PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH PORTIONS ARE
DESIGNATED "[***]"
Exhibit 10.5
THIS FIXED POINT MICROWAVE SERVICES AGREEMENT is made and entered into as
of the 17th day of April, 1998 (the "Effective Date"), by and between Pathnet,
Inc. a Delaware corporation and Pathnet/Idaho Power Equipment, LLC ("LLC"), a
Delaware limited liability company (collectively, the "Parties" and each, a
"Party").
WITNESSETH:
WHEREAS, Pathnet is engaged in the business of creating high capacity,
digital, microwave communications systems for purposes of marketing and selling
the excess long distance telecommunications capacity created by such systems;
WHEREAS, the LLC owns a license to use certain towers, shelters, sites and
equipment owned or leased by Idaho Power Company, an Idaho corporation
("Incumbent") for the purpose of operating an analog microwave
telecommunications system of limited capacity;
WHEREAS, the LLC desires to upgrade such system in the near future to a
higher capacity digital microwave system; and
WHEREAS, the LLC desires to engage Pathnet as, and Pathnet desires to act
as, LLC's sole representative for the purpose of installing, managing, and
operating a high capacity digital microwave system along Incumbent's current
microwave paths.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the Parties agree as follows:
SECTION 1. DEFINITIONS.
1.1 Definitions: As used in this Agreement, the following terms shall have
the meanings indicated:
1.1.1 1/0 Multiplexer: Any device that multiplexes capacity between
the DS-l and the DS-O levels.
1.1.2 1 x 1: A microwave radio configuration consisting of a primary
and a protect radio.
1.1.3 Affiliate: With respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common
control with such Person. For the purposes of this definition, "control"
(including the terms "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract, or otherwise.
1.1.4 Agreement: This Fixed Point Microwave Services Agreement,
including the Schedules and Exhibits attached hereto, as the same may be
amended, supplemented or modified in accordance with the terms hereof.
1.1.5 Alarm and Event Report: As defined in Section 7.7 of Schedule
A.
1.1.6 As-Built Drawing: As defined in Section 4.1.4 of Schedule A.
1.1.7 Available Excess Capacity: The total Pathnet Excess Capacity
available (and not allocated) for use or sale on the System at any given
time from Commissioning through the Expiration Date.
1.1.8 Average Sold Excess Capacity: The cumulative average of the
quotient of (i) Pathnet Excess Capacity less Available Excess Capacity,
divided by (ii) Pathnet Excess Capacity, taken as a percentage.
1.1.9 Bit Error Rate: The number of received bits in error compared
to the total number of bits received.
1.1.10 Breaching Party: As defined in Section 17.1.1.
1.1.11 Business Day: Any day other than a Saturday, a Sunday, or a
day on which the banking institutions in either New York, New York, or the
city and state in which the principal executive offices of Pathnet within
the United States are located, are not open for business.
1.1.12 Capacity Expansion: An increase in telecommunication channels
a System is able to transmit, receive and transport above those created by
the installation of the Initial System, achieved by an addition to or
change in equipment.
1.1.13 Capacity Expansion Schedule: As defined in Section 7.1 of
Schedule A.
1.1.14 CERCLA: Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 6901 et. seq., as amended.
1.1.15 Channel Plan: As defined in Section 1.1 of Schedule A.
1.1.16 Commissioning: With respect to each path or Segment, the date
on which the circuits of such path or Segment are available for service
after completion of all site acceptance testing on the Initial System or
any Capacity Expansion required hereunder.
1.1.17 Contingent Radio Revenue Agreement: That certain Contingent
Radio Revenue Agreement by and between Incumbent, LLC and Pathnet, dated
as of the date hereof.
1.1.18 Customer Agreements: As defined in Section 10.1.1.
1.1.19 Cutover Plan: As defined in Section 4.1.1 of Schedule A.
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1.1.20 DS-0: 64,000 bits per second; The world-wide standard speed
for digitizing one voice conversation using pulse code modulation, which
is approximately equivalent to a single voice or data channel.
1.1.21 DS-1: 24 DS-0's.
1.1.22 DS-3: 672 DS-0's or 28 DS-l's.
1.1.23 Deficiency List: As defined in Section 5.7 of Schedule A.
1.1.24 Dispute: As defined in Section 17.1.3.
1.1.25 Drop and Insert: That process wherein a part of the
information carried in a transmission system is demodulated (dropped) at
an intermediate point and different information is entered (inserted) for
subsequent transmission.
1.1.26 Effective Date: As defined in the introductory paragraph of
this Agreement, as the context indicates.
1.1.27 Error Free Second: Any one-second interval that does not
contain a measurable bit error.
1.1.28 Encumbrance. Any security interests, mortgages, liens,
pledges, charges, claims, easements, reservations, restrictions, clouds,
equities, rights of way, options, rights of first refusal and other
encumbrances whether or not relating to the extension of credit or the
borrowing of money. To "Encumber" shall mean to effect any Encumbrance.
1.1.29 Equipment: Any and all digital microwave radios, radio
components, cards, antennas, waveguides, multiplexers, software and other
equipment or parts required for the operation of the System provided and
installed by Pathnet as set forth on Exhibit A-1 to Schedule A.
1.1.30 Errored Second: Any one-second interval during which one or
more bit errors occur.
1.1.31 Excess Capacity: The Pathnet Excess Capacity and the
Incumbent Excess Capacity (as such term is defined in the Contingent Radio
Revenue Agreement).
1.1.32 Existing System Inventory: As defined in Section 1.1 of
Schedule A.
1.1.33 Expiration Date: The date on which this Agreement and the
rights and obligations hereunder are terminated or expire in accordance
with Section 3.
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1.1.34 FAA: The Federal Aviation Administration, or any other
Federal agency at the time administering tower registration requirements
and regulations.
1.1.35 Failed Second: Any one-second interval that has 1,544 bit
errors at a DS-l rate.
1.1.36 Facilities: Incumbent's and the LLC's towers shelters, sites
and all equipment used by Incumbent, the LLC or Pathnet relating to and
used in association with such towers, shelters and sites for the purpose
of operating the System. The Facilities are as set forth in Schedule B as
amended from time to time.
1.1.37 Facility Encumbrance: As defined in Section 6.9.
1.138 FCC: The Federal Communications Commission, or any other
Federal agency at the time administering the FCC Code.
1.1.39 FCC Code: The Communications Act of 1934, as amended, the
Telecommunications Act of 1996, as amended, and the rules and regulations
promulgated thereunder and related thereto.
1.1.40 First Extension Period: As defined in Section 3.1.3.
1.1.41 Force Majeure Event: As defined in Section 16.3.
1.1.42 Form 415: As defined in Section 11.1.1.
1.1.43 Frequency Availability Model: As defined in Section 1.1 of
Schedule A.
1.1.44 Frequency Diversity: A method of protecting a radio signal by
providing a second radio signal on a different frequency, which will
assume the radio signal load when the regular channel fails.
1.1.45 Governmental Authority: Any nation or government, any state
or other political subdivision thereof and any court, panel, judge, board,
bureau, commission, agency or other entity, body or other person
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.1.46 Hazardous Material: Any substance, material, matter or waste
which is or becomes regulated by any Federal, state or local law,
ordinance, order, rule, regulation, code or any government restrictions or
requirement including, but not limited to, asbestos, petroleum products
and "Hazardous Substances" and "Hazardous Wastes" (as such terms are
defined in CERCLA and RCRA.)
1.1.47 Incumbent: Idaho Power Company, an Idaho corporation.
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1.1.48 Incumbent Capacity: As defined in Section 8.2.2.
1.1.49 Incumbent IRU Agreement: The Indefeasible Right to Use
Agreement by and between the LLC and Incumbent dated as of the date
hereof, as it may be amended, extended or modified from time to time.
1.1.50 Initial System: The initial system with a 1 x 1 configuration
which is comprised of the first 84 DS-l channels (which is equivalent to
2,040 DS-0's) of the System (the "Non-Protect Radio") and the System's 84
DS-l protect channels (the "Protect Radio") and all radio components,
antennas, waveguides, multiplexers, software and other equipment and parts
necessary for the operation thereof.
1.1.51 Initial Term: As defined in Section 3.1.2.
1.1.52 Interconnection: The point at which a private network is
connected to (i) the PSTN, which can include IXC POPs, tandem access
points, the central office, Internet service providers, or major
industrial customer points of presence or (ii) a private network
1.1.53 Interference: Any measurable impairment in the performance of
the System or the quality of the signals received or transmitted on the
System.
1.1.54 IXC: An inter-exchange carrier; a telephone company that
provides long-distance telephone service between LATA's but not within any
one LATA.
1.1.55 Judgment: Any order, judgment, writ, decree, award or other
determination, decision or ruling of any court, judge, justice or
magistrate, any other Governmental Authority or any arbitrator.
1.1.56 LATA: Local Access and Transport Area; one of 161 local
geographic areas in the United States within which a local telephone
company may offer telecommunications services.
1.1.57 LLC: As defined in the introductory paragraph.
1.1.58 LLC Agreement: The Limited Liability Company Agreement of
Pathnet/Idaho Power Equipment, LLC dated as of the date hereof.
1.1.59 LLC Items: As defined in Section 5.1.1.
1.1.60 LLC Payment Cap: As defined in Section 5.1.3.
1.1.61 Losses: Any and all losses, claims, shortages, damages,
liabilities, expenses (including reasonable attorneys' and accountants'
fees), assessments, tax deficiencies and taxes (including interest and
penalties thereon) sustained, suffered or incurred by any party.
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1.1.62 Maintenance Services Agreement: The Maintenance and
Provisioning Services Agreement, by and between Pathnet, Incumbent and LLC
and to be executed within thirty (30) days hereof, as the same may be
amended from time to time in accordance with its terms.
1.1.63 Material Adverse Effect: Any event, fact, circumstance or
occurrence, which results or would with the passage of time result in a
material adverse change in or a material adverse effect on any of: (i) the
condition (financial or otherwise), business, performance, operations,
properties, or prospects of such Person; (ii) the legality, validity or
enforceability of this Agreement; or (iii) the ability of such Person to
perform its material obligations under this Agreement.
1.1.64 Modifications SOW: As defined in Section 2.1 of Schedule A.
1.1.65 Network Management System: As defined in Section 7.6 of
Schedule A.
1.1.66 Network Monitoring Center: As defined in Section 7.5 of
Schedule A.
1.1.67 Non-Breaching Party: As defined in Section 17.1.1.
1.1.68 Notice of Election: As defined in Section 15.3.
1.1.69 OC-3 Multiplexer: Any device that multiplexes capacity
between the OC-3 and the DS-l levels.
1.1.70 Order Wire: A service channel consisting of a 64,000 bit per
second circuit between sites.
1.1.71 OSHA: The Occupational Safety and Health Act, as amended.
1.1.72 Outage: When the Bit Error Rate in each second is worse than
l0^-3 for a period of ten (10) consecutive seconds.
