<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: March 31, 1998
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ________________ to __________________
Commission file number: 333-7841
FIBERNET TELECOM GROUP, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 13-3859938
- --------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
121 Erie Canal Drive, Suite A, Rochester, New York 14626
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
716-225-0440
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes /X/ No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of issuer's classes of common
equity, as of March 15, 1998, was 16,000,000 shares of Common Stock, $.001 par
value.
Transitional Small Business Disclosure Format (check one):
Yes / / No /X/
<PAGE> 2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
See attached.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
COMPANY OVERVIEW
FiberNet Telecom Group, Inc. (the "Company") is a holding company
that conducts substantially all of its business through its direct and indirect
subsidiaries, FiberNet Telecom, Inc., a wholly-owned subsidiary, Local Fiber,
LLC ("Local Fiber") and Equal Access, LLC ("Equal Access").
FiberNet Telecom, Inc., an early stage development company,
delivers integrated telecommunications products and services in tier-one major
metropolitan service areas throughout the United States and manages the two
operating subsidiaries, Local Fiber and Equal Access. Equal Access specializes
in designing, building, and operating intra-building fiber optic transmission
networks called "Premise Distribution Systems" and plans to lease digital
bandwidth circuits to telecommunications providers. Local Fiber is a Competitive
Local Exchange Carrier (CLEC) which plans to provide competitive local
telecommunications service as an alternative to the local exchange carriers
(i.e. the phone company).
The Company has had no commercial operations to date. Since its
inception, the Company has principally engaged in organizational activities,
including developing a strategic operating plan, entering into contract hiring
personnel, and securing debt and equity commitments to fund its plan.
Accordingly, the Company has no relevant operating history upon which an
evaluation of its performance and prospects can be made. The Company is subject
to all of the business risks associated with a new enterprise, including, but
not limited to, risks of unforeseen capital requirements, failure of market
acceptance, failure to establish business relationships, and competitive
disadvantages as against larger and more established companies.
During the first quarter of 1998, Equal Access executed
telecommunications license agreements with an additional two (2) building owners
covering an additional four (4) properties in New York City. To date, Equal
Access has executed agreements with four (4) building owners covering seven (7)
properties. These building owners also control an additional twenty-nine (29)
properties in New York, with whom Equal Access expects to complete contracts
upon the successful completion of the initial buildings.
The Company has generated no revenues to date, and will not
generate any meaningful revenues until the Company successfully completes the
development and installation of the Equal Access Premise Telecommunication
Distribution Systems as well as the installation of Local Fiber's local and long
distance switch. Equal Access expects to begin construction on the initial seven
contracted buildings in the second quarter 1998 and expects them to be
operational by the third quarter 1998.
Local Fiber, plans on initially reselling Bell Atlantic-NYNEX
service in Manhattan beginning in June 1998 to increase revenue and access line
growth. Local Fiber expects to have its switch and network operational by the
fourth quarter 1998 at which time its resale customers will be transferred to
Local Fiber's facilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company has to date financed its development efforts through
direct equity investments from its shareholders. The Company has sustained
losses for the period for the three months ended March 31, 1998 of $459,540 and
from August 10, 1994 (date of inception) to March 31, 1998 of $1,213,162. These
operating losses are due to the development of its telecommunications services
businesses and the Company anticipates that such
2
<PAGE> 3
losses will continue over the next term as it executes its business plan. Cash
used to fund negative EBITDA during the three months ended March 31, 1999 was
approximately $425,000, and purchases of property and equipment during the three
months ended March 31, 1998 was $274,000. The Company paid a $168,000 security
deposit to secure its switching facility at 60 Hudson Street. In addition, the
Company paid a required dividend of $75,000 to its preferred shareholders on
February 24, 1998 at which time the Company converted the Series A Convertible
Cumulative Preferred Stock to common stock.
The Company's planned operations will require significant capital
to fund equipment purchases, engineering costs, and installation. Local Fiber
will spend approximately $11 million over the next twelve months to construct,
engineer, install and purchase a local and long distance switch, electronics
equipment, DACS equipment network control center and monitoring equipment and
fiber and copper cable. Equal Access has projected to complete sixteen buildings
in the next twelve months and has budgeted approximately $9 million in capital
expenditures. The completion of these sixteen buildings is subject to the
execution of additional contracts with building owner/managers as well as
securing additional financing commitments from a third party lender. The capital
will be used for the purchase of transmission equipment, fiber and copper cable,
the construction of network interface equipment rooms in the basements of each
building, and network engineering and installation.
Local Fiber and Equal Access have secured commitments for debt with
a major third party lender. A third party lender has committed to lend $9.9
million including capitalized interest to Local Fiber and $3.12 million
including capitalized interest committed to Equal Access for Phase I debt. Local
Fiber and Equal Access are in the process of fulfilling the conditions precedent
to closing and funding. Phase I will provide debt to cover implementation of the
Company's Premise Distribution System in the initial six buildings. In Phase II,
an additional $8.3 million will be reviewed for credit approval under a separate
credit facility to complete up to an additional 30 buildings. Conditions
precedent to Phase II funding will be the successful implementation of Phase I
as contemplated in the Company's business plan.
The Company expects to accelerate its growth and expand to ten
tier-one markets over the next five years which includes the deployment of
switching and transmission equipment as a CLEC through Local Fiber and the
construction of up to 370 Premise Distribution Systems under Equal Access. The
combination of debt and equity that the Company will have in place is expected
to satisfy cash requirements under this expanded business plan for the next 15
months of operation. However, if the Company's expansion occurs more rapidly
than currently anticipated or if operating results are below expectations, the
Company may require additional capital.
If the Company decides to raise additional capital, the Company may
secure additional funding through the sale of public or private debt and/or
equity securities. There can be no assurance, however, that the Company will be
successful in raising sufficient additional capital on terms that would be
acceptable.
The companies will experience a significant growth in employees
over the next twelve months as its business plans for Local Fiber and Equal
Access begin to develop into fully operational businesses. Projected employees
will increase from the current total of sixteen to approximately forty with the
majority of the increase in sales, customer service, engineering and operations.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
None.
3
<PAGE> 4
Item 2. Change in Securities
On February 24, 1998, the Company converted 1,000,000 shares of its
Series A Convertible Cumulative Preferred Stock ("Series A Preferred Stock")
into common stock. The holders of Series A Preferred Stock are entitled to
participate in all of the rights and privileges granted with respect to the
Company's common stock.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
EXECUTIVE OFFICERS AND DIRECTORS
The following tables set forth the directors and executive officers
of the Company as of March 31, 1998. Directors are elected for a period of one
year and thereafter serve until the next Annual meeting at which their
successors are duly elected by the stockholders. Officers and other employees
serve at the will of the board of directors.
<TABLE>
<CAPTION>
Name Age Positions
- ---- --- ---------
<S> <C> <C>
Santo Petrocelli, Sr. 62 Chairman and Director
Frank J Chiaino 55 President, Chief Executive Officer and Director
John J. Marchaesi 38 Sr. Vice President Finance and Administration and Director
Mark Lipford 42 Vice President Engineering and Operations
Ken Elias 50 Vice President-- Sales and Marketing
Lawrence S. Polan 67 Director
</TABLE>
Santo Petrocelli, Sr. has served as Chairman and Director of
FiberNet Telecom, Inc., FiberNet Equal Access, LLC and Local Fiber LLC, since
their inception. Mr. Petrocelli is the President, Chief Executive Officer and a
Director of Petrocelli Electric Company, and Petrocelli Communications Company.
In addition, he controls Petrocelli Industries, Inc., and SMFS, Inc., investment
companies which have held controlling interests in several communications
ventures including FiberNet Telecom, Inc., FiberNet, Inc. and FiberNet USA, Inc.
Mr. Petrocelli was the former Chairman and Chief Executive Officer of FiberNet
Inc. and FiberNet USA, Inc. prior to their acquisition by WorldComm and
InterMedia Communications Inc. He has over 40 years experience in the
communications, electrical and telecommunications industry.
Frank Chiaino is President, Chief Executive Officer and a Director
of FiberNet Telecom, Inc., and its subsidiaries. Mr. Chiaino has over 30 years
experience in the cable and telecommunications industries. As President and
Chief Executive Officer of Time Warner Communications in Rochester, NY and Vice
President of Time Warner Cable from 1983-1995, Mr. Chiaino participated in
lobbying the New York Public Services Commission for the Rochester Telephone
Open Market Plan. Mr. Chiaino also directed the negotiation of the nations first
interconnect agreement resulting in the development of the first
facilities-based competitive
4
<PAGE> 5
telecommunications local exchange carrier operation in the United States. Mr.
Chiaino has a Masters of Business Administration from Columbia University.
John J. Marchaesi CPA, is Sr. Vice President of Finance and
Administration and a Director of FiberNet Telecom Inc., and its subsidiaries.
Mr. Marchaesi was the Controller of FiberNet USA, Inc. Prior to joining FiberNet
Telecom, Inc., he was a Senior Manager-Internal Audit and Consulting with
Associated Communications Corporation and also the Controller of Cellular
One/Albany Telephone Company. He has over ten years experience in financial
management within the telecommunications industry. He holds an Masters of
Business Administration from Rochester Institute of Technology and a Bachelor of
Science in Business Administration from SUNY, Oswego.
Mark Lipford is Vice President of Engineering and Operations of
FiberNet Telecom, Inc. Mr. Lipford has over 18 years of telecommunications
experience. Mr. Lipford joined FiberNet Telecom, Inc. from Time Warner
Communications where he served as Regional Vice President and General Manager.
He was responsible for the start-up of the nation's first facilities based CLEC.
Mr. Lipford has held positions as Director of Operations at Ohio Bell and
Commonwealth Telephone Company. Mr. Lipford received a Master of Arts from the
University of Akron.
Kenneth Elias is Vice President of Sales and Marketing, Mr. Elias
has over 29 years in the telecommunications industry. Mr. Elias began his career
at NYNEX in 1969 and during his tenure has held a variety of executive level
positions where he was responsible for product development market growth and
sales operations. Mr. Elias has a Bachelor of Science from the Citadel.
Lawrence S. Polan is a Director of FiberNet Telecom, Inc. and its
subsidiaries. Mr. Polan was a former Director of FiberNet, Inc. and FiberNet
USA, Inc. In addition Mr. Polan is the Chief Financial Officer of Petrocelli
Electric Company and Petrocelli Communications Company. Prior to joining
Petrocelli Communications, he was the Chief Financial Officer and Controller of
Visa Resources, Inc. a New York Stock Exchange Company with over $250 Million in
annual revenues. Mr. Polan holds a bachelors degree from St. John's University.
There are currently no arrangements or understandings regarding the
length of time each director is to serve in such capacity except as otherwise
described herein.
Item 6. Exhibits and Reports on Form 8-K
3.1 Amendment to Operating Agreement of FiberNet Equal Access,
L.L.C. dated as of November 13, 1997
3.2 Amendment to Limited Liability Company Operating Agreement of
Local Fiber, L.L.C. dated as of November 13, 1997
10.1 Form of FiberNet Telecom Group, Inc. Stock Option Agreement
10.2 Intercompany Agreement among FiberNet Telecom Group, Inc.,
FiberNet Telecom, Inc. and Local Fiber, L.L.C. dated as
January 1, 1998
10.3 Intercompany Agreement among FiberNet Telecom Group, Inc.,
FiberNet Telecom, Inc. and FiberNet Equal Access, L.L.C.
dated as of January 1, 1998
10.4 Form of License Agreement for Telecommunication Services
10.5 Office Lease between Hudson Telegraph Associates and Local
Fiber, L.L.C. dated as of February 17, 1998
5
<PAGE> 6
10.6 Lease Agreement between Richard R. Lefrois and FiberNet
Telecom, Inc. dated as of March 12, 1998
10.7 General Agreement between FiberNet Equal Access, L.L.C. and
Lucent Technologies, Inc. dated as of December 17, 1997
10.8 General Agreement between Local Fiber, L.L.C. and Lucent
Technologies, Inc. dated as of December 17, 1997
27.1 Financial Data Schedule
6
<PAGE> 7
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FIBERNET TELECOM GROUP, INC.
Date: May 8, 1998 By: /s/ John J. Marchaesi
------------------------------
Name: John J. Marchaesi
Title: Sr. Vice President Finance
7
<PAGE> 8
FIBERNET TELECOM GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND MARCH 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,146,327 $ 4,206,154
Other current assets 3,954 31,227
----------- -----------
Total current assets 5,150,281 4,237,381
Plant and equipment, net 92,223 363,507
Deposit 2,837 176,630
Deferred charges 129,000 180,403
----------- -----------
TOTAL ASSETS $ 5,374,341 $ 4,957,921
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 490,125 $ 524,716
Accounts payable - related party 240,000 240,000
Other accrued expenses -- 82,213
----------- -----------
Total current liabilities $ 730,125 $ 846,929
----------- -----------
Minority interest (1,142) 28,928
Stockholders' Equity
Common Stock, $0.001 par value, 50,000,000 shares
authorized, 15,000,000 and 16,000,000 shares issued and
outstanding at December 31, 1997 and March 31, 1998
respectively 15,000 16,000
Series A Convertible Preferred Cumulative Stock, $0.001 par
value, 5,000,000 shares authorized, 1,000,000 shares issued
and outstanding at December 31, 1997 (Preference in involuntary
liquidation value, $5.125 per share) 1,000 --
Series B voting Preferred Stock $0.001 par value, 80,000 shares
issued and outstanding (Preference in involuntary liquidation
value, $1.00 per share) 80 80
Capital in excess of par value 5,382,901 5,279,147
Deficit accumulated during the development stage (753,623) (1,213,163)
----------- -----------
Total stockholders' equity $ 4,645,358 $ 4,082,064
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 5,374,341 $ 4,957,921
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE> 9
FIBERNET TELECOM GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998
AND FOR THE PERIOD FROM INCEPTION (AUGUST 10, 1994) TO MARCH 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(AUGUST 10,
FOR THE THREE MONTHS ENDED 1994) TO
--------------------------------
MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cost and expenses:
General and administrative $ 522,967 $ 114,812 $ 1,206,009
Other - Related party 20,834 60,000 140,834
------------ ------------ ------------
Loss from operations (543,801) (174,812) (1,346,843)
Interest income 49,279 -- 75,458
------------ ------------ ------------
Loss 494,522 174,812 1,271,385
Minority interest 34,982 2,154 58,222
------------ ------------ ------------
Net loss $ 459,540 $ 172,658 $ 1,213,163
============ ============ ============
Earning per share
Basic and diluted (0.03) (0.01) (0.08)
------------ ------------ ------------
Weighted average shares outstanding 15,400,000 15,000,000 15,400,000
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE> 10
FIBERNET TELECOM GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998, AND
FOR THE PERIOD FROM INCEPTION (AUGUST 10, 1994) TO MARCH 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
FROM
INCEPTION ON
(AUGUST 10,
FOR THE THREE MONTHS ENDED 1994) THROUGH
------------------------------
MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (459,540) $ (172,658) $(1,213,163)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 2,500 -- 4,342
Deferred compensation 31,875 -- 31,875
Minority interest (28,847) (319) (35,293)
Changes in assets and liabilities:
(Increase) decrease in other assets (252,469) 116,368 (319,423)
Increase (decrease) in accounts payable 115,091 26,622 746,216
----------- ----------- -----------
Net cash used in operating activities (591,390) (29,987) (785,446)
Cash flows from investing activities:
Capital expenditures (273,782) -- (367,847)
----------- ----------- -----------
Cash used in investing activities (273,782) -- (367,847)
Cash flows from financing activities:
Dividend paid on preferred stock (75,000) -- (75,000)
Capital contributed -- 30,265 5,434,448
----------- ----------- -----------
Cash provided by financing activities (75,000) 30,265 5,359,448
Net increase (decrease) in cash (940,172) 278 4,206,155
Cash at beginning of period 5,146,327 921 --
----------- ----------- -----------
Cash at end of period $ 4,206,155 $ 1,199 $ 4,206,155
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE> 11
FIBERNET TELECOM GROUP, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED
1. GENERAL
The condensed interim financial statements included herein have been
prepared by FiberNet Telecom Group, Inc. (The Company), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) and reflect all adjustments which are of a normal
recurring nature and which, in the opinion of management, are necessary
for a fair statement of the results for interim periods. Certain
information and footnote disclosures have been condensed or omitted
pursuant to such rules and regulations. Although FiberNet Telecom Group,
Inc. believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these condensed financial
statements be read in conjunction with the financial statements and the
notes thereto included in the Company's latest annual report to
stockholders.
2. LEASE CONTRACTS
The Company has entered into lease agreements for office space in
Rochester, a switching center in New York City, and for collocation space
in seven Equal Access buildings (Equal Access is one of the Company's
subsidiary). Lease expense for the three months ended March 31, 1998 was
$19,146. Estimated future minimum lease payments are:
<TABLE>
<S> <C>
1998 $ 270,115
1999 542,279
2000 542,279
2001 542,279
2002 542,279
Thereafter $ 2,627,309
============
</TABLE>
The Company was requested to make a deposit during this period for the
leasing of space for $173,793.
3. EARNINGS PER SHARE
Basic earnings per share as of March 31, 1998 was computed by dividing net
income by the weighted average number of common shares outstanding during
the quarter as required by FASB Statement No. 128, "Earnings per Share"
("SFAS 128"). As shown in the statement of operation, basic earnings per
share as of March 31, 1997 is calculated assuming shares outstanding as of
December 31, 1997 have been outstanding for that periods. Since the loss
per share decreases, when outstanding options are included in the
computation, those options are antidilutive and are ignored in the
computation of diluted earning per share.
<PAGE> 12
4. STOCK OPTIONS
On January 21, 1998, the Company granted 150,000 shares in a stock option
agreement to an official of the company. The exercise price of the option
was established at $1.95.
On February 27, 1998, the Company granted 340,000 shares in stock option
agreements to officers and other employees of the company. The exercise
price of the option was established at the then market value of $4.625.
5. PREFERRED DIVIDENDS
On February 24, 1998, the Company paid a dividend to the Series A
convertible preferred stockholders of $75,000 and converted all of the
Series A convertible preferred stock into common stock.
6. CAPITALIZED LABOR
The Company has capitalized labor costs for employees and consultants who
have responsibilities for network development, engineering, and
construction. Capitalized costs include payroll and related costs such as
taxes and other fringe benefits. As of March 31, 1998 capitalized labor
totaled $101,723.
<PAGE> 1
Exhibit 3.1
AMENDMENT TO THE
OPERATING AGREEMENT
OF
FIBERNET EQUAL ACCESS, L.L.C.
THIS AMENDMENT TO THE OPERATING AGREEMENT (this "Amendment"), is dated
as of November 13, 1997 and entered into by and between the undersigned members
of FiberNet Equal Access, L.L.C. , a New York limited liability company (the
"Company"). Capitalized terms used without definitions herein have the
respective meaning set forth in the Operating Agreement (as defined below).
RECITALS
WHEREAS, it is desirable to amend the Limited Liability Company
Operating Agreement of FiberNet Equal Access, L.L.C. dated as of December 16,
1996 by and between the members referenced therein (the "Operating Agreement"),
to add FiberNet Telecom, Inc., a Delaware corporation ("FiberNet") as a party
thereto and to acknowledge that SMFS, Inc., LTJ Group, Inc. and LPS Consultants,
Inc. (collectively, the "Members") are no longer members of the Company and have
no further rights or obligations under the Operating Agreement;
WHEREAS, the Members desire that Schedule A to the Operating Agreement
be amended to reflect the change in ownership of the Company; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained and for other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, it
is mutually agreed as follows:
ARTICLE I
SECTION 1.1. ADDITION OF FIBERNET AS A PARTY. FiberNet by execution of
this Amendment hereby agrees to be bound by the terms and conditions of the
Operating Agreement as a member and agrees to be subject to the provisions of
the Operating Agreement applicable to members as though originally a signatory
and party to the Operating Agreement.
<PAGE> 2
SECTION 1.2. CONSENT TO TRANSFER OF MEMBERS' INTERESTS. Pursuant to the
Contribution Agreement dated as of November 13, 1997 by and among the
signatories listed thereto, the Members hereby consent to the transfer of all of
their respective membership interests in the Company to FiberNet Telecom, Inc.
SECTION 1.3. AMENDMENT TO SCHEDULE A. Schedule A to the Operating
Agreement is hereby amended and restated as of the effective date of this
Amendment to read in its entirety as Schedule A attached hereto.
ARTICLE II
SECTION 2.1. RELATION TO THE OPERATING AGREEMENT. The provisions of
this Amendment shall be deemed to be effective as of December 16, 1996 or
immediately upon the execution and delivery hereof. This Amendment and all the
terms and provisions herein contained shall form a part of the Operating
Agreement as fully and with the same effect as if all such terms and provisions
had been set forth in the Operating Agreement. The Operating Agreement shall
remain and continue in full force and effect in accordance with the terms and
provisions thereof, as amended by this Amendment, and the Operating Agreement
and this Amendment shall be read, taken and construed together as one
instrument.
<PAGE> 3
IN WITNESS WHEREOF, the persons signing this Amendment below
conclusively evidence their agreement to the terms and conditions of the
Operating Agreement by so signing here.
FIBERNET TELECOM, INC.
By:/s/ John J. Marchaesi
--------------------------------
Name: John J. Marchaesi
Title: VP Finance
SMFS, INC.
By:/s/ Santo Petrocelli
--------------------------------
Name: Santo Petrocelli
Title: President
LTJ GROUP, INC.
By:/s/ J. A. Tortoretti
--------------------------------
Name: J. A. Tortoretti
Title: President
LPS CONSULTANTS, INC.
By:/s/ Lawrence S. Polan
--------------------------------
Name: Lawrence S. Polan
Title: President
<PAGE> 4
SCHEDULE A
Membership Interests in FiberNet Equal Access L.L.C.
The Members of FiberNet Equal Access L.L.C. as of November 13, 1997 are
as follows:
Name Membership Interests
FiberNet Telecom, Inc. 100%
<PAGE> 1
Exhibit 3.2
AMENDMENT TO
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
LOCAL FIBER, L.L.C.
THIS AMENDMENT TO LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this
"Amendment") of Local Fiber, L.L.C., a New York limited liability company (the
"Company"), is entered into and shall be effective as of November 13, 1997, by
and among the Company and the members executing this Amendment. Capitalized
terms used without definitions herein have the respective meaning set forth in
the Operating Agreement (as defined below).
RECITALS
WHEREAS, the Management Board desires to amend the Limited Liability
Company Operating Agreement of Local Fiber, L.L.C., dated as of March 22, 1996,
by and among the Company and the persons referenced therein (the "Operating
Agreement"), to add FiberNet Telecom, Inc., a Delaware corporation ("FiberNet")
as a party thereto and to acknowledge that SMFS, Inc., LTJ Group, Inc. and LPS
Consultants, Inc. (collectively, the "Members") are no longer members of the
Company and have no further rights or obligations under the Operating Agreement;
WHEREAS, the Members desire that Schedule A to the Operating Agreement
be amended to reflect the change in ownership of the Company; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained and for other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, it
is mutually agreed as follows:
ARTICLE I
SECTION 1.1. ADDITION OF FIBERNET AS A PARTY. FiberNet by execution of
this Amendment hereby agrees to be bound by the terms and conditions of the
Operating Agreement as a member and agrees to be subject to the provisions of
the Operating
<PAGE> 2
Agreement applicable to members as though originally a signatory and party to
the Operating Agreement.
SECTION 1.2. CONSENT TO TRANSFER OF MEMBERS' INTERESTS. Pursuant to the
Contribution Agreement dated as of November 13, 1997 by and among the
signatories listed thereto, the Members hereby consent to the transfer of all of
their respective membership interests in the Company to FiberNet Telecom, Inc.
SECTION 1.3. AMENDMENT TO SCHEDULE A. Schedule A to the Operating
Agreement is hereby amended and restated as of the effective date of this
Amendment to read in its entirety as Schedule A attached hereto.
ARTICLE II
SECTION 2.1. RELATION TO THE OPERATING AGREEMENT. The provisions of
this Amendment shall be deemed to be effective as of November 13, 1997 or
immediately upon the execution and delivery hereof. This Amendment and all the
terms and provisions herein contained shall form a part of the Operating
Agreement as fully and with the same effect as if all such terms and provisions
had been set forth in the Operating Agreement. The Operating Agreement shall
remain and continue in full force and effect in accordance with the terms and
provisions thereof, as amended by this Amendment, and the Operating Agreement
and this Amendment shall be read, taken and construed together as one
instrument.
[Intentionally Left Blank]
<PAGE> 3
IN WITNESS WHEREOF, the persons signing this Amendment below
conclusively evidence their agreement to the terms and conditions of the
Operating Agreement by so signing here.
CLASS A MEMBERS
FIBERNET TELECOM, INC.
By:/s/John J. Marchaesi
--------------------------------
Name: John J. Marchaesi
Title: VP Finance
SMFS, INC.
By:/s/ Santo Petrocelli
--------------------------------
Name: Santo Petrocelli
Title: President
LTJ GROUP, INC.
By:/s/ J. A. Tortoretti
--------------------------------
Name: J.A. Tortoretti
Title: President
LPS CONSULTANTS, INC.
By:/s/ Lawrence S. Polan
--------------------------------
Name: Lawrence S. Polan
Title: President
CLASS B MEMBER
NATIONAL FIBER NETWORK, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 4
SCHEDULE A
CLASS A MEMBERS
NAME AND ADDRESS PERCENTAGE INTEREST
FiberNet Telecom, Inc. 90%
121 Erie Canal Drive, Suite A
Rochester, New York 14626
CLASS B MEMBERS
NAME AND ADDRESS PERCENTAGE INTEREST
NFN, Inc. 10%
60 Hudson Street
New York, New York 10013
<PAGE> 1
Exhibit 10.1
FIBERNET TELECOM GROUP, INC. STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("AGREEMENT"), dated this ____th day of
______________, 1997 between FiberNet Telecom Group, Inc., a Nevada corporation
(the "COMPANY") and _________________________(the "OPTIONEE").
RECITALS
WHEREAS, the Board of Directors of the Company (the "BOARD") has
adopted and the stockholders of the Company have approved the FiberNet Telecom
Group,Inc. Employee Equity Participation Program(the "PLAN")for the issuance of
Incentive Stock Options and Nonstatutory Stock Options pursuant to the Plan,
collectively the "OPTIONS" to Employees (as such term is defined in the Plan) of
the Company;
WHEREAS, the Board has included in the Plan certain provisions to
provide for the grant of stock options intended to qualify as incentive stock
options ("INCENTIVE STOCK OPTIONS") under Section 422 of the Internal Revenue
Code of 1986, as amended, (the "Code") (or any successor provision thereof)and
certain provisions to provide for the grant of stock options intended to qualify
as Nonstatutory Stock Options;
WHEREAS, the Plan authorizes the Administrator, in its discretion, to
grant Options and to determine the details of each Agreement to which such
granted Options relate; and
WHEREAS, the Administrator believes it to be in the best interest of
the Company to grant the Optionee Options to purchase shares of common stock of
the Company (the "SHARES"), at the price and subject to the terms herein, and in
all respects subject to the terms, definitions and provisions of the Plan, which
is incorporated by reference herein.
