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EXHIBIT 10.49
CONSTRUCTION SERVICES AGREEMENT
THIS AGREEMENT is entered into this 30th day of June, 1995, by and between MFS
NETWORK TECHNOLOGIES, INC., a Delaware corporation (hereafter "MFSNT") and MWR
TELECOM, INC., an Iowa corporation (hereafter "MWR"). This Agreement shall
become effective when, and only when, MWR (or its affiliate) enters into an
agreement with the State of Iowa for the construction of dark fiber optic cable
facilities relating to Part III of the Iowa Communications Network, RFP Number
15006S.
MWR and MFSNT agree as set forth below.
1. DEFINITIONS
"Additional Percentage" shall have the meaning ascribed to it in
paragraph 5.2 hereof.
"Contract Documents" shall mean and consist of this Agreement and all
attachments and exhibits hereto, the Plan Documents (as defined
herein), as well as any written change orders executed by both parties
as permitted by this Agreement.
"Force Majeure" shall have the meaning ascribed to it in paragraph 11
hereof.
"Interest Rate" shall have the meaning ascribed to it in paragraph 4.3
hereof.
"MWR Fiber Optic Cable" shall mean and describe the fiber optic cable
system to be designed, constructed and delivered to MWR under this
Agreement.
"Notice to Proceed" shall have the meaning ascribed to it in paragraph
2 hereof.
"Phase I Commitment" shall mean those Projects for which a Notice to
Proceed is issued by MWR within eighteen (18) months after the date of
execution hereof; the total price of all such Projects in the
aggregate shall be at least $10,000,000 (herein the "Minimum Contract
Commitment").
"Phase II Projects" shall mean those Projects for which a Notice to
Proceed is issued during the period of time subsequent to the date on
which MWR exceeds the Minimum Contract Commitment and ending four (4)
years from the date of execution hereof.
"Plan Documents" shall have the meaning ascribed to it in paragraph 2
hereof.
"Project" shall mean the individual segments of the MWR Fiber Optic
Cable to be constructed by MFSNT hereunder on either a fixed-price or
cost-plus basis.
"Project Initiation Notice" shall mean a notice from MWR to MFSNT
respecting a Project which notice details (a) the route for
installation of the relevant portion of the MWR Fiber Optic Cable, (b)
the rights-of-way and pole attachment rights to be used for the
completion thereof (which shall be secured by MWR at its sole cost and
expense), and
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(c) any operational requirements or standards required for the
Project. The Project Initiation Notice shall serve as MWR's request
that MFSNT commence the development of Plan Documents for the
completion of the Project.
"Substantial Completion" shall mean the earliest to occur of either
(a) that stage in the progress of the Work respecting a Project where
the relevant portion of the MWR Fiber Optic Cable has successfully
completed the acceptance testing in accordance with the Acceptance
Test Plan procedure specified paragraph 11 of this Agreement; or (b)
use of the relevant portion of the MWR Fiber Optic Cable by MWR or its
customer(s).
"Work" shall mean and describe all of the services, material and
equipment to be provided and furnished by MFSNT under this Agreement
regarding the MWR Fiber Optic Cable.
2. SCOPE OF WORK
MFSNT shall provide the services, material and equipment required to
complete a Project identified in the Project Initiation Notice in
accordance with the Contract Documents. Within two (2) weeks after
receipt by MFSNT of a Project Initiation Notice, MFSNT shall complete
the preliminary route engineering and development of a scope of work
(the "Plan Documents") for meeting any applicable criteria set forth
in the Project Initiation Notice for the relevant Project. If more
than one (1) Project Initiation Notice is submitted at substantially
the same time of delivery, the first Project's Plan Documents shall be
delivered within the specified two (2) week time frame and the
remaining Plan Documents shall be delivered no later than thirty (30)
days thereafter. The Plan Documents shall also include MFSNT's fixed
price for the completion of the Project as well as a schedule for
Substantial Completion of the Project. MFSNT shall not be
responsible for any delays in the completion of Plan Documents
caused by MWR's undue delay in performing its obligations hereunder.
MWR shall review the Plan Documents and shall, within two (2) weeks of
MFSNT's delivery of same, either issue a Notice to Proceed respecting
the Project or specify, in writing, any reasonable objections of MWR
respecting the Plan Documents for the Project. MFSNT shall work to
resolve any reasonable objections of MWR and, once resolved, MWR shall
issue a Notice to Proceed within five (5) days of said resolution.
When completed and approved, the Plan Documents shall be "Contract
Documents" as defined above.
3. TIME OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
The Work on each Project shall be commenced upon MFSNT's receipt of a
Notice to Proceed from MWR and, subject to authorized adjustments of
time, Substantial Completion respecting each Project shall be achieved
within the time stated in the Plan Documents respecting the particular
Project. In the event that MFSNT fails to achieve Substantial
Completion for a Project within 30 days after the time specified in
the Plan Documents (after accounting for any delays caused by Force
Majeure as provided in this
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Agreement), then MFSNT shall pay to MWR a penalty equal to one-half of
one percent (1/2%) of the price for the Project.
4. PRICE AND PAYMENT
4.1 MWR agrees, subject to all of the terms set forth in this
paragraph 4, to pay MFSNT the price specified in the Plan
Documents for the completion of each Project ("Fixed Price").
4.2 In the alternative, MWR may elect to pay MFSNT a price
calculated on a cost-plus basis for any Project ("Cost-plus
Price") rather than the Fixed Price stated by MFSNT in the
Plan Documents, in which event the Cost-plus Price shall be
calculated as set forth in paragraph 5 hereof. MWR's election
to compensate MFSNT on a Cost-plus basis for each Project must
be exercised at the time MWR delivers its Notice to Proceed
respecting the Project.
4.3 MWR reserves the right on any Project, to reject the options
set forth in paragraphs 4.1 and 4.2, and proceed to select
another contractor for the Project, after first giving notice
to MFSNT that MFSNT has not been selected as the contractor on
that Project. However, this paragraph shall not relieve MWR
of its obligation to retain MFSNT for sufficient work
satisfying the Minimum Contract Commitment.
