EXHIBIT 10.14
Confidential Treatment(1)
Fiber Lease and Innerduct Use Agreement
by and between
Metromedia Fiber Network, Inc.
and
NEXTLINK Communications, Inc.
February 23, 1998
_____________
(1) Redacted portions have been marked with an asterisk (*). The redacted
portions are subject to a request for confidential treatment and has been
filed separately with the Securities and Exchange Commission.
FIBER LEASE AND INNERDUCT USE AGREEMENT
This AGREEMENT ("Agreement") is made and entered into as of the 23rd day of
February, 1998, by and between Metromedia Fiber Network, Inc., a Delaware
corporation ("MFN") and NEXTLINK Communications, Inc. ("NEXTLINK"), a Washington
corporation (either MFN or NEXTLINK being referred to in this Agreement as a
"Party," and collectively as the "Parties").
WHEREAS MFN constructs and maintains a fiber optic cable network and
desires to provide NEXTLINK with long term exclusive use of a portion of this
network subject to the terms and conditions of this Agreement;
WHEREAS NEXTLINK desires to acquire certain long term rights to use
portions of the MFN System as described herein, subject to the terms and
conditions of this Agreement; and
WHEREAS NEXTLINK and MFN are increasing the fiber count in NEXTLINK's
network under the New York Fiber Agreement (as defined below);
NOW, THEREFORE, in consideration of the mutual agreements contained in this
Agreement, the Parties agree as follows.
ARTICLE I DEFINITIONS
For purposes of this Agreement, words spelled with initial capital letters
(other than proper names, section headings, and the beginnings of sentences)
shall have the defined meanings set forth in the applicable provisions of this
Agreement or in this Article I.
"MFN System" shall mean the fiber optic network controlled and operated by MFN
as described in Exhibit A.
"New York Fiber Agreement" means the Fiber Optic Use Agreement between MFN and
NEXTLINK New York, L.L.C., dated June 3, 1997.
"NEXTLINK Fibers" shall mean the fibers leased by NEXTLINK from MFN pursuant to
this Agreement, as described in Exhibit A hereto and more fully defined in
Sections 2.1 and 2.2 herein.
"Pro Rata" shall mean the percentage of the total count of optical fiber strands
and other cables within conduit under the control of MFN that is represented by
the NEXTLINK Fibers.
2
ARTICLE II TERM AND LEASE
2.1 LEASE OF FIBERS. MFN hereby grants to NEXTLINK a lease of the
exclusive use of *** fiber-miles of optical fiber, configured as described in
Exhibit A to this Agreement as of the date of this Agreement and as Exhibit A
may be amended after the date of this Agreement with the agreement of the
Parties and pursuant to Section 2.2, for a Term commencing on the Acceptance
Date for the first segment of NEXTLINK Fibers accepted by NEXTLINK in accordance
with the Acceptance Testing procedures set forth in Section 2.7 ("Acceptance")
and terminating twenty years after the Acceptance Date for the last segment of
NEXTLINK Fibers (the "Term"). MFN shall deliver the NEXTLINK Fibers to NEXTLINK
in logical segments as set forth on Exhibit A. This lease shall provide
NEXTLINK with quiet enjoyment of the NEXTLINK Fibers for the Term. If MFN, in
its sole discretion, extends or renews any underlying right-of-way relating to
the NEXTLINK Fibers beyond the Term, NEXTLINK shall have the right to extend the
Term of the fiber lease for a term corresponding to such extension or renewal
(up to two additional ten-year periods), upon notice to MFN not less than 180
days prior to the expiration of the then-current term. The consideration payable
for any extensions of the Term shall be as stated in Section 3.1. MFN shall
promptly notify NEXTLINK of the expiration dates for rights-of-way relevant to
this Agreement. In the event that NEXTLINK desires to extend the fiber lease, it
shall give notice to MFN no sooner than two years, and no later than one year,
prior to the expiration of the Term (the "Extension Notice"). Within 60 days
after the date of the Extension Notice MFN shall give notice to NEXTLINK
advising NEXTLINK whether or not it intends to renew any relevant rights-of-way.
If MFN does not intend to extend or renew such right-of-way, NEXTLINK shall have
the right to negotiate directly with the holder of any right-of-way for a new
right-of-way. If MFN elects not to renew or extend a right-of-way and intends
to abandon the use of the NEXTLINK Fibers in such right-of-way, MFN shall, upon
NEXTLINK's request, convey title to such NEXTLINK Fibers to NEXTLINK in exchange
for a payment of $100.00 by NEXTLINK.
2.2 DESCRIPTION OF NEXTLINK FIBERS. Exhibit A in the form attached
to this Agreement on the date of this Agreement identifies the type of fiber and
configuration for fiber miles to be leased by NEXTLINK. Exhibit A also states
MFN's anticipated construction schedule for the NEXTLINK Fibers. For a period
of 90 days after the date of this Agreement, NEXTLINK shall have the right (with
the consent of MFN, which shall not be unreasonably withheld or delayed by MFN)
to change the fiber count for particular segments as designated on Exhibit A as
long as the total fiber miles to be changed does not exceed 25% of the total
fiber miles to be leased pursuant to Section 2.1. MFN shall use commercially
reasonable efforts to deliver the NEXTLINK Fibers to NEXTLINK on the schedule
set forth in Exhibit A. NEXTLINK acknowledges, however, that MFN does not
guarantee delivery of the NEXTLINK Fibers to NEXTLINK on the dates set forth on
such schedule.
2.3 LONG-HAUL INNERDUCT. MFN hereby grants to NEXTLINK an exclusive,
indefeasible right of use ("IRU"), for a single, one and one-quarter inch
3
(11/4") vacant innerduct (the "Long-Haul Innerduct") throughout the entire route
described on Exhibit B-4 (the "Long-Haul Route") for a term ending (with respect
to any particular segment) with the expiration of the underlying right-of-way
for that segment (or, in the case of right-of-way held by Consolidated Rail
Corporation, a term ending with the expiration of the first ten-year "Extension
Term" under MFN's agreement with Consolidated Rail Corporation). This IRU shall
commence upon NEXTLINK's Acceptance of the Long-Haul Innerduct. This IRU shall
provide NEXTLINK with quiet enjoyment of the Long-Haul Innerduct for the term
ending as stated above in Section 2.3. NEXTLINK shall have the right to extend
the term for this IRU for a term ending with the expiration of the underlying
right-of-way for any particular segment, if renewed or extended by MFN in its
discretion from time to time, at no additional consideration other than for
maintenance charges and MFN's incremental share of right-of-way fees as stated
in Section 3.2. The Long-Haul Innerduct shall meet the specifications stated on
Exhibit B and shall include fiber-drop or splice points at locations shown on
Exhibit B or otherwise agreed upon by the Parties. MFN shall deliver to
NEXTLINK such evidence of the grant of the IRU for the Long-Haul Innerduct (on
the terms stated in this Agreement) as NEXTLINK may reasonably request upon
Acceptance of the Long-Haul Innerduct by NEXTLINK. The Long-Haul Innerduct
shall be completed and made available for delivery to NEXTLINK in the logical
sequences shown on Exhibit B, no later than the dates set forth on Exhibit C.
MFN shall grant this IRU for segments of the Long-Haul Innerduct as such
segments are completed rather than waiting for completion of the entire Long-
Haul Innerduct. NEXTLINK shall, not later than the next business day after
NEXTLINK's Acceptance of any segment of the Long-Haul Innerduct, instruct the
Escrow Agent (as defined below) to release funds from escrow calculated at the
rate of *** per mile of Long-Haul Innerduct. Together with the IRU for the
Long-Haul Innerduct, MFN shall use commercially reasonable efforts to grant
NEXTLINK either a lease or IRU for innerduct from MFN's Jersey City, New Jersey
point of presence to MFN's New York, New York point of presence at 60 Hudson
Street, as further described on Exhibit B for the term of the IRU set forth in
this paragraph. If MFN is unable to grant such lease or IRU, MFN shall grant
NEXTLINK a lease of fibers from Jersey City, New Jersey to New York, New York.
The lease of fibers in this segment from Jersey City to New York shall include
the same number of fiber strands that are installed for NEXTLINK's use in the
adjoining portions of the Long-Haul Innerduct. NEXTLINK shall directly pay for
the fibers to be installed in the Jersey City to New York segment, or reimburse
MFN for MFN's cost to purchase the fibers, and NEXTLINK shall also pay directly,
or reimburse MFN for, MFN's cost to install the fibers. These fiber miles do
not reduce the fiber miles to be leased by NEXTLINK under Section 2.1.