1.1.73 Part 101: Part 101 of Title 47 of the Code of Federal
Regulations, as amended.
1.1.74 Party: As defined in the introductory paragraph.
1.1.75 Path Studies: As defined in 1.1 of Schedule A.
1.1.76 Pathnet: As defined in the introductory paragraph.
1.1.77 Pathnet Excess Capacity: At any given time, the
telecommunications channels or DS-0's that the System creates, transports
and receives which are granted to
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Pathnet under the Pathnet IRU Agreement and any capacity owned by Pathnet
and created pursuant to a Capacity Expansion.
1.1.78 Pathnet/ Idaho Power License LLC: As defined in Section 9.5.
1.1.79 Pathnet IRU Agreement: The Pathnet Indefeasible Right To Use
Agreement by and between the LLC and Pathnet, in the form attached
hereto as Schedule J, as it may be modified, amended or altered from
time to time.
1.1.80 Pathnet Software: The software (including applications
software and systems software) owned or licensed from a third party by
Pathnet used to provide the services covered in this Agreement.
1.1.81 PCN: A Prior Coordination Notice sent pursuant to Part 101.
1.1.82 Permits: Any and all authorizations, approvals, consents,
licenses, permits, easements, certificates and other rights and
permissions necessary to conduct such Person's business and to own, lease
and operate such Person's properties as currently conducted, owned, leased
or operated.
1.1.83 Person: An individual or a corporation, partnership, limited
liability corporation, trust, incorporated or unincorporated association,
joint venture, joint stock company, or other entity of any kind or any
Governmental Authority.
1.1.84 POP: Point Of Presence; the interconnection between any two
facilities based on networks.
1.1.85 Pre-Commissioning Test Equipment: All equipment required for
the testing required to be performed on the System pursuant to Section 5
of Schedule A, including, but not limited to, all required digital volt
meters, optical power meters, oscilloscopes, RF signal generators, RF
variable attenuators, DADE adjust cables, receiver card extenders and
extension cords.
1.1.86 Preliminary Construction Schedule: As defined in Section 1.1
of Schedule A.
1.1.87 Progress Report: As defined in Section 4.1.2 of Schedule A.
1.1.88 Project Drawings: As defined in Section 1.3 of Schedule A.
1.1.89 Project Management Plan: As defined in Section 4.1.1 of
Schedule A.
1.1.90 Project Schedule: As defined in Section 4.1.1 of Schedule A.
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1.1.91 Protection Configuration: An engineering plant under which
channel capacity is protected either on a fully redundant basis or on a 1
x n protection basis.
1.1.92 PSTN: Publicly Switched Telephone Network.
1.1.93 RCBA: Resource Conservation and Recovery Act, 42 U.S.C.
sections.9601 et seq., as amended.
1.1.94 Requirement of Law: With respect to any Person, all Federal,
state and local laws, rules, regulations, Judgments, injunctions,
standards, codes, limitations, restrictions, conditions, prohibitions,
notices, demands or other requirements or determinations of a court or
other Governmental Authority or an arbitrator, applicable to or binding
upon such Person, any of its property or any business conducted by it or
to which such Person, any of its assets or any business conducted by it is
subject.
1.1.95 Revenue: As defined in Section 6.3 of the Contingent Radio
Revenue Agreement.
1.1.96 Second Extension Period: As defined in Section 3.1.4.
1.1.97 Segment: The portion of a microwave communications network
existing between two geographic points. For purposes of this Agreement,
Segment A is the portion of the microwave communications network between
LaGrande, Oregon and Twin Falls, Idaho, including Hansen Butte, Idaho and
Boise, Idaho, as set forth in Schedule B. Segment B is the portion of the
microwave communications network between Hansen Butte, Idaho and
Pocatello, Idaho, as set forth in Schedule B.
1.1.98 Segment A LLC Estimated Costs: As defined in Section 5.1.2.
1.1.99 Segment A Pathnet Estimated Costs: As defined in Section
5.2.2.
1.1.100 Segment B LLC Estimated Costs: As defined in Section 5.1.2.
1.1.101 Segment B Pathnet Estimated Costs: As defined in Section
5.2.2.
1.1.102 Services: As defined in Section 8.1.
1.1.103 Severely Errored Seconds: Any one second interval where the
Bit Error Rate is greater than or equal to 1 x l0^-3 errors per second at
a DS-l rate regardless of the cause of degradation affecting the channel
error performance including, but not limited to, unprotected equipment
failures and any other factors that contribute to poor performance.
1.1.104 SONET: Synchronous Optical Network; a family of fiber-optic
(or microwave) transmission rates from 51.84 Mbps to 13.22 Gbps, created
to provide the
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flexibility needed to transport many digital signals with different
capacities and to provide a standard to which manufacturers may design.
1.1.105 Space Diversity: Protection of a radio signal by providing a
separate antenna on the same tower to assume the radio signal load when
the regular transmission path on the primary antenna fades, thereby
ensuring continuous transmission.
1.1.106 Spare Parts: The equipment and parts provided by Pathnet to
Incumbent in connection with the performance of Incumbent's obligations
under the Maintenance Services Agreement.
1.1.107 Specifications: As defined in Section 8.2.
1.1.108 Station Log Book: As defined in Section 6.2 of Schedule A.
1.1.109 Subcontractors: Any firm, corporation, or person working
directly or indirectly for a company that furnishes or performs a portion
of the work, labor or material.
1.1.110 Switched Mod Section: A section of network between two
adjacent back-to-back terminals.
1.1.111 System: The high capacity digital SONET Equipment,
Facilities, Network Management System, all other equipment and materials
related thereto, and FCC licenses and other licenses and Permits related
thereto, installed up to a maximum of a 1x7 configuration operated for the
purpose of transmitting, receiving and transporting telecommunications
signals over the Segments set forth on Schedule B and any Capacity
Expansions. As used in this Agreement, 1 x 7 shall mean one protect radio
and seven non-protect radios.
1.1.112 System Budget: As defined in Section 1.1 of Schedule A.
1.1.113 System Budget: As defined in Section 1.1 of Schedule A.
1.1.114 Technology: Inventions, ideas, processes, formulas, and
know-how.
1.1.115 Tower Analysis: As defined in Section 1.1 of Schedule A.
1.1.116 Wayside Channels: The additional DS-l of telecommunications
capacity within each radio beyond the base OC-3 capacity.
1.2 Terms Generally. The definitions in Section 1.1 and elsewhere in this
Agreement shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "herein",
"hereof", "hereto" and "hereunder" and words of similar import refer to this
Agreement (including the Schedules and Exhibits) in its entirety and not to any
part hereto unless the context shall otherwise require. All references herein to
Sections, Exhibits and Schedules shall
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be deemed references to Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. Unless otherwise expressly
provided herein or unless the context shall otherwise require, any references as
of any time to the "Certificate of Incorporation," "Articles of Incorporation,"
"charter," "organizational or constituent documents" or "Bylaws" of any Entity,
to any agreement (including this Agreement) or other contract, instrument or
document or to any agreement statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or regulation to
any corresponding provisions of successor statutes or regulations). Any
reference in this Agreement to a "day" or number and "days" (without the
explicit qualification of "Business") shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
Business Day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day.
SECTION 2. RELATIONSHIP OF THE PARTIES.
2.1 Independent Contractor and Network Manager. The LLC hereby appoints
Pathnet and Pathnet hereby agrees to serve in the following capacities during
the term of this Agreement:
(i) As an independent contractor, Pathnet will serve as the LLC's
sole and exclusive representative in performing analytical pre-design and
design services and installing, testing and ensuring the performance of
the System, as well as any upgrades to such System in accordance with the
terms and conditions set forth in Section 7 and in Schedule A.
(ii) In the role of a network manager, Pathnet will serve as the
point of contact for any Outage or trouble on the System and shall operate
the Network Management System and the Network Monitoring Center as
described in Section 7.6 and Section 7.7 of Schedule A.
(iii) In the role of licensee, Pathnet will license from the LLC a
right to use the Facilities on which to build and operate the system.
SECTION 3. TERM AND EXPIRATION.
3.1 Term. Extension Periods, and Renewal.
3.1.1 Term. This Agreement shall commence on the Effective Date and
shall be in full force and effect as to each Segment upon the commencement
of the Initial Term for such Segment and continuing until the expiration
of the term applicable to such Segment as set forth in this Section 3.
3.1.2 Initial Term. The initial term of a Segment (each an "Initial
Term") shall commence upon Commissioning of such Segment and shall expire
on the fifth (5th) anniversary of the Commissioning of any such Segment.
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3.1.3 First Extension Period. With respect to each Segment, in the
event the Average Sold Excess Capacity of such Segment is equal to or
greater than ten percent (10%) during the Initial Term, the term of the
Agreement shall be automatically extended as to such Segment for an
extension period (each a "First Extension Period") commencing on the day
after the expiration of the Initial Term and expiring on the tenth (l0th)
anniversary thereafter.
3.1.4 Second Extension Period. With respect to each Segment, in the
event the Average Sold Excess Capacity of such Segment is equal to or
greater than ten percent (10%) during the Initial Term and the First
Extension Period (calculated as a single measurement on a cumulative
basis), the term of the Agreement shall be automatically extended as to
such Segment for a second extension period (each a "Second Extension
Period") commencing on the day after the expiration of the First Extension
Period and expiring on the later of the tenth (l0th) anniversary
thereafter of the Second Extension Period of either Segment A or Segment
B.
3.1.5 Segment B. If (i) Incumbent and/or the LLC have not acquired
the sites for the Facilities as set forth in Schedule B, which sites shall
be approved in writing by the LLC and Pathnet for inclusion in the
development of Segment B, within twelve (12) months after the Effective
Date (such approval by Pathnet not to be unreasonably withheld, provided
that if the economic cost to Pathnet materially outweighs the economic
benefit to Pathnet as the result of the use of such site, such
circumstance shall be deemed a reasonable basis for withholding such
consent), or (ii) Incumbent, the LLC and/or Pathnet fall to obtain the
permits, approvals and licences (including frequency coordination)
necessary to begin construction on Segment B within fifteen (15) months
after the Effective Date, the Parties shall not develop Segment B pursuant
to this Agreement and all of the terms and conditions contained herein as
to Segment B shall be deemed terminated and of no further force or effect.
Termination of this Agreement as to Segment B pursuant to the terms of
this Section 3.1.5 shall have no effect as to Segment A, as to which this
Agreement shall remain in full force and effect unless otherwise
terminated pursuant to the terms hereof.
