CONFIDENTIAL TREATMENT
CAPACITY LEASE AND IRU AGREEMENT
THIS CAPACITY LEASE AND IRU AGREEMENT ("Agreement") is made and
entered into as of the 11th day of February, 1999, by and between LEVEL 3
COMMUNICATIONS, LLC, a Delaware limited liability company ("Grantor") and
Communication TeleSystems International, d/b/a "WorldxChange Communications",
a California corporation ("Grantee")
RECITALS
A. Grantor is currently constructing a nationwide multiconduit
fiber optic communications system (the "Grantor System") connecting the
cities identified on Exhibit "A" attached hereto. In addition, Grantor has
and will enter into various arrangements with carriers pursuant to which
Grantor has leased or obtained the right to use fibers, fiber capacity or
transport capacity connecting the cities identified on Exhibit "A" (the
"Leased System").
B. Grantee desires to obtain the right to use transport capacity
along the Leased System and the Grantor System.
C. Grantor desires to grant to Grantee, and Grantee desires to
obtain from Grantor, a lease in the Capacity (as defined below) and (after
such lease term expires) an indefeasible right to use the Capacity, all upon
and subject to the terms and conditions set forth below. Grantor and Grantee
further desire that the provisions of this Agreement would be generally
applicable to future orders for transport capacity submitted by Grantee and
accepted by Grantor under the terms of this Agreement.
ARTICLE 1
DEFINITIONS
1.1 "Acceptance Date" shall mean the date when Grantee delivers (or
is deemed to have delivered) notice of acceptance of a
Completion Notice with respect to a Segment in accordance with
Article 8.
1.2 "Acceptance Testing" shall have the meaning set forth in
Article 8.
1.3 "Access Points" shall have the meaning set forth in Article 9.
1.4 "Affiliate" shall mean, with respect to any specified Person,
any other Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under
common control with, such specified Person ("control,"
"controlled by" and "under common control with" shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise).
1.5 "Availability Notice" shall have the meaning set forth in
Section 7.3.
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1.6 "Capacity" shall mean the transmission capacity ordered by
Grantee and provided by Grantor under the terms of this
Agreement. Capacity shall include, for purposes of this
Agreement, transmission capacity between two points each of
which is a Grantor "gateway" facilities in each city set forth
in Exhibit "A" (all of which are within the continental United
States), as well as additional cities ("Additional Cities")
when and as Grantor establishes a "gateway" facility in such
cities and commences delivery of private line service to other
customers through the Leased System or the Grantor System to
and from such gateway facilities.
1.7 "Capacity Fee" shall mean the fee calculated in accordance with
Exhibit "B" and due and payable in accordance with Section 5.1.
1.8 "Committed Capacity" shall have the meaning set forth in
Section 7.7.
1.9 "Completion Notice" shall have the meaning set forth in
Section 8.2.
1.10 "Dispute Notice" shall have the meaning set forth in
Article 20.
1.11 "Effective Date" shall have the meaning set forth in Article 6.
1.12 "Force Majeure Event" shall have the meaning set forth in
Article 15.
1.13 "Grantor System" shall have the meaning set forth in the
Recitals.
1.14 "IRU" shall have the meaning set forth in Article 4.
1.15 "IRU Term" shall have the meaning set forth in Article 6.
1.16 "Leased System" shall have the meaning set forth in the
Recitals.
1.17 "Lease Term" shall have the meaning set forth in Article 6.
1.18 "Mileage" shall mean the distance between the Segment End
Points for each Segment, measured on a straight line or "air
miles" basis (regardless of the route miles for the Grantor
System or the Leased System).
1.19 "Operations and Maintenance Fee" shall mean the fee calculated
in accordance with Exhibit "B" and due and payable in
accordance with Section 5.1.
1.20 "Person" shall mean any natural person, corporation,
partnership, limited liability company, business trust, joint
venture, association, company or governmental authority.
1.21 "Prime Rate" shall mean, as of any relevant date, the interest
rate most recently published in the Money Rates Section of THE
WALL STREET JOURNAL as the prime rate.
1.22 "Proprietary Information" shall have the meaning set forth in
Section 19.1.
1.23 "Segments" shall have the meaning set forth in Section 2.1.
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1.24 "Segment End Points" shall have the meaning set forth in
Section 2.1.
1.25 "System Route" shall have the meaning set forth in Section 2.1.
1.26 "Term" shall have the meaning set forth in Article 6.
ARTICLE 2
GRANTOR SYSTEM
2.1 The Grantor System will connect the city pairs identified on
Exhibit "A" attached hereto (each city identified on Exhibit
"A" and each Additional City (as applicable) is herein called a
"Segment End Point" (each of which shall be located in
Grantor's "gateway" facility in such city), the route between
the applicable Segment End Points is herein called a "Segment",
and all of the Segments together are herein called the "System
Route"). The specific location of the System Route between
Segment End Points is subject to Grantor obtaining the
applicable permits, rights and rights of way; however, the
System Route will connect the Segment End Points for each
Segment. Each Segment End Point of the Grantor System and the
Leased System shall be served by at least one of the local
exchange carriers specified on Exhibit "D" attached hereto (the
"Qualified LECs") which has sufficient capacity available at
the Segment End Points to permit Grantee to obtain
interconnection of the Capacity to Grantee's network.
2.2 Notwithstanding anything to the contrary contained herein,
Grantor may elect, at its option, to acquire any portion of the
Grantor System from third parties (whether under a lease,
sublease, indefeasible right of use, or otherwise) in lieu of
constructing and installing the Grantor System respecting such
portion; provided, any such acquisition shall not relieve
Grantor of its obligation to provide the Capacity in accordance
with the terms of this Agreement.
ARTICLE 3
LEASED SYSTEM
The Capacity will be made available to Grantee over the Leased System
between the cities identified on Exhibit "A" and each Additional City,
as applicable. Upon completion of the Grantor System, Grantor shall be
permitted to migrate Capacity from the Leased System to the Grantor System,
which migration shall be performed at no cost to Grantee. Grantor shall
cooperate with Grantee to perform such migration in a manner and at a time
which is reasonably designed to minimize the extent and duration of any
interruption in Grantee's use of the Capacity, including performance of a
parallel "hot cut." Grantor agrees that the Segment End Points shall not be
altered as a result of migration of the Capacity from the Leased System to
the Grantor System. Grantor shall provide at least sixty (60) days prior
notice to Grantee of the migration for each Segment involved. Additionally,
Grantor shall reimburse Grantee for all reasonable costs and expenses
incurred by Grantee which are required as a result of such migration.
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ARTICLE 4
LEASE OF CAPACITY AND GRANT OF IRU
As of the Effective Date for each particular Segment along which Capacity is
delivered by Grantor to Grantee hereunder, Grantor hereby leases to Grantee,
and Grantee hereby leases from Grantor for the Lease Term (as defined in
Article 6 hereof), the Capacity between the Segment End Points for each such
Segment. Upon expiration of each Lease Term (and provided that Grantee is not
then in default in the performance hereof, including (but not limited to) its
payment in full of the Capacity Fee and the Operations and Maintenance Fee),
Grantor shall grant to Grantee, and Grantee shall acquire from Grantor, an
exclusive indefeasible right of use in, for the purposes described herein and
for the IRU Term (as defined in Article 6 hereof), the Capacity between the
Segment End Points for each such Segment (the "IRU").
