EXHIBIT 10.19
INITIAL
OPTICAL FIBER DESIGN AND
INSTALLATION AGREEMENT
BETWEEN
FOCAS, INC.
AND
ELECTRIC LIGHTWAVE, INC.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................................................1
ARTICLE II DESCRIPTION OF TRANSACTION..................................................................8
2.1 Utility Agreements.................................................................8
2.2 Delegation of Certain ELI Duties to FOCAS..........................................9
2.3 ELI Duties.........................................................................9
2.4 Licenses Revocable.................................................................9
2.5 Regulatory Approval................................................................9
2.6 Conversion from Revocable License to Irrevocable License..........................10
2.7 Nonexclusive Use of Right of Way..................................................10
2.8 Reservation of Certain Utility Company Rights.....................................10
2.9 Utility Operations................................................................10
2.10 No Property or Possessory Interest................................................11
2.11 Right of Entry....................................................................11
2.12 Entry Conditions..................................................................12
2.13 Cooperation.......................................................................12
2.14 Disclaimer........................................................................12
2.15 Operation of System...............................................................12
2.16 Cable Route.......................................................................13
ARTICLE III TERM.......................................................................................13
3.1 Term..............................................................................13
3.2 Termination of Agreement by ELI...................................................13
ARTICLE IV PAYMENTS...................................................................................14
4.1 Quarterly Payments................................................................14
4.2 Quarterly Payment Due Dates.......................................................14
4.3 Supporting Documentation..........................................................14
4.4 Reimbursement of Costs............................................................14
4.5 Payment Procedure.................................................................15
4.6 Late Payment......................................................................15
4.7 Performance Criteria..............................................................15
4.8 Security Interest.................................................................17
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ARTICLE V SYSTEM DESIGN..............................................................................18
5.1 FOCAS Design Responsibility.......................................................18
5.2 ELI Design Responsibilities.......................................................19
5.3 Utility Company Information.......................................................19
5.4 Notice of Adverse Claims..........................................................20
5.5 Working Drawings..................................................................20
5.6 Scheduling........................................................................20
5.7 Warranty of Work..................................................................21
5.8 Design Performance Completion.....................................................21
ARTICLE VI CONSTRUCTION...............................................................................21
6.1 Scope of Work.....................................................................21
6.2 Regeneration Facilities...........................................................22
6.3 Work Standards....................................................................22
6.4 Time..............................................................................22
6.5 Permits and Approvals.............................................................22
6.6 System Materials..................................................................23
6.7 Interface Between FOCAS and ELI...................................................23
6.8 Title and Risk of Loss............................................................23
6.9 System Warranties.................................................................23
6.10 Use of Contractors................................................................24
6.11 Inspection of Construction........................................................24
6.12 As-Built Drawings.................................................................25
6.13 Completion of System Construction.................................................26
6.14 Warranty of Work..................................................................26
6.15 Construction Performance Completion...............................................26
ARTICLE VII PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE...............................................27
7.1 Avoidance of Encumbrances.........................................................27
7.2 Payment of Ad Valorem Taxes.......................................................27
7.3 Sales or Use Taxes................................................................27
7.4 Liens.............................................................................27
7.5 Discontinuance or Relocation......................................................28
7.6 Relocation of Cable...............................................................28
7.7 Design and Installation of Relocated Facilities...................................29
7.8 Utility Company Maintenance Responsibilities......................................29
7.9 Maintenance of Regeneration Facilities and System Electronics.....................29
7.10 Restoration Plans.................................................................29
7.11 Performance Completion............................................................29
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ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS..................................................29
8.1 Representations, Warranties and Covenants of ELI..................................29
8.2 Representations, Warranties and Covenants of FOCAS................................31
8.3 Confidentiality...................................................................33
8.4 Cooperation.......................................................................35
8.5 Regulatory Compliance.............................................................35
8.6 Certificates......................................................................35
8.7 Independent Status................................................................36
8.8 Transactions with Affiliates......................................................36
8.9 Further Assurances................................................................36
8.10 Audit Rights......................................................................36
8.11 Interference......................................................................36
8.12 Independent System Operator.......................................................36
8.13 Performance in Stead..............................................................37
8.14 Utility Agreements................................................................37
ARTICLE IX INSURANCE..................................................................................37
9.1 Required Insurance Coverage.......................................................37
9.2 General Conditions................................................................38
9.3 Evidence of Insurance.............................................................38
9.4 Blanket Policies..................................................................39
9.5 Self-Insurance....................................................................39
ARTICLE X ASSIGNMENT AND OTHER TRANSFERS.............................................................39
10.1 Transfers.........................................................................39
10.2 Financing.........................................................................39
10.3 Recognition of Transferees........................................................40
10.4 No Assumption or Release..........................................................40
10.5 Mergers and Acquisitions..........................................................40
ARTICLE XI CONDEMNATION...............................................................................40
11.1 Taking............................................................................40
11.2 Notice of Taking..................................................................40
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ARTICLE XII ENVIRONMENTAL HAZARD LIABILITY.............................................................41
12.1 Responsibilities of FOCAS.........................................................41
12.2 Responsibilities of ELI...........................................................41
12.3 Warning...........................................................................41
ARTICLE XIII LIABILITY AND INDEMNITY....................................................................41
13.1 FOCAS Indemnity...................................................................41
13.2 ELI Indemnity.....................................................................42
13.3 No Consequential Damages..........................................................42
13.4 Defense of Claims.................................................................42
13.5 Third-Party Claims................................................................43
13.6 Survival..........................................................................43
13.7 Applicability of Liability Limitations............................................43
13.8 Claims Against Third-Parties......................................................43
13.9 Anti-Indemnity Statute............................................................43
ARTICLE XIV FORCE MAJEURE..............................................................................44
14.1 Excuse of Performance.............................................................44
14.2 Definition........................................................................44
14.3 Continuance after Force Majeure Event.............................................45
ARTICLE XV DEFAULT AND TERMINATION....................................................................45
15.1 Termination Events................................................................45
15.2 Actions Following Occurrence of Termination Event.................................47
15.3 No Release........................................................................47
ARTICLE XVI DISPUTE RESOLUTION.........................................................................48
16.1 Dispute Resolution................................................................48
16.2 Negotiation and Mediation.........................................................48
16.3 Confidentiality...................................................................48
16.4 Injunctive Relief.................................................................48
16.5 Continuing Obligation.............................................................48
16.6 Failure of Mediation..............................................................48
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ARTICLE XVII MISCELLANEOUS..............................................................................49
17.1 Amendments........................................................................49
17.2 Binding Effect....................................................................49
17.3 Waivers...........................................................................49
17.4 Notices...........................................................................49
17.5 Severability......................................................................50
17.6 Interpretation....................................................................50
17.7 Governing Law and Choice of Forum.................................................50
17.8 Commissions.......................................................................50
17.9 Counterparts......................................................................51
17.10 Attorney Fees.....................................................................51
17.11 Costs.............................................................................51
17.12 No Third-Party Beneficiaries......................................................51
17.13 Entire Agreement..................................................................51
17.14 Survival..........................................................................51
17.15 Exhibits..........................................................................51
EXHIBITS
Exhibit "A" Acceptance Testing Standards
Exhibit "B" Cable Route
Exhibit "C" Cable Specifications
Exhibit "D" Performance Criteria
Exhibit "E" Revenue Sharing Route
Exhibit "F" Utility Company Agreements
Exhibit "G" Utility Company Safety Rules
Exhibit "H" Cable Warranty
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INITIAL
OPTICAL FIBER DESIGN
AND INSTALLATION AGREEMENT
THIS INITIAL OPTICAL FIBER DESIGN AND INSTALLATION AGREEMENT
("Agreement") is made and entered into effective as of the 7th day of May, 1998,
by and between FOCAS, INC., a Delaware corporation ("FOCAS"), and ELECTRIC
LIGHTWAVE, INC., a Delaware corporation ("ELI").
R E C I T A L S :
1. ELI has secured or is in the process of securing licenses to use
certain rights of way in the State of California upon which ELI desires to
construct and install or have constructed and installed an optical fiber
telecommunications transmission system over the entire Revenue Sharing Route (as
defined herein) estimated to cover approximately 1300 route miles.
2. FOCAS, at its expense, upon the terms, covenants and conditions set
forth in this Agreement, is willing to design, engineer, and supply the optical
fiber cable and other related facilities and equipment necessary for the
construction and installation of the optical fiber, and to participate in the
construction and installation of the optical fiber over a portion of the Revenue
Sharing Route which portion is estimated to cover approximately 920 route miles.
3. ELI, at its expense, upon the terms, covenants and conditions
contained in this Agreement, desires that FOCAS perform such design,
engineering, construction and installation services for ELI to the point that
the above-mentioned portion of the entire Revenue Sharing Route is completed.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, and for other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, FOCAS and ELI agree as
follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the
meanings specified below:
"Acceptance of Construction" means the written notification
from ELI to FOCAS, pursuant to Section 6.11, that specified work has been
inspected by ELI and found to have been performed substantially in accordance
with the requirements of this Agreement.
"Acceptance Testing Standards" means ELI's Acceptance Testing
Standards set forth on Exhibit "A" attached to and incorporated in this
Agreement by reference.
"Ad Valorem Taxes" means ad valorem property taxes, special
assessments, local improvement district levies and other levies assessed against
the System or the Right of Way.
"Affected Portion" means any portion of the System that is or
may: (1) be affected by a Taking; (2) become the subject of a lien or transfer;
or (3) be damaged or destroyed as the result of the occurrence of an event of
casualty.
"Affiliate" means, with respect to either FOCAS or ELI, any
corporation or other entity that controls such party, is controlled by such
party, or is with such party under common control of another entity.
"Approvals" means all permits, approvals and licenses from all
government authorities having jurisdiction or approval rights with respect to:
(1) the construction and installation of the System; and (2) the use and
occupation of any portion of the Right of Way along the Cable Route where the
System is to be located or to be constructed.
"Approved System Segment" means a System Segment for which
Working Drawings have been approved under the terms of this Agreement for
construction and installation of the Cable, the Cable Accessories, the
Connecting Points and, as applicable, the Regeneration Facilities, the System
Electronics and other facilities and equipment associated with the Approved
System Segment.
"Cable" means one or more optical fiber telecommunications
cables containing single mode, nondispersion shifted optical fibers to be
installed along the Cable Route pursuant to the terms of this Agreement.
"Cable Accessories" means all hardware and appurtenances
necessary for the attachment of the Cable to the Towers.
"Cable Route" means the corridor in which the Cable for the
System will be deployed. An approximate location of the Cable Route is described
on Exhibit "B" attached to and incorporated in this Agreement by reference.
"Cable Specifications" means the drawings and specifications
regarding the Cable, the Cable Accessories, and related hardware and materials
to be employed in the installation and splicing of the Cable. A copy of the
Cable Specifications is attached to and incorporated by reference in this
Agreement as Exhibit "C."
"Cable Use License" means the exclusive right to use the
Commercial Fibers contained in the Cable that follows the portion of the Cable
Route contained in a particular Utility Company's service territory granted by
the Utility Company to ELI in a Utility Agreement. A Cable Use License does not
grant to ELI any right to enter upon or to access the Towers, the Substation
Sites or the Right of Way of the Utility Company.
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"Chief Engineer" means with respect to FOCAS or ELI, as
applicable, the person designated to be responsible for managerial decision
making with respect to the System and this Agreement and to give technical or
managerial advice.
"Commercial Fibers" means the single mode, nondispersion
shifted optical fibers along the entirety of the Revenue Sharing Route in which
ELI holds an exclusive license, lease or IRU.
"Connecting Point" means any point where the network or
facilities of ELI or any Utility Company connect to the System. The connecting
point may be: (1) a splice point in the Cable created during the installation of
the Cable for a Utility Company to access its Dark Fibers; or (2) a splice point
in a connection box located adjacent to a Regeneration Facility created during
the installation of the Cable for ELI's access to the Commercial Fibers.
"CPUC" means the California Public Utilities Commission.
"Dark Fiber Lease Services" means the leasing of dark
Commercial Fibers or capacity in dark Commercial Fibers by ELI to other
telecommunications carriers or commercial users. Dark Fiber Lease Services do
not include the Dark Fibers leased by ELI to the Utility Companies.
"Dark Fibers" means the single mode, nondispersion shifted
optical fibers in the Cable along the entirety of each Developed System Segment
leased to or reserved by the Utility Companies for the purposes and on the terms
described in the Utility Agreements.
"Developed System Segment" means a System Segment on which all
construction and installation work has been completed and regarding which an
Acceptance of Construction has been issued.
"Effective Date" means the date of execution of this Agreement
by FOCAS and ELI.
"Force Majeure Event" shall have the meaning given in Section
14.2.
"Gross Revenues" means for any accounting period:
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(1) The sum of: (a) all revenues billed by
ELI for Transport Services and Dark Fiber Lease Services using
the Commercial Fibers over all or any portion of the entire
Revenue Sharing Route; (b) any other proceeds or value
received or receivable by ELI from any condemnation, eminent
domain or other Taking, or from the exploitation or
commercialization of the System or any interest therein,
including, but not limited to, any business interruption
insurance proceeds; and (c) any recoveries obtained by ELI
from the Utility Companies or others in respect of the System.
(2) Less the sum of: (a) any billed revenues
from the Revenue Sharing Route actually written off (as
determined consistent with ELI's business practices) net of
any cash receipts in respect of previously written off billed
revenue; (b) relocation costs allocable to and paid by ELI as
provided under the terms of any Utility Agreement resulting
from a relocation required by a party other than ELI, FOCAS or
the applicable Utility Company (as described in Section 7.6);
(c) Maintenance cost reimbursement payments made by ELI to the
Utility Companies under the terms of the Utility Agreements to
the extent provided in Section 7.8; (d) the premiums paid for
business interruption insurance relating to the Revenue
Sharing Route, if any; and (e) the cost of recovering any sum
of money from any of the Utility Companies or any other party
if the recovered amount is included in Gross Revenues (as
defined above).
"Hazardous Substances" means any waste, pollutant (as that
term is defined in 42 U.S.C. ss. 9601(33) or in 33 U.S.C. ss. 1362(13) or any
successor statutes thereto), hazardous substance (as that term is defined in 42
U.S.C. ss. 9601(14) or any successor statute thereto), hazardous chemical (as
that term is defined by 29 CFR Part 1910.1200(c) or any successor regulation
thereto), toxic substance, hazardous waste (as that term is defined in 42 U.S.C.
ss. 6901 or any successor statute thereto), radioactive material, special waste,
petroleum, including crude oil or any other hydrocarbon based substance, waste,
or breakdown or decomposition product thereof, or any constituent of any such
substance or waste, including, but not limited to polychlorinated biphenyls, and
asbestos.
"Independent System Operator" means any entity or agency to
which any Utility Company has ceded operational control of its electric
transmission system. An Independent System Operator, among other powers, has
authority to direct the operation of all facilities under its control that
affect the reliability of the electric transmission system and to approve
requests to take electric transmission equipment out of service.
"Irrevocable License" means a Cable Use License or a Right of
Way License that has been approved by the CPUC as described in Sections 2.5 and
2.6.
"IRU" means the exclusive indefeasible right to use the Cable
and the optical fibers contained therein reserved by ELI under the terms of a
Utility Agreement that grants to ELI a Right of Way License.
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"Maintenance" means: (1) routine visual inspection, repair and
maintenance of the Cable, the Cable Accessories, the Towers and the Right of
Way; and (2) disaster restoration.
"Maps" means any drawings or maps that FOCAS, a Utility
Company or ELI is required to prepare, update or submit to any state or federal
regulatory agency as required by applicable statute, rule or regulation.
"Payment Completion Date" means the date described in Section
4.1 of this Agreement.
"Payment Factor" means the percentage factor identified in
Section 4.1(b) which when multiplied against the Gross Revenues for a particular
accounting period produces the Quarterly Payment.
"Performance Completion Date" means the date described in
Section 5.8 of this Agreement.
"Performance Criteria" means those minimum annual Gross
Revenues described in Section 4.7 and set forth on Exhibit "D" attached to and
incorporated in this Agreement by reference.
"Qualified Contractor" means a party with whom ELI or FOCAS
contracts to perform any portion of the work for the System over which ELI or
FOCAS, as applicable, pursuant to the terms of this Agreement, has
responsibility. Each such Qualified Contractor must meet the qualification
standards imposed by ELI, FOCAS and the Utility Companies for the type of work
to be undertaken by such Qualified Contractor.
"Quarterly Payments" means the quarterly payments ELI shall
make to FOCAS under the terms of this Agreement as described in Section 4.1.
"Regeneration Facilities" means each building along the Cable
Route housing any System Electronics used by ELI to operate the System,
including terminal and regenerator equipment. For purposes of this Agreement,
ELI shall design, engineer and construct the Regeneration Facilities. In
addition, ELI shall own or lease the physical structure comprising a
Regeneration Facility, and shall own and install all System Electronics used in
connection with each Regeneration Facility.
