) except as provided in
(v) below, Grantee materially breaches this Agreement and such breach remains
uncured for 30 days (or, if not susceptible of cure within such period, cure has
not been commenced and diligently pursued thereafter) after written notice
thereof by Grantor, (v) Grantee fails, for a period of ten (10) days following
written notice by Grantor of such failure, to make payment in excess of an
aggregate of (***) due hereunder (unless the unpaid sum is being disputed in
good faith), or (vi) any Permitted Guarantor shall materially breach Section 16
of its guaranty
22
referred to in Section 20.06 and such breach shall have a material adverse
effect or such Permitted Guarantor's ability to perform under such Guaranty, and
such breach remains uncured (or Grantee has not substituted a new Guaranty
therefor) for 30 days (or, if not susceptible of cure within such period, cure
has not been commenced and diligently pursued thereafter) after written notice
thereof by Grantor, Grantor may, upon twenty (20) days prior written notice to
Grantee and while such event is continuing, terminate this Agreement as to all
Segments as to which Grantee has not yet paid the Completion Contribution, in
which case Grantee shall have no further obligation to make any payments
hereunder as to the Segments terminated. In addition, upon the occurrence of any
event described in clauses (iv) or (v) above, in addition to any other remedies
available to Grantor at law or in equity, including specific performance and
injunctive relief, Grantor shall have no obligations under Article 12 hereunder
as to any Segments as to which Grantee has paid the Completion Contribution,
unless and until such default is cured. Except as provided in the immediately
preceding sentence, and notwithstanding other provisions in this Agreement to
the contrary, Grantor acknowledges and agrees that Grantor shall have no right
under any circumstances to terminate the IRU, in whole or in part, or any of the
rights and interests of Grantee hereunder, with respect to any Segment for which
the Completion Contribution relating thereto has been fully paid in accordance
with the terms hereof prior to the termination of the Term of such Segment. 5.08
If (i) Grantor or an entity which directly or indirectly controls Grantor (each
a "Grantor Parent") makes a general assignment for the benefit of its creditors,
files a voluntary petition in bankruptcy or the filing by Grantor or any Grantor
Parent of any petition or answer seeking, consenting to, or acquiescing in
reorganization, arrangement, adjustment, composition, liquidation, dissolution,
or similar relief, (ii) an involuntary petition in bankruptcy or other
insolvency protection against Grantor or any Grantor Parent is filed and not
dismissed within one hundred twenty (120) days, (iii) Grantor or any Grantor
Parent defaults with respect to any borrowed money indebtedness of Grantor or
such Grantor Parent having a principal amount in excess of (***), which
indebtedness is already due and payable in full or which default has resulted
in, or would permit, the acceleration of the maturity of such indebtedness, (iv)
Grantor materially
23
breaches this Agreement (except breaches covered by Section 3.04) and such
breach remains uncured 30 days (or, if not susceptible of cure within such
period, cure has not been commenced and diligently pursued thereafter) after
written notice thereof by Grantee, or (v) Level 3 Communications, Inc. (or any
successor guarantor thereunder) shall materially breach Section 16 of its
guaranty referred to in Section 20.05 and such breach shall have a material
adverse effect on its ability to perform under such guaranty, and such breach
remains uncured for 30 days (or, if not susceptible of cure within such period,
cure has not been commenced and diligently pursued thereafter) after written
notice thereof by Grantee, then, after written notice thereof from Grantee,
Grantee may (i) terminate this Agreement, in whole or in part, in which case
Grantee shall have no further obligation to make any payments hereunder as to
the portion terminated, and (ii) subject to Article 17, pursue any legal
remedies it may have under applicable law or principles of equity relating to
such default, including specific performance and injunctive relief.
ARTICLE 6.
REQUIRED RIGHTS
6.01 Grantor covenants and agrees that, during the Term of each Segment, it
shall obtain and maintain in full force and effect all rights, licenses,
permits, authorizations, rights-of-way, easements and other agreements which are
necessary in order to permit Grantor to construct, install, keep installed and
maintain the Grantee Fibers and Grantee Conduit comprising such Segment, to
grant the IRU and to provide Grantee with all other rights and privileges (it
being understood that Grantee's option rights under Section 7.06, prior to the
exercise thereof, shall not be considered for this purpose) under this Agreement
(collectively, the "Required Rights"). Grantor shall use its commercially
reasonable best efforts to cause each such Required Right to provide (a) Grantee
with notice of any default on the part of Grantor thereunder and to permit
Grantee to cure, on behalf of and at the expense of Grantor, any such default
and, thereafter, to continue the use of such Required Right in accordance with
Grantor's rights and interests thereunder, (b) subject to the last sentence of
this Section 6.01, option or
24
renewal rights ("Option Rights") permitting the stated term of each Required
Right to be continued until the end of the economically useful life of the
Grantee Fibers and Grantee Conduit located in the Segment to which such Required
Right relates or otherwise beyond the scheduled expiration date of such Required
Right and (c) provide Grantee with non-disturbance agreements (in form and
substance reasonably satisfactory to Grantee) relating to the Grantee Fibers,
the Grantee Conduit, the Associated Property and Grantee's interest in, and/or
ownership and use thereof. Each Required Right shall by its terms, or by the
terms of an option or similar renewal right exercisable at the sole discretion
of Grantor, remain in effect for the Minimum Period for each Segment covered
thereby, (***), provided further that Grantor shall nevertheless remain bound by
the provisions of Section 5.02 with respect to such Required Rights.
6.02 Grantor further covenants and agrees that during the Term of the IRU
with respect to each Segment:
(a) Grantor shall observe and perform each and every of its obligations
under each Required Right if the failure to observe and perform any such
obligation or obligations would permit the grantor or provider of such Required
Right to terminate such Required Right prior to its stated expiration date or to
increase the fees, charges or assessments due to such grantor or provider, or
would otherwise adversely impair or affect Grantee's rights to use the Grantee
Fibers, the Grantee Conduit and the Associated Property hereunder;
(b) in the event Grantor shall receive notice from any grantor or provider
of a Required Right that Grantor has failed to observe or perform its
obligations under such Required Right (unless Grantor is contesting the validity
of such claimed or alleged failure in good faith, provided such contest does not
adversely impair or affect Grantee's rights hereunder ), Grantor shall give
written notice of such failure to Grantee (promptly following the date Grantor
shall have received notice of such failure) and Grantee may, at its option
(subject to the terms and provisions of the Required Right and
25
the ability of third parties to cure defaults of Grantor thereunder), (i) cure
or correct any such failure and (ii) pay any subsequent amounts due under such
Required Right to the grantor or provider if such Required Right unless Grantee
shall have received written notice from Grantor that Grantor will pay timely all
such amounts;
(c) in the event Grantor is in default of any of its obligations under any
Required Right and Grantee cures such default pursuant to Section 6.02(b)(i) or
Grantee exercises its rights pursuant to Section 6.02 (b)(ii) , Grantor shall
reimburse Grantee promptly upon demand for any and all amounts reasonably paid
by Grantee;
(d) Grantor shall at its sole reasonable cost and expense defend and
protect Grantor's rights in and interests under each Required Right, and
Grantee's rights under this Agreement and Grantee's interest in the Grantee
Fibers, the Grantee Conduit, any Sublease and the Associated Property, against
all Liens attributable to Grantor;
(e) Grantor shall not exercise any right or otherwise take any action under
a Required Right which is inconsistent with its obligations, or Grantee's rights
under this Agreement, nor shall Grantor fail to exercise any such rights if such
failure would be inconsistent with such obligations or rights or would otherwise
adversely affect Grantee's ownership of and/or indefeasible right to use the
Grantee Fibers, the Grantee Conduit and the Associated Property hereunder;
(f) Grantor shall not take any action which would result in the termination
of a Required Right prior to its scheduled expiration (including any extended
term pursuant to an exercised option); and
(g) In the event that (i) the grantor or provider of a Required Right is in
default under such Required Right, (ii) such grantor or provider makes a general
assignment for the benefit of its creditors, files a voluntary petition in
bankruptcy or any petition or consider seeking, consenting to, or acquiescing in
reorganization, arrangement, adjustment, composition, liquidation, dissolution
or similar relief, (iii) an involuntary petition in bankruptcy or other
insolvency protection against such grantor or provider is filed or (iv) any
other event or condition arises which may materially adversely affect Grantor's
rights under such Required Right or Grantee's rights under this Agreement, then
Grantor shall provide Grantee with prompt written notice of each such event or
26
condition and keep Grantee reasonably informed with respect to any subsequent
developments relating thereto.
6.03 In the event any Required Right shall contain, or shall otherwise be
subject to, an Option Right in favor of Grantor with respect to any portion of
the Grantor System, Grantor shall give Grantee written notice thereof at least
90 days prior to the last date required for exercise thereof and either (i)
exercise such Option Right (provided that (a) Grantor shall not be required to
expend, as consideration for exercising any such Option Right, more than the
fair market rate payable at such time for similar rights and terms, except to
the extent that Grantee and the other users of the Grantor System agree at their
option to pay directly or reimburse Grantor for any amounts required to be paid
in excess of such fair market rate, and (b) any such extension shall not modify
the rights or obligations of Grantor or Grantee under this Agreement (including,
without limitation, the amount of fees payable by Grantee pursuant to Article
13)) or (ii) if Grantor elects not to exercise such Option Right and Grantee
wishes to exercise such Option Right and continue to use the portion of the
Grantor System to which such Option Right relates, then Grantor shall (a) if
such Option Right and the Required Right relating thereto are assignable, assign
its interest therein and in such portion of the Grantor System (including,
without limitation, all facilities and rights therein) to Grantee for $1.00 or
(b) if such Option Right or the Required Right relating thereto are not
assignable, exercise such Option Right on behalf of Grantee pursuant to this
Section 6.03, whereupon Grantor shall have no further right, title, interest or
obligation (and Grantee shall have all such right, title, interest and
obligation) under this Agreement to or with respect to such affected portion of
the Grantor System during the period of extension or renewal, provided, and on
the condition, that Grantee shall assume and agree to pay, observe and perform
all of the duties, obligations and liabilities associated with such Required
Right relating to such affected portion arising after the date of such
assumption and shall indemnify Grantor in accordance with Article 16 with
respect to any Losses suffered by Grantor relating to the duties, obligations
and liabilities assumed by Grantee pursuant to this sentence.
27
6.04 Subject to Grantor's compliance with Sections 6.01, 6.02 and 6.03,
then notwithstanding any other provision of this Agreement to the contrary, if a
Required Right expires or otherwise terminates at any time after the Minimum
Period, the Term (with respect to the Segment or Segments or portions thereof
affected thereby) shall likewise automatically expire; provided that, in the
event Grantor or any of its Affiliates shall extend, renew or enter into a new
agreement with respect to such Required Right, the Term shall continue with
respect to such Segment or Segments or portions thereof until the subsequent
expiration or termination of such Required Right; provided further that any such
extension, renewal or new agreement shall not modify the rights or obligations
of Grantor or Grantee under this Agreement (including, without limitation, the
amount of fees payable by Grantee pursuant to Article 13).
6.05 If, after the Acceptance Date with respect to a Segment, Grantor is
required by any Governmental Authority, or by any grantor or provider of a
Required Right prior to the scheduled expiration of such Required Right, to
surrender, cease using or relocate such Segment or portion thereof, including
any of the facilities used or required in providing the IRU, Grantor shall
relocate such Segment of portion thereof and shall have the right, in good
faith, to reasonably determine the extent and timing of, and methods to be used
for such relocation; provided that (i) Grantee shall be kept fully informed of
all actions to be taken and determinations made by Grantor in connection with
such relocation, (ii) any such relocated Segment or portion thereof shall (a) be
constructed in accordance with the construction specifications set forth in
Exhibits "G" and "J" and incorporate fiber and conduit meeting the
specifications set forth in Exhibit "H" (b) be subject to successful completion
of Acceptance Testing (which shall be completed, if practicable, prior to
termination of service on the affected portion of the Grantor System) and (c)
contain the same number of Grantee Fibers as the Segment or portion thereof
being relocated and, if the Segment or portion thereof being relocated contains
the Grantee Conduit, any such relocated Segment or portion thereof shall contain
the Grantee Conduit and (iii) Grantor shall use its commercially reasonable best
efforts to minimize any disruption resulting from such relocation to Grantee's
telecommunication operations. Unless such relocation is the result of a failure
by Grantor to observe and
28
perform its obligations under any Required Rights or this Agreement (e.g.,
failure to obtain a Required Right with a scheduled term at least equal to the
Minimum Period or failure to comply with the terms thereof in order to maintain
such Required Right in effect for the Minimum Period), Grantee shall reimburse
Grantor for its proportionate share of the Costs of such relocation of such
Segment or portion thereof (to the extent Grantor has not been reimbursed or
otherwise compensated by any other Person) as follows: (i) if the affected
Segment or portion thereof includes any conduits (whether or not occupied), the
total Costs of relocation of the affected conduits shall be allocated (***).
6.06 Notwithstanding anything in this Agreement to the contrary, the IRU
and Grantee's rights are subject to the terms of the Required Rights, provided
that the Required Rights shall not contain terms, provisions or obligations
which conflict or are inconsistent with Grantee's rights (it being understood
that Grantee's option rights under Section 7.06, prior to the exercise thereof,
shall not be considered for this purpose) under the IRU or this Agreement or
Grantor's obligations thereunder or hereunder or which impose any other material
obligations or duties on Grantee, and provided further that the Required Rights
may contain customary provisions regarding access and other customary
restrictions and limitations. Except as otherwise provided in this Agreement,
Grantor will not obtain for itself or any of its Affiliates any material rights
or benefits in respect of the Grantor System from the grantor or provider of any
Required Right that it does not make available or cause to be made available to
Grantee on comparable terms.
29
ARTICLE 7.
CONDUIT
7.01 Grantor shall use its commercially reasonable best efforts to have the
IRU for each Segment of the Grantor System consist of 24 fibers and one
unoccupied conduit (or comparable aerial segment).
7.02 (***).