<PAGE> 2
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements hereinafter set forth, the Company and the Optionee
agree as follows:
AGREEMENT
1. Option
(a) Grant of Option. Pursuant to the Plan, the Company hereby grants
the Optionee the option to purchase the Options and number of shares set forth
on Schedule A attached hereto in accordance with the terms and conditions of
this Agreement.
(b) Exercise Period. Except as otherwise provided in this Agreement,
each of the Options granted hereunder shall become exercisable by the Optionee
at the rate of Twenty Percent (20%) per year for five (5) years, according to
the schedule set forth in Section 6.6 of the Plan; provided however, that the
right to exercise an Option as to any fractional Share shall be deemed the right
to exercise an Option as to a full Share with appropriate adjustments made to
the last exercise period so that the total number of Options shall not exceed
that specified under paragraph (a) of Section 1 hereof.
(c) No Lapse of Exercise Power. Any Option which becomes exercisable
on a certain date but is not exercised in full on that date shall not lapse but
shall remain outstanding as to the unexercised portion and shall continue in
effect throughout the remainder of the Option Term (taking into account any
early termination of such Option Term which may be provided for under this
Agreement or the Plan).
(d) Sequential Exercise. Options granted to the Optionee may be
exercised in any order, so that the Optionee may exercise an Option if another
Option, granted at an earlier time, remains outstanding in whole or in part.
(e) Option Term. An Option which is not exercised shall expire upon
the earlier of:
(i) ten (10) years after the date such Option was granted
unless the Optionee is a 10% Holder
<PAGE> 3
(as defined herein), in which case the Option shall expire five (5)
years after such date;
(ii) three (3) months after the date the Optionee's service or
employment with the Company terminates, unless such termination was the
result of the Optionee's death or Total and Permanent Disability or
unless the Company terminates the Optionee's service or employment for
cause;
(iii) one (1) year after the date of the Optionee's death or
Total and Permanent Disability; and
(iv) any such earlier termination date as may be provided by
this Agreement or the Plan.
(f) Option Price. The purchase price per Share under this Agreement
shall be 100% of the Fair Market Value of a Share, except that in the case of an
Optionee who beneficially owns more than ten percent (10%) of the total combined
voting power of all classes of Outstanding Stock of the Company (a "10%
Holder"), the purchase price per Share shall be at least one hundred ten percent
(110%) of the fair market value of such Shares on the date of grant.
(g) Adjustments.
(i) Stock Splits and Dividends. Subject to any required action
by the Board and/or stockholders, the number of Shares covered by the
Plan as provided in SECTION 5.1 of the Plan, the number of Shares
covered by each outstanding Option and the Option Price thereof shall
be proportionately adjusted for any increase or decrease in the number
of issued Shares resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only if paid in Shares),
a stock split or any other increase or decrease in the number of issued
Shares effected without receipt of consideration by the Company.
(ii) Mergers. Subject to any required action by the Board
and/or stockholders, if the Company shall merge with another
corporation and the Company is the surviving corporation in such merger
and under the terms of such merger the Shares outstanding immediately
prior to the merger remain
<PAGE> 4
outstanding and unchanged, each outstanding Option shall continue to
apply to the Shares subject thereto and shall also pertain and apply to
any additional securities and other property, if any, to which a holder
of the number of Shares subject to the Option would have been entitled
as a result of the merger.
(iii) Administrator. Adjustments under this SECTION 1(g) shall
be made by the Administrator, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. In computing any adjustment under this SECTION
1(g), any fractional Share which might otherwise become subject to an
Option shall be eliminated.
2. Limitations on Incentive Stock Options.
(a) Maximum Number of Incentive Stock Options Exercisable During One
Year. To the extent that the aggregate Fair Market Value of the Shares
(determined as of the time an Incentive Stock Option is granted pursuant to the
Plan) exercisable for the first time by an Employee during any calendar year
under the Plan and all similar plans maintained by the Employer Company exceeds
$100,000.00, Options for such Shares shall be treated as Options that are
Nonstatutory Stock Options, and not as Incentive Stock Options. For purposes of
this provision, Options shall be taken into account in the order in which they
were granted.
(b) Non-transferability of Option. An Incentive Stock Option shall
not be assigned or transferred other than by will or by the laws of descent and
distribution. During the lifetime of the Optionee, the Incentive Stock Option
may be exercised only by the Optionee. Transfer of the Incentive Stock Option by
will or by the laws of descent and distribution shall not be effective to bind
the Company unless the Company shall have been furnished with written notice
thereof and an authenticated copy of the will or such other evidence as the
Board may deem necessary to establish the validity of the transfer and the
acceptance by the transferee of the terms and conditions of such Incentive Stock
Option. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Incentive Stock Option contrary to the provisions hereof, or
the levy of any execution,
<PAGE> 5
attachment or similar process upon the Incentive Stock Option shall be null and
void and without effect.
3. Method of Exercising Options. The Option shall be exercised as set
forth in Section 6.6 of the Plan by a written notice delivered to the Company at
its principal office in New York, New York, or such other address designated by
the Company, specifying the number of Shares to be purchased and tendering
payment in full for such Shares. Payment may be tendered in cash or by certified
check, bank cashier's or teller's check or by Shares (valued at Fair Market
Value as of the date of tender), or some combination of the foregoing or such
other form of consideration which has been approved by the Board or the
Committee, including any approved cashless exercise mechanism. In the event all
or part of the Option Price is paid in Shares, any excess of the value of such
Shares over the Option Price will be returned to the Optionee as follows: (i)
any whole Share remaining in excess of the Option Price will be returned in
kind, and may be represented by one or more share certificates, and (ii) any
partial Share remaining in excess of the Option Price will be returned in cash.
4. Withholding. In the event the Company determines that it is required
to withhold state or Federal withholding tax as a result of the exercise of the
Option, as a condition to the exercise thereof, the Optionee shall be required
to make arrangements satisfactory to the Company to enable it to satisfy such
withholding requirements. Payment of such withholding requirements shall be made
in the discretion of the Administrator, (A) in cash, (B) by delivery of Shares
registered in the name of the Optionee, (C) by the Company not issuing such
number of Shares subject to the Option, as have a Fair Market Value at the time
of exercise equal to the amount to be withheld or (D) any combination of (A),
(B) and (C) above. If (I) any Shares are registered under Section 12 of the
Exchange Act, (II) the Optionee is an officer or director (as defined in Section
16 of the Exchange Act) of the Company subject to Section 16(b) of the Exchange
Act and (III) such payment is made with Shares acquired by the Optionee upon the
exercise which gives rise to such withholding, an election under the preceding
sentence (x) must be irrevocable and with respect to all Shares covered by the
Option subject to the election, provided, however, that such election may be
changed through another irrevocable election that takes effect at least six
months after the prior election; or (y) may be made during
<PAGE> 6
the period beginning on the third business day following the date of release of
quarterly and annual summary statements of sales and earnings as provided by
Rule 16b-3(e)(3) of the Securities and Exchange Commission and ending on the
twelfth (12th) business day following such date and only if such period occurs
before the date the Company requires payment of the withholding tax. The
election need not be made during the ten-day window period if counsel to the
Company determines that compliance with such requirement is unnecessary.
5. Issuance of Optioned Stock.
(a) Issuance of Certificates. The Company shall not be required to
issue or deliver any certificate for Shares purchased upon exercise of the
Option, or any portion thereof, prior to fulfillment of each of the following
applicable conditions:
(i) The admission of such Shares to listing on all stock
exchanges or markets on which the Shares are then listed to the extent
such admission is necessary;
(ii) The completion of any registration or other qualification
of such Shares under any federal or state securities laws or under the
rulings or regulations of the Securities and Exchange Commission or any
other governmental regulatory body, which the Board shall in its sole
discretion deem necessary or advisable, or the determination by the
Board in its sole discretion that no such registration or qualification
is required;
(iii) The obtaining of any approval or other clearance from
any federal or state governmental agency which the Board shall, in its
sole discretion, determine to be necessary or advisable; and
(iv) The lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may establish for
reasons of administrative convenience.
(b) Compliance with Securities and Other Laws. In no event shall the
Company be required to sell, issue or deliver Shares pursuant to the Option if
in the opinion of the Board the issuance thereof would constitute a
<PAGE> 7
violation by either the Optionee or the Company of any provision of any law or
regulation of any governmental authority or any securities exchange. As a
condition of any sale or issuance of Shares pursuant to the Option, the Company
may place legends on the Shares, issue stop-transfer orders and require such
agreements or undertakings from the Optionee as the Company may deem necessary
or advisable to assure compliance with any such law or regulation, including if
the Company or its counsel deems it appropriate, representations from the
Optionee that the Optionee is acquiring the Shares solely for investment and not
with a view to distribution and that no distribution of the Shares acquired by
the Optionee will be made unless registered pursuant to applicable federal and
state securities laws or unless, in the opinion of counsel to the Company, such
registration is unnecessary.
6. Option and Agreement Subject to the Plan. This Agreement and the
grant of any Option hereunder are subject to all the terms, conditions and
limitations set forth in the Plan, which is incorporated herein by reference and
should be read in conjunction herewith. The Plan may subject the Option granted
hereunder to additional terms, conditions or limitations which are not
specifically set forth herein. Any inconsistency between the Plan and this
Agreement shall be resolved in favor of the Plan language. A copy of the Plan is
on file for inspection at the Company's principal offices located in New York,
New York.
7. Restrictive Covenants.
(a) Covenant Not to Compete. The Optionee acknowledges that he or
she is aware the services performed by him or her for the Company have been and
are of a special and unique character. The Optionee further acknowledges and
recognizes his or her possession of confidential and proprietary information
regarding the business of the Company. Accordingly, the Optionee agrees that he
or she will not, without the written permission of the Company, within or
outside of the United States for a period of one (1) year from the date on which
such Optionee's employment by or on behalf of the Company or its Subsidiary
Corporations is terminated (i) directly or indirectly engage or become
interested or involved in any Competitive Business (as hereinafter defined),
whether such engagement, interest or involvement shall be as an employer,
officer, director, owner, stockholder, employee, partner or in any other
capacity or relationship, (ii) assist others in engaging in
<PAGE> 8
any Competitive Business in the manner described in the foregoing clause (i), or
(iii) induce employees of the Company to terminate their employment with the
Company or engage in any Competitive Business; provided however, that nothing
contained in this Section 7(a) shall be deemed to prohibit the Optionee from
acquiring, solely for investment purposes, less than 5% of the publicly-traded
shares of the capital stock any corporation. As used in this Section 7(a), the
term "Competitive Business" means and includes any business or activity that is
now or at any time in the future competitive with or directly related to the
business conducted by the Company on the date the Optionee's employment by or on
behalf of the Company is terminated.
(b) Agreement Not to Solicit Customers. For a period of one (1) year
from the date on which such Optionee's employment by or on behalf of the Company
is terminated, the Optionee agrees that he or she will not, for or on behalf of
a Competitive Business, directly or indirectly, as owner, officer, stockholder,
partner, associate, consultant, manager, advisor, representative, employee,
agent, creditor or otherwise, attempt to solicit or in any other way disturb or
service any person, firm or corporation that has been a customer account of the
Company at any time or times prior to the date hereof, whether or not the
Optionee had direct account responsibility for such customer account.
<PAGE> 9
(c) Confidential Information.
(i) The Optionee agrees not to disclose to any person or use,
at any time after the date hereof, any confidential information of the
Company, whether the Optionee has such information in his memory or
embodied in writing or any other physical form. For purposes of this
Agreement, the phrase "confidential information of the Company" means
all information which (a) is known only to the employees of the
Company, or others in a confidential relationship with the Company or
employees of affiliated companies, (b) relates to specific technical
matters, such as the Company's proprietary information, plans, reports,
and promotional sales or operational procedures and materials, or (c)
relates to the identity and solicitation of customers and accounting
procedures of the Company or other business practices of the Company.
(ii) The Optionee agrees not to remove from the premises of
the Company, at any time after the date hereof, any document or object
containing or reflecting an confidential information of the Company or
its Subsidiary Corporations, and the Optionee recognizes that all such
documents and objects, whether developed by the Company or by someone
else for the Company, are the exclusive property of the Company and its
Subsidiary Corporations.
(iii) It is agreed that the names and addresses of customers
who were contacted by the Optionee on behalf of the Company, or of whom
the Optionee became aware through his or her employment with the
Company, are trade secrets of the Company, as is other such
confidential information of the Company, including but not limited to
the customer's business needs and requirements.
(iv) The Optionee shall, at any time requested by the Company
after the date hereof, promptly deliver to the Company all confidential
memoranda, notes, reports, lists, and other documents (and all copies
thereof) relating to the business of the Company which he or she may
then possess or have under his or her control.
<PAGE> 10
8. Administration by Board of Directors.
(a) Generally. The Board or a committee appointed by the Board (the
"COMMITTEE"), acting at the Administrator has the exclusive authority to select
the Employees (who may be officers) who are to be granted Options, determine the
number of Shares to be subject to Options to be granted to each Optionee and
designate such Options as either Incentive Stock Options or Nonstatutory Stock
Options. The interpretation and construction by the Board or the Committee of
any provisions of the Plan or of any Option granted thereunder shall be final.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
(b) Registrations. If any Shares are registered under Section 12 of
the Exchange Act, then notwithstanding the first or second sentence of the
immediately preceding paragraph, after such registration the grant of any Option
under the Plan to any person who shall be an officer or director (as defined in
Section 16 of the Exchange Act) of the Company at the time of such grant shall
only be made either (i) with the approval of the Board if all of its members are
Disinterested Persons or (ii) with the approval of the Committee if all of the
members of the Committee are Disinterested Persons.
9. Lock-Up Agreement. The Optionee agrees, if requested by the Company
and an underwriter of Shares (or other securities) of the Company, not to sell
or otherwise transfer or dispose of any Shares (or other securities) of the
Company held by the Optionee during the one hundred eighty (180) day period
following the effective date of a registration statement filed under the Act,
without the prior consent of the Company or such underwriter, as the case may
be.
10. Miscellaneous.
(a) No Employment Rights. Nothing in this Agreement or in any Option
granted hereunder shall confer upon any individual the right to continue in the
service or employ of the Company.
(b) Binding Effect. This Agreement shall be binding upon, and inure
to the benefit of, the successors and assigns of the Company and upon persons
who acquire the
<PAGE> 11
right to exercise the Option granted hereunder by will or through the laws of
descent and distribution.
(c) Singular, Plural, Gender. Whenever used herein, except where the
context clearly indicates to the contrary, nouns in the singular shall include
the plural, and the masculine pronoun shall include the feminine gender.
(d) Headings. Headings of the Sections hereof are inserted for
convenience and reference and constitute no part of the Agreement.
(e) Rights as Stockholder. An Optionee shall have no rights as a
stockholder with respect to any Shares subject to such Option prior to the
purchase of such Shares by exercise of such Option as provided herein.
(f) Applicable Law. This Agreement and the Option granted hereunder
shall be interpreted, administered and otherwise subject to the laws of the
State of New York, without giving effect to principles of conflicts of law,
except to the extent that the General Corporation Law of Delaware shall govern.
<PAGE> 12
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the day and year first written above.
FIBERNET TELECOM GROUP, INC.
By: ______________________
Name:
Title:
OPTIONEE
By: ______________________
Name:
Address:
<PAGE> 13
SCHEDULE A
Incentive Stock Option(1) Number of Shares
Exercisable
- --------
(1) Such Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code, but shall be considered a Nonstatutory Stock Option to
the extent that it does not comply with the Incentive Stock Option provisions
under the Code.
<PAGE> 1
Exhibit 10.2
INTERCOMPANY AGREEMENT
This INTERCOMPANY AGREEMENT made as of this 1st day of January, 1998,
by and among Local Fiber, LLC, a New York limited liability company (the
"Company"), and FiberNet Telecom, Inc., a Delaware corporation (the "Parent")
and FiberNet Telecom Group, Inc., a Nevada corporation ("FiberNet Group").
WHEREAS, the Company is a subsidiary of Parent and an indirect
subsidiary of FiberNet Group;
WHEREAS, the Company and Parent desire to enter into this Agreement to
set forth their agreements regarding the Parent's provision of management and
related services to the Company;
WHEREAS, that in order to enable the Company to carry on the operations
of the business, FiberNet Group desires to make periodic capital contributions
to the Company.
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. TERM. Parent shall provide management and related services to the
Company and FiberNet Group shall make capital contributions to the Company until
such time as the parties mutually determine to terminate this Agreement.
2. DUTIES OF PARENT. During the term of this Agreement, Parent agrees,
among other things, to (i) provide the Company with financial, technical, and
operational advice in connection with the operation of the business, including,
without limitation, advice relating to maintenance, engineering and construction
of each of the Systems and (ii) assist the Company in any capacity necessary to
operate and manage the business.
3. COMPENSATION OF PARENT. For its services pursuant to this Agreement,
Parent shall be reimbursed for any and all costs and expenses incurred in
connection with managing the day-to-day operations of the Company, including,
without limitation, the allocable portion of salaries of the Parent's employees,
office expenses, premium payments for insurance. Parent shall prepare a monthly
report itemizing in detail any and all expenses incurred in such month and
Company shall promptly pay such amount in full within ten (10) days of receipt
of such report. The Company is required to pay only the
<PAGE> 2
portion of the costs which were incurred by Parent in connection with managing
the Company's business.
4. CAPITAL CONTRIBUTION BY FIBERNET GROUP. FiberNet Group agrees to
provide periodic capital contributions to the Company from time to time and in
such amounts as necessary for the Company to carry on the operations of the
business.
5. NON-ASSIGNABILITY OF AGREEMENT. The Company shall not have the right
to assign this Agreement, other than to a successor of the Company or as
otherwise permitted herein. No assignment of this Agreement shall be made by
Parent or FiberNet Group, unless it is assigned to an affiliate or successor of
Parent or FiberNet Group.
6. ENTIRE AGREEMENT. This Agreement represents the entire understanding
of the parties hereto with respect to the subject matter hereof, and may not be
modified or amended, except by a written instrument executed by each of the
parties hereto designating specifically the terms and provisions so modified and
amended.
7. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
or supplemented only by written agreement of the Company, Parent and FiberNet
Group.
8. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York, without giving effect to the
choice of law principles thereof.
[Intentionally Left Blank]
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
LOCAL FIBER, L.L.C.
By: /s/ John J. Marchaesi
-------------------------------
Name: John J. Marchaesi
Title: Sr. VP Finance
FIBERNET TELECOM, INC.
By: /s/ Frank Chiaino
-------------------------------
Name: Frank Chiaino
Title: President
FIBERNET TELECOM GROUP, INC.
By: /s/ Frank Chiaino
-------------------------------
Name: Frank Chiaino
Title: President
<PAGE> 1
Exhibit 10.3
INTERCOMPANY AGREEMENT
This INTERCOMPANY AGREEMENT made as of this 1st day of January, 1998,
by and among FiberNet Equal Access LLC, a New York limited liability company
(the "Company"), and FiberNet Telecom, Inc., a Delaware corporation (the
"Parent") and FiberNet Telecom Group, Inc., a Nevada corporation ("FiberNet
Group").
WHEREAS, the Company is a subsidiary of Parent and an indirect
subsidiary of FiberNet Group;
WHEREAS, the Company and Parent desire to enter into this Agreement to
set forth their agreements regarding the Parent's provision of management and
related services to the Company;
WHEREAS, that in order to enable the Company to carry on the operations
of the business, FiberNet Group desires to make periodic capital contributions
to the Company.
In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. TERM. Parent shall provide management and related services to the
Company and FiberNet Group shall make capital contributions to the Company until
such time as the parties mutually determine to terminate this Agreement.
2. DUTIES OF PARENT. During the term of this Agreement, Parent agrees,
among other things, to (i) provide the Company with financial, technical, and
operational advice in connection with the operation of the business, including,
without limitation, advice relating to maintenance, engineering and construction
of each of the Systems and (ii) assist the Company in any capacity necessary to
operate and manage the business.
3. COMPENSATION OF PARENT. For its services pursuant to this Agreement,
Parent shall be reimbursed for any and all costs and expenses incurred in
connection with managing the day-to-day operations of the Company, including,
without limitation, the allocable portion of salaries of the Parent's employees,
office expenses, premium payments for insurance. Parent shall prepare a monthly
report itemizing in detail any and all expenses incurred in such month and
Company shall promptly pay such amount in full within ten (10) days of receipt
of such report. The Company is required to pay only the
<PAGE> 2
portion of the costs which were incurred by Parent in connection with managing
the Company's business.
4. CAPITAL CONTRIBUTIONS BY FIBERNET GROUP. FiberNet Group agrees to
provide periodic capital contributions to the Company from time to time and in
such amounts as necessary for the Company to carry on the operations of the
business.
5. NON-ASSIGNABILITY OF AGREEMENT. The Company shall not have the right
to assign this Agreement, other than to a successor of the Company or as
otherwise permitted herein. No assignment of this Agreement shall be made by
Parent or FiberNet Group, unless it is assigned to an affiliate or successor of
Parent or FiberNet Group.
6. ENTIRE AGREEMENT. This Agreement represents the entire understanding
of the parties hereto with respect to the subject matter hereof, and may not be
modified or amended, except by a written instrument executed by each of the
parties hereto designating specifically the terms and provisions so modified and
amended.
7. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
or supplemented only by written agreement of the Company, Parent and FiberNet
Group.
8. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York, without giving effect to the
choice of law principles thereof.
[ Intentionally Left Blank]
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
FIBERNET EQUAL ACCESS, L.L.C.
By: /s/ John J. Marchaesi
-------------------------------
Name: John J. Marchaesi
Title: Sr. VP Finance
FIBERNET TELECOM, INC.
By: /s/ Frank Chiaino
-------------------------------
Name: Frank Chiaino
Title: President
FIBERNET TELECOM GROUP, INC.
By: /s/ Frank Chiaino
-------------------------------
Name: Frank Chiaino
Title: President
<PAGE> 1
LICENSE AGREEMENT FOR TELECOMMUNICATIONS SERVICES
THIS LICENSE AGREEMENT FOR TELECOMMUNICATIONS SERVICES (this
"Agreement"), made as of the __ day of August, 1997, is by and between TISHMAN
SPEYER TRAMMELL CROW LIMITED PARTNERSHIP, a New York limited partnership
("Licensor"), and FIBERNET EQUAL ACCESS, LLC, a New York limited liability
company ("Licensee").
RECITALS
Licensee has requested that Licensor grant to Licensee a license to
construct, operate and maintain a telecommunications distribution system in the
Building (as hereinafter defined) (i) to make available to one or more Tenants
(as hereinafter defined) connections to Carriers (as hereinafter defined) of
each such Tenant's choice, (ii) to provide to Tenants interconnections of their
telecommunications equipment and (iii) to install and maintain related equipment
in certain premises (the "Basement Space") not to exceed 1,000 square feet in a
location reasonably acceptable to Licensor and Licensee on the basement level of
that certain office building (the "Building") owned by Licensor and commonly
known as and located at 1301 Avenue of the Americas, New York, New York.
Licensor has agreed to grant such license to Licensee, subject to the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
"Base CPI" means the CPI for the month in which the Effective Date
occurs.
"Basement Rent" means an amount, per annum, equal to $15.00 per
square foot of Basement Space used in connection with the Facilities, for the
period commencing on the Effective Date and ending on the first (1st)
anniversary of the Effective Date. For every year (or partial year) thereafter
during the Term, Basement Rent shall mean the previous year's Basement Rent;
provided that, if for any Increase Year the Comparative CPI immediately
preceding such Increase Year shall exceed the Base CPI, in the case of the first
(1st) Increase Year or the Comparative CPI of the next preceding Increase Year
in each subsequent Increase Year, the Basement Rent as then in effect shall be
increased by an amount equal to the product of (a) such excess and (b) the
Basement Rental for such Increase Year.
"Carriers" means the local and/or inter exchange carriers,
competitive access carriers, cellular carriers, personal communication network
carriers, wireless carriers and
<PAGE> 2
2
NYNEX (or its successor as the New York regional Bell operating company) now or
hereafter providing the Services to Tenants in the Building.
"Comparative CPI" means the CPI for the month preceding the month in
which each Increase Year commences.
"Consolidated" refers to the consolidation of accounts in accordance
with generally accepted accounting principles ("GAAP").
"CPI" means, for the month involved, the consumer price index for
all urban consumers as issued and published by the U.S. Bureau of Labor
Statistics or if no longer so issued or published, such other reasonably
comparable index or statistical information selected by Licensor as may be
published by a reliable, recognized and non-partisan organization.
"EBITDA" means, for any period, Consolidated net income (or net
loss) plus, to the extent deducted therefrom: (a) interest expense, (b) income
tax expense, (c) depreciation expense and (d) amortization expense, in each case
of Licensee and its subsidiaries, determined in accordance with GAAP for such
period.
"Facilities" means the telecommunications risers, conduits,
redundant fiber optic and dedicated copper cable, digital electronic
transmission devices, switches and associated equipment installed or constructed
in or at the Building by or on behalf of Licensee.
"Force Majeure" means any and all causes beyond the reasonable
control of Licensor or Licensee, as the case may be, including delays caused by
the other party hereto, legal requirements and other forms of governmental
restrictions, regulations, guidelines or controls, whether voluntary or
mandatory, relating to Licensor or the Building (including energy and water or
other utility or service conservation measures), labor disputes, accidents,
mechanical breakdowns, shortages or inability to obtain labor, fuel, steam,
water, electricity or materials through ordinary sources, acts of God, war,
sabotage, embargo, enemy action, civil commotion, fire or other casualty, but
shall not include lack of funds or financial inability to perform.
"Governmental Authority" means any national, state, municipal or
local government or other political subdivision thereof, and any body, agency,
ministry, board, taxing or other authority, court or tribunal of the foregoing
and any corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing.
<PAGE> 3
3
"Increase Year" means the twelve (12) month period beginning on the
first (1st) day of the month in which the first (1st) anniversary of the
Effective Date occurs and each consecutive twelve (12) month period thereafter
during which any portion of the Term occurs.
"Services" means the telecommunications services provided by
Licensee to Tenants and Carriers, including, but not limited to, various types
of voice, video and data communications devices, switching equipment and
information management systems.
"Tenant" means a tenant (or any permitted assignee, licensee or
subtenant of such tenant) in the Building, as acknowledged from time to time by
Licensor to Licensee at Licensee's request.
2. Grant of License. Licensor grants to Licensee, in consideration
of the Fees (as hereinafter defined), a license (the "License") for the sole use
and purpose of designing, installing, maintaining, operating, repairing and
replacing, at the sole expense of Licensee, the Facilities in the Building and
to resell and/or lease capacity from the system to Tenants and Carriers;
provided, however, that Licensor's grant to Licensee of the License hereunder
shall not be effective until such time as Licensee shall have provided evidence
satisfactory to Licensor in Licensor's sole discretion that Licensee has
arranged adequate financing for the construction and maintenance of the
Facilities and provision of the Services ("Adequate Financing"). Licensor's
grant to Licensee of the License hereunder shall be effective on the date (the
"Effective Date") upon which Licensee receives notice from Licensor that
Licensor has determined that Licensee has arranged Adequate Financing. Licensee
shall use the Facilities to provide the Services to Tenants and to Carriers.