3.1.6 Renewal. Upon expiration as to each Segment of the Initial
Term or the First Extension Period, if not automatically extended pursuant
to Section 3.1.3 and 3.1.4 hereof, respectively, or upon the expiration of
the Second Extension Period as to each Segment, this Agreement shall be
automatically renewed as to such Segment for a one-year term, and at the
end of such one-year term for additional one-year terms for each year
thereafter, unless terminated by either Party upon written notice to the
other Party to that effect delivered no less than ninety (90) days prior
to the end of the Initial Term, the First Extension Period, the Second
Extension Period or any such one-year term, as applicable.
3.2 No Unilateral Right to Terminate.
3.2.1 General. Except as provided in Sections 3.1.5, 3.1.6, 3.2.2,
6.2.1, 11.2 and 11.3, neither Party shall have the right to terminate this
Agreement or any rights or obligations of either Party pursuant to this
Agreement as to any Segment.
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3.2.2 Non Performance. If Pathnet does not deliver any Segment of
the System in accordance with the Specifications within eighteen (18)
months after Incumbent and/or the LLC delivers (i) the requisite permits,
approvals and licenses required to develop the sites of the Facilities on
such Segment or (ii) sites of the Facilities in suitable form (including
delivering electric service to the sites) to construct the System for such
Segment, whichever is later, unless such failure of Pathnet to deliver any
Segment of the System in accordance with the Specifications results from
Incumbent unreasonably withholding any approvals required of Incumbent
with respect to installation of the System, then the LLC shall have the
right to terminate this Agreement only as to such Segment.
SECTION 4. CONSIDERATION
4.1 Consideration Paid to Pathnet. In consideration for the services to be
performed and the obligations assumed by Pathnet pursuant to this Agreement, the
LLC shall grant to Pathnet (i) the right to use the Facilities, pursuant to
Section 6, and the Equipment, and (ii) [***]
as set forth in the Channel Plan
pursuant to the terms of the Pathnet IRU Agreement.
SECTION 5. ALLOCATION OF COSTS
5.1 LLC Costs.
5.1.1 LLC Items. Subject to the LLC Payment Cap set forth in Section
5.1.3, LLC shall pay for the services, functions, materials and other
items listed in Section 1 of Schedule C and Exhibit C-1 of Schedule C
(collectively, the "LLC Items") in the manner set forth in Section 5.1.5
and as set forth in the LLC Agreement.
5.1.2 Estimated Cost of LLC Items. On the Effective Date, the total
estimated cost of the LLC Items with respect to Segment A
[***]
(the "Segment A LLC Estimated Costs") and with respect to
Segment B is [***]
(the "Segment B LLC Estimated Costs"). Subject to the
LLC Payment Cap, the costs of such items and the LLC Estimated Costs are
estimates and may be subject to increases or decreases, provided that the
cost of Pathnet engineering and project management shall be no more than
the estimated cost for these items as shown in Schedule C.
5.1.3 LLC Payment Cap. Subject to Section 8.3, LLC shall pay an
amount not to exceed [***] (the "LLC Payment
Cap") in the aggregate for the performance and completion of the LLC Items
on Segments A and B. Payment of any LLC Item shall be approved by Pathnet
prior to the payment thereof if and to the extent such payment is subject
to the LLC Payment Cap. The cost of LLC Items shall be accrued in
accordance with generally accepted accounting principles. Pathnet shall
pay for all amounts incurred over the LLC Payment Cap in the completion
and performance of the LLC Items. As soon as LLC is aware that LLC will
pay an amount in excess of the LLC Payment Cap,
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LLC shall notify Pathnet to that effect. In the event the Parties elect
not to construct Segment B pursuant to Section 3.1.5, the LLC Payment Cap
shall be adjusted to be twenty percent (20%) over the Segment A LLC
Estimated Costs.
5.1.4 Division of Costs Savings. In the event the costs of
completion of the LLC Items for Segment A and Segment B are less than the
LLC Estimated Costs, Pathnet shall deliver to the LLC an invoice setting
forth the differential between the total costs to complete and perform the
LLC Items and the LLC Estimated Costs. Within thirty (30) days of receipt
of such invoice from Pathnet, the LLC shall pay or disburse to Pathnet
thirty-five percent (35%) of such differential. Pathnet shall be liable
for any invoices received after distribution of the costs savings is made
pursuant to this Section 5.1.4.
5.1.5 Payment by LLC. Subject to the LLC Payment Cap set forth in
Section 5.1.3, the LLC shall promptly pay, or the LLC shall cause
Incumbent to promptly pay pursuant to the LLC Agreement, for the LLC Items
for which it is liable upon receipt of a purchase order, invoice or other
bill from Pathnet or from an equipment vendor or service provider
(pursuant to any Pathnet requested retention), provided Pathnet has
approved (which approval shall not be unreasonably withheld) such purchase
order, invoice or bill before any payment is made by the LLC.
5.2 Pathnet Costs.
5.2.1 Pathnet Items. Pathnet shall pay for services, functions,
materials and other items listed in Section 2 of Schedule C, and Exhibit
C-2 of Schedule C (the "Pathnet Items").
5.2.2 Estimated Cost of Pathnet Items. On the Effective Date, the
total estimated cost of the Pathnet Items with respect to Segment A is
[***]
(the "Segment A Pathnet Estimated Costs"), and with respect to
Segment B is [***] (the
"Segment B Pathnet Estimated Costs").
5.2.3 No Cap on Pathnet Items. Subject to Section 3.1.5 regarding
Segment B, Pathnet shall pay for all amounts incurred in completing the
Pathnet Items whether or not the cost of completing such items is less
than, equal to or exceeds the Segment A and Segment B Pathnet Estimated
Costs.
SECTION 6. INDEFEASIBLE RIGHT TO USE.
6.1 Indefeasible Right to Use. The LLC hereby grants to Pathnet for the
term of this Agreement a non-exclusive and indefeasible right to use each of the
Facilities at such sites set forth on Schedule B, and Equipment, including,
without limitation, the Initial System, in each case to the extent necessary for
the performance of Pathnet's rights and obligations under this Agreement
including the right to create and sell capacity on the System including any
Capacity Expansion on the System.
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6.2 Use of Facilities.
6.2.1 Peaceful Enjoyment, Use and Access. Subject to the terms of
Incumbent's site leases Pathnet shall have the right to the non-exclusive
peaceful use and enjoyment of the Facilities during the term of this
Agreement as required for the performance of Pathnet's rights and
obligations under this Agreement, which rights shall include, but not be
limited to (i) the right to use the Facilities and Equipment and (ii) upon
the reasonable request by Pathnet, the right to full and free access to
the Facilities and related equipment; provided, however, any such access
granted by the LLC to Pathnet shall be subject to the reasonable security,
health and safety and other regulatory, procedural and policy requirements
implemented by Incumbent, and provided to Pathnet from time to time,
provided Pathnet shall have twenty (20) days after receipt of any such
policy or procedure to comply therewith. In the event the terms of
Incumbent's site leases materially and adversely affect Pathnet's ability
to perform its obligations under this Agreement, the LLC shall, or the LLC
shall cause Incumbent to, (x) use best efforts to amend any such lease or
otherwise renegotiate any limitations thereto or (y) use commercially
reasonable efforts to lease or acquire an alternative Facility location in
order that Pathnet may perform hereunder. If and to the extent the LLC is
not able, or the LLC is not able to cause Incumbent to (i) amend or
otherwise re-negotiate the site leases or (ii) provide an alternative
Facility available for the installation and operation of the System,
Pathnet shall have, as its sole and exclusive remedy, the unilateral right
but no obligation to terminate this Agreement as to any Segment without
any further recourse against LLC or Incumbent hereunder.
6.2.2 Interference. During the term of this Agreement and subject to
existing customer uses of the Facilities authorized and disclosed to
Pathnet in writing within thirty (30) days of the Effective Date, the LLC
shall not license or otherwise permit any Person to use the Facilities or
any Incumbent controlled facility if the use of such facilities by such
Person would cause any Interference on the System. As of the Effective
Date, the LLC shall not grant any Person a new or expanded right to use
the Facilities or any Incumbent controlled facility which use would in any
way cause Interference on the System. Notwithstanding the foregoing, in
the event another Person causes any Interference on the System through any
use of the Facilities or any Incumbent controlled facility which was not
authorized prior to the Effective Date, the LLC shall, or the LLC shall
cause Incumbent to, use best efforts to compel such Person using such
facilities to immediately take all steps necessary to correct and
eliminate such Interference, including, without limitation, enforcing
provisions in any license or other agreement between Incumbent and/or the
LLC and such Person using the facilities which allow Incumbent and/or the
LLC to compel such Person to cease operation of such Person's system, to
remove such Person's equipment or materials or to modify such Person's
equipment or materials. The LLC acknowledges that any Interference shall
cause irreparable harm to Pathnet and the prompt cessation of Interference
is material to Pathnet's interest in the Facilities and Pathnet's
performance under this Agreement and, as such, Pathnet shall be entitled
to injunctive relief in the enforcement of this Section 6.2.2.
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6.3 Visiting and Exiting Facilities. Upon exiting any Facility, Pathnet,
on behalf of itself and its employees, agents and Subcontractors, shall ensure
that such Facility is returned to a condition, which existed immediately prior
to such visit except for improvements made thereto and reasonable wear and tear.
6.4 Clearances and Other Requirements. At the reasonable request of the
LLC, Pathnet shall require its employees, agents or Subcontractors to (i) apply
to the LLC for any necessary reasonable clearances and (ii) comply with all
other reasonable and applicable requirements, rules, regulations or ordinances
regarding any Person's ability to have access to the Facilities.
6.5 Pathnet's Responsibility. Subject to LLC's payment obligations under
Section 5.1.5, Pathnet shall remain solely responsible for all actions of its
employees, agents, and Subcontractors in connection with the provision of
services to the LLC under this Agreement. Before allowing any Subcontractor to
commence work, Pathnet shall secure from such Subcontractor evidence of
insurance coverage covering such risks as are usually insured against by prudent
companies engaged in the business and activities in which such Subcontractor is
engaged.
6.6 Subletting. Pathnet shall not grant any interest in the Facilities, in
whole or in part, to any Person without the prior written consent of the LLC and
Incumbent; provided, however, Pathnet shall have the right to transfer and
assign its rights or obligations under this Agreement to any successor or assign
in accordance with Section 18.7.
6.7 Surrender. Upon the expiration of the Agreement in accordance with
Section 3, Pathnet shall peacefully and quietly surrender occupation of the
Facilities, without delivery by the LLC or Incumbent to Pathnet of any notice to
quit or demand for possession.
6.8 Colocation. Subject to space availability at the Facilities at the
time of a Pathnet request, including LLC's or Incumbent's reasonably foreseeable
future space needs on the Facilities, the LLC shall or shall cause Incumbent to
allow Pathnet, at no additional charge to colocate at the Facilities all
equipment necessary to support the interconnections set forth on Exhibit A-6 to
Schedule A and any additional interconnections equipment that may be added by
Pathnet from time to time and at any time during the term of this Agreement,
subject to the limitations set forth in Schedule 3 of Schedule A.