"Revenue Sharing Route" means the cable path for the
Commercial Fibers over an estimated 1300 Route Miles. An approximate location of
the Revenue Sharing Route is described on Exhibit "E" attached to and
incorporated in this Agreement by reference.
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"Revocable Licenses" means a Cable Use License or a Right of
Way License regarding which the CPUC has not granted approval to the applicable
Utility Company to convert such license to an Irrevocable License as described
in Sections 2.5 and 2.6.
"Right of Way" means the Utility Companies' real property and
rights related thereto created pursuant to a grant, easement, lease, license or
other agreement which are used for the Cable Route.
"Right of Way License" means the nonexclusive right to use the
Towers, Substation Sites and Right of Way of a particular Utility Company to
install and operate the System granted by the Utility Company to ELI under the
terms of a Utility Agreement. The Right of Way License includes the exclusive
right to use the Commercial Fibers on such Utility Company's portion of the
Cable Route.
"Route Miles" means the actual miles traversed by the
Commercial Fibers (including spurs) based on the "as-built" drawings described
in Section 6.12.
"Scheduled Completion Date" means January 31, 1999.
"Service Ready Date" means the date when the Commercial Fibers
for any particular System Segment are fully installed and meet the Acceptance
Testing Standards, as evidenced by the issuance of an Acceptance of Construction
for that System Segment.
"Substation Sites" means those areas on or near the Right of
Way where a Utility Company owns or leases the land and maintains electric
transmission or distribution equipment and on which ELI, pursuant to the terms
of the Utility Agreements, may locate Regeneration Facilities.
"System" means all of the Cable, the Cable Accessories, the
Connecting Points, the Regeneration Facilities, the System Electronics and other
improvements and equipment forming a part of the telecommunications network
constructed or installed pursuant to the terms of this Agreement over the Cable
Route.
"System Electronics" means all items of equipment, hardware,
software, electronics, optronics and any components thereof owned by ELI that
are used to transmit or monitor telecommunications services over the System.
"System Integrity" means the operation of a Utility Company's
electric system in a manner that is deemed to minimize the risk of injury to
persons and property and enable the Utility Company to provide adequate and
reliable electric service to its customers, as determined by the Utility
Company.
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"System Materials" means all Cable, Cable Accessories, System
Electronics, and other equipment and materials obtained by FOCAS or ELI under
the terms of this Agreement to construct or equip any portion of the System.
"System Segment" means a portion of the System with defined
beginning and end points.
"Taking" means the exercise of the power of eminent domain by
any public or quasi-public authority, or any other entity having the same or
similar authority to divest title to real or personal property from a person.
"Term" means the period of time beginning on the Effective
Date and terminating on that date which is thirty (30) days after the twentieth
(20th) year anniversary of the date the entire Revenue Sharing Route is
completed.
"Tower" means a tower or pole along the Cable Route: (1)
erected for electric power transmission, including all attendant equipment,
structures and power sources; or (2) used for the attachment of electrical power
transmission or distribution facilities.
"Tower Sites" means those areas on the Right of Way on which
Towers are located.
"Transferee" means any individual or entity to which either
FOCAS or ELI, pursuant to Article X, transfers or assigns any interest in this
Agreement.
"Transport Services" means individual circuits used or sold as
bulk transport by ELI to other telecommunications carriers or to commercial
users for long-haul traffic on the Commercial Fibers.
"Utility Agreements" means the written agreements entered into
by ELI with the Utility Companies, or by ELI and FOCAS with any Utility Company,
which provide, among other things, for the design, engineering, construction and
installation of the System. Copies of the Utility Agreements are attached to and
incorporated by reference in this Agreement as Exhibit "F."
"Utility Companies" means Pacific Gas and Electric Company,
PacifiCorp, Southern California Edison, and any other electric power
transmission company with which ELI enters into a written agreement for use of
Right of Way to construct and install a portion of the System.
"Utility Operations" means the procurement, generation,
transmission, distribution, management or monitoring by a Utility Company of its
services, or any combination thereof, including, without limitation, consulting
and advising with respect to the use thereof and providing all related equipment
and services.
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"Working Drawings" means the construction plans for the
installation of the System along the Cable Route.
ARTICLE II
DESCRIPTION OF TRANSACTION
--------------------------
2.1 Utility Agreements. Under the terms of the Utility
Agreements, the Utility Companies and ELI have or will agree to design, engineer
and install the System along the Cable Route. ELI has entered into, or is about
to enter into a separate Utility Agreement with each of the Utility Companies
relating to that portion of the Right of Way owned or controlled by each such
Utility Company. The duties and responsibilities of the Utility Companies and
ELI under the terms of the Utility Agreements are summarized below:
(a) Utility Companies. Under the terms of the Utility
Agreements, each Utility Company agrees to grant to ELI a Right of Way
License, or a Cable Use License.
(1) Under a Utility Agreement which grants a
Right of Way License to ELI, the applicable Utility Company:
(A) grants to ELI a license to enter upon the Right of Way
controlled by such Utility Company for the purposes of
designing, engineering, constructing and installing the
System; (B) authorizes ELI and ELI's employees, agents and
contractors to enter on such Utility Company's Right of Way,
Towers and Substation Sites to exercise ELI's rights under the
terms of its Utility Agreement with ELI; (3) allows ELI to
reserve for ELI's exclusive use an IRU in and to the Cable to
be installed on such Utility Company's Right of Way; and (4)
upon completion of the construction and installation of the
System, leases from ELI Dark Fibers in the Cable installed on
such Utility Company's Right of Way.
(2) Under a Utility Agreement which grants a
Cable Use License to ELI, the applicable Utility Company
agrees to: (A) design and install an optical fiber
communications system using the Utility Company's Right of Way
along its portion of the Cable Route; (B) upon completion of
the installation of the Cable along its portion of the Cable
Route, grant to ELI an exclusive license to use the Commercial
Fibers in the Cable installed by the Utility Company on such
Utility Company's Right of Way; and (C) reserve for the
Utility Company's own use the Dark Fibers to be installed on
such Utility Company's Right of Way.
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(b) ELI. Under the terms of the Utility Agreements,
ELI makes the following undertakings:
(1) With respect to a Utility Agreement
that grants to ELI a Right of Way License, ELI agrees to: (A)
design, engineer, construct and install the System; (B) upon
completion of the construction and installation of the System
on such Utility Company's portion of the Cable Route, and
subject to ELI's reservation of an exclusive IRU to the
Commercial Fibers along such portion of the Cable Route,
transfer legal title to the Cable and the Cable Accessories
installed on the Utility Company's Right of Way to that
Utility Company; and (C) upon completion of the construction
and installation of the System on such Utility Company's
portion of the Cable Route, lease to such Utility Company the
Dark Fibers in the Cable installed on such Utility Company's
Right of Way.
(2) With respect to a Utility Agreement that
grants to ELI a Cable Use License, ELI agrees to: (A) supply
the Cable for use in the installation of the System on the
Utility Company's portion of the Cable Route; and (B) upon
completion of the construction and installation of the System
along such portion of the Cable Route, transfer legal title to
the Cable and the Cable Accessories installed on the Utility
Company's Right of Way to that Utility Company.
2.2 Delegation of Certain ELI Duties to FOCAS. Under the terms
of this Agreement, ELI delegates to FOCAS (as contemplated by the terms of the
Utility Agreements) certain of the duties and responsibilities assumed by ELI
under the terms of the Utility Agreements. In consideration of the Quarterly
Payments made by ELI to FOCAS under the terms of this Agreement with respect to
the portion of the Cable Route for which FOCAS has responsibility: (a) FOCAS, at
its expense, shall manufacture or acquire and deliver the Cable for the System
for all of the Cable Route; and (b) with respect only to those Utility
Agreements that grant a Right of Way License, FOCAS, at its expense, either
directly or indirectly through one or more approved Qualified Contractors and in
accordance with the requirements of Article V, shall perform or cause to be
performed the design, engineering and installation work for the Cable, the Cable
Accessories and the Connecting Points.
2.3 ELI Duties. As provided in and subject to the provisions
of this Agreement, ELI, at its expense, shall design, engineer and construct the
Regeneration Facilities, and shall acquire and install all System Electronics.
2.4 Licenses Revocable. Under the terms of the Utility
Agreements, the Right of Way Licenses and the Cable Use Licenses are revocable,
until such time as each license is approved by the CPUC (as described in Section
2.5). Consequently, until approval is obtained from the CPUC, the rights of ELI
and, hence FOCAS, under the terms of the Right of Way Licenses and the Cable Use
Licenses shall consist only of a revocable right to use and shall be subject to
all terms, covenants and conditions applicable to such licenses as contained in
the Utility Agreements.
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2.5 Regulatory Approval. Each Utility Company and ELI shall
jointly apply to the CPUC under Section 851 of the California Public Utilities
Code for an Approval authorizing the Utility Company to enter into an
irrevocable Right of Way License or Cable Use License, as applicable, with ELI.
FOCAS shall cooperate fully in the application process by providing, at FOCAS's
sole cost and expense, any information, personnel or other resources a Utility
Company or ELI may reasonably request from time to time. FOCAS's cooperation
shall include assisting in the preparation of applications, discovery and
testimony and making available to the Utility Companies, ELI, the CPUC and other
relevant authorities all necessary and appropriate FOCAS information and
personnel. ELI shall provide FOCAS with a copy of all such applications made to
the CPUC under the terms of the Utility Agreements. ELI makes no representation
or warranty concerning the likelihood that any such Approval can be secured, or
with respect to the nature or extent of any conditions or limitations which may
be imposed thereby, how long the application or approval process may take, or
the costs that may be incurred in such process.
2.6 Conversion from Revocable License to Irrevocable License.
If and when a Utility Company secures a final non-reviewable Approval from the
CPUC to enter into an irrevocable Right of Way License or Cable Use License, as
applicable, with ELI for the purposes and on the terms set forth in the
applicable Utility Agreement, the revocable nature of the license described in
the applicable Utility Agreement shall automatically convert into an Irrevocable
License. Except as specifically described in the Utility Agreements, each such
Irrevocable License shall be on the same terms, covenants and conditions as the
Revocable License it replaces. ELI shall provide written notice to FOCAS of the
conversion of each Revocable License to an Irrevocable License, which notice
shall specify the effective date thereof. Thereafter, use, as applicable, of the
Cable, the Towers, the Substation Sites and the Right of Way by ELI and FOCAS
for such portion of the Cable Route shall be in accordance with the terms of the
Irrevocable License contemplated by the applicable Utility Agreement.
2.7 Nonexclusive Use of Right of Way. Under the terms of the
Utility Agreements, any use of a Utility Company's Towers, Substation Sites and
Right of Way granted to ELI is expressly made nonexclusive. In addition, each
Utility Company expressly reserves the right to negotiate with any third-party
with respect to the use by such third-party of such Utility Company's Towers,
Substation Sites and Right of Way, subject to the rights specifically granted to
ELI under the applicable Utility Agreement.
2.8 Reservation of Certain Utility Company Rights. FOCAS
understands and acknowledges that under the terms of the Utility Agreements,
each Utility Company reserves for itself, its successors and assigns, the right
to use such Utility Company's Towers, Substation Sites and Right of Way, or any
portion thereof, for any purpose such Utility Company finds necessary, together
with the right to enter upon or into such Towers, Substation Sites and Right of
Way, or any portion thereof, at all times, and for any and all purposes.
Further, each Utility Company may exercise such rights without any notice to or
consent from ELI or FOCAS and without payment of any compensation to ELI or
FOCAS.
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2.9 Utility Operations. FOCAS also understands and
acknowledges that under the terms of the Utility Agreements, if a Utility
Company determines that modifications to the Towers, the Substation Sites, or
the Right of Way owned or controlled by such Utility Company over, upon or
through which the System is installed, or any portion thereof, are necessary to
conduct Utility Operations in a manner that adversely affects the use of the
System, the Utility Company must provide ELI with twelve (12) months' prior
written notice of its intention to make such modifications. The notice must be
accompanied with an alternate route plan for the Affected Portion of the System,
to the extent any such alternate route plan can be made available. However, the
foregoing right is not available after a Revocable License converts to an
Irrevocable License as described in Section 2.6.
2.10 No Property or Possessory Interest. Neither the Revocable
Licenses, the Irrevocable Licenses, ELI's exercise of its rights under any
Utility Agreement, or FOCAS's exercise of its rights under this Agreement, shall
confer upon FOCAS any property interest in any of the Towers, the Substation
Sites, or the Right of Way, whether or not owned in fee simple by a Utility
Company or a third-party. Notwithstanding the generality of the foregoing
sentence, FOCAS, subject to the terms of this Agreement and the Utility
Agreements that grant a Right of Way License, shall have the right to enter upon
the Towers, the Substation Sites and the Right of Way to install the Cable and
the Cable Accessories, and to construct the Connecting Points. FOCAS shall have
no such right of entry with respect to a Utility Company's Towers, Substation
Sites and Right of Way that are subject to a Cable Use License only.
2.11 Right of Entry. FOCAS shall notify ELI's Project Manager
and, if requested by ELI, the applicable Utility Company whenever FOCAS intends
to enter upon the Towers, the Substation Sites and the Right of Way of a Utility
Company that has granted a Right of Way License to ELI in connection with
FOCAS's performance under this Agreement in accordance with the following notice
requirements:
(a) FOCAS shall give not less than seventy-two (72)
hours prior notice by telephone to ELI at (360) 816-4032 before
entering any Right of Way for the purpose of surveying and inspecting
or making such engineering and other tests as may be necessary or
desirable for FOCAS to complete the Working Drawings, including,
without limitation, engineering, design and installation plans and
costs estimates for the work contemplated by this Agreement.
(b) FOCAS shall give not less than one week's prior
telephone notice to ELI at (360) 816-4032 before entering any Right of
Way for the performance of any construction to be performed by FOCAS or
by others consistent with and under the terms of Section 6.10.
(c) FOCAS shall give not less than forty-eight (48)
hours prior telephone notice to ELI at (360) 816-4032 before entering
any Right of Way for the purpose of inspection, testing, Maintenance,
repair or exercise of any other right of FOCAS under this Agreement
with respect to any portion of the System not attached to the Towers.
-11-
(d) In cases of emergency with respect to any portion
of the installed Cable, FOCAS shall provide as much prior telephone
notice as possible to ELI at (360) 816-4032.
2.12 Entry Conditions. ELI, from time to time by written
notice to FOCAS, may specify additional entry conditions or requirements
relating to a Right of Way License arising out of the relationship of a Utility
Company with a particular land owner, including, without limitation, prior
telephone notice to the land owner, no entry unless accompanied by the
applicable Utility Company's personnel, and entry only through a specific route.
FOCAS's right of entry to the Towers, the Substation Sites and the Right of Way
subject to a Right of Way License is further subject to the conditions that: (a)
FOCAS shall comply with each Utility Company's established safety rules, copies
of which are attached to and incorporated by reference in this Agreement as
Exhibit "G," when working around the Towers, cables or other elements of the
Utility Companies' electric power transmission system; and (b) FOCAS shall
indemnify ELI with respect to such entry as further provided in Section 13.1 of
this Agreement. If entry by FOCAS is scheduled to last more than one consecutive
day, a single telephone notice describing the scope and duration of the entry
shall be sufficient notice. If such scope or duration changes, additional notice
consistent with the requirements of Section 2.11 shall be given.
2.13 Cooperation. FOCAS shall cooperate with ELI and each
Utility Company in designing, engineering, constructing and installing the
System. FOCAS shall follow and comply with the applicable Cable Specifications
and safety rules of each Utility Company in fulfilling FOCAS's obligations under
this Agreement.
2.14 Disclaimer. ELI makes no representation or warranty
whatsoever (including no warranty of merchantability or fitness for a particular
purpose) concerning the nature, adequacy or suitability of the Towers, the
Substation Sites, or the Right of Way for the purposes intended by FOCAS. FOCAS
acknowledges that neither ELI nor any of ELI's officers, employees or agents has
made, nor is FOCAS entering into this Agreement in reliance upon, any such
representation or warranty.
2.15 Operation of System. Following the Service Ready Date for
each Developed System Segment, unless expressly provided otherwise in this
Agreement, FOCAS's rights under this Agreement to such Developed System Segment
shall be limited to the receipt of Quarterly Payments derived from the Revenue
Sharing Route as described in Section 4.1 and FOCAS's other rights under Article
IV. ELI shall have full authority and responsibility with respect to the
operation of the System and the marketing, pricing and sale of Transport Service
and Dark Fiber Lease Services over the Revenue Sharing Route. ELI shall keep
FOCAS generally informed regarding ELI's marketing efforts with respect to the
Revenue Sharing Route and, without obligation, shall accept input from FOCAS
regarding the marketing of services over the Revenue Sharing Route.