The License may only be exercised for the purposes specified herein, and any
attempt to exercise the License for any other purpose, without the prior written
approval of Licensor, shall render the License immediately void. Notwithstanding
the foregoing, Licensor shall have the right to grant, renew or extend licenses
to a Carrier whenever a Tenant shall request direct service from, or access to,
any such Carrier; provided, however, that such Carrier shall not be permitted to
lease or resell excess capacity to other Tenants unless requested to do so by
such other Tenants. Licensor further agrees that no other Carrier or entity
shall be granted a license in the Building for the purposes contemplated by this
Agreement.
3. Provision of Space; Construction. Subject to the rights of
Tenants, Licensor shall provide (i) non-exclusive space in the conduits, risers
and shafts located in the common areas of the Building as designated by Licensor
and (ii) use of the Basement Space, for Licensee to install, construct,
operate, repair, maintain and replace the Facilities as designated by Licensor.
Licensee shall deliver plans and specifications relating to the installation and
construction of the Facilities in accordance with the terms, provisions and time
frames set forth in Exhibit A attached hereto. Licensee shall cause all of the
Facilities to be installed and constructed in accordance with Exhibit A. Subject
to the rights of
<PAGE> 4
4
Tenants, Force Majeure and other circumstances beyond Licensor's reasonable
control, Licensor shall use its reasonable efforts to provide Licensee access to
the Building, including the Facilities, twenty-four hours a day, so that
Licensee may perform maintenance and repair functions.
4. Payment of Rent. Licensee shall pay to Licensor without notice or
demand, and without any set-off, counterclaim, abatement or deduction
whatsoever, in lawful money of the United States by wire transfer of funds to
Licensor's account, as designated by Licensor, or by check drawn upon a bank
approved by Licensor, Basement Rent in equal monthly installments, in advance,
on the first (1st) day of each calendar month during the Term, commencing on the
Effective Date.
5. Repair by Licensee. Licensee shall not permit the Facilities to
be removed or demolished except in accordance with this Agreement. Licensee
shall maintain the Facilities in good repair, working order and condition,
subject to reasonable wear and tear. Licensee shall promptly restore, replace or
rebuild the Facilities or any part thereof at any time damaged or destroyed by
any casualty (whether or not insured against or insurable) in accordance with
Section 6.
6. Alterations. Licensee shall not make or allow to be made any
alterations or additions to the Facilities ("Alterations") without first
obtaining the consent of Licensor. Licensor's consent will not be unreasonably
withheld with respect to any proposed Non-Structural Alteration. An Alteration
shall be deemed to be "Nonstructural" if such Alteration would not, in
Licensor's sole judgment, affect the structural, mechanical, electrical,
plumbing, fire protection, life safety or other systems of the Building. All
Alterations shall be subject to the guidelines and requirements set forth on
Exhibit A.
7. Liens. Subject to Section 13(a)(ii), Licensee shall own the
Facilities free and clear of any liens, charges, security interests or
encumbrances whatsoever. Should any mechanic's or other lien be filed against
any portion of the Building or the land on which it is located by reason of
Licensee's acts or omissions or because of a claim against Licensee, Licensee
shall cause the same to be cancelled or discharged of record by bond or
otherwise within ten (10) days after notice from Licensor. If Licensee shall
fail to cancel or discharge any such lien within said 10 day period, Licensor
may cancel or discharge the same and upon Licensor's demand, Licensee shall
reimburse Licensor for all costs incurred in cancelling or discharging such
liens. Notwithstanding the foregoing, Licensee, at its expense, after notice to
Licensor, may contest, by appropriate proceedings prosecuted diligently and in
good faith, the validity of such lien; provided that Licensee maintains proper
reserves in connection therewith and such proceedings could not subject Licensor
to any civil or criminal penalty or liability or involve any risk of sale,
forfeiture or loss of the Building or any property of Licensor or tenants of the
building or constitute a default under any loan documents or other agreements
affecting the Building.
<PAGE> 5
5
8. Services. (a) Throughout the Term, Licensee shall offer the
Services to all Tenants. Licensee shall maintain the Facilities so that the
Services and the Facilities (i) shall be the most competitive, up-to-date and
technically advanced services and facilities available to tenants in the New
York metropolitan area and shall be sufficient to satisfy the technical
requirements established from time to time by any Carrier and (ii) shall have
the capacity to fulfill the additional needs of Tenants from time to time.
Licensee agrees to adopt new technologies to improve the Services and the
Facilities if requested by Licensor if the same are being utilized in comparable
office buildings in the New York metropolitan area.
(b) Licensee shall operate the Facilities and render the Services in
a manner that will not disrupt, affect or interfere with any other provider of
services in the Building (including any public utility or Carrier) or any
Tenant's use, occupancy and enjoyment of its premises or the common areas of the
Building.
(c) The fees charged by Licensee for the Services shall be
comparable to those charged by other providers of similar services or facilities
in the New York metropolitan area.
(d) The Services shall be available at all times to Tenants and
Carriers who subscribe thereto, subject to the terms of any direct agreements
between Licensee and any such Tenant or Carrier.
(e) Licensee shall not offer any services other than the Services,
or install any equipment other than the Facilities, or discontinue to offer the
Services and the Facilities, without the consent of Licensor.
(f) Licensee shall include, as a standard term in each contract
which it proposes to execute with a Tenant or a Carrier, a clause stating that
(i) in the case of Tenants, any cessation or interruption of the Services or any
breach of such contract by Licensee shall not constitute a default or
constructive eviction by Licensor under the lease between such Tenant and
Licensor and (ii) such Tenant or Carrier shall hold harmless Licensor, its
agents, employees and related persons from any claims such Tenant may have
against Licensee pursuant to such contract.
(g) Within thirty (30) days after the date of this Agreement,
Licensee shall submit to Licensor for its approval copies of contracts which
Licensee proposes to execute with any Carrier or Tenant. Licensee shall utilize
any such contracts with Carriers or Tenants which have been approved by Licensor
and shall not materially alter or modify such contracts without Licensor's
approval.
<PAGE> 6
6
(h) Licensee shall maintain an emergency repair service at all times
in connection with the provision of the Services. Licensee shall respond
immediately to any interruption in the Services and take all actions reasonably
necessary to restore the Services immediately.
(i) Licensee shall provide the Services to Tenants and Carriers
only.
(j) Upon execution of this Agreement, Licensee may, subject to the
approval of Licensor, such approval not to be unreasonably withheld, conduct a
survey of Tenants to determine customer demand for telecommunication services.
9. Right to Perform Licensee's Covenants. If Licensee shall fail to
perform any of its obligations under this Agreement, Licensor may but shall not
be obligated to, subject to the terms of any Tripartite Agreement (as
hereinafter defined) then in effect, perform the same at the expense of Licensee
(a) immediately and without notice in the case of emergency or in case such
failure unreasonably interferes with the use of the Services or any other
service provided to Tenants or constitutes a default by Landlord under any lease
or other agreement with a Tenant and (b) in any other case if such failure
continues after two (2) days from the date of the giving by Licensor to Licensee
of notice of Licensor's intention so to perform the same or, in the case of a
failure which for causes beyond Licensee's reasonable control cannot with due
diligence be cured within such 2 day period, such 2 day period shall be deemed
extended if Licensee (i) shall immediately upon the receipt of such notice,
advise Licensor of Licensee's intention to institute all steps necessary to cure
such failure and (ii) shall institute and thereafter with reasonable diligence
prosecute to completion all steps necessary to cure the same. Licensee shall pay
to Licensor all sums expended by Licensor in connection with such cure promptly
after demand by Licensor therefore. All sums not paid within five (5) days after
the date when due under this Agreement shall earn interest at a rate per annum
equal to the lesser of (a) two percentage points (2%) above the rate announced
from time to time by Citibank, N.A. as its "base rate" to be in effect in its
principal office in New York, New York or (b) the maximum rate permitted by
applicable law from the date when due until paid.
10. Term. (a) The License shall be for a term (the "Term")
commencing on the Effective Date and ending on the tenth (10th) anniversary of
the Effective Date (unless sooner terminated pursuant to the terms hereof). At
any time within ninety (90) days after a transfer, directly or indirectly, of
not less than a majority interest in the ownership of the Building, then in any
such event, Licensor, upon sixty (60) days written notice to Licensee, may
revoke the License and upon expiration of such 60 day period, the License shall
be of no further force and effect; provided, however, that Licensor shall pay to
Licensee an amount equal to the sum of (i) the total amount of (A) cash funded
as capital contributions by Licensee to fund the installation of the Facilities
and (B) indebtedness the proceeds of which were used to fund the installation of
the Facilities, to the extent the amounts in (A) and (B)
<PAGE> 7
7
remain unamortized as of the date of such transfer calculated using the schedule
of amortization set forth on Exhibit B and (ii) payment of the market value of
Licensee's operation of the Facilities which value shall be calculated based on
an EBITDA valuation method for a period equal to ten (10) years less the then
expired portion of the Term, using a discount rate of fourteen percent (14%).
Promptly after completion of installation of the Facilities, Licensee shall
calculate and provide evidence of the calculation of item (i) above to Licensor.
Licensor shall have the right to challenge and audit such calculations. The cost
of such audit shall be reimbursed to Licensor by Licensee should a discrepancy
of more than five percent (5%) be discovered as a result of such audit.
(b) If, within 180 days after the expiration of the term hereof,
Licensor shall intend to enter into a license arrangement similar hereto for the
provision of telecommunication services in such manner and by such medium as
shall then be appropriate. Licensor shall notify Licensee of its intentions in
such regard and Licensee shall be entitled to submit whatever proposals it
chooses for the provision of such services, it being understood and agreed that
Licensee shall have no right to renew this Agreement and Licensor shall be under
no obligation to accept any proposals so submitted by Licensee.
11. Taxes, Fees and Permits. Licensee shall pay all federal, state
and local taxes applicable to the License, the Facilities, the Licensor Work,
the Licensee Work and the Alterations. Further, Licensee shall procure, maintain
and pay for all fees, permits and governmental agency licenses necessary in
connection with the installation, maintenance and operation of the Facilities
and the provision of the Services. Licensee shall provide Licensor with copies
of all such permits and licenses.
12. License Fees. In consideration of the rights and privileges
granted to Licensee under this Agreement, and in addition to the payment of
Basement Rent, Licensee agrees to pay to Licensor license fees (the "License
Fees") equal to fourteen percent (14%) of the gross revenues received by
Licensee from the Carriers, Tenants or any other parties in connection with the
use of the Facilities or the provision of the Services ("Gross Revenues") per
annum. Gross Revenues shall not include bad debts or refundable deposits. Within
fifteen (15) days after the end of each calendar quarter during the Term,
Licensee shall deliver to Licensor a statement of Gross Revenues for the
previous quarter, certified by an officer of Licensee. At the request of
Licensor, Licensee shall make available such additional information and records
to allow Licensor to review and verify such statements of Gross Revenues.
License Fees shall be payable monthly in arrears on the twentieth (20th) of each
month, calculated on billings for the previous month. Payment of the License Fee
shall be accompanied by a detailed list of customers billed and services
provided for the relevant period.
In the event that the tax status of Licensor (or any constituent
thereof) shall at any time cause it to be preferable to Licensor to receive
License Fees calculated on a "gross"
<PAGE> 8
8
rather than a "net" basis, Licensee agrees to cooperate with Licensor in
negotiating an amendment or modification of this Agreement to reflect
recomputation and recharacterization of the License Fees and shall at the
request of Licensor execute and deliver such documents reasonably required to
effect such amendment or modification. Any amendment or modification pursuant to
this Section shall be structured so that the economic results to Licensor and
Licensee shall be substantially similar to those set forth herein without
regard to such amendment or modification.
13. Assignment or Sublicense. (a) Licensee shall not assign this
Agreement or grant a sublicense to any person, firm, entity or corporation for
the operation of the Facilities without the prior written consent of Licensor;
provided, however, that Licensor will not unreasonably withhold its consent to
an assignment of this License to an (i) entity wholly owned by Licensee, or (ii)
entity which (A) succeeds to all or substantially all of Licensee's assets
whether by merger, sale or otherwise, (B) has a net worth equal to or greater
than Licensee's net worth on the date hereof or immediately prior to such
assignment, whichever is greater and (C) is controlled by one or more
individuals having not less than ten years experience managing the provision of
telecommunication services in the New York metropolitan area. Without limiting
the foregoing, Licensor shall not unreasonably withhold its consent to a
collateral assignment of this Agreement or the granting of a security interest
in the Facilities to any credit, financing, or lending institution (a "Lender")
from which Licensee obtains Adequate Financing; provided that, in each case, (y)
the interests created by such financing arrangements do not violate the
provisions of any mortgage or ground lease affecting the Building and (z) such
credit, financing or lending institution enters into an agreement (a "Tripartite
Agreement") with Licensor and Licensee providing, inter alia, that such
institution (1) will not take any action to disrupt the provision of services
hereunder by Licensee without the prior written approval of Licensor, (2) will
agree that, upon a default by Licensee under loan agreement between Licensee and
such institution, Licensor may assume the operation of the Facilities either
directly or through such Carrier as Licensor shall identify, and (3) will not
take any action to remove or dispose of any portion of the Facilities without
Licensor's approval.
(b) No assignment of this Agreement shall in any way relieve or
release Licensee of any of its obligations under this Agreement, including
without limitation, the payment of all amounts due hereunder. Any sublicense
granted by Licensee shall be subject to all of the terms and conditions of this
Agreement.
(c) Licensor shall have the right to transfer and assign, in whole
or in part, all of its rights and obligations under this Agreement and in such
event and upon such transfer and assignment no further liability or obligation
shall thereafter accrue against Licensor and such transferee or assignee shall
be bound by all of the terms and conditions of this Agreement.
<PAGE> 9
9
14. Subordination. This Agreement and the License granted hereunder
is and shall be subject and subordinate to all ground or underlying leases,
mortgages and deeds of trust which now or hereafter affect the Building and/or
any ground or underlying leases thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof and all advances thereunder;
provided, however, that Licensor shall request from any future mortgagee or
ground lessor its agreement that, so long as Licensee is not then in default
under this Agreement, such mortgagee or ground lessor shall not disturb the
possession of Licensee hereunder upon foreclosure of such mortgage or
termination of such ground lease, as applicable. The provisions of this Section
shall be automatic and shall not require any further action on the part of
Licensee. In confirmation of such subordination, Licensee will execute and
deliver upon demand of Licensor any and all reasonable instruments desired by
Licensor subordinating the License to such lease, mortgage or deed of trust.
15. End of Term. Upon the expiration or any earlier termination of
the Term of this Agreement, Licensee may remove the Facilities from the
Building. Licensor, by notice to Licensee delivered at least 30 days prior to
such expiration, or within 30 days after any such earlier termination, may
require Licensee to remove all or any portion of the Facilities from the
Building, in which event Licensee shall promptly remove from the Building the
Facilities so specified for removal. Licensee shall reimburse Licensor upon
demand for the cost of repairing any damage to the Building occasioned by any
such removal. Any Facilities not removed as aforesaid shall be deemed to have
been abandoned by Licensee.
16. No Warranties. Licensor makes no representation or warranties
whatsoever with respect to the condition of the Building, or the fairness or
suitability of the Building for the installation, maintenance and operation of
the Facilities; the License herein granted to Licensee is made on an "as is"
basis with all flaws and faults; and Licensee hereby acknowledges that it has
inspected the Building, including the portions thereof subject to the License
herein granted and agrees to accept all of the foregoing in its present
condition. Licensee acknowledges that, except as expressly provided herein,
Licensor is under no obligation to perform any work or provide any materials or
services to Licensee in connection with this Agreement.
17. Non-Recourse. The liability of Licensor for any of Licensor's
obligations under this Agreement shall be limited to Licensor's interest in the
Building, and Licensee shall not look to any of Licensor's other assets for
enforcement or satisfaction of any such obligation, nor shall Licensee seek
recourse for such enforcement or satisfaction against any direct or indirect
general or limited partner, officer, director, employee or shareholder of
Licensor. No direct or indirect general partner or limited partner, officer,
director, employee or shareholder of Licensor shall be personally liable for the
performance of Licensor's obligations under this Agreement. In no event shall
Licensor or Licensee ever
<PAGE> 10
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be liable for consequential, exemplary or punitive damages in connection with
any breach or default by such party of the terms and provisions of this
Agreement.
18. Security. Licensee shall provide adequate security and
maintenance personnel in order to ensure the safe operation of the Facilities.
Licensee shall provide to Licensor a personal computer connection for an on-line
network trouble reporting data base to monitor the Facilities.
19. Compliance with Laws. Licensee, at its sole cost and expense,
will comply with all present and future laws, rules, orders, ordinances,
regulations, statutes, requirements, codes and executive orders, extraordinary
as well as ordinary, of all Governmental Authorities now existing or hereafter
created, and of any applicable fire rating bureau, or other body exercising
similar functions, affecting the Building, or any street, avenue or sidewalk
comprising a part of or any vault in or under the same, or requiring removal of
any encroachment, or affecting the maintenance, use or occupation of the
Building, which are applicable to the facilities and/or the use thereof.
Licensee shall install, maintain and operate all of its equipment used in
connection with the Facilities in conformity with all laws, codes and
regulations of all Government Authorities having jurisdiction over the
installation, use and operation of the Facilities including, without limitation,
the Federal Communications Commission and the New York Public Service
Commission; provided, however, that if compliance with such laws, codes and
regulations would require a change in the size, configuration or location of the
Facilities, such changes shall be subject to Licensor's prior written consent,
which Licensor may not arbitrarily withhold.
20. Maintenance. Throughout the term of this Agreement, Licensee, at
its sole cost and expense, will maintain and take good care of the Facilities
and other fixtures and appurtenances therein, and make all repairs thereto as
and when needed to preserve them in good working order and condition; provided
that any repairs which in Licensor's sole judgment affect the structural,
mechanical, electrical, plumbing, fire protection or life safety systems of the
Building shall be subject to the provisions of Section 6. Licensee shall repair,
to Licensor's satisfaction and at Licensee's sole cost and expense, all damage
or injury to any part of the Building, or to its fixtures, equipment and
appurtenances, caused by or resulting from the Facilities, the moving of
Licensee's property, or any act or omission of Licensee or Licensee's agents,
employees, invitees or licensees. In the event Licensor performs any such
obligations on Licensee's behalf, all sums paid by Licensor and all costs
incurred by Licensor in performing said obligations shall be paid by Licensee to
Licensor on demand, said demand to be accompanied by invoices marked "paid" or
other evidence of payment.
21. Electricity. (a) Licensee shall pay Licensor, within fifteen
(15) days of receipt of an invoice therefor, for the cost of electricity or
other sources of energy
<PAGE> 11
11
consumed in connection with the Facilities, if any, including any electricity
used by any Carrier in connection with the provision of the Services in the
Building.
(b) Licensor, at Licensee's expense, may install a submeter or
submeters to monitor separately Licensee's consumption of electric energy in
operating the Facilities or using the Basement Space. Licensor may, in the
alternative, at Licensor's option and at Licensee's expense, from time to time
cause an electrical engineer or utility consultant selected by Licensor to make
a survey of the connected power load of the Facilities to determine the electric
energy consumed thereby. The findings of the engineer or consultant shall be
binding upon the parties.
22. Indemnity. Licensor shall not be liable to Licensee, or to
Licensee's agents, contractors or employees or to any Carrier or any recipient
of the Services for any loss or damage to person or property caused for any
reason whatsoever (including, without, limitation, by reason of revocation of
the License pursuant to Section 27 or by reason of any theft, misappropriation
or other loss of the Facilities), except if the same shall have resulted solely
from Licensor's gross negligence or wilful misconduct. To the fullest extent
permitted by law, Licensee shall indemnify and hold harmless Licensor,
Licensor's agents, employees and representatives and their respective direct and
indirect partners, officers, directors, shareholders, agents and employees and
the holders of any mortgage or ground lease affecting the Building
(collectively, the "Indemnitees") from and against all claims, damages, losses
and expenses, including, without limitation, attorneys' fees and disbursements,
directly or indirectly arising out of or resulting from this Agreement, the
performance of the Alterations, the Licensor's Work, the Licensee's Work, any
use of the Facilities or provision of the Services, except to the extent any
such claim, damage, loss or expense is caused by Licensor's gross negligence or
willful misconduct. The indemnity under this Section 22 shall not be construed
to negate, waive, or otherwise reduce any other right of indemnity at law or in
equity which would otherwise exist as to the matters described herein. In any
and all claims against the Indemnitees by an employee of Licensee, or anyone
directly or indirectly employed by Licensee or anyone for whose acts Licensee
may be liable hereunder, the indemnification obligation under this Section 22
shall not be limited in any way by any limitation of the amount or type of
damages, compensation or benefits payable by or for the License under the
applicable worker or workmen's compensation acts. The indemnity provisions
contained in this Section 22 shall survive the termination of this Agreement.
23. Force Majeure. Licensor shall not be liable for any failure to
provide access to the Facilities, to assure the beneficial use of the Facilities
or to furnish any services or utilities required under this Agreement when such
failure is caused by Force Majeure, and Licensee shall not be entitled to any
damages resulting from such failure, nor shall such failure relieve Licensee of
the obligation to pay all sums due hereunder or constitute or be construed as a
constructive or other eviction of Licensee. If Licensor is required or elects to
make alterations to the Building in order to comply with mandatory or voluntary
controls or
<PAGE> 12
12
guidelines relating to the use or conservation of energy, water or any other
utility or service, neither such compliance nor the making of such alterations
shall in any event entitle Licensee to any damages, relieve Licensee of the
obligation to pay any of the sums due hereunder, or constitute or be construed
as a constructive or other eviction of Licensee.
24. Insurance. (a) Licensee shall keep the Facilities insured
against fire and such other risks as may be included in the broad form of
extended coverage insurance from time to time available. Any monies received by
Licensee for loss or damage under such insurance shall be applied by Licensee
first to restore, replace or rebuild the Facilities (or any part thereof)
damaged or destroyed by any such insured casualty in accordance with this
Agreement.
(b) Licensee shall maintain comprehensive general liability
insurance, including, without limitation, premises operations, independent
contractors, completed operations, broad form property damage, personal injury
and blanket contractual liability, with limits of liability for bodily injury
and property damage of not less than Four Million Dollars ($4,000,000.00) per
occurrence. All policies of insurance shall be issued by an insurance company
licensed to do business in the State of New York, which is rated "A" and a
"Financial Size Category" of at least "VIII" or better by Best's Key Rating
Guide. Licensor and, if requested by Licensor, any mortgagee shall be included
as an additional insured under such insurance using a standard I.S.O.
endorsement or its equivalent. The insurance may be carried under blanket
policies, but each must be primary insurance for the Licensor and any such
mortgagee against all claims or losses arising from bodily injury, sickness,
disease or death or to injury or destruction of tangible property including the
loss of use resulting therefrom. Within ten (10) days after the execution of
this Agreement, and at least (10) days prior to the expiration of such
policies, Licensee shall deliver to Licensor duplicate originals of the policies
or renewals thereof, with proof of payment of premiums therefor. The insurance
policy shall be further endorsed to provide that such policy shall not be
materially altered or changed or canceled without at least thirty (30) days'
prior written notice thereof by registered or certified mail to Licensor.
(c) In the event the Building or the Facilities shall be so damaged
or destroyed that Licensor shall determine to demolish or remodel or
substantially rebuild the Building or so as to make the use of the Facilities
impractical as determined by Licensor's qualified engineer or telecommunications
consultant reasonably acceptable to Licensee and having the technical expertise
necessary to make such a determination, then either party may elect to terminate
this License on not less than twenty (20) days' prior notice to the other party
effective as of a date specified in such notice, and upon the date specified in
such notice the term of the License shall expire as fully and completely as if
such date were the date set forth above for the termination of this License.
<PAGE> 13
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(d) If neither party elects to terminate this License pursuant to
the provisions of subparagraph (c) above, Licensor shall exercise reasonable
efforts to repair damage to the Building occasioned by fire or other casualty
excepting a fire that occurs in or is caused by the Facilities, and except
further, however, that Licensor in no event shall be required to repair, replace
or restore any property of Licensee comprising part of the Facilities, all of
which property shall be covered under separate insurance policies carried by
Licensee for Licensee's sole benefit pursuant to subparagraphs (a) and (b)
above.
(e) Anything in this Agreement to the contrary notwithstanding,
Licensor and Licensee each waive all rights of action, against the other, the
other party's tenants and the respective agents, employees and representative
and the respective direct and indirect partners, officers, directors,
shareholders, agents and employees of all of the foregoing, for any loss or
damage that may occur to the Facilities, the Building or any personal property
of the waiving party by reason of fire, the elements or any other cause which
could be insured against under the terms of standard fire and the then
obtainable extended coverage insurance policies, regardless of cause or origin,
including negligence. Licensee shall advise insurers of the foregoing and such
waiver shall be part of each policy maintained by Licensee that applies to the
Building.
25. Default. If Licensee shall fail (a) twice in any twelve (12)
month period, to pay any License Fees when due and such failure continues for
more than five (5) days or (b) to perform any of its obligations under this
Agreement, and such failure continues for a period of ten (10) days (unless such
default cannot reasonably be cured within such 10 day period, in which case such
period shall be extended as long as Licensee has commenced the curing of such
default and thereafter prosecutes the curing of same with diligence), Licensor
shall have the option to revoke the License and terminate this Agreement or at
its election, Licensor may then, at Licensee's expense, cure such default on the
part of Licensee by any means available to Licensor, without relieving Licensee
of any of its obligations hereunder.
26. Relocation. Upon not less than ninety (90) days' prior written
notice, Licensor shall have the right, in the exercise of Licensor's reasonable
discretion, to require Licensee, at Licensor's sole cost and expense, to
duplicate and remove the original Facilities to such other suitable space within
the Building as Licensor shall reasonably designate. Any such duplication and
removal of the original Facilities shall be subject to the terms and conditions
of this Agreement. Upon any such duplication and removal of the original of the
Facilities, the License granted by this Agreement shall be deemed to apply to
such portion of the Building in which the Facilities are then located as
designated by Licensor. Licensor shall only request such duplication and removal
of the original Facilities for good cause (taking into consideration the expense
and inconvenience to Licensee and its customers) and if no other reasonable
alternative exists.
<PAGE> 14
14
27. Building Rules and Regulations. Licensee shall faithfully
observe and comply with the rules and regulations of the Building now in effect,
a copy of which is attached hereto as Exhibit C and, after notice thereof, all
reasonable modifications thereof and additions thereto from time to time
promulgated in writing by Licensor (collectively, the "Building Rules").
Licensor shall not be responsible to Licensee for the nonperformance by any
other tenant, licensee or occupant of the Building of any of the Building Rules.
28. No Waiver. No waiver by Licensor of any term, condition, or
requirement of this Agreement shall constitute a waiver of any other term,
condition or requirement hereof, or constitute a waiver of the same term,
condition or requirement in any other instance.
29. Applicable Law. This Agreement and the License created hereby
shall be governed by and construed in accordance with the laws of the State of
New York applicable to agreements entered into and to be performed entirely
within said state.
30. Notices. All notices, demands, requests and other communications
which are required or permitted herein shall be in writing and shall be sent
either by (a) registered or certified mail, postage prepaid, return receipt
requested, or (b) Federal Express or such other nationally recognized overnight
delivery service (a "Courier"), addressed as set forth below or to 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 on the third (3rd) business day after posting or the
first (1st) business day after depositing with such Courier. All notices
delivered to multiple addresses shall be dispatched using the same means of
delivery.
If to Licensee:
FiberNet Equal Access, LLC
1212 43rd Avenue
Long Island City, New York 11101
Attention: President
Copy to:
Paul Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attention: Scott M. Wornow, Esq.