4.4 Payment of 95% of the entire price respecting a Project
(whether Fixed Price or Cost-plus) shall be due within thirty
(30) days from MWR's receipt of an invoice from MFSNT. MFSNT
shall prepare its invoice after Substantial Completion of the
Project. The 5% retainage shall be due within thirty (30)
days from the issuance of the Final Acceptance Certificate as
provided in paragraph 11. Any payment of amounts not subject
to reasonable dispute which are not received by MFSNT when due
shall thereafter bear interest at a floating rate, adjusted
daily, equal to two (2) percentage points above the Prime Rate
as then published in the Money Rates section of the Eastern
Edition of The Wall Street Journal as that rate which is the
base rate on corporate loans posted by a substantial
percentage of the nation's largest banks (the "Interest
Rate"). In the event The Wall Street Journal publishes more
than one Prime Rate, the higher or highest such Prime Rate
shall apply. Interest shall not accrue on amounts reasonably
disputed between the parties.
4.5 The price includes Federal manufacturer's and retailer's
excise taxes, state and local sales and/or use taxes, and any
federal, state or local taxes of a similar nature. All such
taxes, if applicable, shall be paid by MFSNT.
4.6 Provided MFSNT has made reasonable progress in the completion
of the Work, MFSNT shall not be obligated to proceed further
with the Work respecting any
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Project if MWR fails to make or cause to be made any payments
when due hereunder, excepting any payments which are
reasonably disputed. MFSNT may suspend performance of the
Work and all of its obligations hereunder until such time as
all delinquent, undisputed, payments have been made by MWR. In
the event that MFSNT elects to suspend the Work as a
consequence of MWR's failure to make payments of the price,
MFSNT shall provide MWR with five (5) days' written notice of
such election, and MFSNT may suspend performance on the sixth
day after the date on which such notice was sent by MFSNT to
MWR. The period during which performance of the Work is
suspended due to nonpayment by MWR shall result in an equal
extension of the date for Substantial Completion of any
Projects then being performed. MFSNT shall also receive an
equitable adjustment of the price respecting such Projects to
recover the costs of any delays due to MWR's nonpayment.
4.7 In the event that MWR is in default on any payment due under
this Agreement, MWR shall furnish to MFSNT reasonable evidence
that financial arrangements have been made to fulfill MWR's
obligations under this Agreement. In the event that MWR is
unable to provide MFSNT with such evidence, MFSNT may exercise
its right to suspend the Work under paragraph 4.6 of this
Agreement.
4.8 MWR, except as set forth herein, shall be obligated to pay
MFSNT fifteen percent (15%) of the remaining balance of the
Minimum Contract Commitment irrespective of the total price
for all Projects after the expiration of the Phase I time
period. MWR's obligation to pay such amount shall not apply
to the extent that the State of Iowa does not authorize future
funding, or de-authorizes current funding, for the Iowa
Communications Network, Part III, and the Minimum Contract
Commitment shall be reduced in an amount equal to the amounts
not authorized or de-authorized. Notwithstanding such actions
by the State of Iowa, MWR shall remain liable for the payment
of the price for all work actually performed on a Project
after MFSNT receives a Notice to Proceed on that Project.
4.9 MWR shall be entitled to a rebate in the amount of $150,000
once MWR has paid to MFSNT a total price for all Projects of
$20,000,000. MWR shall be entitled to an additional rebate in
the amount of $200,000 once MWR has paid to MFSNT a total
price for all Projects of $50,000,000.
4.10 MFSNT agrees that the prices for the Projects to be completed
by it pursuant to the provisions of this Agreement shall be no
less favorable to MWR than MFSNT's other contracts with
customers for projects of similar size, scope and character
within the State of Iowa. In the event that MFSNT enters into
agreements with other customers for projects of similar size,
scope and character containing prices more favorable than
those contained herein, then the price(s) for Project(s) in
this Agreement shall be amended to provide MWR with prices no
less favorable to MWR than such other MFSNT contracts.
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5. COST-PLUS PRICE OPTION
5.1 The provisions of this paragraph 5 shall be applicable only to
the extent that MWR elects to pay the Cost-plus Price for a
Project. In the event that MWR elects to pay the Cost-plus
Price for a Project as permitted in Paragraph 4.2 of this
Agreement, then MWR agrees to reimburse MFSNT for all costs,
subject to the Cost Cap, necessarily incurred and paid by
MFSNT in the proper prosecution of the Work respecting the
Project, plus an amount of money calculated by multiplying
certain costs by the appropriate "Additional Percentage" (as
defined herein).
5.2 The "Additional Percentage" shall be:
(a) 12.5% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed to the date of
payment is less than or equal to twenty million
dollars ($20,000,000);
(b) 12% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is greater than twenty million
dollars ($20,000,000), but not greater than thirty
million dollars ($30,000,000);
(c) 11% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is greater than thirty million
dollars ($30,000,000), but not greater than forty
million dollars ($40,000,000);
(d) 10% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is greater than forty million dollars
($40,000,000).
For purposes of calculating the sums to be included in the
Cost-plus Price as a result of the Additional Percentage, the
costs set forth in paragraphs 5.5 (f), (j) and (l), and
paragraphs 5.6 (f), (h) and (i) shall not be included. In the
event that an MFSNT invoice relates to Work above and below
any of the above thresholds. MFSNT shall prorate its invoice
to reflect to the appropriate Additional Percentages.
5.3 The "Cost Cap" shall be the percentage limitations set forth
below multiplied by the direct cumulative costs applicable to
a Project, which Cost Cap shall limit the indirect costs
recoverable by MFSNT in the event that MWR elects to pay the
Cost-plus Price:
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(a) 15% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is less than or equal to twenty
million dollars ($20,000,000);
(b) 12% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is greater than twenty million
dollars ($20,000,000), but not greater than thirty
million dollars ($30,000,000);
(c) 11% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is greater than thirty million
dollars ($30,000,000), but not greater than forty
million dollars ($40,000,000);
(d) 10% when the cumulative sum total of the price paid
to MFSNT hereunder for Work performed prior to the
date of payment is greater than forty million dollars
($40,000,000).