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2.16 Cable Route. FOCAS and ELI estimate that the portion of
the Revenue Sharing Route for which FOCAS has responsibility under this
Agreement will extend a distance of 920 Route Miles when the System is
completed. In the event Working Drawings for the Cable Route project the total
distance of the Cable Route will exceed such estimate by more than 10 Route
Miles, or fall short of such estimate by more than 10 Route Miles, FOCAS and ELI
shall meet expeditiously to discuss and negotiate in good faith the effect of
such overage or shortfall. Among other things, FOCAS and ELI may agree to modify
the projected Cable Route, adjust the Payment Factor identified in Section 4.1,
or modify other financial considerations between them as described in this
Agreement.
ARTICLE III
TERM
----
3.1 Term. The Term of this Agreement shall commence on the
Effective Date and shall continue, unless sooner terminated pursuant to the
terms of this Agreement, until midnight Pacific time on that date which is
thirty (30) days after the twentieth (20th) year anniversary of the date the
entire Revenue Sharing Route is completed. ELI shall exercise its rights to
renew or extend the term of any Utility Agreement to the extent necessary to
avoid the expiration of the term of such Utility Agreement prior to the
expiration of the Term of this Agreement.
3.2 Termination of Agreement by ELI. With ten (10) days' prior
written notice to FOCAS, ELI may terminate this Agreement if by the sixtieth
(60th) day following the Effective Date:
(a) ELI and FOCAS, in their reasonable discretion,
determine that the operating requirements, protocols, rules or policies
of any Independent System Operator, and the transfer of operational
control of electric transmission systems to such Independent System
Operator make it economically infeasible for: (1) ELI and FOCAS to
design or construct the System; or (2) for ELI to use the System for
the purposes contemplated by this Agreement and the Utility Agreements;
or
(b) The Detailed Restoration Plans (as defined in the
Utility Agreements) in form and content reasonably acceptable to the
Utility Companies and ELI have not been completed.
Upon either such termination, ELI shall reimburse FOCAS for any actual and
direct costs, incurred by FOCAS under the terms of this Agreement through the
date of the notice of termination. ELI shall make such reimbursement payment to
FOCAS within thirty (30) days after receipt from FOCAS of an invoice detailing
FOCAS's reimbursable costs as provided in this Section 3.2. ELI shall have the
audit rights described in Section 8.10 in reviewing FOCAS's reimbursable costs
under this Section 3.2.
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ARTICLE IV
PAYMENTS
--------
4.1 Quarterly Payments. In consideration of the performance by
FOCAS of its obligations specified in this Agreement, ELI shall pay the
Quarterly Payments to FOCAS according to the following specifications:
(a) The Quarterly Payment shall be calculated by
multiplying the Gross Revenues for the applicable three month period by
the Payment Factor.
(b) Until the cumulative amount of ELI's Quarterly
Payments to FOCAS under this Agreement equals * DOLLARS (*), per actual
Route Mile of the Cable Route (the date as of which such cumulative
amount is paid is referred to as the "Payment Completion Date"), the
Payment Factor shall be * percent (*%).
(c) After the Payment Completion Date, ELI shall have
no further Quarterly Payment obligations pursuant to this Agreement.
4.2 Quarterly Payment Due Dates. Throughout the Term, the
Quarterly Payments shall be due and payable within thirty (30) days after each
three month period following the Effective Date, beginning with the three month
period immediately following the month during which ELI first receives any Gross
Revenues.
4.3 Supporting Documentation. Each Quarterly Payment shall be
accompanied by a quarterly report detailing the Gross Revenues, identified into
categories of revenues, including Dark Fiber Lease Services and Transport
Services. ELI and FOCAS shall agree on a reporting format to be used prior to
the due date of ELI's first Quarterly Payment.
4.4 Reimbursement of Costs. On or before the twentieth (20th)
working day of each calendar month following the Effective Date, ELI and FOCAS
shall prepare and submit to each other, if applicable, an invoice for all
identified reimbursable costs pursuant to Articles III, V, VI and VII and XIII
incurred by or for the account of the invoicing party during the immediately
preceding calendar month, together with all other identified reimbursable costs
previously incurred by the invoicing party and not previously invoiced. For
purposes of this Section 4.4, "incurred" means the actual and reasonable
payments made by the invoicing party to contractors, vendors, suppliers and
other third-parties, as well as reasonable expenses booked or recorded by the
invoicing party for costs relating to its own personnel, materials and supplies
charged to such work, including actual and direct costs including fully loaded
labor costs (calculated at 1.3 times base compensation). The full amount of each
such invoice shall be due and payable by the invoiced party within thirty (30)
days following receipt thereof. If the invoiced party disputes any amount
invoiced under this Section 4.4, the amount not in dispute shall be promptly
paid and any disputed amount that is ultimately determined to have been payable
shall be paid promptly following resolution of the dispute. Any dispute that is
not resolved by mutual agreement of the parties shall be resolved in accordance
with Article XVI.
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
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4.5 Payment Procedure. Any fees payable to FOCAS or ELI under
this Agreement shall be made by check payable to FOCAS or ELI, as applicable,
and sent to the following addresses:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Treasurer
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may, at its option, and upon not less than five (5) working days
prior written notice to the other, change the place of payment described above.
4.6 Late Payment. If any payment under the terms of this
Agreement is not received by the party entitled to payment within fifteen (15)
days after the date it becomes due, the payor shall pay to the payee, in
addition to the amount due, a late fee charge in an amount equal to five percent
(5%) of the amount due. The late payment charge shall not apply to amounts not
paid because of a good faith dispute between the parties.
4.7 Performance Criteria.
(a) Annual Requirement. ELI shall achieve Gross
Revenues from the Revenue Sharing Route in an amount equal to or
greater than the applicable Performance Criteria set forth on Exhibit
"D" attached to this Agreement. The Gross Revenues requirement shall be
measured annually beginning with the twelve (12) month period which
begins thirty (30) days after the entire Revenue Sharing Route is
completed. Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, in the event ELI cannot provide
telecommunications services along any material portion of the Revenue
Sharing Route for more than a continuous period of twelve (12) hours
due to a failure of the cable, an event of casualty or a Force Majeure
Event which is not adequately covered by business interruption
insurance, the Performance Criteria for the applicable year (as shown
of Exhibit "D") shall be reduced proportionately based on a fraction,
the numerator of which is the number of days (rounded up to the nearest
one-half day) the Revenue Sharing Route is non-operational, and the
denominator of which is three hundred sixty-five (365).
-15-
(b) Performance Audits. FOCAS shall have the right to
make a performance audit within sixty (60) days of the conclusion of
each annual period. If FOCAS determines that ELI has failed to meet the
annual Performance Criteria, FOCAS shall give ELI written notice of
such failure. ELI shall have thirty (30) working days after receipt of
written notice from FOCAS in which to: (1) review the results of
FOCAS's audit; (2) provide any new information or data that might alter
FOCAS's audit conclusions; and (3) consider a resolution of any
differences of opinion concerning the results of the performance audit,
or both.
(c) Rights of FOCAS and ELI. If at the end of such
thirty (30) working day period, FOCAS and ELI have not reached an
agreement to resolve any differences of opinion concerning the results
of a performance audit, FOCAS and ELI shall have the rights described
below:
(1) ELI, at its option, may cure the
Performance Criteria shortfall by paying FOCAS the Quarterly
Payments that, in the aggregate, would be required if ELI had
met the Performance Criteria for the annual period in
question.
(2) If ELI elects not to cure the
Performance Criteria shortfall, or in the event of a default
by ELI as described in Section 15.1(b)(5), this Agreement
shall continue and FOCAS, at its option and without prejudice
to its rights to Quarterly Payments (as provided in this
Article IV), may succeed to ELI's interest in the unused
Commercial Fibers over the entire Revenue Sharing Route,
subject to the terms, covenants and conditions of the Utility
Agreements. If FOCAS elects to succeed to ELI's interest in
the unused Commercial Fibers, ELI shall have the right,
subject to the terms of this Agreement, to continue its use of
the Commercial Fibers then being used by ELI to provide
Transport Services and Dark Fiber Lease Services. In addition,
during the balance of the Term, ELI shall have the right to
lease unused dark fiber capacity in the System from FOCAS on
the same terms offered by FOCAS to other carriers for similar
services using comparable capacity and for a comparable term.
Such right to lease unused dark fiber capacity is not a right
of first refusal in favor of ELI, and FOCAS may lease unused
dark fiber capacity to other telecommunications carriers or
users. During any period when ELI continues to use any portion
of the Commercial Fibers (as provided in this Section
4.7(c)(2)), ELI shall continue to make the Quarterly Payments
required in this Article IV.
(3) In the event FOCAS exercises its right
to succeed to ELI's interest in the unused Commercial Fibers
as provided above, ELI shall cooperate with FOCAS to allow
co-location of other users of the Commercial Fibers in ELI's
Regeneration Facilities, based on the availability of space.
FOCAS or such other users shall pay ELI then existing market
rates for co-location services.
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(4) If at the time of FOCAS's election to
succeed to ELI's interest in the unused Commercial Fibers (as
provided above) the applicable Payment Factor under the terms
of this Agreement is the percentage described in Section
4.1(b), all revenues obtained by FOCAS from the use of such
unused Commercial Fibers shall be applied towards the
cumulative amount of Quarterly Payments described in Section
4.1(b). Thereafter, when the cumulative amount of ELI's
Quarterly Payments and FOCAS's revenues obtained from the use
of the Commercial Fibers available to FOCAS (as provided
above) exceeds the cumulative amount described in Section
4.1(b), ELI's obligation to make Quarterly Payments under this
Agreement shall cease and the Payment Completion Date shall be
deemed to have occurred. ELI shall have the right, on an
annual basis until the Payment Completion Date, to audit
FOCAS's books and records relating to FOCAS's use of the
Commercial Fibers.
(5) Notwithstanding any other provision of
this Agreement, the rights and obligations of FOCAS and ELI
described in this Section 4.7(c) shall constitute the sole
remedy of FOCAS for a failure by ELI to satisfy the
Performance Criteria. No such failure in and of itself shall
constitute a breach of this Agreement or entitle FOCAS to
damages for breach of contract.
(d) Dispute Resolution. Nothing in this Section 4.7
shall prevent either FOCAS or ELI from seeking a resolution of any
dispute hereunder pursuant to the provisions of Article XVI of this
Agreement.
(e) Early Service Gross Revenues. Gross Revenues
generated by ELI using the Commercial Fibers before the Service Ready
Date for the entire System, and paid to FOCAS pursuant to Section 4.2
of this Agreement, shall be aggregated for purposes of this subsection
as a credit against the Performance Criteria in year one as identified
on Exhibit "D" attached to this Agreement.
4.8 Security Interest.
(a) Consents. ELI shall promptly determine whether
any consent of a lender or other party is required for ELI to grant to
FOCAS the security interest described in Section 4.8(b). If consent is
required, ELI shall use reasonable efforts to obtain such consent.
-17-
(b) Grant of Security Interest. Subject to the
determination that consent is not required and, if consent is required,
subject to ELI obtaining all such required consents, ELI hereby grants
to FOCAS a security interest in the Gross Revenues and all accounts
arising thereunder, now or hereafter existing, and all proceeds of the
foregoing to the extent of FOCAS's interest in the Gross Revenues (as
described in this Agreement). Such security interest shall become
effective upon ELI's determination that: (1) consent, as provided above
in this Section 4.8 is not required; or (2) all required consents have
been obtained.
(c) Financing Statements. Following the effective
date of the grant of the security interest described in Section 4.8(b),
ELI shall execute and deliver to FOCAS any Uniform Commercial Code
Financing Statements or Continuation Statements necessary to perfect or
continue the perfection of FOCAS's security interest in the Gross
Revenues.
(d) Enforcement of Security Interest. FOCAS may
exercise its remedies with respect to the security interest granted in
Section 4.8(b) only upon the occurrence and continuance of a default by
ELI under Section 15.1(b)(5) of this Agreement.
ARTICLE V
SYSTEM DESIGN
-------------
5.1 FOCAS Design Responsibility. Subject to the terms of the
applicable Utility Agreement, FOCAS, at FOCAS's cost and expense, shall design
and engineer the Cable and the Cable Accessories to follow the portion of the
Cable Route for which FOCAS has responsibility under this Agreement and any
modifications to the Towers, the Substation Sites or the Right of Way necessary
to accommodate the Cable, the Cable Accessories and the Connecting Points. The
design shall include only those modifications to the Towers needed to
accommodate installation of the Cable and the Cable Accessories and shall not
include any upgrade by any Utility Company, unless requested by the Utility
Company and paid for separately by the Utility Company to FOCAS. Any such
additional upgrade work shall not materially interfere with or delay the design
or construction of any System Segment. In addition, the design shall include
optical fiber drop-offs at each Regeneration Facility site including the
Connecting Points adjacent to the Regeneration Facilities. FOCAS shall furnish
ELI with copies of any computer models, analyses, and design specifications
developed for modifications to the Towers. In fulfilling its responsibilities
under this Section 5.1, FOCAS shall follow: (a) the Cable Specifications; (b)
the Utility Companies' established procedures for working in and around the
Towers and their electric transmission facilities, including the applicable
safety rules set forth on Exhibit "G" attached to this Agreement; (c) the
Utility Companies' design specifications relating to the Dark Fibers and
associated Connecting Points; (d) the Utility Companies' engineering standards
and specifications for the Towers; (e) ELI's design specifications relating to
the Connecting Points for optical fiber drop-offs adjacent to the Regeneration
Facilities; and (f) FOCAS's customary design and engineering standards and
specifications. FOCAS shall reimburse ELI for any design, engineering, drawing
review, or analysis that ELI performs for the System in the place of FOCAS under
the terms of this Agreement as provided in Section 4.4.
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5.2 ELI Design Responsibilities. ELI, at ELI's cost and
expense, shall design and engineer the Regeneration Facilities and all System
Electronics. The design shall include the extension of fiber optic cable from
the Regeneration Facilities out to the Connecting Points adjacent to the
Regeneration Facilities. ELI shall reimburse FOCAS for any design, engineering,
drawing review, or analysis that FOCAS performs for the System in the place of
ELI under the terms of this Agreement as provided in Section 4.4.
5.3 Utility Company Information. To facilitate FOCAS's design
and engineering responsibilities under this Agreement, ELI shall furnish to
FOCAS, to the extent available from the Utility Companies, with reasonable
promptness after request from FOCAS, and upon the condition that FOCAS shall
reimburse ELI for ELI's reasonable cost of obtaining and delivering the same:
(a) Copies of all Utility Company established
procedures for working in and around the Towers and copies of all
Utility Company transmission facilities and design specifications
relating to the Dark Fibers and associated Connecting Points.
(b) Copies of all available Maps, charts and other
engineering data and documentation pertaining to specified portions of
the Right of Way and the physical conditions thereof, including the
location and nature of all Towers, power stations, Substation Sites,
and other improvements, as well as all relevant engineering data and
plans relating thereto;
(c) Copies of all available title documentation with
respect to specified sections of the Right of Way (including existing
easements, rights of use or other use or occupancy rights, if any,
previously granted), the Tower Sites, the Substation Sites and other
existing agreements respecting the Right of Way (including, without
limitation, utility crossings) and restrictions on the right to use and
to occupy the same for the purposes intended by this Agreement;
(d) Any available information on pending or planned
relocation projects by the Utility Companies or others along specified
sections of the Right of Way and information regarding material
scheduling restraints on obtaining temporary clearances on particular
System Segments along the Right of Way;
(e) Maps and other available documentation sufficient
to describe the identity and location of other users of specified
portions of the Right of Way, the Tower Sites, the Substation Sites and
the Towers, as well as identification of areas within the Right of Way
which might contain title or possession problems due to the nature of
the ownership, third-party right of way ownership (including, without
limitation, reversionary or reentry rights of underlying fee owners) or
third-party rights to use the Towers; and
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(f) A copy of each Map of any portion of the Cable
Route each year throughout the Term, when prepared and filed with any
government agency, and a copy of any amendments or supplements to each
Map which may be prepared and so filed from time to time.
5.4 Notice of Adverse Claims. ELI shall promptly notify FOCAS
in writing of any adverse claims, actual or threatened, affecting the Right of
Way, the Towers, the Tower Sites, the Substation Sites, the Regeneration
Facilities, or the Cable Route.
5.5 Working Drawings. When FOCAS has completed the design for
any System Segment, FOCAS shall either prepare, or cause any applicable
contractor to prepare, and submit to ELI Working Drawings for the construction
of that System Segment. The Working Drawings shall include plans and
specifications for the Cable, the Cable Accessories and the Connecting Points
(including Connecting Points for the Dark Fibers at locations designated by the
applicable Utility Company). Within thirty (30) working days of submission of
the Working Drawings, ELI shall approve the same in whole or in part (which
approval shall not be unreasonably withheld) or raise any objections to the
Working Drawings, which objections shall be stated in writing and in reasonable
detail and include a statement of the necessary modifications required to obtain
approval. If ELI fails to respond within such thirty (30) working day period,
ELI shall be deemed to have approved the Working Drawings. Upon receipt of any
objections to the Working Drawings, FOCAS shall use its reasonable efforts to:
(i) correct, or cause the applicable contractor to correct, the Working Drawings
with respect to which such objections were noted by making appropriate changes
thereto and to re-submit the same to ELI for approval or objection as stated
above; or (ii) dispute such objection by referring the matter in question for
determination to the Chief Engineers of FOCAS and ELI (without thereby waiving
any rights with respect to the matter in controversy). Approval by ELI of
Working Drawings submitted by FOCAS shall constitute ELI's approval solely with
respect to ELI's telecommunications system and shall in no way be deemed to
constitute an opinion of ELI with respect to the effect of the
telecommunications system on any Utility Company's electric transmission system.