ARTICLE 5
FEES AND PAYMENT
5.1 The Capacity Fee shall be calculated on the basis of the
Mileage for each Segment as set forth on Exhibit "B". [ * ]
of the Capacity Fee for each Segment (the "Initial Payment")
shall be due and payable within five (5) days after the
Acceptance Date for each Segment. The balance of the Capacity Fee
shall accrue interest at the rate of [ * ] per annum and shall
be due and payable monthly in advance (with the first payment due
on the first day of the month following the Acceptance Date and
subsequent payments due on the first day of each month
thereafter) over sixty (60) months, in equal monthly installments
of principal and interest. The first monthly installment of the
Capacity Fee shall include a prorated payment (based on a thirty
(30) day month) of the Capacity Fee for the period of time from
and after the Acceptance Date until the date such first monthly
installment is due.
5.2 In addition to the Capacity Fee, Grantee shall, on the
Acceptance Date and on or before the first day of each month
thereafter during the Term, pay Grantor the Operations and
Maintenance Fee calculated on the basis of the Mileage for each
Segment as set forth on Exhibit "B". The Operations and
Maintenance Fee for the first and last month of the Term shall
be prorated based on a thirty (30) day month. The Operations
and Maintenance Fee set forth in Exhibit "B" shall be increased
on each anniversary of the Acceptance Date of the first Segment
by the lesser of (a) the increase, if any, in the Consumer
Price Index, All Urban Consumers (CPI-U), U.S. City Average,
published by the United States Department of Labor, Bureau of
Labor Statistics, for the preceding twelve (12) month period,
or (b) [ * ]. In the event the above-described index shall
cease to be computed or published, Grantor may, in its reasonable
discretion, designate a successor index to be used in determining
any increase to the Operations and Maintenance Fee.
5.3 Nonrecurring charges for reconfigurations or swaps on the
Capacity shall be as set forth in Exhibit "F", and shall be
paid within thirty (30) days of Grantee's receipt of an invoice
for such charges.
* Confidential treatment has been requested for a portion of this Exhibit
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5.4 All payments made by Grantee under this Article shall be made
without any deduction or withholding for or on account of any
tax, duty or other charges of whatever nature imposed by any
taxing or governmental authority, but excluding taxes or other
impositions relating to the income or profits of Grantor
(collectively "Taxes"). If Grantee is or was required by law to
make any deduction or withholding from any payment due
hereunder to Grantor (other than as a result of Grantee's
receipt of a garnishment from a taxing authority respecting
taxes owed or allegedly owed by Grantor), then, notwithstanding
anything to the contrary contained in this Agreement, the gross
amount payable by Grantee to Grantor will be increased so that,
after any such deduction or withholding for Taxes, the net
amount received by Grantor will not be less than Grantor would
have received had no such deduction or withholding been
required.
5.5 Except for taxes based on Grantor's net income and except with
respect to ad valorem personal and real property taxes imposed
on Grantor's property, Grantee shall be responsible for payment
of all sales, use, gross receipts, excise, access, bypass,
surcharge, franchise or other local, state and federal taxes,
fees, charges, or surcharges, however designated, imposed on or
based upon the provision, sale or use of the Capacity delivered
by Grantor. Any such taxes required to be paid by Grantor shall
be separately noted and added to the Operations and Maintenance
Fee. Any federal, state or local tax, fee, charge, or surcharge
shall be payable only for Capacity that is subject to such
imposition.
5.6 Any sums not paid by Grantee when due shall bear interest at
the rate of [ * ] per month or the highest rate permitted by
law (whichever is lower), from the date payment was due until
paid in full.
ARTICLE 6
TERM
The lease of Capacity with respect to each Segment shall become effective on
the first day when both (i) the Acceptance Date with respect to the Segment
has occurred and (ii) Grantor has received the Initial Payment due to Grantor
under Section 5.1 with respect to such Capacity (the "Effective Date"). The
term of the lease of Capacity shall expire, with respect to each order for
Capacity, on the fifth anniversary of the Effective Date (or such sooner date
as provided in Article 16 hereof) (the "Lease Term"). The IRU with respect to
Capacity ordered shall commence upon expiration of the Lease Term for such
Capacity (provided that the Lease Term has not been terminated under Article
16 hereof and further provided that Grantee is not then in material default
hereof). Subject to the provisions of Article 16, the IRU with respect to
each Segment shall terminate fifteen (15) years after the termination of the
Lease Term (the "IRU Term"). The Lease Term and the IRU Term shall
collectively be referred to as the "Term."
ARTICLE 7
ORDERS FOR CAPACITY
7.1 Grantee may (but is not hereby obligated, except as otherwise
provided in Section 7.7 hereof), for a period of five (5) years
after execution of this Agreement, submit orders to Grantor for
the delivery of Capacity ("Orders") under the terms of this
Agreement.
* Confidential treatment has been requested for a portion of this Exhibit
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Grantor shall, except as otherwise provided herein, deliver
such Capacity between the Segment End Points under the terms of
this Agreement.
7.2 Any Order for the delivery of Capacity by Grantee shall be made
in writing and shall contain the following information: (a) the
level or amount of Capacity requested (Grantee shall be
permitted to order Capacity in increments of no less than [ * ]
and no greater than [ * ]), (b) the city pairs between which
such Capacity is requested, (c) any date(s) upon which Grantee
requires such Capacity (which, unless otherwise agreed by
Grantor, shall be no later than ninety (90) days from the date
of the request), and (d) such other information Grantee deems
reasonably necessary including required Ancillary Services as
set forth in Exhibit "F" hereto. Grantee must submit such
requests to Grantor by facsimile or E-Mail as mutually agreed
upon to the contact identified by Grantor.
7.3 Grantor shall, within five (5) days after the receipt of such
Order, either (a) request additional information from Grantee
respecting such request (but only in the event that information
on Grantor's standard order form has not been supplied by
Grantee), (b) deliver written notice to Grantee that Grantor
will not provide the requested Capacity, setting forth in such
notice the reason(s) why such requested Capacity cannot be
provided or (c) deliver written notice to Grantee (the
"Availability Notice") stating that the requested Capacity can
be provided on terms contained in this Agreement and in the
written request. In the event that Grantor fails to respond to
an Order within five (5) days after receipt thereof, Grantee
shall provide Grantor's designated representative with E-Mail
or facsimile notice, as mutually agreed upon by both parties,
of such failure and Grantor shall have one (1) business day
after receipt of such E-Mail or facsimile notice within which
to cure its failure to respond to the Order. In the event
Grantor fails to so cure, Grantor shall be deemed to have
refused to provide the requested Capacity. The Availability
Notice shall include a specification of the channel facility
assignment to one of the Qualified LECs, if then known to
Grantor, as well as a Letter of Agency ("LOA") which authorizes
Grantee to order the necessary local facilities. If Grantor is
unable to provide specification of the channel facility
assignment to a Qualified LEC at the time of the Availability
Notice, Grantor shall provide such specification (together with
the LOA) on the last to occur of (a) fifteen (15) days after
delivery of the Availability Notice, or (b) thirty (30) days
prior to the requested start date for the subject Capacity. The
failure of Grantor to provide a written specification of the
channel facility assignment or the LOA within the time
specified above shall be treated as a rejection by Grantor of
the Order and shall entitle Grantee to pursue the remedy set
forth in Section 16.4 of this Agreement. Grantor's issuance of
the Availability Notice constitutes a firm order and Grantee
will then have until ten (10) days prior to the requested start
date for the subject Capacity to cancel the Order with no
cancellation charges. Should Grantee cancel the order after the
period 10 days prior to the requested start date for the subject
Capacity, Grantee will then be obligated to pay a cancellation
fee in the amount set forth in Exhibit "F". In the event Grantee
cancels an order for Capacity, Grantor shall have no obligation
to provide the Capacity specified therein, and Grantee shall not
be obligated to accept such Capacity. Grantee may not cancel any
order after Grantor has provided a Completion Notice for the
subject Capacity.