<PAGE> 15
15
If to Licensor:
Tishman Speyer Trammell Crow Limited Partnership
c/o Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: General Counsel
Copy to:
Tishman Speyer Trammell Crow Limited Partnership
c/o Tishman Speyer Properties, L.P.
520 Madison Avenue
New York, New York 10022
Attention: Region Manager
31. No Leasehold Interest. This Agreement is not to be construed in
any way to grant to Licensee any leasehold or any other real property interest
in the portions of the Building licensed hereby or in any other portion of the
Building, it being intended that this Agreement merely grant to Licensee a
license to enter upon and use the Facilities during the Term in accordance with
the terms and conditions hereof. Nothing contained herein shall be construed to
grant to Licensee any property or ownership interest in the Building or to
create a partnership or joint venture between Licensor and Licensee.
32. Attorneys' Fees. Should any action be brought arising out of
this Agreement, including, without limitation, any action for declaratory or
injunctive relief, the prevailing party shall be entitled to reasonable
attorneys' fees and costs and expenses of investigation all as actually incurred
and including, without limitation, attorneys' fees, costs and expenses of
investigation incurred in appellate proceedings or in any action or
participation in, or in connection with, any case or proceeding under Chapters
7, 11 or 13 of the Bankruptcy Code or any successor statutes, and any judgment
or decree rendered in any such actions or proceedings shall include an award
thereof. The reasonableness of attorneys' fees and costs awarded pursuant to
this Section shall be determined by the court and not by the jury.
33. Brokers. Licensee represents that it has dealt with no broker in
connection with this Agreement and Licensee shall hold harmless Licensor from
and against any and all liability, loss, damage, expense, claim, action, demand,
suit or obligation arising out of or relating to a breach by Licensee of this
representation.
34. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the provision of telecommunications
services to the Building by
<PAGE> 16
16
Licensee and supersedes any other agreements that may exist between the parties
as of the date hereof. This Agreement may not be amended or modified except by a
writing duly executed by the parties hereto. Any past, present or future
promises or representations not contained in this Agreement or in a duly
executed written amendment thereto are and will be null and void and may not now
or in the future be relied upon by any party.
35. Severability. If any provision of this Agreement shall be held
to be invalid or unenforceable, the remaining provisions of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
<PAGE> 17
17
IN WITNESS WHEREOF, Licensor and Licensee have executed this
Agreement as of the date first written above.
LICENSOR:
TISHMAN SPEYER TRAMMELL CROW LIMITED
PARTNERSHIP
By: TISHMAN SPEYER PCA PARTNERS, a general partner
By: Tishman Speyer Institutional
Partnership, L.P., a general partner
By: Tishman/Speyer Institutional
Associates Limited Partnership, its
general partner
By: I.M.P. Realty Corp., its
general partner
By: ____________________
Name:
Title:
LICENSEE:
FIBERNET EQUAL ACCESS, LLC
By: /s/ [Illegible]
----------------------------
Name:
Title: Vice Pres.
<PAGE> 18
EXHIBIT A
INSTALLATION AND CONSTRUCTION
1. Licensee shall retain the services of the Building engineers or other
independent consultants with respect to any Alteration or aspect of the
Facilities relating to or affecting the structural, mechanical, electrical,
plumbing, fire protection and life safety systems of the Building ("Licensor
Work"). Licensee shall deliver to Licensor for Licensor's approval complete
engineering drawings and specifications ("Plans") in connection with any
Licensor Work at least 20 days prior to the commencement of such Licensor Work
(with respect to the initial installation of the Facilities, Licensee shall
deliver Plans no later than 14 days after the Effective Date). Licensor or
Licensor's designee shall perform the Licensor Work and Licensee shall promptly,
after receipt of invoices therefor, pay the cost of the Licensor Work (including
the costs of retaining engineers or other independent consultants) to Licensor
or Licensor's designee.
2. A. Licensee may retain the services of a contractor (the "Outside
Contractor") to perform any work in the Building, other than the Licensor Work
("Licensee Work"). Licensee shall deliver to Licensor for Licensor's approval
Plans in connection with any Licensee Work at least 20 days prior to the
commencement of such Licensee Work (with respect to the initial installation of
the Facilities, Licensee shall deliver Plans no later than 14 days after the
Effective Date). With respect to Plans submitted to Licensor for Licensor Work
or Licensee Work, Licensor shall review such Plans and shall notify Licensee of
any required revisions or additions within 10 business days after delivery of
the Plans to Licensor. Based upon Licensor's comments with respect to required
revisions or additions in such Plans, Licensee shall make such revisions or
additions and, on or before the date which is 5 business days after Licensor
gives the notice referred to above, shall redeliver such Plans to Licensor for
Licensor's approval.
B. Licensee shall obtain the prior written consent of Licensor as to
the Outside Contractor to be used by Licensee. At Licensee's request, Licensor
will furnish a list of approved contractors. Licensee shall be solely
responsible for obtaining all governmental licenses or permits required in
connection with any Licensee Work and Licensee shall arrange for all required
inspections of such Licensee Work by Governmental Authorities.
C. The Outside Contractor shall: (a) conduct its work in such a
manner so as not to interfere with any other construction occurring on or in the
Building or with the use, occupancy or enjoyment by any Tenant of its premises
or of the common areas of the Building; (b) comply with the Building Rules (as
defined in the Agreement of which this Exhibit is a part); (c) maintain such
insurance and bonds as may be reasonably requested by Licensor or as required by
applicable law (but in any event said bonds shall be in amounts equal to the
full value or cost of the work being done by the Outside Contractor); and (d) be
responsible for reaching agreement with Licensor as to the terms and conditions
for
<PAGE> 19
A-2
conducting its work, including, without limitation, arrangements for systems
interfacing, use of utilities, storage of materials and access to the Building.
As a condition precedent to Licensor's approving the Outside Contractor under
Subsection (B) above. Licensee and the Outside Contractor shall deliver to
Licensor such assurances or instruments to evidence the Outside Contractor's
compliance or agreement to comply with the provisions of this Subsection (C) as
may be reasonably requested by Licensor.
D. All materialmen, contractors, artisans, mechanics, laborers and
other parties contracting with Licensee for the furnishing of any labor,
services, materials, supplies or equipment with respect to the Building are
hereby charged with notice that they must look solely to Licensee for payment
for the same. Licensee shall repair or cause to be repaired all damage caused by
the Outside Contractor, its subcontractors or their employees. Licensee shall
protect the Building, including all Licensor Work, from damage or soiling by the
Outside Contractor and movers, and shall pay for any replacements, repairs or
extra cleaning necessitated by the performance of work by the Outside Contractor
or the moving of fixtures, equipment, furnishings, furniture and other property
of Licensee into or out of the Building.
E. Upon completion of any Licensee Work, Licensee shall deliver to
Licensor a copy of the final plans and specifications which show the actual
construction of the Facilities.
F. Licensee shall not employ, or permit the employment of, any
contractor, mechanic or laborer, or permit any materials to be delivered to or
used in the Building if, in Licensor's sole judgment, such employment, delivery
or use will interfere or cause any conflict with other contractors, mechanics or
laborers engaged in the construction, maintenance or operation of the Building
by Licensor or the use and enjoyment of Tenants. In the event of such
interference or conflict, upon Licensor's request, Licensee shall cause all
contractors, mechanics or laborers causing such interference or conflict to
leave the Building immediately.
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT B
AMORTIZATION SCHEDULE
======================
<S> <C>
Year 1 100%
----------------------
Year 2 100%
----------------------
Year 3 100%
----------------------
Year 4 85%
----------------------
Year 5 70%
----------------------
Year 6 50%
----------------------
Year 7 25%
----------------------
Years 8-10 0%
======================
</TABLE>
<PAGE> 21
EXHIBIT C
BUILDING RULES AND REGULATIONS
1. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades, screens or other
obstructions shall be attached to or hung in or used in connection with any
exterior window or entry door of the Basement Space, without the prior written
consent of Licensor.
2. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed to any part of the outside of the
Basement Space or Building or on the inside, of the Basement Space if the same
can be seen from the outside of the Basement Space without the prior written
consent of Licensor. Lettering on doors, if and when approved by Licensor, shall
be inscribed, painted or affixed for Licensee in a size, color and style
acceptable to Licensor.
3. The grills, louvers, skylights, windows and doors that reflect or
admit light and/or air into the premises, halls, passageways or other public
places in the Building shall not be covered or obstructed by Licensee, nor shall
any bottles, parcels or other articles be placed on the window sills, radiators
or convectors.
4. Licensor shall have the right to prohibit any advertising by
Licensee which, in Licensor's opinion, tends to impair the reputation of the
Building or its desirability as a Building for offices, and upon written notice
from Licensor, Licensee shall refrain from or discontinue such advertising.
5. The sidewalks, entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by Licensee or used for any purpose other than ingress or egress to and from the
Basement Space and for delivery of merchandise and equipment in prompt and
efficient manner, using elevators and passageways designated for such delivery
by Licensor.
6. Except in those areas designated by Licensee as "security areas",
additional locks or bolts of any kind which shall not be operable by the Grand
Master Key for the Building shall not be placed upon any of the doors or windows
by Licensee, nor shall any changes be made in locks or the mechanism thereof
which shall make such locks inoperable by said Grand Master Key. Licensee shall,
upon the termination of its tenancy, turn over to Licensor all keys of stores,
offices and toilet rooms, either furnished to or otherwise procured by Licensee
and in the event of the loss of any keys furnished by Licensor, Licensee shall
pay to Licensor the cost thereof.
<PAGE> 22
C-2
7. Licensee shall keep the entrance door to the Basement Space
closed at all times.
8. All removals or the carrying in or out of any freight, furniture,
packages, boxes, crates or any other object or matter of any description must
take place during Building standard hours therefor and in such elevators as
Licensor or its agent may determine from time to time. Licensor reserves the
right to inspect all objects and matter to be brought into the Building and to
exclude from the Building all objects and matter which violate any of these
Rules and Regulations or the Agreement of which these Rules and Regulations are
a part. Licensor may require any person leaving the public areas of the Building
with any package or other object or matter to submit a pass, signed by an
authorized person, listing such package or object matter is being removed, but
the establishment and enforcement of such requirement shall not impose any
responsibility on Licensor for the protection of Licensee or any Tenant against
the removal of property from the premises of Licensee.
9. There shall not be used in any space or in the public halls of
the Building, either by Licensee or any Tenant or by jobbers or any others in
the moving or delivery or receipt of safes, freight, furniture, packages, boxes,
crates, paper, office material or any other matter or thing, any hand trucks
except those equipped with rubber tires, side guards and such other safeguards
as Licensor shall designate.
10. None of Licensee's employees, visitors or contractors shall be
permitted to have access to the Building's roof, mechanical, electrical or
telephone rooms/closets without permission from Licensor.
11. Licensee shall not make or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises or those having business with them.
12. Licensee shall not lay floor tile, or other similar floor
covering so that the same shall come in direct contact with the floor of the
Basement Space and, if such floor covering is desired to be used, an interlining
of builder's deadening felt shall be first affixed to the floor by a paste or
other material, soluble in water, the use of cement or other similar adhesive
material being expressly prohibited.
13. Neither Licensee nor any of Licensee's servants, employees,
agents, visitors or licensees, shall at any time bring or keep upon the Basement
Space any inflammable, combustible or explosive fluid, chemical or substance
except such minimal quantities that are incidental to normal office occupancy.
<PAGE> 23
C-3
14. Licensee shall not use or keep or permit to be used or kept, any
hazardous or toxic materials or any foul or noxious gas or substance in the
Basement Space or permit or suffer the Basement Space to be occupied or used in
a manner offensive or objectionable to Licensor or other occupants of the
Building by reason of noise, odors, vibrations or interfere in any way with
other Tenants or those having business therein.
15. Licensee shall not cause or permit any odors of cooking or other
processes or any unusual or objectionable odors to emanate from the demised
Basement Space which would annoy other tenants or create a public or private
nuisance. No cooking shall be done in the Basement Space except as is expressly
permitted in the foregoing Agreement.
16. Except as specifically provided in the Agreement, Licensee shall
not do any cooking, conduct any restaurant, luncheonette or cafeteria for the
sale or service of food or beverages to its employees or to others.
17. Licensee may, at its sole cost and expense and subject to
compliance with all applicable requirements of the Agreement, install and
maintain vending machines for the exclusive use by Licensee, its officers,
employees and business guests, provided that each machine, where necessary,
shall have a waterproof mat thereunder and be connected to a drain. Licensee
shall not permit the delivery of any food or beverage to the Basement Space,
except by such persons delivering the same as shall be approved by Licensor,
which approval shall not be unreasonably withheld or delayed.
18. Licensee shall not employ any person or persons other than the
janitor of Licensor for the purpose of cleaning the Basement Space, unless
otherwise agreed to by Licensor in writing. Licensee shall not cause any
unnecessary labor by reason of Licensee's carelessness or indifference in the
preservation of good order and cleanliness. Licensee shall not clean or permit
the cleaning of any window in the premise from the outside, in violation of any
requirements.
19. Licensee shall store all its trash, garbage and recyclables
within its Basement Space. No material shall be disposed of which may result in
a violation of any law or ordinance governing such disposal. All garbage and
refuse disposal shall be made only though entry ways and elevators provided for
such purposes and at such times as Licensor shall designate. Licensee shall use
the Building's hauler.
20. Licensee shall, at its expense, provide artificial light for the
employees of Licensor while doing janitor service or other cleaning, and in
making repairs or alterations in the Basement Space.
<PAGE> 24
C-4
21. Licensee shall not mark, paint, drill into or in any way deface
any part of the Basement Space or the Building, except with the prior written
consent of Licensor. No boring, cutting or stringing or wires shall be
permitted, except with prior written consent of Licensor, and as Licensor may
direct.
22. The water and wash closets, electrical closets, mechanical
rooms, fire stairs and other plumbing fixtures shall not be used for any
purposes other than those for which they were constructed and no sweepings,
rubbish, rags, acids or other substances shall be deposited therein. All damages
resulting from any misuse of the fixtures shall be borne by Licensee or the
Tenant who or whose servants, employees, agents, visitors or licensees shall
have caused the same.
23. Licensee, before closing and leaving the Basement Space at any
time, shall see that all lights, water, faucets, etc. are turned out. All
entrance doors in the Basement Space shall be left locked by Licensee when the
Basement Space is not in use.
24. No bicycles, vehicles or animals of any kind (except for seeing
eye dogs) shall be brought into or kept by Licensee in or about the Basement
Space or the Building.
25. Canvassing, soliciting and peddling in the Building is
prohibited and Licensee shall cooperate to prevent the same.
26. The Basement Space shall not be used for lodging or sleeping or
for any immoral or illegal purposes.
27. The Basement Space shall not be used for manufacturing, for the
storage of merchandise, or for the sale of merchandise, goods or property of any
kind at auction or otherwise, except as specifically permitted by the Agreement.
28. Licensee shall not occupy or permit any portion of the Basement
Space demised to it to be occupied as an office for a public stenographer or
public typist or for the possession, storage, manufacture or sale of narcotics,
dope, tobacco in any form or as a barber or manicure shop or as an employment
bureau. Licensee shall not engage or pay any employees on the Basement Space,
except those actually working for such Licensee on said Basement Space, nor
advertise for labor giving an address at said Basement Space.
29. Licensee shall not accept barbering or bootblacking services in
the Basement Space, from any company or persons not approved by Licensor, and at
hours and under regulations other than as fixed by Licensor.
<PAGE> 25
C-5
30. The requirements of Licensee will be attended to only upon
written application at the office of the Building, except in the event of any
emergency condition. Employees shall not perform any work or do anything outside
of their regular duties, unless under special instructions from the office of
Licensor or in response to an emergency condition.
31. Licensee shall be responsible for the delivery and pick up of
all mail from the United States post office.
32. Licensor reserves the right to exclude from the Building between
the hours of 6 P.M. and 8 A.M. and at all hours on Saturdays, Sundays and legal
holidays all persons who do not present a pass to the Building signed or
approved by Licensor. Licensee shall be responsible for all persons for whom a
pass shall be issued at the request of Licensee and shall be liable to Licensor
for all acts of such persons.
33. Licensee shall not invite to the Basement Space, or permit the
visit of, persons in such number or under such conditions as to interfere with
the use and enjoyment of any of the plazas, entrances, corridors, elevators and
other facilities of the building by other Tenants.
34. In accordance with the alteration section of the Agreement.
Licensor shall review and approve architectural and engineering drawings. The
review/alteration of Licensee drawings and/or specifications by Tishman Speyer
Properties and any of its representatives is not intended to verify the
Licensee's engineering or design requirements and/or solutions. The
review/alteration is performed to determine compatibility with the Building's
systems and lease conditions.
35. Licensee renovations are to (i) be performed by those
contractors and subcontractors on the Licensor's approved contractor's list,
(ii) adhere to the Building's applicable Standard Operating Procedures, and
(iii) be compatible with Building Class E System and other common systems, etc.
36. Licensor may waive any one or more of these Rules and
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Licensor shall be construed as a waiver of such Rules and Regulations
in favor or any other tenant or tenants, nor prevent Licensor from thereafter
enforcing any such Rules and Regulations against any or all of the tenants of
the Building.
37. Licensor shall not be responsible to Licensee or to any other
person for the non-observance or violation of these Rules and Regulations by any
other tenant or other person. Licensee shall be deemed to have read these Rules
and Regulations and to have agreed to abide by them as a condition to its
occupancy of the Basement Space.
<PAGE> 26
C-6
38. These Rules and Regulations are in addition to, and shall not be
constructed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the Building.
<PAGE> 1
2/94
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
Agreement of Lease, made as of this 17th day of February 1998, between HUDSON
TELEGRAPH ASSOCIATES, a New York limited partnership, having an address c/o
Williams Real Estate Co. Inc., 380 Madison Avenue, New York, New York 10017
("Owner" or "Landlord") and Local Fiber, LLC, a New York corporation, having an
address at 121 Erie Canal Drive, Suite A, Rochester, New York 14626 ("Tenant")
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner a
portion of the nineteenth (19th) floor as shown hatched on Exhibit A annexed
hereto (the "premises" or "demised premises") in the building known as 60 Hudson
Street (the "Building" or "building"), in the Borough of Manhattan, City of New
York, for the term (the "Term") of approximately ten (10) years and eight (8)
months, to commence on the date hereof (the "Commencement Date") and to expire
on July 31, 2008 (the "Expiration Date")(or until such Term shall cease and
expire as hereinafter provided), at the fixed annual rental rate (the "Fixed
Rent") of $309,419.00 per annum, subject to adjustment as hereinafter provided,
which Tenant agrees to pay in lawful money of the United States which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment, in equal monthly installments in advance on the first day
of each month during said term, at the office of Owner or such other place as
Owner may designate, without any set off or deduction whatsoever, except that
Tenant shall pay the first _____ monthly installment(s) on the execution hereof
(unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent
1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy
2. Tenant shall use and occupy demised premises for general office
purposes, and, to the extent permitted by the certificate of occupancy for the
Building, for telecommunications facilities and ancillary uses, and for no other
purpose.
Tenant Alterations:
3. Tenant shall make no changes in or to the demised premises of any
nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, Tenant at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved by Owner. Tenant shall, before making
any alterations, additions, installations or improvement, at its expense, obtain
all permits, approvals and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Owner and Tenant agrees to carry and will cause Tenant's
contractors and sub-contractors to carry such workman's compensation, general
liability, personal and property damage insurance, as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or material
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within thirty days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as the termination of this lease, elects to relinquish
Owner's right thereto and to have them removed by the Tenant, in which event the
same shall be removed from the premises by Tenant prior to the expiration of the
lease, at Tenant's expense. Nothing in this Article shall be construed to give
Owner title to or to prevent Tenant's removal of trade fixtures, moveable office
furniture and equipment, but upon removal of any such from the premises or upon
removal of other installations as may be required by Owner, Tenant shall
immediately and at its expense, repair and restore the premises to the
condition existing prior to installation and repair any damage to the demised
premises or the building due to such removal. All property permitted or required
to be removed, by Tenant at the end of the term remaining in the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or may be removed from the premises by
Owner, at Tenant's expense.
Maintenance and Repairs:
4. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or non-structural repairs caused by or resulting from carelessness,
omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment of Tenant or any
subtenant. Tenant shall also repair all damage to the building and the demised
premises caused by the moving of Tenant's fixtures, furniture and equipment.
Tenant shall promptly make, at Tenant's expense, all repairs in and to the
demised premises for which Tenant is responsible, using only the contractor for
the trade or trades in question, selected from a list of at least two
contractors per trade submitted by Owner. Any other repairs in or to the
building or the facilities and systems thereof for which Tenant is responsible
shall be performed by Owner at the Tenant's expense. Owner shall maintain in
good working order and repair the exterior and the structural portions of the
building, including the structural portions of its demised premises, and the
public portions of the building interior and the building plumbing, electrical,
heating and ventilating systems (to the extent such systems presently exists)
serving the demised premises. Tenant agrees to give prompt notice of any
defective condition in the premises for which Owner may be responsible
hereunder. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or others making repairs, alterations,
additions or improvements in or to any portion of the building or the demised
premises or in and to the fixtures, appurtenances or equipment thereof. It is
specifically agreed that Tenant shall not be entitled to any setoff or reduction
of rent by reason of any failure of Owner to comply with the covenants of this
or any other article of this Lease. Tenant agrees that Tenant's sole remedy at
law in such instance will be by way of an action for damages for breach of
contract. The provisions of this Article 4 shall not apply in the case of fire
or other casualty which are dealt with in Article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the Labor Law or any other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having or asserting
jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads:
6. Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire
Underwriters, Insurance Services Office, or any similar body which shall impose
any violation, order or duty upon Owner or Tenant with respect to the demised
premises, whether or not arising out of Tenant's use or manner of use thereof,
(including Tenant's permitted use) or, with respect to the building if arising
out of Tenant's use or manner of use of the premises or the building (including
the use permitted under the lease). Nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant may, after securing Owner to
<PAGE> 2
Owner's satisfaction against all damages, interest, penalties and expenses,
including, but not limited to, reasonable attorney's fees, by cash deposit or by
surety bond in an amount and in a company satisfactory to Owner, contest and
appeal any such laws, ordinances, orders, rules, regulations or requirements
provided same is done with all reasonable promptness and provided such appeal
shall not subject Owner to prosecution for a criminal offense or constitute a
default under the lease or mortgage under which Owner may be obligated, or cause
the demised premises or any part thereof to be condemned or vacated. Tenant
shall not do or permit any act or thing to be done in or to the demised premises
which is contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner with respect to the demised premises or the building of which
the demised premises form a part, or which shall or might subject Owner to any
liability or responsibility to any person or for property damage. Tenant shall
not keep anything in the demised premises except as now or hereafter permitted
by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating
Organization or other authority having jurisdiction, and then only in such
manner and such quantity so as not to increase the rate for fire insurance
applicable to the building, nor use the premises in a manner which will increase
the insurance rate for the building or any property located therein over that in
effect prior to the commencement of Tenant's occupancy. Tenant shall pay all
costs, expenses, fines, penalties, or damages, which may be imposed upon Owner
by reason of Tenant's failure to comply with the provisions of this article and
if by reason of such failure the fire insurance rate shall, at the beginning of
this lease or at any time thereafter, be higher than it otherwise would be, then
Tenant shall reimburse Owner, as additional rent hereunder, for that portion of
all fire insurance premiums thereafter paid by Owner which shall have been
charged because of such failure by Tenant. In any action or proceeding wherein
Owner and Tenant are parties, a schedule or "make-up" of rate for the building
or demised premises issued by the New York Fire Insurance Exchange, or other
body making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rates then applicable to said premises. Tenant shall not place a
load upon any floor of the demised premises exceeding the floor load per square
foot area which it was designed to carry and which is allowed by law. Owner
reserves the right to prescribe the weight and position of all safes, business
machines and mechanical equipment. Such installations shall be placed and
maintained by Tenant, at Tenant's expense, in settings sufficient, in Owner's
judgment, to absorb and prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying
leases and to all mortgages which may now or hereafter affect such leases or the
real property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
Property Loss, Damage Reimbursement Indemnity:
8. Owner or its agent shall not be liable for any damage to any property
of Tenant or of others entrusted to employees of the building, nor for loss of
or damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Owner, its agents, servants or
employees. Owner or its agents will not be liable for any such damage caused by
other tenants or persons in, upon or about said building or caused by operations
in construction of any private, public or quasi public work. If at any time any
windows of the demised premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by law) for any
reason whatsoever including, but not limited to Owner's own acts, Owner shall
not be liable for any damage Tenant may sustain thereby and Tenant shall not be
entitled to any compensation therefore nor abatement or diminution of rent nor
shall the same release Tenant from its obligations hereunder nor constitute an
eviction. Tenant shall indemnify and save harmless Owner against and from all
liabilities, obligations, damages, penalties, claims, costs and expenses for
which Owner shall not be reimbursed by insurance, including reasonable attorneys
fees, paid, suffered or incurred as a result of any breach by Tenant, Tenant's
agents, contractors, employees, invitees, or licensees, of any covenant or
condition of this lease, or the carelessness, negligence or improper conduct of
the Tenant, Tenant's agents, contractors, employees, invitees or licensees.
Tenant's liability under this lease extends to the acts and omissions of any
sub-tenant, and any agent, contractor, employee, invitee or licensee of any
sub-tenant. In case any action or proceeding is brought against Owner by reason
of any such claim, Tenant, upon written notice from Owner, will, at Tenant's
expense, resist or defend such action or proceeding by counsel approved by Owner
in writing, such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall gave immediate notice thereof to Owner and
this lease shall continue in full force and effect except as hereinafter set
forth. (b) If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by and
at the expense of Owner and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other casualty, then the
rent and other items of additional rent as hereinafter expressly provided shall
be proportionately paid up to the time of the casualty and thenceforth shall
cease until the date when the premises shall have been repaired and restored by
Owner (or sooner reoccupied in part by Tenant then rent shall be apportioned as
provided in subsection (b) above) subject to Owner's right to elect not to
restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised premises are damaged in
whole or in part) if the building shall be so damaged that Owner shall decide to
demolish it or to rebuild it, then, in any of such events, Owner may elect to
terminate this lease by written notice to Tenant, given within 90 days after
such fire or casualty, or 30 days after adjustment of the insurance claim for
such fire or casualty, whichever is sooner, specifying a date for the expiration
of the lease, which date shall not be more than 60 days after the giving of such
notice, and upon the date specified in such notice the term of this lease shall
expire as fully and completely as if such date were the date set forth above for
the termination of this lease and Tenant shall forthwith quit, surrender and
vacate the premises without prejudice however, to Landlord's rights and remedies
against Tenant under the lease provisions in effect prior to such termination,
and any rent owing shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restorations under the conditions
of (b) and (c) hereof, with all reasonable expedition, subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Owner's
control. After any such casualty, Tenant shall cooperate with Owner's
restoration by removing from the premises as promptly as reasonably possible,
all of Tenant' salvageable inventory and movable equipment, furniture, and other
property. Tenant's liability for rent shall resume five (5) days after written
notice from Owner that the premises are substantially ready for Tenant's
occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability
that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, including Owner's obligation to restore under
subparagraph (b) above, each party shall look first to any insurance in its
favor before making any claim against the other party for recovery for loss or
damage resulting from fire or other casualty, and to the extent that such
insurance is in force and collectible and to the extent permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery with respect to
subparagraphs (b), (d), and (e) above, against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The release
and waiver herein referred to shall be deemed to include any loss or damage to
the demised premises and/or to any personal property, equipment, trade fixture,
goods and merchandise located therein. The foregoing release and waiver shall be
in force only if both releasor's insurance policies contain a clause providing
that such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and/or furnishings or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in the event, the term of this lease shall cease and terminate from the date
of title vesting in such proceeding and Tenant shall have no claim for the value
of any unexpired term of said lease and assigns to Owner, Tenant's entire
interest in any such award. Tenant shall have the right to make an independent
claim to the condemning authority for the value of Tenant's moving expenses and
personal property, trade fixtures and equipment, provided Tenant is entitled
pursuant to the terms of the lease to remove such property, trade fixture and
equipment at the end of the term and provided further such claim does not reduce
Owner's award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage or encumber this agreement, nor
underlet, or suffer or permit the demised premises or any part thereof to be
used by others, without the prior written consent of Owner in each instance.