6.9 Subordination. Pathnet shall subordinate its interest in the
Facilities to (i) all deeds of trust, deeds to secure debts, mortgages and other
security instruments now or hereafter Encumbering all or any portion of the real
property relating to the Facilities described on Schedule G (each, a "Facility
Encumbrance") and (ii) any increases, renewals, modifications, consolidations,
replacements and extensions of any such Facility Encumbrance. In connection with
such subordination of Pathnet's interest in the Facility to all Facility
Encumbrances, Pathnet shall, as requested by the LLC, within fifteen (15) days
after any request by Incumbent, execute and deliver a commercially reasonable
subordination, non-disturbance and attornment agreement with all Persons secured
by such Facility Encumbrances. Pathnet shall, as requested by the LLC, execute
and
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deliver similar subordination, non-disturbance and attornment agreements with
each future Person secured by a Facility Encumbrance.
6.10 Removal of Equipment. Upon the Expiration Date, the LLC shall have
the option of purchasing any and all of the Pathnet owned Equipment located on
the Facilities at its then fair market value. Pathnet shall, at the LLC's
request and direction, remove any or all Pathnet owned Equipment not so
purchased by the LLC from the LLC's Facilities and restore each site to its
condition as of Commissioning (reasonable wear and tear, and damage from the
elements, excepted) within sixty (60) days after the Expiration Date and at
Pathnet's sole expense. In the event Pathnet fails to perform such requested
removal within such sixty (60) day period, as determined by the LLC in its sole
discretion, the LLC may remove such Equipment and restore each site to its
condition as of Commissioning, (reasonable wear and tear, and damage from the
elements, excepted), and Pathnet shall promptly pay the LLC all costs reasonably
incurred by the LLC for such removal and restoration. The LLC shall have no
liability to Pathnet in connection with any damage to the Pathnet owned
Equipment resulting from its removal by the LLC.
6.11 Removal of Hazardous Materials. Within ninety (90) days after the
written request of Incumbent, or in any event, within ninety (90) days after the
Expiration Date, Pathnet shall remove from the Facilities any and all Hazardous
Materials, that were brought to the Facilities by Pathnet during the term of
this Agreement in violation of Requirements of Law.
SECTION 7. PROGRAM MANAGEMENT AND PROJECT MANAGEMENT.
7.1 Program Manager. In connection with the Services and other services
performed by Pathnet under this Agreement, Pathnet shall provide a Program
Manager whose duties shall include (i) supervising the project through design,
installation and operation, (ii) supervising the Project Manager, (iii)
overseeing the Field Manager and the other Pathnet personnel, and (iv) ensuring
the performance of Pathnet's rights and obligations under this Agreement.
7.2 Project Management for Modifications. In connection with the
modifications of the Facilities set forth in Section 2 of Schedule A, Pathnet
shall provide a Project Manager, a Field Manager, an Applications Engineer and a
Project Engineer, each of whom shall have the duties as set forth in Section 7.4
with respect to such modifications of the Facilities.
7.3 Project Management for Installation. In connection with the
installation of the System set forth in Section 4 of Schedule A, Pathnet shall
provide a Project Manager, a Field Manager, an Applications Engineer and a
Project Engineer, each of whom shall have the duties as set forth in Section 7.4
with respect to such installation of the System.
7.4 Pathnet Project Management Personnel. The Project Managers, Field
Managers, Applications Engineers and Project Engineers shall each have the
duties as set forth below:
(a) Project Manager. Pathnet shall provide a Project Manager whose
duties shall include ensuring the overall functional integrity of the
System, the preparation, amendment
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and adherence to a construction schedule, and compliance with Pathnet's
other obligations under Schedule A.
(b) Field Manager. Pathnet shall provide a Field Manager whose
duties shall include the oversight and direction of all on-site
activities, the coordination of all Subcontractors and all required
communication with the Project Manager.
(c) Applications Engineer. Pathnet shall provide an Applications
Engineer, whose duties shall include the review and translation of the
System configuration into specific hardware requirements, precise
interface levels, intra and inter-rack cabling and all other necessary
peripheral equipment, rack profiles and required Interconnection data.
(d) Project Manager. Pathnet shall provide a Project Engineer whose
duties shall include the performance of all planning and support
activities and a detailed site survey to gather data for development of
the installation plan and testing plan.
SECTION 8. SERVICES AND SYSTEMS SPECIFICATIONS.
8.1 Services
8.1.1 System Design, Modification, Installation, Operation and
Performance. Pathnet and the LLC shall perform their respective functions
with respect to the design, modification, installation, operation and
performance of the System as set forth on Schedule A and in this Section 8
(the "Services"); provided, that in the event such performance requires
Incumbent's performance, the LLC shall cause Incumbent to so perform.
8.1.2 Upgrade of System. In accordance with its performance of the
Services, Pathnet shall have the right, at its own expense and with the
LLC's prior approval, which approval shall not be unreasonably withheld or
delayed, to upgrade the System and Equipment, and the System and Equipment
operation policies and procedures, including, but not limited to, (i)
replacing Equipment, (ii) adding newly available improved Equipment, and
(iii) modifying policies, procedures and specifications relating to the
System, to conform such policies, procedures and specifications with new
Technology or industry standards; provided, however, nothing contained in
this Section 8.1.2 shall limit Pathnet's rights to perform any Capacity
Expansion pursuant to this Agreement.
8.1.3 Incumbent Training. Pathnet shall provide to Incumbent the
training as set forth on Schedule D.
8.1.4 Maintenance. Pathnet shall enter into the Maintenance Services
Agreement with Incumbent and shall perform all of its obligations
thereunder, including the provision of Spare Parts. The LLC shall
cooperate with Incumbent and Pathnet to permit the performance of the
services or other activities called for or required under the Maintenance
Services Agreement.
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8.1.5 Performance of the Services. Pathnet shall have the right to
engage Subcontractors to perform any of the Services subject to the LLC's
prior approval, which approval shall not be unreasonably withheld or
delayed.
(A) Subcontractors. Nothing contained herein shall create or
imply privity of contract between the LLC and any Subcontractor,
notwithstanding the LLC's consent to any Subcontractor. Pathnet
acknowledges and agrees that the LLC shall have no obligation to (i)
supervise any Pathnet Subcontractor or its employees or (ii) pay any
Pathnet Subcontractor or its employees other than to the extent
required pursuant to Section 5 or as otherwise agreed in writing by
the Parties. No dealings of any kind between the LLC and any
Subcontractor shall be deemed a waiver of the foregoing by the LLC
unless the LLC (at the LLC's election) specifically agrees otherwise
in writing.
(B) Except for any liens arising from LLC's or Incumbent's
failure to pay for the LLC Items for which they are responsible
under Section 5.1.5, if any Subcontractor or any other Person
claiming to have been employed (directly or indirectly) by or
through Pathnet files a lien, Pathnet shall satisfy, remove or
discharge such lien at Pathnet's expense by bonding, payment or
otherwise within thirty (30) days after notice to Pathnet of the
filing thereof. If Pathnet fails to do so, the LLC may satisfy,
remove or discharge such lien, and Pathnet shall pay the same to the
LLC upon demand.
8.2 Specifications.
8.2.1 General. Pathnet and the LLC shall perform the Services in
accordance with any and all technical and operational specifications set
forth in Schedule A (the "Specifications"); provided that in the event
such performance requires Incumbent's performance, the LLC shall cause
Incumbent to so perform.
8.2.2 Channel Plan.
(A) Original Channel Plan. On the Effective Date, the LLC
shall deliver to Pathnet a proposed T-l channelization plan setting
forth the proposed capacity needs of Incumbent at each Facility (the
"Incumbent Capacity"). Such capacity shall be sold to Incumbent by
the LLC pursuant to Incumbent IRU Agreement. Such capacity (i) shall
in no event exceed [***]
and (ii) shall be subject to Drop and
Insert capacity at each Switched Mod Section. Pathnet shall
incorporate the LLC's proposed channelization plan into the Channel
Plan subject to the limitations set forth in this Section 8.2.2.
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(B) Amended Channel Plan. Upon written notice to Pathnet and
subject to the capacity granted under the Incumbent IRU Agreement,
the LLC shall have the right to modify Incumbent Capacity (as
described in the Channel Plan) along the network any time after
Commissioning, provided that sufficient Drop and Insert capacity
exists at each Facility not designated as a repeater terminal
between each Switched Mod Section using available Wayside Channels
to effect such modification. Within ninety (90) days after receipt
of any such written notice from the LLC, Pathnet shall make such
modification to the configuration of the Channel Plan at no charge
to the LLC.
8.2.3 Specifications. Standards and Inspections. In connection with
the Services set forth in Section 2 and Section 4 of Schedule A, Pathnet
shall comply with the following requirements:
(A) Obligation to Construct. Pathnet shall use commercially
reasonable efforts to ensure that the modification of the System set
forth in Section 2 of Schedule A and the installation of the System
set forth in Section 4 of Schedule A occur as expeditiously as
possible and in no event later than the 18 month period set forth in
Section 3.2.2.
(B) Industry Standards. All Services and materials supplied
pursuant to Schedule A must meet or exceed all applicable
Specifications. Where Specifications are not stated, such work
performed and materials supplied will meet all applicable provisions
of the following standards: (i) EIA RS-l95 (latest edition), (ii)
EIA/TIA-222 (latest edition), (iii) American Society of Testing
Materials A 325 and A 572, (iv) the applicable sections of the
National Electric Code, (v) the American National Standards
Institute, (vi) ACI 318-83, (vii) ACI-305, (viii) ACI-306, (ix) OSHA
29 CFR 1910 and (x) all other applicable Federal, state and local
regulations of all Governmental Authorities with jurisdiction;
provided, however, in the case of a conflicting requirement of
standards, the more stringent standard shall apply.
(C) Site Inspections. During the performance of the Services,
Incumbent shall allow Pathnet to perform site inspections during
normal business hours, or in the case of an emergency, at any time,
subject to the access limitations set forth herein.
8.2.4 Plans, drawings, etc. All plans, specifications, drawings,
presentations, schedules, budgets, analyses, and other documents of any
kind prepared by Pathnet or any Subcontractor in connection with the
System (the "Project Documents"), and all rights therein, shall be and
remain the joint property of both Pathnet and the LLC. Submission or
description of any document described in the foregoing sentence to any
Person or Governmental Authority for purposes of, or in connection with,
the System shall not be construed as publication in derogation of the
LLC's rights under this Agreement. The term "Project Documents" shall not
include non-technical, non-drawing type documents, memos, analyses, and
other writings used solely for the internal purposes of Pathnet or any
Subcontractor.