7.4 Grantee shall, no later than ten (10) days prior to the
requested start date for the subject Capacity, provide Grantor
with the "Design Layout Record" or "DLR" for the local
* Confidential treatment has been requested for a portion of this Exhibit
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facility to which such Capacity shall be connected. Grantee's failure to
deliver such information to Grantor as within the time stated above shall
extend, on a day-for-day basis, the time within which Grantor is
otherwise obligated to deliver such Capacity to Grantee.
7.5 The terms and provisions of this Agreement shall, unless otherwise
agreed in writing by the parties, be applicable to the delivery of the
Capacity.
7.6 Grantor agrees to deliver a Completion Notice with respect to Capacity
ordered between the Segment Endpoints listed on Exhibit "A" within the
following times:
(a) [ * ] days after receipt of an Order for any Orders
submitted within the first [ * ] after execution hereof;
(b) [ * ] after receipt of an Order (other than Orders
submitted within the first [ * ] after execution hereof) for
DS-3 Capacity;
(c) [ * ] after receipt of an Order (other than
Orders submitted within the first [ * ] after execution
hereof) for OC-3 Capacity.
PROVIDED, however, that Capacity to and from each Segment End Point may
not be ordered by Grantee at any time prior to the dates set forth in
Exhibit "A". Notwithstanding the foregoing, in no event shall Grantor be
obligated (unless otherwise agreed in writing by Grantor which
references this Section 7.6) to install more than [ * ] circuits or
more than [ * ] circuit along any Segment in any calendar month. Grantor
shall under no circumstances be obligated to deliver Capacity, and the
remedies set forth in Section 16.4 shall not apply to, either (a) any
Capacity which is ordered after Grantee has satisfied the Committed
Capacity requirement set forth in Section 7.7 below, other than an order
pursuant to the provisions of Section 7.8 for a swap of Capacity where
the new Capacity ordered will replace Capacity which was originally
ordered as part of the Committed Capacity or previously swapped for
Capacity which was part of the Committed Capacity, or (b) any Capacity
ordered for a city pair where Grantee has previously ordered [ * ] or
more DS-3's (or the equivalent thereof). Grantee's sole remedy for default
in the performance of this Section is set forth in Section 16.4. In the
event that a Force Majeure Event (as defined in Article 15) prevents
Grantor from satisfying the requirements of this Section, then,
notwithstanding Article 15, Grantee shall be entitled to the remedies set
forth in Section 16.4. A schedule of Grantee's currently forecasted
Capacity orders is set forth as Exhibit "C". Although this forecast
represents Grantee's present estimate of future needs, it is not binding
and shall not affect the obligations of Grantor and Grantee under this
Agreement under any circumstances.
7.7 Grantee hereby agrees that, in the first nine (9) months after execution
of this Agreement, Grantee shall submit orders for Capacity between the
Segment End Points listed on Exhibit "A" which equal or exceed
[ * ] (the "Committed Capacity"). Grantor's sole remedy for default in
the performance of this Section is set forth in Section 16.5.
* Confidential treatment has been requested for a portion of this Exhibit
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7.8 Grantee shall be permitted to swap Capacity which has been ordered
between two Segment End Points for Capacity between two other Segment
End Points. In the event that the total DS-0 Mileage for the new Capacity
is equal to or less than the total DS-0 Mileage for the old Capacity, no
additional Capacity Fee will be assessed. In the event that the total
DS-0 Mileage for the new Capacity is greater than the total DS-0 Mileage
for the old Capacity, an additional Capacity Fee shall be due and
payable within five (5) days after the Acceptance Date for the new
Capacity. Grantee shall in no event be entitled to a refund, rebate or
reduction in the Capacity Fee as a result of a request to swap Capacity,
but any Capacity lost by Grantee as a result of a swap may be used on a
mile for mile basis on future Orders for Capacity. Delivery of the new
Capacity shall be governed by the provisions hereof applicable to
ordering and delivery of Capacity, except that no new Capacity Fee shall
be payable on that portion of a future order attributable to swapped
Capacity. Nonrecurring charges, as specified in Exhibit "F", shall be
due and payable in the event Grantee requests to swap Capacity.
Notwithstanding anything in this Section, Grantee shall not be permitted
to request a swap of Capacity at any time during the first year after
the Acceptance Date for such Capacity.
7.9 Grantee shall be permitted to delay the requested installation date for
Capacity two (2) times with respect to any order, provided that (a) each
such request shall be submitted in writing, (b) each such request must
be received by Grantor no later than five (5) days prior to the
then-scheduled installation date, and (c) Grantee shall be permitted to
extend the date for installation by no more than thirty (30) days with
respect to each request (so that installation for Capacity may be
delayed by a maximum of sixty (60) days from the originally scheduled
installation date.)
ARTICLE 8
ACCEPTANCE TESTING AND COMPLETION
8.1 Grantor shall test the Capacity and the Ancillary Services relating
thereto in accordance with generally acceptable industry standards
("Acceptance Testing"). Grantor shall provide Grantee with prior notice
of the date and time of Acceptance Testing and Grantee shall have the
right, but not the obligation, at Grantee's cost and expense, to
participate in the end to end Acceptance Testing.
8.2 When Grantor has reasonably determined that the results of the
Acceptance Testing with respect to a particular Segment show that the
Capacity and the Ancillary Services relating thereto so tested is
operating substantially in conformity with the applicable specifications
required to meet the Acceptance Testing, Grantor shall provide written
notice of same to Grantee (a "Completion Notice"). Grantee shall, within
five (5) days of receipt of the Completion Notice, either accept or
reject the Completion Notice (specifying, if rejected, the defect or
failure in the Acceptance Testing and/or the items or matters to be
remedied) by delivery of written notice to Grantor. In the event Grantee
rejects the Completion Notice, Grantor shall promptly, and at no cost of
Grantee, commence to remedy the defect or failure specified in Grantee's
notice. Thereafter Grantor shall again give Grantee a Completion Notice
with respect to such Segment. The foregoing procedure shall apply again
and successively thereafter until Grantor has remedied all defects or
failures specified by Grantee. However, the failure of Grantor to
provide Capacity which is operating substantially in conformity with the
applicable
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requirements of the Acceptance Testing by the date which is the later of
(i) within fifteen (15) days after Grantor's initial delivery of a
Completion Notice; (ii) the date upon which the Capacity was due under
Section 7.6; and (iii) the requested start date contained in Grantee's
Order, shall constitute a failure of delivery and shall entitle Grantee
to pursue the remedy set forth in Section 16.4 of this Agreement. Any
failure by Grantee to timely reject a Completion Notice shall be deemed
to constitute acceptance for purposes of this Agreement and Grantee
shall be deemed to have delivered a notice of acceptance on the
fifteenth day after delivery of the Completion Notice.
ARTICLE 9
ACCESS
Subject to payment of the fees and charges specified in Exhibit "F" and "G"
attached hereto, Grantor shall provide Grantee with access to, and Grantee
shall have the right to interconnect its communications system with, the
Capacity at the Segment End Points and, subject to the consent of Grantor, at
other technically feasible access points (the "Access Points"). Grantor shall
permit Grantee to connect with a local carrier at each Segment End Point,
provided that such local carrier is listed on Exhibit "D". Grantee shall have
the right (subject to availability of space in Grantor's facilities on a
non-discriminatory basis) to obtain colocation space from Grantor in each
Segment End Point for the purpose of interconnecting its communications
systems with the Capacity. The terms and conditions applicable to each such
colocation are specified in Exhibit "E" and the rates for each such
colocation are set forth in Exhibit "G". These rates, terms and conditions
shall be memorialized in individual Customer order forms for each requested
colocation space. In addition, Grantee shall have the right to lease
capacity on Grantor's entrance facilities at the Segment End Points at the
rates then being offered by Grantor to other customers with similar usage and
term commitment levels as Grantee requests.