Transfer of the majority of the stock of a corporate Tenant or the majority
partnership interest of a partnership Tenant shall be deemed an assignment. If
this lease be assigned, or if the demised premises or any part thereof be
underlet or occupied by anybody other than Tenant, Owner may, after default by
Tenant, collect rent from the assignee, under-tenant or occupant, and apply the
net amount collected to the rent herein reserved, but no such assignment,
underletting, occupancy or collection shall be deemed a waiver of this covenant,
or the acceptance of the assignee, under-tenant or occupant as tenant, or a
release of Tenant from the further performance by Tenant of covenants on the
part of Tenant herein contained. The consent by Owner to an assignment or
underletting shall not in any wise be construed to relieve Tenant from obtaining
the express consent in writing of Owner to any further assignment or
underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent inclusion, as
the case may be, to be added in RIDER* attached hereto. Tenant covenants and
agrees that at all times its use of electric current shall not exceed the
capacity of existing feeders to the building or the risers or wiring
installations and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no way make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to the demised premises or to any other portion of the building or
which Owner may elect to perform. Tenant shall permit Owner to use and maintain
and replace pipes and conduits in and through the demised premises and to erect
new pipes and conduits therein provided they are concealed within the walls,
floor, or ceiling. Owner may, during the progress of any work in the demised
premises, take all necessary materials and equipment into said premises without
the same constituting an eviction nor shall the Tenant be entitled to any
abatement of rent while such work is in progress nor to any damages by reason of
loss or interruption of business or otherwise. Throughout the term hereof Owner
shall have the right to enter the demised premises at reasonable hours for the
purpose of showing the same to prospective purchasers or mortgagees of the
building, and during the last six months of the term for the purpose of showing
the
- ----------
* Rider to be added if necessary
<PAGE> 3
same to prospective tenants. If Tenant is not present to open and permit an
entry into the demised premises, Owner or Owner's agents may enter the same
whenever such entry may be necessary or permissible by master key or forcibly
and provided reasonable care is exercised to safeguard Tenant's property, such
entry shall not render Owner or its agents liable therefor, nor in any event
shall the obligations of Tenant hereunder be affected. If during the last month
of the term Tenant shall have removed all or substantially all of Tenant's
property therefrom Owner may immediately enter, alter, renovate or redecorate
the demised premises without limitation or abatement of rent, or incurring
liability to Tenant for any compensation and such act shall have no effect on
this lease or Tenant's obligations hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered,
not within the property line of the building is leased hereunder, anything
contained in or indicated on any sketch, blue print or plan, or anything
contained elsewhere in this lease to the contrary notwithstanding. Owner makes
no representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding,
this lease may be cancelled by Owner by the sending of a written notice to
Tenant within a reasonable time after the happening of any one or more of the
following events: (1) the commencement of a case in bankruptcy or under the laws
of any state naming Tenant as the debtor; or (2) the making by Tenant of an
assignment or any other arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or under Tenant, or by
reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) it is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this
lease other than the covenants for the payment of rent or additional rent; or if
the demised premises becomes vacant or deserted; or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the demised premises shall be taken or occupied by someone other than Tenant; or
if this lease be rejected under ss. 235 of Title 11 of the U.S. Code (bankruptcy
code); or if Tenant shall fail to move into or take possession of the premises
within thirty (30) days after the commencement of the term of this lease, then,
in any one or more of such events, upon Owner serving a written fifteen (15)
days notice upon Tenant specifying the nature of said default and upon the
expiration of said fifteen (15) days, if Tenant shall have failed to comply with
or remedy such default, or if the said default or omission complained of shall
be of a nature that the same cannot be completely cured or remedied within the
said fifteen (15) day period, and if Tenant shall not have diligently commenced
curing such default within such fifteen (15) day period, and shall not
thereafter with reasonable diligence and in good faith, proceed to remedy or
cure such default, then Owner may serve a written five (5) days' notice of
cancellation of this lease upon Tenant, and upon the expiration of said five (5)
days this lease and the term thereunder shall end and expire as fully and
completely as if the expiration of such five (5) day period were the day herein
definitely fixed for the end and expiration of this lease and the term thereof
and Tenant shall then quit and surrender the demised premises to Owner but
Tenant shall remain liable as hereinafter provided.
(2). If the notice provided for in (1) hereof shall have been given, and
the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and disposess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, (b) Owner
may re-let the premises or any part or parts thereof, either in the name of
Owner or otherwise, for a term or terms, which may at Owners's option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this lease and may grant concessions or free rent or charge a higher
rental than that in this lease, and/or (c) Tenant or the legal representatives
of Tenant shall also pay Owner as liquidated damages for the failure of Tenant
to observe and perform said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and/or convenanted to be paid and the net
amount, if any, of the rents collected on account of the lease or leases of the
demised premises for each month of the period which would otherwise have
constituted the balance of the term of this lease. The failure of Owner to
re-let the premises or any part or parts thereof shall not release or affect
Tenant's liability for damages. In computing such liquidated damages there shall
be added to the said deficiency such expenses as Owner may incur in connection
with re-letting, such as legal expenses, reasonable attorneys' fees, brokerage,
advertising and for keeping the demised premises in good order or for preparing
the same for re-letting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the rent day specified in this lease and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Owner to collect the deficiency for any month
shall not prejudice in any way the rights of Owner to collect the deficiency for
any subsequent month by a similar proceeding. Owner, in putting the demised
premises in good order or preparing the same for re-rental may, at Owner's
option, make such alterations, repairs, replacements, and/or decorations in the
demised premises as Owner, in Owner's sole judgment, considers advisable and
necessary for the purpose of re-letting the demised premises, and the making of
such alterations, repairs, replacements, and/or decorations shall not operate or
be construed to release Tenant from liability hereunder as aforesaid. Owner
shall in no event be liable in any way whatsoever for failure to re-let the
demised premises, or in the event that the demised premises are re-let, for
failure to collect the rent thereof under such re-letting, and in no event shall
Tenant be entitled to receive any excess, if any, of such net rents collected
over the sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed for
any cause, or in the event of Owner obtaining possession of demised premises, by
reason of the violation by Tenant of any of the covenants and conditions of this
lease, or otherwise.
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any term
or covenant on Tenant's part to be observed or performed under or by virtue of
any of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period of any (except in an
emergency), then, unless otherwise provided elsewhere in this lease, Owner may
immediately or at any time thereafter and without notice perform the obligation
of Tenant thereunder. If Owner, in connection with the foregoing or in
connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to attorney's fees, in instituting, prosecuting or
defending any action or proceeding, and prevails in any such action or
proceeding then Tenant will reimburse Owner for such sums so paid or obligations
incurred with interest and costs. The foregoing expenses incurred by reason of
Tenant's default shall be deemed to be additional rent hereunder and shall be
paid by Tenant to Owner within ten (10) days of rendition of any bill or
statement to Tenant therefor. If Tenant's lease term shall have expired at the
time of making of such expenditures or incurring of such obligations, such sums
shall be recoverable by Owner, as damages.
Building Alterations and Management:
20. Owner shall have the right at any time without the same constituting
an eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
such controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
No Representations by Owner:
21. Neither Owner nor Owner's agents have made any representations or
promises with respect to the physical condition of the building, the land upon
which it is erected or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was to taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement
<PAGE> 4
hereafter made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease,
Tenant shall quit and surrender to Owner the demised premises, broom clean, in
good order and condition, ordinary wear and damages which Tenant is not required
to repair as provided elsewhere in this lease excepted, and Tenant shall remove
all its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the
rent and additional rent and observing and performing all the terms, covenants
and conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject, nevertheless,
to the terms and conditions of this lease including, but not limited to, Article
31 hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If Owner is unable to give possession of the demised premises on the
date of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants or if the
demised premises are located in a building being constructed, because such
building has not been sufficiently completed to make the premises ready for
occupancy or because of the fact that a certificate of occupancy has not been
procured or for any other reason, Owner shall not be subject to any liability
for failure to give possession on said date and the validity of the lease shall
not be impaired under such circumstances, nor shall the same be construed in any
wise to extend the term of this lease, but the rent payable hereunder shall be
abated (provided Tenant is not responsible for Owner's inability to obtain
possession or complete construction) until after Owner shall have given Tenant
written notice that the Owner is able to deliver possession in condition
required by this lease. If permission is given to Tenant to enter into the
possession of the demised premises or to occupy premises other than the demised
premises prior to the date specified as the commencement of the term of this
lease, Tenant covenants and agrees that such possession and/or occupancy shall
be deemed to be under all the terms, covenants, conditions and provisions of
this lease except the obligation to pay the fixed annual rent set forth in the
preamble to this lease. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist
upon the strict performance of any covenant or condition of this lease or of any
of the Rules or Regulations, set forth or hereafter adopted by Owner, shall not
prevent a subsequent act which would have originally constituted a violation
from having all the force and effect of an original violation. The receipt by
Owner of rent and/or additional rent with knowledge of the breach of any
covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earlier stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be deemed an acceptance
of a surrender of said premises, and no agreement to accept such surrender shall
be valid unless in writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Waiver of Trial by Jury:
26. It is mutually agreed by and between Owner and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant, Tenant's use of or occupancy of said premises,
and any emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Owner commences any proceeding or action for
possession including a summary proceeding for possession of the premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding including a counterclaim under Article 4 except for statutory
mandatory counterclaims.
Inability to Perform:
27. This Lease and the obligation of Tenant is pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures, or other materials if Owner is prevented or delayed from so doing by
reason of strike or labor troubles or any cause whatsoever including, but not
limited to, government preemption or restrictions or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions which have been or are affected, either
directly or indirectly, by war or other emergency.
Bills and Notices:
28. Except as otherwise in this lease provided, a bill, statement, notice
or communication which Owner may desire or be required to give to Tenant, shall
be deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Services Provided by Owners:
29. As long as Tenant is not in default under any of the covenants of this
lease beyond the applicable grace period provided in this lease for the curing
of such defaults, Owner shall provide: (a) necessary elevator facilities on
business days from 8 a.m. to 6 p.m. and have one elevator subject to call at all
other times; (c) water for ordinary lavatory purposes, but if Tenant uses or
consumes water for any other purposes or in unusual quantities (of which fact
Owner shall be the sole judge), Owner may install a water meter at Tenant's
expense which Tenant shall thereafter maintain at Tenant's expense in good
working order and repair to register such water consumption and Tenant shall pay
for water consumed as shown on said meter as additional rent as and when bills
are rendered; (d) the demised premises are to be kept clean by Tenant, at
Tenant's sole expense, in a manner reasonably satisfactory to Owner and no one
other than persons approved by Owner shall be permitted to enter said premises
or the building of which they are a part for such purpose. Tenant shall pay
Owner the cost of removal of any of Tenant's refuse and rubbish from the
building; (f) Owner reserves the right to stop services of the heating,
elevators, plumbing, air-conditioning, power systems or cleaning or other
services, if any, when necessary by reason of accident or for repairs,
alterations, replacements or improvements necessary or desirable in the judgment
of Owner for as long as may be reasonably required by reason thereof. If the
building of which the demised premises are a part supplies manually operated
elevator service, Owner at any time may substitute automatic control elevator
service and proceed diligently with alterations necessary therefor without in
any wise affecting this lease or the obligation of Tenant hereunder.
Captions:
30. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provisions thereof.
Definitions:
31. The term "office," or "offices," wherever used in this lease, shall
not be construed to mean premises used as a store or stores, for the sale or
display, at any time, of goods, wares or merchandise, of any kind, or as a
restaurant, shop, booth, bootblack or other stand, barber shop, or for other
similar purposes or for manufacturing. The term "Owner" means a landlord or
lessor, and as used in this lease means only the owner, or the mortgagee in
possession, for the time being of the land and building (or the owner of a lease
of the building or of the land and building) of which the demised premises form
a part, so that in the event of any sale or sales of said land and building or
of said lease, or in the event of a lease of said building, or of the land and
building, the said Owner shall be and hereby is entirely freed and relieved of
all covenants and obligations of Owner hereunder, and it shall be deemed and
construed without further agreement between the parties or their successors in
interest, or between the parties and the purchaser, at any such sale, or the
said lessee of the building, or of the land and building, that the purchaser or
the lessee of the building has assumed and agreed to carry out any and all
covenants and obligations of Owner, hereunder. The words "re-enter" and
"re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business days" as used in this lease shall exclude Saturdays,
Sundays and all days observed by the State or Federal Government as legal
holidays and those designated as holidays by the applicable building service
union employees service contract or by the applicable Operating Engineers
contract with respect to HVAC service. Wherever it is expressly provided in this
lease that consent shall not be unreasonably witheld, such consent shall not be
unreasonably delayed.
Adjacent Excavation--Shorting:
32. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Owner, or diminution or abatement of
rent.
Rules and Regulations:
33. Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faithfully, and comply strictly with, the Rules and
Regulations and such other and further reasonable Rules and Regulations as Owner
or Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon Owner within fifteen (15) days after the giving of notice thereof.
Nothing
<PAGE> 5
in this lease contained shall be construed to impose upon Owner any duty or
obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its
servants, employees, agents, visitors or licensees.
Security:
34. Tenant has deposited with Owner the sum of $* as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency occurred before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Estoppel Certificate:
35. Tenant, at any time, and from time to time, upon at least 10 days'
prior notice by Owner, shall execute, acknowledge and deliver to Owner, and/or
to any other person, firm or corporation specified by Owner, a statement
certifying that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
Successors and Assigns:
36. The covenants, conditions and agreements contained in this lease shall
bind and insure to the benefit of Owner and Tenant and their respective heirs,
distributors, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building, for the satisfaction of Tenant's remedies
for the collection of a judgment (or other judicial process) against Owner in
the event of any default by Owner hereunder, and no other property or assets of
such Owner (or any partner, member, officer or director thereof, disclosed or
undisclosed), shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant's remedies under enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this lease, the
relationship of Owner and Tenant hereunder, or Tenant's use and occupancy of the
demised premises.
- ----------
* $168,162.50 (the "Security Deposit")
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
HUDSON TELEGRAPH ASSOCIATES
By: PMFWH Newcorp., Inc., General Partner
Witness for Owner:
By: /s/ Nicholas Sardone
- --------------------- -------------------------------------------
Name: Nicholas Sardone
Title: Vice President
Local Fiber, LLC
Witness for Tenant:
By: /s/ John J. Marchaesi
- --------------------- -------------------------------------------
Name: John J. Marchaesi
Title: Sr. VP Finance
Employer ID No.: 11-3361849
ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came
to me known, who being by me duly sworn, did depose and say that he resides
in ;
that he is the of
the corporation described in and which executed the foregoing instrument, as
OWNER; that he knows the seal of said corporation; the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
----------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came ,
to be known and known to me to be the individual
described in and who, as OWNER, executed the foregoing instrument and
acknowledged to me that he executed the same.
----------------------------
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came ,
to me known, who being by me duly sworn, did depose and say that he resides
in ;
that be is the of
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
----------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally came ,
to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
----------------------------
<PAGE> 6
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to
Owner making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all the
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or proof, or notice, or demand, whereby to charge the undersigned therefor, all
of which the undersigned hereby expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor hereunder shall
in no wise be terminated, affected or impaired by reason of the assertion by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within lease. The undersigned further covenants and
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, modification or extension of this lease and during any period
when Tenant is occupying the premises as a "statutory tenant." As a further
inducement to Owner to make this lease and in consideration thereof, Owner and
the undersigned covenant and agree that in any action or proceeding brought by
either Owner or the undersigned against the other on any matters whatsoever
arising out of, under, or by virtue of the terms of this lease or of this
guarantee that Owner and the undersigned shall and do hereby waive trial by
jury.
Dated: __________________ 19__
- ---------------------------------------------
Guarantor
- ---------------------------------------------
Witness
- ---------------------------------------------
Guarantor's Residence
- ---------------------------------------------
Business Address
- ---------------------------------------------
Firm Name
STATE OF NEW YORK, ) ss.:
COUNTY OF )
On this ___ day of ________________, 19__, before me personally came ___________
_______________________________________________________________________________,
to me known and known to me to be the individual described in, and who executed
the foregoing Guaranty and acknowledged to me that he executed the same.
________________________________________
Notary
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used
for any purposes other than those for which they were designed or constructed
and no sweepings, rubbish, rags, acids or other substances shall be deposited
therein, and the expense of any breakage, stoppage, or drainage resulting from
the violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease or which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and
each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building, all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such persons. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any Tenant
which in Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for offices, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, explosive or hazardous fluid,
material, chemical or substance, or cause or permit any odors of cooking or
other processes, or any unusual or other objectionable odors to permeate in or
emanate from the demised premises.
13. If the building contains central air conditioning and ventilation,
Tenant agrees to keep all windows closed at all times and to abide by all rules
and regulations issued by the Owner with respect to such services. If Tenant
requires air conditioning or ventilation after the usual hours, Tenant shall
give notice in writing to the building superintendent prior to 3:00 p.m. in the
case of services required on week days, and prior to 3:00 p.m. on the day prior
in case of after hours service required on weekends or on holidays. Tenant shall
cooperate with Owner in obtaining maximum effectiveness of the cooling system by
lowering and closing venetian blinds and/or drapes and curtains when the sun's
rays fall directly on the windows of the demised premises.
14. Tenant shall not move any safe, heavy machinery, heavy equipment,
bulky matter, or fixtures into or out of the building without Landlord's prior
written consent. If such safe, machinery, equipment, bulky matter or fixtures
requires special handling, all work in connection therewith shall comply with
the Administrative Code of the City of New York and all other laws and
regulations applicable thereto and shall be done during such hours as Owner may
designate.
15. Refuse and Trash. (1) Compliance by Tenant. Tenant covenants and
agrees, at its sole cost and expense, to comply with all present and future
laws, orders, and regulations of all state, federal , municipal, and local
governments, departments, commissions and boards regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash.
Tenant shall sort and separate such waste products, garbage, refuse and trash
into such categories as provided by law. Each separately sorted category of
waste products, garbage, refuse and trash shall be placed in separate
receptacles reasonably approved by Owner. Such separate receptacles may, at
Owner's option, be removed from the demised premises in accordance with a
collection schedule prescribed by law. Tenant shall remove, or cause to be
removed by a contractor acceptable to Owner, at Owner's sole discretion, such
items as Owner may expressly designate. (2) Owner's Rights in Event of
Noncompliance. Owner has the option to refuse to collect or accept from Tenant
waste products, garbage, refuse or trash (a) that is not separated and sorted as
required by law or (b) which consists of such items as Owner may expressly
designate for Tenant's removal, and to require Tenant to arrange for such
collection at Tenant's sole cost and expense, utilizing a contractor
satisfactory to Owner. Tenant shall pay all costs, expenses, fines, penalties,
or damages that may be imposed on Owner or Tenant by reason of Tenant's failure
to comply with the provisions of this Building Rule 15, and, at Tenant's sole
cost and expense, shall indemnity, defend and hold Owner harmless (including
reasonable legal fees and expenses) from and against any actions, claims and
suits arising from such noncompliance, utilizing counsel reasonably satisfactory
to Owner.
Address
Premises
================================================================================
TO
================================================================================
STANDARD FORM OF
[LOGO] OFFICE [LOGO]
LEASE
The Real Estate Board of New York, Inc.
(c) Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
================================================================================
Dated _______________________________ 19__
Rent Per Year __________________________________________________________________
Rent Per Month _________________________________________________________________
Term ___________________________________________________________________________
From ___________________________________________________________________________
To _____________________________________________________________________________
Drawn by ________________________________ Checked by ___________________________
Entered by ______________________________ Approved by __________________________
================================================================================
<PAGE> 7
RIDER TO LEASE DATED AS OF FEBRUARY 17, 1998 BETWEEN
HUDSON TELEGRAPH ASSOCIATES, AS LANDLORD, AND
LOCAL FIBER, LLC, AS TENANT
If and to the extent that any of the provisions of this rider conflict or
are otherwise inconsistent with any of the printed provisions of this lease,
whether or not such inconsistency is expressly noted in this rider, the
provisions of this rider shall prevail.
37. Definitions
The following terms contained in this Article 37 shall have the meanings
hereinafter set forth as such terms are used throughout this lease, including
the exhibits, schedules and riders hereto (if any).
(A) "Base Tax Year" shall mean the tax fiscal year July 1, 1997 to June
30, 1998.
(B) "Base Year Taxes" shall mean the Real Estate Taxes as finally
determined for the Base Tax Year.
(C) "Subsequent Tax Year" shall mean any tax fiscal year commencing on
or after July 1, 1998.
(D) "Tenant's Proportionate Share" shall mean 1.602%.
(E) "Base Labor Month" shall mean January, 1998.
(F) "Multiplication Factor" shall mean 13,453.
(G) "Labor Rate Multiple" shall mean one.
(H) "Broker" shall mean Williams Real Estate Co. Inc.
(I) "Rent Commencement Date" shall mean August 1, 1998.
(J) "Law" shall mean any law, rule, order, ordinance, regulation or
requirement of any governmental authority having or asserting
jurisdiction or any order, rule, requirement or regulation of any
utility company, insurer of Landlord or the Board of Fire
Underwriters (or successor organization), whether now or hereafter
in effect, and all amendments thereto.
38. Rental Payments
(A) All payments other than Fixed Rent to be made by Tenant pursuant to
this lease shall be deemed additional rent and, in the event of any non-payment
thereof, Landlord shall have all rights and remedies provided for herein or by
law for non-payment of rent.
(B) All payments of Fixed Rent and additional rent (collectively, "rent"
or "rental") to be made by Tenant pursuant to this lease shall be made by checks
drawn upon a New York City bank that is a member of the New York Clearing House
Association or any successor thereto.
(C) Unless Landlord shall otherwise expressly agree in writing, acceptance
of Fixed Rent or additional rent from anyone other than Tenant shall not relieve
Tenant of any of its obligations under this lease, including the obligation to
pay Fixed Rent and additional rent, and Landlord shall have the right at any
time, upon notice to Tenant, to require Tenant to pay the Fixed Rent and
additional rent payable hereunder directly to Landlord. Furthermore, such
acceptance of Fixed Rent or additional rent shall not be deemed to constitute
Landlord's consent to an assignment of this lease or a subletting or other
occupancy of the demised
<PAGE> 8
premises by anyone other than Tenant, nor a waiver of any of Landlord's rights
or Tenant's obligations under this lease.
(D) Landlord's failure to timely bill all or any portion of any amount
payable pursuant to this lease for any period during the Term shall neither
constitute a waiver of Landlord's right to ultimately collect such amount or to
bill Tenant at any subsequent time retroactively for the entire amount so
unbilled, which previously unbilled amount shall be payable within thirty (30)
days after being so billed.
39. Tax Escalation
(A) For purposes of this lease, "Real Estate Taxes" shall mean all the
real estate taxes and assessments imposed by any governmental authority having
jurisdiction over the Building and the land upon which it is located ("Land")
(including specifically, but without limitation, so-called "BID" taxes) or any
tax or assessment hereafter imposed in whole or in part in substitution for such
real estate taxes and/or assessments.
(B) If the Real Estate Taxes for any Subsequent Tax Year during the Term
exceed the Base Year Taxes (as initially imposed, if not finally determined when
a payment is due pursuant to this Section (B)), Tenant shall pay Landlord
Tenant's Proportionate Share of such excess within fifteen (15) days after
Landlord shall furnish to Tenant a statement (the "Tax Statement") setting forth
the amount thereby due and payable by Tenant. If Real Estate Taxes are payable
by Landlord to the applicable taxing authority in installments, then Landlord
shall bill Tenant for Tenant's Proportionate Share of increased Real Estate
Taxes in corresponding installments, such that Tenant's payment is due not more
than fifteen (15) days prior to the date when Landlord is obligated to pay the
Real Estate Taxes to the applicable taxing authority. If the actual amount of
Real Estate Taxes is not known to Landlord as of the date of Landlord's Tax
Statement, then Landlord may nevertheless bill Tenant for such installment on
the basis of a good faith estimate, in which event Tenant shall pay the amount
so estimated within fifteen (15) days after receipt of such bill, subject to
prompt refund by Landlord, or payment by Tenant, upon a supplemental billing by
Landlord once the amount actually owed by Tenant is determined. Upon Tenant's
request, Landlord shall provide Tenant with a copy of the current tax bill used
in the preparation of the Tax Statement.
(C) If the Base Year Taxes ultimately are reduced to less than the Real
Estate Taxes initially imposed upon the Land and the Building for the Base Tax
Year, Tenant shall pay Landlord, promptly upon demand, any additional amount
thereby payable pursuant to Section (B) for all applicable Subsequent Tax Years.
(D) If Landlord receives any refund of Real Estate Taxes for any
Subsequent Tax Year for which Tenant has made a payment pursuant hereto,
Landlord shall (after deducting from such refund all expenses incurred in
connection therewith) pay Tenant, if not in default hereunder, Tenant's
Proportionate Share of the net refund. Tenant shall pay Landlord Tenant's
Proportionate Share of the costs and expenses of any nature (including, without
limitation, consulting, appraisal, legal and accounting fees) incurred by
Landlord in good faith in connection with any tax protest or other proceeding or
arrangement leading or intending to lead to a reduction in Real Estate Taxes,
whether before or after the initial assessment thereof.
(E) If any Subsequent Tax Year is only partially within the Term, all
payments pursuant hereto shall be appropriately prorated, based on the portion
of the Subsequent Tax Year that is within the Term. Except as limited by
Articles 9 and 10: (1) Tenant's obligation to make the payments required by
Sections (B), (C) and (D) shall survive the Expiration Date or any sooner
termination of this lease; and (2) Landlord's obligation to make the payments
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<PAGE> 9
required by Section (D) shall survive the Expiration Date or any sooner
termination of this lease pursuant to Articles 9 and 10.
(F) Each Tax Statement given by Landlord pursuant to Section (B) shall be
binding upon Tenant unless, within thirty (30) days after its receipt of such
Tax Statement, Tenant notifies Landlord of its disagreement therewith,
specifying the portion thereof with which Tenant disagrees. Pending resolution
of such dispute, Tenant shall, without prejudice to its rights, pay all amounts
determined by Landlord to be due, subject to prompt refund by Landlord (without
interest) upon any contrary determination.