30
7.03 Grantor shall give written notice to Grantee of the likely occurrence
of a Pinch Event with respect to a Segment or a portion thereof, promptly
following Grantor's knowledge of the likelihood of such Pinch Event, which
notice shall certify that, in Grantor's good faith determination, either (i)
such Pinch Event will be temporary and Grantor will deliver the Grantee Conduit
in such Segment or portion thereof by the date specified in such notice (which
date shall not be later than the applicable Completion Date) or (ii) such Pinch
Event will be permanent and Grantor will not deliver the Grantee Conduit by the
applicable Completion Date. Notwithstanding anything in this Agreement to the
contrary, (a) in the event that Grantor delivers a notice pursuant to clause (i)
above, for purposes of determining the Minimum Period with respect to such
Segment only, the Acceptance Date for the Segment or portion thereof to which
such notice relates shall not commence until the date that the Grantee Conduit
has been delivered and (b) in the event that Grantor delivers a notice pursuant
to clause (ii) above, then Grantor shall have no obligation to deliver, and
Grantee shall have no obligation to accept or pay for, the Grantee Conduit in
the Segment or portion thereof to which such notice relates after the date of
such notice. In each of clauses (a) and (b) above, the IRU Contribution and the
Recurring Charge for such Segment shall be adjusted in accordance with Section
7.04 below. If, prior to the later of the third anniversary of the Commencement
Date and the delivery of the last Segment delivered hereunder, such Segment or
portion thereof includes at least three conduits, (A) in the event that a notice
has been delivered pursuant to clause (i) above, Grantee shall take delivery of
and pay for the Grantee Conduit in accordance with the terms of this Agreement,
and (B) in the event that a notice has been delivered pursuant to clause (ii)
above, Grantee shall have the option (which option shall
31
be exercisable within 30 days following receipt of written notice of proposed
delivery by Grantor) to take delivery of and pay for the Grantee Conduit in
accordance with the terms of this Agreement. In either such case, if Grantee
takes delivery of and pays for the Grantee Conduit, the IRU Contribution and
Recurring Charge for such Segment shall be adjusted as provided in Section 7.05
below.
7.04 (***).
7.05 In the event that (i) Grantor delivers a notice pursuant to Section
7.03(i) and Grantee takes delivery of the Grantee Conduit in the Segment or
portion thereof to which such notice relates by the applicable Completion Date
or (ii) Grantee exercises its
32
option pursuant to clause (B) of the last sentence of Section 7.03, then (a)
Grantee shall reconvey to Grantor, or relinquish the use of, any fibers in
excess of the Initial Grantee Fibers granted to Grantee pursuant to Section
7.02, (b) Grantor shall reimburse Grantee for all Incremental Costs paid by
Grantee pursuant to Section 7.02 and (c) Grantee shall pay Grantor the excess of
the IRU Contribution for such Segment over the amount of the fee paid by Grantee
with respect thereto pursuant to Section 7.04 and the Recurring Charge shall be
restored from and after the date of such delivery to what it would have been if
such Pinch Event had not occurred.
7.06 Grantor agrees that in the event the Grantor System in any Segment
shall include six or more conduits (inclusive of the Grantee Conduit and the
conduit housing the Cable), Grantee shall have the option to elect that the IRU
with respect to the Grantee Fibers in such Segment be increased to include
twenty-five percent (15%) of the fibers installed (rounded up to the nearest
whole fiber) in every conduit after the first five conduits (inclusive of the
Grantee Conduit and the conduit housing the Cable), provided that if
Grantorgrants to an unrelated party an indefeasible right to use all of the
fibers installed in any such conduit, Grantee shall not have such option but in
lieu thereof Grantor shall pay Grantee, simultaneously with the grant of such
right, an amount in cash equal to 25% of the value of the consideration received
by Grantor for such indefeasible right to use such fibers (it being understood
that, if such indefeasible right to use such fibers is part of a larger
transaction, any allocation of consideration in such transaction shall not be
relevant for purposes of this Section 7.06 and, if Grantor and Grantee are
unable to agree on the amount of the total consideration allocable to such
indefeasible right to use, such amount shall be determined by the procedures set
forth in Article 24). Grantor shall give written notice to Grantee prior to
installing any fiber in such sixth conduit and any subsequent conduit, which
notice shall contain Grantor's good faith estimate of Grantee's proportionate
share of the costs and other amounts described below which will be payable by
Grantee. If Grantor installs fiber in one or more conduits contemporaneously
under circumstances where at least one of such conduits would be subject to this
Section 7.06, Grantee may select which of those conduits is subject to its
option rights under this Section 7.06. Grantee shall have a period of ninety
(90) days
33
after receipt of such notice to exercise its option under this Section 7.06 by
written notice to Grantor. In the event Grantee shall exercise its option with
respect to such a conduit in any Segment, all fibers installed therein for
Grantee's use shall be deemed to be and constitute Additional Grantee Fibers
hereunder and Grantee shall be responsible for, and Grantee shall pay to Grantor
from time to time during the Term (at least five (5) days prior to the date
Grantor is required to make payments as a result of the occupancy of such
conduit), Grantee's proportionate share (based on the number of fibers in such
conduit which will become Additional Grantee Fibers and the total fiber count in
such conduit) of each of: (i) the Incremental Costs incurred by Grantor in
connection with the installation of the Additional Grantor Fibers in such
conduit; (ii) the operating expenses incurred by Grantor in connection with the
fibers in such conduit; and (iii) the fees, costs or charges payable under the
terms of any related Required Right(s) as a result of the placement or use of
fiber in such conduit. In the event Grantee shall fail to timely exercise the
option provided in this Section 7.06 with respect to a conduit, or if Grantee
notifies Grantor in writing of its desire to surrender such option with respect
to any conduit in any Segment, Grantee's option with respect to such conduit
shall terminate, but Grantee's option with respect to any subsequent conduits or
other Segments shall continue in full force and effect. Notwithstanding anything
contained in this Agreement to the contrary, Grantor shall never be obligated to
cause six or more conduits to be installed as a part of the Grantor System and
Grantor shall not be in breach or default hereunder or otherwise liable to
Grantee if the Grantor System does not include six or more conduits. The rights
granted to Grantee under this Section 7.06 shall not apply to (x) any inner city
or local loop conduit constructed or installed by Grantor in a city in the form
of a spur (which may have two or more connection points) to the Grantor System,
provided that this sentence shall not modify Grantor's obligations under Section
2.02 or (y) if the Grantor System consists of (***) conduits, any conduits in
excess of (***) conduits constructed or installed by Grantor, simultaneously
with and adjacent to the other conduits constituting part of the Grantor System,
expressly for exchange for conduits in another Segment or portion of the Grantor
System provided by an unrelated third party (and no more than a de minimis
amount of other consideration).
34
7.07 Grantee may elect at any time during the Term of a Segment to have
fibers installed within all or any part of the Grantee Conduit in such Segment,
on such reasonable schedule as may be specified by Grantee and approved by
Grantor (which approval shall not be unreasonably withheld), and, subject to
Article 19, Grantor shall install such fibers in accordance with such schedule,
subject to the following: (i) Grantee shall provide to Grantor for Grantor's
reasonable approval and, if applicable, to the grantors or providers of any
Required Rights, detailed installation plans and specifications, the proposed
contractor or contractors, the schedule for installation, and such other
information or documentation as may be reasonably requested by Grantor or as may
be required under any Required Right, and (ii) Grantee shall reimburse Grantor
for all Costs incurred by Grantor in connection with such installation (but not
including the cost of construction of the Grantee Conduit itself). 7.08 Any
installation of fiber for Grantee's use within a Segment under Sections 7.06 or
7.07 shall not extend the Minimum Period with respect to such Segment.
ARTICLE 8.
CONSTRUCTION OF THE GRANTOR SYSTEM
8.01 Grantor will design, engineer, install and construct the Grantor
System (including any portion of the Grantor System delivered pursuant to
Article 7) in conformity with the construction specifications set forth in
Exhibit "G" and all applicable manufacturer specifications and in a workmanlike
manner and in accordance with industry standards and building, construction and
safety codes, as well as any and all other applicable governmental laws, codes,
ordinances, statutes and regulations. Such responsibilities shall include,
without limitation, preparation of construction drawings, materials
specifications and materials requisitions. The Grantee Fibers shall meet or
exceed the applicable fiber specifications set forth in Exhibit "H". The Grantee
Conduit, and all other conduits in which Grantee Fibers are located, shall meet
the applicable specifications set forth in Exhibit "H".
35
8.02 Grantor will provide Regeneration Facilities and Opamp Facilities to
be located along the Grantor System, in each case consisting of and providing
space and amenities as described in Exhibit "I".
8.03 Grantor will undertake the Acceptance Testing of each of the Segments.
8.04 Subject to Sections 7.02 and 7.07, Grantor will procure all materials
to be incorporated in and to become a permanent part of the Grantor System
(other than fibers to be installed in the Grantee Conduit which may be procured
by Grantee at Grantee's option).
8.05 Subject to the provisions of Article 6, Grantor will obtain and
maintain in full force and effect the Required Rights without default by Grantor
thereunder.
8.06 Grantor and Grantee will mutually consult with each other (on a
monthly basis and at such other times upon request of either party) to attempt
to coordinate construction of the Grantor System with other network construction
which may be undertaken by, or on behalf of, Grantee.
8.07 During the course of construction of each Segment, Grantor will
prepare and provide to Grantee (***) a construction schedule and progress
reports, including notice regarding whether Grantor reasonably believes that
such Segment may be subject to a Pinch Event. Subject to the terms and
provisions of any applicable Required Right, Grantee shall have the right, but
not the obligation, on at least twenty four (24) hours prior notice to Grantor,
to inspect and be present at the construction and installation of each Segment
(which may consist of continuous or regular on-site inspections by dedicated
representatives of Grantee), including the installation, splicing and testing of
the Grantee Fibers and the installation of the Grantee Conduit incorporated
therein; provided that no inspection or failure to inspect by Grantee shall
impair or invalidate any rights and remedies of Grantee under this Agreement or
modify, amend or otherwise affect any of the representations, warranties,
covenants or agreements of Grantor under this Agreement. If, during the course
of any such construction, installation, splicing or testing, any deviation from
the specifications set forth in any Exhibit hereto is discovered, the
construction or installation of the affected portion of the
36
Segment shall be repaired promptly to such specifications in such Exhibit at
Grantor's sole cost and expense.
8.08 Grantor shall make available to Grantee for inspection by Grantee
copies of all information, documents, agreements, reports, permits, drawings and
specifications generated, obtained or acquired by Grantor in performing its
duties pursuant to this Article 8 that are material to the grant of the IRU to
Grantee, including the Required Rights, subject only to the condition that the
terms of each such document or the legal restrictions applicable to such
information or document permits disclosure to Grantee; provided that Grantor
will use its commercially reasonable best efforts to obtain a waiver of any
existing confidentiality and/or non-disclosure restrictions, and to exempt
Grantee from subsequent confidentiality and/or non-disclosure restrictions, that
would restrict Grantor's ability to make such documents and/or information
available to Grantee for inspection.
8.09 For purposes of the foregoing, Grantor shall be deemed to have
complied with any Exhibit notwithstanding deviations to such Exhibit, provided
that Grantor (i) notifies Grantee of such deviation (which may be given in a
general format at monthly intervals unless Grantee requests more specific
details), (ii) compliance was not or would not be commercially practicable and
(iii) such deviations do not diminish the value, utility, reliability or
expected useful life of the item or matter concerned or otherwise adversely
affect Grantee's rights or obligations under this Agreement.
8.10 The parties acknowledge that Grantee's contributions to the cost of
constructing the Grantor System are limited to the payment of the IRU
Contribution. Without limitation, Grantee will not have any obligation, over and
above payment of the IRU Contribution as contemplated hereunder, with respect to
Grantor's responsibilities set forth in Sections 8.01, 8.02, 8.03, 8.04 or 8.05.
37
ARTICLE 9.
ACCEPTANCE TESTING
9.01 Grantor shall test the Grantee Fibers and the Grantee Conduit in
accordance with the procedures and standards specified in Exhibit "J"
("Acceptance Testing"). Acceptance Testing shall progress span by span along
each Segment as cable splicing progresses or, in the case of the Grantee
Conduit, as set forth in Exhibit "J", so that test results may be reviewed in a
timely manner. Grantor shall provide Grantee with at least 14 days' prior notice
of the date and time of each Acceptance Testing and Grantee shall have the
right, but not the obligation, to be present to observe the Acceptance Testing.
9.02 When Grantor reasonably determines the Grantee Fibers and the Grantee
Conduit with respect to an entire Segment are installed and operating in
conformity with the applicable specifications set forth in Exhibits "G", "H",
and "J", and Grantor is otherwise in compliance with the other provisions of
this Agreement with respect to such Segment, Grantor shall provide written
notice of same to Grantee (a "Completion Notice"), together with a copy of the
results of the Acceptance Testing for such Segment. Grantee shall, within
fifteen (15) days of receipt of the Completion Notice, either accept or reject
the Completion Notice (specifying, if rejected, the defect or failure in such
Acceptance Testing and/or the items required to be remedied and/or replaced in
order for such Segment to be in conformity with the applicable specifications
set forth in Exhibit "J" and other provisions of this Agreement) by delivery of
written notice to Grantor. In the event Grantee rejects the Completion Notice,
Grantor shall promptly, and at no cost to Grantee, commence to remedy the defect
or failure. Thereafter, Grantor shall again give Grantee a Completion Notice
with respect to such Segment. The foregoing procedure shall apply again and
successively thereafter until Grantor has remedied all defects or failures. Any
failure by Grantee to timely reject a Completion Notice shall be deemed to
constitute acceptance for purposes of this Agreement, and in that event Grantee
shall be deemed to have delivered a notice of acceptance on the thirtieth day
after delivery of the Completion Notice. The successful completion of Acceptance
Testing, and the
38
occurrence of an Acceptance Date, with respect to the Grantee Fibers and the
Grantee Conduit in accordance with this Article 9 shall not relieve Grantor of
its obligation to repair defects in the Grantor System in accordance with
Section 12.02.
ARTICLE 10.
ACCESS
10.01 Grantor shall provide Grantee with access to, and Grantee shall have
the right to interconnect with, the Grantee Fibers and the Grantee Conduit at
Segment End Points and, subject to the terms and provisions of the Required
Rights, at other technically feasible access points along the Grantor System
(the "Access Points"). The specific location of such Access Points shall be
determined by Grantor during the design, engineering and permitting phases of
construction and after consultation and coordination with Grantee, and, at a
minimum, Access Points will be provided at the intervals specified in Exhibit
"I".
10.02 Grantor may route the Grantee Fibers through Grantor's space in the
Regeneration Facilities or Opamp Facilities in its sole discretion (so long as
such routing does not materially adversely affect the security, safety or use of
the Grantee Fibers or the Associated Property). Grantee Fibers may, upon
Grantee's written consent (which shall not be unreasonably withheld), be routed
through Grantor's terminal, endlink or pop sites. In each case, Grantor shall be
responsible for all costs and expenses associated therewith.