ARTICLE 10
MAINTENANCE AND REPAIR
10.1 Grantor shall use reasonable efforts to cause the Capacity which is
leased or in which an IRU has been granted hereunder to be maintained in
efficient working order and in accordance with industry standards.
10.2 Should any condition exist in any Capacity which is leased or in which an
IRU has been granted hereunder that may impair the integrity of such
Capacity, Grantor shall take reasonable actions to initiate or cause to
be initiated maintenance on such Capacity which may include the
deactivation of such Capacity. Grantor shall, to the extent reasonably
practicable, advise Grantee in writing at least 30 days (or such shorter
period as may be agreed) prior to the initiation of a planned maintenance
operation of the timing and scope of such planned maintenance operation.
10.3 In the event of disruption of operation of the Capacity, Grantor shall
use commercially reasonable efforts to cause service to be restored as
quickly as reasonably possible, and Grantor shall take such measures as
are reasonably necessary to obtain such objective.
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10.4 Grantor shall, in the performance of its obligations set forth in this
Article 10, use the same level of efforts to maintain and restore the
Capacity as Grantor employs in connection with the maintenance and
restoration of Grantor's own service and facilities.
10.5 Grantor shall provide Ancillary Services in a commercially reasonable
manner, and in accordance with industry standards.
10.6 If total outages for any given circuit (including outages attributable
to maintenance or Force Majeure Events) exceed [ * ] in any
twelve (12) month period, Grantee shall have the right (exercisable
within thirty (30) days after total outages exceed such level) to
terminate delivery of the circuit and receive a refund of the unused
portion of the Capacity Fee paid for such circuit as set forth in
Section 16.3.
ARTICLE 11
USE OF CAPACITY
11.1 Grantee represents and warrants that it will use the Capacity and the
IRU hereunder in compliance with all applicable government codes,
ordinances, laws, rules and regulations.
11.2 Subject to the provisions of this Agreement, Grantee may use the
Capacity and the IRU for any lawful purpose. Grantee acknowledges and
agrees that it has no right to use any fibers included or incorporated
in the Leased System or the Grantor System, and that Grantee shall keep
any and all of the Leased System and the Grantor System free from any
liens, rights or claims of any third party attributable to Grantee.
11.3 Notwithstanding anything to the contrary contained in this Agreement,
Grantee covenants and agrees that Grantee shall not, that Grantee
shall have no right to, and that Grantor may enjoin Grantee from any
attempt to, assign, sell, lease, sublease, transfer, or convey the IRU
granted hereunder with respect to any Segment. Grantee may sell
services using the Capacity or lease portions of the Capacity to third
parties without restriction. By way of example regarding the
foregoing, Grantee would be prohibited from transferring any Segment
to a third party on an IRU basis but would have the unrestricted right
to lease all or a portion of the Capacity to third parties. No such
sale or lease shall, however, eliminate or affect either party's
obligations under this Agreement.
11.4 Grantee shall not use the Capacity in a way which physically
interferes in any way with or otherwise adversely affects the use of
the fibers, cable or conduit of any other Person using the Leased
System, the Grantor System or capacity therein.
11.5 Grantee and Grantor agree to cooperate with and support each other in
complying with any requirements applicable to their respective rights
and obligations hereunder by any governmental authority, so long as
(i) such cooperation does not materially increase a party's costs or
efforts in connection with the performance of this Agreement and
(ii) the party requesting such support or cooperation shall reimburse
the other party for all costs and expenses incurred in connection
therewith.
* Confidential treatment has been requested for a portion of this Exhibit
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ARTICLE 12
INDEMNIFICATION
12.1 Subject to the provisions of Article 13, Grantor hereby agrees to
indemnify, defend, protect and hold harmless Grantee and its
employees, officers and directors, from and against, and assumes
liability for: (i) any injury, loss or damage to any Person, tangible
property of facilities of any Person (including reasonable attorney
fees and costs) to the extent arising out of or resulting from the
negligence or willful misconduct of Grantor, its officers, employees,
servants, affiliates, agents, contractors, licensees, invitees and
vendors arising out of or in connection with the performance by
Grantor of its obligations under this Agreement; and (ii) any claims,
liabilities or damages arising out of any violation by Grantor of any
regulation, rule, statute or court order of any governmental authority
in connection with the performance by Grantor of its obligations under
this Agreement.
12.2 Subject to the provisions of Article 13, Grantee hereby agrees to
indemnify, defend, protect and hold harmless Grantor, and its
employees, officers and directors, from and against, and assumes
liability for: (i) any injury, loss or damage to any Person, tangible
property or facilities of any Person (including reasonable attorney
fees and costs) to the extent arising out of or resulting from the
negligence or willful misconduct of Grantee, its officers, employees,
servants, affiliates, agents, contractors, licensees, invitees and
vendors arising out of or in connection with the exercise by Grantee
of its rights under this Agreement; and (ii) any claims, liabilities
or damages arising out of any violation by Grantee of any regulation,
rule, statute or court order of any governmental authority in connection
with the exercise by Grantee of its rights under this Agreement.
12.3 Grantor and Grantee agree to promptly provide each other with notice
of any claim which may result in an indemnification obligation
hereunder. The indemnifying party may defend such claim with counsel
of its own choosing provided that no settlement or compromise of any
such claim shall occur without the consent of the indemnified party,
which consent shall not be unreasonably withheld or delayed.
12.4 Grantor and Grantee each expressly recognize and agree that its
obligation to indemnify, defend, protect and save the other harmless
is not a material obligation to the continuing performance of its other
obligations, if any, hereunder. In the event that a party shall fail
for any reason to so indemnify, defend, protect and save the other
harmless, the injured party hereby expressly recognizes that its sole
remedy in such event shall be the right to bring legal proceedings
against the other party for its damages as a result of the other
party's said failure to indemnify, defend, protect and save harmless.
These obligations shall survive the expiration or termination of this
Agreement.
ARTICLE 13
LIMITATION OF LIABILITY
Notwithstanding any provision in any other Article of this Agreement to the
contrary and except to the extent caused by the willful misconduct of a
party, neither party shall be liable to the other party for any special,
incidental, indirect, punitive or consequential damages, whether
-11-
foreseeable or not, arising out of, or in connection with such party's
failure to perform its respective obligations hereunder, including, but not
limited to, loss of profits or revenue (whether arising out of transmission
interruptions or problems, any interruption or degradation of service or
otherwise), or claims of customers, whether occasioned by any construction,
reconstruction, relocation, repair or maintenance performed by, or failed to
be performed by, the other party or any other cause whatsoever, including
breach of contract, breach of warranty, negligence, or strict liability, all
claims for which damages are hereby specifically waived. This Article shall
not eliminate the right of the parties to pursue and obtain the relief
specified in Sections 16.4 and 16.5. Nothing contained herein shall operate
as a limitation on the right of either party hereto to bring an action for
damages against any third party, including claims for indirect, special or
consequential damages, based on any acts or omissions of such third party.
ARTICLE 14
INSURANCE
14.1 During the term of this Agreement, each party shall obtain and
maintain, and shall require any of its permitted subcontractors to
obtain and maintain, the following insurance, naming the other party as
an additional insured: (i) not less than $5,000,000.00 combined single
limit liability insurance, on an occurrence basis, for personal injury
and property damage, including injury or damage arising from the
operation of vehicles or equipment and liability for completed
operations; (ii) worker's compensation insurance in amounts required by
applicable law and employer's liability insurance with a limit of at
least $1,000,000.00 per occurrence; and (iii) automobile liability
insurance covering death or injury to any person or persons, or damage
to property arising from the operation of vehicles or equipment, with
limits of not less than $1,000,000.00 per occurrence.