5.6 Scheduling. ELI and FOCAS shall jointly develop an
implementation plan for the design and construction of the System. The
implementation plan shall include a master schedule for all phases of System
design, engineering, placement of Regeneration Facilities, bidding, permitting,
clearances, construction, testing and required Approvals. The implementation
plan shall also sequence the work along the Cable Route in an orderly and
efficient manner that complies with the terms and requirements of the Utility
Agreements. ELI shall have primary responsibility for planning and scheduling
work associated with the Regeneration Facilities, SONET procurement, System
Electronics procurement and installation, and System turn-up. Subject to the
terms of the applicable Utility Agreement, FOCAS shall have primary planning and
scheduling responsibilities for Cable installation and splicing. The master
schedule shall be managed by ELI's Project Management Group. ELI and FOCAS shall
each designate a project management representative to coordinate efforts under
this Section 5.6. ELI shall make capital investments to provision the Commercial
Fibers with electronics, optronics, buildings, other infrastructure, and fiber
connectivity with local exchange carrier networks and interexchange carrier
networks, at a level sufficient to meet the revenue projections set forth on
Exhibit "D."
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5.7 Warranty of Work. FOCAS and its Qualified Contractors, and
their subcontractors and agents who perform work to design or engineer the
System shall warrant their work in accordance with industry standards and
practices and the terms of this Agreement (including, without limitation, the
Cable Specifications). FOCAS shall, at its own cost and expense, enforce the
provisions of such warranties following completion of the work. The warranty for
the Cable shall be FOCAS's standard manufacturer's warranty which shall be a
minimum of three (3) years of operation. In addition, FOCAS shall warrant that
all design and engineering work performed by or for FOCAS (as provided in this
Article V) is consistent with industry standards and shall conform to reasonable
standards of care, skill and diligence. Such warranty shall extend for a period
of one (1) year following the Service Ready Date for the entire System. FOCAS is
not hereby warranting any design or engineering work for the System performed or
to be performed by a Utility Company. ELI's sole and exclusive remedy for a
breach of the warranty described in this Section 5.7 shall be the repair and
replacement of the warranted item or items or the correction of the warranted
work. FOCAS shall be given a reasonable time, not to exceed thirty (30) days, to
remedy the item or work in need of repair, replacement or correction. In the
event FOCAS fails to complete the repair, replacement or other correction within
such thirty (30) day period, ELI may complete the repair, replacement or other
corrective work and invoice FOCAS for the cost incurred by ELI in performing
such work as provided in Section 4.4.
5.8 Design Performance Completion. Upon the Service Ready Date
for the entire Cable Route evidencing completion of all System Segments (both
Cable and System Electronics) for the Cable Route (the "Performance Completion
Date"), except as provided in Section 5.7, neither FOCAS nor ELI shall have any
further performance obligations under this Article V.
ARTICLE VI
CONSTRUCTION
------------
6.1 Scope of Work. Subject to the terms of the applicable
Utility Agreement, FOCAS shall be responsible to provide and to install the
Cable, the Cable Accessories, the Connecting Points, the construction of any
modifications to the Towers, the Substation Sites or the Right of Way necessary
to accommodate the Cable, the Cable Accessories and the Connecting Points over
the portion of the Cable Route for which FOCAS has responsibility under this
Agreement. The installation work undertaken by FOCAS shall be performed by FOCAS
or one or more Qualified Contractors. ELI shall have the right to approve the
appointment and qualifications of each Qualified Contractor, which consent shall
not be unreasonably withheld or delayed. In order to permit FOCAS to perform its
construction responsibilities under this Agreement, FOCAS and the Qualified
Contractors shall have access to the Right of Way, the Towers, the Tower Sites
and the Substation Sites, subject to the notice requirements of Sections 2.11
and 2.12. Modification to the Towers shall be limited to those needed to
accommodate installation of the Cable and the Cable Accessories, and shall not
include any upgrade sought by the Utility Companies for other purposes.
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6.2 Regeneration Facilities. ELI shall be responsible for the
construction of all Regeneration Facilities and the installation of all System
Electronics. The construction and installation work shall be performed by ELI or
one or more Qualified Contractors. FOCAS shall have the right to approve the
appointment and qualifications of each Qualified Contractor, which consent shall
not be unreasonably withheld or delayed.
6.3 Work Standards. All work to be performed hereunder by ELI,
FOCAS and all Qualified Contractors shall be performed in a good, workmanlike
manner and in compliance with the requirements of this Agreement and applicable
electrical safety codes, prudent utility practice, and all applicable other
laws, ordinances, codes, regulations and Approvals of any government authority
having jurisdiction thereover. Work in areas adjacent to electrically energized
equipment shall be performed in accordance with the applicable Utility Company's
established safety rules set forth on Exhibit "G" attached to this Agreement.
6.4 Time. Installation of the Cable, the Cable Accessories and
the Connecting Points by FOCAS under the terms of this Agreement, to the extent
practicable and within the reasonable control of FOCAS, shall be carried out by
FOCAS in accordance with the implementation plan and master schedule prepared
pursuant to Section 5.6. The implementation plan and master schedule shall be
updated and revised at regular intervals by FOCAS with the approval of ELI,
which approval shall not be unreasonably withheld or delayed. Such updating and
revision shall include, without limitation, adjustment for delays caused by a
Force Majeure Event. Unless otherwise agreed, extensions of time under such
updates and revisions shall not operate to extend the Scheduled Completion Date
or to amend the terms and requirements regarding the completion of the System
described in Section 6.13.
6.5 Permits and Approvals. FOCAS shall use its reasonable
efforts to secure on a timely basis, at FOCAS's expense, all necessary Approvals
from government authorities having jurisdiction or approval rights with respect
to FOCAS's installation of the Cable, the Cable Accessories and the Connecting
Points. The foregoing provision does not impose any requirement on FOCAS to
obtain the CPUC Approval described in Section 2.5. FOCAS shall indemnify and
save ELI harmless from any and all claims, including the expense reasonably
incurred by ELI to defend itself against such claims, resulting from or arising
out of FOCAS's failure to obtain such Approvals. ELI shall use reasonable
efforts to obtain on a timely basis all necessary Approvals from government
authorities having jurisdiction or approval rights with respect to the
construction of the Regeneration Facilities and the installation of the System
Electronics. ELI shall indemnify and save FOCAS harmless from any and all
claims, including the expense reasonably incurred by FOCAS to defend itself
against such claims, resulting from or arising out of ELI's failure to obtain
such Approvals. FOCAS and ELI shall cooperate with each other and shall
coordinate efforts with the Utility Companies to cause their respective
personnel and contractors to render all reasonable assistance in the procurement
of the Approvals.
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6.6 System Materials. Subject to the terms of the applicable
Utility Agreements, FOCAS, at its expense, shall provide all System Materials
necessary to install the Cable, including the Cable Accessories and the Cable
and other System Materials required to complete the System, up to and including
the Connecting Points. ELI, at its expense, shall provide all System Materials
necessary to construct and install the Regeneration Facilities and the System
Electronics, and other System Materials required to complete the System up to
the Connecting Points. All System Materials shall comply with the Cable
Specifications and shall meet the specifications described in the Working
Drawings.
6.7 Interface Between FOCAS and ELI. FOCAS and ELI shall
cooperate and mutually agree upon the respective responsibilities of each party
with respect to the interface or interconnection between the portion of the
System for which ELI has construction and installation responsibilities, and the
portion of the System for which FOCAS has construction and installation
responsibilities.
6.8 Title and Risk of Loss.
(a) Cable and Cable Accessories. At all times during
the course of construction, up until the time of the issuance of an
Acceptance of Construction with respect to any System Segment, FOCAS
shall retain title to and shall bear the risk of loss or damage with
respect to the Cable and all associated System Materials used by FOCAS
to install the Cable. Upon the issuance of an Acceptance of
Construction with respect to any System Segment, legal title to the
Cable and the Cable Accessories shall pass to the applicable Utility
Company. Notwithstanding such transfer of title to the Utility Company,
after issuance of an Acceptance of Construction, ELI shall bear the
risk of loss or damage with respect to the Cable and the Cable
Accessories.
(b) Regeneration Facilities and System Electronics.
Title to and risk of loss associated with the Regeneration Facilities
(other than to the underlying real property) and the System Electronics
shall remain with ELI both before and after the issuance of an
Acceptance of Construction.
6.9 System Warranties. In procuring and obtaining System
Materials pursuant to Section 6.6, each of FOCAS and ELI shall use reasonable
efforts to obtain from the vendors and suppliers thereof, for the benefit of
FOCAS, the applicable Utility Company and ELI, warranties that the System
Materials shall be: (a) of the kind and quality described in the applicable
Working Drawings and the purchase orders and contracts therefor; (b) free of
defects in workmanship, material, design and title; (c) of good and merchantable
quality; and (d) where appropriate, fit for their intended purpose. FOCAS shall
administer for the benefit of FOCAS, the Utility Companies and ELI the
manufacturer's and other warranties for the Cable and its associated hardware.
If requested by ELI, FOCAS shall assign all such warranties for the Cable and
its associated hardware to ELI or the applicable Utility Company. ELI shall
administer the manufacturer's and other warranties with respect to the System
Electronics both before and after the issuance of an Acceptance of Construction
associated with such System Segment.
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6.10 Use of Contractors. FOCAS shall have the right, at its
cost and expense, to have any of the design, engineering, construction and
installation work to be provided by FOCAS under the terms of this Agreement
performed by one or more Qualified Contractors; provided that each such
Qualified Contractor retained by FOCAS to install the Cable shall be subject to
the prior approval of ELI and the applicable Utility Company. No such contract
or subcontract shall create a contractual relationship between ELI or the
Utility Companies and the Qualified Contractor, and FOCAS shall be solely
responsible for the engagement and management of the Qualified Contractors.
6.11 Inspection of Construction.
(a) Inspections During Construction. ELI may perform
routine inspections of any construction over which FOCAS has
responsibility while construction is in progress. A representative of
the applicable Utility Company may be on-site during all construction
work to perform functions such as safety watch, protection of its
electric transmission system, and to obtain clearances.
(b) Cable Testing. FOCAS shall test the Cable
installed by FOCAS in accordance with the Acceptance Testing Standards
to verify that the Cable is operating in accordance with the
specifications set forth in Exhibit "A." Testing shall progress segment
by segment along the Cable Route as Cable splicing progresses so that
test results may be reviewed in a timely manner. ELI and each
applicable Utility Company shall have the right, but not the obligation
to have a representative present to observe the testing, and FOCAS
shall provide ELI prior notice of FOCAS's testing schedule. Within five
(5) working days of the conclusion of any such testing, FOCAS shall
provide ELI with a copy of the test results. ELI shall have the right,
but not the obligation, at its sole expense, to conduct its own tests
on the Cable to verify that it is operating in accordance with the
Acceptance Testing Standards set forth on Exhibit "A," and for
conformance with the applicable Working Drawings and other construction
requirements of this Agreement. ELI shall have thirty (30) working days
following receipt of FOCAS's test results to conduct its own Cable
inspections and tests.
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(c) Acceptance of Construction. After such thirty
(30) working day period, ELI shall furnish FOCAS with either: (i) an
Acceptance of Construction with respect to the installation of the
Cable, the Cable Accessories and the Connecting Points along such
Approved System Segment; or (ii) a statement setting forth in
reasonable detail any objections to or defects in such installation.
ELI's failure to furnish a written notification within such fifteen
(15) day working period, shall be deemed to constitute an Acceptance of
Construction for purposes of this Agreement.
(d) Statement of Objections. Upon receipt of any such
statement of objections, FOCAS shall either: (1) correct, or cause the
applicable Qualified Contractor to correct, the objections or defects,
whereupon ELI shall re-inspect the same within fifteen (15) working
days following receipt from FOCAS that the work has been corrected, and
if found corrected, issue an Acceptance of Construction as stated
above; or (2) dispute such statement of objections or defects by
referring the disputed issues for determination to the Chief Engineers
of FOCAS and ELI (without thereby waiving any rights with respect to
the issues in controversy). Notwithstanding the foregoing, acceptance
of the construction and installation work associated with the Cable and
the Cable Accessories for any System Segment by ELI shall constitute
ELI's approval solely with respect to ELI's telecommunications system
and shall in no way be deemed to constitute an opinion of ELI with
respect to the effect of the telecommunications system on any Utility
Company's electric transmission system.
6.12 As-Built Drawings. Within fifteen (15) working days
following the issuance of an Acceptance of Construction for any System Segment,
constructed by FOCAS, FOCAS, at FOCAS's cost, shall submit, or cause the
applicable Qualified Contractor to submit, to ELI "as-built" drawings of the
Cable, the Cable Accessories and the Connecting Points in paper and electronic
file formats (AutoCadd Version 13). FOCAS shall also provide to ELI, at no cost
to ELI, Cable splicing and splice data records for ELI's fiber database records.
Within fifteen (15) working days following the delivery of the "as-built"
drawings, ELI shall inspect the Cable, the Cable Accessories and the Connecting
Points along such Developed System Segment for conformance with the "as-built"
drawings. Within fifteen (15) working days following such inspection, ELI shall
furnish FOCAS with either: (a) an acceptance of the drawings with respect to the
Cable, the Cable Accessories and the Connecting Points; or (b) a statement
setting forth in reasonable detail any reasonable objections to or defects in
the drawings thereof. Failure of ELI to issue written notification to FOCAS
within such fifteen (15) working day period shall be deemed to constitute
acceptance of such drawings by ELI for purposes of this Agreement. Upon receipt
of any such statement of reasonable objections or defects, FOCAS shall either:
(i) promptly amend, or cause the applicable Qualified Contractor to amend, the
"as-built" drawings, if so requested by ELI; (ii) correct the defects, or cause
the applicable Qualified Contractor to correct the defects, whereupon ELI shall
re-inspect the same within fifteen (15) working days following notice from FOCAS
that the work has been corrected and, if found corrected, issue an acceptance of
the drawings as provided above; or (iii) dispute such statement of objections or
defects by referring the disputed issues for determination, without thereby
waiving any rights with respect to the issues in controversy, to the Chief
Engineers of FOCAS and ELI. Notwithstanding the foregoing, ELI's approval of any
"as-built" drawings or statement of any objections to such "as-built" drawings
shall signify approval of or objections with respect to ELI's telecommunications
system along such Developed System Segment only and shall in no way be deemed to
represent an opinion of ELI with respect to the effect of the telecommunications
system on any Utility Company's electric transmission system.
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6.13 Completion of System Construction. FOCAS shall diligently
seek to complete the installation of all Cable, Cable Accessories and Connecting
Points over which FOCAS has construction responsibility under the terms of this
Agreement by the Scheduled Completion Date. If the Service Ready Date has not
occurred by the ninetieth (90th) day following the Scheduled Completion Date and
Section 14.1 does not apply, ELI, at its option, may notify FOCAS in writing
that ELI or ELI's designee will assume all or part of the project construction
administration, and FOCAS shall work with ELI to transfer to ELI that part of
the construction project administration as may be requested by ELI. If ELI
participates in such construction, FOCAS shall promptly reimburse ELI the direct
and actual costs incurred by ELI in such participation as described in Section
4.4. ELI shall provide reasonable supporting documentation for its costs.
6.14 Warranty of Work. Each of FOCAS and ELI shall cause their
respective contractors, subcontractors and agents who perform work to install
the System (including, without limitation each Qualified Contractor) to warrant
their work in accordance with industry standards and practices and the terms of
this Agreement (including, without limitation, the Cable Specifications). FOCAS
or ELI, as applicable, shall, at its own cost and expense, enforce the
provisions of such warranties following completion of the work. A copy of
FOCAS's manufacturer's warranty for the Cable is attached to and incorporated by
reference in this Agreement as Exhibit "H." In addition, FOCAS shall warrant
that all installation work (as provided in this Article VI) is consistent with
industry standards and shall conform to reasonable standards of care, skill and
diligence. Such warranty shall extend for a period of one (1) year following the
Service Ready Date for the entire System. ELI's sole and exclusive remedy for a
breach of the warranty described in this Section 6.14 shall be the repair and
replacement of the warranted item or items or the correction of the warranted
work. FOCAS is not hereby warranting any installation work for the System
performed or to be performed by a Utility Company. FOCAS shall be given a
reasonable time, not to exceed thirty (30) days, to remedy the item or work in
need of repair, replacement or correction. In the event FOCAS fails to complete
the repair, replacement or other correction within such thirty (30) day period,
ELI may complete the repair, replacement or other corrective work and invoice
FOCAS for the cost incurred by ELI in performing such work as provided in
Section 4.4.