The grant of the IRU described in this Section 2.3 is subject to (i)
MFN's receipt of any necessary consents of holders of underlying rights-of-way
required for such IRU , (ii) NEXTLINK entering into such agreement as the holder
of the underlying right-of-way may reasonably request, and (iii) to NEXTLINK's
approval of the amount of right-of-way fees or other fees to be incurred by
NEXTLINK with respect to the Long-Haul Innerduct and of the terms of all
rights-of-way applicable to the Long-Haul
4
Innerduct. The Parties shall cooperate in good faith, using their respective
commercially reasonable efforts, to obtain the necessary consents or agreements
from holders of underlying rights-of-way. If such consents have not been
obtained within one year after the date of this Agreement, or if NEXTLINK has
not approved the amount of the right-of-way fees or other fees to be incurred by
NEXTLINK and the terms of all rights of way applicable to the Long-Haul
Innerduct within one year after the date of this Agreement, then either Party
may, by written notice to the other Party, terminate the Parties' Agreement for
the IRU under this Section 2.3. Upon such termination, NEXTLINK shall have the
right to select one of the following options, which shall be determined by
NEXTLINK as soon as practical after such termination: (a) NEXTLINK may elect to
terminate the portion of this Agreement relating to the grant of the IRU
pursuant to this Section 2.3 and pay MFN an additional $4,000,000 in
consideration of the fiber lease described in Section 2.1, by deposit into
escrow under the Escrow Agreement (as defined below), which $4,000,000 shall be
disbursed over time upon Acceptance of segments of the NEXTLINK Fibers, in
proportion to the number of fiber miles in such segment compared with the
then-remaining number of fiber miles of NEXTLINK Fibers yet to be delivered; or
(b) if MFN is permitted to pull additional fiber in the Long-Haul Route,
NEXTLINK may (to the extent MFN is permitted to do so under applicable
right-of-way agreements) require MFN to grant NEXTLINK a lease or IRU for the
number of strands requested by NEXTLINK, up to a maximum of 432 strands of fiber
throughout the Long-Haul Route for a one-time payment of *** per fiber mile that
is subject to such lease or IRU (less all amounts released to MFN from escrow,
and the down payment made by NEXTLINK, with respect to the Long-Haul Innerduct),
or (c) if MFN is not permitted to pull additional fiber in the Long-Haul Route,
NEXTLINK may require MFN to lease to NEXTLINK up to 96 strands of fiber for a
one-time lease payment of *** per fiber mile (less all amounts released to MFN
from escrow, and the down payment made by NEXTLINK, with respect to the
Long-Haul Innerduct). The lease or IRU granted under clause (b) and the lease
granted under clause (c) shall expire on expiration of the IRU for the Long-Haul
Innerduct.
2.4 ADDITIONAL INNERDUCT. In the event MFN owns innerduct or the
equivalent in any portion of the route of the NEXTLINK Fibers, and MFN elects to
offer such innerduct or equivalent to NEXTLINK, such election to be in MFN's
sole discretion, and if NEXTLINK elects to accept such offer, such election to
be in NEXTLINK's sole discretion, MFN shall grant NEXTLINK a 20-year IRU for an
additional single, one and one-quarter inch (11/4") vacant innerduct (the
"Additional Innerduct"), or equivalent raceway space, in the route agreed to in
writing by the Parties. MFN shall deliver to NEXTLINK such evidence of the grant
of the IRU for the Additional Innerduct (on the terms stated in this Agreement)
as NEXTLINK may reasonably request upon Acceptance of the Additional Innerduct
by NEXTLINK. The Additional Innerduct shall meet the specifications stated in
Exhibit B with respect to the type, quality and other specifications. NEXTLINK
shall have the right to extend the Term for this IRU for a term ending with the
expiration of the underlying right-of-way for any particular segment, as renewed
or extended by MFN from time to time, at no
5
additional consideration other than for maintenance charges and incremental
share of right-of-way fees as stated in Section 3.3.
2.5 INSTALLATION OF FIBER IN LONG-HAUL INNERDUCT. NEXTLINK shall
give MFN not less than ninety days written notice prior to the date NEXTLINK
desires to have installation of fiber in the Long-Haul Innerduct commence.
NEXTLINK shall select a contractor from a list of contractors approved by MFN to
install such fiber. At NEXTLINK's option, NEXTLINK may require such contractors
to participate in a competitive-bid process prior to selection of the
contractor. NEXTLINK shall pay the cost charged by such contractor for the
installation. MFN shall have the right to manage and supervise the
installation. NEXTLINK shall reimburse MFN for MFN's reasonable costs for time
spent in such management and supervision, as set forth in invoice from MFN to
NEXTLINK showing in reasonable detail the time spent by MFN personnel.
NEXTLINK's notice regarding the installation shall designate the number of
strands that NEXTLINK intends to have installed in such Long-Haul Innerduct. By
written notice to NEXTLINK within thirty days after such notice from NEXTLINK,
MFN may exercise its option to require NEXTLINK to lease to MFN fiber in one or
more segments of the Long-Haul Innerduct as stated in this Section 2.5. If MFN
fails to provide such notice to NEXTLINK, MFN shall have no right to require
NEXTLINK to lease to MFN fibers in any innerduct. NEXTLINK shall, at MFN's
request, include in the single bundle of fibers installed in such innerduct a
minimum of 96 additional strands of fiber. Subject to the foregoing, if
NEXTLINK has fewer 336 fibers installed in such Long-Haul Innerduct, MFN shall
have the right to increase the number of strands to be installed for MFN by
NEXTLINK above 96 such that a total of up to 432 strands will be installed in
the Long-Haul Innerduct. NEXTLINK shall lease such fibers to MFN for a period
equal to the remaining term on NEXTLINK's IRU for the Long-Haul Innerduct (as
extended or renewed) with no lease payment due from MFN to NEXTLINK. The lease
shall commence on delivery of the fiber strands to MFN.
2.6 COLLOCATION. The Parties shall consult and negotiate with each
other with respect to collocation space, regeneration sites and the like,
including possible swaps of collocation space and regeneration sites. Any
agreement between the Parties with respect thereto shall be in writing and shall
state the pricing terms.
2.7 SPLICING; ACCEPTANCE TESTING. MFN shall, at NEXTLINK's request,
provide such services as shall be necessary to connect the NEXTLINK Fibers,
Long-Haul Innerduct and Additional Innerduct and spurs, laterals, subrings and
other network assets (including regeneration equipment) on and after the
Acceptance Date at splice points and other appropriate points identified on
Exhibits A and B, and also as requested by NEXTLINK at other technically
feasible locations, with the consent of MFN, which consent shall not be
unreasonably withheld or delayed by MFN. NEXTLINK shall have the right to
supervise such work, at NEXTLINK's expense. NEXTLINK shall reimburse MFN for
MFN's reasonable costs in performing such services.
6
(a) MFN shall test all NEXTLINK Fibers, Long-Haul Innerduct and
Additional Innerduct in accordance with the specifications stated in the
Exhibits to this Agreement ("Acceptance Testing") to verify that such the
NEXTLINK Fibers, Long-Haul Innerduct and Additional Innerduct are installed in
compliance with the specifications described in the applicable Exhibits.
Acceptance Testing shall progress span by span along each segment as cable
splicing or other installation progresses, so that test results may be reviewed
in a timely manner. Where practical, MFN shall provide NEXTLINK at least ten
(10) business days advance notice, but in any case at least five (5) business
days advance notice, of the date and time of each Acceptance Testing (each of
which shall take place during normal business hours where practical) such that
NEXTLINK shall have the right, but not the obligation, to have a person or
persons present to observe MFN's Acceptance Testing. When MFN has determined
that the results of the Acceptance Testing with respect to a particular span
show that the NEXTLINK Fibers, Long-Haul Innerduct or Additional Innerduct so
tested are installed and in compliance with the applicable specifications set
forth in the Exhibits to this Agreement, MFN shall promptly provide NEXTLINK
with a copy of such test results.
(b) When MFN reasonably determines the NEXTLINK Fibers,
Long-Haul Innerduct or Additional Innerduct with respect to an entire segment
are installed substantially in conformity with the applicable specifications set
forth in the Exhibits to this Agreement, MFN shall promptly provide written
notice of completion to NEXTLINK (a "Completion Notice"). NEXTLINK shall,
within fourteen (14) days of receipt of the Completion Notice, either reject the
Completion Notice specifying the defect or failure in such Acceptance Testing or
give MFN written notice of acceptance of such Acceptance Testing (the period
from the date of NEXTLINK's receipt of the Completion Notice to the date of
MFN's receipt of NEXTLINK's notice of rejection or Acceptance being referred to
herein as the "Review Period"). In the event NEXTLINK rejects the Completion
Notice, MFN shall promptly, and not later than fourteen (14) days after receipt
of NEXTLINK's notice of rejection, and at no cost to NEXTLINK, commence to
remedy the defect or failure. Thereafter, upon completion of the remediation of
the defect or failure, MFN shall again give NEXTLINK a Completion Notice. The
foregoing procedure shall apply again and successively thereafter for a total of
two attempts to remedy the defect or failure. If MFN fails to adequately remedy
or cure the defect or failure after two attempts, NEXTLINK shall have the right
to proceed promptly and in an economically efficient manner for a period of up
to thirty days to cure such defects or failures at MFN's cost and expense, which
shall be paid by MFN to NEXTLINK upon demand, or at the election of NEXTLINK
offset from any payment by NEXTLINK to MFN under this Agreement. No acceptance
of, or failure by NEXTLINK to reject, the Completion Notice shall be deemed to
be a waiver of any rights or remedies of NEXTLINK under this Agreement; provided
that NEXTLINK's use of the fiber or Innerduct in question (other than in
connection with testing) and any failure by NEXTLINK to timely reject as set
forth above shall be deemed Acceptance for purposes of this Agreement. The date
when NEXTLINK accepts or is deemed to have accepted a Completion Notice or cures
such defects at MFN'S cost and expense as provided above with respect to any
portion of the NEXTLINK Fibers is herein defined
7
as the "Acceptance Date." Not later than the business day following the
Acceptance Date, NEXTLINK shall cause the Escrow Agent to release from escrow a
portion of the funds held by the Escrow Agent under the Escrow Agreement, in the
amount designated by the Parties in the applicable Exhibits corresponding to the
segment being accepted by NEXTLINK.