14.2 Both parties expressly acknowledge that a party shall be deemed to be
in compliance with the provisions of this Article if it maintains an
approved self-insurance program providing for a retention of up to
$1,000,000.00. If either party provides any of the foregoing coverages
on a claims made basis, such policy or policies shall be for at least a
three (3) year extended reporting or discovery period.
14.3 Unless otherwise agreed, all insurance policies shall be obtained and
maintained with companies rated A or better by Best's Key Rating Guide
and each party shall, upon request, provide the other party with an
insurance certificate confirming compliance with the requirements of
this Article.
14.4 Grantee and Grantor shall each obtain from the insurance companies
providing the coverages required by this Agreement, the permission of
such insurers to allow such party to waive all rights of subrogation
and such party does hereby waive all rights of said insurance companies
to subrogation against the other party, its affiliates, subsidiaries,
assignees, officers, directors and employees.
14.5 In the event either party fails to maintain the required insurance
coverages and a claim is made or suffered, such party shall indemnify
and hold harmless the other party from any and all claims for which the
required insurance would have provided coverage.
-12-
ARTICLE 15
FORCE MAJEURE
Except with respect to (a) Grantee's obligations to pay the Capacity Fee and
the Operations and Maintenance Fee, and (b) the rights and obligations of
Grantor and Grantee under Sections 10.6 and 16.4, neither party shall be in
default under this Agreement if and to the extent that any failure or delay
in such party's performance of one or more of its obligations hereunder is
caused by any of the following conditions, and such party's performance of
such obligation or obligations shall be excused and extended for and during
the period of any such delay: act of God; fire; flood; fiber or cable cuts;
government codes, ordinances, laws, rules, regulations or restrictions; war
or civil disorder; or any other cause beyond the reasonable control of such
party (each a "Force Majeure Event"). The party claiming relief under this
Article shall notify the other in writing of the existence of the event
relied on and the cessation or termination of said event, and shall use its
best efforts to avoid or minimize the delay caused by the Force Majeure Event.
ARTICLE 15
DEFAULT
16.1 If (i) Grantee makes a general assignment for the benefit of its
creditors, files a voluntary petition in bankruptcy or any
petition or answer seeking, consenting to, or acquiescing in
reorganization, arrangement, adjustment, composition, liquidation,
dissolution or similar relief; (ii) an involuntary petition in
bankruptcy, other insolvency protection against Grantee as filed
and not dismissed with 120 days; (iii) Grantee fails to pay the
Capacity Fee on a timely basis and such failure continues for a
period of twenty (20) days after written notice thereof; or (iv)
Grantee fails to observe and perform any other term or provision of
this Agreement and such failure continues for a period of thirty
(30) days after written notice from Grantor (or if such failure is
not susceptible of a cure within such thirty (30) day period, cure
has not been commenced and diligently pursued thereafter to
completion), then Grantor may (A) terminate this Agreement or the
Term with respect to any Capacity, in whole or in part, in which
event Grantor shall have no further duties or obligations
hereunder, and (B) subject to Article 13, pursue any legal remedies
it may have under applicable law or principles of equity relating
to such default, including an action for damages, payment of the
unpaid Capacity Fee or Operations and Maintenance Fee, specific
performance and/or injunctive relief.
16.2 If (i) Grantor makes a general assignment for the benefit of its
creditors, files a voluntary petition in bankruptcy or any petition
or answer seeking, consenting to, or acquiescing in reorganization,
arrangement, adjustment, composition, liquidation, dissolution or
similar relief; (ii) an involuntary petition in bankruptcy, other
insolvency protection against Grantor as filed and not dismissed
with 120 days; (iii) Grantor fails to observe and perform the terms
and provisions of this Agreement and such failure continues for a
period of thirty (30) days after written notice from Grantee (or to
such failure as not susceptible of a cure within such thirty (30)
day period, cure has not been commenced and diligently pursued
thereafter to completion), then Grantee may, subject to Section
16.3 below, (A) terminate this Agreement and the Term, in whole or
in part, in which event Grantee shall have no further duties or
obligations hereunder, and (B) subject to Article 13, pursue any
legal remedies it may have under applicable law or principles of
-13-
equity relating to such default, including an action for damages,
specific performance and/or injunctive relief.
16.3 Except with respect to a failure to make Capacity available within
the time set forth in Article 7 and Section 8.2 (the remedy for
which is set forth in Section 16.4 below), Grantee's sole and
exclusive remedy with respect to each Segment for any failure of
Grantor to delivery the Capacity within such Segment in accordance
with this Agreement shall be to terminate the Term of such Segment,
in which event Grantor shall refund a prorated portion of the
Capacity Fee for the remaining unused balance of the Term with
respect to such Segment, together with interest thereon at the
Prime Rate plus [ * ] from the date payment was made to
Grantor until the date of the refund.
16.4 In the event that Grantor fails to make Capacity available within
the time(s) set forth in Section 7.6, Grantee shall provide
Grantor with written notice of such failure and Grantor shall have
a period of fifteen (15) days after receipt of such written notice
within which to cure such failure (either by providing the Capacity
(in working order and having passed Acceptance Testing) via the
Leased System or the Grantor System, or through "off-net"
arrangements). If Grantor fails to make the Capacity available
within such fifteen (15) day period, or if Grantor fails to provide
working capacity within the time(s) required by Section 8.2
("Non-Delivered Capacity), Grantee may elect to acquire replacement
services for such Non-Delivered Capacity of equal or lesser
capacity and receive a credit off of the Capacity Fee equal to
the sum of (a) all reasonable nonrecurring charges (including
reasonable order expedite charges) incurred by Grantee in
connection with such replacement services and (b) the extent to
which the total monthly recurring charges incurred by Grantee for
such replacement services through the date which is sixty (60) days
after Grantor makes the Non-delivered Capacity available to Grantee
in working order and having passed Acceptance Testing) exceeds
[*] per DS-0 mile.
Grantee shall obtain replacement services on a month-to-month
basis, shall use its best efforts to obtain a minimum of three (3)
price quotations for the delivery of such replacement services
from reputable suppliers, and shall provide copies of such
quotations to Grantor (unless prohibited by nondisclosure
agreements, in which event Grantee shall provide as much
information to Grantor as possible without violating such
nondisclosure agreements). Upon receipt of such quotations, Grantor
shall have the right to select the carrier which shall deliver
replacement services to Grantee; provided, however, if Grantor
fails to make such selection by written notice to Grantee by
facsimile within one (1) business day of Grantor's receipt of the
quotations, Grantee shall have the right to make such selection. In
the event that Grantee is prohibited from disclosing quotations to
Grantor as a result of nondisclosure agreements and Grantee is
unable, after making efforts to do so, to obtain the consent of the
supplier to disclose the quotation to Grantor, then Grantee may
make such selection itself (provided that Grantee shall be
obligated to select such replacement carrier on a commercially
reasonable basis). Any credit due under the foregoing shall be
applied to sums due from Grantee hereunder for a period of six (6)
months after Grantee incurs such expense. In the event that the
aggregate credits are not fully used within such time, Grantor
shall pay the remaining balance of the credit to Grantee in cash.
The total credit to which Grantee shall be entitled under this
Section shall in no event be greater than the total Capacity Fee
for the Non-Delivered Capacity (provided that, if the total credit
amount exceeds the cap set
* Confidential treatment has been requested for a portion of this
Exhibit
-14-
forth in this sentence, Grantee shall not thereafter be obligated to
accept the Non-Delivered Capacity from Grantor when and if grantor
makes such Capacity available). In the event that Grantee receives
a credit under this Section as a result of a failure of Grantor to
deliver requested Capacity, and Grantor subsequently delivers such
Capacity to Grantee, then the Term of Grantee's use of the Capacity
shall be deemed to have commenced on the date that Grantee first
received the replacement services purchased by it.