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8.3 Change Orders. To the extent requested by the LLC and agreed to by
Pathnet, this Agreement shall incorporate (i) future issuance of change orders
for equipment and services beyond the scope of the Services and this Section 8
of the Agreement, and (ii) Pathnet's provision of additional equipment and
services in accordance with such orders. To the extent mutually agreed upon by
the Parties, all such orders shall be deemed to be supplements to and governed
by the terms of this Agreement. The Segment A and Segment B LLC Estimated Costs
and the LLC Payment Cap may be modified to reflect any agreed upon change
orders. In the event the LLC provides an alternative facility to the Facilities
set forth in Schedule B, pursuant to Sections 6.2.1, 11.2 and 11.3 for
installation of the System, Pathnet and the LLC shall adjust the Segment A and
Segment B LLC Estimated Costs, the Segment A and Segment B Pathnet Estimated
Costs and the LLC Payment Cap as applicable to incorporate the inclusion or
exclusion of any such facility.
SECTION 9. OWNERSHIP, DEPRECIATION AND ENCUMBRANCE OF SYSTEM.
9.1 Ownership of Equipment and Assets.
9.1.1 Equipment and Assets Owned by the LLC. The LLC shall own or
license the equipment and assets relating to the System as set forth in
Schedule E.
9.1.2 Equipment and Assets Owned by Pathnet. Pathnet shall own the
equipment and assets relating to the System as set forth in Schedule E.
9.2 Depreciation of Equipment.
9.2.1 Depreciation by the LLC. The LLC shall have the right to fully
depreciate the equipment and assets currently owned or to be owned by the
LLC as listed in Schedule E.
9.2.2 Depreciation by Pathnet. Pathnet shall have the right to fully
depreciate the equipment and assets currently owned or to be owned by
Pathnet as listed in Schedule E.
9.3 Encumbrance.
9.3.1 Initial System. Pathnet shall not Encumber the radios (other
than the protect radio), radio software, antenna, waveguide, multiplexers
or any other Equipment required to operate the Initial System in
accordance with Specifications hereunder.
9.3.2 Other Equipment, Materials, Agreements and Assets. Pathnet
shall have the right, unless it otherwise agrees in writing, to Encumber
(i) the Equipment used in any Capacity Expansion, (ii) the Revenue
generated from the sale of the Excess Capacity, (iii) any Customer
Agreement entered into by Pathnet with respect to the sale of Excess
Capacity, (iv) this Agreement and any related documents, instruments and
agreements executed and delivered in connection with this Agreement and
any rights and obligations hereunder, and (v) the Equipment relating to
the Initial System other than the radios, radio
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software, antenna, waveguide, multiplexers and any other
Equipment required to operate the Initial System in accordance with the
Specifications hereunder.
9.3.3 Vendor Remedies. The LLC hereby acknowledges that pursuant to
the Encumbrances granted by Pathnet to certain equipment vendors, service
providers or other lenders, in accordance with Section 9.3.2, such
vendors, providers or lenders shall have the right to assume and perform
Pathnet's rights and obligations under this Agreement and the other
documents, instruments and agreements executed in connection herewith and
will be bound by the terms hereof and thereof.
9.4 Taxes. The Parties' respective responsibilities for taxes arising
under or in connection with this Agreement shall be as follows: (i) each Party
shall be responsible for any personal or real property taxes on property it owns
or leases, for franchise and privilege taxes on its business and for taxes based
on its net income or gross revenue and (ii) Pathnet shall be responsible for any
sales, use, excise, value-added services, consumption and other taxes and duties
payable by the LLC or Incumbent on any goods and services used or consumed in
providing the services to be performed by Pathnet under this Agreement, where
the tax is imposed on the LLC's acquisition or use of such goods or services and
the amount of the tax is measured by the LLC's costs in acquiring such goods or
services; provided, however, that Pathnet shall not be responsible for any
Federal, state or local income taxes of Incumbent or the LLC or any franchise
taxes of Incumbent or the LLC.
9.5 Special Purpose Subsidiary Relating to Initial System Licenses.
(a) Pathnet shall contribute to Pathnet/Idaho Power License, LLC, a
Delaware limited liability company ("Pathnet/Idaho Power License LLC") and
cause Pathnet/Idaho Power License LLC to hold, the FCC licenses relating
to the Initial System.
(b) On the Effective Date, Pathnet and the LLC shall execute and
deliver the Pledge Agreement relating to the Pathnet/Idaho Power License
LLC substantially in the form attached hereto as Schedule H.
9.6 Security Interest in Initial System Protect Radio. On the Effective
Date, Pathnet and the LLC shall execute and deliver the Security Agreement
substantially in the form attached hereto as Schedule I, pursuant to which
Pathnet shall grant the LLC a security interest in the Initial System Protect
Radio.
9.7 Agreement Regarding Bankruptcy. Pathnet agrees and shall cause each
subsidiary of Pathnet contracting with the Pathnet/Idaho Power License LLC to
agree, that neither Pathnet, nor any such subsidiary of Pathnet shall take any
actions that would cause the involuntary bankruptcy of the Pathnet/Idaho Power
License LLC.
9.8 Spectrum License Agreement. On the Effective Date, the LLC and
Pathnet/Idaho Power License LLC shall execute a Spectrum License Agreement
substantially in the form set forth in Schedule K.
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SECTION 10. EXCESS CAPACITY MARKETING AND SALES.
10.1 Customer Agreements.
10.1.1 Authorization. Pathnet shall negotiate, execute and deliver
any and all agreements and arrangements ("Customer Agreements") for
customers of the Excess Capacity, which Customer Agreements shall contain
terms and conditions determined by Pathnet in its sole discretion.
10.1.2 Approval and Consent by the LLC. If the terms of any Customer
Agreement require the written approval or consent of the LLC as a
condition to the execution, delivery or performance, the LLC shall
promptly provide such written approval or consent, subject to the
indemnification rights set forth in Section 16.2(d); provided such
approval or consent shall not increase the LLC's liability or obligations
under this Agreement or otherwise.
10.1.3 Modifications to System. In the event that any Customer
Agreement requires that the System be modified in any way, Pathnet shall
ensure that any such modifications (i) shall not compromise the integrity
and performance of the System in accordance with the Specifications and
(ii) shall be made at no additional cost to the LLC.
SECTION 11. FCC LICENSES AND OTHER REGULATORY APPROVALS AND LICENSES.
11.1 FCC Rules and Regulations.
11.1.1 Microwave Radio Station Licenses.
(A) Preparation and Filing of Forms 415. Subject to Section
11.4, Pathnet shall be responsible for all regulatory filings
required to obtain FCC approvals to own and operate the System and
to sell telecommunications capacity to other common carriers,
including but not limited to the initial application(s) for licenses
and any amendments or modifications to the licenses. If necessary,
Pathnet shall be responsible for any filings relating to
cancellation of a license. Pathnet shall be solely responsible for
any expenses incurred with respect to these filings and Pathnet
shall be solely responsible for fees associated with such
applications, including the initial application fees. Pathnet shall
prepare and timely file all required Form 415, Applications for
Authorization in the Microwave Services (each a "Form 415"), or any
successor forms, documents or instruments to such Form 415 as the
FCC may prescribe, including but not limited to, the preparation or
ordering of all frequency coordinations required pursuant to
Schedule B and Schedule C of Form 415, in order to own, operate and
sell the Excess Capacity of the System in accordance with the terms
and conditions of this Agreement. To the extent reasonably
necessary, the LLC and Incumbent shall cooperate with Pathnet in
obtaining FCC approvals.
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(B) Identity of License. All Microwave Radio Station Licenses
issued by the FCC relating to the System shall be licensed in
Pathnet's or Pathnet/Idaho Power License LLC's name. To the extent
permitted by law, Pathnet shall remain licensed under the FCC Code
until such time as its licenses may be terminated. The LLC and
Incumbent shall be permitted to continue to own and be licensed as
private microwave operators at the stations licensed to Pathnet
relating to the system, provided that (i) that frequency assignments
of such private licenses do not interfere with the System
(including, but not limited to, any Capacity Expansion of the
System) and (ii) such private licenses are permitted under the FCC
Code.
(C) Maintenance of License. Pathnet shall maintain in good
standing each Microwave Radio Station License relating to the
System, including, but not limited to, fees, preparing and filing
any required amendments to the Forms 415 relating to the System and
submitting and filing any supplementary information as required by
the FCC.
11.1.2 Common Carrier Reporting Obligations. Pathnet shall prepare
and file all forms, reports, instruments, documents and agreements
required by the FCC and FCC Code relating to Pathnet's status as a "common
carrier" under the FCC Code.
11.1.3 Tariff Filings. Pathnet shall prepare and timely file all
tariff applications pursuant to 47 CFR 61, as amended, or any successor
statute, rule or regulation and shall request and file all necessary
waivers of such tariff requirements, as determined by Pathnet in its sole
discretion.
11.1.4 Frequency Coordination Notices. During the term of this
Agreement, Pathnet shall prepare and send all required frequency
coordination notices required under 47 CFR 101.103, as amended, or any
successor statute, rule or regulation and shall respond, as appropriate,
to all PCNs received by Pathnet, the LLC or Incumbent relating to the
System.
11.1.5 Delivery of Copies. Pathnet shall provide to the LLC a copy
of all filings and submissions with the FCC, relating to the System,
within (10) days after request by the LLC.
11.1.6 Assistance in Preparation of License Applications. Upon
request by Pathnet, and in a timely manner, the LLC shall provide to
Pathnet all information necessary for the completion of all required
filings and submissions with the FCC including, but not limited to the
LLC's authorized signature on any filings or other submissions to the FCC
or any documents, instruments or agreements completed in connection with
such filings and submissions.
11.1.7 Spectral Loading Requirements. Pathnet shall (i) ensure that
the System, as licensed, shall comply with all spectral loading
requirements set forth in 47 CFR 101.141, or any successor statute, rule
or regulation or (ii) obtain a waiver of any or all of such requirements;
provided, however, if the System does not meet such spectral loading
requirements and Pathnet is unable to obtain a waiver of such
requirements, Pathnet shall
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have the right, at its sole cost and expense, to modify the System to a
hot-standby Protection Configuration until such time as the spectral
loading requirements can be met; provided such configuration meets the
System's performance requirements.
11.1.8 Default in FCC License. In the event that the FCC institutes
a penalty against or fine imposed on Pathnet, the LLC, or the System, due
to non-compliance with any FCC requirements by Pathnet, Pathnet shall
promptly pay such penalty or fine (in the case such penalty or fine is
instituted as the result of an act or omission on the part of Pathnet) or
the LLC shall promptly pay such penalty or fine (in the event such penalty
or fine is instituted as the result of an act or omission on the part of
the LLC).