2.8 REMOVAL ON TERMINATION. Upon the expiration of the fiber lease
and IRUs provided to NEXTLINK in this Agreement, or any earlier termination of
this Agreement, NEXTLINK shall exercise commercially reasonable efforts to
remove all NEXTLINK property from the MFN System and reroute NEXTLINK's traffic
within sixty (60) days from such expiration or termination and shall complete
such removal in a manner that does not interfere with or damage the MFN System.
In the event that NEXTLINK fails to remove its property within such period, MFN
may remove and store the NEXTLINK property at NEXTLINK's expense.
2.9 CONSTRUCTION STANDARDS. All construction required for
performance by MFN of its obligations under this Agreement shall be performed in
accordance with the terms stated in any Exhibit to this Agreement and in
accordance with industry standards.
2.10 COOPERATION IN PLANNING. The Parties shall cooperate in good
faith in planning the design and construction of the NEXTLINK Fibers, the
Long-Haul Innerduct and the Additional Innerduct. Not less frequently than once
every six months, NEXTLINK and MFN shall meet to evaluate MFN's construction
plans and network design and to consider NEXTLINK's comments and requests for
modifications. Except as may be requested to comply with the applicable
specifications stated in this Agreement or an Exhibit to this Agreement, MFN
shall not have any obligation to make modifications requested by NEXTLINK. MFN
shall promptly notify NEXTLINK of any material deviation from the route design
previously proposed by MFN for any particular segments and NEXTLINK shall have
the right to withdraw from participation in the affected portion of the route
and the right to designate (in a commercially reasonable manner) replacement
fibers in technically feasible locations. To the extent technically feasible
and commercially reasonable, however, MFN shall add additional splice points and
make other changes requested by NEXTLINK (at NEXTLINK's expense), provided that
NEXTLINK responds with such requests within the time periods reasonably
determined from time to time by MFN (and given to NEXTLINK in writing) based on
MFN's construction schedule.
2.11 INCREASE IN NEW YORK FIBERS. As part of the consideration
NEXTLINK is receiving under this Agreement, MFN shall increase the fiber count
for the "Leased Fibers" as defined in the New York Fiber Agreement by the number
of fiber miles equivalent to the number of fiber miles required to increase the
fiber count for such "Leased Fibers" to *** fibers in all segments of such
"Leased Fibers." The specific fiber counts by segment shall be as stated by
NEXTLINK in a written request to MFN within 90 days after the date of this
Agreement, with the consent of MFN
8
(which shall not be unreasonably withheld or delayed by MFN). This Section 2.11
shall not obligate MFN to install these additional strands of fiber in any
particular location unless MFN is obligated to lease to NEXTLINK fiber at that
location under the New York Fiber Agreement. No additional payment shall be due
from NEXTLINK under this Agreement or the New York Fiber Agreement as a result
of such increase in the fiber count for such Leased Fibers. Such increase in
fiber count shall not reduce the fiber-miles NEXTLINK is entitled to lease under
Section 2.1 of this Agreement.
2.12 NEXTLINK and MFN agree that the lease to MFN contemplated under
Section 2.5 and the provision of additional fiber to NEXTLINK contemplated under
Section 2.11 are of equivalent value and are valued at Four Million Four Hundred
Thousand Dollars ($4,400,000).
ARTICLE III TERMS OF PAYMENT
3.1 FIBER LEASE PAYMENT. In consideration of the lease of fibers set
forth in Section 2.1, NEXTLINK shall pay MFN a one-time lease payment of $***.
This lease payment shall be paid as follows: on the third business day following
the execution of this Agreement by both parties, NEXTLINK shall pay the sum of
$*** by wire transfer directly to MFN. Within five days after the execution by
the Parties and the Escrow Agent (as defined in Section 3.4) of the Escrow
Agreement (as defined in Section 3.4) NEXTLINK shall pay the balance of $*** by
wire transfer to the Escrow Agent identified in Section 3.4 below. The funds in
escrow shall be released from escrow as segments of the NEXTLINK Fibers are
accepted by NEXTLINK. If the Term is extended as provided in Section 2.1, the
lease payment for such extended term shall be determined at a rate equal to 35%
of the fair market value of the fiber lease at the commencement of each
extension, plus payment of MFN's maintenance charges at market rates and
increases in right-of-way fees. No monthly charges or other recurring charges
shall be due from NEXTLINK in connection with the lease or maintenance of the
NEXTLINK Fibers (except for maintenance required (i) at NEXTLINK's request, but
not required for compliance with the specifications stated in this Exhibits to
this Agreement, or (ii) as a result of NEXTLINK's acts or omissions.
3.2 LONG-HAUL INNERDUCT PAYMENT. In consideration of the grant of
the IRU for the Long-Haul Innerduct set forth in Section 2.3, NEXTLINK shall pay
MFN a one-time payment of $***. This payment shall be made as follows: on the
third business day following the execution of this Agreement by both parties,
NEXTLINK shall pay the sum $*** by wire transfer directly to MFN. Within five
days after the execution of the Escrow Agreement by the Parties and the Escrow
Agent, NEXTLINK shall pay the balance of $*** by wire transfer to the Escrow
Agent identified in Section 3.4 below. NEXTLINK shall instruct the Escrow Agent
to release $*** (in increments of $*** with respect to the CSX right-of-way and
$*** with respect to the Conrail right-of-way) to MFN promptly after MFN obtains
any necessary consents of holders of rights-of-way under Section 2.3, and
NEXTLINK has approved the amount of right-of-way fees or other fees to be
incurred by NEXTLINK with respect to the Long-Haul Innerduct and
9
NEXTLINK has approved the terms of all right-of-way agreements NEXTLINK is
required to enter into with respect to the Long-Haul Innerduct and the terms of
any consent given by any holder of such right-of-way. The balance of the funds
in escrow shall be released from escrow as segments of the Long-Haul Innerduct
are accepted by NEXTLINK. No monthly charges or other recurring charges shall
be due from NEXTLINK in connection with the IRU for the Long-Haul Innerduct.
NEXTLINK shall be responsible for payment of maintenance costs with respect to
such Long-Haul Innerduct, by hiring MFN to maintain such Long-Haul Innerduct and
paying MFN's reasonable charges for such maintenance. For a period of two years
after NEXTLINK's Acceptance of the Long-Haul Innerduct, such maintenance charges
shall be calculated at a rate of $200.00 per year per route mile. Such
maintenance charges shall increase or decrease thereafter based on MFN's actual
maintenance costs, as may be agreed by the Parties at the time or, failing such
agreement of the Parties, pursuant to the dispute resolution process set forth
in this Agreement. NEXTLINK shall pay MFN for Emergency Unscheduled Maintenance
on a time and materials basis. If any additional right-of-way fees or other
fees are imposed on MFN by the holder of the underlying right-of-way or other
third party as a result of the installation or use by NEXTLINK of the Long-Haul
Innerduct, NEXTLINK shall pay such additional fees either directly or on a
pass-through basis to MFN. For any pass-through payment, NEXTLINK shall have
the right to receive evidence reasonably satisfactory to NEXTLINK that such
additional fees were actually paid by MFN, or are payable by MFN, with respect
to the installation (or use by NEXTLINK) of the Long-Haul Innerduct. If MFN
exercises its right under Section 2.5 to include fiber in the Long-Haul
Innerduct, NEXTLINK's share of expenses for maintenance and right-of-way fees
under this Section 3.2 shall be reduced Pro Rata. No additional payment shall
be required from NEXTLINK for any renewal or extension of the IRU for the
Long-Haul Innerduct, but NEXTLINK shall continue to pay for maintenance as
required and other fees under this Section 3.2 and shall pay its pro rata share
of any increase right-of-way or other fees incurred by MFN as a result of such
renewal or extension of the right-of-way.