10.03 Grantor shall have the right to control all activities concerning the
Grantor System at all of the Access Points, provided that after the Acceptance
Date for each Segment, Grantor shall not splice Grantee Fibers located in any
Segment or otherwise undertake any activities with respect to the Grantee Fibers
or the Grantee Conduit located in such Segment except in connection with a
relocation pursuant to Section 6.05, as required to perform maintenance as
described in Exhibit "K" or as otherwise directed by Grantee. In the event
Grantor shall undertake any such activities (including splicing) related to the
Grantee Fibers and/or Grantee Conduit at any Access Point at Grantee's request,
such activities shall be conducted in accordance with requirements as agreed to
39
by the parties and Grantee shall reimburse Grantor for all Costs incurred by
Grantor in connection with such activities.
10.04 Grantor shall determine the exact locations of the Regeneration
Facilities and Opamp Facilities after consultation and coordination with
Grantee. Grantee shall have access to the Regeneration Facilities and Opamp
Facilities 24 hours per day, 7 days per week, provided that Grantee shall comply
with such customary access requirements consistent therewith as provided in the
Required Rights.
10.05 Following the initial construction of the Grantor System in a
Segment, Grantor agrees to allow Grantee, subject to customary access and other
customary restrictions and limitations of any applicable Required Rights, to
establish additional technically feasible Access Points along the Grantor
System. Grantor agrees to use commercially reasonable good faith efforts to
obtain the consent or approval, if necessary, of a grantor or provider of any
applicable Required Right in connection with such additional Access Points. Any
additional Access Points shall be constructed or installed by Grantor and all
Costs associated therewith shall be paid by Grantee.
10.06 Grantor shall (i) make available to Grantee such dedicated space and
amenities (e.g., power, caging, lighting, etc.) in Regeneration Facilities and
Opamp Facilities (***) and (ii) cause such Regeneration and Opamp Facilities to
be located at such intervals as set forth on Exhibit "I" along the Grantor
System as are necessary to light the Initial Grantee Fibers using equipment
requiring facility space similar to industry-standard equipment like that used
by Grantor to provision similar capacity over the same number of fibers, (***).
10.07 If after the Acceptance Date for a Segment, Grantee requires
additional space within a Regeneration Facility or Opamp Facility in order to
utilize the Grantee Fibers (including any fibers which may be subsequently
installed in the Grantee Conduit), Grantor shall use commercially reasonable
best efforts to provide such additional space (which may include the
construction of new regeneration or opamp facilities or the
40
enlargement of existing Regeneration Facilities and Opamp Facilities); provided,
in no event shall Grantor be required to provide Grantee with any additional
space which, with the initial Grantee space, is greater than the space required
by Grantor to provide similar capacity utilizing an equivalent number of its own
fibers, provided further that Grantor shall have no obligations under this
Section 10.07 for any additional space located outside Grantor System right of
way unless Grantee has no other commercially reasonable alternative. To the
extent any such additional space shall require the consent or approval of a
grantor or provider or a Required Right, Grantor will use commercially
reasonable best efforts to obtain such consent or approval. Grantee shall pay
all Costs relating to any such additional space.
10.08 The IRU granted hereunder shall include Grantee's right to install
equipment, or replace existing equipment, in the space located at the Opamp
Facilities and Regeneration Facilities made available to Grantee pursuant to
this Agreement. All such equipment shall be owned by Grantee and Grantor shall
have no right, title or interest therein.
ARTICLE 11.
OPERATIONS
11.01 Subject to Articles 6 and 15, Grantee shall have full and complete
control and responsibility for determining all matters with respect to the use
of the Grantee Fibersand the Grantee Conduit, including, without limitation, any
network and service configuration or designs, routing configurations,
re-grooming, rearrangement or consolidation of channels or circuits and all
related functions with regard to the use of the Grantee Fibers.
11.02 Grantee acknowledges and agrees that except for the items included as
a part of the Regeneration Facilities and Opamp Facilities as described on
Exhibit "I", Grantor is not supplying nor is Grantor obligated to supply to
Grantee any optronics or electronics or optical or electrical equipment or other
facilities, all of which are the sole responsibility of Grantee, nor is Grantor
responsible for performing any work other than as specified in this Agreement.
41
11.03 Following the Acceptance Date for any Segment, upon not less than
(***) days written notice from Grantor to Grantee, Grantor may at its option,
subject to Grantee's prior written approval (which approval shall not be
unreasonably delayed or withheld) substitute for the Initial Grantee Fibers in
any Segment or Segments, an equal number of alternative, newer fibers within
another conduit constituting part of the Grantor System (but not fibers acquired
from third parties unless the Grantee Fibers being substituted were delivered
pursuant to Section 2.05), provided that in any such event, such substitution
(i) shall be in accordance with Grantee's applicable operating procedures, (ii)
shall be effected at the sole cost of Grantor, including, without limitation,
all disconnect and reconnect costs, fees and expenses, (iii) shall be
constructed in accordance with the specifications and procedures set forth in
Exhibits "G" and "J", incorporate fiber and conduit meeting the specifications
set forth in Exhibit "H" and successfully tested in accordance with the
Acceptance Testing, (iv) shall not interrupt the operation or adversely affect
the use, operation or performance of Grantee's network or business, or change
any Segment End Points, Access Points, Regeneration Facilities, node or switch
facilities used by Grantee hereunder, all as determined by Grantee in its
reasonable discretion, (v) shall not modify Grantor's obligations under Article
7 and (vi) Grantee shall be reasonably satisfied that any such relocation shall
not otherwise affect its rights, privileges or costs under this Agreement.
ARTICLE 12.
MAINTENANCE AND REPAIR OF THE GRANTOR SYSTEM
12.01 From and after the Acceptance Date with respect to each Segment,
Grantor shall maintain such Segment, or cause such Segment to be maintained in a
workmanlike manner and, in accordance with the maintenance requirements and
procedures set forth in Exhibit "K" attached hereto, all applicable manufacturer
specifications, industry standards and building, construction and safety codes,
as well as any and all other applicable governmental laws, codes, ordinances,
statutes and regulations. The costs of
42
all scheduled maintenance of the Grantee Fibers and/or Grantee Conduit shall be
paid by Grantor; provided, however, that Grantee shall reimburse Grantor for its
(***) of the Costs (excluding costs which Grantor would otherwise have incurred
as part of scheduled maintenance e.g., if personnel otherwise on scheduled
maintenance duty attend to the unscheduled situation) of any unscheduled
maintenance and repair of the Grantee Fibers and/or Grantee Conduit as follows:
(i) if the affected portion of the Grantor System includes any conduits (whether
or not occupied), the total Costs of repair of the affected conduits shall be
allocated pro rata among the conduits affected; (ii) such Costs allocated to
each affected conduit carrying the Grantee Fibers shall be further allocated to
Grantee (***).
12.02 Notwithstanding anything in this Agreement to the contrary, if , at
any time prior to the date that is (***) months after the Acceptance Date for a
Segment, Grantee shall notify Grantor in writing of its discovery of a deviation
from the specifications set forth in any Exhibit hereto with respect to such
Segment, the construction or installation of the affected portion of such
Segment shall be repaired promptly to such specification by Grantor at Grantor's
sole cost and expense.
ARTICLE 13.
RECURRING CHARGE
13.01 Except as expressly provided otherwise in this Agreement, Grantor
shall be responsible for the payment of all costs and expenses relating to the
Grantor System, including, without limitation, (i) all fees and charges payable
to the grantors or providers of the Required Rights, (ii) the costs of
constructing and maintaining the Grantor System, (iii) all charges and expenses
(including utility charges) associated with the operation of the Regeneration
Facilities and Opamp Facilities and (iv) all Impositions.
43
13.02 In consideration of Grantor's responsibilities in Section 13.01 and
otherwise under this Agreement, subject to the adjustments described in Sections
7.04, 7.06 and 13.03 through 13.07, Grantee shall pay to Grantor each year, with
respect to each Segment, commencing with the Acceptance Date of such Segment and
continuing until the Term of the IRU with respect to such Segment shall have
expired or terminated, the following sums (the "Recurring Charge"): (i) the
product obtained when: (A) (***) is multiplied by (B) the number of Route Miles
in such Segment (the "ROW Charge"), plus (ii) the product obtained when: (A)
(***) is multiplied by (B) the number of Route Miles in such Segment (the
"Operating Expense Charge").
13.03 Commencing on the date of installation of any Grantee Fibers within
the Grantee Conduit, the ROW Charge shall be increased by the product obtained
when: (i) (***) is multiplied by (ii) the number of Route Miles where Grantee
Fibers have been installed in the Grantee Conduit.
13.04 (***).
13.05 (***).
44
13.06 The Recurring Charge applicable to each Segment, as the same may be
adjusted from time to time pursuant to the foregoing provisions of this Article
13, the Operating Expense Estimate and the sums described in Section 13.03(i),
13.04(i)(A) and 13.04(ii)(A), shall be adjusted on each anniversary of the
Acceptance Date of such Segment by the change, if any, in the Consumer Price
Index, All Urban Consumers, U.S. City Average, published by the United States
Department of Labor, Bureau of Labor Statistics (the "CPI-U"), for the preceding
twelve month period (or, with respect to the Operating Expense Charge, in the
event such index shall cease to be computed or published, Grantor and Grantee
shall mutually designate a comparable successor index to be used in determining
the adjustment to such Charge); provided that (a) the ROW Charge for a Segment
shall only be adjusted pursuant to this Section 13.06 to the extent the
instrument governing the Required Right for such Segment explicitly provides for
an adjustment based on the CPI-U or a comparable index and (b) the Operating
Expense Charge and the Operating Expense Estimate shall only be adjusted
pursuant to this Section 13.06 if neither Grantee nor Grantor has performed an
audit for the preceding twelve-month periods in accordance with Section 13.05.
13.07 Grantee shall pay the Operating Expense Charge portion of the
Recurring Charge for a Segment monthly on the first day of each month of the
Term of the IRU respecting such Segment (with the Operating Expense Charge for
any partial calendar month prorated). Grantee shall pay the ROW Charge portion
of the Recurring Charge for all Segments in the aggregate on a monthly basis,
with the amount of each month's payment being equal to the amount obtained by
multiplying the total amount of ROW Charges due by Grantee on all Segments by a
fraction, the numerator of which is the total
45
amount of Required Right Payments due by Grantor on all Segments during such
month and the denominator of which is the total amount of Required Right
Payments due by Grantor on all Segments during the calendar year.
13.08 Notwithstanding anything in this Agreement to the contrary, if (i)
any Segment is the subject of a Force Majeure Event which results in a
disruption of Grantee's operations or business and (ii) Grantor's obligation to
pay costs and expenses relating to such Segment of the type described in Section
13.01 is relieved or excused, in whole or in part, during the pendency of such
Force Majeure Event, then Grantee's obligation to pay Recurring Charges with
respect to such Segment during the pendency of such Force Majeure Event shall be
proportionately reduced.
13.09 In addition to Grantee's other rights and remedies under this
Agreement and under applicable law, Grantee shall have the right from time to
time, to the fullest extent permitted by law, to set off or deduct amounts owed
to Grantor hereunder (including, without limitations, amounts required to be
reimbursed to Grantee pursuant to Sections 6.02(c) and 14.07) from or against
any and all payments required to be made to Grantor pursuant to this Article 13.
ARTICLE 14.
IMPOSITIONS
14.01 Grantor and Grantee acknowledge and agree that it is their mutual
objective and intent to (i) minimize, to the extent feasible, the aggregate
Impositions payable with respect to the Grantor System and (ii) share such
Impositions according to their respective interests in the Grantor System, and
that they will cooperate with each other and coordinate their mutual efforts to
achieve such objectives in accordance with the provisions of this Article 14.
14.02 Grantor shall be responsible for and shall timely pay any and all
Impositions with respect to the Grantor System which Impositions are imposed or
assessed prior to the Acceptance Date of a Segment. Notwithstanding the
foregoing obligations, Grantor shall have the right to challenge any such
Impositions so long as the
46
challenge of such Impositions does not adversely affect Grantee's rights or
interests hereunder.
14.03 After the Acceptance Date for each Segment, Grantor shall timely pay,
or cause to be paid, any and all Impositions imposed upon or with respect to
such Segment to the extent such Impositions (a) have not been separately
assessed or imposed upon or against the interest of Grantee in the Grantor
System or (b) consist of real property or ad valorem taxes relating to the
Grantor System, including, without limitation, real property or ad valorem taxes
on the Initial Grantee Fibers, the Grantee Conduit and the Regeneration and
Opamp Facilities (whether or not such Impositions have been separately assessed
or imposed upon or against the interest of Grantee in the Grantor System), which
real property or ad valorem taxes shall constitute part of the Actual Operating
Expenses and shall be subject to adjustment as described in Article 13. Upon
receipt of a notice of any Imposition after the Acceptance Date for any Segment,
Grantor shall promptly notify Grantee of such Imposition and following payment
of such Imposition by Grantor, Grantee shall, within thirty (30) days of its
receipt of an invoice from Grantor, reimburse Grantor for its proportionate
share of such Imposition (except for the Impositions described in clause (b) of
this Section 14.03, which Impositions shall constitute part of Actual Operating
Expenses and shall be paid in accordance with Article 13), which share shall be
determined (i) to the extent possible, based upon the manner and methodology
used by the particular authority imposing such Impositions (e.g., on the cost of
the relative property interests, historic or projected revenue derived
therefrom, or any combination thereof); or (ii) if the same cannot be so
determined, then based upon Grantee's proportionate share of the total fiber
count in the affected portion of the Grantor System, provided that any such
Imposition which was separately assessed against Grantee or any other Person
using the Grantor System shall be taken into account in determining such
proportionate share. Grantor shall provide Grantee with reasonable supporting
documentation for Impositions for which Grantor seeks reimbursement. If any
Imposition assessed upon Grantor or Grantee is based on assets or business in
any state in addition to its interest in the Grantor System (i.e., central
assessment), Grantor and Grantee shall work together in good faith to allocate a
proper portion of such
47
assessment to such interests alone and if Grantor and Grantee are unable to
agree on such allocation within thirty (30) days from the date Grantor or
Grantee delivered notice to the other party regarding such allocation, such
allocation shall be determined by an arbitration procedure in accordance with
Section 24.01(iv).