11.2 Zoning Requirements. The LLC shall be responsible for obtaining
appropriately zoned sites and maintaining zoning and land use compliance of the
Facilities throughout the term of the Agreement. Pathnet shall be responsible
for complying with all zoning requirements as provided by the LLC as applicable
to the installation and operation of the System and its Facilities. The LLC
shall advise Pathnet of zoning requirements, which, in the reasonable opinion of
the LLC, differ from those generally applicable to microwave facilities. The LLC
shall provide to Pathnet all required information and shall cooperate with
Pathnet in connection with Pathnet's compliance with all zoning requirements
pursuant to this Section 11.2. Notwithstanding the foregoing, the LLC and
Incumbent shall, or shall cause Incumbent to, implement either (i) best efforts
to obtain all necessary zoning and permits for each Facility or (ii) in the
event Incumbent and/or the LLC are unable to obtain such necessary zoning and
permits, commercially reasonable efforts to obtain an alternative facility
available for installation and operation of the System in order for Pathnet to
perform its obligations under this Agreement. If and to the extent the LLC
and/or Incumbent cannot obtain the required zoning and permits for any Segment,
Pathnet shall have, as its sole and exclusive remedy, the unilateral right but
not obligation to terminate this Agreement, as to any Segment, without any
further recourse against LLC or Incumbent hereunder.
11.3 Lessor Requirements. Where Incumbent leases sites for the location of
its Facilities, the LLC shall be responsible for obtaining all consents or
approvals of the site lessor necessary for construction and operation of the
System. Pathnet and the LLC shall comply with all site lessor requirements.
Pathnet and the LLC shall each cooperate with the other in connection with the
other's compliance with all site lessor approvals pursuant to this Section 11.3.
Notwithstanding the foregoing, the LLC shall, or shall cause Incumbent to,
implement (i) best efforts to obtain all necessary site lessor consents and
approvals for each Facility or (ii) commercially reasonable efforts to obtain an
alternative facility available for installation and operation of the System in
order for Pathnet to perform its obligations under this Agreement. If and to the
extent the LLC and/or Incumbent cannot obtain the required site lessor approval,
Pathnet shall have, as its sole exclusive remedy, the unilateral right but not
obligation to terminate this Agreement, as to any Segment, without any further
recourse against LLC or Incumbent hereunder.
11.4 Tower Registration. Incumbent and the LLC shall ensure timely
compliance with all FAA and FCC tower registration requirements including, but
not limited to, the preparation of any filings with or the obtaining of any
waivers or extensions from the FAA or FCC. The LLC
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and/or Incumbent shall promptly notify Pathnet of any deficiency or
non-compliance with any such tower registration requirements, filings, waivers
or extensions.
SECTION 12. INSURANCE.
12.1 Delivery of Certificates of Insurance. Upon the LLC's request and
prior to the commencement of any Services by Pathnet, Pathnet shall deliver to
the LLC Certificates of Insurance relating to Pathnet's Commercial General
Liability Insurance Policy, Workers Compensation Insurance Policy, Automobile
Liability Insurance, Excess Liability Insurance Policy and Professional
Liability Insurance.
12.2 Pathnet Insurance Coverage. During the term of this Agreement,
Pathnet shall maintain the types of insurance at the coverage limits set forth
below each naming Incumbent and the LLC as an additional insured and providing
for thirty (30) days' prior notification to the LLC and Incumbent and the right
of Incumbent and/or the LLC to cure any default prior to cancellation:
(a) Worker's Compensation Insurance. Workers Compensation Insurance
as required by laws and regulations applicable to and covering Persons
performing the Services;
(b) Commercial General Liability Insurance. Commercial General
Liability Insurance with a limit of not less than $1,000,000 per
occurrence and $ 1,000,000 in the aggregate;
(c) Automobile Liability Insurance. Automobile Liability Insurance,
which includes coverage for non-owned and hired vehicles with a limit of
not less than $1,000,000;
(d) Excess Liability Insurance. Excess Liability Insurance with a
limit of not less than $4,000,000; and
(e) Professional Liability Insurance. Professional Liability
Insurance with a limit of not less than $10,000,000.
12.3 LLC Insurance Coverage Incumbent or the LLC shall maintain insurance
coverage on the Facilities properties and operations of Incumbent and the LLC to
the extent necessary to permit Pathnet to operate the System and perform its
obligations in the event of any property or operations damages or losses which
coverage shall include general liability and other forms of insurance covering
such risks as are usually insured against by prudent companies engaged in the
business and activities in which the LLC is engaged, in amounts which are
adequate in relation to the business and properties of the LLC, and all premiums
to date have been and will continue to be paid in full.
12.4 Proof of Licensed Subcontractors. Upon request of the LLC, Pathnet
shall provide to the LLC proof of licensing and certification of insurance for
any Subcontractors engaged by Pathnet to provide Services, during the term of
such engagement.
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SECTION 13. SOFTWARE AND PROPRIETARY RIGHTS.
13.1 Pathnet Software. Pathnet retains all right, title and interest in
and to Pathnet Software. As of the Effective Date and pursuant to the Pathnet
Sublicense Agreement attached hereto as Schedule F, the LLC is granted a
nonexclusive sublicense to use Pathnet Software for the sole purpose of
receiving the services pursuant to this Agreement. Pathnet Software will be made
available to the LLC in such form and on such media as exists on the Effective
Date, together with existing documentation and any other related materials. The
LLC shall not be permitted to use Pathnet Software for the benefit of any
entities for any use other than performance of the LLC's rights under this
Agreement or any agreement executed in connection therewith, without the prior
written consent of Pathnet which may be withheld at Pathnet's sole discretion.
Except as otherwise requested or approved by Pathnet, the LLC shall cease all
use of Pathnet Software upon expiration of this Agreement. Notwithstanding the
foregoing, the LLC shall have the right to purchase or license the Pathnet
Software from Pathnet to the extent Pathnet owns or otherwise has the ability to
sell or license such software on terms that shall be agreed upon by the Parties
negotiating in good faith.
13.2 Proprietary Rights. The LLC acknowledges and agrees that all or
portions of the information and materials, including but not limited to the
Pathnet Software and related documentation to be supplied by Pathnet hereunder
are owned by Pathnet and/or others and are proprietary in nature. The LLC also
acknowledges and agrees that Pathnet and/or its suppliers have and will retain
all proprietary rights in such information and materials. The LLC (i) shall
respect such claim of proprietary right, (ii) shall protect such information at
least to the extent that it protects its own proprietary information, (iii)
shall not use such information except for the purposes for which its is being
made available as set forth in this Agreement and (iv) shall not reproduce,
print, disclose, or otherwise make said information available to any third
party, in whole or in part, in whatever form.
SECTION 14. REPRESENTATIONS AND WARRANTIES.
14.1 Representations and Warranties of Each Party. Each Party hereby
represents and warrants the other Party as follows:
14.1.1 Due Incorporation and Formation; Authorization of Agreements;
Binding Effect. Such Party is a corporation or limited liability company,
as the case may be, duly formed or organized, and validly existing under
the laws of its state of incorporation or organization, and has the
corporate or limited liability company authority to own its property and
carry on its business as owned and carried on as of the Effective Date.
Such Party is duly licensed or qualified to do business and is in good
standing (if applicable) in each jurisdiction in which the failure to be
so licensed or qualified would have a Material Adverse Effect on such
Party. Such Party has the corporate or limited liability company authority
to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by such Party
and this Agreement constitutes a legal, valid and binding obligation of
such Party enforceable in accordance with its terms, subject
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as to enforceability to limits imposed by bankruptcy, insolvency or
similar laws affecting creditors rights generally and the availability of
equitable remedies.
14.1.2 No Conflict; No Default. Neither the execution or delivery of
this Agreement by such Party, nor (except as would not have a Material
Adverse Effect on such Party), the performance of this Agreement by such
Party or the consummation by such Party of the transactions contemplated
hereby in accordance with the terms and conditions hereof: (i) will
conflict with, violate, result in a breach of or constitute a default
under any of the terms, conditions or provisions of the certificate or
articles of incorporation or bylaws or LLC operating agreement (or other
governing documents) of such Party or any material agreement or instrument
to which such Party is a party or by which such Party may be bound, (ii)
will conflict with, violate or result in a breach of, constitute a default
under (whether with notice or lapse of time or both), accelerate or permit
the acceleration of the performance required by, give to others any
interests or rights or require any consent, authorization or approval
under any contract to which such Party is a party or by which such Party
is or may be bound or to which any equity interest held by such Party or
any of its material properties or assets is subject or (iii) will result
in the creation or imposition of any Encumbrance upon any equity interest
held by such Party in the LLC or any of the other material properties or
assets of such Party, other than Facility Encumbrances.
14.1.3 No Consent. Other than consents and approvals contemplated by
Section 10.1, no consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Authority,
domestic or foreign, is required to be obtained by such Party in
connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby, except those
that have been obtained and are in full force and effect pursuant to
Section 14.1.5.
14.1.4 Compliance with Laws and Regulations. The performance of its
obligations under this Agreement will not result in a violation in any
respect of (i) any applicable Federal, state, local or foreign laws,
ordinances, regulations, rulings and orders of government agencies
applicable to its business in any respect the violation of which could
have a Material Adverse Effect (including Requirements of Law relating to
pollution, protection of the environment, emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic, hazardous or regulated substances or wastes into the
environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage disposal, transport or handling of
pollutants or other such hazardous or regulated substances or wastes) or
(ii) any applicable order, Judgment, injunction, award or decree in any
respect which could have a Material Adverse Effect on such Party.
14.1.5 Permits. Such Party has or will obtain all authorizations,
approvals, consents, licenses, Permits and certificates (including, but
not limited to all required approvals from the FCC) necessary to perform
its respective obligations under this Agreement and to own, lease and
operate its properties as currently or anticipated to be conducted, owned,
leased or operated, as the case may be, for which the failure to possess
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would result in a Material Adverse Effect. No violations are outstanding or
uncured with respect to any such Permits and no proceeding is pending to revoke
or limit any Permit.
14.1.6 Title to Assets, Properties and Rights and Related Matters.
Except as set forth in Section 6.2.1, 11.2 and 11.3 and on Schedule G,
such Party has and will continue to have for the term of this Agreement
good and marketable title to all the properties, interests in properties
and assets, real, personal or mixed, necessary for the conduct of such
Party's business and for the transactions contemplated by this Agreement
(including, but not limited to, any rights of way, leasehold interests,
easements, proofs of dedication and rights necessary to ensure vehicular
and pedestrian ingress and egress to and from any such properties or
assets), free and clear of all Encumbrances of any kind or character,
except (i) liens for current taxes not yet due and payable, (ii)
Encumbrances securing taxes, assessments, governmental charges or levies
or the Encumbrances of materialmen, carriers, landlords and like persons,
all of which are not yet due and payable and (iii) minor Encumbrances of a
character that do not substantially impair the assets or properties of
such Party or which will not have a Material Adverse Effect on such Party.
The LLC will cause Incumbent to use best efforts to keep in full force and
effect any leases of or affecting the Facilities and will cause Incumbent
to use best efforts to renew or enter into new leases for the Facilities
as necessary to ensure that Incumbent has sufficient right, title and
interest in and to the Facilities throughout the term of this Agreement
and to permit the LLC and Pathnet to perform their respective obligations
and rights hereunder.