3.3 ADDITIONAL INNERDUCT PAYMENT. In consideration of the grant of
any IRU for the Additional Innerduct set forth in Section 2.4, NEXTLINK shall
pay MFN a one-time fee equal to *** per mile, rounded up or down to the nearest
mile based on the total number of miles of Additional Innerduct granted to
NEXTLINK. This payment shall be paid directly to MFN at the time NEXTLINK
accepts delivery of the Additional Innerduct. No monthly charges or other
recurring charges shall be due from NEXTLINK in connection with the grant of the
IRU with respect to the Additional Innerduct. NEXTLINK shall be responsible for
payment of maintenance costs with respect to such Additional Innerduct, by
hiring MFN to maintain such Additional Innerduct and paying MFN's reasonable
charges for such maintenance. Such maintenance charges shall be calculated at
the rate per year per route mile applicable under Section 3.2 at the time.
NEXTLINK shall pay MFN for Emergency Unscheduled Maintenance on a time and
materials basis. If any additional right-of-way fees or other fees are imposed
on MFN by the holder of the underlying right-of-way as a result of the
installation (or use by NEXTLINK) of the Additional Innerduct, NEXTLINK shall
pay
10
such additional fees either directly or on a pass-through basis to MFN. For any
pass-through payment, NEXTLINK shall have the right to receive evidence
reasonably satisfactory to NEXTLINK that such additional fees were actually paid
by MFN, or are payable by MFN, with respect to the installation of the
Additional Innerduct. No additional payment shall be required from NEXTLINK for
any renewal or extension of the IRU for the Additional Innerduct, but NEXTLINK
shall continue to pay for maintenance as required in this Section 3.3 and shall
pay its pro rata share of any increase right-of-way or other fees incurred by
MFN as a result of such renewal or extension of the right-of-way.
3.4 ESCROW. Promptly after the execution of this Agreement, the
Parties shall enter an Escrow Agreement substantially in the form attached as
Exhibit G hereto (the "Escrow Agreement"), with such changes as may be
reasonably requested by the Escrow Agent. Pursuant to the Escrow Agreement,
NEXTLINK shall make deposits as set forth in this Article III to an escrow
account established with First Trust National Association or other escrow agent
satisfactory to both Parties (the "Escrow Agent"). The Escrow Agreement shall
authorize the Escrow Agent to remit the Escrow Deposit (as defined in the Escrow
Agreement), when the conditions precedent to such payments, as provided herein,
are satisfied.
3.5 PAYMENT BY MFN. MFN shall pay NEXTLINK for MFN's pro rata share
of the additional costs for materials and right-of-way fees and similar fees
(other than labor) that NEXTLINK incurs as a result of MFN's exercise of its
rights under Section 2.5.
ARTICLE IV MAINTENANCE AND REPAIR OF THE NEXTLINK FIBERS
4.1 ROUTINE MAINTENANCE. Routine maintenance and repair of the
NEXTLINK Fibers described in Section 2.1 ("Scheduled Maintenance") shall be
performed at MFN's expense by or under the direction of MFN. Scheduled
Maintenance shall commence with respect to each segment upon the Acceptance Date
for such segment. All scheduled maintenance shall be performed in accordance
with industry standards and in compliance with MFN's standard maintenance
procedures.
4.2 UNSCHEDULED MAINTENANCE. Non-routine maintenance and repair of
the NEXTLINK Fibers which is not included as Scheduled Maintenance ("Unscheduled
Maintenance"), shall be performed at MFN's expense (except to the extent caused
by the acts or omissions of NEXTLINK) by or under the direction of MFN.
Unscheduled Maintenance shall commence with respect to each segment upon the
Acceptance Date for such segment. Unscheduled Maintenance shall consist of:
(a) "Emergency Unscheduled Maintenance" in response to an alarm
identification by MFN's Operations Center, notification by NEXTLINK or
notification by any third party of any failure, interruption or impairment in
the operation
11
of the NEXTLINK Fibers, or any event imminently likely to cause the failure,
interruption or impairment in the operation of the NEXTLINK Fibers.
(b) "Non-Emergency Unscheduled Maintenance" in response to any
potential service-affecting situation to prevent any failure, interruption or
impairment in the operation of the NEXTLINK Fibers.
NEXTLINK shall promptly report the need for Unscheduled Maintenance to
MFN in accordance with procedures promulgated by MFN from time to time. MFN
will log the time of NEXTLINK's report, verify the problem and will dispatch
personnel promptly (and as provided in Section 4.3) to take corrective action.
If NEXTLINK has caused the problem giving rise to the Unscheduled Maintenance,
NEXTLINK shall reimburse MFN for MFN's reasonable costs (on a time and materials
basis) with respect to such problem.
4.3 OPERATIONS CENTERS. MFN shall operate and maintain one or more
Operations Centers ("OCs") staffed twenty-four hours a day, seven (7) days a
week by trained and qualified personnel beginning with the earliest Acceptance
Date under this Agreement. Qualified maintenance personnel shall be available
for dispatch twenty-four (24) hours a day, seven (7) days week. MFN shall use
its best efforts to have its first maintenance representative at the site
requiring Emergency Unscheduled Maintenance activity within two (2) hours after
the time MFN becomes aware of an event requiring Emergency Unscheduled
Maintenance. MFN shall maintain a telephone number through which NEXTLINK may
contact personnel at an OC without toll from the New York metropolitan area.
MFN's OC personnel shall dispatch maintenance and repair personnel along the
system to handle and repair problems detected in the NEXTLINK Fibers, (i)
through NEXTLINK's remote surveillance equipment and upon notification by
NEXTLINK to MFN, or (ii) upon notification by a third party.
4.4 COOPERATION AND COORDINATION. NEXTLINK shall utilize an
Operations Escalation List, as updated from time to time, to report and seek
immediate initial redress of exceptions noted in the performance of MFN in
meeting maintenance service objectives. NEXTLINK will, as necessary, arrange
for escorted access for MFN to all sites of the NEXTLINK Fibers, subject to
applicable contractual underlying real property and other third-party
limitations and restrictions. In performing its services hereunder, MFN shall
take workmanlike care to prevent impairment to the signal continuity and
performance of the NEXTLINK Fibers. The precautions to be taken by MFN shall
include notification to NEXTLINK. In addition, MFN shall reasonably cooperate
with NEXTLINK in sharing information and analyzing the disturbances regarding
the cable and/or fibers. In the event that any Scheduled or Unscheduled
Maintenance hereunder requires a traffic roll or reconfiguration involving
cable, fiber, electronic equipment, or regeneration or other facilities of
NEXTLINK, then NEXTLINK shall, at MFN's reasonable request, make such personnel
of NEXTLINK available as may be necessary in order to accomplish such
maintenance, which personnel shall coordinate and cooperate with MFN in
performing such maintenance as required
12
of MFN hereunder. MFN shall use its best efforts to notify NEXTLINK at least
five business days prior to the date of any Scheduled Maintenance on any
NEXTLINK Fibers and as soon as possible after becoming aware of the need for
Unscheduled Maintenance. NEXTLINK shall have the right to be present during the
performance of any Scheduled Maintenance on any NEXTLINK Fibers or Unscheduled
Maintenance so long as this requirement does not interfere with MFN's ability to
perform its obligations under this Agreement. In the event that Scheduled
Maintenance is canceled or delayed for whatever reason as previously notified,
MFN shall notify NEXTLINK at MFN's earliest opportunity, and will comply with
the provisions of the previous sentence to reschedule any delayed activity.
4.5 FACILITIES. MFN shall maintain the NEXTLINK Fibers in a manner
that will permit NEXTLINK's use, in accordance with the terms and conditions of
this Agreement, of the NEXTLINK Fibers and associated facilities required to be
provided under the terms of this Agreement. Except to the extent otherwise
expressly provided in this Agreement, NEXTLINK will be solely responsible for
providing and paying for any and all maintenance of all electronic, optronic and
other equipment, materials and facilities used by NEXTLINK in connection with
the operation of the NEXTLINK Fibers, none of which is included in the
maintenance services to be provided hereunder.