14.04 Upon notice of the assertion or proposed assertion of any Imposition
described in Section 14.03, Grantor shall promptly and in good faith consult
with Grantee concerning the underlying facts and whether to contest or to
continue to contest such assertion or proposed assertion. Notwithstanding any
provision herein to the contrary, Grantor shall have the right to contest any
Imposition described in Section 14.03 above by any lawful and appropriate means
(including by nonpayment of such Imposition), provided such nonpayment does not
adversely affect the title (if applicable), rights or property delivered or to
be delivered to Grantee pursuant hereto. The out-of-pocket costs and expenses
(including reasonable attorney fees) incurred by Grantor in any such contest
shall be shared by Grantor and Grantee in the same proportion as to which the
parties would have shared in such Impositions, as they were originally assessed.
Any refunds or credits resulting from a contest brought pursuant to this Section
14.04 shall be divided between Grantor and Grantee in the same proportion as to
which such refunded or credited Impositions were borne by Grantor and Grantee.
In any such event, Grantor shall provide timely notice of such challenge to
Grantee. If Grantor chooses to proceed with such challenge after receipt of a
written objection to the challenge from Grantee, Grantor shall conduct such
challenge at its own cost and expense, provided that Grantee shall not receive
the benefit of any refund or credit, if any, obtained as a result of a
successful challenge. If Grantor does not contest an Imposition, Grantee shall
have the right, after notice to Grantor, to contest such Imposition as long as
such contest does not adversely affect the title, property or rights of Grantor.
The out-of-pocket costs and expenses (including reasonable attorney's fees)
incurred by Grantee in any such contest shall be shared by Grantee and Grantor
in the same proportion as to which the parties shared in such Imposition, as it
was originally assessed. Any refunds or credits resulting from a contest shall
be divided between Grantee and Grantor in the same proportion as to which such
refunded or credited Imposition was borne by Grantee and Grantor. If
48
Grantee chooses to proceed with such contest after receipt of written objection
to the challenge from Grantor, Grantee shall conduct such challenge at its own
cost and expense, provided that Grantor shall not receive the benefit of any
refund or credit, if any, obtained as a result of a successful challenge;
provided, however, that notwithstanding anything to the contrary in this Article
14, Grantor shall have complete authority over and discretion to control
(including the authority to dismiss or not pursue) any contests relating to
Impositions based upon the computation of Grantor's taxable income under the
Internal Revenue Code or state income or franchise tax laws.
14.05 Following the Acceptance Date for each Segment, Grantor and Grantee,
respectively, shall be separately responsible for any and all Impositions
(except for the Impositions described in clause (b) of Section 14.03, which
shall constitute a part of the Actual Operating Expenses and shall be paid in
accordance with Article 13) (i) expressly or implicitly imposed upon, based
upon, or otherwise measured by the gross receipts, gross income, net receipts or
net income received by or accrued to such party due to its respective interest
in or use of such Segment and/or the Grantee Fibers and/or the Grantee Conduit
located within such Segment, or (ii) which have been separately assessed or
imposed upon the respective interest of such party in such Segment and/or the
Grantee Fibers and/or the Grantee Conduit located within such Segment.
14.06 Grantor and Grantee agree to cooperate fully in the preparation of
any returns or reports relating to the Impositions. Grantor and Grantee further
acknowledge and agree that the provisions of this Article 14 are intended to
allocate the Impositions expected to be assessed against or imposed upon the
parties with respect to the Grantor System based upon the procedures and methods
of computation by which Impositions generally have been assessed and imposed to
date, and that material changes in the procedures and methods of computation by
which such assessments are assessed and imposed could significantly alter the
fundamental economic assumptions underlying the transactions hereunder to the
parties. Accordingly, Grantor and Grantee agree that, if in the future the
procedures or methods of computation by which Impositions are assessed or
imposed against the parties change materially from the procedures or methods of
computation by which they are imposed as of the date hereof, the parties will
negotiate in
49
good faith an amendment to the provisions of this Article 14 in order to
preserve, to the extent reasonably possible, the economic intent and effect of
this Article 14 as of the date hereof.
14.07 Notwithstanding anything in this Agreement to the contrary, in the
event that Grantor fails to pay any Imposition it is required to pay under this
Agreement Grantee may, at its option (i) pay such Imposition to the taxing
authority assessing such Imposition and (ii) pay all subsequent Impositions
assessed by such taxing authority, unless Grantee shall have received written
notice from Grantor the Grantee will pay timely all such Impositions. In the
event Grantee makes any payments pursuant to this Section 14.07, Grantor shall
reimburse Grantee promptly upon demand for any and all amounts paid by Grantee.
ARTICLE 15.
USE OF GRANTOR SYSTEM
15.01 Grantee represents and warrants that it will use the Grantee Fibers
and/or Grantee Conduit and the IRU hereunder in compliance with all applicable
government codes, ordinances, laws, rules and regulations. Grantor represents
and warrants that it will use the Grantor System, and shall obtain from each
other user of the Grantor System a representation and warranty that it will use
the Grantor System, in compliance with all applicable government codes,
ordinances, laws, rules and regulations.
15.02 Subject to the provisions of Article 6 and this Article 15, Grantee
may use the Grantee Fibers, the Grantee Conduit and the IRU for any lawful
purpose. Grantee acknowledges and agrees that it has no right to use any fibers,
other than the Grantee Fibers, included or incorporated in the Grantor System,
and that Grantee shall keep any and all of the Grantor System, other than the
Grantee Fibers, the Grantee Conduit and Grantee's interest in and right to use
the Associated Property, free from all Liens attributable to Grantee. Grantor
acknowledges and agrees that it (i) has no right to use the Grantee Fibers or
the Grantee Conduit, (ii) shall keep the portion of the Grantor System in which
Grantee shall receive the IRU free and clear of all Liens attributable to
50
Grantor (other than the Liens in favor of Grantee created pursuant to this
Agreement) and (iii) shall obtain an acknowledgment and agreement from each
other Person that uses the Grantor System that such Person has no right to use
the Grantee Fibers or the Grantee Conduit and shall keep the portion of the
Grantor System in which Grantee shall receive the IRU free and clear of all
Liens of any third party attributable to such Person.
15.03 (***).
15.04 Neither Grantor nor Grantee shall use the Grantor System in a way
which physically interferes in any way with or otherwise adversely affects the
use of the fibers, cable or conduit of any other Person using the Grantor
System, provided that customary and normal telecommunications activities will
never be deemed to physically interfere with or otherwise adversely affect the
use of the fibers, cable or conduit of any Person and
51
Grantor shall obtain a similar agreement from each other Person that uses the
Grantor System.
15.05 Grantee and Grantor shall promptly notify each other of any matters
pertaining to, or the occurrence (or impending occurrence) of, any event of
which it is aware that could give rise to any damage or impending damage to or
loss of the Grantor System, or any impairment of Grantee's right of use or other
rights and privileges therein.
ARTICLE 16.
INDEMNIFICATION
16.01 Subject to the provisions of Section 3.04, Section 16.07, Article 17
and Section 22.03, Grantor hereby agrees to indemnify, defend, protect and hold
harmless Grantee, its Affiliates, the Designated Parties and their Affiliates,
and their respective employees, officers, directors, agents and representatives
(the "Grantee Indemnified Parties") from and against, and assumes liability for,
any and all claims, injuries, losses, expenses, damages or liabilities of
Grantee or any other Grantee Indemnified Party (including, without limitation,
reasonable attorneys' fees) (collectively, "Losses") which arise out of or
result from, directly or indirectly, in whole or in part: (i) the breach by
Grantor of any of its representations, covenants or other obligations hereunder;
(ii) the negligence or willful misconduct of Grantor, its officers, employees,
servants, Affiliates, agents, contractors, licensees, invitees and vendors
arising out of or in connection with the performance by Grantor or such other
Persons of their respective obligations under this Agreement; (iii) any
violation by Grantor or its Affiliates of any regulation, rule, statute or court
order of any Governmental Authority in connection with the performance by
Grantor of its obligations under this Agreement; and (iv) any interference with
or infringement of the rights of a third party as a result of a Grantee
Indemnified Party's use of the Grantor System in accordance with the provisions
of this Agreement.
16.02 Grantee hereby agrees to indemnify, defend, protect and hold harmless
Grantor and its Affiliates, and their respective employees, officers, directors,
agents and representatives (the "Grantor Indemnified Parties") from and against,
and assumes
52
liability for, any and all Losses of Grantor or any other Grantor Indemnified
Party which arise out of or result from, directly or indirectly, in whole or in
part: (i) the breach by Grantee of any of its representations, covenants or
other obligations hereunder; (ii) the negligence or willful misconduct of
Grantee, its officers, employees, servants, Affiliates, agents, contractors,
licensees, invitees and vendors arising out of or in connection with the
performance by Grantee or such other Persons of their respective obligations
under this Agreement; and (iii) any violation by Grantee or its Affiliates of
any regulation, rule, statute or court order of any Governmental Authority in
connection with the performance by Grantee of its obligations under this
Agreement.
16.03 Grantor and Grantee agree to promptly provide each other with notice
of any claim which may result in an indemnification obligation hereunder,
provided, however, that the indemnifying party's obligations hereunder shall not
be affected by the failure to give such notice except to the extent that it can
demonstrate that it was materially prejudiced thereby. The indemnifying party
may defend such claim and, if it so elects, such defense shall be controlled by
the indemnifying party and all costs associated with such defense shall be borne
by the indemnifying party. In any such proceeding, the indemnified party shall
have the right to participate in such defense at its own expense, provided that
the indemnifying party shall pay the reasonable fees and expenses of counsel
retained by the indemnified party in the event that (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceedings (including any
impleaded parties) include both the indemnifying party and the indemnified party
and the representation of both parties by the same counsel would be
inappropriate, in the reasonable opinion of the indemnified party, due to
material, actual or potential differing interests between them. In the event
that the indemnified party retains separate counsel at the indemnified party's
expense in accordance with the foregoing sentence, the indemnified party and its
counsel will reasonably cooperate with the indemnifying party and its counsel in
order to minimize the indemnifying party's overall legal expenses relating to
the claim. In no event shall the indemnifying party be liable for more than one
firm of attorneys (in addition to local counsel with respect to any jurisdiction
in which
53
local counsel may be required) for all indemnified parties in any one legal
action or group or related legal actions.
16.04 The indemnifying party shall have the right to settle or compromise
any such claim of which it has assumed the defense only upon the receipt of
written consent to such settlement or compromise from the indemnified party,
which consent shall not be unreasonably withheld or delayed; provided, however,
that the indemnified party shall not be obligated to consent to any settlement
unless it involves claims for money damages only or other relief not involving
or affecting the indemnified party, which are being paid or performed in full by
other than the indemnified party, and any such failure to consent shall not be
deemed unreasonable.
16.05 If the indemnifying party fails to assume the defense of a claim
pursuant to Section 16.03, then, upon twenty (20) days notice to the
indemnifying party setting forth the details thereof, the indemnified party
shall have the right to pay, compromise or defend any such claim (without
further notice to the indemnifying party) and to assert the amount of any
payment on such claim plus the expense of defense or settlement as an indemnity
claim. The indemnified party shall also have the right, exercisable in good
faith and upon reasonable prior notice to the indemnifying party, to take such
action as may be reasonably necessary to avoid a default prior to the assumption
of the defense of the claim by the indemnifying party and any expenses incurred
by so acting shall be paid by the indemnifying party.
16.06 Grantor and Grantee each expressly recognize and agree that its
obligation to indemnify, defend, protect and save the other harmless is not a
material obligation to the continuing performance of its obligations, if any,
hereunder. In the event that a party shall fail for any reason to so indemnify,
defend, protect and save the other harmless, the injured party hereby expressly
recognizes that its sole remedy in such event shall be the right to bring legal
proceedings against the other party for its damages as a result of the other
party's said failure to indemnify, defend, protect and save harmless. These
obligations shall survive the expiration or termination of this Agreement.
16.07 Notwithstanding the foregoing provisions of this Article 16, to the
extent Grantor is required under the terms and provisions of any Required Right
to indemnify
54
the grantor or provider thereof from and against any and all claims, suits,
judgments, liabilities, losses and expenses arising out of the service
interruption, cessation or unreliability of the Grantor System, regardless of
whether such claims, suits, judgments, liabilities, losses or expenses arise
from the sole or partial negligence, actions or inaction of such grantor or
provider and its employees, servants, agents, contractors, sub-contractors or
other Persons using the property covered by such Required Right, Grantee hereby
releases such grantor or provider from, and hereby waives, all claims, suits,
judgments, liabilities, losses and expenses for which Grantor would be otherwise
be required to indemnify such Required Right grantor or provider (unless such
indemnification is not enforceable as a matter of law) arising out of the
service interruption, cessation or unreliability of the Grantor System
regardless of whether such claims, suits, judgments, liabilities, losses or
expenses arise from the sole or partial negligence, actions or inactions, of
such grantor or provider or its employees, servants, agents, contractors,
subcontractors or other Persons using the property covered by such Required
Right.
ARTICLE 17.
LIMITATION OF LIABILITY
Notwithstanding any provision of this Agreement to the contrary, neither
party shall be liable to the other party for any special, incidental, indirect,
punitive or consequential damages, whether foreseeable or not, arising out of,
or in connection with such party's failure to perform its respective obligations
hereunder, including, but not limited to, loss of profits or revenue (whether
arising out of transmission interruptions or problems, any interruption or
degradation of service or otherwise), or claims of customers, whether occasioned
by any construction, reconstruction, relocation, repair or maintenance performed
by, or failed to be performed by, the other party or any other cause whatsoever,
including breach of contract, breach or warranty, negligence and strict
liability, all claims for which damages are hereby specifically waived. Except
as set forth in Section 16.07, nothing contained herein shall operate as a
limitation on the right of
55
either party hereto to bring an action for damages against any third party,
including claims for indirect, special or consequential damages, based on any
acts or omissions of such third party.
ARTICLE 18.