40. Expense Escalation
(A) For purposes of the formula and other provisions set forth in this
Article and elsewhere in this lease:
(1) "Rate" shall mean the minimum regular hourly wage rate,
including adjustments of every kind and nature (not including, however,
so-called "fringe benefits") prescribed for Porters (as hereinafter defined) for
Class A office buildings (or any successor category), pursuant to the present
and any successor agreement between the Realty Advisory Board on Labor
Relations, Inc. (or any successor thereto) and Local 32B - 32J of the Service
Employees International Union, AFL-CIO (or any successor thereto), covering the
wage rates for Porters in such buildings ("Agreement"), provided, however, that,
(a) if, at any time during the Term, regular employment of Porters occurs on
days or during hours when overtime or other premium pay rates are in effect
pursuant to the Agreement, "Rate" shall mean the average hourly wage rate,
including adjustments of every kind and nature (not including, however,
so-called fringe benefits) for the hours in a calendar week during which Porters
are regularly employed (e.g., if, pursuant to the Agreement, the regular weekly
employment of Porters is for forty hours, at a regular hourly wage rate (not
including so-called fringe benefits), of $12.00 for the first thirty hours and
an overtime hourly wage rate (not including so-called fringe benefits), of
$15.00 for the remaining ten hours, the average hourly wage rate (not including
so-called fringe benefits), for the applicable period shall, before adjustment
pursuant to the provisions of Section (B), be the weekly wage rate of $510.00,
divided by the number of regular hours of employment, to wit, forty, or $12.75),
and that, (b) if, at any time during the Term, no Agreement exists, Rate shall
mean the average minimum regular hourly wage rate, including adjustments of
every kind and nature (not including, however, so-called fringe benefits)
actually payable to Porters by Landlord or the contractor performing cleaning
services in the Building, or, if no Porters are employed at the Building, such
rate for Porters employed at Class A office buildings (as such buildings are
presently described in the Agreement).
(2) "Base Rate" shall mean the Rate in effect during the Base Labor
Month.
(3) "Porters" shall mean those employees engaged in the general
maintenance and operation of office buildings, classified as "Others" in the
current Agreement, who have been employed for twenty-five (25) years or more, or
failing such classification in any subsequent Agreement, the most nearly
comparable classification in such Agreement.
(B) In determining the Base Rate and/or the Rate on each applicable
occasion pursuant to this lease, the Base Rate and the Rate shall be calculated
on the basis of the number of hours that would be actually worked by Porters
during the applicable calendar year pursuant to the Agreement assuming all time
which Porters were entitled not to work, if all relevant circumstances provided
for in the Agreement occurred, actually was not worked [e.g., if the Agreement
is predicated on a 2,080 hour work year (40 hours X 52 weeks) and Porters are
paid for the following time which they are
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<PAGE> 10
entitled not to work if all relevant circumstances provided for in the Agreement
occur (Vacation - 120 hours, Holidays - 88 hours, Birthday - 8 hours, Medical
Checkup - 16 hours, Sick Days - 80 hours, Disaster Day - 8 hours and Relief Time
- - 148.5 hours), then the Base Rate and the Rate shall be calculated on the basis
of Porters actually working 1,611.5 hours (2,080 hours less 468.5 hours)].
(C) If, in any period during the Term, the Rate exceeds the Base Rate,
Tenant shall pay Landlord an amount ("Expense Escalation") equal to the product
of (1) the Multiplication Factor, multiplied by (2) the Labor Rate Multiple,
multiplied by (3) the amount by which the Rate exceeds the Base Rate. The
Expense Escalation shall be appropriately adjusted for any such period that is
only partially within the Term. The Expense Escalation shall be payable in equal
monthly installments, commencing with the first installment of Fixed Rent due on
or after the effective date of any increase in the Rate and continuing
thereafter until the effective date of any subsequent increase, whereupon such
installments shall be appropriately adjusted. Landlord shall furnish Tenant with
a statement itemizing Tenant's liability pursuant to this subdivision whenever
such liability arises or changes. Except as limited by Articles 9 and 10,
Tenant's obligation to make such payments shall survive the Expiration Date or
any sooner termination of this lease. Notwithstanding the foregoing, if, by
reason of any law, or any rule, order, regulation or requirement of any
governmental or quasi-governmental authority having or asserting jurisdiction
(collectively, "PW Law"), an increase in the Rate is reduced or does not take
effect, or increases in the Rate are limited or prohibited, then, for the period
covered by the PW Law ("Law Period"), the Rate for purposes of this Article
shall be deemed to increase by the same percentage and for the same period as
comprehended by the most recent increase in the Rate prior to the effective date
of the PW Law, which periodic increase shall be deemed to continue throughout
the Law Period.
(D) Each statement given by Landlord pursuant to Section (C) shall be
binding upon Tenant unless, within thirty (30) days after its receipt of such
statement, Tenant notifies Landlord of its disagreement therewith, specifying
the portion thereof with which Tenant disagrees. Pending resolution of such
dispute, Tenant shall, without prejudice to its rights, pay all amounts
determined by Landlord to be due, subject to prompt refund by Landlord (without
interest) upon any contrary determination.
(E) As used herein:
(1) "Fuel Cost" shall mean Landlord's cost for all fuel (including
steam and/or oil) used in the operation of the Building.
(2) "Electricity Cost" shall mean Landlord's cost for all
electricity used in lighting all the public and service areas of the Building
and operating all of the service facilities of the Building (as determined by an
independent electrical engineer or consultant selected by Landlord);
(3) "Utilities Cost" shall mean the sum of the Fuel Cost and the
Electricity Cost;
(4) "Base Utilities Cost" shall mean the Utilities Cost for the
initial Utility Year (i.e., 1998); and
(5) "Utility Year" shall mean each calendar year, beginning with
1998, all or any part of which falls within the Term.
(F) If the Utilities Cost for any Utility Year shall be greater than the
Base Utilities Cost, Tenant shall pay Landlord Tenant's Proportionate Share of
such excess ("Utilities Payment"). Any such liability shall be appropriately
prorated for the final
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<PAGE> 11
Utility Year. Tenant's obligation to make such payment shall survive the
expiration or sooner termination of this lease.
(G) After the initial Utility Year, Landlord shall forward Tenant an
itemized statement ("Utilities Statement") of the Base Utilities Cost.
Thereafter, Landlord shall forward Tenant a Utilities Statement of the Utilities
Cost for the prior Utility Year and a computation of the amount payable by
Tenant pursuant to Section (F).
(H) With each installment of Fixed Rent payable during the second Utility
Year, Tenant shall pay Landlord, on account of the amount payable pursuant to
this Article for such Utility Year, Tenant's Proportionate Share of the product
of (i) five percent (5%) of the Base Utilities Cost, and (ii) one-twelfth)
(1/12). Such payments shall be deferred until Landlord forwards the applicable
Utilities Statement of Base Utilities Cost, whereupon Tenant promptly shall pay
all deferred payments and thereafter commence such payments.
(I) With each installment of Fixed Rent payable during and after the third
Utility Year, Tenant shall pay to Landlord on account of the amount payable
pursuant to this Article for the then Utility Year,
(1) until Landlord forwards the applicable Utilities Statement for
the preceding Utility Year, the amount of the monthly payment during December of
such preceding Utility Year; and
(2) after Landlord forwards the applicable Utilities Statement for
the preceding Utility Year, one-twelfth of the amount payable pursuant to
Section (F) for such preceding Utility Year.
(J) Once Landlord forwards the applicable Utilities Statement for the
preceding Utility Year, Landlord and/or Tenant, as the case may be, promptly
shall make appropriate payment to the other (without interest) of any amount
overpaid by Tenant or owing to Landlord for such Utility Year based on the
amount due pursuant to such Utilities Statement and amounts theretofore paid by
Tenant for such preceding Utility Year.
(K) Landlord's Utilities Statement for any Utility Year shall be
conclusive and binding upon Tenant unless within thirty (30) days after receipt
of such Utilities Statement, Tenant notifies Landlord that it disputes the
correctness of the Utilities Statement, specifying the respects in which it is
claimed to be incorrect. In the event of any such dispute, pending the
determination thereof, Tenant shall make payment in accordance with Landlord's
Utilities Statement, without prejudice to its position. If such dispute is
determined in Tenant's favor, Landlord shall forthwith pay Tenant (without
interest) the amount so overpaid by Tenant.
41. Abatement and Adjustments of Fixed Rent
Anything herein to the contrary notwithstanding:
(A) Provided this lease shall be in full force and effect and Tenant shall
not be in default hereunder beyond any applicable notice and grace period, the
Fixed Rent shall abate from the Commencement Date through the date that is one
day prior to the Rent Commencement Date; and
(B) Effective on August 1, 2003, the Fixed Rent (exclusive of the Fixed
Rent payable pursuant to Article 68) shall be increased to $336,325.00 per
annum.
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<PAGE> 12
42. Electricity
(A) Landlord shall furnish, at a location designated by Landlord, for
Tenant's use in the demised premises three hundred fifty (350) amps at four
hundred eighty (480) volts. Said power exceeds the standard Landlord provision
of fifteen (15) watts of power per rentable square foot at one hundred
twenty/two hundred eight (120/208) volts by one hundred forty-eight (148) amps.
Such additional power shall be provided by Landlord to Tenant at the cost of one
hundred fifty ($150.00) dollars per amp or twenty two thousand two hundred
($22,200.00) dollars to be paid upon execution of this lease and subject to the
terms and conditions set forth in this Article 42. In bringing such current from
such designated location to the premises, Tenant shall use only such electrical
contractors as are then on the approved list for the Building. Any additional
current required by Tenant shall be provided by Landlord, if available, at a
cost of one hundred fifty ($150.00) dollars per amp if provided during the
twelve (12) month period after the date hereof, and, if later provided, at
Landlord's then standard charge. If at any time during the Term, whether before
or after Tenant's power is increased or decreased, Landlord reasonably
determines that Tenant is not using any portion of the electric capacity then
servicing the demised premises, then Landlord shall have the right, after not
less than fifteen (15) days notice to Tenant, to recapture any such power not
then being used by Tenant without compensation to Tenant. If Landlord so
recaptures any power and, at a later date, Tenant requires provision of
additional power, Landlord shall use all reasonable efforts to provide the same
and Tenant will not be required to pay the per amp charge referred to above for
such part of the additional power as had been recaptured. Tenant's consumption
of electrical energy at the demised premises shall be measured by submeters
installed by Landlord at Tenant's expense.
(B) (1) From and after the Commencement Date, Tenant shall purchase all
electric current consumed in or in connection with the demised premises from
Landlord or Landlord's designated agent and pay therefor an amount equal to
105% of Landlord's Average Cost (as hereinafter defined) applied to all
electricity consumed in or in connection with the demised premises during the
applicable billing period, as measured by the submeters in the demised premises.
(2) "Landlord's Average Cost" for all purposes of this lease shall
be determined by dividing (y) the total dollar amount billed to Landlord for the
Building by the entity providing electric current to the Building (the "Electric
Company") for the relevant billing period (including, without limitation, all
charges for "demand," fuel, "on-peak" and "off-peak" usage, "time of day" usage
and any and all other relevant adjustments and charges) by (z) the total
kilowatt hours utilized by the Building for such billing period.
(C) Where more than one submeter measures Tenant's consumption of
electricity, the service rendered through each submeter may be computed and
billed separately in accordance with the provisions hereof. Bills therefor shall
be rendered at such times as Landlord may elect and shall be payable on demand
as additional rent. In the event that such bills are not paid within thirty (30)
days after the same are rendered, Landlord may, without further notice,
discontinue the service of electric current to the demised premises without
releasing Tenant from any liability under this lease and without Landlord's
agent incurring any liability for any damage or loss sustained by Tenant by such
discontinuance of service.
(D) Landlord shall not in any way be liable or responsible to Tenant for
any loss, damage or expense that Tenant may sustain or incur if either the
quantity or character of electric service is changed or is no longer available
or suitable for Tenant's requirements. Tenant's use of electric current shall
never exceed
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<PAGE> 13
the capacity of existing feeders or risers to, or wiring installations in, the
Building and the demised premises. Any riser or risers to supply Tenant's
electrical requirements will, upon written request of Tenant, be installed by
Landlord at the sole cost and expense of Tenant if, in Landlord's reasonable
judgment, the same are necessary and will not cause adverse damage or injury to
the Building or the operation thereof or the demised premises, cause or create a
dangerous or hazardous condition, entail excessive or unreasonable alterations,
repairs or expense or interfere with or disturb other tenants or occupants. In
addition to the installation of such riser or risers, Landlord will also, at the
sole cost and expense of Tenant, install all other equipment proper and
necessary in connection therewith, subject to the aforesaid terms and
conditions. All of such costs and expense shall be paid by Tenant to Landlord
within fifteen (15) days after rendition of any bill or statement to Tenant
therefore.
(E) Landlord may discontinue such service of electric current upon sixty
(60) days notice to Tenant without being liable to Tenant therefor or without in
any way affecting this lease or the liability of Tenant hereunder or causing a
diminution of Fixed Rent. Such discontinuance shall not be deemed to be a
lessening or diminution of service within the meaning of any law, rule or
regulation now or hereafter enacted, promulgated or issued. In the event
Landlord gives such notice of discontinuance, Landlord shall permit Tenant to
receive such service direct from the Electric Company, in which event Tenant
shall, at its own cost and expense, furnish and install all risers, service
wiring, switches and other equipment necessary for such installation and
required by the Electric Company and, at its own cost and expense, maintain and
keep in good repair all such risers, wiring, switches and equipment. Provided
that Tenant proceeds promptly and diligently after receipt of Landlord's notice
to arrange to obtain electric current directly from the Electric Company,
Landlord may not discontinue electric service until Tenant is able to obtain
service directly from the Electric Company (unless Landlord is compelled to do
so by Law or the Electric Company).
(F) Tenant shall make no alterations or additions to the electric
equipment and/or appliances presently installed in the demised premises without
the prior written consent of Landlord in each instance. Rigid conduit only will
be allowed.
(G) If any tax is imposed upon Landlord's receipt from the sale or resale
of electric energy to Tenant by any federal, state or municipal authority, where
permitted by law, Tenant's pro-rata share of such taxes shall be paid by Tenant
to Landlord.
(H) Anything in Section (B) to the contrary notwithstanding, if the
Commencement Date shall occur prior to the installation and proper calibration
of the submeters, then (i) Tenant shall pay Landlord for Tenant's consumption of
electricity in the demised premises at the rate of $1,681.63 per month during
any period when construction is taking place in the demised premises; and (ii)
from and after the date on which Tenant occupies all or a portion of the demised
premises for the conduct of business and until the installation and proper
calibration of the submeters, Tenant shall pay Landlord $3,363.25 per month on
account, such payments to be retroactively adjusted based on the average
kilowatts and kilowatt hours consumed over the first three (3) months after
installation and proper calibration of the submeters. In addition, if during any
time during the Term, it shall be determined that the submeters servicing the
demised premises were malfunctioning, or if Tenant's power is increased prior to
the installation and proper calibration of any required additional meters,
Tenant shall pay Landlord an amount reasonably estimated by Landlord's
electrical consultant to be the amount that would have been payable by Tenant
had such malfunction not occurred or had the additional power been properly
metered, as the case may be.
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<PAGE> 14
43. Restrictions on Use
(A) Anything in Article 2 to the contrary notwithstanding, Tenant shall
not use or permit all or any part of the demised premises to be used for the:
(1) storage for purpose of sale of any alcoholic beverage in the demised
premises; (2) storage for retail sale of any product or material in the demised
premises; (3) conduct of a manufacturing, printing or electronic data processing
business, except that Tenant may operate business office reproducing equipment,
electronic data processing equipment and other business machines for Tenant's
own requirements (but shall not permit the use of any such equipment by or for
the benefit of any party other than Tenant); (4) rendition of any health or
related services, conduct of a school or conduct of any business that results in
the presence of the general public in the demised premises; (5) conduct of the
business of an employment agency or executive search firm; (6) conduct of any
public auction, gathering, meeting or exhibition; (7) conduct of a stock
brokerage office or business; or (8) occupancy of a foreign, United States,
state, municipal or other governmental or quasi-governmental body, agency or
department or any authority or other entity that is affiliated therewith or
controlled thereby.
(B) Tenant shall not use or permit all or any part of the demised premises
to be used in any manner that is inconsistent with a first class office building
or so as to impose any additional burden upon Landlord in its operation.
(C) Tenant shall not obtain or accept for use in the demised premises
towel, barbering, boot blacking, floor polishing, lighting maintenance, cleaning
or other similar services from any party not theretofore approved by Landlord
(which party's charges shall not be excessive) and Landlord will not
unreasonably withhold such approval. Such services shall be furnished only at
such hours, in such places within the demised premises and pursuant to such
regulations as Landlord prescribes.
44. Assignment, Etc.
Supplementing Article 11:
(A) Tenant shall neither: (i) publicly advertise the availability of all
or any part of the demised premises at a rental rate less than the rental rate
at which Landlord is then offering to lease comparable space in the Building; or
(ii) assign this lease to or sublet to or permit the occupancy of all or any
part of the demised premises by any other party that is then a tenant,
subtenant, licensee or occupant of any space in the Building or that has
negotiated with Landlord for space in the Building within the twelve (12) month
period preceding the date of Landlord's receipt of Tenant's Notice pursuant to
Section (B) (nor shall Tenant accept an assignment of a lease or sublet space
from any tenant, subtenant, licensee or occupant of any space in the Building).
Tenant shall designate Williams Real Estate Co. Inc. (or the then rental agent
for the Building) as its exclusive agent in connection with any subletting of
all or any part of the premises or any assignment of this lease.
(B) If Tenant wishes to assign this lease (a transfer of more than a fifty
percent (50%) beneficial interest in Tenant, whether such transfer occurs at
one time, or in a series of related transactions, and whether of stock,
partnership interest or otherwise, by any party in interest being deemed an
assignment of this lease), sublet all or any part of the demised premises or
permit the demised premises to be occupied by any other party, Tenant shall
first notify Landlord ("Tenant's Notice"), specifying the name of the proposed
assignee, subtenant or occupant, the name of and character of its business, its
proposed use of the premises, the terms of the proposed assignment, sublease or
occupancy (including, without limitation, the commencement and expiration
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<PAGE> 15
dates thereof) and current information as to the financial responsibility and
standing of the proposed assignee, sublessee or occupant and shall provide
Landlord with such other information as it reasonably requests. If only a
portion of the demised premises (not constituting an entire floor of the
Building) is to be so sublet or occupied, Tenant's Notice shall be accompanied
by a reasonably accurate floor plan, indicating such portion. The portion of the
demised premises to which such proposed assignment, sublease or occupancy is to
be applicable is hereinafter referred to as the "Space."
(C) Landlord may, within sixty (60) days after its receipt of Tenant's
Notice, by notice to Tenant ("Landlord's Notice"), require that (i) Tenant
sublease the Space to Landlord or its nominee, on the terms set forth in Section
(D), or (ii) this lease be terminated as to the Space for the period specified
in Tenant's Notice, on the terms set forth in Section (E). If Tenant's proposed
assignment or sublease is for more than fifty percent (50%) of the demised
premises or the then balance of the Term is three (3) years or less, Landlord
also may, by Landlord's Notice, terminate this lease as of the proposed
commencement date for such assignment, sublease or occupancy. If Landlord fails
to exercise such option, it shall not unreasonably withhold its consent to the
proposed assignment, sublease or occupancy (provided that the proposed use of
the premises by the proposed assignee, subtenant or occupant complies with the
terms of this lease, including, without limitation, Articles 2 and 43 hereof),
but such consent shall be deemed of no effect if such assignment, sublease or
occupancy is not consummated upon the terms set forth in Tenant's Notice and
within thirty (30) days after such consent is given.
(D) If Landlord requires that Tenant execute a sublease ("Sublease")
pursuant to clause (C) (i), the Sublease shall be upon the same terms as this
lease, except for such terms thereof as are inapplicable and except that: (i)
the term of the Sublease shall be the term specified in Tenant's Notice
commencing, at Landlord's option, on (a) the commencement date set forth in
Tenant's Notice, or (b) a date designated by Landlord which shall not be more
than thirty (30) days after the date of Landlord's Notice; (ii) the Fixed Rent
for the Sublease shall be the lesser of (a) the pro rata Fixed Rent for the
Space Tenant is then paying Landlord hereunder, or (b) the Fixed Rent set forth
in Tenant's Notice; (iii) Tenant's Proportionate Share and the Multiplication
Factor for the Sublease shall be determined based on the relative sizes of the
Space and the initial demised premises; (iv) the subtenant under the Sublease
shall have the unrestricted right to assign the Sublease or any interest
therein, to further sublet all or any part of the Space and/or to make any
alterations, decorations, additions or improvements in and to the Space (all or
any part of which may be removed, at Landlord's option, at any time, provided
Landlord repairs all damage caused by such removal); (v) Tenant, as sublandlord
under the Sublease, shall, at its expense: (a) erect all partitions required to
separate the Space from the remainder of the demised premises and install a
separate submeter to measure the consumption of electricity in the Space (or, in
the alternative, the parties shall agree on an equitable method to allocate
electricity charges between the Space and the balance of the premises) and (b)
to the extent necessitated by the Sublease, install all doors required for
independent access from the Space to the elevators, lavatories and staircases on
the floor and install all equipment and facilities (including, without
limitation, men's and women's toilets) required to comply with all applicable
Laws and to enable Landlord to maintain and service the Space and permit the
Space to be used as an independent unit; (vi) the Sublease shall provide that
the termination of all or any portion of this lease by merger is not thereby
intended; and (vii) at the expiration of the Sublease, the Space shall, subject
to clause (iv), be returned to Tenant as then existing.
(E) If Landlord requires that this lease be terminated as to the Space
pursuant to clause (C) (ii), then Landlord and Tenant
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<PAGE> 16
shall execute and deliver a supplementary agreement modifying this lease by
eliminating the Space from the demised premises for the term specified in
Tenant's Notice commencing, at Landlord's option, on (a) the commencement date
set forth in Tenant's Notice, or (b) a date designated by Landlord which shall
not be more than thirty (30) days after the date of Landlord's Notice, and, for
such period, reducing the Fixed Rent and additional rent payable hereunder on a
pro rata basis.
(F) Anything herein to the contrary notwithstanding, Tenant may not assign
this lease or sublet all or any part of the demised premises prior to the
expiration of the first year of the Term.
(G) No assignment of this lease shall be effective unless and until Tenant
delivers to Landlord duplicate originals of the instrument of assignment
(wherein the assignee assumes the performance of Tenant's obligations under this
lease) and any accompanying documents.
(H) In the event of any such assignment, Landlord and the assignee may
modify this lease in any manner, without notice to Tenant or Tenant's prior
consent, without thereby terminating Tenant's liability for the performance of
its obligations under this lease, except that any such modification which, in
any way, increases any of such obligations shall not, to the extent of such
increase only, be binding upon Tenant.
(I) No sublease of all or any part of the demised premises (except a
Sublease) shall be effective unless and until Tenant delivers to Landlord
duplicate originals of the instrument of sublease (containing the provision
required by Section (J)) and any accompanying documents. Any such sublease shall
be subject and subordinate to this lease.
(J) Any such sublease shall contain substantially the following
provisions:
(1) "In the event of a default under any underlying lease of all or
any portion of the premises demised hereby that results in the termination of
such lease, the subtenant hereunder shall, at the option of the lessor under any
such lease ("Underlying Lessor"), attorn to and recognize the Underlying Lessor
as landlord hereunder and shall, promptly upon the Underlying Lessor's request,
execute and deliver all instruments necessary or appropriate to confirm such
attornment and recognition. Notwithstanding such attornment and recognition, the
Underlying Lessor shall not (a) be liable for any previous act or omission of
the landlord under this sublease, (b) be subject to any offset, not expressly
provided for in this sublease, that shall have accrued to the subtenant
hereunder against said landlord, or (c) be bound by any modification of this
sublease or by any prepayment of more than one month's rent, unless such
modification or prepayment shall have been previously approved in writing by the
Underlying Lessor. The subtenant hereunder hereby waives all rights under any
present or future law to elect, by reason of the termination of such underlying
lease, to terminate this sublease or surrender possession of the premises
demised hereby.
(2) This sublease may not be assigned or the premises demised
hereunder further sublet, in whole or in part, without the prior written
consent of the Underlying Lessor."
(K) No assignment or sublease, whether or not consented to by Landlord and
whether or not any such consent is required, shall release Tenant from its
liability for the performance of Tenant's obligations hereunder during the
balance of the Term. Landlord's consent to any assignment or sublease shall not
constitute its consent to any (i) further assignment of this lease or of any
permitted sublease or (ii) further sublease of all or any portion of the
premises demised hereunder or under any permitted sublease. If a sublease to
which Landlord has consented is assigned or all or
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any portion of the premises demised thereunder is sublet without the consent of
Landlord in each instance obtained, Tenant shall immediately terminate such
sublease, or arrange for the termination thereof, and proceed expeditiously to
have the occupant thereunder dispossessed.
(L) Tenant shall pay to Landlord, promptly upon demand therefor, all costs
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred by Landlord in connection with any assignment of this
lease or sublease of all or any part of the demised premises.
(M) If Landlord shall give its consent to any assignment of this lease or
to any sublease or if Tenant shall otherwise enter into any assignment or
sublease permitted hereunder, Tenant shall in consideration therefor, pay to
Landlord, as and when payable to Tenant
(1) in the case of an assignment, fifty (50%) percent of all sums
and other considerations paid to Tenant by the assignee for or by reason of such
assignment (including, but not limited to, sums paid for the sale of Tenant's
fixtures, leasehold improvements, equipment, furniture, furnishings or other
personal property, less the then fair market value thereof); and
(2) in the case of a sublease, fifty (50%) percent of the amount, if
any, by which (i) any rents, additional charges or other consideration payable
under the sublease to Tenant by the subtenant (including, but not limited to,
sums paid for the sale or rental of Tenant's fixtures, leasehold improvements,
equipment, furniture or other personal property, less the then fair market value
thereof) exceeds (ii) the Fixed Rent and additional rent accruing during the
term of the sublease in respect of the Space (at the rate per square foot
payable by Tenant hereunder) pursuant to the terms of this lease.
(N) Landlord acknowledges that the business to be conducted by Tenant in
the demised premises requires the installation of certain communications
equipment owned by customers of Tenant in the demised premises, in order for
such customers to interconnect with Tenant's terminal facilities. Landlord
expressly agrees that Tenant may license the use of portions of the demised
premises to its customers solely for the purpose of locating equipment therein
without Landlord's' further consent; provided, however, that such license shall
be granted only upon the execution by Tenant and its customers of an agreement
that expressly provides that (i) such license and the rights of such licensee
shall at all times be subordinate to this lease and shall not be binding on
Landlord; (ii) such license will expire no later than the day prior to the
expiration or earlier termination of this lease; and (iii) such license shall be
for equipment only and shall not grant to the licensee the right to occupy any
portion of the Building or the demised premises. No such license shall become
effective unless and until Tenant has delivered a fully executed counterpart
thereof to Landlord.
45. Brokerage
Tenant represents that it dealt only with the Broker as broker in
connection with this lease and Landlord shall pay the Broker's commission
therefor pursuant to separate agreement. Tenant shall indemnify Landlord against
all loss, damage, liability, cost and expense (including reasonable attorney's
fees) pertaining to any other brokerage commission or like compensation that is
based on alleged actions of Tenant or its agents or representatives. Tenant's
liability hereunder shall survive any expiration or termination of this lease.