4.6 FIBERS. MFN shall perform appropriate Scheduled Maintenance on
the cable containing the NEXTLINK Fibers in accordance with MFN's then current
preventative maintenance procedures as agreed to by NEXTLINK, which shall not
substantially deviate from standard industry practice. MFN shall maintain
sufficient capability to teleconference with NEXTLINK during an Emergency
Unscheduled Maintenance in order to provide regular communication during the
repair process. When correcting or repairing cable discontinuity or damage,
including but not limited to in the event of Emergency Unscheduled Maintenance,
MFN shall use reasonable efforts to repair traffic-affecting discontinuity
within four (4) hours after the MFN maintenance employee's arrival at the
problem site. In order to accomplish such objective, it is acknowledged that
the repairs so effected may be temporary in nature. In such event, within
twenty-four (24) hours after completion of any such Emergency Unscheduled
Maintenance, MFN shall commence its planning for permanent repair, and
thereafter promptly shall notify NEXTLINK of such plans, and shall implement
such permanent repair within an appropriate time thereafter. Restoration of
open fibers on fiber strands not immediately required for service shall be
completed on a mutually agreed-upon schedule. If the fiber is required for
immediate service, the repair shall be scheduled for the next available Planned
Service Work Period ("PSWP"). In performing repairs, MFN shall comply with the
splicing specifications as set forth in Exhibit E. MFN shall provide to
NEXTLINK any modifications to these specifications as may be necessary or
appropriate in any particular instance for NEXTLINK's approval, which approval
shall not be unreasonably withheld. MFN's representatives that are responsible
for initial restoration of a cut cable shall carry on their vehicles the
typically appropriate equipment that would enable a temporary splice, with the
objective of restoring operating capability in as little time as possible. MFN
shall maintain and supply an inventory of spare cable
13
in storage facilities supplied and maintained by MFN at strategic locations to
facilitate timely restoration.
4.7 PLANNED SERVICE WORK PERIOD ("PSWP"). Scheduled Maintenance that
is reasonably expected to produce any signal discontinuity must be coordinated
between the parties. Generally, this work should be scheduled after midnight and
before 6:00 a.m. local time. Major system work such as fiber rolls and hot cuts
will be scheduled for PSWP weekends. A calendar showing approved PSWP will be
agreed upon in the last quarter of every year for the year to come. The intent
is to avoid jeopardy work on the first and last weekends of the month and
high-traffic holidays.
4.8 RESTORATION. MFN shall use its best efforts to respond to any
interruption of service or a failure of the NEXTLINK Fibers to operate in
accordance with the specifications set forth in the applicable Exhibits to this
Agreement (in any event, an "Outage") as quickly as possible in accordance with
the procedures set forth herein. When restoring a cut cable in the NEXTLINK
Fibers, the parties agree to work together to restore all traffic as quickly as
possible. MFN, promptly upon arriving on the site of the cut, shall determine
the course of action to be taken to restore the cable and shall begin
restoration efforts. MFN shall splice fibers tube by tube or ribbon by ribbon,
rotating between tubes or ribbons operated by any fiber lessees or holders of
IRUs (collectively, "Interest Holders"), including NEXTLINK, in accordance with
the following described priority and rotation mechanics; provided that, lit
fibers in all buffer tubes or ribbons shall have priority over any dark fibers
in order to allow transmission systems to come back on line; and provided
further that MFN will continue such restoration efforts until all lit fibers in
all buffer tubes or ribbons are spliced and all traffic restored. In general,
priority among Interest Holders affected by a cut shall be determined on a
rotating restoration-by-restoration and segment-by-segment basis, to provide
fair restoration to all Interest Holders. However, MFN shall establish a
Priority Customer Grouping ("PCG") which will receive, whenever possible,
priority in the restoration of tubes or ribbons that affect their use of MFN
facilities. NEXTLINK shall be a member of the PCG. The goal of emergency
restoration splicing shall be to restore service as quickly as possible. This
requires the use of some type of mechanical splice, such as the "3M Fiber Lock"
to complete the temporary restoration. Permanent restorations will take place
as soon as possible after the temporary splice is complete.
4.9 STANDARDS; SUBCONTRACTING. All Scheduled Maintenance shall be
performed in accordance with industry standards and in compliance with the
Standards observed by MFN in its maintenance on any other similar MFN assets.
MFN may subcontract any of the maintenance services hereunder; provided that MFN
shall require the subcontractor(s) to perform in accordance with the requirement
and procedures set forth herein and all applicable industry standards. The use
of any such subcontractor shall not relieve MFN of any of its obligations
hereunder.
4.10 FIBER REPLACEMENT. In the event all or any part of the NEXTLINK
Fibers shall require replacement during the term of this Agreement, such
replacement
14
shall be made as soon as reasonably practical, at MFN's sole cost and expense;
except, however, if the replacement of the NEXTLINK Fibers is required as a
result of the acts or omissions of NEXTLINK, MFN shall make such replacement at
NEXTLINK's cost and expense on a time and materials basis.
4.11 OUTAGES. During the Term of this Agreement, MFN shall refund to
NEXTLINK, the amounts set forth in Exhibit H hereto, as compensation for
"Outages." Payment of such amounts shall be NEXTLINK's sole remedy for such
Outages. For the purposes of this Agreement, an Outage is the complete
interruption of service over any fiber circuit in the NEXTLINK Fibers, whether
or not due to the physical damage or severance of such fiber circuit; except
that no interruption of service caused in whole or in part by the negligent act
or omission or willful misconduct of NEXTLINK shall constitute an Outage.
4.12 REPLACEMENT MAINTENANCE. For any isolated incident wherein MFN
has failed to cure an Outage within the time frames stated in this Agreement or
on an Exhibit to this Agreement, or has failed to otherwise perform its
maintenance obligations as required under this Agreement, NEXTLINK may (after
notice to MFN, which may be oral if the circumstances so require) secure the
services of the contractor selected in advance by MFN for the purposes of
repairing and maintaining the NEXTLINK Fibers, the Long-Haul Innerduct or the
Additional Innerduct (as the case may be) at such location at MFN's expense.
ARTICLE V PERMITS, ACCESS, AND REQUIRED RIGHTS-OF-WAY
5.1 MFN represents and warrants that it has obtained or will obtain
all regulatory approvals, franchises, permits, orders, consents, and
rights-of-way, either by contract or through a franchise, and all other rights
necessary to be obtained by MFN to enable its provision of the NEXTLINK Fibers
and the grant of the IRU for the Long-Haul Innerduct and the Additional
Innerduct (all of which are herein collectively referred to as the
"Rights-of-Way"). If any provision in the Right-of-Way would in the reasonable
judgment of MFN, have an adverse impact on NEXTLINK, MFN shall, on or before
the Acceptance Date for each segment of NEXTLINK Fibers, Long-Haul Innerduct or
Additional Innerduct, provide NEXTLINK with a copy or, in MFN's discretion, a
reasonably-detailed summary of all Rights-of-Way applicable to such segment of
the MFN System accepted. MFN shall exercise reasonable efforts to obtain any
necessary consent of any third party to the disclosure of such Rights-of-Way.
MFN shall use commercially reasonable efforts to cause such Rights-of-Way to
remain effective through the Term and any extensions (or to replace such
Right-of-Way with suitable replacement Right-of-Way). MFN shall in no event be
required to extend any Right-of-Way other than the first ten-year renewal option
pursuant to MFN's agreement with Conrail dated February 24, 1997, as amended.
In the event that any Rights-of-Way are discontinued and not replaced and the
loss of such Rights-of-Way adversely affects the use of the NEXTLINK Fibers, the
Long-Haul Innerduct, or the Additional Innerduct, MFN shall issue a rebate to
NEXTLINK. The amount of the rebate shall be the pro rata
15
portion of the payment allocable to the remainder of the term, in proportion to
the number of fiber miles (or route miles in the case of Long-Haul Innerduct or
Additional Innerduct).
ARTICLE VI RELOCATION OF THE MFN SYSTEM AND THE NEXTLINK FIBERS
6.1 If MFN receives notice of any request, intent, or plan by any
third party, including, but not limited to, a governmental entity, to relocate
any segment of MFN's fiber network used in the provision of the NEXTLINK Fibers,
the Long-Haul Innerduct or the Additional Innerduct, MFN shall notify NEXTLINK
of such request, intent, or plan and shall consult with NEXTLINK regarding
proceedings and negotiations involving such proposed relocation and communicate
with NEXTLINK regarding the status of such proceedings and negotiations. If MFN
is required by any such third party to relocate any segment of MFN's fiber
network used in providing the NEXTLINK Fibers, the Long-Haul Innerduct or the
Additional Innerduct, MFN shall give NEXTLINK at least sixty (60) days' (or such
lesser period of notice that MFN may have received) prior written notice of any
such relocation ("Relocation Notice"). Along with the Relocation Notice, MFN
shall provide an estimate of the cost of such relocation. MFN shall relocate
the NEXTLINK Fibers, the Long-Haul Innerduct or the Additional Innerduct (as the
case may be), and, to the extent MFN is not reimbursed for the cost of such
relocation by a third party, governmental entity or otherwise, NEXTLINK shall
pay its Pro Rata share of the costs associated with the relocation of the
NEXTLINK Fibers, the Long-Haul Innerduct or the Additional Innerduct (as the
case may be); except, however, to the extent that the factors causing such
relocation are under MFN's control. MFN shall use its reasonable best efforts
to secure an agreement for reimbursement from any third party, governmental
entity or otherwise, requiring any relocation of the MFN System and the NEXTLINK
Fibers, the Long-Haul Innerduct or the Additional Innerduct,.