In the event that an MFSNT invoice relates to Work above and
below any of the above thresholds, MFSNT shall prorate its
invoice to reflect to the appropriate Cost Cap.
5.4 Reimbursable costs allowable for any Project shall be the
direct costs and, as limited by the Cost Cap, the indirect
costs and expenses which are actually incurred by MFSNT in the
performance of the Work respecting the Project and which are
necessary and incidental thereto. MWR shall identify a
representative of MWR for purposes of any consents for
expenditures required by this paragraph.
5.5 Direct costs shall include, but shall not be limited to, the
following:
(a) Travel expenses relating to trips to various
fabricating plants, subcontractor or material
supplier locations to inspect their facilities, the
progress of the Work and/or financial condition in
regard to the Work on the Project, provided prior
written approval for such expense is obtained from
MWR.
(b) Labor used in MFSNT's yard in connection with the
fabrication of items for use on a Project.
(c) The cost of all Work subcontracted and the cost of
all permanent materials, equipment and supplies
required. Credit shall be given MWR for all rebates
and trade or quantity discounts allowed by vendors
and received by MFSNT for the purchase of materials,
equipment, supplies or services.
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MFSNT shall evaluate competitive bids from suppliers
and subcontractors. MFSNT and MWR shall mutually
agree on the selection of subcontractors.
(d) The cost of all temporary and other expendable
services, materials and supplies, including fuel, oil
and grease, wire and manila rope, tarpaulin, cleaning
supplies, lumber and material used for temporary
structures, temporary wiring for electric power, and
such expendable supplies and services as are normally
consumed in performance of the Work. Any such
expendable materials and supplies for which MFSNT has
been reimbursed by MWR and which remain after
completion of the Work will be disposed of, for the
account of MWR, as directed by MWR.
(e) The cost of all necessary inspections, tests,
loading, handling, permits, transportation and
insurance of whatever character or description paid
by MFSNT or materials and supplies used by MFSNT.
(f) The cost of rental of all equipment required for the
Work. The cost of rental of equipment from third
parties shall be the actual rental rate charged. The
cost of rental of MFSNT's equipment shall be in
accordance with the rates taken from the Rental Rate
Blue Book for Construction Equipment, compiled by the
National Research & Appraisal Company ("Blue Book
Rates"). The rates charged for MFSNT's own equipment
or equipment owned by subsidiaries or Affiliates of
MFSNT under this Agreement shall be 100 percent of
the current rates, updated periodically to reflect
any adjustment in the Blue Book Rates. If Blue Book
Rates are not available for such equipment, the
rental rates applicable to MFSNT's own equipment or
equipment owned by the subsidiaries or affiliates of
MFSNT shall be based on the current market rates for
renting or leasing similar items from a third party
rental company. The cost of rental of any
miscellaneous MFSNT-owned equipment, shall be
established by MFSNT, subject to the approval of MWR.
Added to the above rental cost of MFSNT's own
equipment or equipment owned by subsidiaries or
Affiliates of MFSNT shall be repair material and
parts cost for minor repairs. Actual cost for fuel,
oil, grease, expendable supplies, services, and
repair Labor cost shall be reimbursed separately.
The cost of periodic overhauls of the major
components, such as engines, transmissions, etc., is
included in the rental rate.
(g) The cost of transportation, loading and unloading of
equipment and tools required for the Work.
(h) All sums paid for permits and inspection fees.
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(i) The fees of any consultants engaged in a
professional capacity having first obtained the prior
written approval of MWR.
(j) Losses and expenses, not compensated by insurance or
otherwise, including but not limited to the
deductible amount paid by MFSNT in connection with
the Work not covered by insurance, provided such has
resulted from causes other than the fault or neglect
of MFSNT, its subcontractors, agents or employees.
(k) Electric energy, fuel and other similar job site
items necessary to and entering into the cost of the
Work.
(l) All federal, state and local taxes and impositions,
except taxes on MFSNT's income, in connection with
the Work or materials to be performed or furnished
hereunder, including but not limited to, unemployment
and old age benefit taxes, sales taxes, use taxes,
property taxes and excise taxes.
(m) Such other items properly and reasonably chargeable
as direct costs of the Project.
5.6 Indirect costs (which are included in the Cost-plus Price
subject to the Cost Cap) shall include, but shall not be
limited to, the following:
(a) The cost of labor, including fringe benefits, payroll
insurance and taxes, and group medical, life and
disability coverage, as required for the Work. The
Project managers, construction superintendents,
engineers, office employees, CADD and surveying
personnel, purchasing agent and similar employees
stationed at the job site shall be considered as
labor and shall not exceed the number normally
employed on projects of this type, size and duration.
Salary levels for all MFSNT employees assigned to
the Project shall be established in accordance with
MFSNT's standard corporate policies.
(b) Vacation pay, sick leave pay, R&Rs and bonuses paid
to employees at the site, commensurate with MFSNT's
previous and existing policy. Vacation pay, sick
leave pay, and bonuses shall be prorated on a
calendar month basis for the period of time the
employee is assigned to the Project.
(c) The cost of moving supervisory and administrative
employees who are assigned to the Work from their
last place of employment in accordance with MFSNT's
previous and existing moving policy. Such moving
costs shall be subject to the prior written approval
of MWR.
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(d) Travel expense in connection with MFSNT's standard
R&R policy.
(e) In order to reduce the number of personnel assigned
to the Project or to expedite the performance of the
Work hereunder, it may become necessary to perform
off-job engineering, clerical and/or accounting Work
in which case the costs of such Work shall be charged
to the job, subject to the prior written approval of
MWR, on an hourly basis as supported by time cards.
(f) The cost of MFSNT's worker's compensation, general
liability, automobile liability and contingent
liability insurance for limits normally carried by
MFSNT. The cost of any builder's risk insurance.