14.1.7 Labor Matters. Such Party has complied in all material
respects with all applicable Federal, state and local laws and ordinances
relating to the employment of labor, including the provisions thereof
relating to wages, hours, employee benefit plans and the payment of social
security taxes, and is not liable for any arrears of wages or any tax
related thereto (except for currently accrued and unpaid wages and except
for currently accrued withholding, payroll, unemployment and social
security taxes payment of which is not overdue) or penalties for failure
to comply with any of the foregoing, and neither has received a notice to
the contrary from any Governmental Authority. Such Party has not suffered
any strike, slowdown, picketing or work stoppage by any union or other
group or employees affecting the business of such Party, and no such event
or action is threatened.
14.1.8 Contract or Restriction. Such Party is not a Party to or
bound by any contract or agreement nor is subject to any corporate
restrictions that could materially and adversely affect the business,
properties or condition, financial or otherwise, of such Party (other than
adverse effects resulting from vendor creditors exercising their rights
against collateral pledged by such Party pursuant to applicable vendor
credit documents) or adversely affect or call into question the power or
authority of such Party to enter into or perform this Agreement or any of
the agreements or instruments executed by such Party in connection
herewith, or that otherwise adversely affect or call into question the
validity or enforceability of this Agreement or any of the agreements or
instruments executed by such Party in connection herewith.
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14.1.9 Litigation. There are no pending or, to the best of each
Party's knowledge, threatened actions or proceedings before any court,
arbitrator or governmental or administrative body or agency that could in
any way adversely affect or call into question the power or authority of
such Party to enter into or perform this Agreement or any of the
agreements or instruments executed in connection herewith, or that in any
way adversely affect or call into question the validity or enforceability
of this Agreement or any of the agreements or instruments executed in
connection herewith.
14.1.10 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER
PATHNET NOR THE LLC MAKES ANY OTHER EXPRESS WARRANTY AND THERE ARE NO
IMPLIED WARRANTIES WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS
OR OTHER SUBJECT MATTER OF THIS AGREEMENT. PATHNET AND THE LLC HEREBY
DISCLAIM THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
14.2 Representations and Warranties of Pathnet.
14.2.1 Hazardous Materials. Pathnet represents and warrants that (i)
Pathnet is and shall remain in compliance with any and all Federal, state
or local permits in regard to Hazardous Materials, (ii) Pathnet shall
report to applicable Governmental Authorities any release of reportable
quantities of Hazardous Materials as mandated by Section 103 (a) of CERCLA
and (iii) Pathnet will, within five (5) Business Days of receipt, send to
the LLC a copy of any notice, order, inspection report or other document
issued by any government authorities relating to Pathnet's status with
environmental or health and safety laws.
14.2.2 Services. Pathnet warrants (i) that the Services will be
performed in a workmanlike manner and (ii) that it has or will obtain
agreements or arrangements with its employees, agents and Subcontractors
sufficient to allow it to provide the LLC with the Services.
SECTION 15. INDEMNIFICATION AS A RESULT OF THIRD PARTY CLAIMS.
15.1 Indemnification by the LLC. The LLC agrees to indemnify, defend and
hold harmless Pathnet and its Affiliates and their respective officers,
directors, employees, agents, successors and assigns from and against any and
all Losses and threatened Losses arising from, in connection with, or based on
allegations of, any of the following:
(a) any claims of infringement of any patent, trade secret,
copyright or other proprietary rights alleged to have occurred in
connection with systems or other resources provided by Pathnet to the LLC
and arising out of the actions of the LLC, its employees, officers or
agents.
(b) any claims arising out of the untruth, inaccuracy or breach of
any representation or warranty of the LLC set forth in this Agreement.
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(c) subject to Section 16.2 (d) below, the liability of Pathnet for
(i) any personal injury, disease or death of any person, (ii) damage to or
loss of any property, money damages or specific performance owed to any
third party (by contract or operation of law) or (iii) any fines,
penalties, taxes, claims, demands, charges, actions, causes of action,
assessments, environmental response costs, environmental penalties,
injunctive obligations any of which items (i), (ii) or (iii) are caused
by, arise out of, or are in any way incidental to, or are connected with,
actions or omissions of the LLC, its employees, officers or agents.
15.2 Indemnification by Pathnet. Pathnet agrees to indemnify, defend and
hold harmless the LLC and its Affiliates and their respective officers,
directors, employees, agents, successors and assigns from and against any and
all Losses and threatened Losses arising from, in connection with, or based on
allegations of, any of the following:
(a) any claims of infringement of any patent, trade secret,
copyright or other proprietary rights alleged to have occurred in
connection with systems or other resources provided by Pathnet to the LLC
either as a contribution to the LLC, pursuant to this Agreement or the
Pathnet Sublicense Agreement, dated as of the date hereof, or otherwise
and arising out of the actions of Pathnet.
(b) any claims arising out of the untruth, inaccuracy or breach of
any representation or warranty of Pathnet set forth in this Agreement.
(c) the liability of the LLC for (i) any personal injury, disease or
death of any person, (ii) damage to or loss of any property, money damages
or specific performance owed to any third party (by contract or operation
of law) or (iii) any fines, penalties, taxes, assessments, environmental
response costs, environmental penalties or injunctive obligations any of
which items (i), (ii) or (iii) are caused by, arise out of, or are in any
way incidental to, or are connected with, actions or omissions of Pathnet,
its employees, officers, directors or agents.
(d) the liability of the LLC to Pathnet's customers arising out of
any or all obligations to or contracts with customers or Pathnet to
purchase Pathnet Excess Capacity for alleged loss of profits or revenue by
said customers (or the customers of said customers) resulting from a loss
of service over the System.
15.3 Indemnification Procedures. With respect to any third party claims,
the following procedures shall apply:
(a) Notice. Promptly after receipt by an entity entitled to
indemnification under Section 15.1 or Section 15.2 of notice of the
commencement or threatened commencement of any civil, criminal,
administrative or investigative action or proceeding involving a claim in
respect of which the indemnitee will seek indemnification pursuant to any
such section, the indemnitee shall notify the indemnitor of such claim in
writing. No failure to so notify an indemnitor shall relieve it of its
obligations under this Agreement except to the extent that it can
demonstrate damages attributable to such failure. Within fifteen (15) days
following
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receipt of written notice from the indemnitee relating to any claim, bill
no later than ten (10) days before the date on which any response to a
complaint or summons is due, the indenmitor shall notify the indemnitee in
writing if the indenmitor elects to assume control of the defense and
settlement of that claim (a "Notice of Election").
(b) Procedure Following Notice of Election. If the indemnitor
delivers a Notice of Election relating to any claim within the required
notice period, the indemnitor shall be entitled to have sole control over
the defense and settlement of such claim; provided that, (i) the
indemnitee shall be entitled to participate in the defense of such claim
and to employ counsel at its own expense to assist in the handling of such
claim, and (ii) the indemnitor shall provide prior written notice to the
indemnitee before entering into any settlement of such claim or ceasing to
defend against such claim. After the indemnitor has delivered a Notice of
Election relating to any claim in accordance with the subsection (a)
above, the indemnitor shall not be liable to the indemnitee for any legal
expenses incurred by the indemnitee in connection with the defense of that
claim. In addition, the indemnitor shall not be required to indemnify the
indemnitee for any amount paid or payable by the indemnitee in the
settlement of any claim for which the indemnitor has delivered a timely
Notice of Election, if such amount was agreed to without the written
consent of the indemnitor.
(c) Procedure Where No Notice of Election Is Delivered. If the
indemnitor does not deliver a Notice of Election relating to any claim
within the required notice period, the indemnitee shall have the right to
defend or settle the claim in such manner as it may deem appropriate, at
the cost and expense of the indemnitor. The indemnitor shall promptly
reimburse the indemnitee for all such costs and expenses.
15.4 Subrogation. In the event that an indemnitor shall be obligated to
indemnify an indemnitee pursuant to Section 15.1 or Section 15.2, the indemnitor
shall, upon payment of such indemnity in full, be subrogated to all rights of
the indemnitee with respect to the claims to which such indemnification relates.
SECTION 16. LIABILITY OF THE PARTIES TO EACH OTHER.
16.1 Liability Generally. Subject to the specific provisions of this
Section 16, it is the intent of the Parties that each Party shall be liable to
the other Party for any actual damages incurred by the Non-Breaching Party as a
result of the Breaching Party's failure to perform its obligations in the manner
required by this Agreement and failure to cure such nonperformance as set forth
in Section 17.1.1.
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16.2 Liability Restrictions.
(a) SUBJECT TO SUBSECTION (b) BELOW, IN NO EVENT, WHETHER IN
CONTRACT OR IN TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE AND STRICT
LIABILITY IN TORT), SHALL A PARTY BE LIABLE TO THE OTHER PARTY FOR
INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
(b) The limitations set forth in subsection 16.2 shall not apply
with respect to damages occasioned by a violation of Section 13 of this
Agreement.
(c) Each Party shall have a duty to mitigate damages for which the
other Party is responsible.
(d) Each Party shall be liable to the other Party for any actual
damages as set forth in Section 16.1 only if, and to the extent that the
aggregate of all losses arising from or in connection with any failure to
perform obligations in the manner required by this Agreement exceeds ten
thousand dollars ($10,000.00), except with respect to any payment
obligations set forth in Section 5.
16.3 Force Majeure. No Party shall be liable for any breach, default or
delay in the performance of its obligations under this Agreement (i) if and to
the extent such default or delay is caused, directly or indirectly, by: fire,
flood, earthquake, elements of nature or acts of God, riots, civil disorders,
rebellions or revolutions in any country, changes in Requirements of Law
relating to the System or to the sale of Excess Capacity, or any other cause
beyond the reasonable control of such Party (a "Force Majeure Event"), (ii)
provided the non-performing Party is without fault in causing such breach,
default or delay, and such breach, default or delay could not have been
prevented by reasonable precautions and cannot reasonably be circumvented by the
non-performing Party through the use of alternate sources, work around plans or
other means.
SECTION 17. INFORMAL DISPUTE RESOLUTION; ARBITRATION.
17.1 Informal Dispute Resolution.
17.1.1 Notice of Breach, Cure and Remedies. In the event of a
material breach by either Pathnet or the LLC (the "Breaching Party") the
other Party (the "Non-Breaching Party") shall send by certified mail a
written notice of such material breach to the Breaching Party setting
forth the specific allegations of such breach. Upon receipt of the notice
of breach, the Breaching Party shall have thirty (30) days to cure such
breach. In the event the Breaching Party fails to cure such breach, as
determined by the Non-Breaching Party in its sole discretion, or the
Breaching Party determines, in its sole discretion, that it has cured such
breach, either the Breaching Party or the Non-Breaching Party may invoke
the settlement procedures set forth in Section 17 to resolve whether such
breach has been cured.