16.5 In the event that Grantee fails to satisfy the Committed Capacity
requirement set forth in Section 7.7, Grantor shall provide Grantee
with written notice of such failure and Grantee shall have a
period of thirty (30) days after receipt of such notice to submit
orders so that the aggregate amount of Capacity ordered is equal to
or exceeds the Committed Capacity. In the event that Grantee fails
to do so, then, commencing on the date which is thirty (30) days
after receipt of the written notice and on a monthly basis
thereafter, Grantee shall be liable to pay to Grantor an additional
charge (the "Shortfall Fee") (in addition to the amount payable by
Grantee for Capacity which is actually delivered hereunder) equal
to the difference between the Capacity Fee payable by Grantee for
Capacity which is then being delivered to Grantee and the amount of
the Capacity Fee (including any Initial Payments) that Grantee
would have been required to pay had Grantee satisfied the Committed
Capacity requirement and such level of Capacity had been provided
to Grantee hereunder. The portion of the Shortfall Fee which
represents the Initial Payment for unordered Capacity shall be
credited to the Initial Payment that would otherwise be due on
Orders for Capacity submitted by Grantee.
By way of example concerning the Shortfall Fee, assume that Grantee
fails to place any orders during the first nine (9) months of the
Term and that Grantor provided Grantee with written notice of such
failure. In this example, assuming further that Grantee fails to
submit any Orders within thirty (30) days after receipt of such
notice, on the thirty-first (31st) day after receipt of such
notice, Grantee would be required to pay Grantor the sum of
[*] (representing the total of all Initial Payments that Grantee would
have been required to pay had Grantee satisfied the Committed Capacity
requirement and such level of Capacity had been provided to Grantee
hereunder) and Grantee would also be required to commence payment of
the monthly installments for the balance of the Capacity Fee.
ARTICLE 17
ASSIGNMENT
17.1 Neither party shall assign, encumber or otherwise transfer this
Agreement to any other Person without the prior written consent of
the other party, which consent shall not be unreasonably withheld;
provided, each party shall have the right, without the other
party's consent, but with prior written notice to the other party,
to assign or otherwise transfer this Agreement (i) as collateral to
any institutional lender of such party subject to the prior rights
and obligations of the parties hereunder; and (ii) to any Affiliate
of such party, or to any entity into which such party may be
merged or consolidated or which purchases all or substantially all
of the assets of such party; provided that such party shall not be
released from its obligations hereunder. Any assignee or transferee
shall continue to be subject to all of the provisions of this
Agreement, (except that any lender referred to in clause (i) above
shall not incur any obligations under this Agreement nor shall it
be
* Confidential treatment has been requested for a portion of this
Exhibit
-15-
restricted from exercising any right of enforcement of foreclosure with
respect to any related security interest or lien, so long as the purchaser in
foreclosure is subject to the provisions of this Agreement).
17.2 This Agreement and each of the parties' respective rights and
obligations under this Agreement, shall be binding upon and shall inure
to the benefit of the parties hereto and each of their respective
permitted successors and assigns.
ARTICLE 18
REPRESENTATIONS AND WARRANTIES
18.1 Each party represents and warrants that: (i) it has the full right and
authority to enter into, execute, deliver and perform its obligations
under this Agreement; (ii) it has taken all requisite corporate action
to approve the execution, delivery and performance of this Agreement;
(iii) this Agreement constitutes a legal, valid and binding obligation
enforceable against such party in accordance with its terms, subject to
bankruptcy, insolvency, creditors' rights and general equitable
principles; and (iv) its execution of and performance under this
Agreement shall not violate any applicable existing regulations, rules,
statutes or court orders of any local, state or federal government
agency, court or body.
18.2 EXCEPT AS SET FORTH IN THE FOREGOING SECTION OR IN ARTICLE 10, GRANTOR
MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE CAPACITY,
INCLUDING ANY WARRANTY OR MERCHANTABILITY OR FITNESS FOR PARTICULAR
PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
ARTICLE 19
CONFIDENTIALITY
19.1 Grantor and Grantee hereby agree that if either party provides
confidential or proprietary information to the other party
("Proprietary Information"), such Proprietary Information shall
be held in confidence, and the receiving party shall afford such
Proprietary Information the same care and protection as it affords
generally to its own confidential and proprietary information
(which in any case shall be not less than reasonable care) in order to
avoid disclosure to or unauthorized use by any third party. The parties
acknowledge and agree that all information disclosed by either party to
the other in connection with or pursuant to this Agreement shall be
deemed to be Proprietary Information, provided that written information
is clearly marked in a conspicuous place as being confidential or
proprietary and verbal information is indicated as being confidential or
proprietary when given and promptly confirmed in writing as such
thereafter. All Proprietary Information, unless otherwise specified in
writing, shall remain the property of the disclosing party, shall be
used by the receiving party only for the intended purpose, and such
written Proprietary Information, including all copies thereof,
shall be returned to the disclosing party or destroyed after the
receiving party's need for it has expired or upon the request of the
disclosing party. Proprietary Information shall not be reproduced except
to the extent necessary to accomplish the purpose and intent of this
Agreement, or as otherwise may be permitted in writing by the
disclosing party.
-16-
19.2 Section 19.1 shall not apply to any Proprietary Information which (i)
becomes publicly available other than through the disclosing party;
(ii) is required to be disclosed by a governmental or judicial law,
order, rule or regulation; (iii) is independently developed by the
receiving party; or (iv) becomes available to the receiving party
without restriction from a third party.
19.3 Notwithstanding Sections 19.1 and 19.2 either party may disclose
Proprietary Information to its employees, agents, and legal and
financial advisors and providers to the extent necessary or
appropriate in connection with the negotiation and/or performance of
this Agreement or in obtaining financing, provided that each such
party is notified of the confidential and proprietary nature of such
Proprietary Information and is subject to or agrees to be bound by
similar restrictions on its use and disclosure.
19.4 Neither party shall issue any public announcement or press
release relating to the execution of this Agreement without the prior
approval of the other party.
19.5 In the event either party shall be required to disclose all or
any part of this Agreement in, or attach all or any part of this
Agreement in, any regulatory filing or statement, each party agrees to
discuss and work cooperatively, in good faith, with the other party,
to protect, to the extent possible, those items or matters which the
other party deems confidential and which may, in accordance
with applicable laws, be deleted therefrom.
19.6 The provisions of this Article shall survive expiration or termination
of this Agreement.
ARTICLE 20
DISPUTE RESOLUTION
If the parties are unable to resolve any dispute arising under or relating to
this Agreement, the parties shall resolve such disagreement or dispute as
follows:
(a) Either party may refer the matter to the appropriate managers of
the parties by written notice to the other party (the "Dispute
Notice"). Within fifteen (15) days after delivery of the Dispute
Notice such managers of both parties will use good faith efforts
to schedule a meeting at a mutually acceptable time and place to
attempt to resolve the dispute.
(b) If the matter has not been resolved within thirty (30) days after
delivery of the Dispute Notice, or if such officers fail to meet
within fifteen (15) days after delivery of such Dispute Notice,
either party may initiate mediation in accordance with the
procedures set forth in (c) below. All negotiations conducted by
such officers shall be confidential and shall be treated as
compromise and settlement negotiations for purposes of federal
and state rules of evidence.