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46. Building Directory
(A) Landlord shall, upon Tenant's request, list on the Building's
directory ("Directory"), the names of Tenant, any other party occupying any part
of the demised premises pursuant hereto and their officers or employees,
provided the number of Directory lines so provided by Landlord does not exceed
Tenant's Proportionate Share of the Directory's capacity.
(B) The listing of any party's name other than Tenant's shall neither
grant such party any right or interest in this lease and/or the demised premises
nor constitute Landlord's consent to any assignment or sublease to or occupancy
by such party. Such listing may be terminated by Landlord at any time, without
prior notice. The initial listing(s) on the Directory shall be provided by
Landlord without charge to Tenant. Thereafter, Tenant shall pay Landlord's
standard fee for any work performed in connection with any additions, deletions
or changes to the Directory.
47. Exculpatory Clause
(A) Anything herein to the contrary notwithstanding, the liability of
Landlord and the partners of, or any other party that holds any interest in,
Landlord for negligence, failure to perform lease obligations or otherwise under
or in connection with this lease shall be limited to each of their respective
interests in the Land and Building. Tenant shall neither seek to enforce nor
enforce any judgment or other remedy against any other asset of Landlord, any
partner of Landlord or any party that holds any interest in Landlord.
(B) In any claim made by Tenant against Landlord alleging that Landlord
has acted unreasonably where Landlord had an obligation to act reasonably,
Tenant shall have no right to recover damages from Landlord and Tenant's sole
and exclusive recourse against Landlord shall be an action seeking specific
performance of Landlord's obligation to act reasonably.
48. Submission to Jurisdiction, Etc.
(A) This lease shall be deemed to have been made in New York County, New
York, and shall be construed in accordance with the laws of the State of New
York. All actions or proceedings relating, directly or indirectly, to this lease
shall be litigated only in courts located within the County of New York. Tenant
and their respective successors and assigns hereby subject themselves to the
jurisdiction of any state or federal court located within such county, waive the
personal service of any process upon them in any action or proceeding therein
and consent that such process may be served by certified or registered mail,
return receipt requested, directed to Tenant and any successor at Tenant's
address hereinabove set forth, any successor and to any assignee at the address
set forth in the respective instruments. Such service shall be deemed made two
days after such process is so mailed.
(B) Whenever any default by Tenant causes Landlord to incur attorneys'
fees and/or any other costs or expenses, Tenant agrees that it shall pay and/or
reimburse Landlord for such fees, costs or expenses within ten (10) days after
being billed therefor.
(C) If any monies owing by Tenant under this lease are paid more than
fifteen (15) days after the date such monies are payable pursuant to the
provisions of this lease, Tenant shall pay Landlord interest thereon, at the
rate of two (2%) percent per annum over the so called "prime" or "base" interest
rate of Citibank N.A. from time to time in effect, for the period from the date
such monies were payable to the date such monies are paid.
(D) The submission of this lease to Tenant shall not constitute an offer
by Landlord to execute and exchange a lease
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with Tenant and is made subject to Landlord's acceptance, execution and delivery
thereof.
49. Requests by Mortgagee or Others
(A) If any present or prospective mortgagee of the Land, Building or any
leasehold interest therein requires, as a condition precedent to issuing or
extending its loan, the modification of this lease in such manner as does not
materially lessen Tenant's rights or increase its obligations hereunder, Tenant
shall not delay or withhold its consent to such modification and shall execute
and deliver such confirming documents therefor as such mortgagee requires.
(B) If Landlord, in conjunction with any proposed sale or mortgaging of
all or any portion of the Land and Building or any leasehold interest therein,
requests the delivery of financial statements or other information relating to
the financial condition of Tenant, Tenant shall deliver such financial
statements or such other information within ten (10) days after Landlord's
written request therefor.
50. Delivery of Demised Premises
Supplementing Article 21, the demised premises shall be leased to Tenant
in their "as is" condition on the Commencement Date and Landlord shall not be
required to perform any work to prepare the demised premises for Tenant's
occupancy, except that, with reasonable diligence after the execution and
exchange of this lease, Landlord will (i) demolish, in a Building standard
manner, the existing improvements in the premises, including the removal of
asbestos, if any, therein, but not including floor tile, even if
asbestos-containing, as to which Landlord will have no responsibility or
obligation, and (ii) construct a Building-standard demising wall and install a
Building-standard entrance door to the premises. The demised premises will be
delivered free of refuse and rubbish and the cracked panes of glass in the
windows will be replaced in a timely manner. The taking of possession of the
demised premises by Tenant shall be conclusive evidence as against Tenant that,
at the time such possession was so taken, the demised premises and the Building
were in good and satisfactory condition.
With reasonable promptness after Tenant's request therefor, Landlord shall
provide up to two (2) clay ducts for Tenant's use at a one (1) time cost of
fifteen thousand ($15,000.00) dollars for each clay duct, to be paid upon
Tenant's request therefor.
Tenant shall be permitted to remove the existing radiators from the
demised premises and return them to Landlord, provided that, in so doing, Tenant
will be deemed to have waived its right, pursuant to Article 29 of this lease,
to receive heat in the demised premises from Landlord.
51. Insurance
During the Term, Tenant shall pay for and keep in force general liability
policies in standard form protecting against all liability occasioned by
accident or occurrence, subject to customary exclusions, and containing only
such "deductibles" as Landlord reasonably approves, such policies to be written
by recognized and well-rated insurance companies licensed to transact business
in the State of New York, authorized to issue such policies, and reasonably
approved by Landlord. The minimum limits of liability shall be a combined single
limit with respect to each occurrence in an amount of not less than $3,000,000
for injury (or death) and damage to property. If at any time during the Term it
appears that public liability or property damage limits in the City of New York
for buildings similarly situated, due regard being given to the use and
occupancy thereof, are higher than the foregoing limits, then Tenant shall
increase the foregoing limits
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accordingly. Landlord (and each member thereof in the event Landlord is a
partnership, joint venture or other entity) and Landlord's managing agent
(Landlord's current managing agent is Williams Real Estate Co. Inc.) shall be
named as additional insured in the aforesaid insurance policies. Tenant shall
also secure and keep in force "all risk" property insurance, including loss by
fire and, by means of the standard extended coverage endorsement, loss or damage
by such other casualties as may be covered thereby, covering all of its personal
property, equipment, trade fixtures, goods, merchandise, furniture, furnishings
and other items removable by Tenant located in the premises for the full
replacement value thereof from time to time. All such policies shall provide
that Landlord shall be afforded not less than thirty (30) days' prior notice of
cancellation of said insurance. Tenant shall deliver Acord 27 certificates of
insurance evidencing such policies, or certified copies or duplicate originals
of the policies and reasonably satisfactory evidence of payment of premiums, if
requested by Landlord. All premiums and charges for the aforesaid insurance
shall be paid by Tenant. If Tenant shall fail to maintain any such required
insurance, or to pay the premiums therefor when due, Landlord may obtain such
insurance or make such payment and the cost thereof to Landlord shall be repaid
to Landlord by Tenant on demand as additional rent. Tenant shall not violate or
permit to be violated any condition of any of said policies and Tenant shall
perform and satisfy the requirements of the companies writing such policies.
52. Bankruptcy
Without limiting any of the provisions of Articles 16, 17 or 18 hereof,
if, pursuant to the Bankruptcy Code of 1978, as the same may be amended, Tenant
is permitted to assign this lease in disregard of the obligations contained in
Articles 11 and 44 hereof, Tenant agrees that adequate assurance of future
performance by the assignee permitted under such Code shall mean the deposit of
cash security with Landlord in an amount equal to the sum of one year's Fixed
Rent then reserved hereunder plus an amount equal to all additional rent payable
under this lease for the calendar year preceding the year in which such
assignment is intended to become effective, which deposit shall be held by
Landlord, without interest, for the balance of the Term as security for the full
and faithful performance of all of the obligations under this lease on the part
of Tenant yet to be performed. If Tenant receives or is to receive any valuable
consideration for such an assignment of this lease, such consideration, after
deducting therefrom (A) the brokerage commissions, if any, and other expenses
reasonably incurred by Tenant for such assignment and (B) any portion of such
consideration reasonably designated by the assignee as paid for the purchase of
Tenant's property in the demised premises, shall be and become the sole and
exclusive property of Landlord and shall be paid over to Landlord directly by
such assignee. In addition, adequate assurance shall mean that any such assignee
of this lease shall have a net worth, exclusive of good will, equal to at least
fifteen (15) times the aggregate of the Fixed Rent reserved hereunder plus all
additional rent for the preceding calendar year as aforesaid.
53. Local Law 5/Required Alterations
Supplementing Article 6:
(A) All work performed or installations made by Tenant (or by Landlord at
Tenant's request and expense) in and to the demised premises shall be done in a
fashion such that the demised premises and the Building shall be in compliance
with the requirements of Local Law 5 of 1973 of The City of New York, as
heretofore and hereafter amended ("Local Law 5"). The foregoing shall include,
without limitation, (i) compliance with the compartmentalization requirements of
Local Law 5, (ii) relocation of existing fire detection devices, alarm signals
and/or communication devices necessitated by the alteration of the demised
premises, and (iii)
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installation of such additional fire control or detection devices as may be
required by Law as a result of Tenant's manner of use of the demised premises.
In addition, Tenant shall cause the demised premises to be connected to the
Building "Class E" system and arrange to have the demised premises and Tenant
added to the "Class E" computer.
(B) Landlord shall not be responsible for any damage to Tenant's fire
control or detection devices nor shall Landlord have any responsibility for the
maintenance or replacement thereof. Tenant shall indemnify Landlord from and
against all loss, damage, cost, liability or expense (including, without
limitation, reasonable attorneys' fees and disbursements) suffered or incurred
by Landlord by reason of the installation and/or operation of any such devices.
(C) All work and installations required to be undertaken by Tenant
pursuant to this Article shall be performed at Tenant's sole cost and expense
and in accordance with plans and specifications and by contractors previously
approved by Landlord.
(D) The fact that Landlord shall have heretofore consented to any
installations or alterations made by Tenant in the demised premises shall not
relieve Tenant of its obligations pursuant to this Article with respect to such
installations or alterations.
(E) If any utility company or governmental or quasi-governmental authority
requires any work, installation or improvement to be made to the Building in
connection with any Alteration performed by Tenant, the installation or
operation of equipment or machinery in the demised premises or for any other
reason relating to Tenant's use or occupancy of the demised premises, Tenant
shall reimburse Landlord for the cost of such work, installation or improvement
on demand.
54. Tenant's Alterations
(A) Tenant shall not make or perform, or permit the making or performance
of, any alterations, installations, improvements, additions or other physical
changes in or about the demised premises (collectively, "Alterations") without
Landlord's prior consent. Landlord agrees not unreasonably to withhold its
consent to any Alterations that are nonstructural and that do not affect the
Building's systems and facilities, provided that such Alterations are performed
only by contractors or mechanics first approved by Landlord, do not affect any
part of the Building other than the demised premises (including, without
limitation, the exterior thereof), do not adversely affect any service required
to be furnished by Landlord to Tenant or to any other tenant or occupant of the
Building and do not reduce the value or utility of the Building. All Alterations
shall be done at Tenant's expense and at such times and in such manner as
Landlord may from time to time reasonably designate pursuant to the conditions
for Alterations prescribed by Landlord for the Building ("Alteration
Regulations"). Prior to making any Alterations, Tenant (i) shall submit to
Landlord detailed plans and specifications (including layout, architectural,
mechanical and structural drawings) for each proposed Alteration and shall not
commence any such Alteration without first obtaining Landlord's approval of such
plans and specifications, (ii) shall, at its expense, obtain all permits,
approvals and certificates required by any governmental or quasi-governmental
bodies, and (iii) shall furnish to Landlord duplicate original policies of
worker's compensation insurance (covering all persons to be employed by Tenant
and Tenant's contractors and subcontractors in connection with such Alteration)
and comprehensive public liability (including property damage coverage)
insurance in such form, with such companies, for such periods and in such
amounts as Landlord may reasonably require, naming Landlord and its agents as
additional insureds. Upon completion of such Alteration, Tenant, at Tenant's
expense, shall obtain certificates of final approval of such Alteration required
by any governmental
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or quasi-governmental bodies and shall furnish Landlord with copies thereof and
shall, within thirty (30) days of such completion, deliver a set of final "as
built" drawings to Landlord reflecting the Alteration. All Alterations shall be
made and performed in accordance with the Alteration Regulations. All materials
and equipment to be incorporated in the demised premises as a result of all
Alterations shall be new and first quality. No such materials or equipment shall
be subject to any lien, encumbrance, chattel mortgage, title retention or
security agreement. Tenant shall not, at any time prior to or during the Term,
directly or indirectly employ, or permit the employment of, any contractor,
mechanic or laborer in the demised premises, whether in connection with any
Alteration or otherwise, if, in Landlord's sole discretion, such employment
will interfere or cause any conflict with other contractors, mechanics, or
laborers engaged in the construction, maintenance or operation of the Building
by Landlord, Tenant or others. In the event of any such interference or
conflict, Tenant, upon demand of Landlord, shall cause all contractors,
mechanics or laborers causing such interference or conflict to leave the
Building immediately.
(B) No approval of any plans or specifications by Landlord or consent by
Landlord allowing Tenant to make any Alterations or any inspection of
Alterations made by or for Landlord shall in any way be deemed, to be an
agreement by Landlord that the contemplated Alterations comply with any legal
requirements or insurance requirements or the certificate of occupancy for the
Building nor shall it be deemed to be a waiver by Landlord of the compliance by
Tenant of any provision of this lease.
(C) Tenant shall promptly reimburse Landlord for all fees, costs and
expenses including, but not limited to, those of architects and engineers,
incurred by Landlord in connection with the review of Tenant's plans and
specifications and inspecting the Alterations to determine whether the same are
being or have been performed in accordance with the approved plans and
specifications therefor and with all legal and insurance requirements. Copies of
bills evidencing such fees, costs and expenses will be provided to Tenant in a
timely manner upon Tenant's request.
55. Estoppel Certificate
Tenant, at any time, and from time to time, upon at least ten (10) days'
prior notice by Landlord, shall execute, acknowledge and deliver to Landlord,
and/or, to any other party, firm or corporation specified by Landlord
("Recipient"), a statement (1) certifying that this lease is unmodified and in
full force and effect (or, if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), (2) stating
the dates to which Fixed Rent and additional rent have been paid, (3) stating
whether or not there exists any defaults by Landlord under this lease and, if
so, specifying each such default, (4) confirming (if such is the case) that
Tenant has accepted possession of and is currently occupying the demised
premises for the conduct of business and that all improvements required to be
made by Landlord (if any) have been completed to Tenant's satisfaction, (5)
stating the commencement and expiration dates of this lease, (6) stating whether
or not there are any existing defenses to or offsets against Landlord's
enforcement of this lease and Tenant's obligation to pay Fixed Rent and
additional rent hereunder, and (7) furnishing any other information that may be
reasonably requested by the Recipient.
56. Holdover
In the event Tenant shall hold over after the expiration of the Term, the
parties hereby agree that Tenant's occupancy of the demised premises after the
expiration of the Term shall be upon all of the terms set forth in this lease
except that Tenant shall pay as a use and occupancy charge for the holdover
period an amount equal to the higher of (A) an amount equal to two times the pro
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rata Fixed Rent and additional rent payable by Tenant during the last year of
the Term; or (B) an amount equal to the then market rental value for the demised
premises.
57. Conditional Limitation
In the event that twice in any twelve (12) month period (A) a default of
the kind set forth in Section 17(1) shall have occurred or (B) Tenant shall have
defaulted in the payment of Fixed Rent or additional rent, or any part of
either, and Landlord shall have commenced a summary proceeding to dispossess
Tenant in each such instance, then, notwithstanding that such defaults may have
been cured at any time after the commencement of such summary proceeding, any
further default by Tenant within such twelve (12) month period shall be deemed
to be a violation of a substantial obligation of this lease by Tenant and
Landlord may serve a written three (3) days' notice of cancellation of this
lease upon Tenant and, upon the expiration of said three (3) days, this lease
and the Term shall end and expire as fully and completely as if the expiration
of such three (3). day period were the day herein definitely fixed for the end
and expiration of this lease and the Term and Tenant shall then quit and
surrender the demised premises to Landlord, but Tenant shall remain liable as
elsewhere provided in this Lease.
58. Limitation on Rent
If on the Commencement Date, or at any time during the Term, the Fixed
Rent or additional rent reserved in this lease is not fully collectible by
reason of any federal, state, county or city law, proclamation, order or
regulation, or any direction of any public officer or body pursuant to law and
of general application (collectively, "Rent Law"), Tenant agrees to take such
lawful steps as Landlord may reasonably request to permit Landlord to collect
the maximum rents that may be legally permissible from time to time during the
continuance of such Rent Law (but not in excess of the amounts reserved therefor
under this lease). Upon the termination of the effectiveness of such Rent Law,
Tenant shall pay to Landlord, to the extent permitted by the Rent Law, an amount
equal to (A) the Fixed Rent and additional rent that would have been paid
pursuant to this lease but for such Rent Law, less (B) the Fixed Rent and
additional rent paid by Tenant to Landlord during the period such Rent Law was
in effect.
59. Acceptance of Keys
If Landlord or Landlord's managing or rental agent accepts from Tenant one
or more keys to the demised premises in order to assist Tenant in showing the
demised premises for subletting or other disposition or for the performance of
work therein for Tenant or for any other purpose, the acceptance of such key or
keys shall not constitute an acceptance of a surrender of the demised premises
nor a waiver of any of Landlord's rights or Tenant's obligations under this
lease including, without limitation, the provisions relating to assignment and
subletting and the condition of the demised premises.
60. Security Deposit
(A) Landlord shall deposit the Security Deposit, if in cash, in an
interest-bearing account. Provided that Tenant is not then in default hereunder
after expiration of any applicable notice and/or grace period, Landlord will pay
the accrued interest on the Security Deposit, less a one (1%) percent per annum
administrative fee, to Tenant on or about January 1 of each year beginning on
January 1, 1999.
(B) Supplementing Article 34, Tenant may, at the execution of this lease
or at any time during the Term, replace the cash Security Deposit with an
irrevocable letter of credit (the "Letter of Credit") in the amount of the
Security Deposit issued by a New
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York City commercial bank acceptable to Landlord in its sole discretion, and in
the form of the letter of credit annexed hereto as Exhibit B, to be held by
Landlord as the Security Deposit in accordance with Article 34 and this Article
60. The Letter of Credit shall (i) initially expire not less than one (1) year
from the Commencement Date or the date of issuance if delivered to Landlord
thereafter, (ii) provide for automatic renewals for periods of not less than one
(1) year, and (iii) have a final expiration date not less than four (4) months
after the Expiration Date. Tenant shall pay to Landlord, on demand and as
additional rent hereunder, all fees and charges paid by Landlord to the bank
issuing the Letter of Credit in connection with the transfer of same to any
future owner of the Building. In the event of a default by Tenant in the
performance of any of the terms, provisions and conditions of this lease,
Landlord shall be permitted to draw down any portion or the entire amount of the
Letter of Credit and apply the proceeds or any part thereof in accordance with
Article 34 of this lease and retain the balance for the Security Deposit.
Landlord shall also have the right to draw down any portion or the entire amount
of the Letter of Credit in the event that Landlord receives notice that the date
of expiry of the Letter of Credit will not be extended by the issuing bank and
retain the proceeds for the Security Deposit. If Landlord shall have drawn
against the Letter of Credit and applied all or any portion thereof, or if
Landlord shall have applied any portion of any cash Security Deposit, then
Tenant shall deposit with Landlord, upon demand, a sufficient amount of cash to
bring the balance of the monies held by Landlord to the amount of the Security
Deposit. Tenant's failure to comply with the preceding sentence will entitle
Landlord to exercise all the same remedies as are available in the event of a
default in the payment of Fixed Rent.
If Tenant elects to replace the cash Security Deposit with an irrevocable
Letter of Credit, the provisions of Article 60 (A) of this lease shall not
apply.
61. Definitions of "Landlord" and "Owner"
The terms "Owner" and "Landlord," whenever used in this lease (including,
without limitation, in Article 31), shall have the same meaning.
62. Landmark Designation
Tenant is hereby notified that the premises are subject to the
jurisdiction of the Landmarks Preservation Commission. In accordance with
sections 25-305, 25-306, 25-309 and 25-310 of the Administrative Code of the
City of New York and the rules set forth in Title 63 of the Rules of the City of
New York, any demolition, construction, reconstruction, alteration or minor work
as described in such sections and such rules may not be commenced within or at
the premises without the prior written approval of the Landmarks Preservation
Commission. Tenant is notified that such demolition, construction,
reconstruction, alterations or minor work includes, but is not limited to, (a)
work to the exterior of the premises involving windows, signs, awnings,
flagpoles, banners and storefront alterations and (b) interior work to the
premises that (i) requires a permit from the Department of Buildings or (ii)
changes, destroys or affects an interior architectural feature of an interior
landmark or an exterior architectural feature of an improvement that is a
landmark or located on a landmark site or in a historic district.
63. Hazardous Materials
Tenant shall not cause nor permit Hazardous Materials (as defined below)
to be used, transported, stored, released, handled, produced or installed in or
from the demised premises, except that inflammable or combustible (but not
explosive) items may be brought into and used within the demised premises in
limited quantities to the extent currently needed for the operation of customary
office
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equipment, so long as done in compliance with all Laws. The term "Hazardous
Materials" shall mean, for the purposes hereof, any flammable, explosive or
radio-active materials, hazardous wastes, hazardous or toxic substances or
related materials, asbestos or any material containing asbestos, or any other
substance or material, as defined by any present or future Law, including,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, the Hazardous Materials Transportation Act,
as amended, the Resources Conservation and Recovery Act, as amended, Superfund
Amendment and Reauthorization Act of 1986 and in the regulations adopted and
publications promulgated pursuant to each of the foregoing. In the event of a
breach of the provisions of this Article 63, Landlord, in addition to all of its
rights and remedies under this lease and pursuant to Law, may require Tenant to
remove any such Hazardous Materials from the demised premises or the Building in
the manner prescribed for such removal by all requirements of Law. The
provisions of this Article 63 shall survive the expiration or sooner termination
of this lease.
64. Interconnections
(A) Subject to Landlord's prior approval, which will not be unreasonably
withheld, Tenant shall have the right to install and run both vertical and
horizontal communication interconnections, via conduit, wave guide and ceramic
duct, provided that such installation is performed in accordance with all
applicable Laws and the relevant provisions of this lease including, without
limitation, Articles 3, 6 and 54 and in accordance with plans and specifications
previously approved by Landlord. Prior to any cable pulls being installed
through any conduits running through other tenant spaces, Tenant shall present a
copy of an agreement between Tenant and such other tenant (reasonably
satisfactory to Landlord) whereby such other tenant consents to Tenant making
the proposed connection or other installation.
(B) All interconnections shall conform to the following specifications:
(1) The conduit shall be supported a minimum of every 10 linear
feet.
(2) The conduit shall be tagged each 15 linear feet, with letters
a minimum of 2-1/2 inches in height, as required by Landlord
in its approval letter.
(3) All penetrations of fire-rated partitions or slabs shall be
fire-stopped with a UL approved material of equal or greater
rating.
(4) Tenant shall inform the building manager on completion of the
installation for final inspection and approval.
(5) Tenant's sub-contractor must coordinate all work with the
building manager and other tenants affected by the work.
(6) All conduit shall be rigid conduit or elastic metal tubing.
Tenant acknowledges that the use of any other type of conduit
is inherently risky, particularly in an environment, like the
Building, that has very numerous conduit runs and that will
have many more. If, however, Tenant requests, and Landlord
permits, plastic flexible conduit (which will be permitted, if
at all, only for fiber cable), then Tenant acknowledges that
such installation will be at Tenant's sole risk, and Tenant
hereby agrees to indemnify Landlord and its partners, and the
respective directors, officers, agents and employees of
Landlord and its partners
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(collectively, the "Landlord Parties"), and to hold the
Landlord Parties harmless, against and from all loss, damage,
cost, liability or expense (including, without limitation,
reasonable attorneys' fees and disbursements) suffered or
incurred by Landlord by reason of any claim arising from the
installation and/or use of any such conduit or any damage
resulting to any cable installed therein, whether or not
arising in whole or in part from the negligence of any
Landlord Party.
65. Landlord's Access
Supplementing Article 13, upon reasonable prior notice to Tenant (which
need not be in writing), except in an emergency when no notice shall be
required, Landlord and other tenants, licensees and occupants of the Building
shall have access to the Building shafts and conduits located within the demised
premises.
66. Landlord's Option to Relocate Tenant
At any time prior to the execution and delivery of this lease, Landlord
shall have the right to relocate Tenant to other space located in the Building
(the "Substitution Space") of substantially comparable size and condition as the
demised premises, in which event this lease shall be modified by (i) deleting
all reference to the demised premises and the insertion of the Substitution
Space in place thereof, (ii) adjusting the Fixed Rent to an amount equal to the
rent per rentable square foot payable by Tenant under this lease multiplied by
the number of rentable square feet in the Substitution Space, and (iii) a
modification of the definition of Tenant's Proportionate Share (as currently
defined in Article 37 hereof) to accurately represent the percentage by which
the rentable area of the Substitution Space bears to the total rentable area of
the Building, and (iv) a modification of the definition of the Multiplication
Factor to represent accurately the number of rentable square feet in the
Substitution Space. In all other respects, the terms and conditions contained in
this lease (including escalations and base years) shall remain unmodified.
67. Miscellaneous
(A) Supplementing Article 13, Landlord agrees to consult with Tenant in
good faith in connection with the location of any water pipes that Landlord may
wish to install through the premises so as to minimize the potential for any
damage to Tenant's equipment.
(B) Landlord agrees, except in the event of an emergency, to give Tenant
notice (which notice need not be in writing and may be given to a responsible
person occupying the premises) at least 72 hours in advance of any planned
electric outage controlled by Landlord.
(C) Landlord will remove or cause to be removed the equipment presently
located on the set-back area adjacent to the demised premises promptly after the
owner thereof abandons its use of the same.
68. Set-Back Space
(A) Tenant shall have the exclusive right to use two (2) portions of the
set-back space on the l9th floor of the Building for the sole purpose of
locating a generator, fuel tank and/or HVAC equipment thereon, such portion
being an agreed 1,786 usable square feet located as shown hatched on Exhibit C
(the "Set-Back Space"). Tenant shall pay Fixed Rent of $17,860 per annum for the
Set-Back Space from and after the Rent Commencement Date. To the extent
applicable, the Set-Back Space shall be deemed to be part of the demised
premises and all of the provisions of this lease, including, without limitation,
Article 8 hereof, shall be
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applicable thereto. Tenant hereby agrees to repair any damage to the Set-Back
Space and to indemnify and save harmless Landlord from and against all loss,
damage, liability, cost and expense of any nature (including, without
limitation, reasonable attorneys' fees and expenses) by reason of accidents,
damage, injury or loss to any and all persons and property, or either,
whomsoever or whatsoever resulting from or arising in connection with Tenant's
use of the Set-Back Space.