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17.1.2 Role of Program Manager. In the event the LLC has a dispute,
controversy or other complaint relating to Pathnet's performance of
Pathnet's rights and obligations under this Agreement, the LLC shall have
the right to first contact the Program Manager to resolve such dispute,
controversy or other complaint. If the LLC is not satisfied with the
resolution provided by the Program Manager, the LLC may resort to the
arbitration procedures set forth in this Section 17.
17.1.3 Resolution of Disputes. Any and all disputes and
controversies between the LLC and Pathnet concerning the negotiation,
interpretation, performance, breach or termination of this Agreement (each
a "Dispute") shall be subject to resolution as set forth in this Section
17.
17.1.4 Settlement Discussions. Any Dispute shall be attempted to be
resolved first through amicable settlement discussions and each Party
shall bear its own costs and attorney's fees of such settlement
discussions. Each Party hereby agrees to use good faith efforts to reach a
settlement through such amicable settlement discussions, provided,
however, that, nothing herein shall prevent a Non-Breaching Party from
immediately exercising any and all rights such Party may have, other than
submission of such Dispute to arbitration or institution of legal
proceedings, either of which remedies may only be invoked pursuant to the
terms hereof and after failure of the settlement discussions required
hereby.
17.1.5 Referral to Binding Arbitration or Litigation. In the event
the Parties fail to reach a settlement of the Dispute pursuant to
settlement discussions in accordance with Section 17.1.4, each Party (the
"Complaining Party") shall have the right, to file suit in a court of
competent jurisdiction in a neutral forum or upon mutual consent of the
parties, to refer such Dispute for final resolution by binding arbitration
in accordance with the rules of the American Association of Arbitration
(the "AAA"); provided, however, that the non-Complaining Party shall only
have the right to institute suit regarding the Dispute in a court of
competent jurisdiction prior to the commencement of the initial
arbitration hearing, and upon filing such suit, the arbitration
proceedings shall be deemed terminated.
17.1.6 Binding Effect. The Parties acknowledge and agree that (i)
the award in any arbitration shall be final, conclusive and binding on the
Parties and (ii) any such arbitration award be a final resolution of the
Dispute between the Parties to the same extent as a final judgment of a
court of competent jurisdiction.
17.1.7 Arbitration Process.
(A) Notice. To commence the arbitration process, the
Complaining Party shall deliver to the other Party a written notice
in accordance with the AAA rules.
(B) Site and Arbitration Tribunal. Absent agreement to the
contrary by the Parties, the arbitration will be conducted in
Washington, D.C., by a panel of three (3) arbitrators with expertise
in the fields of telecommunications engineering and construction,
provided, however, in the case of particular witnesses not subject
to
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subpoena at the designated hearing site, hearings may be held at any
place designated by the arbitrators where such witnesses can be
compelled to attend, and, with the consent of the Parties, before a
single member of the arbitration tribunal. Within thirty (30) days
after the deliverance of the notice of arbitration, each Party must
select one (1) arbitrator and a third arbitrator will be selected by
agreement of the two (2) arbitrators selected by the Parties. If
either Party fails to select an arbitrator or there is no agreement
on the selection of the third arbitrator, AAA will select such
arbitrators.
(C) Transcripts and Evidence. Both Parties shall cause a
written transcript of all proceedings and testimony to be kept and
the cost of such transcript shall be borne equally by the Parties
pending the final award. All documents that either Party proposes to
offer in evidence, except for those objected to by the other Party,
shall be deemed to be self-authenticating.
(D) Applicable Law. The arbitrators shall determine the claims
and defenses of the Parties and render their final award in
accordance with the governing law of this Agreement as set forth in
Section 18.5. Notwithstanding anything set forth in the Arbitration
Rules to the contrary, the provisions of this Section 17 shall
govern any arbitration proceeding brought in relation to this
Agreement or the transactions contemplated thereby.
(E) Sanctions. The Parties acknowledge that, in addition to
any other remedy allowed or specified in or under the AAA rules, the
failure of a Party to comply with any interim, partial or
interlocutory order, after due notice and opportunity to cure such
non-compliance, may be treated by the arbitrators as a default and
all or some of the claims or defenses of the defaulting Party may be
stricken and partial or final award entered against such Party, as
determined by the arbitrators in their sole discretion.
(F) Limitation on Awards. Arbitrators may not award (i)
incidental, consequential or punitive damages in the resolutions of
any Dispute and the Parties hereby waive all rights to and claims
for monetary awards other than compensatory damages, (ii) any other
right or remedy that contravenes the terms and conditions of this
Agreement, or (iii) except as provided in Section 3.2, termination
of this Agreement.
(G) Period of Limitations. In the event the Party claiming a
Dispute does not either file suit or institute binding arbitration
within four (4) years after the commencement of settlement
discussions pursuant to Section 17.1.4, such Party shall forever be
barred from bringing a claim on the specific subject matter of such
Dispute.
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(H) Arbitration Award. Any arbitration award must be in
writing and must contain findings of fact and conclusions of law
upon which the arbitrators relied in making the decision relating to
such award.
(I) Attorney's Fees. The arbitrators shall award the
reasonable cost, including attorneys' fees, to the prevailing Party.
SECTION 18. MISCELLANEOUS.
18.1 Notices. All notices pertaining to disputes arising from this
Agreement shall be directed to a corporate entity or employee designated by the
signatories as having full rights and responsibilities to address such issues.
Notices under this Agreement shall be sufficient only if personally delivered by
a commercial prepaid delivery or courier service or mailed by Certified or
registered mail, return receipt requested to a Party at its address set forth
below or as amended by notice pursuant to this Section 18.1 If not received
sooner, notice by mail shall be deemed received five (5) Business Days after
deposit in the U.S. mail. All notices shall be delivered as follows:
If to Pathnet:
Michael A. Lubin, Esquire
Vice President and General Counsel
Pathnet, Inc.
1015 3lst Street, NW
Washington, D.C. 20007
Tel:202.625.7284
Fax:202.625.7369
If to the LLC:
Dave Angell
Pathnet/Idaho Power Equipment, LLC
c/o Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, ID 83702-5627
Tel:208.388.2701
Fax:208.388.6902
18.2 Binding Nature: Entire Agreement. Pathnet and the LLC acknowledge
that (i) each has read and understands the terms and conditions of this
Agreement and agrees to be bound by such terms and conditions, (ii) this
Agreement shall be binding on each of Pathnet and the LLC and their respective
successors and assigns, (iii) this Agreement together with any agreements or
documents executed in connection and contemporaneously herewith is the complete
and conclusive statement of the agreement between the Parties, (iv) this
Agreement together with any agreements or documents executed in connection and
contemporaneously herewith supersedes any and all prior agreements and
arrangements between the Parties and all understandings and agreements, oral and
written, heretofore made between the LLC and Pathnet are merged in this
Agreement which together
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with any agreements or documents executed in connection and contemporaneously
herewith, fully and completely expresses their agreement on the subject matter
of this Agreement and (v) this Agreement together with any agreements or
documents executed in connection and contemporaneously herewith sets forth the
entire agreement on the subject matter hereof.
18.3 Amendment. No modifications of, additions to or waiver of this
Agreement shall be binding upon the LLC or Pathnet unless such modification,
addition or waiver is in writing and signed by an authorized representative of
each Party.
18.4 Severability. If any provision, sentence, phrase or word of this
Agreement or the application thereof to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of such provision,
sentence, phrase or word to Persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
18.5 Governing Law. This Agreement, and the rights and obligations of the
Parties hereunder, shall be governed and interpreted in accordance with the laws
of the State of Idaho (other than the choice of law rules thereof).
18.6 Survival. Any provision of this Agreement which contemplates
performance or observance subsequent to any termination or expiration of this
Agreement shall survive such termination or expiration and continue in full
force and effect.
18.7 Assignment. At any time and from time to time, Pathnet shall have the
right to assign this Agreement or any of Pathnet's rights and obligations under
this Agreement to an assignee, which assignee shall be bound by the terms and
conditions of this Agreement; provided, that in no event shall any such
assignment relieve Pathnet of its obligations under this Agreement. The LLC may
not or shall not have the right to assign this Agreement or any of its rights
and obligations hereunder without the prior written consent of Pathnet, which
consent shall not be unreasonably withheld; provided, however, the LLC may
assign its right and obligations, in whole but not in part, under this Agreement
without the approval of Pathnet, to any entity which acquires all or
substantially all of the assets of the LLC or to any subsidiary, Affiliate or
successor in a merger or consolidation of the LLC; provided, that in no event
shall any such assignment relieve the LLC of its obligations under this
Agreement.
18.8 Waiver. Failure or delay on the part of the LLC or Pathnet to
exercise any right, power or privilege under this Agreement shall not constitute
a waiver of any right power or privilege of this Agreement.
18.9 Recordation. Each Party hereby acknowledges that this Agreement may
be subject to recordation and the costs, fees or expenses associated with any
such recordation shall be borne by the recording Party.
18.10 Good Faith Renegotiation. Notwithstanding anything set forth herein
to the contrary, the Parties hereby agree that in the event a Governmental
Authority issues a decision, order, rule or other rulemaking of any kind, which
necessitates any modification or amendment to this
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Agreement, the Parties shall negotiate in good faith to modify or amend this
Agreement to comply with such decision, order, rule or other rulemaking.
18.11 Confidential Terms and Conditions. The LLC shall not disclose,
except as required by law or as set forth in Section 18.9, the terms and
conditions of this Agreement to any third party.
18.12 LLC's Designated Representative. The LLC shall on the Effective Date
designate in writing a representative who shall have express authority to bind
the LLC with respect to all matters requiring the LLC's approval or
authorization in connection with this Agreement (the "LLC Representative"). Such
LLC Representative shall have the authority to make decisions and grant any and
all consents required under this Agreement on behalf of the LLC and Pathnet
shall be entitled to rely on any such decision or consent by the LLC
Representative.
18.13 Outsourcing. In addition to, and not in place of, any rights of
Pathnet under this Agreement, Pathnet shall have the right to engage third party
Subcontractors to perform any or all of Pathnet's rights and obligations under
this Agreement, subject to the LLC's prior approval, which approval shall not be
unreasonably withheld; provided that such approval shall not be required for
third-party operation of the Network Monitoring Center.
18.14 Schedule B. In the event the Parties mutually agree to include any
additional or alternative sites in the development of the System, as set forth
herein, such additional or alternative sites shall be amended on Schedule B and
shall be deemed included in Schedule B for all purposes herein.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of
the date first written above.
PATHNET, INC.
By: /s/ Dave Schaeffer
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Name: Dave Schaeffer
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Title: Chairman
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PATHNET/IDAHO POWER EQUIPMENT, LLC
By: /s/ Kip W. Runyan
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Name: Kip W. Runyan
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Title: President
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