(c) If such officers are unable to resolve the dispute or have failed
to meet, the parties may elect to participate in a nonbinding
mediation procedure as follows:
-17-
(i) A mediator will be selected by having counsel for each party
agree on a single person to act as mediator. The parties'
counsel as well as up to three (3) representatives of each of
the parties will appear before the mediator at a time and
place determined by the mediator, but not more than sixty
(60) days after delivery of the Dispute Notice. The fees of
the mediator and other costs of the mediation will be shared
equally by the parties.
(ii) Each party will present a review of the matter and its
position with respect to such matter. At the conclusion of
both presentations the parties may ask questions of each
other. Either party may abandon the mediation procedure at
the end of the presentation and question periods and the
mediation procedure shall not be binding on either party.
(d) If the matter is not resolved after applying the mediation
procedure set forth above, or if either party refuses to take
part in the mediation process, either party may initiate legal
proceedings to resolve their dispute. Any such legal proceedings
shall take place in Denver, Colorado.
ARTICLE 21
NOTICES
All notices or other communications which are required or permitted herein
shall be in writing and sufficient if delivered personally, sent by prepaid
overnight air courier, or sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
IF TO GRANTOR (prior to July 1, 1999):
LEVEL 3 COMMUNICATIONS, LLC
1450 Infinite Drive
Louisville, Colorado 80027
Attn: General Counsel
(after July 1, 1999):
LEVEL 3 COMMUNICATIONS, LLC
1025 Eldorado Drive
Broomfield, Colorado 80021
Attn: General Counsel
IF TO GRANTEE: WORLDxCHANGE COMMUNICATIONS
9999 Willow Creek Road
San Diego, CA 92131
Attn: Legal Department
-18-
or at such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if delivered
personally, on the business day after dispatch if sent by overnight air
courier, or on the third business day after posting if sent by mail.
ARTICLE 22
ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the entire and final agreement and understanding
between the parties with respect to the subject matter hereof and supersedes
all prior agreements relating to the subject matter hereof, which are of no
further force or effect. The Exhibits referred to herein are integral parts
hereof and are hereby made a part of this Agreement. This Agreement may only
be modified or supplemented by an instrument in writing executed by a duly
authorized representative of each party.
ARTICLE 23
RELATIONSHIP OF THE PARTIES
The relationship between Grantee and Grantor shall not be that of partners,
agents, or joint venturers for one another, and nothing contained in this
Agreement shall be deemed to constitute a partnership or agency agreement
between them for any purposes, including but not limited to federal income
tax purposes.
ARTICLE 24
COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same instrument.
-19-
ARTICLE 25
ANCILLARY SERVICES
Grantor shall, at the request of Grantee, provide the ancillary services set
forth in Exhibit "F" (the "Ancillary Services"). Except as noted on Exhibit "A",
Grantor shall deliver Ancillary Services which are requested on the same Order
form as an Order for Capacity within the time frames set forth in Section 7.6 of
this Agreement. Grantor shall use its reasonable efforts to deliver Ancillary
Services which are requested separate from an Order for Capacity within
commercially reasonable times. The charges for Ancillary Services are set forth
in Exhibit "F", shall be fixed for the Term of the Agreement and shall be
payable by Grantee on a monthly basis.
IN WITNESS WHEREOF, Grantor and Grantee have executed this Agreement as of the
date first above written.
LEVEL 3 COMMUNICATIONS, LLC, a
Delaware limited liability company
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: Vice President
--------------------------------------
COMMUNICATION TELESYSTEMS INTERNATIONAL,
a California corporation
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: CEO
--------------------------------------
[STAMP]
-20-
EXHIBIT "A"
SEGMENT ENDPOINTS AND IN-SERVICE DATES
City In-Service Date
---------------------------------------------------------------
New York, New York [ * ]
Washington, D.C. [ * ]
Philadelphia, Pennsylvania [ * ]
Boston, Massachusetts [ * ]
Atlanta, Georgia [ * ]
Detroit, Michigan [ * ]
Chicago, Illinois [ * ]
Houston, Texas [ * ]
Dallas, Texas [ * ]
Denver, Colorado [ * ]
San Diego, California [ * ]
Los Angeles, California [ * ]
San Jose, California [ * ]
San Francisco, California [ * ]
Seattle, Washington [ * ]
Las Vegas, Nevada [ * ]
St. Louis, Missouri [ * ]
Salt Lake City, Utah [ * ]
Phoenix, Arizona [ * ]
Baltimore, Maryland [ * ]
Cincinnati, Ohio [ * ]
* Confidential treatment has been requested for a portion of this Exhibit
-21-
Miami, Florida [ * ]
Newark, New Jersey [ * ]
Orlando, Florida [ * ]
Stamford, Connecticut [ * ]
Tampa, Florida [ * ]
* Confidential treatment has been requested for a portion of this Exhibit
** With respect to Las Vegas, Salt Lake City and Phoenix only, until such time
as Grantor's gateway facility is completed, Grantor shall have an extra
thirty (30) days to deliver M 1/3 multiplexing.
-22-
EXHIBIT "B"
CAPACITY FEE, OPERATIONS AND MAINTENANCE FEE
A. THE CAPACITY FEE.
[*]
B. THE OPERATIONS AND MAINTENANCE FEE.
[*]
C. CALCULATION OF FEES.
The Capacity Fee and the Operations and Maintenance Fee shall be calculated
based on "V&H" miles between Grantor's gateway facilities. [*]
*Confidential treatment has been requested for a portion of this Exhibit
-23-
EXHIBIT "C"
GRANTEE'S CAPACITY FORECAST
City Pair Quantity of DS-3's
- ----------- -----------------------
New York - Los Angeles [ * ]
Dallas - Los Angeles [ * ]
Dallas - Chicago [ * ]
Chicago - New York [ * ]
Chicago - Los Angeles [ * ]
Los Angeles - Las Vegas [ * ]
Los Angeles - Phoenix [ * ]
San Francisco - Portland [ * ]
New York - Atlanta [ * ]
New York - Miami [ * ]
*Confidential treatment has been requested for a portion of this Exhibit
-24-
EXHIBIT "D"
QUALIFIED LECs
New York, New York Bell, WorldCom
Washington, D.C. Bell, WorldCom
Philadelphia, Pennsylvania Bell, WorldCom
Boston, Massachusetts Bell, WorldCom
Atlanta, Georgia Bell, WorldCom
Detroit, Michigan Bell, WorldCom
Chicago, Illinois Bell, WorldCom
Houston, Texas Bell, WorldCom
Dallas, Texas Bell, WorldCom
Denver, Colorado Bell, WorldCom
San Diego, California Bell, WorldCom
Los Angeles, California Bell, WorldCom
San Jose, California Bell, WorldCom
San Francisco, California Bell, WorldCom
Seattle, Washington Bell, WorldCom
Las Vegas, Nevada Bell, WorldCom
St. Louis, Missouri Bell, WorldCom
Salt Lake City, Utah Bell, WorldCom
Phoenix, Arizona Bell, WorldCom
This List may be amended by mutual agreement of Grantor and Grantee as new local
exchange carriers are added to those available in the Gateways and POP's above
and as new Gateways and POP's are added to the list along with their serving
local exchange carriers
-25-
EXHIBIT "E"
COLOCATION TERMS AND CONDITIONS
-26-
TERMS AND CONDITIONS
TELEPHONY COLOCATION
The following Terms and Conditions shall be applicable to Customer's use of
space within Level 3 facilities used for the purpose of colocating
telecommunications equipment (the "Space") ordered by Customer under any
Customer Order.
1. Upon execution and performance of Customer's obligations under a Customer
Order for use of Space, Customer shall be granted the right to occupy the Space
identified therein. Customer may submit multiple Customer Orders requesting use
of different Space, each of which shall be governed by the terms hereof.