(g) Stationery and supplies, postage and the actual cost
of all telephone, office/warehouse rent, telegraph
and other type of communications expense, all as used
at the job site.
(h) Employee training costs consistent with MFSNT's
current employee development program. Such costs
shall be subject to the prior written approval of
MWR.
(i) Any costs of employee training and/or certifications
necessary or required for the design and installation
of the equipment used in the construction of a
Project. Such costs must be approved in writing, in
advance, by MWR.
(j) Such other items properly and reasonably chargeable
as indirect costs of the Project
5.7 In the event the construction of any Project is terminated for
any reason prior to its completion, MWR shall pay and
reimburse MFSNT for all reimbursable expenses incurred through
the date of termination, plus the appropriate Additional
Percentage. Upon receipt of payment from McLeod MFSNT shall
provide documentation to McLeod's reasonable satisfaction
evidencing transfer of title to McLeod for all
work-in-progress at the time of termination.
5.8 MFSNT agrees to furnish efficient business administration and
superintendence, to use every reasonable effort to minimize
expense to MWR, and to keep upon the Work at all times an
adequate supply of qualified workers, machinery and materials
and to promote the progress of the Work in the most
expeditious and economical manner consistent with the
interests of MWR.
5.9 MFSNT shall keep accurate and detailed books of account open
to the inspection of MWR to verify quantities and costs which
are not based on negotiated or
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stipulated rates. MFSNT shall keep such full and detailed
accounts and job costs as may be necessary for proper
financial management by MFSNT under this Agreement in a
fashion reasonably satisfactory to MWR. MFSNT shall at all
times act in good faith and to the best advantage of MWR in
the purchase of materials, in the employment of labor, and in
all its conduct and activities relative thereto.
6. PHASE I AND PHASE II PROJECTS
6.1 MWR shall retain MFSNT as its sole and exclusive contractor,
subject to the provisions of paragraph 4.3, for the completion
of Work respecting the Phase I Projects and shall issue a
Project Initiation Notice to MFSNT respecting all of the Phase
I Projects within eighteen (18) months after the execution of
this Agreement.
6.2 MWR shall have the option, but not the obligation, to retain
MFSNT to complete Phase II Projects in accordance with the
terms and conditions stated herein.
7. RISK OF LOSS
MFSNT shall bear the risk of loss for all Work until such Work is
delivered to MWR and accepted by MWR as provided in this Agreement;
provided, however, that MFSNT shall not be responsible for any such
loss due to the actions or omissions of MWR. Title and ownership of
the MWR Fiber Optic Cable shall pass to MWR or MWR's nominee upon such
acceptance, subject, however, to receipt of final payment by MFSNT.
MFSNT warrants that MWR shall acquire good and clear title to the
materials and equipment supplied by MFSNT being purchased free and
clear of all liens.
8. PERFORMANCE OF WORK
8.1 MFSNT shall furnish all required design work, engineering
work, technical services, labor, supervision, tools, equipment
and materials necessary for the performance of the Work on the
MWR Fiber Optic Cable in a proper, efficient and workmanlike
manner. MFSNT shall perform the Work on the MWR Fiber Optic
Cable in a prompt and diligent manner, so as to promote the
general progress of the entire construction, and shall not, by
delay or otherwise, interfere with or hinder the work of any
other contractor. Any materials that are to be furnished by
MFSNT or MWR for the MWR Fiber Optic Cable shall be furnished
in sufficient time to enable MFSNT to perform and complete the
Work within the time or times provided for in this Agreement.
Upon written request by MWR, MFSNT shall furnish to MWR such
evidence as MWR may reasonably require relating to MFSNT's
ability to fully perform this Agreement in the manner and
within the time specified herein.
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8.2 All MFSNT employees shall have the skill and experience
required to perform the Work assigned to them. If any person
employed by MFSNT is performing the Work in an improper,
uncooperative or incompetent manner which affects the progress
of the Work, then at the written request of MWR, MFSNT shall
remove such person and such person shall not be re-employed on
the Project without the prior written approval of MWR. Any
costs associated with replacing an MFSNT employee removed
under this paragraph, and in retraining a replacement for such
employee, shall be borne by MFSNT and shall not be included in
the price, PROVIDED that MWR supplies a reasonable basis for
requesting removal of such employee.
8.3 MFSNT shall promptly remove, replace, repair, or otherwise
correct any portion of the Work that is defective in material
or workmanship or that otherwise is not in conformance with
the Contract Documents, PROVIDED that MFSNT is supplied with
notice of such defect or non-conformance within 1 year after
Substantial Completion. MFSNT shall bear all costs of
correcting any of its defects or non-conformances under this
paragraph. All supplier's warranties with regard to any
portion of the Work shall be assigned and transferred to MWR
upon Substantial Completion, and MFSNT shall undertake all
action as may be necessary to assure to MWR the benefit of
such warranties. No such warranty or other supplier's
obligation shall in any way relieve MFSNT from its primary
obligations to MWR with regard to any warranties and
liabilities hereunder. In the event that any such supplier's
warranty shall cover a portion of the MWR Fiber Optic Cable as
to which MFSNT may have liability hereunder, MWR may elect (i)
to pursue such supplier's warranty independently without
releasing MFSNT from any liability hereunder to the extent the
same is not discharged by such supplier, or (ii) to call upon
MFSNT to remedy such defect, in which event MWR shall assign
to MFSNT the benefit of any supplier's warranty incident to
such remedy.
8.4 MWR shall have the right to inspect the Work at all stages and
at all times.
8.5 All costs and expenses of labor, material, engineering, tools,
equipment, technical support and utility services required for
the Work shall be the sole responsibility of MFSNT (except to
the extent that MWR elects to compensate MFSNT on a cost-plus
basis as set forth in paragraph 5 hereof).
8.6 The parties agree that the Plan Documents will show the design
and engineering of the Projects on the MWR Fiber Optic Cable
and the material to be furnished for the construction of the
MWR Fiber Optic Cable. MFSNT shall be permitted to supplement
the Plan Documents where necessary upon the prior written
consent of MWR, which shall not be unreasonably withheld.