6.15 Construction Performance Completion. Effective upon the
Performance Completion Date, except as provided in Section 6.14, neither FOCAS
nor ELI shall have any further performance obligations under this Article VI.
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ARTICLE VII
PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE
--------------------------------------------
7.1 Avoidance of Encumbrances. FOCAS shall not create or
permit any lien or other encumbrance against the Right of Way, the Towers, the
Substation Sites, the Cable, the Cable Accessories, the Connecting Points, the
Regeneration Facilities, the System Electronics, the Commercial Fibers, any IRU
(or comparable lease or other right), or the Gross Revenues. ELI shall not
create or permit any lien or other encumbrance against the Right of Way, the
Towers, the Substation Sites, or create or permit any lien or other encumbrance
not existing as of the Effective Date affecting ELI's right, title or interest
in and to the Cable, the Cable Accessories, the Connecting Points, the
Regeneration Facilities, the System Electronics, the Commercial Fibers, any IRU
(or comparable lease or other right), or the Gross Revenues. Such covenant by
ELI shall not affect ELI's right to market over the System, or to sell, lease,
assign or swap rights in and to the Commercial Fibers as provided in Section
10.1(b). The foregoing covenant shall not be breached by the creation of
mechanic's, materialman's, or similar liens in the ordinary course of
construction or installation, provided that such liens are satisfied, bonded, or
otherwise provided for in due course by the party hereto which is responsible
for the creation or imposition of such liens.
7.2 Payment of Ad Valorem Taxes. ELI or the applicable Utility
Company shall pay any Ad Valorem Taxes assessed against the System during the
Term. FOCAS shall not be required to pay any such Ad Valorem Taxes.
7.3 Sales or Use Taxes.
(a) FOCAS. FOCAS shall pay or cause to be paid all
sales and use taxes associated with or attributable to FOCAS's
provision and installation of the Cable, the Cable Accessories and the
Connecting Points. FOCAS shall indemnify and hold ELI harmless from and
against all sales and use taxes associated with or attributable to the
provision and installation of the Cable, the Cable Accessories and the
Connecting Points.
(b) ELI. ELI shall pay or cause to be paid all sales
and use taxes associated with or attributable to ELI's provision and
installation of the Regeneration Facilities and the System Electronics.
ELI shall indemnify and hold FOCAS harmless from and against all sales
and use taxes associated with or attributable to the provision and
installation of the Regeneration Facilities and the System Electronics.
7.4 Liens.
(a) Release of Liens. In the event the System or any
portion thereof becomes subject to any mechanics', artisans' or
materialmen's lien, the following provisions shall apply:
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(1) If such a lien is chargeable to or
through FOCAS, FOCAS shall promptly cause the same to be
discharged and released of record (by payment, posting of
bond, court deposit or other means) without cost to ELI or the
applicable Utility Company. FOCAS shall indemnify ELI against
all costs and expenses (including reasonable attorney fees)
reasonably incurred in discharging and releasing such lien. If
any such lien is not so discharged and released within ninety
(90) days after notice thereof by ELI to FOCAS, then ELI may
pay or secure the release or discharge thereof at the expense
of FOCAS.
(2) If such a lien is chargeable to or
through ELI, ELI shall promptly cause the same to be
discharged and released of record (by payment, posting of
bond, court deposit or other means) without cost to FOCAS. ELI
shall indemnify FOCAS against all costs and expenses
(including reasonable attorney fees) reasonably incurred in
discharging and releasing such lien. If any such lien is not
so discharged and released within ninety (90) days after
notice thereof by FOCAS to ELI, then FOCAS may pay or secure
the release or discharge thereof at the expense of ELI.
(b) Contest of Liens. Nothing in this Agreement shall
preclude FOCAS or ELI from contesting any lien described in Section
7.4(a) above or the contract or action upon which the same arose after
the same shall have been bonded or otherwise released of record, as
provided above.
(c) Facilities as Collateral. Neither FOCAS nor ELI
shall create or permit a pledge or encumbrance of any of its interests
in the System which in any manner impairs or could impair the use and
operation of the System for internal or commercial telecommunications
purposes.
7.5 Discontinuance or Relocation. Each Utility Company shall
be entitled to discontinue its use of or to relocate any part of its electric
transmission system, including the Towers, or to discontinue use of any portion
of the Right of Way or the Substation Sites. However, as provided in the Utility
Agreements, a Utility Company may not take any action to release or relinquish
voluntarily its underlying property interests along the Right of Way, whether by
a Taking or otherwise, without first notifying ELI. In the event of any such
discontinuance or relocation, during or after construction of any System
Segment, ELI shall give written notice to FOCAS as soon as reasonably
practicable. The notice of discontinuance or relocation shall be accompanied by
a plan of any alternative route, if available.
7.6 Relocation of Cable. In the event the Cable or the Cable
Route requires relocation or replacement, the cost of such relocation or
replacement shall be allocated as provided in the Utility Agreements; provided,
however, if FOCAS requests the relocation, FOCAS shall pay all of ELI's and the
applicable Utility Company's relocation costs. If the relocation is required
other than by ELI, FOCAS or a Utility Company, the relocation costs allocable to
and paid by ELI as provided under the terms of the applicable Utility Agreement
shall be deducted from Gross Revenues for the applicable accounting period when
calculating the Quarterly Payment.
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7.7 Design and Installation of Relocated Facilities. In the
event of the relocation of any portion of the System after the Service Ready
Date for the Affected Portion, FOCAS shall have the same design and installation
responsibilities for the relocated Cable, Cable Accessories and Connecting
Points as described in Articles V and VI. In the event of any such relocation,
FOCAS shall be compensated for such materials and for such design and
installation services in accordance with the cost allocations described in
Section 7.6 in a reasonable amount which is consistent with then prevailing
market rates, terms and conditions.
7.8 Utility Company Maintenance Responsibilities. Under the
terms of the Utility Agreements, each Utility Company is responsible for the
Maintenance of the Cable, the Cable Accessories, the Connecting Points, the
Towers, the Substation Sites and the Right of Way along its portion of the Cable
Route. ELI is required, under the terms of the Utility Agreements, to reimburse
the Utility Companies for such Maintenance costs. All such Maintenance costs
allocable to and paid by ELI under the terms of the Utility Agreements, net of
casualty insurance and other recoveries by ELI, shall be a deduction from the
Gross Revenues obtained by ELI from the use of the System for the purpose of
calculating the Quarterly Payments.
7.9 Maintenance of Regeneration Facilities and System
Electronics. ELI, at ELI's sole cost, shall be responsible for the Maintenance
of the Regeneration Facilities and the System Electronics.
7.10 Restoration Plans. ELI shall not agree to the terms of
the detailed restoration plan contemplated by each Utility Agreement, without
the prior written consent of FOCAS, which consent shall not be unreasonably
withheld or delayed.
7.11 Performance Completion. Except to the extent of
obligations incurred or undertaken by FOCAS or ELI which are outstanding as of
the Performance Completion Date, effective upon the Performance Completion Date,
neither FOCAS nor ELI shall have any further performance obligations under this
Article VII.
ARTICLE VIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
8.1 Representations, Warranties and Covenants of ELI. ELI
represents and warrants to FOCAS, and covenants with FOCAS, as follows:
(a) Authority. ELI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to enter
into this Agreement and to perform according to the terms, covenants
and conditions contained in this Agreement.
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(b) Restrictions. The execution and performance of
this Agreement, any instrument or document required by this Agreement,
and the consummation of the transactions contemplated by this Agreement
will not violate any article, bylaw or other corporate restriction, or
to the best of ELI's knowledge, any statute, ordinance, law, order,
ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which ELI is subject.
(c) Binding Obligation. This Agreement, when duly
executed by ELI, shall constitute a valid, legal and binding obligation
of ELI, and shall be enforceable in accordance with its terms, subject
to the effect of any bankruptcy, insolvency, reorganization,
liquidation, moratorium, receivership, conservatorship, readjustment of
debts, or other similar laws affecting the rights of creditors
generally.
(d) Government Approvals. ELI has all necessary
government approvals to enter into and to perform its obligations under
this Agreement, excepting approvals, if any, required from local
government authorities regarding ELI's use of the System located within
the jurisdiction of any such government authority, which approvals ELI
shall use reasonable efforts to obtain.
(e) Proceedings. Except for matters now pending or
that may hereafter be brought by or before the CPUC or other regulatory
bodies having jurisdiction over ELI and the activities contemplated by
this Agreement relating to the provision of telecommunications
services, no litigation or government proceeding is pending, or to
ELI's knowledge, threatened which might adversely affect this
Agreement, the transactions contemplated by this Agreement, or ELI's
rights under, or ability to perform pursuant to the terms of, this
Agreement. ELI shall promptly notify FOCAS of any material adverse
claims, actual or threatened, affecting any part of the System or ELI's
telecommunications business in the State of California.
(f) Conduct of Business. ELI will operate the System
in a safe manner and will use reasonable efforts to comply in all
material respects with applicable laws, regulations and government
orders. ELI shall use reasonable efforts, consistent with reasonable
commercial practices, to maximize Gross Revenues generated from the
Revenue Sharing Route.
(g) Compliance with Government Requirements. ELI has
not violated any rule, order or regulation issued by any government
authority with respect to ELI, its business or operations which may
materially and adversely affect ELI's ability to execute and perform
its obligations under this Agreement.
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(h) Financing Restrictions. This Agreement does not
violate any terms, covenants, conditions or restrictions in any
mortgages, bonds and other indentures of ELI.
(i) Resources and Capacity. ELI possesses sufficient
financial, managerial, and technical capacity and resources to perform
its obligations under the terms of this Agreement.
(j) Relationship with Contractors. ELI shall timely
perform all of its duties and obligations to ELI's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete ELI's design, engineering, construction
and installation obligations under this Agreement.
(k) Enforcement of Utility Agreements. ELI covenants
that it shall use its best efforts to enforce the provisions of the
Utility Agreements including but not limited to the provisions of
Sections 2.6, 9.9 and 9.10(a)(2) of the Utility Agreement with Pacific
Gas and Electric Company dated effective as of December 31, 1997 to the
end that the Utility Company shall pay to ELI, and ELI in turn shall
pay to FOCAS from the funds paid by the Utility Company to ELI net of
ELI's cost of enforcement, FOCAS's costs (based on a rate of $* per
Route Mile) arising from any revocation, relocation, or discontinuance
to the fullest extent of the provisions of such Utility Agreements.
(l) Consents of Utility Companies. ELI shall use its
best efforts to obtain the consent of each Utility Company to the
succession by FOCAS to ELI's interest in the unused Commercial Fibers
subject to the Utility Agreement with such Utility Company (on the
terms described in Section 4.7 of this Agreement) either: (1) in the
provisions of the Utility Agreement; or (2) by a separate
acknowledgment from the Utility Company promptly following the
effective date of such Utility Agreement.
8.2 Representations, Warranties and Covenants of FOCAS. FOCAS
represents and warrants to ELI, and covenants with ELI, as follows:
(a) Authority. FOCAS is corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to enter
into this Agreement and to perform according to the terms, covenants
and conditions contained in this Agreement.
(b) Restrictions. The execution and performance of
this Agreement, any instrument or document required by this Agreement,
and the consummation of the transactions contemplated by this Agreement
will not violate any article, bylaw or other corporate restriction, or
to the best of FOCAS's knowledge, any statute, ordinance, law, order,
ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which FOCAS is subject.
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
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(c) Binding Obligation. This Agreement, when duly
executed by FOCAS, shall constitute a valid, legal and binding
obligation of FOCAS, and shall be enforceable in accordance with its
terms, subject to the effect of any bankruptcy, insolvency,
reorganization, liquidation, moratorium, receivership, conservatorship,
readjustment of debts, or other similar laws affecting the rights of
creditors generally.
(d) Government Approvals. FOCAS has or will use
reasonable efforts to procure all necessary government approvals to
enter into and to perform its obligations under this Agreement.
(e) Proceedings. Except for matters now pending or
that may hereafter be brought by or before the CPUC or other regulatory
bodies having jurisdiction over the activities contemplated by this
Agreement relating to the provisions of telecommunications services, no
litigation or governmental proceeding, including, without limitation,
before the CPUC, is pending, or to FOCAS's knowledge, threatened which
might adversely affect this Agreement, the transactions contemplated by
this Agreement, or FOCAS's rights under, or ability to perform pursuant
to the terms of, this Agreement. FOCAS shall promptly notify ELI of any
material adverse claims, actual or threatened, affecting any portion of
the System.
(f) Conduct of Business. In performing its
obligations under this Agreement, FOCAS will use reasonable efforts to
comply in all material respects with all applicable laws, regulations
and government orders.
(g) Compliance with Government Requirements. To its
knowledge, FOCAS has not violated any rule, order or regulation issued
by any government authority with respect to FOCAS, its business or
operations which may materially and adversely affect FOCAS's ability to
execute and perform its obligations under this Agreement.
(h) Financing Restrictions. This Agreement does not
violate any terms, covenants, conditions or restrictions in any
mortgages, bonds and other indentures of FOCAS.
(i) Resources and Capacity. FOCAS possesses
sufficient financial, managerial, and technical capacity and resources
to perform its obligations under the terms of this Agreement.
(j) Relationship with Contractors. FOCAS shall timely
perform all of its duties and obligations to FOCAS's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete FOCAS's design, engineering, construction
and installation obligations under this Agreement.
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8.3 Confidentiality. For purposes of this Section 8.3, the
term "Information" shall mean all information furnished by FOCAS and ELI to each
other, or by or to their respective representatives, including drafts and the
final form of this Agreement, whether or not reduced to writing or specifically
identified as intellectual property, non-public, confidential, or proprietary,
and all analyses, compilations, data, studies, or other documents prepared by
FOCAS or ELI containing, or based in whole or in part on, any such furnished
information, or reflecting review of, or interest in, all or part of such
information. As used in this Agreement, a "representative" of FOCAS or ELI, as
the case may be, shall mean any and all directors, officers, employees, agents
or representatives, including, without limitation, contractors, subcontractors,
attorneys, accountants, consultants and financial advisors of FOCAS or ELI, as
the case may be. In consideration of being furnished with the Information, FOCAS
and ELI agree that:
(a) Nondisclosure. The Information will be kept
confidential and will not, without the prior written consent of the
party providing the information, be disclosed by the other party or any
of its representatives, in any manner whatsoever, in whole or in part,
and will not be used by a party or any of its representatives directly
or indirectly for any purpose other than activities contemplated by
this Agreement. Moreover, FOCAS and ELI will transmit the Information
only to those representatives who need to know the Information for the
purpose of performing or exercising each party's obligations and rights
under this Agreement.
(b) Authorized Disclosure. Without the prior written
consent of the other party, neither party or its representatives will
disclose to any other person the fact that the Information has been
made available, or any of the terms, conditions or other facts with
respect to this Agreement, except as required by law and then only with
prior written notice given, as soon as possible, to the other party and
in compliance with the provisions of Section 17.4. The term "person" as
used in this Agreement shall be interpreted broadly to include, without
limitation, any corporation, company, group, partnership or individual.
(c) Nonconfidential Information. This Section 8.3
shall be inoperative as to any portion of the Information which: (1) is
or becomes generally available to the public other than as a result of
a disclosure by a party or its representatives; (2) becomes available
to a party in good faith from a third-party not subject to a
confidential obligation to the party; or (3) was known to a party on a
nonconfidential basis prior to its disclosure by the other party or one
of its representatives.
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(d) Compelled Disclosure. In the event that either
party or anyone to whom the party transmits the Information relating to
this Agreement is requested or becomes legally compelled (by oral
questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, or any similar process) to
disclose any of the Information, the party so compelled will provide
prompt written notice of such event to the other party so that the
notified party may seek a protective order or other appropriate remedy,
waive compliance with the provisions of this Agreement or both. In the
event that such protective order or other remedy is not obtained or
that the notified party waives compliance with the provisions of this
Agreement, the legally compelled party will furnish only that portion
of the Information which is legally required and will exercise
reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Information.
(e) Public Records Law. It is understood that FOCAS
and ELI are or may in the future be subject to public records
disclosure laws, and that these laws will govern the disclosure
responsibilities of FOCAS and ELI notwithstanding the terms of this
Agreement. To the extent reasonably practical, FOCAS and ELI will
notify each other of any public records requests of any part of the
Information, and will give the other party a reasonable opportunity to
contest the public records request.
(f) Non-Waiver. The failure or delay by a party in
exercising any rights, power or privilege under this Section 8.3 shall
not operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any right,
power or privilege hereunder.
(g) Public Communications. All press releases and
other public communications of any sort relating to this Agreement or
the transactions described herein shall be subject to the prior
approval of the applicable Utility Company and both FOCAS and ELI,
which approval by FOCAS or ELI shall not be unreasonably withheld or
delayed. Excluded from the foregoing are disclosures required by
securities laws and rules or regulations of securities exchanges
applicable to the parties or their publicly-held Affiliates.