INSURANCE
18.01 During the term of this Agreement, each party shall obtain and
maintain, and shall require any of its permitted subcontractors to obtain and
maintain, the following insurance, naming the other party as an additional
insured: (i) not less than $5,000,000.00combined single limit liability
insurance, on an occurrence basis, for personal injury and property damage,
including injury or damage arising from the operation of vehicles or equipment
and liability for completed operations; (ii) worker's compensation insurance in
amounts required by applicable law and employer's liability insurance with a
limit of at least $1,000,000.00 per occurrence; (iii) automobile liability
insurance covering death or injury to any person or persons, or damage to
property arising from the operation of vehicles of vehicles or equipment, with
limits of not less than $1,000,000.00 per occurrence; and (iv) any other
insurance coverages required under or pursuant to the Required Rights. Grantor
shall require its subcontractors who are engaged in connection with the
construction of the Grantor System to maintain insurance in the types and
amounts as would be obtained by a prudent person to provide adequate protection
against loss. In all circumstances, Grantor shall require its subcontractors to
carry a minimum of $1,000,000 in commercial general liability insurance. Grantee
shall be listed as an additional insured on all polices set forth above, except
workers' compensation. Grantor shall provide to Grantee a certificate of
insurance evidencing such insurance coverage. Evidence of insurance furnished
shall contain a clause stating Grantee "shall be notified in writing at least
thirty (30) days prior to any cancellation of, or any material change or new
exclusions in, the policy".
18.02 During the term of this Agreement: (i) Grantee shall obtain and
maintain "all risk" property insurance in an amount equal to the replacement
costs of all electronic,
56
optronic and other equipment utilized by Grantee in connection with the Grantee
Fibers and/or Grantee Conduit, naming Grantor as an additional insured; and (ii)
Grantor shall obtain and maintain "all risk" property insurance in amount equal
to the replacement cost of the Regeneration and Opamp Facilities, naming Grantee
as an additional insured.
18.03 Both parties expressly acknowledge that a party shall be deemed to be
in compliance with the provisions of this Article if it maintains an approved
self-insurance program providing for a retention of up to $1,000,000.00. If
either party provides any of the foregoing coverages on a claims made basis,
such policy or policies shall be for at least a three (3) year extended
reporting or discovery period.
18.04 Unless otherwise agreed, all insurance policies shall be obtained and
maintained with companies rated "A" or better by Best's Key Rating Guide and
each party shall, upon request, provide the other party with an insurance
certificate confirming compliance with the requirements of this Article 18.
18.05 Grantee and Grantor shall each obtain from the insurance companies
providing the coverages required by this Agreement, the permission of such
insurers to allow such party to waive all rights of subrogation and such party
does hereby waive all rights of said insurance companies to subrogation against
the other party, its affiliates, subsidiaries, assignees, officers, directors
and employees.
18.06 In the event either party fails to maintain the required insurance
coverages and a claim is made or suffered, such party shall indemnify and hold
harmless the other party from any and all claims for which the required
insurance would have provided coverage. In addition, in the event of any such
failure which continues after seven (7) days' written notice thereof by the
other party, such other party may, but shall not be obligated to, obtain such
insurance and shall have the right to be reimbursed for the cost of such
insurance by the party failing to obtain such insurance.
18.07 In no event shall either Grantee or Grantor be required to obtain or
maintain insurance against loss or damage to the Grantee Fibers or Grantee
Conduit.
57
ARTICLE 19.
FORCE MAJEURE
Except as may be otherwise specifically provided in this Agreement, neither
party shall be in default under this Agreement if and to the extent that any
failure or delay in uch party's performance of one or more of its obligations
hereunder is caused by any of the following conditions, and such party's
performance of such obligation or obligations shall be excused and extended for
and during the period of any such delay: acts of God, war, strikes and other
similar catastrophic events beyond such party's control (***). The party
claiming relief under this Article shall notify the other in writing of the
existence of the event relied on, the steps it is taking or proposing to take to
remedy such event and the cessation or termination of said event.
ARTICLE 20.
ADDITIONAL COVENANTS
20.01 Grantor and Grantee shall be entitled, to the extent permitted under
applicable law, to jointly participate in any condemnation proceedings regarding
the Grantor System, the Grantee Fibers, the Grantor Conduit, any Sublease or the
Required Rights and to seek compensation by either joint or separate awards for
the economic value of their respective interests in the portion of the Grantor
System subject to such condemnation proceeding. If Grantor shall receive
compensation with respect to any such condemnation proceeding under
circumstances where Grantee does not, to the extent such compensation is not
applied to relocate the affected portion of the Grantor System under Section
6.05, Grantee shall be entitled to a portion of the Grantor award commensurate
with Grantee's rights under this Agreement. Grantor shall notify Grantee
immediately upon receipt of a formal notice of condemnation or taking or of any
similar threatened condemnation proceeding regarding the Grantor System, the
Grantee Fibers, the Grantee Conduit, or the Required Rights. Grantor shall not
sell the Grantor System
58
(or any portion thereof) or any Required Rights to an acquiring agency authority
or other party in lieu of condemnation without prior written notice of at least
thirty (30) days to Grantee. Grantee's rights under this Section 20.01 shall be
in addition to, not in substitution of, Grantee's rights under Section 6.05.
20.02 All transactions between Grantor and any of its Affiliates relating
to this Agreement (including, without limitation, transactions relating to the
maintenance of the Grantor System) shall be upon fair and reasonable terms that
are no less favorable to Grantor than those which would have been obtained in a
comparable arm's-length transaction with a Person not an Affiliate. Grantor
shall provide Grantee with prompt written notice, including a reasonably
detailed summary of the economic terms, of all such transactions.
20.03 Except to the extent prohibited by any Required Right, Grantor
agrees, upon request of Grantee, to execute, acknowledge and deliver such
documents or instruments as Grantee shall deem necessary or appropriate to
evidence or safeguard the IRU, the transfer of title contemplated by this
Agreement, any Sublease and the security interest provided for in Section 3.03.
If Grantor files any documents on its own behalf, it will simultaneously file
documents in the same location for Grantee at Grantee's cost, if so requested.
20.04 To the extent that the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ AntiTrust Improvements Act
of 1976, as amended (the "HSR Act"), applies to any of the transactions
contemplated by this Agreement, Grantee and Grantor shall take promptly all
actions necessary to make any filings required under the HSR Act with respect to
such transactions and to resolve any investigation or other inquiry concerning
such transactions commenced by the Federal Trade Commission or the AntiTrust
Division of the United States Department of Justice or any state attorneys
general. Notwithstanding anything in this Agreement to the contrary, in the
event the HSR Act is applicable to any of the transactions contemplated by this
Agreement, then this Agreement shall not become effective (except for the
provisions of Articles 20, 21 and 23 through 31), and no payments shall be due
hereunder, until the requirements of the HSR Act and any similar antitrust law
applicable
59
to such transactions shall have been satisfied and the waiting period thereunder
shall have expired or been terminated.
20.05 On and after the date hereof, Grantor's obligations under this
Agreement shall be guaranteed by Level 3 Communications, Inc., (or, subject to
the consent of Grantee, which consent shall not be unreasonably withheld, any
other entity) pursuant to a guaranty in the form of Exhibit "N" attached hereto.
20.06 On and after the date hereof, Grantee's obligations under this
Agreement shall be guaranteed by NEXTLINK Communications, Inc., Eagle River
Investments, LLC or Nextel Communications, Inc. (or, subject to the consent of
Grantor, which consent shall not be unreasonably withheld, any other entity)
(each, a "Permitted Guarantor"), pursuant to one or more guaranties in the form
of Exhibit "O" attached hereto. From time to time after the date hereof, (i) a
Permitted Guarantor which has not previously delivered such a guaranty may
execute and deliver such a guaranty to Grantor and (ii) a Permitted Guarantor
may cancel a guaranty previously delivered by such Permitted Guarantor or reduce
or increase the percentage of such obligations guaranteed by such Permitted
Guarantors' guaranty, provided that at all times after the date hereof 100% of
such obligations in the aggregate are guaranteed by one or more of the Permitted
Guarantors and provided further that without the consent of Grantor, which shall
not be unreasonably withheld, the percentage of such obligations guaranteed by
any Permitted Guarantor's guaranty shall not be increased if such Permitted
Guarantor has suffered a material adverse change in its financial condition or
prospects relative to such condition or prospects on the date hereof.
ARTICLE 21.
ASSIGNMENT
21.01 Neither party shall assign, encumber or otherwise transfer this
Agreement to any other Person without the prior written consent of the other
party, which consent shall not be unreasonably withheld; provided, each party
shall have the right, without the other party's consent, but with prior written
notice to the other party, to assign or
60
otherwise transfer this Agreement, in whole or in part, (i) as collateral to any
institutional lender of such party subject to the prior rights and obligations
of the parties hereunder, (ii) in the case of Grantor, to an Affiliate of
Grantor, or to any entity with which Grantor may be merged or consolidated, or
which purchases all or substantially all of the assets of Grantor, or (iii) in
the case of Grantee, to any Designated Party; provided that in each of clauses
(i) through (iii) above, such party shall not be released from its obligations
hereunder. Any assignee or transferee shall be subject to all of the provisions
of this Agreement (except that any lender referred to in clause (i) above shall
not be restricted from exercising any right of enforcement or foreclosure with
respect to any related security interest or lien, so long as the purchaser in
foreclosure is subject to the provisions of this Agreement (whether before or
after foreclosure) and neither Grantor's nor Grantee's rights and obligations
hereunder are otherwise impaired or adversely affected).
21.02 Any and all additional fees, charges, costs or expenses which result
under the Required Rights or otherwise as a result of any permitted assignment
or transfer of this Agreement by a party shall be paid by such party.
21.03 This Agreement and each of the parties' respective rights and
obligations under this Agreement, shall be binding upon and shall inure to the
benefit of the parties hereto and each of their respective permitted successors
and assigns.
21.04 Nothing contained in this Article 21 shall be deemed or construed to
prohibit Grantor from selling, leasing, granting indefeasible rights of use or
entering into similar agreements or arrangements with other Persons respecting
any fibers and conduit constituting a part of the Grantor System, provided that
no such sale, lease, grant, agreement or arrangement shall impair or otherwise
adversely affect Grantee's rights and privileges hereunder and Grantor complies
with all of its obligations hereunder in connection therewith.
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ARTICLE 22.
REPRESENTATIONS AND WARRANTIES
22.01 Each party represents and warrants that: (i) it is a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation; (ii) it is
duly qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed is not reasonably likely to have a material adverse
effect on its business, operations, condition (financial or otherwise) or
properties or Grantee's or Grantor's rights and obligations hereunder; (iii) has
the full right and authority to enter into, execute, deliver and perform its
obligations under this Agreement; (iv) it has taken all requisite corporate
action to approve the execution, delivery and performance of this Agreement; (v)
this Agreement constitutes a legal, valid and binding obligation enforceable
against such party in accordance with its terms, subject to bankruptcy,
insolvency, creditors' rights and general equitable principles; and (vi) its
execution, delivery and performance of this Agreement shall not violate any
applicable existing regulations, rules, statutes or court orders of any
Governmental Authority and shall not conflict with or result in the breach of,
or constitute a default under (a) in the case of Grantor, any contract, loan
agreement, indenture, mortgage, deed of trust, lease, Required Right agreement,
indefeasible right of use agreement or other agreement binding on or affecting
Grantor or any of its properties, or (b) in the case of Grantee, any contract,
loan agreement, indenture, mortgage, deed of trust, lease, or other agreement
binding on or affecting Grantee or any of its properties.
22.02 [Intentionally omitted]
22.03 Grantor represents and warrants that the Segments of the Grantor
System that it delivers pursuant hereto shall be constructed in accordance with
the specifications set forth in the applicable Exhibit attached hereto and in
Section 8.01; provided Grantee's sole rights and remedies against Grantor with
respect to any breach of such representation shall be those set forth in
Sections 8.07 and 12.02 of this Agreement.
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22.04 EXCEPT AS SET FORTH IN THE FOREGOING SECTIONS 22.01 and 22.03,
GRANTOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE GRANTEE
FIBERS, THE GRANTEE CONDUIT, THE ASSOCIATED PROPERTY OR THE GRANTOR SYSTEM,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND
ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
22.05 Grantee acknowledges and agrees that Grantor shall have no liability
with respect to any defect in or failure of the Grantee Fibers and/or Grantee
Conduit to perform in accordance with the vendor's or manufacturer's warranties
applicable to such Grantee Fibers and/or the Grantee Conduit, provided that such
defect or failure is not attributable to any breach by Grantor of its
obligations under this Agreement. Grantor shall (i) provide Grantee with copies
of all manufacturer's, vendor's, contractor's or other warranties applicable to
the Grantee Fibers and/or the Grantee Conduit within each Segment, (ii) use
commercially reasonable best efforts to cause all such warranties to be in
effect for at least twelve months after the Acceptance Date for such Segment and
to use commercially reasonable best efforts to obtain additional warranty
coverage after such 12-month period, (iii) to the extent the assignment of any
such warranty is not prohibited by the terms thereof, assign all such warranties
with respect to the Grantee Fiber or Grantee Conduit to Grantee on or prior to
the Acceptance Date of such Segment, and (iv) to the extent assignment of any
such warranty is prohibited by the terms thereof and any maintenance or repairs
to the Grantor System are required as a result of a breach of any such warranty,
Grantor shall pursue all remedies against such manufacturers, contractors or
vendors on behalf of Grantee and other Persons having the right of use of the
Grantor System, and Grantor shall reimburse Grantee's costs for any maintenance
Grantee has incurred as a result of any breach of warranty to the extent the
manufacturer, contractor or vendor pays such costs.
22.06 Grantor and Grantee acknowledge and agree that for purposes of
federal, state and local law, (i) the grant of the IRU to the Grantee in the
Grantee Fibers, the Grantee Conduit and the Associated Property for each Segment
hereunder shall be treated
63
by each of them as an executed grant to Grantee of an interest in real property
with respect to such Segment, (ii) to the extent that ownership of the Grantee
Fibers and the Grantee Conduit is transferred to Grantee hereunder, such grant
shall constitute a transfer of title of real property and to the extent that
ownership of the Grantee Fibers and the Grantee Conduit is not transferred to
Grantee hereunder, such grant shall constitute a leasehold interest in real
property, (iii) no material obligation of either Grantee or Grantor shall remain
to be performed with respect to such grant or Segment and (iv) with respect to
each such grant, this Agreement is not intended as an executory contract or
unexpired lease subject to assumption, rejection or assignment by the trustee in
bankruptcy of any party to this Agreement, including, without limitation,
assumption, rejection or assignment under Section 365 of the Bankruptcy Code.
22.07 The representations of Grantor and Grantee under Section 22.01 shall
be deemed to have been made on the date hereof and on each date on which Grantee
is required to make an IRU Contribution or Recurring Charge payment hereunder.
ARTICLE 23.