ARTICLE VII CONDEMNATION
7.1 PARTICIPATION IN PROCEEDINGS. In the event any portion of the
MFN System, the NEXTLINK Fibers, the Long-Haul Innerduct, the Additional
Innerduct, and/or the Rights-of-Way in or upon which they shall have been
installed, become the subject of a condemnation proceeding which is not
dismissed within one hundred eighty (180) days of the date of filing of such
proceeding and which could reasonably be expected to result in a taking by any
governmental agency or other party cloaked with the power of eminent domain for
public purpose or use, both parties shall be entitled, to the extent permitted
under applicable law, to participate in any condemnation proceedings to seek to
obtain compensation by either joint or separate awards for the economic value of
their respective interests in the portion of the MFN System subject to such
condemnation.
16
7.2 NOTICE. Upon its receipt of a formal notice of condemnation or
taking, MFN shall notify NEXTLINK immediately of any condemnation proceeding
filed against the MFN System, including the NEXTLINK Fibers, the Long-Haul
Innerduct, the Additional Innerduct, and/or the Rights-of-Way in or upon which
the NEXTLINK Fibers, Long-Haul Innerduct and/or Additional Innerduct shall have
been installed. MFN shall also notify NEXTLINK of any similar threatened
condemnation proceeding and agrees not to sell the NEXTLINK Fibers, the
Long-Haul Innerduct, the Additional Innerduct, and/or Rights-of-Way to such
acquiring agency, authority or other party in lieu of condemnation without prior
written notice of ten (10) business days to NEXTLINK.
ARTICLE VIII USE OF THE NEXTLINK FIBERS
8.1 REPAIR BY MFN. NEXTLINK shall not, by itself or by or through
any agent or contractor, make any repair or replacement of the NEXTLINK Fibers
or any other equipment owned by MFN except as provided in Section 4.12 herein.
8.2 COMPLIANCE WITH LAW. NEXTLINK shall not use the NEXTLINK Fibers,
the Long-Haul Innerduct or the Additional Innerduct in any way that fails to
comply with any applicable federal, state or local code, ordinance, law, rule,
regulation or restriction or any policy of insurance.
8.3 USE. For a period of seven years after MFN's receipt of payment
of all amounts due under Sections 3.1 and 3.2 of this Agreement, (a) NEXTLINK
shall not, directly or indirectly, sublease, condo, sublicense or wholesale the
NEXTLINK Fibers, the Long-Haul Innerduct, the Additional Innerduct, or any
fibers deployed in such innerduct, to any third party that is not directly or
indirectly majority-owned, controlled or operated under a management agreement
by NEXTLINK or by Craig O. McCaw (a "Permitted Assignee") unless the traffic on
such NEXTLINK Fibers or carried on fibers in such Long-Haul Innerduct or
Additional Innerduct is distributed through the transmission and switching
equipment of NEXTLINK or a Permitted Assignee; (b) NEXTLINK shall ensure that
the NEXTLINK Fibers, Long-Haul Innerduct and Additional Innerduct shall be
utilized solely for its business purposes and the business purposes of any
Permitted Assignee; and (c) NEXTLINK shall not, in any event, sublease, condo,
sublicense or wholesale to any third party other than a Permitted Assignee any
dark fiber-optic capacity or any lit fiber-optic capacity on any fibers
contained in the Long-Haul Innerduct or the Additional Innerduct unless such lit
fiber optic capacity is distributed through the transmission and switching
equipment of NEXTLINK or a Permitted Assignee. NEXTLINK shall not (even after
the expiration of the seven-year period stated above) sublease, condo,
sublicense or wholesale to any third party other than a Permitted Assignee any
dark or lit fiber-optic capacity on the NEXTLINK Fibers, unless such lit fiber
optic capacity is distributed through the transmission and switching equipment
of NEXTLINK or a Permitted Assignee. For purposes of this Agreement, a
"management agreement" means an agreement under which the manager has management
control over the business operations of the entity in
17
question, whether by virtue of a management agreement, management provisions in
a limited liability company agreement or partnership agreement, or by other
agreement. In the event of a sale of an entity that was directly or indirectly
majority-owned, controlled or operated under a management agreement by Craig O.
McCaw, with the result that such ownership, control and management conditions
are no longer met, such entity shall have the right, without any payment to MFN,
to transfer the NEXTLINK Fibers, Long-Haul Innerduct and/or Additional Innerduct
at issue back to NEXTLINK or a Permitted Assignee. As an alternative to such
transfer, NEXTLINK or the purchasing entity shall pay to MFN a fee calculated as
follows: for a sale of the entity during the first five years after the
commencement of the Term, a fee equal to *** per fiber mile; for a sale of the
entity during the next five years, a fee equal to *** per fiber mile; for a sale
of the entity during the next five years, a fee equal to *** per fiber mile; and
for a sale of the entity thereafter, no fee. The purchasing entity shall
nonetheless continue to be bound by the provisions of this Section 8.3.
ARTICLE IX OWNERSHIP OF THE NEXTLINK FIBERS
9.1 NEXTLINK shall have an undivided exclusive leasehold interest in
the NEXTLINK Fibers. NEXTLINK shall have undivided, absolute legal title to
ownership in the fibers installed in the Long-Haul Innerduct and the Additional
Innerduct. MFN shall have an undivided exclusive leasehold interest in any
fibers installed for MFN in the Long-Haul Innerduct pursuant to Section 2.5.
MFN shall have undivided, absolute legal title to ownership in the MFN System,
including the NEXTLINK Fibers, the Long-Haul Innerduct and the Additional
Innerduct. The Parties shall not make any representation to any third party
that is contrary to the terms of this Section 9.1.
ARTICLE X REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 COMPLIANCE WITH SPECIFICATIONS. MFN represents and warrants that
the NEXTLINK Fibers, Long-Haul Innerduct and Additional Innerduct have been or
will be constructed substantially as represented in the applicable Exhibit to
this Agreement, and warrants that for the Term of this Agreement, the NEXTLINK
Fibers, Long-Haul Innerduct and Additional Innerduct shall comply with the
parameters of the specifications set forth in the Exhibits hereto; provided,
however, that such warranties shall in no way be deemed to be a limitation on or
in derogation of MFN's obligations under Article IV herein. MFN represents and
warrants that the Long-Haul Innerduct and the Additional Innerduct will be of a
size sufficient to contain 432 strands of ribbon fiber and that the NEXTLINK
Fibers, the Long-Haul Innerduct and the Additional Innerduct will conform in all
material respects to the as-builts delivered by MFN under this Agreement from
time to time.
10.2 LIMITATIONS. EXCEPT AS EXPRESSLY PROVIDED IN THE FOREGOING
SECTION 10.1, MFN MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY
OF MERCHANTABILITY OR FITNESS
18
FOR A PARTICULAR PURPOSE WITH RESPECT TO THE MFN SYSTEM, NEXTLINK FIBERS,
LONG-HAUL INNERDUCT AND ADDITIONAL INNERDUCT, DEMAND MAINTENANCE, AND SCHEDULED
MAINTENANCE THEREON. IN NO EVENT SHALL EITHER PARTY HERETO BE LIABLE TO THE
OTHER PARTY OR TO ANY THIRD PARTY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, OR
PUNITIVE DAMAGES, INCLUDING THOSE BASED ON LOSS OF REVENUES, PROFITS, OR
BUSINESS OPPORTUNITIES, WHETHER OR NOT SUCH PARTY HAD OR SHOULD HAVE HAD ANY
KNOWLEDGE, ACTUAL OR CONSTRUCTIVE, THAT SUCH DAMAGES MIGHT BE INCURRED.
10.3 AUTHORITY OF MFN. MFN represents and warrants to NEXTLINK that
it has full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by MFN have been duly and validly authorized by all necessary corporate
action on the part of MFN.
10.4 AUTHORITY OF NEXTLINK. NEXTLINK represents and warrants to MFN
that it has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by NEXTLINK have been duly and validly authorized by all
necessary corporate action on the part of NEXTLINK.
10.5 MFN COMPLIANCE. MFN represents and warrants to NEXTLINK that MFN
is in compliance in all material respects with all laws, regulations and
agreements (including franchises and right-of-way agreements) applicable to its
construction and operation of the MFN System. MFN shall perform all of its
obligations under all right-of-way agreements applicable to the MFN System and
shall promptly notify NEXTLINK of any default, or the assertion by a third party
of the existence of any default, under any franchise, right-of-way agreement or
other agreement material to the MFN System or the operation of the NEXTLINK
Fibers. MFN has obtained and holds (or will, subject to the second paragraph of
Section 2.3 and Section 5.1, obtain and hold) all permits, licenses,
right-of-way agreements and approvals necessary to perform its obligations under
this Agreement and to operate the MFN System as presently conducted and as
contemplated by this Agreement in accordance with applicable law. Except as
provided in Section 2.3 with respect to the consent of underlying right-of-way
holders, neither the execution nor performance of this Agreement nor the
delivery of the NEXTLINK Fibers, Long-Haul Innerduct and Additional Innerduct
contemplated hereby conflict with or result in a breach or violation of any
provision of MFN's franchise or applicable law. There is no action, suit,
investigation, claim, arbitration, or litigation pending, or to MFN's knowledge,
threatened against, affecting, or involving MFN or the operation of the NEXTLINK
Fibers, the
19
Long-Haul Innerduct, or the Additional Innerduct at law or in equity or before
any court, arbitrator, or governmental authority that is reasonably likely to
result in a material adverse effect on MFN's performance of its obligations
under this Agreement or the operation of the NEXTLINK Fibers, the Long-Haul
Innerduct, or the Additional Innerduct. MFN is not in default in any material
respect of any contract with a third party that is reasonably likely to result
in a material adverse effect on MFN's performance of is obligations under this
Agreement or on the operation by NEXTLINK of the NEXTLINK Fibers, the Long-Haul
Innerduct, and the Additional Innerduct.