(h) Equitable Relief. FOCAS and ELI shall be entitled
to equitable relief, including injunctive relief and specific
performance, in the event of any breach of the confidentiality
provisions of this Agreement. Such remedies shall not be deemed to be
the exclusive remedies for a breach of this Agreement by FOCAS, ELI or
their respective representatives, but shall be in addition to all other
remedies available by law or equity. A breach of the provisions of this
Section 8.3 may subject that party who has provided Information to
irreparable harm and injury.
(i) Ownership of Information. The Information
acquired from the other party or any of its representatives shall be
and shall remain the exclusive property of the disclosing party.
Neither the disclosure of Information, or the execution of this
Agreement shall be construed as a license to the party receiving
Information to make use of, or sell the Information or products derived
from the Information, or to make use of it in any way that damages or
competitively disadvantages the party disclosing the Information.
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8.4 Cooperation. FOCAS and ELI shall cooperate with each
other, in good faith, and shall use reasonable efforts to:
(a) System Design and Deployment. Expeditiously
complete the design and installation of the System as provided in this
Agreement;
(b) Conflicts Resolution. Negotiate reasonable and
mutually beneficial resolutions to all conflicts that may arise between
FOCAS and ELI relating to the design, installation, Maintenance,
operation and use of the System or any other duty, right or obligation
of either of them relating to or arising out of this Agreement;
(c) Approvals and Consents. Obtain all regulatory,
government, third-party and shareholder approvals, consents, permits
and franchises as may be necessary or prudent for the operation of the
System as described in this Agreement; and
(d) Coordination and Cooperation with Utility
Companies. Coordinate efforts under this Agreement with ELI's
obligations under the Utility Agreements, and to cooperate with the
Utility Companies to design, engineer, construct and install the System
in accordance with the requirements of and pursuant to the terms of the
Utility Agreements, including, without limitation, the Cable
Specifications and each Utility Company's safety rules.
8.5 Regulatory Compliance. FOCAS and ELI shall each be
responsible to comply with the regulatory requirements relating to its own
business practices and operations.
8.6 Certificates. Upon request of either FOCAS or ELI, at any
time and from time to time, the other party without charge and within thirty
(30) days following receipt of such request, shall certify in writing to the
requesting party: (a) that this Agreement is in full force and effect and has
not been supplemented, modified or amended (or if there have been supplements,
modifications or amendments, specifying same); (b) whether, to the best
knowledge of the party issuing such certificate, any sums are then due and
payable by ELI to FOCAS or by FOCAS to ELI pursuant to any provisions of this
Agreement (and if such sums remain unpaid, the amount thereof); (c) whether, to
the best knowledge of the party issuing such certificate, the other party is in
default in the performance of any term, covenant or condition of this Agreement
(or, if defaults exist, specifying each particular in which it is asserted such
other party is in default); (d) if such certificate is issued in connection with
any financing of any portion of the System, the requesting party is authorized
to enter into the financing transaction and that the other party will adhere to
and perform its obligations under Article X, following its receipt of notice of
the transfer; and (e) as to other matters as the party requesting such
certificate may reasonably request.
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8.7 Independent Status. FOCAS and ELI reserve no control
whatsoever over the employment, discharge, compensation of or services rendered
by the employees or contractors of each other, notwithstanding the ability of
FOCAS and ELI to exercise certain rights to enforce the various standards and
specifications agreed upon pursuant to this Agreement. Nothing in this Agreement
shall be construed as inconsistent with the foregoing independent status and
relationship or as creating or implying a partnership or joint venture between
FOCAS and ELI.
8.8 Transactions with Affiliates. All transactions with an
Affiliate involving the System entered into by either FOCAS or ELI shall be at
arm's-length, for market prices and shall comply with any applicable regulatory
requirements.
8.9 Further Assurances. FOCAS and ELI, with reasonable
promptness, shall each execute and deliver such further instruments, documents,
applications and requests or petitions for authority as may be necessary or
prudent to implement or carry out more effectively the terms, covenants and
conditions of this Agreement.
8.10 Audit Rights. FOCAS shall have the right to audit ELI's
books and records relating solely to the Quarterly Payments and the satisfaction
of the Performance Criteria, including, without limitation, the Gross Revenues
derived from the operation of the Revenue Sharing Route, and ELI's costs for
which ELI, under the terms of Section 4.4 of this Agreement, seeks reimbursement
or contribution from FOCAS. Any such audit shall be conducted: (a) by a
reputable public accountant or, as applicable, a member of the internal auditing
staff of FOCAS or ELI; and (b) during reasonable business hours in such manner
as not to interfere with the normal business activities of the party being
audited.
8.11 Interference. Whenever a Utility Company notifies FOCAS
or ELI that the System or any portion thereof materially interferes with the
operation of such Utility Company's equipment or with existing equipment of
current licensees, or constitutes a hazard to the service rendered by the
Utility Company or other licensee, or fails to comply with the codes or
regulations herein before referred to, FOCAS and ELI shall cooperate with each
other and use reasonable efforts to cooperate with and assist the Utility
Company to remedy the interference or hazard. Under no circumstances shall
either ELI, FOCAS, or their respective employees or Qualified Contractors
disturb, tamper with or contact any Utility Company equipment, without the
Utility Company's consent. ELI and FOCAS shall each avoid contact with Utility
Company's lines, wires and transformers, whether or not they appear to be
energized.
8.12 Independent System Operator. ELI shall provide FOCAS with
a copy of the organizational documents, protocols and operating policies of the
Independent System Operator relevant to FOCAS's obligations under this Agreement
and not protected by confidentiality covenants when available to ELI.
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8.13 Performance in Stead. Should either party (the
"Non-performing Party") fail to make any payment or to do any act as provided in
this Agreement, then the other party (the "Other Party"), at the Other Party's
option, without any obligation to do so, and without releasing the
Non-performing Party from any obligation under this Agreement may: (a) make or
do the same in such manner and to such extent the Other Party may deem necessary
to protect the Other Party's rights under this Agreement or any of the Utility
Agreements; (b) commence, appear in and defend any action or proceeding
purporting to affect the Other Party's rights or interests under this Agreement
or to the System; (c) pay, purchase, contest or compromise any encumbrance,
charge or lien which, in the sole judgment of the Other Party, affects or may
affect the Other Party's rights or interests under this Agreement or to the
System; and (d) in exercising any such powers, incur any liability, expend such
reasonable amounts as the Other Party, in its sole discretion, may deem
necessary.
8.14 Utility Agreements. No amendments shall be made to any of
the Utility Agreements which affect FOCAS without FOCAS's prior written consent,
which consent shall not be unreasonably withheld or delayed.
ARTICLE IX
INSURANCE
---------
9.1 Required Insurance Coverage. Without limiting any of the
liabilities or other obligations of FOCAS or ELI, both parties shall procure and
cause their respective contractors, including, without limitation, Qualified
Contractors, to procure and maintain in force at their own cost and expense the
following insurance coverages during any period of construction and throughout
the Term, as applicable:
(a) Workers Compensation and Employers Liability
Insurance. Workers Compensation Insurance to cover obligations imposed
by applicable federal and state statutes and Employers Liability
Insurance with a minimum limit of $1,000,000.00 for injury or death for
each accident.
(b) Commercial Liability Insurance. Commercial
Liability Insurance with a minimum combined single limit of
$10,000,000.00 each occurrence. The policy shall include coverage for
bodily injury liability, property damage liability, personal injury
liability, products liability, completed operations liability, and
contractual liability for liability assumed under this Agreement. The
policy shall contain a severability of interest provision.
(c) Automobile Liability Insurance. Automobile
Liability Insurance with a minimum combined single limit of
$3,000,000.00 for each accident for bodily injury and property damage,
to include coverage for all owned, non-owned and hired vehicles.
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(d) Professional Liability Insurance. Professional
Liability Insurance for engineering activities performed by each party
under the terms of this Agreement. The limit of coverage shall not be
less than $1,000,000.00 for each claim.
9.2 General Conditions. The following general conditions apply
to the extent FOCAS or ELI do not self-insure:
(a) FOCAS Policies. The policies required to be
maintained by FOCAS and its contractors pursuant to Sections 9.1(b),
(c) and (d) shall: (1) include ELI as an additional insured; (2)
provide that ELI shall not by reason of its inclusion as an additional
insured, incur liability to the insurer for payment of premiums for
such insurance; and (3) provide that such insurance is primary and not
excess without right of contribution from any other insurance which
might be otherwise available to ELI.
(b) ELI Policies. The policies required to be
maintained by ELI and its contractors pursuant to Sections 9.1(b), (c)
and (d) shall: (1) include FOCAS as an additional insured; (2) provide
that FOCAS shall not by reason of its inclusion as an additional
insured, incur liability to the insurer for payment of premiums for
such insurance; and (3) provide that such insurance is primary and not
excess without right of contribution from any other insurance which
might be otherwise available to FOCAS.
9.3 Evidence of Insurance. Prior to commencing work under the
terms of this Agreement, FOCAS, ELI and their respective contractors shall
furnish a certificate of insurance as evidence attesting that the insurance
required under this Article IX is in effect. Each policy of insurance required
hereunder shall state that coverage shall not be cancelled except after thirty
(30) days' prior written notice to the other party. The certificate of insurance
must be signed by a person authorized by that insurer to bind coverage on its
behalf and shall be submitted:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may inspect original policies or require complete certified copies
at any time. Upon request, each of FOCAS and ELI shall furnish the other with
the same evidence of insurance for its contractors and subcontractors as
required by this Article IX.
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9.4 Blanket Policies. Nothing in this Article IX shall be
construed to prevent either FOCAS or ELI from satisfying its insurance
obligations pursuant to this Agreement under a blanket policy or policies of
insurance which meet or exceed the requirements of this Article IX.
9.5 Self-Insurance. Notwithstanding any provision in this
Article IX to the contrary, FOCAS may self-insure and ELI, through its parent
Citizens Utilities Company, may self-insure all or any portion of the insurance
required under this Agreement.
ARTICLE X
ASSIGNMENT AND OTHER TRANSFERS
------------------------------
10.1 Transfers. This Agreement and the rights granted under
this Agreement are being granted in reliance on the financial standing and
technical experience of FOCAS and ELI and are thus granted personally to ELI by
FOCAS and to FOCAS by ELI. Neither FOCAS nor ELI may assign any right under this
Agreement, whether in whole or in part, without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the generality of the foregoing:
(a) Either party may assign its rights in this
Agreement in whole or in part without the consent of the other party to
an Affiliate, provided that such assignment shall not relieve the
assigning party of any of its obligations under this Agreement; and
(b) ELI, without prior notice to or the prior consent
of FOCAS, shall have the right to sell, lease, assign or swap rights in
and to the Commercial Fibers to commercial users of telecommunications
services and to other telecommunications services providers in the
ordinary course of business. All such transactions shall be subject to
the terms of this Agreement, and no such transaction shall relieve ELI
of its obligations under this Agreement.
10.2 Financing. In the event that ELI or FOCAS, after
obtaining the consent of the other party pursuant to Section 10.1, assigns its
interest under this Agreement pursuant to a sale-leaseback or other financing
transaction, the non-transferring party agrees that, upon written notice to it
specifying: (a) the name and address of the Transferee; and (b) the name and
address of the Transferee's agent who is entitled to receive notice on behalf of
the Transferee, the non-transferring party will simultaneously give to such
agent any notices required to be given to the transferring party under this
Agreement. The non-transferring party shall accept payment or performance by the
Transferee's agent of any obligation of the transferring party provided such
payment or performance shall be made within the applicable cure periods allowed
by this Agreement. The Transferee's agent shall have the right to cure any
default by the transferring party within the applicable cure periods allowed by
this Agreement. Subject to the terms of Section 10.1 and this Section 10.2, the
Transferee may further assign or transfer any rights or interests it may have
under this Agreement from time to time, in whole or in part, with the prior
written consent of the non-transferring party, which consent shall not be
unreasonably withheld or delayed.
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10.3 Recognition of Transferees. ELI and FOCAS shall recognize
each other's authorized Transferees as provided this Article X, so long as all
of the obligations of the transferring party under this Agreement are being
performed and such Transferee agrees to be bound by and to observe and perform
the obligations of the transferring party under this Agreement.
10.4 No Assumption or Release. Except as set forth in Section
10.3, no assignment under this Article X shall be deemed to be an assumption by
the Transferee of the obligations of the transferring party under this
Agreement. The transferring party shall not in any event be released, relieved
or discharged of or from any of the obligations assumed under this Agreement
unless specifically agreed to by the non-transferring party.
10.5 Mergers and Acquisitions. Notwithstanding any provision
of this Agreement to the contrary, neither FOCAS nor ELI shall be restricted or
prohibited by this Agreement from participating in or completing any mergers
with or acquisitions of businesses similar to or comparable in nature with the
business in which they are now engaged, provided that the successor by merger to
either FOCAS or ELI shall be subject to the terms, covenants and conditions of
this Agreement and shall be deemed to have assumed all obligations of the
merging party hereunder.
ARTICLE XI
CONDEMNATION
------------
11.1 Taking. Should any portion of the Towers, the Substation
Sites or the Right of Way owned or controlled by a Utility Company be the
subject of a Taking, the Revocable License or the Irrevocable License, as then
applicable, granted to ELI under the terms of the applicable Utility Agreement,
to the extent appropriated by such Taking, shall terminate. In the event of a
Taking, the Cable Route shall be relocated as provided in Sections 7.5, 7.6 and
7.7.
11.2 Notice of Taking. ELI shall promptly notify FOCAS of any
Taking threatened or filed against any portion of the Towers, the Substation
Sites or the Right of Way. Under the terms of the Utility Agreements, the
applicable Utility Company, to the extent reasonably available, is required to
procure alternate Right of Way within which the System may be relocated
following such Taking. FOCAS shall cooperate with ELI and the applicable Utility
Company to relocate any portion of the System affected by a taking, whether
before or after the completion of the installation of the Cable.
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ARTICLE XII
ENVIRONMENTAL HAZARD LIABILITY
12.1 Responsibilities of FOCAS. If any Hazardous Substance is
unlawfully introduced or released by FOCAS or any of its contractors or
subcontractors which affects any portion of the System, FOCAS shall defend,
indemnify and hold ELI and the applicable Utility Company harmless from and
against any and all expenses, claims, fines and actions arising out of the
existence, introduction or release of any such Hazardous Substance, including,
without limitation, attorney fees and costs. In addition, FOCAS shall also bear
all costs of removing, neutralizing, containing or otherwise remediating any
such Hazardous Substance.
12.2 Responsibilities of ELI. If any Hazardous Substance is
unlawfully introduced or released by ELI or any of its contractors or
subcontractors which affects any portion of the System, ELI shall defend,
indemnify and hold FOCAS and the applicable Utility Company harmless from and
against any and all expenses, claims, fines and actions arising out of the
existence, introduction or release of any such Hazardous Substance, including,
without limitation, attorney fees and costs. In addition, ELI shall also bear
all costs of removing, neutralizing, containing or otherwise remediating any
such Hazardous Substance.
12.3 Warning. The California Health and Safety Code requires
businesses to provide warnings prior to exposing individuals to material listed
by the Governor of California as chemicals "known to the State of California to
cause cancer, birth defects or reproductive harm." The Utility Companies use or
may use chemicals on the Governor's list at many of their facilities and
locations. Accordingly, in exercising its rights and performing the work or
services contemplated by this Agreement, FOCAS and its contractors and
subcontractors and their respective employees and agents may be exposed to
chemicals on the Governor's list. FOCAS shall be responsible for notifying all
such persons that work performed hereunder may result in exposures to chemicals
on the Governor's list.
ARTICLE XIII
LIABILITY AND INDEMNITY
-----------------------
13.1 FOCAS Indemnity. FOCAS shall indemnify, defend and hold
harmless ELI, its parent corporation, officers, agents and employees (the "ELI
Indemnitees") of and from any claim, demand, lawsuit, or action of any kind for
injury to or death of persons, including, but not limited to, employees of FOCAS
or ELI, and damage or destruction of property, including, but not limited to,
property of FOCAS, any Utility Company or ELI, or other loss or damage incurred
by ELI, arising out of: (a) negligent acts or omissions or willful misconduct of
FOCAS, its agents, officers, directors, employees or contractors; or (b) the
breach by FOCAS of any of its obligations under this Agreement. The obligation
to indemnify shall extend to and encompass all costs incurred by ELI and any ELI
Indemnitee in defending such claims, demands, lawsuits or actions, including,
but not limited to, attorney, witness and expert witness fees, and any other
litigation related expenses. FOCAS's obligations pursuant to this Section 13.1
shall not extend to claims, demands, lawsuits or actions for liability to the
extent attributable to the negligence or willful misconduct of ELI, the ELI
Indemnitees, or their respective contractors, successors or assigns, or to the
acts of third-parties. FOCAS shall pay any cost that may be incurred by ELI or
the ELI Indemnitees in enforcing this indemnity, including reasonable attorney
fees.