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8.7 MFSNT shall keep available during the progress of the Work a
competent manager who shall be the authorized representative
of MFSNT. Directions and communications to MFSNT's manager
from MWR in connection with the Work shall be treated as
directions and communications to MFSNT. During the
prosecution of the Work, MFSNT shall establish and maintain
Project management facilities in the Cedar Rapids, Iowa area.
8.8 In connection with the Work, MFSNT shall have the following
duties and obligations:
(a) MFSNT shall protect all property of MWR and any
adjacent property, and shall take all necessary
precautions for the safety of its employees on, in,
or about the site and shall comply with all safety
rules and regulations and with applicable federal,
state and municipal safety laws and building codes.
(b) During the course of the Work, MFSNT shall procure
any and all permits and licenses of a temporary
nature that are necessary for performance thereof and
shall observe and abide by all applicable
restrictions and all laws, regulations, ordinances,
and other rules of any governmental authority having
jurisdiction over the Work.
8.9 MFSNT shall defend and indemnify MWR against and hold MWR
harmless from any and all loss, costs, and expense including,
without limitation, attorney's fees and costs, associated with
all mechanic's or materialman's liens and claims and shall
keep MWR's property free and clear of all liens, claims, and
encumbrances arising from its performance of its obligations
under this paragraph 8.
9. CHANGES
MWR and MFSNT may by written agreement make changes in, additions to,
and omissions from, the MWR Fiber Optic Cable, and MFSNT shall
promptly proceed with the performance of the Work with respect thereto
as so changed. The price and time for performance shall be equitably
adjusted to compensate for increased or decreased costs of performance
or time for performance resulting from such changes, additions and
omissions.
10. EXTENSION OF TIME
10.1 MFSNT shall not be liable, in whole or in part, for
nonperformance or delay in performance of any of its
obligations set forth in this Agreement due to events,
contingencies or causes beyond the control and without the
fault of MFSNT, including, but not limited to, fire, flood,
earthquakes, lightning, unusually severe weather, acts of God,
acts of any governmental authority, war, riot, accidents,
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embargoes, strikes, labor disputes, or acts or omissions of
MWR or other parties (collectively referred to as "Force
Majeure"), or any event of Force Majeure which impacts the
performance of MFSNT's suppliers or subcontractors with
respect to this Agreement.
10.2 MFSNT shall be entitled to the issuance of a change order
extending the date for Substantial Completion for an equitable
period of time.
11. ACCEPTANCE
11.1 MFSNT shall, within sixty (60) days after the execution date
of this Agreement, draft and deliver to McLeod acceptable
testing procedures and an Acceptance Test Plan ("ATP") for
testing of the MWR Fiber Optic Cable. The testing procedures
and ATP are subject to MWR's approval, which shall not be
unreasonably withheld.
11.2 MFSNT shall perform all tests required by the ATP and shall
demonstrate to MWR that a Project meets the applicable
performance parameters set out in the Contract Documents.
Once MFSNT determines that a Project is substantially complete
and ready for use by MWR, MFSNT shall notify MWR, and
demonstrate the functioning of the Project. Within three (3)
business days thereafter, MWR must provide a Final Acceptance
Certificate or provide MFSNT in writing a listing of any
deficiencies. After MFSNT corrects such deficiencies, or
challenges such, MFSNT will provide a new notice of completion
and the three (3) notice process shall repeat until Final
Acceptance is given.
12. WARRANTIES
12.1 Cable Warranty
Notwithstanding MWR's acceptance of a Project under paragraph
11, MFSNT warrants each Project to be of good workmanship and
materials in accordance with the Contract Documents for a
period of one (1) year from the date of the Final Acceptance
Certificate.
12.2 Remedies for Breach of Warranty
MWR's sole and exclusive remedy and MFSNT's sole and exclusive
maximum liability under the warranty contained in paragraph
12.1 shall be, at the sole option of MFSNT, to repair (with
new or functionally operative parts) or replace any defective
portion of the Project of which MFSNT receives notice during
the warranty period provided in paragraph 12.1 provided that
MFSNT is promptly notified in writing upon discovery by MWR
that any portion of the Project has
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failed to conform with the Contract Documents, such writing to
include an explanation of any such alleged defects.
MFSNT's warranty does not extend to defects caused by acts of
God, accident, fire or other hazard, nor by any misuse,
neglect (except misuse or neglect by MFSNT), alterations,
storage, attempts to repair, or use by MWR, its agents,
customers or third parties, of other supplies not meeting
equipment specifications.
MFSNT shall use all reasonable efforts to promptly repair or
replace all such defective Work; provided, that MFSNT shall
repair or replace such defective Work within thirty (30) days
following its confirmation of the defect, unless reasonable
circumstances dictate a shorter or longer period, in which
event the parties shall in good faith mutually agree upon such
period. All replaced defective equipment or items shall
become the sole property of MFSNT.
12.3 Third Party Warranties
In addition to the foregoing warranty, MFSNT hereby assigns to
MWR, and MWR shall have the benefit of, any and all
subcontractors' and suppliers' warranties with respect to the
equipment in the MWR Fiber Optic Cable. MFSNT agrees that its
contracts with the subcontractors and suppliers shall require
that such parties (i) consent to the assignment of such
warranties (if any) to MWR, and (ii) agree that such
warranties (if any) shall be enforceable by MWR in its own
name.
12.4 THE FOREGOING WARRANTIES AND REMEDIES CONSTITUTE THE ONLY
WARRANTIES WITH RESPECT TO THE MWR Fiber Optic Cable AND ARE
MWR'S EXCLUSIVE REMEDIES IN THE EVENT OF BREACH OF SUCH
WARRANTIES. SUCH WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. MFSNT SHALL IN NO EVENT
BE LIABLE FOR ANY INCIDENTAL, SPECIAL, OR CONSEQUENTIAL
DAMAGES OF ANY NATURE WHATSOEVER FOR ANY REASON.