CONFIDENTIALITY
23.01 Grantor and Grantee hereby agree that if either party provides
confidential or proprietary information to the other party ("Proprietary
Information"), such Proprietary Information shall be held in confidence, and the
receiving party shall afford Proprietary Information the same care and
protection as it affords generally to its own confidential and proprietary
information (which in any case shall be not less than reasonable care) in order
to avoid disclosure to or unauthorized use by any third party. The parties
acknowledge and agree that all information disclosed by either party to the
other in connection with or pursuant to this Agreement shall be deemed to be
Proprietary Information provided that written information is clearly marked in a
conspicuous place as being confidential or proprietary and verbal information is
indicated as being confidential or proprietary when given and promptly confirmed
in writing as such thereafter. All Proprietary Information, unless otherwise
specified in writing, shall remain the property
64
of the disclosing party, shall be used by the receiving party only for the
intended purpose, and such written Proprietary Information, including all copies
thereof, shall be returned to the disclosing party or destroyed after the
receiving party's need for it has expired or upon the request of the disclosing
party. Proprietary Information shall not be reproduced except to the extent
necessary to accomplish the purpose and intent of this Agreement, or as
otherwise may be permitted in writing by the disclosing party.
23.02 The foregoing provisions of Section 23.01 shall not apply to any
Proprietary Information which (i) becomes publicly available other than through
the disclosing party; (ii) is required to be disclosed by a governmental or
judicial law, order, rule or regulation; (iii) is independently developed by the
receiving party; or (iv) becomes available to the receiving party on a
non-confidential basis from a third party which is not actually known by the
receiving party to be bound by a confidentiality agreement or obligation. If any
Proprietary Information is required to be disclosed pursuant to the foregoing
clause (ii), the party required to make such disclosure shall promptly inform
the other party of the requirements of such disclosure.
23.03 Notwithstanding anything in this Article 23 to the contrary, either
party may disclose Proprietary Information to its employees, agents, and legal
and financial advisors and providers (including its existing and prospective
lenders, joint venture partners and other financiers) to the extent necessary or
appropriate in connection with the negotiation and/or performance of this
Agreement or in obtaining financing, provided that each such party is notified
of the confidential and proprietary nature of such Proprietary Information and
is subject to or agrees to be bound by similar restrictions on its use and
disclosure.
23.04 The parties shall (i) maintain in confidence both the fact that this
Agreement has been entered into and its contents and (ii) without limiting the
foregoing clause (i), not refer to this Agreement or the other party in any
press release, marketing materials, governmental filing or other documents or
publications, in each case without the consent of such other party (which
consent shall not be unreasonably withheld), except in each case (a) to the
extent required by law (and in such case, only after reasonable prior written
notice to the other party), (b) in the case of Grantee, to customers
65
or potential customers of Grantee, (c) to employees, agents and legal and
financial advisors and providers as provided in Section 23.03 and (d) in
connection with public filings made pursuant to Section 23.02.
23.05 The provisions of this Article 23 shall survive expiration or
termination of this Agreement.
ARTICLE 24.
DISPUTE RESOLUTION.
24.01 If the parties are unable to resolve any dispute arising under or
relating to this Agreement, including, without limitation, any disagreement as
to the appropriate reduction of the IRU Contribution and/or Recurring Charge
described in Article 7, the parties shall resolve such disagreement or dispute
as follows:
(i) The matter shall first be referred by either party to the
chief executive officers or the chief operating officers of the parties by
written notice to the other party (the "Dispute Notice"). Within fifteen (15)
days after delivery of the Dispute Notice such officers of both parties shall
meet at a mutually acceptable time and place to exchange all relevant
information in an attempt to resolve the dispute. All negotiations conducted by
such officers shall be confidential and shall be treated as compromise and
settlement negotiations for purposes of federal and state rules of evidence.
(ii) If the matter has not been resolved within thirty (30)
days after delivery of the Dispute Notice, or if such officers fail to meet
within fifteen (15) days after delivery of such Dispute Notice, either party may
initiate mediation and, if applicable, arbitration in accordance with the
procedures set forth in (iii) and (iv) below.
(iii) If such officers are unable to resolve the dispute or
have failed to meet, the parties agree to participate in a non-binding mediation
procedure as follows: (A) a mediator will be selected by having counsel for each
party agree on a single person to act as mediator. The parties' counsel as well
as up to three representatives of each of the parties will appear before the
mediator at a time and place determined by the mediator, but not more than sixty
(60) days after delivery of the Dispute Notice. The fees
66
of the mediator and other costs of the mediation will be shared equally by the
parties. (B) Each party will present a review of the matter and its position
with respect to such matter. At the conclusion of both presentations the parties
may ask questions of each other. Either party may abandon the mediation
procedure at the end of the presentation and question periods and the mediation
procedure shall not be binding on either party.
(iv) If the matter is not resolved after attempts at mediation
as set forth above, or if either party refuses to take part in the mediation
process, the parties hereby agree to submit all such matters to arbitration in
Wilmington, Delaware according to the commercial rules and practices of the
American Arbitration Association from time to time in effect. Arbitration shall
be by three independent and impartial arbitrators. Such arbitrators shall have
experience in the subject matter involved in the dispute, unless both parties
agree in writing to waive any such requirement. Each of the parties shall
appoint one arbitrator within fifteen (15) days after initiation of arbitration
and the two arbitrators so appointed shall select a third arbitrator within ten
(10) days of their appointment, which third arbitrator shall be the chair of the
panel. In the event the parties or the arbitrators fail to select arbitrators as
required herein, the American Arbitration Association shall select such
arbitrators. The arbitrators shall conduct a hearing no later than sixty (60)
days after initiation of the matter to arbitration and a decision shall be
rendered by the arbitrators within thirty (30) days of the hearing. At the
hearing the parties shall present such evidence and witnesses as they may chose
with or without counsel. Adherence to formal rules of evidence shall not be
required but the arbitration panel shall consider any evidence and testimony it
determines to be relevant in accordance with procedures it determines to be
appropriate. Consistent with the expedited nature of arbitration provided in
this Agreement, each party shall, upon the written request of the other party,
promptly provide the other with copies of documents relevant to issues raised by
any claim or counterclaim submitted to arbitration. Any dispute regarding the
relevance or scope of discovery shall be determined by the chair of the
arbitration panel, whose determination shall be conclusive. All discovery shall
be commenced promptly after the initiation of arbitration and shall be completed
no less than ten (10) days before the scheduled arbitration date. The
arbitration determination
67
shall be in writing and shall specify the factual and legal bases for the
determination. The parties agree to abide by all decisions and determinations
rendered in such proceedings and such decisions and determinations shall be
final and binding on the parties. The arbitrators shall have the power, if
requested by any party in connection with an arbitration hereunder, to order any
preliminary and/or final injunctive relief or equitable relief requested by a
party and deemed appropriate by the arbitrators solely to carry out the
provision of this Agreement. All such decisions and determinations may be filed
for confirmation in any federal court located in the State of Delaware. The
arbitrators, fees and other costs of arbitration (including, without limitation,
attorneys' fees) shall be borne by the party against whom the award is rendered
except as the arbitration panel may otherwise provide. 24.02 Notwithstanding
anything in this Agreement to the contrary, and without first complying with the
dispute resolution procedures set forth in this Article 24, Grantee may apply to
any court of competent jurisdiction where the Grantor System is located for
preliminary injunctive relief or specific performance in accordance with Section
24.03, in the event that Grantee's use of the Grantee Fibers, Grantee Conduit
and Associated Property, or its rights and privileges hereunder, are jeopardized
by virtue of an alleged breach by Grantor of its obligations hereunder.
24.03 Subject to Sections 3.04 and 7.02, Grantor acknowledges and agrees
that, in light of the unique derivative nature of Grantee's rights hereunder and
the importance of the Grantor System to Grantee's business operations as well as
the provisions of Article 17 limiting certain claims for monetary liability,
Grantee would not have an adequate remedy at law for money damages if any of the
covenants or agreements contained in this Agreement were not performed in
accordance with their terms and therefore agrees that Grantee shall be entitled
to specific enforcement of such covenants and agreements in any arbitration
proceeding pursuant to Section 24.01 or any judicial proceeding pursuant to
Section 24.02.
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ARTICLE 25.
NOTICES
All notices or other communications which are required or permitted herein
shall be in writing and sufficient if delivered personally, sent by nationally
recognized prepaid overnight air courier, or sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
IF TO GRANTOR: ▇▇▇▇▇ ▇ Communications, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇ Communications, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇.▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
IF TO GRANTEE: INTERNEXT, LLC
c/o NEXTLINK Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to: NEXTLINK Communications, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Counsel
or at such other address as the party to whom notice is be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered personally, on
the business day after dispatch if sent by overnight air courier, or on the
seventh business day after posting if sent by mail.
69
ARTICLE 26.
ENTIRE AGREEMENT; AMENDMENT; HEADINGS
This Agreement constitutes the entire and final agreement and understanding
between the parties with respect to the subject matter hereof and supersedes all
prior agreements relating to the subject matter hereof, which are of no further
force or effect. The Exhibits referred to herein are integral parts hereof and
are hereby made a part of this Agreement. This Agreement may only be modified or
supplemented by an instrument in writing executed by a duly authorized
representative of each party. The title and headings of this Agreement and its
various Articles are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
ARTICLE 27.
RELATIONSHIP OF THE PARTIES
The relationship between Grantee and Grantor shall not be that of partners,
agents, or joint venturers for one another, and nothing contained in this
Agreement shall be deemed to constitute a partnership or agency agreement
between them for any purposes, including but not limited to federal income tax
purposes.
ARTICLE 28.
COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same instrument.
70
ARTICLE 29.
GOVERNING LAW, VENUE AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without regard to conflict of law
principles. Except as provided in Article 24, any litigation based hereon, or
arising out of or in connection with a default by either party in the
performance of its obligations hereunder, shall be brought and maintained
exclusively in the courts of the State of Delaware or in the United States
District Court for the District of Delaware, and each party hereby irrevocably
submits to the jurisdiction of such courts for the purpose of any such
litigation and waives any objection based on forum non conveniens or otherwise.
ARTICLE 30.
SEVERABILITY
If any term, covenant or condition contained herein shall, to any extent,
be invalid or unenforceable in any respect under the laws governing this
Agreement, the remainder of this Agreement shall not be affected thereby, and
each term, covenant or condition of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
ARTICLE 31.
NO THIRD PARTY BENEFICIARIES
Nothing in this Agreement shall confer any rights upon any Person other
than the parties hereto and their respective heirs, successors or assigns and
the Persons entitled to indemnification under Article 16 hereof.
71
ARTICLE 32.
FURTHER ASSURANCES
Each party shall take such other actions as may from time to time be
necessary or appropriate in order to carry out the intent and purpose of this
Agreement and the transactions contemplated hereby.
IN WITNESS WHEREOF, Grantor and Grantee have executed this IRU Agreement as
of the date first above written.
LEVEL 3 COMMUNICATIONS, LLC, a
Delaware limited liability company
By /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇
Title: President
INTERNEXT, LLC, a
Delaware limited liability company
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
72
EXHIBIT "A-2"
CITY LIST
No. Major Cities
--- ------------
1 ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇ ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
4 Philadelphia
5 Chicago
6 Denver
7 Detroit
8 Seattle
9 Houston
10 Dallas
11 Atlanta
12 Los Angeles
13 San Francisco
14 San Diego
15 San ▇▇▇▇
16 Newark
17 Baltimore
18 Miami
19 Tampa
20 ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇
22 St. Louis
23 Cincinnati
24 Pittsburgh
25 Portland
Non-Major Cities
----------------
26 Phoenix
27 Cleveland
28 Stamford
29 White Plains
30 Princeton
31 Richmond
32 Charlotte
33 Sacramento
34 Raleigh
35 Kansas City
36 Hartford
37 Austin
38 Memphis
39 ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇
42 San Antonio
43 Vancouver
44 Indianapolis
45 Jacksonville
46 Montreal
47 New Orleans
48 Louisville
49 Wilmington
50 Las Vegas
In the event Grantor elects not to construct Phase Three, Toronto, Vancouver and
Montreal shall be removed the the above City List and Grantee may (i) move a
city from the Non-Major Cities list to the Major Cities list, and (ii) designate
up to three of the following cities as Non-Major Cities: El Paso, Stratford,
Fort Worth, Albany or Buffalo.
2
EXHIBIT "N"
GUARANTY AGREEMENT
GUARANTY AGREEMENT, dated as of July __, 1998, between Level 3
Communications, Inc., a _______ corporation ("Guarantor"), and ________, a
_______ [Grantee]("Beneficiary").
W I T N E S S E T H :
WHEREAS, Guarantor is, directly or indirectly, the owner of 100% of the
issued and outstanding membership interests in Level 3 Communications, LLC, a
Delaware limited liability company ("Grantor");
WHEREAS, Beneficiary and Grantor have entered into an IRU Agreement, dated
as of July 18, 1998 (the "IRU Agreement"), providing for the grant to
Beneficiary of ownership of and/or an indefeasible right to use certain
facilities in the Grantor System (as defined in the IRU Agreement); and
WHEREAS, pursuant to the terms of the IRU Agreement, Grantor's obligations
under the IRU Agreement are required to be guaranteed by Guarantor.
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used herein without other definition
shall have the respective meanings ascribed to them in the IRU Agreement.
2. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiary (a) the due, prompt and complete payment by Grantor of all amounts
due to Beneficiary under the IRU Agreement, when and as the same shall become
due and payable and (b) the due, prompt and faithful performance of, and
compliance with, all other covenants, undertakings and obligations of Grantor
set forth in the IRU Agreement (the obligations referred to in clauses (a) and
(b) of this Section 2 are herein referred to collectively as the "Guaranteed
Obligations").
This guaranty is a guaranty of payment, performance and compliance and not
of collectibility and is in no way conditioned or contingent upon any attempt to
collect from or enforce performance or compliance by Grantor or upon any other
event or condition whatsoever. If for any reason whatsoever Grantor shall fail
or be unable duly, punctually and fully to pay such amounts as and when the same
shall become due and payable or to perform or comply with any other Guaranteed
Obligation, Guarantor will forthwith pay or cause to be paid the Guaranteed
Obligations to Beneficiary, in lawful money of the United States, or perform or
comply with such Guaranteed Obligations or cause such
1
Guaranteed Obligations to be performed or complied with. Guarantor, promptly
after demand, will reimburse Beneficiary for all costs and expenses of
collecting such amounts or otherwise enforcing this Agreement, including,
without limitation, the fees and expenses of counsel. Notwithstanding any other
provision of this Agreement to the contrary, Guarantor shall have all rights of
Grantor under IRU Agreement with respect to the determination of amounts due and
determination of other obligations, including, without limitation, the
provisions of Article 24 of the IRU Agreement, except to the extent that such
rights have been exhausted or waived by Grantor.