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13.2 ELI Indemnity. ELI shall indemnify, defend and hold
harmless FOCAS, its officers, agents and employees (the "FOCAS Indemnitees") of
and from any claim, demand, lawsuit, or action of any kind for injury to or
death of persons, including, but not limited to, employees of FOCAS or ELI, and
damage or destruction of property, including, but not limited to, property of
either FOCAS or ELI, or other loss or damage incurred by FOCAS, arising out of:
(a) negligent acts or omissions or willful misconduct of ELI, its agents,
officers, directors, employees or contractors; or (b) the breach by ELI of any
of its obligations under this Agreement. The obligation to indemnify shall
extend to and encompass all costs incurred by FOCAS and any FOCAS Indemnitee in
defending such claims, demands, lawsuits or actions, including, but not limited
to, attorney, witness and expert witness fees, and any other litigation related
expenses. ELI's obligations pursuant to this Section 13.2 shall not extend to
claims, demands, lawsuits or actions for liability to the extent attributable to
the negligence or willful misconduct of FOCAS, the FOCAS Indemnitees, or their
respective contractors, successors or assigns, or the acts of third-parties. ELI
shall pay any cost that may be incurred by FOCAS or the FOCAS Indemnitees in
enforcing this indemnity, including reasonable attorney fees.
13.3 No Consequential Damages. NOTWITHSTANDING ANY PROVISION
IN THIS AGREEMENT TO THE CONTRARY, NEITHER FOCAS NOR ELI SHALL BE LIABLE TO THE
OTHER FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES,
INCLUDING WITHOUT LIMITATION, LOSS OF USE, LOSS OF PROFITS, COST OF CAPITAL OR
INCREASED OPERATING COSTS, ARISING OUT OF THIS TRANSACTION WHETHER BY REASON OF
CONTRACT, INDEMNITY, STRICT LIABILITY, NEGLIGENCE, INTENTIONAL CONDUCT, BREACH
OF WARRANTY OR FROM BREACH OF THIS AGREEMENT. The foregoing provision shall not
prohibit FOCAS or ELI from seeking and obtaining general contract damages for a
breach of this Agreement, including, without limitation, the payment or
application of any monetary obligation described in Article IV.
13.4 Defense of Claims. Either FOCAS or ELI as the
indemnifying party hereunder shall have the right to defend the other by counsel
of the indemnifying party's selection reasonably satisfactory to the indemnified
party, with respect to any claims within the indemnification obligations of this
Article XIII. FOCAS and ELI shall give each other prompt notice of any asserted
claims or actions indemnified against, shall cooperate with each other in the
defense of any such claims or actions, and shall not settle any such claims or
actions without the prior written consent of the other.
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13.5 Third-Party Claims. Except as set forth in Sections 10.2,
13.1 and 13.2, nothing in this Agreement shall be construed to create rights in,
or duties or liabilities to, or any standard of care with reference to, or to
grant remedies to, any person or entity not a party to this Agreement. FOCAS and
ELI by entering into this Agreement do not hold themselves out as furnishing
like or similar services to any other person or entity.
13.6 Survival. The obligations of the respective parties under
this Article XIII shall survive the expiration or earlier termination of this
Agreement.
13.7 Applicability of Liability Limitations. The waivers and
disclaimers of liability, releases from liability, exclusive remedy provisions,
and (except as expressly stated to the contrary therein) indemnity and hold
harmless provisions expressed throughout this Agreement shall: (a) apply even in
the event of the fault, negligence (in whole or in part), strict liability, or
breach of contract of the party released or whose liability is waived,
disclaimed, limited, apportioned or fixed by such exclusive remedy provision, or
who is indemnified or held harmless; and (b) extend to the Affiliates, parent
corporations, directors, officers, employees and agents of both FOCAS and ELI.
Such provisions shall continue in full force and effect notwithstanding the
completion, termination, suspension, cancellation or rescission of this
Agreement, or termination of the rights and privileges granted by this
Agreement. No parent corporation, officer, director, employee, agent or other
individual representative of either FOCAS or ELI shall be personally responsible
for any liability arising under this Agreement.
13.8 Claims Against Third-Parties. Nothing contained herein
shall operate as a limitation on the right of either FOCAS or ELI to bring an
action for damages against any third-party, including indirect, special or
consequential damages, based on any acts or omissions of such third-party as
such acts or omissions may affect the construction, operation or use of the
Commercial Fibers, the Dark Fibers or the System. FOCAS and ELI shall reasonably
cooperate with each other, including, without limitation, executing documents
and doing whatever else may be reasonably appropriate to enable the other to
pursue any such action against such third-party. Each of FOCAS and ELI shall
assign such rights of claims, execute such documents and to whatever else may be
reasonably necessary to enable the other to pursue any such action against such
third-party. The provisions of this Section 13.8, however, shall not permit
either FOCAS or ELI to bring an action for damages against a third-party for
indirect, special or consequential damages if such third-party, directly or
through one or more intermediate parties, pursuant to this Agreement, has a
right of indemnification, impleader, cross claim, contribution, or other right
of recovery against FOCAS or ELI.
13.9 Anti-Indemnity Statute. FOCAS and ELI are aware of the
provisions of Section 2782 of the California Civil Code. FOCAS and ELI have
negotiated and agreed to the provisions of this Agreement that address the
apportionment of risk, such as the warranty, insurance and liability provisions
of this Agreement. For adequate consideration both FOCAS and ELI have concluded
this Agreement with the intent that the apportionment of risk in this Agreement
be valid and binding under such code section and the laws of California in
general.
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ARTICLE XIV
FORCE MAJEURE
-------------
14.1 Excuse of Performance. Notwithstanding anything in this
Agreement to the contrary, neither FOCAS nor ELI shall be liable or responsible
for a delay or failure in performing or carrying out any of its obligations
(other than its obligations to make payments under Article IV) under this
Agreement caused by a Force Majeure Event (as defined below).
14.2 Definition. The term "Force Majeure Event" as used in
this Agreement shall mean any cause beyond the reasonable control of FOCAS or
ELI, as applicable, or beyond the reasonable control of any of their respective
contractors, subcontractors, suppliers or vendors, including without limitation:
(a) Acts of God. Acts of God, including, but not
necessarily limited to, lightning, earthquakes, adverse weather of
greater duration or intensity than normally expected for the job area
and time of year, fires, explosions, floods, other natural
catastrophes, sabotage, acts of a public enemy, wars, blockades,
embargoes, insurrections, riots or civil disturbances;
(b) Labor Disputes. Labor disputes, including, but
not necessarily limited to, strikes, work slowdowns, work stoppages or
labor disruptions, labor or material shortages, or delays or
disruptions of transportation;
(c) Court Orders. Orders and judgments of any
federal, state or local court, administrative agency or government body
materially and adversely affecting use of the Revenue Sharing Route;
(d) Government or Regulatory Agencies. Orders or
judgments of any government or regulatory agency materially and
adversely affecting use of the Revenue Sharing Route.
(e) Independent System Operator. Actions of any
Independent System Operator having operational control over any Utility
Company's electric transmission system which materially and adversely
affects the use of the System;
(f) Change in Law. The adoption of or change in any
federal, state or local laws, rules, regulations, ordinances, permits
or licenses, or changes in the interpretation of such laws, rules,
regulations, ordinances, permits or licenses, by a court or public
agency having appropriate jurisdiction after the date of the execution
of this Agreement which make performance hereunder unlawful,
impossible, or economically infeasible or which frustrates the purpose
and intent of this Agreement; or
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(g) Government Approvals. Any suspension,
termination, interruption, denial or failure to issue or renew by any
government authority or other party having approval rights of any
Approval required or necessary hereunder for the construction,
installation or operation of the System or for either party to perform
its obligations hereunder, except when such suspension, termination,
interruption, denial or failure to issue or renew results from the
negligent act or failure to act of the party claiming the occurrence of
a Force Majeure Event.
14.3 Continuance after Force Majeure Event. If either FOCAS or
ELI cannot fulfill any of its obligations under this Agreement by reason of a
Force Majeure Event, such party shall promptly notify the other and shall
exercise due diligence to remove such inability with all reasonable dispatch;
provided, that nothing contained in this Section 14.3 shall be construed as
requiring FOCAS or ELI to settle any strike, work stoppage or other labor
dispute in which it may be involved, or to accept any permit, certificate,
license or other Approval on terms deemed unacceptable to such party, or to
enter into any contract or other undertaking on terms which the party deems to
be unduly burdensome or costly.
ARTICLE XV
DEFAULT AND TERMINATION
-----------------------
15.1 Termination Events. The occurrence and continuance of the
following events may result in the termination of this Agreement, subject to the
provisions of this Article XV:
(a) Change of Conditions. A change of conditions
under which FOCAS, ELI or any portion of the Revenue Sharing Route
operates which is beyond the control of the parties such that the
Revenue Sharing Route, or any material portion thereof, cannot continue
to operate as contemplated by the terms of this Agreement, including,
without limitation:
(1) A change in the financial condition of
FOCAS or ELI that materially and adversely affects the ability
of FOCAS or ELI to perform in accordance with the terms,
covenants and conditions of this Agreement;
(2) The occurrence of an event of casualty
which results in the physical destruction of ten percent (10%)
or more of the Revenue Sharing Route;
(3) Changes in law or in the regulatory
environment that materially and adversely affect the use of
any portion of the Revenue Sharing Route;
-45-
(4) Actions by an Independent System
Operator that materially and adversely affect the use of any
portion of the Revenue Sharing Route;
(5) The occurrence of a Force Majeure Event
that renders FOCAS or ELI unable to perform its material
obligations under this Agreement for a continuous period of
six (6) months;
(6) The inability of a Utility Company or
ELI to obtain any required material Approvals for the use and
occupation of the Right of Way and the Towers by the System;
(7) The inability of a Utility Company or
FOCAS to obtain any required material Approvals for the
installation of the Cable, the Cable Accessories and the
Connecting Points; or
(8) The termination of any Utility Agreement
other than due to a default by ELI thereunder.
(b) Default. A material default under the terms,
covenants or conditions of this Agreement by either FOCAS or ELI,
including, without limitation:
(1) The failure of either FOCAS or ELI to
make any payment required under the terms of this Agreement
when due;
(2) Either FOCAS or ELI announces to the
other its intention to terminate this Agreement for strategic
or other reasons that are unrelated to the parties'
performance under this Agreement;
(3) The willful failure by either FOCAS or
ELI to perform its obligations under the terms of this
Agreement;
(4) Either FOCAS or ELI, by willful acts or
omissions, places either itself or the Revenue Sharing Route
or any portion thereof in a position or condition which
violates the terms, covenants and conditions of this Agreement
or effectively terminates this Agreement, including, without
limitation, a willful failure to cure a default after having
received written notice thereof from the other party; or
(5) Either FOCAS or ELI becomes insolvent,
is dissolved or liquidated, files or has filed against it a
petition in bankruptcy, reorganization, dissolution or
liquidation or similar action (which in the case of an
involuntary filing against a party is not stayed or dismissed
within ninety (90) days after the filing thereof), or is
adjudicated a bankrupt, or has a receiver appointed for its
assets.
-46-
15.2 Actions Following Occurrence of Termination Event. Should
any termination event described in Section 15.1 occur, FOCAS and ELI shall have
the following rights and obligations:
(a) Change of Conditions. If the termination event is
a change in conditions described in Section 15.1(a), FOCAS and ELI
shall meet expeditiously to discuss and negotiate in good faith the
effect of the changed condition on this Agreement, their respective
performance obligations hereunder, and their ability to perform under
the terms, covenants and conditions of this Agreement. By mutual
consent, FOCAS and ELI may terminate this Agreement, or modify this
Agreement to address and account for the changed condition in a
mutually acceptable manner. If FOCAS and ELI cannot agree on a solution
to the effect of the changed condition, either party, by written notice
to the other, may elect to terminate this Agreement; provided that
nothing herein shall abrogate, reduce, alter, or adversely affect the
right of either FOCAS or ELI to receive, or their respective
obligations to make, the payments required by Article IV.
(b) Default. If the termination event is a default
described in Section 15.1(b), the nondefaulting party shall give
written notice of such occurrence to the defaulting party. The
defaulting party shall be given a reasonable time to cure any breach or
default as follows:
(1) In the case of a monetary default, the
defaulting party shall have thirty (30) days after receipt of
the written notice in which to effectuate a cure.
(2) In the case of a nonmonetary default,
the defaulting party shall have sixty (60) days after receipt
of the written notice in which to effectuate a cure. If the
nonmonetary default cannot be corrected within such sixty (60)
day period, the defaulting party shall have an additional
reasonable time in which to effectuate a cure, provided the
defaulting party commences corrective action within the
original sixty (60) day period and thereafter diligently
prosecutes the corrective action to completion. If the
defaulting party does not timely cure the breach or default
within the time periods specified above, the nondefaulting
party may elect to terminate this Agreement by providing
written notice of such election to the defaulting party.
(c) Remedies. In the event of an uncured breach or
default described in Section 15.1(b), the nondefaulting party shall
have available to it all legal remedies available at law or in equity
for breach of contract, including, without limitation, general contract
damages.
15.3 No Release. No termination or expiration of this
Agreement or the rights granted hereunder shall release either FOCAS or ELI, as
applicable, from any liability or obligation (whether for the Quarterly Payment
or other payments described in Article IV, payments of indemnity or otherwise)
which may have become due, attached or accrued prior to, or which become due,
attach or accrue at the time or by reason of, such termination or expiration.
-47-
ARTICLE XVI
DISPUTE RESOLUTION
------------------
16.1 Dispute Resolution. Except as may otherwise be set forth
expressly herein, all disputes arising under this Agreement shall be resolved as
set forth in this Article XVI.
16.2 Negotiation and Mediation. FOCAS and ELI shall attempt in
good faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiations between a Vice President of FOCAS or his or her
designated representative and an executive of similar authority of ELI. Either
FOCAS or ELI may give the other party written notice of any dispute. Within
twenty (20) days after delivery of such notice, the designated executives shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary to exchange information and to attempt to resolve the
dispute. If the matter has not been resolved within thirty (30) days of the
first meeting, either FOCAS or ELI may initiate a mediation of the controversy.
The mediation shall be facilitated by a mediator that is acceptable to both
parties and shall conclude within sixty (60) days of its commencement, unless
FOCAS and ELI agree to extend the mediation process beyond such deadline. Upon
agreeing on a mediator, FOCAS and ELI shall enter into a written agreement for
the mediation services. The mediation shall be conducted in accordance with the
Commercial Mediation Rules of the American Arbitration Association.
16.3 Confidentiality. All negotiations and any mediation
conducted pursuant to Section 16.2 shall be confidential and shall be treated as
compromise and settlement negotiations, to which Section 1152.5 of the
California Evidence Code shall apply, which Section is incorporated in this
Agreement by reference.
16.4 Injunctive Relief. Notwithstanding the foregoing
provisions, either FOCAS or ELI may seek a preliminary injunction, other
provisional judicial remedy, or other equitable remedies if in its judgment such
action is necessary to avoid irreparable damage or to preserve the status quo.
16.5 Continuing Obligation. FOCAS and ELI shall continue to
perform their obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
16.6 Failure of Mediation. If FOCAS and ELI, after good faith
efforts to mediate a dispute under the terms of this Agreement (as provided in
Section 16.2), cannot agree to a resolution of the dispute either party may
pursue whatever legal remedies may be available to such party, at law or in
equity, before a court of competent jurisdiction and with venue as provided in
Section 17.7.
-48-
ARTICLE XVII
MISCELLANEOUS
-------------
17.1 Amendments. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated orally and may only be
modified or amended by an instrument in writing, signed by both FOCAS and ELI.
17.2 Binding Effect. This Agreement shall be binding upon
FOCAS, ELI and their respective successors and assigns. This Agreement shall
inure to the benefit of FOCAS, ELI and, to the extent provided in Article X,
their respective successors and assigns.
17.3 Waivers. The failure by FOCAS or ELI at any time or times
hereafter to require strict performance by the other of any of the undertakings,
agreements or covenants contained in this Agreement shall not waive, affect or
diminish any right of FOCAS or ELI under this Agreement to demand strict
compliance and performance therewith. None of the undertakings, agreements or
covenants of FOCAS and ELI under this Agreement shall be deemed to have been
waived unless such waiver is evidenced by an instrument in writing signed by the
party to be charged specifying such waiver.
17.4 Notices. Unless otherwise specifically provided in this
Agreement, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, or sent by
courier or United States certified mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy, or
five (5) days after deposit in the United States mail, with postage prepaid and
properly addressed, as follows:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
Telephone: (770) 664-4949
Facsimile: (770) 664-4379
-49-
With copy to: Cookson America, Inc.