13. PROPRIETARY INFORMATION/CONFIDENTIALITY
All technical and business information of a proprietary nature, in
whatever form recorded, furnished to a party under or in contemplation
of this Agreement and marked or otherwise specified by the party
delivering such information as proprietary shall remain the property
of the party so delivering. Unless otherwise consented to in writing
(which consent shall not be unreasonably withheld), such information:
(i) shall be treated in confidence and used only for purposes of this
Agreement, except as otherwise required by law, (ii) shall not be
reproduced or copied in whole or in part, except as necessary for use
as authorized
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herein, and (iii) shall, together with any copies thereof, be returned
or destroyed when no longer needed. The above conditions do not apply
to any part of the information which was previously known to a party
free of obligations of confidentiality or use, and shall expire five
(5) years after Substantial Completion. This Agreement imposes no
obligation upon a recipient of such information which was or becomes a
matter of public knowledge through disclosure by its owner; is
rightfully received by the recipient from a third party without a duty
of confidentiality; is disclosed by owner to a third party without a
duty of confidentiality on that third party; is independently
developed by the recipient; is disclosed under operation of law; or is
disclosed by the recipient with the owner's prior written approval
14. INDEMNIFICATION
14.1 (a) MFSNT shall indemnify, defend and save harmless MWR
and each of its directors, officers, agents,
representatives and employees (the "MWR Indemnitees")
from and against any and all loss, damage, injury,
liability (including any and all attorneys' fees and
disbursements and all other costs and expenses
incurred in the investigation, defense or settlement
of any claims covered by this indemnity), and claims
thereof (hereinafter, "Claims") for injury to or
death of a person, including an employee of MFSNT or
a MWR Indemnitee, or for loss of or damage to
property resulting from MFSNT's performance of this
Agreement, except to the extent that such indemnity
is void or otherwise unenforceable under applicable
law in effect on or validly retroactive to the date
of this Agreement and except where the Claim is the
result of negligence or willful misconduct of a MWR
Indemnitee.
(b) Notwithstanding the foregoing, if negligence or
willful misconduct of a MWR Indemnitee has
contributed to a loss, MFSNT shall not be obligated
to indemnify the MWR Indemnitees for the
proportionate share of such Claims caused by such
negligence or willful misconduct. MWR shall have the
right, at its own cost, to retain counsel to monitor
or participate in the defense of any Claim that is
covered by MFSNT's indemnity hereunder. MWR shall
reimburse MFSNT for that portion of a Claim
determined or agreed to be caused by MWR's negligence
or willful misconduct. Reimbursement shall be due to
MFSNT thirty (30) days after the determination or
agreement with respect thereto, and shall bear
interest at the Interest Rate from said date until
the date of payment by MWR.
14.2 MWR shall indemnify, defend and save harmless MFSNT and each
of its directors, officers, agents, representatives and
employees (the "MFSNT Indemnitees") from and against any and
all loss, damage, injury, liability, and claims thereof for
injury to or death of a person, including an employee of MWR
or an MFSNT Indemnitee, or for loss of or damage to property
resulting directly
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or indirectly from MFSNT's performance of this Agreement where
such loss, damage, injury, liability or claim is the result of
negligence or willful misconduct of a MWR Indemnitee.
15. INSURANCE
15.1 MFSNT shall not commence the Work until it has obtained
insurance specified in paragraph 15.5, nor shall MFSNT allow
any subcontractor to commence work until insurance as
typically required by MFSNT of its subcontractors has been
obtained and approved.
15.2 Prior to commencing Work on the first Project, MFSNT shall
provide MWR with a certificate of insurance ("Certificate of
Insurance") executed by an authorized representative of the
insurer(s) evidencing that MFSNT's insurance complies with
this paragraph 15. The Certificate of Insurance shall
reference this Agreement. In addition, a copy of all required
endorsements shall be attached to and form a part of the
Certificate of Insurance.
15.3 Policies shall be endorsed to provide MWR with 30 days' prior
written notice of any nonrenewal, cancellation, reduction or
material change in coverage.
15.4 Policies shall be issued by companies which hold a current
policyholders' alphabetic and financial size category rating
of not less than A:X according to Best's Insurance Reports.
15.5 MFSNT shall obtain the following insurance:
Commercial general liability insurance for bodily injury
(including death) and property damage which provides limits of
not less than one million dollars ($1,000,000) per occurrence
and four million dollars ($4,000,000) annual aggregate as
respects products/completed operations if applicable.
Coverages included shall be:
(1) Premises and operations;
(2) Broad form property damage;
(3) Products and completed operations;
(4) Blanket contractual liability;
(5) Personal injury liability; or
(6) Independent contractors' liability.
Automobile Liability Insurance for bodily injury (including
death) and property damage that provides total limits of not
less than one million dollars ($1,000,000) combined single
limit per occurrence to all owned, non-owned and hired
vehicles.
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Statutory Workers' Compensation/Employer's Liability Insurance
for not less than one million dollars ($1,000,000) per
occurrence applicable to employer's liability coverage for all
employees engaged in services or operations under this
Agreement. The policy shall include broad form
all-states/other states coverage.
Coverage shall be endorsed to include the insurer's waiver of
subrogation in favor of MWR, its directors, officers,
representatives, agents and employees, a copy of which shall
be provided to MWR.
MWR shall be listed as an additional insured on any policies
provided for hereunder.
15.6 MWR acknowledges that some insurance requirements contained in
this paragraph 15 may be fulfilled by a funded self-insurance
program of MFSNT. Any self-insurance program must be first
approved in writing by MWR.
16. LIENS AND CLAIMS
MFSNT shall, as and when requested, furnish evidence satisfactory to
MWR that all amounts due for labor and material furnished by MFSNT in
connection with performance of this Agreement have been paid,
including union, health, welfare and pension fund payments and payroll
taxes. Such evidence shall be furnished in such form and manner as
requested by MWR. MFSNT, when requested, shall furnish to MWR
releases of bond rights and lien rights by persons who have furnished
labor, material or other things in the performance of this Agreement.