3. Representations and Warranties. Guarantor hereby represents and warrants
as follows:
(a) Organization, Good Standing, Etc. Guarantor is a corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, and to enter into and to carry out the terms of
this Agreement.
(b) Authorization and Enforceability. The execution and delivery by Guarantor
of this Agreement and all other agreements and documents to be executed and
delivered by it in connection herewith, the performance by Guarantor of its
obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate acts and other proceedings of
Guarantor. This Agreement and all other agreements and documents to be
executed and delivered by Guarantor in connection herewith have been duly
and validly executed and delivered by Guarantor and constitute legal, valid
and binding obligations of Guarantor, enforceable against it in accordance
with their respective terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, rearrangment,
fraudulent transfers, conservatorship or other laws (including court
decisions) affecting the enforcement of creditors' rights generally.
(c) Relationship to Company. Guarantor owns, directly or indirectly, 100% of
the issued and outstanding membership interests in Grantor.
(d) Compliance with Other Instruments, Etc. The execution and delivery by
Guarantor of, and performance of the obligations of Guarantor under, this
Agreement will not result in any violation of or be in conflict with or
constitute a default under any term of any agreement or instrument to which
it is a party or by which it is bound or any term of any applicable law,
ordinance, rule or regulation of any governmental authority or any term of
any applicable order, judgment or decree of any court, arbitrator or
governmental authority or result in the creation of (or impose any
obligation on Guarantor to create) any lien upon any of the properties or
assets of Guarantor pursuant to any such term, which violation, conflict,
default or lien might have a materially adverse effect on the business,
operations, condition (financial or physical), properties, net assets or
liabilities of Guarantor or upon the ability of Guarantor to perform its
obligations under this Agreement.
2
(e) Governmental Consent. No consent, approval or authorization of, or
declaration or filing with, any governmental authority, on the part of
Guarantor is required for the valid execution and delivery of this
Agreement and the due performance of the obligations of Guarantor under
this Agreement.
4. Guarantor's Obligations Unconditional. The obligations of Guarantor
under this Agreement are primary, absolute and unconditional obligations of
Guarantor, are not subject to any counterclaim, set-off, deduction, diminution,
abatement, recoupment, suspension, deferment or defense based upon any claim
Guarantor or any other person may have against Grantor, Beneficiary or any other
person, and shall remain in full force and effect without regard to, and shall
not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not Guarantor or Grantor shall have any
knowledge or notice thereof), including, without limitation:
(a) any amendment of or change in, or termination or waiver of, the IRU
Agreement;
(b) any furnishing, acceptance or release of, or any defect in any security
for, any of the Guaranteed Obligations;
(c) any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in the IRU
Agreement, or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of the
IRU Agreement;
(d) any failure, omission or delay on the part of Beneficiary to enforce,
assert or exercise any right, power or remedy conferred on it in this
Agreement;
(e) any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors,
composition, receivership, conservatorship, custodianship, liquidation,
marshalling of assets and liabilities or similar proceedings with respect
to Grantor or any other person or any of their respective properties or
creditors, or any action taken by any trustee or receiver or by any court
in any such proceeding;
(f) any discharge, termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of the IRU Agreement;
(g) any merger or consolidation of Grantor or Guarantor into or with any other
corporation, or any sale, lease or transfer of any of the assets of Grantor
or Guarantor to any other person;
(h) any change in the ownership of any membership interests in Grantor, or any
change in the corporate relationship between Grantor and Guarantor, or any
termination of such relationship; or
(i) any other occurrence, circumstance, happening or event whatsoever, whether
similar or dissimilar to the foregoing, whether foreseen or unfore
3
seen, and any other circumstance which might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a guarantor or surety or
which might otherwise limit recourse against Guarantor.
5. Full Recourse Obligations. The obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor enforceable against it to
the full extent of all its assets and properties.
6. Waiver. Guarantor unconditionally waives, to the extent permitted by
applicable law, (a) notice of any of the matters referred to in Section 4, (b)
notice to Guarantor of the incurrence of any of the Guaranteed Obligations,
notice to Guarantor or Grantor of any breach or default by Grantor with respect
to any of the Guaranteed Obligations or any other notice that may be required,
by statute, rule of law or otherwise, to preserve any rights of Beneficiary
against Guarantor, (c) presentment to or demand of payment from Grantor or
Guarantor with respect to any Guaranteed Obligation or protest for nonpayment or
dishonor, (d) any right to the enforcement, assertion, exercise or exhaustion by
Beneficiary of any right, power, privilege or remedy conferred in the IRU
Agreement or otherwise, (e) any requirement of diligence on the part of
Beneficiary, (f) any requirement to mitigate the damages resulting from any
default under the IRU Agreement, (g) any notice of any sale, transfer or other
disposition of any right, title to or interest in the IRU Agreement, (h) any
release of Guarantor from its obligations hereunder resulting from any loss by
it of its rights of subrogation hereunder and (i) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety or which might otherwise limit
recourse against Guarantor.
7. Subrogation. Upon the payment and performance in full of all Guaranteed
Obligations, Guarantor shall be subrogated to the rights of Beneficiary in
respect of any payment or other obligation with respect to which an amount has
been payable by Guarantor hereunder. Guarantor shall not seek to exercise any
rights of subrogation, reimbursement or indemnity arising from payments made by
Guarantor pursuant to the provisions of this Agreement until the full and
complete payment or performance and discharge of the Guaranteed Obligations.
8. Effect of Bankruptcy Proceedings, etc. This Guaranty shall continue to
be effective or be automatically reinstated, as the case may be, if at any time
any payment made by any person on account of any of the sums due Beneficiary
pursuant to the terms of the IRU Agreement is rescinded or must otherwise be
restored or returned by such holder upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Grantor or any other person, or
upon or as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to Grantor or other person or any
substantial part of its property, or otherwise, all as though such payment had
not been made.
9. Term of Agreement. This Agreement and all guarantees, covenants and
agreements of Guarantor contained herein shall continue in full force and effect
and shall not be discharged until such time as all of the Guaranteed Obligations
and
4
other independent payment obligations of Guarantor under this Agreement shall be
paid and performed in full and all of the agreements of Guarantor hereunder
shall be duly paid and performed in full.
10. Notices. All notices under the terms and provisions hereof shall be in
writing, and shall be delivered or sent by telex or telecopy or mailed by
first-class mail, postage prepaid, addressed, (a) if to Beneficiary, at the
address set forth in Article 25 of the IRU Agreement, or at such other address
as Beneficiary shall from time to time designate in writing to Guarantor and (b)
if to Guarantor, at , or at such other address as Guarantor shall from time to
time designate in writing to Beneficiary. Any notice so addressed shall be
deemed to be given when so delivered or sent or, if mailed, on the third
business day after being so mailed.
11. Amendments, etc. No amendment, alteration, modification or waiver of
any term or provision of this Agreement, nor consent to any departure by
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Beneficiary, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
12. Submission to Jurisdiction. Guarantor, for itself and its successors
and assigns, hereby irrevocably (a) agrees that any legal or equitable action,
suit or proceeding against Guarantor arising out of or relating to this
Agreement or any transaction contemplated hereby or the subject matter of any of
the foregoing may be instituted in any state or federal court in the State of
Delaware, (b) waives any objection which it may now or hereafter have to the
venue of any action, suit or proceeding, (c) irrevocably submits itself to the
nonexclusive jurisdiction of any state or federal court of competent
jurisdiction in the State of Delaware for purposes of any such action, suit or
proceeding. Guarantor waives personal service of process and consents that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with the
provisions of Section 10, and service so made shall be deemed completed on the
third business day after mailing. Nothing contained in this Section 12 shall be
deemed to affect the right of Beneficiary to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
Guarantor in any jurisdiction.
13. WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND BENEFICIARY IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
FOREGOING.
14. Survival. All warranties, representations and covenants made by
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been relied upon by Beneficiary
and shall survive the execution and delivery of this Agreement, regardless of
any investigation made by
5
Beneficiary or on its behalf. All statements in any such certificate or other
instrument shall constitute warranties and representations by Guarantor
hereunder.
15. Miscellaneous. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Guarantor hereby
waives any provision of law that renders any provisions hereof prohibited or
unenforceable in any respect. The terms of this Agreement shall be binding upon,
and inure to the benefit of, Guarantor and Beneficiary and their respective
successors and assigns. No term or provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Guarantor and Beneficiary. The section and paragraph headings in this
Agreement and the table of contents are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof,
and all references herein to numbered sections, unless otherwise indicated, are
to sections in this Agreement. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to applicable principles of conflicts of law.
16. Special Covenants. Guarantor, as issuer, and IBJ ▇▇▇▇▇▇▇▇ Bank and
Trust Company, as trustee, are parties to a certain Indenture dated as of April
28, 1998 respecting $2,000,000,000 9-1/8% Senior Notes due 2008 (the
"Indenture"). Sections 801, 1005, 1016 and 1018 (including related definitions)
of the Indenture, as the same may be amended or modified from time to time shall
be deemed incorporated herein by reference and deemed obligations of Guarantor
to Beneficiary for and during the period commencing with the date hereof and
ending on the final completion of the Grantor System (excluding any Segments
terminated by Beneficiary or otherwise undelivered by Grantor pursuant to
Section 3.04 of the IRU Agreement), following which, the covenants and
agreements of Guarantor in this Section 16 shall terminate and such sections of
the Indenture shall no longer be deemed incorporated herein by reference.
Guarantor shall deliver to Beneficiary on request (but not more than once per
year), a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her knowledge of
Guarantor's compliance during the period covered by such report with all
conditions and covenants of this Agreement.
17. Qualification to Special Covenants.. The provisions of section 16 of
this Agreement shall be of no force or effect during any period that, if
Guarantor has publicly-traded common stock, the total market value of
Guarantor's outstanding common stock as determined on the basis of closing price
(or, if Guarantor is privately held, the total value of its outstanding common
stock, as demonstrated to the reasonable satisfaction of Beneficiary) exceeds
$1.5 billion.
6
IN WITNESS WHEREOF, Guarantor and Beneficiary have each caused this
Agreement to be duly executed as of the day and year first above written.
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇.,
as Guarantor
By ______________________
Title:
---------------------------------------,
as Beneficiary
By _______________________
Title:
7
EXHIBIT "O"
GUARANTY AGREEMENT
GUARANTY AGREEMENT, dated as of _____ __, ____, between [Name of Permitted
Guarantor], a _______ corporation ("Guarantor"), and Level 3 Communications,
LLC, a Delaware limited liability company ("Beneficiary").
W I T N E S S E T H :
WHEREAS, Guarantor is, directly or indirectly, the owner of [__]% of the
issued and outstanding [membership interests in][capital stock of] INTERNEXT,
LLC a Delaware limited liability company ("Grantee");
WHEREAS, Beneficiary and Grantee have entered into an IRU Agreement, dated
as of July 18, 1998 (the "IRU Agreement"), providing for the grant to Grantee of
an indefeasible right to use and/or ownership of certain facilities in the
Grantor System (as defined in the IRU Agreement);
WHEREAS, pursuant to the terms of the IRU Agreement, Grantee's obligations
under the IRU Agreement are required to be guaranteed from time to time by one
or more of the Permitted Guarantors (as defined in the IRU Agreement); and
WHEREAS, Guarantor is a Permitted Guarantor.
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used herein without other definition
shall have the respective meanings ascribed to them in the IRU Agreement. In
addition, the following terms shall have the following meanings:
(a) "Guaranteed Obligations" shall mean, as of any date of determination, an
amount equal to (but not exceeding) __% of the the IRU Obligations,
provided that any IRU Obligations (including, without limitation, interest
and penalty obligations) resulting from or relating to another Permitted
Guarantor's failure to make any payment under such Permitted Guarantor's
guaranty shall be excluded for purposes of determining Guaranteed
Obligations.
(b) "IRU Obligations" shall mean (i) the due, prompt and complete payment of
all amounts due to Beneficiary by Grantee under the IRU Agreement, when and
as the same shall become due and payable and (ii) the due, prompt and
faithful performance of, and compliance with, all other covenants,
undertakings and obligations of Grantee set forth in the IRU Agreement.
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2. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
Beneficiary the Guaranteed Obligations. This guaranty is a guaranty of payment,
performance and compliance and not of collectibility and is in no way
conditioned or contingent upon any attempt to collect from or enforce
performance or compliance by Grantee or upon any other event or condition
whatsoever. If for any reason whatsoever Grantee shall fail or be unable duly,
punctually and fully to pay such amounts as and when the same shall become due
and payable or to perform or comply with any other Guaranteed Obligation,
Guarantor will forthwith pay or cause to be paid the Guaranteed Obligations to
Beneficiary, in lawful money of the United States, or perform or comply with
such Guaranteed Obligations or cause such Guaranteed Obligations to be performed
or complied with. Guarantor, promptly after demand, will reimburse Beneficiary
for all costs and expenses of collecting such amounts or otherwise enforcing
this Agreement, including, without limitation, the fees and expenses of counsel.
Notwithstanding any other provision of this Agreement to the contrary, Guarantor
shall have all rights of Grantee under IRU Agreement with respect to the
determination of amounts due and determination of other obligations, including,
without limitation, the provisions of Article 24 of the IRU Agreement, except to
the extent that such rights have been exhausted or waived by Grantee.
3. Representations and Warranties. Guarantor hereby represents and warrants
as follows:
(a) Organization, Good Standing, Etc. Guarantor is a corporation duly organized
and validly existing and in good standing under the laws of the State of
_______ and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, and to enter into and to carry out the terms of
this Agreement.
(b) Authorization and Enforceability. The execution and delivery by Guarantor
of this Agreement and all other agreements and documents to be executed and
delivered by it in connection herewith, the performance by Guarantor of its
obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate acts and other proceedings of
Guarantor. This Agreement and all other agreements and documents to be
executed and delivered by Guarantor in connection herewith have been duly
and validly executed and delivered by Guarantor and constitute legal, valid
and binding obligations of Guarantor, enforceable against it in accordance
with their respective terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, rearrangment,
fraudulent transfers, conservatorship or other laws (including court
decisions) affecting the enforcement of creditors' rights generally.
(c) Relationship to Company. Guarantor owns, directly or indirectly [__]% of
the issued and outstanding [membership interests in][capital stock of]
Grantee.