1 Cookson Place
Providence, Rhode Island 02903
Attn: James V. Rosati
Telephone: (401) 521-1000
Facsimile: (401) 521-5273
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Legal Department
Telephone: (360) 892-1000
Facsimile: (360) 816-3821
Such addresses may be changed by notice to the other party given in the same
manner as above provided.
17.5 Severability. If any term or provision of this Agreement
shall, to any extent, be determined by a court of competent jurisdiction to be
void, voidable or unenforceable, such void, voidable or unenforceable term or
provision shall not affect any other term or provision of this Agreement.
17.6 Interpretation. Whenever the context shall require, the
plural shall include the singular, the whole shall include any part thereof, and
any gender shall include both other genders. The article, section and subsection
headings contained in this Agreement are for purposes of reference only and
shall not limit, expand or otherwise affect the construction of any provisions
hereof. All references in this Agreement to articles, sections and subsections,
unless expressly noted otherwise, are to articles, sections and subsections
contained in this Agreement. Unless the context requires otherwise, references
in this Agreement to "party" shall be to either FOCAS or ELI, as applicable, and
references to "parties" shall be to both FOCAS and ELI.
17.7 Governing Law and Choice of Forum. This Agreement and all
matters relating hereto shall be governed by, construed and interpreted in
accordance with the laws of the State of California. Any mediation under this
agreement shall be held in the State of California, County of San Francisco.
Jurisdiction for any disputes arising out of this Agreement shall be exclusively
in the courts of the State of California, state or federal, and any litigation
shall be brought in San Francisco County, California.
17.8 Commissions. FOCAS and ELI shall indemnify and hold each
other harmless (including attorney fees and costs) from and against any and all
claims for brokerage and finder's fees or commissions which may be asserted
against the other based on the actions or omissions of the indemnifying party.
FOCAS and ELI shall each pay any fees or compensation due to their respective
consultants as advisors, if any, with respect to this transaction.
-50-
17.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered, shall be
deemed an original, but all such counterparts taken together shall constitute
only one instrument.
17.10 Attorney Fees. FOCAS and ELI agree that should either of
them default in any of the covenants or agreements contained herein, the
defaulting party shall pay all costs and expenses, including reasonable attorney
fees and costs, incurred by the nondefaulting party to protect its rights
hereunder, regardless of whether an action is commenced or prosecuted to
judgment.
17.11 Costs. Except as otherwise set forth in this Agreement,
FOCAS and ELI shall each be responsible for its own costs, including legal fees,
incurred in negotiating and finalizing this Agreement.
17.12 No Third-Party Beneficiaries. Except as otherwise
expressly provided in this Agreement, the terms, covenants and conditions of
this Agreement, shall not be construed as being for the benefit of any person
who is not a signatory to this Agreement.
17.13 Entire Agreement. This Agreement expresses the entire
understanding of FOCAS and ELI relating to the subject matter hereof. All prior
understandings, written or oral, with respect to such subject matter are hereby
merged herein and superseded.
17.14 Survival. In addition to the survival provisions set
forth elsewhere in this Agreement, those Articles or Sections of this Agreement
which by their nature should survive expiration or other termination of the
Agreement, include Section 5.7 (Warranty of Work), Section 6.14 (Warranty of
Work), Section 7.11 (Performance Completion), Section 8.3 (Confidentiality),
Article XIII (Liability and Indemnity), Section 15.2 (Actions Following
Occurrence of Termination Event), and Section 15.3 (No Release).
17.15 Exhibits. The exhibits to this Agreement referenced
above are an integral part of the agreement and understanding of the parties and
are incorporated in this Agreement by reference. Any exhibits referred to above
in this Agreement which are not attached hereto as of the Effective Date may be
attached to this Agreement following the Effective Date when approved as to form
by both FOCAS and ELI. The omission of any of the exhibits from this Agreement
as of the Effective Date shall not affect the enforceability of this Agreement.
-51-
DATED effective as of the date first above written.
FOCAS:
FOCAS, INC., a Delaware corporation
By: /s/ James V. Rosati
Title: Chairman
ELI:
ELECTRIC LIGHTWAVE, INC., a Delaware corporation
By: /s/Daryl A. Ferguson
Title: Chief Executive Officer
G:\5093\194\INIT0504.AGR
-52-
EXHIBIT "A"
ACCEPTANCE TESTING STANDARDS
----------------------------
FOCAS shall meet or exceed the Acceptance Testing Standards set forth below.
ELI Network Span and Final Acceptance Requirements:
1.0 Design Criteria:
The number of cable splices at the time of original construction must be
designed to an average of 4 km between splices. Due to cable cuts, and cable
relocation, additional splices are allowed. The number of splices must be
closely monitored to insure attenuation and reflection tolerances are
maintained. FOCAS will endeavor to keep the number of splices in a span to a
minimum.
Construction:
Cable must be constructed in accordance with sound commercial practices. The
National Electrical Code shall be followed in every case except where local
regulations are more stringent, in which case local regulations shall govern.
2.0 Typical Fiber Cable Information:
Single mode fiber specifications may vary, depending on the fiber manufacturer.
Typical levels of 0.40 dB per Km @ 1310nm and 0.30 per Km @ 1550nm are expected.
3.0 Span Requirements:
Span documentation must be performed using the two following methods: OTDR
(optical time domain reflectometer) and insertion loss (stabilized light source
and power meter) measurement in each direction at 1550nm wavelength.
o Maximum total span loss must not exceed 35.0 dB at 1550nm for a
100 Km span.
o Maximum dB/Km loss must not exceed 0.30 dB/Km at 1550nm excluding
splices
o In no case shall a fiber show a point discontinuity greater than
0.1dB. Discontinuities (known as steps, or attenuation
non-uniformities) shall be measured with an optical time domain
reflectometer (OTDR) to determine the loss of the localized
attenuation. The lease squares fit method of measurement must be
used to determine the magnitude of the loss of a point
discontinuity.
o Span loss will be the sum of cable loss in dB/Km plus System
splice loss in dB. The test results will be submitted to ELI in a
format approved by ELI.
o Maximum span dispersion = 2250 ps/mn/Km for a 100 Km span. o
Performance levels at the time of acceptance must be maintained
at all times. o Test data including OTDR hard copies or
electronic data must be submitted to Common System Engineering
before Final Acceptance. ELI, at its discretion, may choose to
physically monitor any or all testing associated with Final
Acceptance of the Commercial Fibers.
In the event the measured span measured values exceeds the calculated values,
FOCAS will perform corrective maintenance as required to restore the Commercial
Fibers to the calculated values.
4.0 Splice Loss:
The splice loss will average 0.10dB @ 1550 nm. All splicing will be performed by
FOCAS. Further, no individual splice will exceed 0.30dB. Splices shall be
measured using bi-directional methods to average absolute splice loss. All fiber
splicing must be fusion type. The test results will be submitted to ELI in a
format approved by ELI.
5.0 Compliance:
ELI, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of the Commercial Fibers. Test data including OTDR
hard copies or electronic data must be submitted to ELI for review. Traces will
be taken on each fiber after all work is completed, bi-directionally, at 1310 nm
and 1550 nm, and submitted on 3 1/2 inch floppy disks. Filenames will be
approved by the Project Engineer prior to traces being submitted. ELI has the
option to waive any specifications and/or requirements listed in the technical
specification criteria.
6.0 Waivers:
FOCAS must provide Cable with attenuation of not greater than 0.30 dB/Km @
1550nm and will not be required to perform corrective maintenance under 0.30dB
to reduce span attenuation.
7.0 Key Optical Performance Characteristics Required for Single-Mode Optical
Cables:
A2
7.1 Attenuation Single Mode Non-Shifted:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement. o The attenuation must not exceed 0.40 dB/Km when
measured at a wavelength of 1.30 microns (1310nm) using the two
point measurement.
7.2 Attenuation Single Mode Dispersion Shifted:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement.
7.3 Attenuation versus Wavelength Single-Mode and Dispersion Shifted:
o The attenuation for the wavelength region form 1525 nm to 1575 nm
must not exceed the attenuation at 1550 nm by more than 0.05
dB/Km.
7.4 Chromatic Dispersion Non-Dispersion Shifted (ps/nm-km):
o For conventional single mode fibers, the zero dispersion
wavelength must be 1300 to 1322.5nm. The maximum dispersion slope
(SoMAX) must be no greater than 0.092ps/(km-nm squared). The
nominal zero dispersion wavelength must be near 1310nm zero
dispersion range. The dispersion between 1530 and 1570 nm must be
less than or equal to 18 ps/(nm km).
7.5 Cutoff Wavelength:
o The cutoff wavelength of cabled fiber must be less than 1260 nm.
7.6 Core Diameter:
o The core diameter must be typically 8.30 plus or minus 0.13.
7.7 Temperature:
o Cable operating temperature range -40(degree) C to +85(degree) C.
FOCAS will insure that the Cable and related appurtenances meet all of the above
optical performance characteristics operating systems power level.
A3
EXHIBIT "B"
CABLE ROUTE
-----------
An approximate description of the Cable Route is set out below:
Utility Company Route Description
PacifiCorp *
PG&E *
Southern California *
Edison
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
EXHIBIT "C"
CABLE SPECIFICATIONS
--------------------
SINGLE-MODE OPTICAL FIBER
GENERAL
The fiber is optimized for use in the 1310 nm wavelength region. The
information-carrying capacity of the fiber is at its highest in this
transmission window; it is also where dispersion is the lowest. The fiber can
also be effectively used in the 1550 nm wavelength region.
The fiber coating is optimized for use in many single and multi-fiber cable
designs including loose tube, ribbon, slotted core and tight buffer cables. The
fiber coating shall provide fiber protection and must be easy to work with. The
fiber coating must be capable of mechanical stripping with an outside diameter
of at least 245 (mu)m.
The fiber is manufactured using the Outside Vapor Deposition (OVD) process,
which produces a totally synthetic, ultra-pure fiber. As a result, the fiber has
consistent geometric properties, high strength and low attenuation. The Vapor
Axiel Deposition (VAD) process may also be used.
GENERAL FEATURES AND BENEFITS
o Versatility in 1310 nm and 1550 nm applications.
o Geometrical properties that allow for low splice loss and high splice
yields.
o OVD and VAD manufacturing reliability and product consistency.
o Optimized for use in ribbon, loose tube and other common cable designs.
OPTICAL SPECIFICATIONS
Attenuation
- ------------------------------------------------
Uncabled Fiber Attenuation Cells Point Discontinuity
- ------------------------------------------------
- ------------------------- ----------------------
Attenuation Cells No point of discontinuity greater than 0.10 dB at either 1310 nm
(dB/km) or 1550 nm.
- ------------------------- ----------------------
- ------------------------- ----------------------
Wavelength (nm) Standard
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1310 0.40 Attenuation at the Water Peak
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1550 0.30 The attenuation at 1383 plus or minus 3 nm shall not exceed 2.1 dB/km.
- ------------------------- ----------------------
- --------------------------------------------------------------
Attenuation vs. Wavelength
- --------------------------------------------------------------
- --------------------- ------------------- --------------------
Range Ref. lambda Max Increase The attenuation in a given wavelength range does
(nm) (nm) alpha (dB/km) not exceed the attenuation of the reference
wavelength (lambda) by more than the value alpha.
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1285-1330 1310 0.1
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1525-1575 1550 0.05
- --------------------- ------------------- --------------------
- -----------------------------------------------------------------------------
Attenuation With Bending
- -----------------------------------------------------------------------------
- -------------------- ----------------- ----------------- --------------------
Mandrel Number of Wavelength Induced The induced attenuation due to
Diameter Turns (nm) Attenuation fiber wrapped around a mandrel
(nm) (dB) of a specified diameter.
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
32 1 1550 0.50
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1310 0.05
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1550 0.10
- -------------------- ----------------- ----------------- --------------------
o Cable Cutoff Wavelength (lambda ccf) o Mode-Field Diameter
(lambda ccf) less than 1260 nm 9.30 plus or minus 0.50 mu m at 1310 nm
10.50 plus or minus 1.00 mu m at 1550 nm
o Dispersion
Zero Dispersion Wavelength (lambda o): 1300 nm Less than or equal to (lambda o) Less than or equal to 1322 nm
Zero Dispersion Slope (So): Less than or equal to 0.092 ps/(nm squared times km)
Fiber Polarization Mode Dispersion Coefficient (PMD): Less than or equal to 0.5 psec divided by square root km
C2
- --------------------------------------------------------------------------------------------------------------------
Dispersion Calculation
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
The agreement sets forth a detailed calculation of dispersion.
- --------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SPECIFICATIONS
- ------------------------------------------ --------------------------------
Environmental Test Induced Operating Temperature Range
Condition Attenuation -60(degree)C to +85(degree)C
(dB/km)
- ------------------------------------------ --------------------------------
- ------------------------------------------ -------------- -----------------
1310 nm 1550 nm
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature Dependence 0.05 0.05
- -60(degree)to +85(degree)C
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature-Humidity Cycling 0.05 0.05
- -10(degree)C to +85(degree)C, up to 98% RH
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Water Immersion, 23(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Heat Aging, 85(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
DIMENSIONAL SPECIFICATIONS
Standard Length (km/reel): 2.2 - 25.0
Glass Geometry Coating Geometry
Fiber Curl: greater than equal to 2.0 m radius of curvature Coating Diameter: 245 plus or minus 10 mu m
Cladding Diameter: 125.0 + 1.0 mu m Coating-Cladding Concentricity: less than 12 mu m
Core-Clad Concentricity: less than or equal to 0.8 mu m
Cladding Non-Circularity: less than 1.0%
Defined as: 1- (Min. Cladding Diameter divided by Max. Cladding Diameter) x 100
C3
MECHANICAL SPECIFICATIONS
Proof Test:
The entire length of fiber is subjected to a tensile proof stress greater than
or equal to 100 kpsi (0.7 GN/m squared)
Cable Selection:
The Cable jacket shall comply with applicable National Electrical Safety Code
(NESC) standards for storm loading.
PERFORMANCE CHARACTERIZATIONS Characterized parameters must be typical values.
Core Diameter: Refractive Index Difference:
8.3 mu m 0.36%
Numerical Aperture: Effective Group Index of Refraction (Neff):
0.13 1.4675 or 1.466 at 1310 nm
NA measured at the one percent power angle of a 1.4681 or 1.467 at 1550 nm
one-dimensional far-field scan at 1310 nm.
Zero Dispersion Wavelength (lambda omicron): Fatigue Resistance Parameter (nd):
1312 nm greater than or equal to 20
Zero Dispersion Slope (S omicron): Coating Strip Force:
0.092 ps divided by (nm2 times km) Dry: greater than 0.3 lbf and less than 2.0 lbf
Wet: 14 days room temperature: 0.7 lbs. (3.2 N)
C4
EXHIBIT "D"
PERFORMANCE CRITERIA
- --------------------------------------------------------------------------------------------------------------------
($ in thousands)
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Year (Measured from Revenue Forecast Performance Criteria
Completion Date for entire
Revenue Sharing Route)
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 1 (months 1-12) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 2 (months 13-24) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 3 (months 25-36) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 4 (months 37-48) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 5 (months 49-62) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 6 (months 63-72) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 7 (months 73-84) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 8 (months 85-96) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 9 (months 97-108) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 10 (months 109-120) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 11 (months 121-132) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 12 (months 133-144) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 13 (months 145-156) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 14 (months 157-168) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 15 (months 169-180) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 16 (months 181-192) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 17 (months 193-204) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 18 (months 205-216) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 19 (months 217-228) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 20 (months 229-240) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
EXHIBIT "E"
REVENUE SHARING ROUTE
The revenue sharing route originates in the Portland, Oregon area and terminates
in Los Angeles, California, passing through Sacramento and San Francisco,
California.
EXHIBIT "F"
UTILITY COMPANY AGREEMENTS
[to be completed]
EXHIBIT "G"
UTILITY COMPANY SAFETY RULES
[to be completed]
EXHIBIT "H"
CABLE WARRANTY
FOCAS MANUFACTURER'S
LIMITED WARRANTY
FOCAS warrants that the Cable to be delivered under the foregoing
agreement will be of the kind and quality described in the order or agreement
and will be free of defects in workmanship or material for a period of three
years from the date its installation is completed and accepted by ELI. Should
any failure to conform to this warranty appear within such three year period,
FOCAS will, upon notification thereof and substantiation that the products have
been stored, installed and maintained in accordance with FOCAS's recommendations
and standard industry practice, correct such defects by suitable repair to or
replacement of the product. THIS WARRANTY IS EXCLUSIVE AND IT IS IN LIEU OF ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER
WARRANTY OF QUALITY, WHETHER EXPRESS OR IMPLIED, EXCEPT THE WARRANTY OF TITLE
AND AGAINST PATENT INFRINGEMENT. FOCAS SHALL NOT BE LIABLE UNDER ANY
CIRCUMSTANCES FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES TO ANY PARTY WHATSOEVER.
FOCAS shall have no obligation or liability of any kind and it is further agreed
and understood that the consideration stated for those products described in the
foregoing agreement is consideration for the limitation of FOCAS's liability
hereunder.