2. Customer shall be permitted to use the Space only for: (a) placement and
maintenance of communications equipment which shall be interconnected to the
network services offered by Level 3, or (b) to cross connect to the facilities
of other communications carriers. The nonrecurring and monthly recurring charges
for the Space and any Services ordered by Customer shall be set forth in each
Customer Order.
4. Level 3 shall perform such janitorial services, environmental systems
maintenance, power plant maintenance and other actions as are reasonably
required to maintain the facility in which the Space is located in good
condition which is suitable for the placement of communications equipment.
Customer shall maintain the Space in orderly and safe condition, and shall
return the Space to Level 3 at the conclusion of the term set forth in the
Customer Order in the same condition (reasonable wear and tear excepted) as when
such Space was delivered to Customer. EXCEPT AS EXPRESSLY STATED HEREIN OR IN
ANY CUSTOMER ORDER, THE SPACE SHALL BE DELIVERED AND ACCEPTED "AS IS" BY
CUSTOMER, AND NO REPRESENTATION HAS BEEN MADE BY LEVEL 3 AS TO THE FITNESS OF
THE SPACE FOR CUSTOMER'S INTENDED PURPOSE.
5. The term of use of the Space shall begin on the later to occur of the date
requested by Customer or the date that Level 3 completes the build-out of the
Space. Customer's use of the Space shall continue for the term of the Capacity
Lease and IRU Agreement, subject to cancellation by Customer upon not less than
120 days prior notice.
6. Level 3 shall use reasonable efforts to complete the build-out and make the
Space available to Customer on or before the date requested by the Customer. In
the event that Level 3 fails to complete the build-out within sixty (60) days of
the date requested by Customer, then Customer may terminate its rights to use
such Space and receive a refund of any fees paid for the use or build-out of
such Space.
7. Customer shall abide by any posted or otherwise communicated reasonable
rules relating to use of, access to, or security measures respecting the
Space. In the event that unauthorized parties gain access to the Space
through access cards, keys or other access devices provided to Customer,
Customer shall be responsible for any damages incurred as a result thereof.
Customer shall be responsible for the cost of replacing any security devices
lost or stolen after delivery thereof to Customer. In addition, Level 3 shall
have the right to terminate Customer's use of the Space in the event that:
(a) Level 3's rights to use the facility within which the Space is located
terminates or expires for any reason; (b) Customer has violated the terms
hereof and (if such violation is susceptible of cure) has failed to cure such
violation within twenty (20) days after written notice thereof; (c) Customer
makes any material alterations to the Space without first obtaining the
written consent of Level 3 (which consent shall not be unreasonably
withheld); (d) Customer allows personnel or contractors to enter the Space
who have not been approved by Level 3 in advance; or (e) Customer violates
any posted or otherwise communicated rules relating to use of or access to
the Space and (if such violation is susceptible of cure) has failed to cure
such violation within twenty (20) days after written notice thereof. Level 3
shall use reasonable efforts to notify Customer of any events that may result
in termination of the use of the Space.
8. Customer shall pay all monthly recurring fees, cross-connect fees, power
charges and nonrecurring fees specified in each Customer Order for the agreed
term thereof. In the event that Customer terminates a Customer Order for Space
or in the event that the Customer Order is terminated due to a failure of
Customer to satisfy the requirements set forth herein or in the Customer Order
prior to the end of the agreed term, Customer shall pay a termination charge
equal to the costs incurred by Level 3 in returning the Space to a condition
suitable for use by other parties, plus the percentage of the monthly recurring
fees for the terminated Space calculated as follows:
A. 100% of the monthly recurring fees that would have been charged for the
Space for months 1-12 of the agreed term; plus
Page 1 of 2
B. 75% of the monthly recurring fees that would have been charged for the
Space for months 13-24 of the agreed term; plus
C. 50% of the monthly recurring fees that would have been charged for the Space
for months 25 through the end of the agreed term.
9. Level 3 reserves the right to change the location or configuration of the
Space, provided, however, that Level 3 shall not arbitrarily or discriminatorily
require such changes. Level 3 and Customer shall work in good faith to minimize
any disruption in Customer's services that may be caused by such changes in
location or configuration of the Space.
10. Prior to occupancy and during the term of use of any Space, Customer
shall procure and maintain the following minimum insurance coverage: (a)
Workers' Compensation in compliance with all applicable statutes of
appropriate jurisdiction. Employer's Liability with limits of $500,000 each
accident; (b) Commercial General Liability with combined single limits of
$1,000,000 each occurrence; and (c) "All Risk" Property insurance covering
all of Customers personal property located in the Space. Customer's
Commercial General Liability policy shall be endorsed to show Level 3 (and
any underlying property owner, as requested by Level 3) as an additional
insured. All policies shall provide that Customer's insurers waive all rights
of subrogation against Level 3. Customer shall furnish Level 3 with
certificates of insurance demonstrating that Customer has obtained the
required insurance coverages prior to occupancy of the Space. Such
certificates shall contain a statement that the insurance coverage shall not
be materially changed or cancelled without at least thirty (30) days' prior
written notice to Level 3. Customer shall require any contractor entering the
Space on its behalf to procure and maintain the same types, amounts and
coverage extensions as required of Customer above.
11. The liability of Level 3 for damages arising out of the furnishing of
Space, including but not limited to mistakes, omissions, interruptions, delays,
tortious conduct or errors, or other defects arising out of the failure to
furnish Space, whether caused by acts of commission or omission, shall be
limited to a prorated refund of the charges paid by Customer for the use of the
Space hereunder. The extension of such refunds shall be the sole remedy of
Customer and the sole liability of Level 3. However this provision shall not
limit the liability of Level 3 for willful misconduct.
Page 2 of 2
EXHIBIT "F"
ANCILLARY CHARGES
Charges and Rates set forth in this Exhibit "F" shall remain effective for the
Term of the Agreement.
A. NONRECURRING CHARGES FOR RECONFIGURATIONS AND SWAPS.
[*]
[*]
B. OTHER ANCILLARY SERVICES AND CHARGES.
Echo Cancellers [*]
M1/3 Multiplexing [*]
DS-3 Cross Connects
1. Level 3 DS-1 IXC to DS-1 Local Access [*]
Bypass or Colocate
2. Level 3 DSX Cross Connect Panel [*]
Bypass or Colocate
3. Non Level 3 DS-1 Facilities to [*]
Non Level 3 DS-1 Facilities
4. Level 3 DS-3 IXC to DS-3 Local [*]
Access Bypass or Colocate
5. Non Level 3 DS-3 Facilities to [*]
Non Level 3 DS-3 Facilities
** Grantee must accept and pay for such services for a minimum term of one year
from date of installation.
C. CANCELLATION CHARGES
[*]
[*]
*Confidential treatment has been requested for a portion of this Exhibit
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EXHIBIT "G"
COLOCATION CHARGES
Charges and Rates set forth in this Exhibit "G" shall remain effective for a
minimum period of five (5) years from the date of execution of the Agreement.
Thereafter, Grantor may, on a non-discriminatory basis, adjust such charges
upon thirty (30) days advance written notice to Grantee; provided that such
charges shall not exceed those then being charged by Grantor to other similarly
situated customers for equivalent services.
Enclosed Cabinet: Nonrecurring Installation Charge Monthly Recurring Charge
1 Year Term [*] [*]
2 Year Term [*] [*]
3 Year Term [*] [*]
AC and DC Power: Nonrecurring Installation Charge Monthly Recurring Charge
[*] [*]
[*]
[*]
Scheduled or unscheduled Maintenance Charges: [*]
*Confidential treatment has been requested for a portion of this Exhibit
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