10.6 NEXTLINK COMPLIANCE. NEXTLINK represents and warrants to MFN
that NEXTLINK is in compliance in all material respects with all laws and
regulations applicable to the operation of the business it intends to pursue
through the use of the NEXTLINK Fibers, the Long-Haul Innerduct and the
Additional Innerduct. NEXTLINK has obtained or will obtain all permits,
licenses, and approvals necessary to perform its obligations under this
Agreement and to conduct its business as contemplated by this Agreement, in
accordance with applicable law. Neither the execution nor performance of this
Agreement nor the Acceptance of the NEXTLINK Fibers, Long-Haul Innerduct or
Additional Innerduct contemplated hereby conflict with or result in a breach or
violation of any provision of applicable law. There is no action, suit,
investigation, claim, arbitration, or litigation pending, or to NEXTLINK's
knowledge, threatened against, affecting, or involving NEXTLINK at law or in
equity or before any court, arbitrator, or governmental authority that is
reasonably likely to result in a material adverse effect on NEXTLINK's
performance of its obligations under this Agreement. NEXTLINK is not in default
in any material respect of any contract with a third party that is reasonably
likely to result in a material adverse effect upon NEXTLINK's performance of its
obligations under this Agreement.
10.7 NO BROKER. NEXTLINK and MFN each represent and warrant to the
other that it has not retained any broker, finder, investment banker or other
similar person or entity who is entitled to any brokerage fee, finder's fee or
other similar fee or commission in connection with the transactions described in
this Agreement.
ARTICLE XI TAXES
11.1 For purposes of this Agreement, "Taxes" shall include license,
permit or franchise fees and sales and use taxes imposed by any governmental
entity. NEXTLINK shall be responsible for, and shall timely pay, any and all
Taxes imposed with respect to this Agreement upon NEXTLINK. MFN shall be
responsible for, and shall timely pay, any and all Taxes imposed with respect to
this Agreement upon MFN. Notwithstanding the foregoing, all sales and use
taxes assessed on transactions contemplated by this Agreement shall be borne by
the grantee of any IRU or lessee of any lease.
11.2 If at any time any Tax is imposed on, assessed against or borne
by either NEXTLINK or MFN with respect to this Agreement, NEXTLINK or MFN, as
the case may be, shall have the right to protest, by appropriate proceedings,
the imposition or assessment of any such Tax. In such event, NEXTLINK or MFN,
as the case may be, shall be responsible for such payments and shall indemnify
and hold the
20
other Party harmless from and against any liability, expense, legal action or
cost, including reasonable attorneys' fees, resulting from the exercise of its
rights under this Section 11.2. In the event of any refund, rebate, reduction
or abatement of any such Tax, the Party who was responsible for paying such Tax
shall be entitled to receive the entire benefit of such refund, rebate,
reduction or abatement.
ARTICLE XII LIABILITY
12.1 LIMITATIONS. Neither NEXTLINK nor MFN shall be liable to the
other for any indirect, special, punitive, or consequential damages (including,
but not limited to, any claim from any customer for loss of services) arising
under this Agreement or from any breach or partial breach of the provisions of
this Agreement or arising out of any act or omission of either Party hereto, its
employees, servants, contractors and/or agents. Both MFN and NEXTLINK shall use
their reasonable best efforts to include in any agreement with any third party
relating to the use of the MFN System or the NEXTLINK Fibers a waiver by such
third party of any claim for indirect, special, punitive, or consequential
damages (including, but not limited to, any claim from any client or customer
for loss of services) arising out of or as a result of any act or omission by
either Party hereto, its employees, servants, contractors and/or agents.
Nothing in this paragraph shall limit NEXTLINK's right to receive liquidated
damages on the terms stated on the Exhibits to this Agreement.
12.2 INDEMNITY. Each Party agrees to indemnify, defend, protect and
save the other harmless from and against any claim, damage, loss, liability,
cost, and expense (including reasonable attorney's fees) in connection with any
personal injury or other tortious act, including death, loss, or damage to any
property or facilities of any party (including MFN, NEXTLINK, or any other party
operating or using any part of the MFN System or the NEXTLINK Fibers, Long-Haul
Innerduct or Additional Innerduct) arising out of or resulting in any way from
the acts or omissions to act, negligent or otherwise, of such party, its
employees, servants, contractors, and/or agents in connection with the exercise
of its rights and obligations under the terms of this Agreement or any breach by
such party of any obligation contained herein.
12.3 THIRD PARTIES. Nothing contained herein shall operate as a
limitation on the right of either Party hereto to bring an action for damages,
including consequential damages, against any third party based on any acts or
omissions of such third party as such acts or omissions may affect the
construction, operation, or use of the MFN System or the NEXTLINK Fibers;
provided, however, that each Party hereto shall assign such rights or claims,
execute such documents, and do whatever else may be reasonably necessary to
enable the injured Party to pursue any such action against such third party.
21
ARTICLE XIII INSURANCE
13.1 Each Party shall, at its own expense, secure and maintain in
force, throughout the Term, general liability insurance, with competent and
qualified issuing insurance companies, such that the total available limits to
all insureds will not be less than three million dollars ($3,000,000.00) in
respect of injuries to or death of any one person and not less than five million
dollars ($5,000,000.00) in respect of injuries to or death of any number of
persons aggregated for any one occurrence and not less than three million
dollars ($3,000,000.00) in respect of damage to or loss of use of property in
any one occurrence, and worker's compensation and employer's liability insurance
as required by the laws all applicable government entities. Such insurance may
be provided in policy or policies, primary and excess, including the so-called
umbrella or catastrophe forms. The undertaking with respect to insurance shall
not relieve either Party of its obligation in Article XII. In addition, each
Party shall comply with the insurance requirements in any underlying
right-of-way agreements (provided that such Party has knowledge of such
requirements).
ARTICLE XIV FORCE MAJEURE
14.1 The obligations of the Parties hereto are subject to force
majeure and neither Party shall be in default under this Agreement if any
failure or delay in performance is caused by any factor beyond such Party's
reasonable control, including but not limited to such as strike or other labor
problems; accidents; acts of God; fire; flood; adverse weather conditions;
material or facility shortages or unavailability not resulting from such Party's
failure to timely place orders therefor; lack of transportation; the imposition
of any governmental codes, ordinances, laws, rules, regulations or restrictions;
condemnation or the exercise of rights of eminent domain; war or civil disorder.
ARTICLE XV DEFAULT
15.1 DEFAULTS. Neither Party shall be in default under this
Agreement, or in breach of any provision hereof unless and until the other Party
shall have given it written notice of such breach and it shall have failed to
cure the same within thirty (30) days after receipt of such notice; provided,
however, that where such breach cannot reasonably be cured within such thirty
(30) day period, if the defaulting Party shall proceed promptly to cure the same
and prosecute such curing with due diligence, the time for curing such breach
shall be extended for such period of time as may be necessary to complete such
curing up to a maximum cure period of 180 days. Upon the failure by the
defaulting Party to timely cure any such breach after notice thereof from the
other Party, the non-defaulting Party shall have the right, in its sole
discretion, to take such action as it may determine to be necessary to cure the
breach, to terminate this Agreement with respect to the segment or segments of
the NEXTLINK Fibers, Long-Haul Innerduct or Additional Innerduct adversely
affected by such default, and to recover damages subject to the limitations
stated in this Agreement. If this Agreement is
22
terminated by NEXTLINK pursuant to this Section, in addition to other remedies,
NEXTLINK may cease payment of any charges that would thereafter become payable
under this Agreement with respect to the segment or segments as to which this
Agreement is terminated.
15.2 REMEDIES NOT EXCLUSIVE. Subject to Section 12.1 and except as
provided in Section 4.11 with respect to Outages and except with respect to
liquidated damages payments made by MFN under this Agreement (which shall, in
each case, be NEXTLINK's exclusive remedy), no remedy provided for herein is
intended to be exclusive, but each remedy shall be cumulative and in addition to
and may be exercised concurrently with any other remedy available to MFN or
NEXTLINK at law or in equity.