MFSNT shall deliver its Work free from all claims, encumbrances and
liens, excepting only those that may arise out of failure of payment
on the part of MWR.
17. SITE CONDITIONS
17.1 MFSNT shall notify MWR in writing promptly after MFSNT learns
of, and before such conditions are disturbed, (1) subsurface
or latent physical conditions at the site differing materially
from those known to MFSNT at the initiation of Work on a
Project or (2) unknown physical conditions at the site, of an
unusual nature, differing materially from those ordinarily
encountered and generally recognized as inherent in work of
the character provided for in this Agreement. MWR shall
promptly investigate the conditions, and if it finds that such
conditions exist and that they are likely to cause a
significant increase or decrease in MFSNT's costs or the time
required for Substantial Completion, then MWR and MFSNT shall
negotiate in good faith toward an equitable adjustment of the
price and time required for Substantial Completion under this
Agreement. For any Project constructed under the Fixed Price
option, subsurface or latent conditions shall not include rock
presence.
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17.2 In the event MFSNT encounters toxic or hazardous materials in
the performance of the Work which were not introduced to the
site directly by MFSNT, any resulting delays shall be
considered to be an event of Force Majeure and MFSNT shall
have no obligation, responsibility or liability with respect
to any such materials.
18. DEFAULT
18.1 Subject to the expiration of all applicable care periods as
provided herein, and unless otherwise excused by reason of
Force Majeure, an "MFSNT Default" shall mean a material breach
of this Agreement by MFSNT as to any of the following: (i)
MFSNT has not completed the Projects required to be completed
in accordance with this Agreement; (ii) the MWR Fiber Optic
Cable does not meet the requirements set forth in the Contract
Documents; (iii) MFSNT has failed to perform any other
material obligation to be performed by MFSNT pursuant to this
Agreement; or (iv) MFSNT becomes insolvent, or institutes or
has instituted against it bankruptcy proceedings, or makes a
general assignment for the benefit of creditors, or if a
receiver is appointed for the benefit of its creditors, or if
a receiver is appointed on account of its insolvency.
18.2 If an MFSNT Default occurs, then MWR shall notify MFSNT in
writing (the "Default Notice"), specifying the alleged default
and advising MFSNT that unless such default is cured within
thirty (30) days following the receipt by MFSNT of such
Default Notice, MFSNT shall be in breach of this Agreement;
provided, however, that if such MFSNT Default cannot be cured
within thirty (30) days following receipt by MFSNT of such
Default Notice, MFSNT shall have an additional reasonable
period of time in which to cure such MFSNT Default so long as
MFSNT promptly commences and in good faith diligently
continues to pursue the cure of such MFSNT Default.
18.3 Unless otherwise mutually agreed upon by MWR and MFSNT in
writing and set forth in an amendment to this Agreement, if an
MFSNT Default occurs and is not excused or cured as provided
in this Agreement, then MFSNT shall be liable for all direct
damages resulting from such MFSNT Default; provided, however,
that MFSNT's liability for such direct damages shall not
exceed the price applicable to the particular Project(s)
wherein the MFSNT Default occurs, less the total price for any
items delivered to and accepted by MWR. Notwithstanding the
preceding sentence or any other provision to the contrary,
MFSNT's sole liability for failure to repair or replace
defective equipment in the MWR Fiber Optic Cable in accordance
with paragraph 12, is set forth in paragraph 12.2. MWR agrees
that the payment of direct damages shall be its sole and
exclusive remedy for an MFSNT Default and that upon such
payment, MFSNT shall be fully released from any and all
liability under this Agreement and this Agreement thereupon
shall terminate and be of no further force or effect. MFSNT
SHALL NOT BE LIABLE
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FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, OR
PUNITIVE DAMAGES, OR LOSS OF PROFITS OR REVENUES, WHETHER SUCH
DAMAGES ARE ALLEGED AS A RESULT OF TORT (INCLUDING STRICT
LIABILITY), CONTRACT, WARRANTY, OR OTHERWISE.
18.4 Subject to the expiration of all applicable cure periods as
provided herein, and unless otherwise excused by Force
Majeure, a "MWR Default" shall mean (i) a material breach of
any of the provisions of this Agreement by MWR, or (ii) MWR
becomes insolvent, or institutes or has instituted against it
bankruptcy proceedings, or makes a general assignment for the
benefit of creditors, or if a receiver is appointed for the
benefit of its creditors, or if a receiver is appointed on
account of its insolvency. If a MWR Default occurs, except as
to payment defaults under Paragraph 4.5, MFSNT shall issue a
written notice of default providing therein for a thirty (30)
day period in which MWR shall have an opportunity to cure,
provided that cure is possible and feasible. If, after
opportunity to cure, the MWR Default remains, MFSNT may either
suspend performance or terminate this Agreement and may
exercise any and all rights and remedies provided herein or by
law, including but not limited to the right to seek specific
performance hereof or to seek recovery of damages from MWR
relating to or caused by a breach of this Agreement. The
provisions of this Paragraph 18.4 are in addition to, and not
exclusive of, MFSNT's right to suspend performance in the
event of a failure by MWR to make timely payments to MFSNT
under paragraph 4 of this Agreement. MWR SHALL NOT BE LIABLE
FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, OR
PUNITIVE DAMAGES, OR LOSS OF PROFITS OR REVENUES BY THIRD
PARTIES, WHETHER SUCH DAMAGES ARE ALLEGED AS A RESULT OF TORT
(INCLUDING STRICT LIABILITY), CONTRACT, WARRANTY, OR
OTHERWISE.
18.5 If a party cannot reasonably cure a default within the time
frame set forth, the party is entitled such reasonable time as
is necessary to cure the default providing the party is acting
in good faith and using its continuous best efforts to cure
such default as quickly as is possible under the
circumstances.
19. INDEPENDENT CONTRACTOR
The performance by MFSNT and/or MWR of all duties and obligations
under this Agreement shall be as independent contractors and not as
agents of the other party, and no persons employed or utilized by a
performing party shall be considered the employees or agents of the
other. Neither party shall have the authority to enter into any
agreement purporting to bind the other without its specific written
authorization. The parties agree that this Agreement does not create
a partnership between, or a joint venture of, MFSNT and MWR.