(d) Compliance with Other Instruments, Etc. The execution and delivery by
Guarantor of, and performance of the obligations of Guarantor under, this
2
Agreement will not result in any violation of or be in conflict with or
constitute a default under any term of any agreement or instrument to which it
is a party or by which it is bound or any term of any applicable law, ordinance,
rule or regulation of any governmental authority or any term of any applicable
order, judgment or decree of any court, arbitrator or governmental authority or
result in the creation of (or impose any obligation on Guarantor to create) any
lien upon any of the properties or assets of Guarantor pursuant to any such
term, which violation, conflict, default or lien might have a materially adverse
effect on the business, operations, condition (financial or physical),
properties, net assets or liabilities of Guarantor or upon the ability of
Guarantor to perform its obligations under this Agreement.
(e) Governmental Consent. No consent, approval or authorization of, or
declaration or filing with, any governmental authority, on the part of
Guarantor is required for the valid execution and delivery of this
Agreement and the due performance of the obligations of Guarantor under
this Agreement.
4. Guarantor's Obligations Unconditional. The obligations of Guarantor
under this Agreement are primary, absolute and unconditional obligations of
Guarantor, are not subject to any counterclaim, set-off, deduction, diminution,
abatement, recoupment, suspension, deferment or defense based upon any claim
Guarantor or any other person may have against Grantee, Beneficiary or any other
person, and shall remain in full force and effect without regard to, and shall
not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not Guarantor or Grantee shall have any
knowledge or notice thereof), including, without limitation:
(a) any amendment of or change in, or termination or waiver of, the IRU
Agreement;
(b) any furnishing, acceptance or release of, or any defect in any security
for, any of the Guaranteed Obligations;
(c) any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in the IRU
Agreement, or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of the
IRU Agreement;
(d) any failure, omission or delay on the part of Beneficiary to enforce,
assert or exercise any right, power or remedy conferred on it in this
Agreement;
(e) any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors,
composition, receivership, conservatorship, custodianship, liquidation,
marshalling of assets and liabilities or similar proceedings with respect
to Grantee or any other person or any of their respective properties or
creditors, or any action taken by any trustee or receiver or by any court
in any such proceeding;
3
(f) any discharge, termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of the IRU Agreement;
(g) any merger or consolidation of Grantee or Guarantor into or with any other
corporation, or any sale, lease or transfer of any of the assets of Grantee
or Guarantor to any other person;
(h) any change in the ownership of any [membership interests in][capital stock
of] Grantee, or any change in the corporate relationship between Grantee
and Guarantor, or any termination of such relationship; or
(i) any other occurrence, circumstance, happening or event whatsoever, whether
similar or dissimilar to the foregoing, whether foreseen or unforeseen, and
any other circumstance which might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a guarantor or surety
or which might otherwise limit recourse against Guarantor.
5. Full Recourse Obligations. The obligations of Guarantor set forth herein
constitute the full recourse obligations of Guarantor enforceable against it to
the full extent of all its assets and properties.
6. Waiver. Guarantor unconditionally waives, to the extent permitted by
applicable law, (a) notice of any of the matters referred to in Section 4, (b)
notice to Guarantor of the incurrence of any of the Guaranteed Obligations,
notice to Guarantor or Grantee of any breach or default by Grantee with respect
to any of the Guaranteed Obligations or any other notice that may be required,
by statute, rule of law or otherwise, to preserve any rights of Beneficiary
against Guarantor, (c) presentment to or demand of payment from Grantee or
Guarantor with respect to any Guaranteed Obligation or protest for nonpayment or
dishonor, (d) any right to the enforcement, assertion, exercise or exhaustion by
Beneficiary of any right, power, privilege or remedy conferred in the IRU
Agreement or otherwise, (e) any requirement of diligence on the part of
Beneficiary, (f) any requirement to mitigate the damages resulting from any
default under the IRU Agreement, (g) any notice of any sale, transfer or other
disposition of any right, title to or interest in the IRU Agreement, (h) any
release of Guarantor from its obligations hereunder resulting from any loss by
it of its rights of subrogation hereunder and (i) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety or which might otherwise limit
recourse against Guarantor.
7. Subrogation. Upon the payment and performance in full of all Guaranteed
Obligations, Guarantor shall be subrogated to the rights of Beneficiary in
respect of any payment or other obligation with respect to which an amount has
been payable by Guarantor hereunder. Guarantor shall not seek to exercise any
rights of subrogation, reimbursement or indemnity arising from payments made by
Guarantor pursuant to the provisions of this Agreement until the full and
complete payment or performance and discharge of the Guaranteed Obligations.
4
8. Effect of Bankruptcy Proceedings, etc. This Guaranty shall continue to
be effective or be automatically reinstated, as the case may be, if at any time
any payment made by any person on account of any of the sums due Beneficiary
pursuant to the terms of the IRU Agreement is rescinded or must otherwise be
restored or returned by such holder upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Grantee or any other person, or
upon or as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to Grantee or other person or any
substantial part of its property, or otherwise, all as though such payment had
not been made.
9. Term of Agreement. This Agreement and all guarantees, covenants and
agreements of Guarantor contained herein shall continue in full force and effect
and shall not be discharged until such time as all of the Guaranteed Obligations
and other independent payment obligations of Guarantor under this Agreement
shall be paid and performed in full and all of the agreements of Guarantor
hereunder shall be duly paid and performed in full. Notwithstanding anything in
this Agreement to the contrary, this Agreement may be terminated, replaced or
amended in the manner contemplated by, and subject to the provisions of, Section
20.06 of the IRU Agreement.
10. Notices. All notices under the terms and provisions hereof shall be in
writing, and shall be delivered or sent by telex or telecopy or mailed by
first-class mail, postage prepaid, addressed, (a) if to Beneficiary, at the
address set forth in Article 25 of the IRU Agreement, or at such other address
as Beneficiary shall from time to time designate in writing to Guarantor and (b)
if to Guarantor, at , or at such other address as Guarantor shall from time to
time designate in writing to Beneficiary. Any notice so addressed shall be
deemed to be given when so delivered or sent or, if mailed, on the third
business day after being so mailed.
11. Amendments, etc. Except as provided in Section 9, no amendment,
alteration, modification or waiver of any term or provision of this Agreement,
nor consent to any departure by Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by Beneficiary, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
12. Submission to Jurisdiction. Guarantor, for itself and its successors
and assigns, hereby irrevocably (a) agrees that any legal or equitable action,
suit or proceeding against Guarantor arising out of or relating to this
Agreement or any transaction contemplated hereby or the subject matter of any of
the foregoing may be instituted in any state or federal court in the State of
Delaware, (b) waives any objection which it may now or hereafter have to the
venue of any action, suit or proceeding, (c) irrevocably submits itself to the
nonexclusive jurisdiction of any state or federal court of competent
jurisdiction in the State of Delaware for purposes of any such action, suit or
proceeding. Guarantor waives personal service of process and consents that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified or determined in accordance with the
provisions of Section 10, and service so made shall be deemed completed on the
third business day after mailing.
5
Nothing contained in this Section 12 shall be deemed to affect the right of
Beneficiary to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against Guarantor in any jurisdiction.
13. WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND BENEFICIARY IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE
FOREGOING.
14. Survival. All warranties, representations and covenants made by
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been relied upon by Beneficiary
and shall survive the execution and delivery of this Agreement, regardless of
any investigation made by Beneficiary or on its behalf. All statements in any
such certificate or other instrument shall constitute warranties and
representations by Guarantor hereunder.
15. Miscellaneous. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Guarantor hereby
waives any provision of law that renders any provisions hereof prohibited or
unenforceable in any respect. The terms of this Agreement shall be binding upon,
and inure to the benefit of, Guarantor and Beneficiary and their respective
successors and assigns. No term or provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Guarantor and Beneficiary. The section and paragraph headings in this
Agreement and the table of contents are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof,
and all references herein to numbered sections, unless otherwise indicated, are
to sections in this Agreement. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to applicable principles of conflicts of law.
16. Special Covenants. Guarantor hereby covenants and agrees as follows:
(a) For purposes of this Section 16, the following terms are defined:
(1) "Board of Directors" means the board of directors of Guarantor.
(2) "Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and any rights (other than debt securities convertible
or
6
exchangeable into an equity interest), warrants or options to acquire an equity
interest in such Person.
(3) "Consolidated Net Worth" of any Person means the stockholders' equity
of such Person, determined on a consolidated basis in accordance with generally
accepted accounting principles.
(4) "Fair Market Value" means, with respect to any Property, the price that
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction. Unless otherwise specified herein,
Fair Market Value shall be determined by the Board of Directors acting in good
faith and shall be evidenced by a Board of Directors resolution.
(5) "Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including Capital Stock in, and other securities of, any
other Person.
(6) "Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
(7) "Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only for so long as
no senior class of securities has such voting power by reason of any
contingency.
(b) Guarantor shall not, in a single transaction or a series of related
transactions, (i) consolidate with or merge into any other Person or
Persons or permit any other Person to consolidate with or merge into
Guarantor or (ii) directly or indirectly, transfer, sell, lease, convey or
otherwise dispose of all or substantially all its assets to any other
Person or Persons, unless:
(1) in a transaction in which Guarantor is not the surviving Person or in
which Guarantor transfers, sells, leases, conveys or otherwise disposes of all
or substantially all of its assets to any other Person, the resulting, surviving
or transferee Person (the "successor entity") is organized under the laws of the
United States or any State thereof or the District of Columbia and shall
expressly assume all of Guarantor's obligations under this Agreement;
7
(2) immediately after giving effect to such transaction, the Consolidated
Net Worth of Guarantor (or the successor entity) is equal to or greater than
that of Guarantor immediately prior to the transaction; and
(3) in the case of a transfer, sale, lease, conveyance or other disposition
of all or substantially all of the assets of Guarantor, such assets shall have
been transferred as an entirety or virtually as an entirety to one Person and
such Person shall have complied with all the provisions of (1) and (2) above.
(c) Guarantor shall cause all properties owned by Guarantor or any Subsidiary
or used or held for use in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of Guarantor may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided that nothing contained
herein shall prevent Guarantor or any Subsidiary from discontinuing the
maintenance of any of such properties if such discontinuance is, in the
judgment of Guarantor, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect
to Beneficiary.
(d) Guarantor shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell, lease, transfer or otherwise dispose of any
material portion of its Property to, or purchase any material portion of
Property from, or enter into any material contract, agreement,
understanding, loan, advance, guarantee or transaction (including the
rendering of services) with or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless such Affiliate
Transaction or series of Affiliate Transactions is (i) in the best interest
of Guarantor or such Subsidiary and (ii) on terms that are no less
favorable to Guarantor or such Subsidiary than those that would have been
obtained in a comparable arm's-length transaction by Guarantor or such
Subsidiary with a Person that is not an Affiliate (or, in the event that
there are no comparable transactions involving Persons who are not
Affiliates of Guarantor or the relevant Subsidiary to apply for comparative
purposes, is otherwise on terms that, taken as a whole, Guarantor has
determined to be fair to Guarantor or the relevant Subsidiary).
Notwithstanding the foregoing, the following shall not be deemed Affiliate
Transactions: (i) any employment agreement entered into by Guarantor or any
of its Subsidiaries in the ordinary course of business and consistent with
industry practice; (ii) any agreement or arrangement with respect to the
compensation of a director or officer of Guarantor or any Subsidiary
approved by a majority of the disinterested members of the Board of
Directors and consistent with industry practice; (iii) transactions between
or among the Company and its Subsidiaries, provided that no more than 5% of
the Voting Stock (on a fully diluted basis) of any such Subsidiary is owned
by an Affiliate of
8
Guarantor (other than a Subsidiary); (iv) transactions pursuant to the terms of
any agreement or arrangement as in effect on the date hereof; and (v)
transactions with respect to wirelink or wireless transmission capacity, the
lease or sharing or other use of cable or fiber optic lines, equipment,
rights-of-way or other access rights, between Guarantor (or any Subsidiary) and
any other Person.
(e) Guarantor shall not, and shall not permit any Subsidiary to, sell, transfer
or dispose of any of its Property with a Fair Market Value of $5,000,000 or
more outside the ordinary course of its business (excluding any sale,
transfer or disposition of Property that is obsolete or no longer used by
or useful to Guarantor or any Subsidiary) unless:
(1) Guarantor or the Subsidiary, as the case may be, receives consideration
for such disposition at least equal to the Fair Market Value for the Property
sold or disposed of.
(2) the consideration received in connection therewith is used by Guarantor
or such Subsidiary within 360 days of receipt for the payment of expenses in the
ordinary course of business, for the payment of debt of Guarantor or such
Subsidiary, or for reinvestment in the business of Guarantor or such Subsidiary.
(f) Guarantor shall deliver to Beneficiary on request (but not more than once
per year), a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or
her knowledge of Guarantor's compliance during the period covered by such
report with all conditions and covenants of this Agreement.
The covenants and agreements contained in this Section 16 shall terminate
effective as of the date of full and complete payment of the IRU Fee to
Beneficiary in accordance with the terms and provisions of the IRU Agreement.
17. Qualification to Special Covenants.. Any Guarantor maintaining an
indenture qualified under the Trust Indenture Act of 1939, as amended, with at
least $100 million of indebtedness outstanding pursuant thereto shall have the
right, in its sole discretion, to re-execute and redeliver this Agreement to
Beneficiary omitting section 16 and substituting in its place a covenant
substantially equivalent to section 16 of the similar agreement executed by
▇▇▇▇▇ ▇ Communications, Inc. as Guarantor, except referencing one of its public
indentures and the sections thereof equivalent to the matters addressed in the
current version of section 16 of this Agreement. In addition, the provisions of
section 16 of this Agreement or of any redelivered Agreement shall be of no
force or effect during any period that, if Guarantor has publicly-traded common
stock, the total market value of Guarantor's outstanding common stock as
determined on the basis of closing price (or, if Guarantor is privately held,
the total value of its outstanding common stock, as demonstrated to the
reasonable satisfaction of Beneficiary) exceeds the amount obtained when $1.5
billion is multiplied by the percentage set forth in paragraph 1(a) of this
Agreement.
9
IN WITNESS WHEREOF, Guarantor and Beneficiary have each caused this
Agreement to be duly executed as of the day and year first above written.
[Name of Permitted Guarantor],
as Guarantor
By _____________________
Title:
LEVEL 3 COMMUNICATIONS, LLC,
as Beneficiary
By ______________________
Title:
10