ARTICLE XVI CONFIDENTIALITY
16.1 CONFIDENTIALITY. The Parties acknowledge and agree that the
information each Party has provided or will provide in connection with this
Agreement, including, without limitation, the terms and conditions of this
Agreement, are and shall be confidential and proprietary to the Party providing
such information (the "Providing Party"). The Party in receipt of confidential
information (the "Receiving Party") agrees not to use or disclose to any third
party the confidential information of the Providing Party except as required for
performance of its obligations under this Agreement. Each Party shall restrict
dissemination of confidential information to only those persons in its
respective organization who must have access to such confidential information in
order to perform its obligations under this Agreement. Neither Party shall be
required to hold confidential any information which becomes publicly available
other than through the Receiving Party; which is independently developed by the
Receiving Party; which becomes available to the Receiving Party without
restriction from a third party; with respect to which the Providing Party
consents to the disclosure by the Receiving Party; or with respect to which a
court, administrative agency, or other governmental body with jurisdiction over
the Receiving Party orders the disclosure, provided that in such circumstances
the Receiving Party first provides the Providing Party with notice of such
required disclosure and takes reasonable steps to allow the Providing Party to
seek a protective order with respect to the confidential information. The
Receiving Party will cooperate and assist the Providing Party in connection with
such protective order at the Providing Party's request.
16.2 EXISTING AGREEMENT. The provisions of this Article XVI shall be
subject to and superseded by any separate confidentiality agreement between the
Parties, whether now existing or later entered into.
16.3 PERMITTED DISCLOSURES. Notwithstanding the other provisions of
this Article XVI and without waiver of any obligations hereunder, MFN may
disclose the identity of NEXTLINK as a customer of MFN and NEXTLINK may disclose
the identity of MFN as a supplier of NEXTLINK, and each Party may disclose the
length of the
23
Term of this Agreement, the number of route miles provided pursuant to this
Agreement, the route of the NEXTLINK Fibers, Long-Haul Innerduct and Additional
Innerduct, and the total consideration payable by NEXTLINK under this Agreement.
Except when an immediate disclosure is required by law, the Parties shall confer
about any proposed disclosure in advance of the disclosure.
ARTICLE XVII NOTICES
17.1 NOTICES. Unless otherwise provided herein, all notices and
communications concerning this Agreement shall be in writing and addressed as
follows:
If to MFN:
Metromedia Fiber Network, Inc.
c/o Metromedia Fiber Network Services, Inc.
Suite 1502
110 East 42nd Street
New York, New York 10018
Fax: (212) 687-9188
Attention: Chief Executive Officer and Vice President Legal
Affairs
With a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
29th Floor
New York, New York 10112
Fax: (212) 698-7825
Attention: Barry A. Adelman, Esq.
If to NEXTLINK:
NEXTLINK Communications, Inc.
155 108th Avenue, N.E.
Bellevue, Washington
Fax: (425) 519-8910
Attention: General Counsel
24
With a copy to:
Davis Wright Tremaine
1300 S.W. Fifth Avenue, Suite 2300
Portland, OR 97201
Fax: (503) 778-5299
Attention: Jay D. Hull
or at such other address as may be designated in writing to the other Party.
17.2 DATE OF DELIVERY. Unless otherwise provided herein, notices
shall be sent by certified U.S. Mail, return receipt requested, or by commercial
overnight delivery service, or by facsimile, and shall be deemed delivered: if
sent by U.S. Mail, five (5) days after deposit; if sent by facsimile, upon
verification of receipt; or, if sent by commercial overnight delivery service,
one (1) business day after deposit.
ARTICLE XVIII ASSIGNMENT; SUCCESSION
18.1 ASSIGNMENT BY NEXTLINK. NEXTLINK shall not assign or otherwise
transfer this Agreement, in whole or in part, to any other party without the
prior written consent of MFN. NEXTLINK shall remain secondarily liable for all
payments and other performance due under this Agreement after assignment.
Without such consent, NEXTLINK shall have the right to assign, sublet, or
otherwise transfer this Agreement, in whole or in part, to any parent,
subsidiary or affiliate of NEXTLINK which shall control, be under the control
of, or be under common control with NEXTLINK, any entity that purchases all or
substantially all of the assets of NEXTLINK, or any entity formed by the merger
of NEXTLINK and another entity. Any such assignee shall be subject to the terms
of this Agreement, including Section 8.3.
18.2 ASSIGNMENT BY MFN. MFN shall not assign or otherwise transfer
this Agreement, in whole or in part, to any other party without to the prior
written consent of NEXTLINK. MFN shall remain secondarily liable for all
payments and other performance due under this Agreement after assignment.
Without such consent, MFN shall have the right to assign or otherwise transfer
this Agreement to any parent, subsidiary or affiliate of MFN which shall
control, be under the control of, or be under common control with MFN, any
entity which purchases all or substantially all of the assets of MFN, or any
entity formed by the merger of MFN and another entity. Any such assignee shall
be subject to the terms of this Agreement.
18.3 ASSIGNMENT FOR SECURITY PURPOSES. Except to the extent such
assignment is prohibited by any right-of-way agreement relevant to this
Agreement, the Parties shall also have the right to assign this Agreement and
their respective rights under this Agreement as collateral for indebtedness
incurred by such Party in favor of a bank or other institutional creditor, if
such assignment is part of a grant of a security interest in additional assets
of such Party. The creditor shall be required to agree, as of the grant
25
of such assignment for security purposes, that such assignment is subject to the
terms applicable rights-of-way and to the terms of this Agreement, which shall
be binding on the creditor and on any entity acquiring an interest in this
Agreement as a result of the foreclosure of such assignment for security
purposes.
18.4 BINDING AGREEMENT. Subject to the provisions of this Article
XVIII, this Agreement, and each of the Parties' respective rights and
obligations hereunder, shall be binding upon and shall inure to the benefit of
the Parties hereto and each of their respective permitted successors and
assigns.
ARTICLE XIX GOVERNING LAW
19.1 This Agreement shall be interpreted and construed in accordance
with the internal laws of the State of New York without giving effect to its
principles of conflicts of laws.
ARTICLE XX DISPUTE RESOLUTION
20.1 DISPUTE RESOLUTION. Any claims or disputes arising under the
terms and provisions of this Agreement, or any claims or disputes which the
Parties are unable to resolve to their mutual satisfaction within thirty (30)
calendar days (or such longer period as may be mutually agreed upon) from the
date that either Party notifies the other in writing that such claim or dispute
exists, shall be settled in New York, New York, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
at the time of the dispute. The written notice shall contain a concise
statement of the claim or issue in dispute, together with relevant facts and
data to support the claim. The arbitrator(s) shall be bound by the limits on
damages set forth in this Agreement. The decision of the arbitrator(s) shall be
final and binding upon the Parties if based upon written findings of law and
fact. The arbitrator(s) shall be empowered to order injunctive relief and
either Party may obtain judgment on the decision of the arbitrator(s) in a court
of competent jurisdiction. Each Party shall bear the cost of preparing and
presenting its own case. The cost of the arbitration, including the fees and
expenses of the arbitrator(s), will be shared equally by the parties hereto
unless the award otherwise provides.
20.2 CONTINUING PERFORMANCE. During arbitration proceedings under
this Article, MFN shall continue to provide the NEXTLINK Fibers, the Long-Haul
Innerduct and the Additional Innerduct pursuant to this Agreement and NEXTLINK
shall continue to make payments in accordance with this Agreement.
ARTICLE XXI ENTIRE AGREEMENT
21.1 This Agreement, and any Exhibits attached hereto or to be
attached hereto, constitute the entire agreement between the parties hereto with
respect to the
26
subject matter hereof and supersede any and all prior negotiations,
understandings, and agreements with respect hereto, whether oral or written.
ARTICLE XXII MISCELLANEOUS
22.1 HEADINGS. The headings of the Articles in this Agreement are
strictly for convenience and shall not in any way be construed as amplifying or
limiting any of the terms, provisions, or conditions of this Agreement.
22.2 SEVERABILITY. In the event any term of this Agreement shall be
held invalid, illegal, or unenforceable in whole or in part, neither the
validity of the remaining part of such term nor the validity of the remaining
terms of this Agreement shall in any way be affected thereby.
22.3 AMENDMENTS. This Agreement may be amended only by a written
instrument executed by the Parties.
22.4 WAIVER. No failure to exercise and no delay in exercising, on the
part of either party hereto, any right, power, or privilege hereunder shall
operate as a waiver hereof, except as expressly provided herein.
22.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement is the
joint work product of both parties and, in the event of ambiguity no presumption
shall be imposed against any party by reason of document preparation.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as
of the day and year first above written.
METROMEDIA FIBER NETWORK, INC. NEXTLINK COMMUNICATIONS, INC.
/s/ Howard M. Finkelstein /s/ James F. Voelker
- ------------------------------------- ---------------------------------
By: Howard M. Finkelstein, President By: James F. Voelker, President