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20. ARBITRATION
20.1 All claims, disputes and other matters in question arising out
of, or relating to, this contract or the breach thereof, shall
be decided by arbitration before an arbitration panel in
Omaha, Nebraska, in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association then
in effect unless the parties mutually agree otherwise. Such
"Arbitration Panel" shall be composed of three (3)
arbitrators, one selected by each party and the third selected
by the agreement of the other two arbitrators. This agreement
to arbitrate shall be specifically enforceable under the
prevailing arbitration law. The award rendered by the
Arbitration Panel shall be final, and judgment may be entered
upon it in accordance with applicable law in any court having
jurisdiction thereof.
20.2 Notice of demand for arbitration shall be filed in writing
with the other party to the contract and with the American
Arbitration Association. The demand for arbitration shall be
made within a reasonable time after the claim, dispute or
other matter in question has arisen, and in no event shall it
be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of
limitations.
20.3 If the presence of other persons or entities is required for
relief to be accorded in the arbitration, MFSNT and MWR shall
attempt to include such persons or entities in the
arbitration.
20.4 MFSNT shall carry on the Work and maintain the progress
schedule during any arbitration proceedings, unless otherwise
agreed by MFSNT and MWR in writing, or unless MFSNT has
elected to suspend performance pursuant to paragraph 4 of this
Agreement.
21. PUBLICITY
Each party shall submit to the other a proposed copy of all
advertising, sales promotion, press releases, and any other publicity
matters relating to this Agreement (collectively "Advertising")
wherein the name, trademark, code, specifications or service mark of
the other party or its affiliates is mentioned; and each party further
shall not publish or use such Advertising without the other's prior
written approval. Such approval shall be granted as promptly as
possible (usually within ten (10) days) and shall not be unreasonably
withheld.
22. COMPLIANCE WITH LAW
Each party agrees to fully comply with all laws, ordinances and
regulations applicable to the performance of their respective
obligations hereunder.
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23. ASSIGNMENT
Neither party shall assign, transfer, convey or otherwise dispose of
(collectively, "Transfer") any rights, title, or interest in or to
this Agreement without the prior written consent of the other party,
such consent not to be unreasonably withheld. Either party may
Transfer this Agreement without the advance written consent of the
other to an entity controlled by, controlling or under common control
with a party hereto, or in connection with a corporate restructuring
of a party. Any Transfer by a party without required prior written
consent of the other party shall constitute a default hereunder.
24. GOVERNING LAW
The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of Iowa, except for its
rules with respect to the conflict of laws.
26. SEVERABILITY
If this Agreement contains any provision found to be unlawful, then
such provision shall be deemed to be of no effect and shall be deemed
stricken from this Agreement without affecting the binding force of
this Agreement as it shall remain after striking such provision.
27. WAIVER
A failure of either party to exercise any right provided for in this
Agreement shall not be deemed to be a waiver of the same or any other
right hereunder. Any waiver by either party of a breach of any
provision of this Agreement shall not be deemed to be a waiver of any
other or subsequent breach and shall not be construed to be a
modification of the terms of this Agreement unless and until agreed to
in writing by both parties.
28. CAPTIONS
Paragraph headings are inserted herein for convenience only and shall
not affect the meaning or interpretation of this Agreement or any
provision hereof.
29. NOTICES
All notices and other communications under this Agreement shall be
properly given only if made in writing and (i) mailed by certified
mail, return receipt required, postage prepaid, (ii) delivered by hand
(including messenger or recognized delivery, courier or air express
service) or (iii) delivered by facsimile transmission to the party at
the address or facsimile number set forth in this paragraph 29 or such
other address or facsimile number as such party may designate by
notice to the other party. Such notices and other communications shall
be effective on the date of receipt (evidenced by the certified mail
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receipt) if mailed or if delivered by facsimile transmission or on the
date of hand delivery if hand delivered. If any such notice or
communication is not received or cannot be delivered due to a change
in the address of the receiving party of which notice was not
previously given to the sending party or due to a refusal to accept by
the receiving party, such notice or other communication shall be
effective on the date delivery is attempted. Any notice or other
communication under this Agreement may be given on behalf of a party
by the attorney for such party.
If to MFSNT:
MFS Network Technologies, Inc.
1200 Landmark Center, Suite 1300
Omaha, Nebraska 68102
Attention: President and Legal Counsel
Facsimile: 402/233-7582
with a copy to:
MFS Communications Company, Inc.
200 Kiewit Plaza
3555 Farnam Street
Omaha, Nebraska 68131
Attention: Terrence J. Ferguson,
General Counsel
Facsimile: 402/977-5335
If to MWR:
McLeod, Inc.
Town Centre, Suite 500
221 Third Ave. Southeast
Cedar Rapids, Iowa 52401
Attention: Kirk Kaalberg
Facsimile: 319/398-7070
with a copy to:
McLeod, Inc.
Town Centre, Suite 500
221 Third Ave. Southeast
Cedar Rapids, Iowa 52401
Attention: Casey Mahon
General Counsel
Facsimile: 319/398-7070
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30. AUTHORIZATIONS
All authorizations or approvals required of a party under this
Agreement shall not be unreasonably withheld and shall be given in a
timely fashion and without unreasonable delay. Time is of the essence
hereunder.
31. ENTIRE AGREEMENT
This Agreement, including the Exhibits referenced and attached hereto,
comprise all the terms, conditions and agreements of the parties with
respect to the subject matter herein, and except as expressly provided
herein this Agreement may not be altered or amended except in writing,
signed by each party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives, as of the date first set
forth above.
MFS NETWORK TECHNOLOGIES, INC. MWR TELECOM, INC.
By /s/ KEVIN P. MOERSCH By /s/ STEPHEN C. GRAY
---------------------- -------------------------------------
Kevin P. Moersch Stephen C. Gray
President President and Chief Operating Officer
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