(B) Landlord makes no representations concerning the condition of the
Set-Back Space or the equipment, if any, located thereon. Tenant agrees to
accept the Set-Back Space in its "as is" condition on the date hereof. Landlord
shall not be required to perform any work to prepare the Set-Back Space for
Tenant's occupancy.
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<PAGE> 28
EXHIBIT A
[GRAPHIC OMITTED]
[FLOORPLAN]
<PAGE> 29
EXHIBIT B
[Name and Address
of Landlord]
Re: Irrevocable Clean Letter of Credit
Gentlemen:
By order of our client, ____________________________, we hereby open our
clean irrevocable Letter of Credit No. ______ in your favor for an amount not to
exceed in the aggregate $__________ US Dollars effective immediately.
Funds under this credit are available to you against your sight draft
drawn on us mentioning thereon our Credit No. _________________.
This Letter of Credit shall expire one year from the date hereof;
provided, however, that it is a condition of this Letter of Credit that it shall
be deemed automatically extended, from time to time, without amendment, for one
year from the expiry date hereof and from each and every future expiry date,
unless at least sixty (60) days prior to any expiry date we shall notify you by
registered mail that we elect not to consider this Letter of Credit renewed for
any such additional period.
This Letter of Credit is transferable and may be transferred one or more
times. However, no transfer shall be effective unless advice of such transfer is
received by us in the form attached signed by you.
We hereby agree with you that all drafts drawn or negotiated in compliance
with the terms of this Letter of Credit will be duly and promptly honored upon
presentment and delivery of your draft to our office at ___________________ if
negotiated on or prior to the expiry date as the same may from time to time be
extended.
Except as otherwise specified herein, this Letter of Credit is subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500.
Very truly yours,
(Name of Bank)
By:
---------------------------------
<PAGE> 30
EXHIBIT B-1
Re: Credit Issued by
----------------------- ------------------------
Gentlemen:
For value received, the undersigned beneficiary irrevocably transfers to:
- --------------------------------------------------------------------------------
(Name of Second Beneficiary)
- --------------------------------------------------------------------------------
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in such letter
of Credit are transferred to the second beneficiary and the second beneficiary
shall have the sole rights as beneficiary thereof, including sole rights
relating to any amendments whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the second beneficiary without necessity of any consent of or notice
of the undersigned beneficiary.
The advice of such Letter of Credit is returned herewith, and we ask you
to endorse the assignment on the reverse thereof and forward it directly to the
second beneficiary with your customary notice of transfer.
Enclosed is remittance of $100.00 in payment of your transfer commission
and in addition thereto we agree to pay you on demand any expenses that may be
incurred by you in connection with this transfer.
Yours very truly,
SIGNATURE AUTHENTICATED
(Bank) Signature of Beneficiary
(Authorized Signature)
<PAGE> 31
EXHIBIT C
[GRAPHIC OMITTED]
[FLOORPLAN]
<PAGE> 1
[LETTERHEAD OF LE FROIS DEVELOPMENT]
THIS AGREEMENT OF LEASE, dated as of the 12th day of March, 1998, between
RICHARD R. LEFROIS, having an office and place of business located at 1020
Lehigh Station Road, Henrietta, New York, hereinafter described as "Landlord"
and Fibernet Telecom, Inc. a Corporation organized under the laws of the State
of Delaware, with an address of 121 Erie Canal Drive, Rochester, New York 14626,
hereinafter described as "Tenant".
WITNESETH:
1. DESCRIPTION
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord the
premises described on "Exhibit A" attached hereto, consisting of approximately
15,000 square feet of floor area located at 100 Town Centre Drive, Rochester,
New York 14623 (the "Premises").
2. TERM
(A). The term of this Lease (The "Lease Term") shall be seven (7) years, to
commence on July 1, 1998 and to end at midnight, June 30, 2005. In the event
Tenant shall elect to construct its own office space during the term of this
lease, or any extension, and shall use the services of Landlord as construction
contractor, Landlord agrees that the term of this lease shall end (and the
respective duties of the parties hereto shall terminate) when Tenant takes
beneficial occupancy of the new Premises construction by Landlord.
(B). The term "Lease Year" as used herein is defined to be a period of twelve
consecutive calendar months beginning July 1, 1998 of each year of the Lease
Term.
3. RENT
The rent during the term of this Lease shall be $110,000.00 annually, to be paid
in equal consecutive monthly installments of $9,166.67 in advance on the first
(1st) day of each month
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during the term hereof, without deduction, setoff or prior demand which rent
Tenant agrees to pay in lawful money of the United States, which shall be
legal tender in payment of all debts and dues, public and private, to the
Landlord, Mr. Richard R. LeFrois, P. 0. Box 92878, Department No. 102,
Rochester, New York 14692, or such other place as the Landlord may designate.
This Lease is granted and accepted upon the foregoing and upon the following
covenants and conditions and subject to the following restrictions, to all and
every one of which the parties consent; and each of the parties hereby expressly
covenants and agrees to keep, perform and observe all the terms, covenants and
conditions herein contained on its part to be kept, performed and observed.
4. USE
The Premises may be used and occupied exclusively by Tenant as a network center,
an office and warehouse. Tenant will not at anytime use or occupy the Premises
in violation of its approved use. No part of the Premises shall be occupied or
used by any persons for any purpose or in any manner so as to increase the
insurance risk or rates or prevent the obtaining of insurance; nor so that, in
accordance with any requirement or law or any public authority, the Landlord
shall be obligated, on account of the purpose or manner of said use or
occupation, to make any addition or alteration to or in the building. If, by
reason of Tenant's failure to comply with this provision, the fire insurance
rate at any time shall be higher than it otherwise would have been then Tenant
shall reimburse Landlord, as additional rent, for that part of all fire
insurance premiums thereafter paid by Landlord by reason or such violation by
Tenant.
5. LANDLORD'S REPAIRS
Landlord Shall Maintain and Repair:
1. All Structural Elements of the Premises.
2. Exterior walls.
3. Roofs.
4. Major Repairs to the Pipes, Fixtures.
Tenant is responsible for the maintenance of the appliances and equipment
which includes the HVAC units. As long as damages have not been caused by
tenant's failure to
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maintain appliances and equipment properly, Landlord shall be responsible
for major repairs or replacement to the appliances and equipment,
including the HVAC equipment.
As used herein, the term "major repairs" shall mean repairs costing more
than Five Hundred Dollars, ($500.00) individually or aggregating more than
One Thousand Dollars, ($1,000.00) in any lease year in respect of any one
such system.
6. UTILITIES
(A) Tenant shall pay, as additional rent, all charges for light, heat,
power, electric, gas, water, sewerage charges, pollution charges, Pure Water
charges, fuel charges and such other similar services furnished or used by
Tenant in connection with the Premises during the Lease Term.
(B) Landlord agrees to install separate utility meters for the Premises.
7. REMEDIES OF TENANT REGARDING PROVISION OF SERVICES AND UTILITIES
No diminution or abatement of rent or other compensation shall be claimed or
allowed for inconvenience or discomfort arising from the making of ordinary
repairs or improvements to the building or to its appliances except in the event
that such repairs are necessitated (i) by any failure by Landlord to carry out
its duties to repair and maintain the Premises hereunder, or (ii) by the
negligent, reckless or intentional act of Landlord, it's assigns, agents,
employees or guests. However, to the extent that any part of the Premises is
unavailable to Tenant as a result of the necessity to comply with any law,
ordinance or order of a governmental authority, the rent shall be apportioned
ratably. In respect to the various "services", if any, herein expressly or
impliedly agreed to, be furnished by the Landlord to the Tenant, it is agreed
that there shall be no diminution or abatement of the rent, or any other
compensation, for interruption or curtailment of such "services" when such
interruption or curtailment shall be due to accident, alterations or repairs
reasonably or necessary to be made or to some other cause, not gross negligence
on the part of the Landlord. No such interruption or curtailment of any such
"services" shall be deemed a constructive eviction. Any required repairs,
alterations, etc., shall be done with reasonable dispatch.
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8. PREPARATION OF PREMISES
Landlord's Improvements:
(A). Space to be divided into:
Approximately 10,000 square feet of finished office space.
Approximately 5,000 square feet of unfinished warehouse space.
(B). The finished office space to incorporate:
1. Office space to be open "bull pen".
2. The office area will have dropped ceilings with 2' x 4'
lay-ins and recessed lighting fixtures of sufficient candle
power to eliminate need of desk lighting
3. The office area will have nine (9) feet of drywall painted
4. Each office door will be equipped with different individual
locks and keys, but all locks "master Keyed" for the Branch
Manager only (including the door opening into the warehouse
area).
5. If Tenant desires window treatments, Tenant shall provide any
and all window treatments. Any interior window treatment shall
be per Tenants design, any exterior window treatment shall be
verticals to maintain a similar exterior appearance.
9. MAINTENANCE AND REPAIRS
Tenant (a) except as specifically set forth in section 5, shall, at the Tenant's
own expense, take good care of the Premises, and the pipes, fixtures,
appliances, equipment and appurtenances belonging thereto, and keep the same in
good order and repairs (if any) shall of comparable quality to the original
work; on default of Tenant to do such work, the Landlord may do it for Tenant's
account, and Tenant shall reimburse Landlord for the reasonable cost of such
repairs; (b) shall not cut or drill or otherwise deface or injure the building;
(c) shall not use or permit the use of the roof except as shall be expressly
permitted in writing by Landlord, including, without limitation, for the
installation thereon of any antenna, airlines, masts, or other radio or
television equipment; (d) shall not, without the Landlord's prior written
consent first obtained in each instance, permit any matter or thing to be
extended or projected from the window sash, window sill, cornice or fire escape
of the Premises; (e) shall, within thirty (30) days after the Landlord's demand
and submission to Tenant appropriate documentation thereof, pay to Landlord as
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additional rent hereunder, an amount equal to any increase, if any, in the
amount of the fire insurance premium applicable to the building for and during
the Demised term resulting from the Tenant's use and occupancy of the Premises
in violation of the use permitted in this Lease, or from the Tenant's failure to
comply with any requirements of law or the commercially reasonable
recommendation of Landlord's insurance carrier; (f) shall not, without the
Landlord's prior written consent first obtained in each instance which shall not
be unreasonably withheld, make alteration or addition to the electric wiring,
equipment, or appliances, including, without limitation, any heating, air
conditioning system, water systems, or gas pipe systems, or tap any mains or
pipes to supply water for refrigeration or air conditioning apparatus; (g) shall
not, without Landlord's prior written consent first obtained in each instance
which shall not be unreasonably withheld, make any alterations, decorations or
improvements in or to the Premises, provided however, Landlord's consent to
non-structural interior alterations or decorations shall not be unreasonably
withheld; (h) shall comply with all reasonable and uniform regulations and
orders of Landlord designated to promote the safety or good order of the
building; and (i) shall promptly discharge by filing the necessary bond, or
otherwise, any mechanic's lien or other lien filed against the Premises because
of any work or material done or furnished to the Tenant. All alterations,
additions or improvements made to the Premises by either party, including
railings, galleries, decorations, paneling and similar items, unless Landlord
shall otherwise elect in writing, shall become the property of Landlord and be
surrendered as part of the Premises at the expiration or earlier termination of
this Lease.
10. COVENANT AGAINST ASSIGNMENT AND SUBLETTING
(A) Without the previous written consent of the Landlord, neither the
Tenant, nor the Tenant's legal representatives or successors in interest by
operation of law or otherwise, shall assign or mortgage this Lease, or sublet
the whole or any part of the Premises or any part thereof to be used by others.
Any consent by Landlord to any act of assignment or subletting shall be held to
apply only to the specific transaction thereby authorized. Such consent shall
not be construed as a waiver of the duty of Tenant, or the legal representatives
or assigns of Tenant, to obtain from the legal representatives or assigns of
Tenant, to obtain from Landlord consent to any other or subsequent assignment or
subletting, or as modifying or limiting the rights of Landlord under the
foregoing covenant by Tenant not to assign or sublet without such consent. Any
material violation of any provision of this Lease, whether by act or omission,
by any assignee, subtenant, or undertenant, or occupant shall be deemed a
violation of such provision by Tenant, it being the intention and meaning of the
parties hereto that Tenant shall assume and be liable to Landlord for any and
all acts and omissions of any and all assignees, sub-tenants and under-tenants
and occupants. If this Lease be assigned, the Landlord may, and is hereby
empowered to collect rent from the assignee if the Premises or any part thereof
be underlet or
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occupied by any person or Corporation other than Tenant. Landlord, in the event
of Tenant's default may, and is hereby empowered to, collect rent from the
undertenant or occupant; in either of such events, Landlord may apply the net
amount received by it to the rent herein reserved, and no such collection shall
be deemed a waiver of the covenant herein against assignment and underletting,
or the acceptance of the assignee, undertenant, or a release of the Tenant from
the further performance of the covenants herein contained on the part of the
Tenant.
(B) Notwithstanding the provision of paragraph 10(A) hereof, the Tenant
may, without the Landlord's consent, assign this Lease to any parent, affiliated
or subsidiary corporation, provided such assignment does not relieve the
original Tenant of any liability hereunder.
11. RIGHT OF ENTRY
Tenant, during the term hereof, shall permit inspection upon reasonable prior
notice before entry of the demised Premises during reasonable business hours by
Landlord's agents or representatives, and by or on behalf of prospective
purchasers; and shall permit access by the Landlord, or Landlord's agents or
representatives during reasonable hours for the purpose of making repairs,
renovations or decorations.
12. COVENANT TO SURRENDER; REMOVAL OF PERSONAL PROPERTY
On the last day of the Lease Term or on the sooner termination thereof, Tenant
shall peaceably and quietly leave, surrender and yield up unto the Landlord all
and singular the Premises broom-clean and in good order and repair, ordinary
wear and tear and damage by fire, condemnation or other casualty as is insurable
under present or future standard forms of fire and extended coverage insurance
policies, excepted, together with all alterations, additions and improvements
which may have been made upon the Premises with Landlord's permission except
movable furniture or movable trade fixtures put in at the expenses of Tenant. If
the last day of the Lease Term falls on Sunday, this Lease shall expire on the
business day immediately preceding it. Tenant, on or before said date, shall
remove all its property from the Premises, and all property not so removed shall
be deemed abandoned by Tenant. If said Premises be not surrendered at the end of
the term, Tenant shall make good to Landlord all reasonable costs which Landlord
shall actually incure by reason thereof
13. FIRE OR CASUALTY DAMAGE
In case of damage to the Premises or the building of which the Premises are a
part by fire, or other casualty as is insurable under present or future standard
forms of fire and extended coverage insurance policies, Landlord, unless it
shall otherwise elect as hereinafter provided,
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shall repair the same with reasonable dispatch after written notice of damage.
If the Premises, or any part thereof, are damaged by fire, enemy action, or
other casualty to such an extent as to be rendered untenantable, but are,
nevertheless, repaired by Landlord, then the rent shall be abated to an extent
corresponding with the time during which and the extent to which said Premises
may have been untenantable. If such repairs, however, are delayed because of
Tenant's failure to adjust Tenant's own insurance claim, no reduction shall be
made beyond a reasonable time allowed for such adjustment. If the Landlord in
its exclusive discretion, shall decide, within a reasonable time after the
occurrence of any such fire, enemy action, or other casualty, to demolish,
rebuild or reconstruct the building, then, upon at least sixty (60) days written
notice given by Landlord to Tenant, this lease shall terminate on a date to be
specified in such notice as if that date had been originally fixed as the
expiration date of the Lease Term, and the rent shall be adjusted as of the time
of the occurrence of any such fire, enemy action, or other casualty. Tenant
shall give immediate notice to Landlord in case of fire or other casualty or in
the event of accidents to or defect in any fixtures or equipment of the
building. Landlord, for itself and its insurers, hereby releases Tenant with
respect to any liability (including that deriving from the fault or neglect of
Tenant, assignees, sub-tenants, its agents, employees or other persons under its
or their direction or control) which Tenant might otherwise have for any damage
to the building or the Premises by fire, explosion, or any other perils covered
by Landlord's insurance, occurring during the Lease Term. Whenever Landlord
elects to insure the Premises or the building against fire or other casualty
with an insurance company selected by Landlord, Landlord shall cause all
policies evidencing such insurance to include a provision permitting such
release of liability if such a provision is obtainable from such insurer at no
additional expense to Landlord. If such insurer will not include such a
provision in said policy, or if the inclusion of such provision in such policy
would involve an additional expense for Landlord, Landlord shall so advise
Tenant within a reasonable time. Where such a provision is obtainable from such
insurer and Tenant notifies Landlord in writing within a reasonable time
thereafter the Tenant desires Landlord to cause such a provision to be included
in such policy at the expense of Tenant, Landlord shall cause such a provision
to be included, and Tenant agrees to pay promptly all reasonable expenses
incurred by Landlord as a result of such inclusion.
In case Landlord shall fail to complete such repairs within ninety (90) days
from the date of such damage, the Tenant may at any time after such ninety (90)
day period give Landlord thirty (30) days notice in writing of termination of
this lease, then at the expiration of such thirty day period, this lease shall
terminate as completely as if that were the date fixed for expiration of the
term of this lease unless, Landlord shall have completed such repairs prior to
the expiration of such thirty day period.
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14. CONDEMNATION
If the whole or a substantial part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof by a public body vested with the power of eminent
domain, then, when possession shall be taken thereunder of the Premises, or any
part thereof, the term herein demised and all rights of Tenant hereunder shall
immediately cease and terminate, and the rent shall be adjusted as of the time
of such termination.
15. RELEASE FROM LIABILITY IF UNABLE TO PERFORM
In case Landlord is prevented from making any repairs, decorations or installing
any fixtures or articles of equipment, or performing any other covenant or duty,
whether expressed herein or implied, to be performed on Landlord's part, due to
the Landlord's inability to obtain, or difficulty in obtaining, labor or
materials necessary thereof, or due to any governmental rules or regulations
relating to the priority of national defense requirements or due to any other
cause beyond Landlord's control, Landlord shall not be liable to Tenant for
damages resulting therefrom; nor shall the same give rise to a claim in the
Tenant's favor that such failure constitutes actual or constructive, total or
partial eviction from the Premises.
16. INSURANCE
(A) Tenant covenants and agrees, at its sole cost and expense, throughout
the duration of this Lease, to obtain, keep and maintain in full force and
effect for the mutual benefit of Landlord and Tenant, comprehensive liability
insurance claims for damage to persons or property arising out of the use and
occupancy of the Premises or any part or parts in limits not less than One
Million Dollars, ($l,000,000.00) for a combined single limit bodily injury,
property damage policy. Such public liability policy or policies shall name
Landlord as an additional insured. Tenant will supply Landlord with certificates
of insurance evidencing the term of this Lease prior to taking occupancy.
(B) All insurance provided for in this paragraph 16 may be in the form of
a general coverage, floater policy or so called blanket policies which may be
furnished by Tenant, or the parent corporation of Tenant or any related entity.
(C) Landlord shall keep the building containing the Premises insured
against loss or damage by fire with extended coverage endorsement in an amount
not less than 80% of the full insurable value thereof. Tenant agrees to pay its
proportionate share of the cost of said insurance during the term hereof. Said
proportionate share shall be determined by multiplying the cost of said
insurance by a fraction, the numerator of which shall be the square foot area of
the Premises and the denominator the total rentable square foot area of the
building of which the Premises are
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a part. A statement of the cost of said insurance shall be rendered to Tenant
and shall be payable on or before the end of the month in which said statement
is rendered.
17. INDEMNITY
Except as otherwise provided in Section 13 hereof, Tenant shall indemnify
Landlord against any reasonable expense, loss or liability paid, suffered or
incurred as the result of any material breach by Tenant, Tenant's agents,
servants, employees, contractors, invitees or licensees, of any covenant or
condition of this Lease, or the carelessness, negligence or improper conduct of
Tenant, Tenant's agents, servants, employees, contractors or invitees. Tenant's
liability under this Lease extends to the acts and omissions of any sub-tenant,
and any agent, servant, employee, invitee or licensee of any such sub-tenant.
18. WAIVER OF SUBROGATION
Tenant hereby releases Landlord from any and all liability for any loss or
damage caused by fire, or other casualty to the property of Tenant on the
Premises or the contents of the Premises even if such fire or other causality
shall be brought about by the fault or negligence of Landlord or its agents, to
the extent that such liabilities and/or damages are actually reimbursed by
Landlord's insurance.
19. MECHANIC'S LIEN
Tenant shall not do or suffer anything to be done whereby the Premises may be
encumbered by any mechanic's lien and shall, whenever and as often as any
mechanic's lien is filed against the Premises for labor or material furnished or
to be furnished to Tenant, discharge the same of record within ten (10) days
after the date of filing. Notice is hereby given that Landlord shall not be
liable for any labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's or other lien for any such labor or materials
shall attach to or affect the reversionary or other estate or interest of
Landlord in and to the Premises herein demised.
20. DEFAULT CLAUSE
Each of the following shall be deemed a default by Tenant and a breach of this
Lease:
(A) Tenant's failure to make payment for the rent herein reserved or any
part thereof, for a period of ten (10) days after written notice delivered to
the Tenant.
(B) Failure by Tenant to perform any other material covenant or condition
of this Lease on the part of Tenant to be performed for a period of thirty (30)
days after service of notice thereof by Landlord on Tenant, provided however,
that if the nature of Tenant's default is such that it cannot be cured solely by
payment of money and that more than thirty (30) days may be
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reasonably required for such cure, then Tenant shall not be deemed to be in
default if Tenant shall commence such cure within such thirty (30) day period
and shall thereafter diligently prosecute such cure to completion.
21. REMEDIES IN EVENT OF DEFAULT; NOTICE OF TERMINATION
In the event of any such default of Tenant, and at any time thereafter, Landlord
may serve a written notice upon Tenant that Landlord elects to terminate this
Lease upon a specified date not less than thirty (30) days after the date of the
serving of such notice, and this Lease shall then expire on the date so
specified as if that date had been originally fixed as the expiration date of
the term herein granted. No defaults shall be deemed waived unless in writing
and signed by Landlord.
22. RE-ENTRY
In the event this Lease shall be terminated as hereinbefore provided, or by
summary proceedings or otherwise, or in the event that the Premises shall be
abandoned by Tenant, during the Lease Term, Landlord, or its agents, servants or
employees, may, immediately or any time thereafter, re-enter and resume
possession of said Premises or such part thereof, and remove all persons and
property therefrom, either by summary dispossess proceedings or by a suitable
action or proceedings at law.
23. RELETTING
In the event this Lease shall be terminated as provided in Article 21 hereof, by
summary proceedings or otherwise, or if the Premises shall be abandoned by
Tenant, or shall become vacant during the Term hereof, Landlord may, in its own
name, but as agent for Tenant if the Lease be not terminated, or if the Lease is
terminated, in its own behalf, relet the whole or any portion of said Premises,
for any period equal to or greater or less than the remainder of the original
Lease Term, for any sum which it may deem reasonable, to any tenant which it may
deem suitable and satisfactory, and for any use and purpose which it may deem
appropriate. In no event, however, shall Landlord be under any obligation to
relet the Premises for any purpose, other than that specified in this Lease
which the Landlord may regard as injurious to the Premises or to any tenant
which Landlord, in the exercise of reasonable discretion, shall deem to be
objectionable.
24. MEASURE OF DAMAGES IN EVENT OF DEFAULT
In the event that this Lease be terminated by summary proceeding, or otherwise,
or if the Premises are abandoned, and whether or not the Premises be relet,
Landlord shall be entitled to recover from Tenant and Tenant shall pay to
Landlord, the following:
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(A) An amount equal to all reasonable expenses, if any, including
reasonable counsel fees incurred by the Landlord in recovering possession of the
Premises, and all reasonable costs and charges for the care of said Premises
while vacant, not otherwise the obligation of Landlord, which damages shall be
due and payable by Tenant to Landlord at such time or times as such expenses are
actually incurred by Landlord; and
(B) An amount equal to the amount of all rent and additional rent reserved
under this Lease, less the net rent, if any, collected by Landlord on reletting
the Premises, which shall be immediately due and payable by Tenant to Landlord
and Landlord shall be entitled thereupon to recover same from Tenant on the
several days on which the rent and additional rent reserved in this Lease would
have become due and payable; that is to say, upon each of such days Tenant shall
pay to Landlord the amount of deficiency then existing. Such net rent collected
on reletting by Landlord shall be computed by deducting from the gross rents
collected all reasonable expenses incurred by the Landlord in connection with
the reletting, but shall not include the cost of performing any covenant
contained in paragraph 24.
Without any previous notice or demand, separate actions may be maintained by
Landlord against Tenant from time to time to recover any damages, which, at the
commencement of any such action, have then or theretofore become due and payable
to Landlord under paragraph 24, without waiting until the end of the original
Lease Term.
25. COVENANTS INDEPENDENT
Each and every covenant contained in this Lease shall be deemed separate and
independent, and not dependent on other provisions of this Lease or the use and
occupation of the Premises by Tenant, and the performance of any such covenant
shall not be considered to be rent or other payment for the use of said
Premises.
26. LANDLORD MAY CURE DEFAULTS
In the event of any material breach hereunder by Tenant, Landlord shall have the
right to cure such breach for the account and at the expense of Tenant. However,
Landlord shall give Tenant prior written notice of its intention to exercise its
said right hereunder and a reasonable opportunity for Tenant to cure any such
breach. If Landlord at any time, by reason of such breach, is compelled to pay,
any sum of money or do any act which will require the payment of any sum of
money, or is compelled to incur any expense, including reasonable attorney's
fees, in instituting, prosecuting and/or defending any action or proceeding to
enforce Landlord's rights hereunder, the sum or sums so paid by Landlord, with
all interest, and costs, shall be deemed to be additional rent hereunder and
shall be due from Tenant to Landlord on the first day of the month following the
incurring of such respective expenses.
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<PAGE> 12
27. REAL ESTATE TAXES AND ASSESSMENTS
(A) Tenant shall in all instances, pay as additional rent a portion of all
real estate taxes including extraordinary and/or special assessments (and all
costs and fees incurred by Landlord in contesting the fees) which may be levied
or assessed by apparent lawful taxing authority against the land, building and
all other improvements of which the Premises are a part. Such portion shall be
determined as follows: the Tenant shall pay that portion of such taxes as shall
be equal to the product obtained by multiplying said taxes by a fraction, the
numerator of which shall be the square foot area of the Premises and the
denominator the total rentable square feet of the building of which the Premises
are a part. Statement of such additional rent, including all taxes levied or
assessed in each calendar year, shall be rendered to Tenant and shall be paid on
or before the end of the month in which the statement is rendered, but in no
event shall such payment be due fewer then ten (10) days from the date such
statement is received. A tax bill submitted to Tenant shall be conclusive
evidence of the amount of taxes assessed or levied. Such additional rent
attributable to the year in which the term of this lease terminates shall be
apportioned from the date of the commencement of the term of this lease to the
end of the calendar year in which the lease commences or from the beginning of
the calendar year in which this lease terminates to the date of the termination
of the term of this Lease as the case may be and shall be paid within ten (10)
days after demand therefore. Each tax or assessment levied during the calendar
years in which this lease commences and terminates shall be included in the
computation of Tenant's portion regardless of the date of the commencement or
termination of the term of this lease.
(B) Tenant shall pay before delinquency any and all taxes, assessments,
license fees and public charges levied, assessed or imposed and which become
payable during the lease term upon leasehold improvements, fixtures, furniture,
appliances and personal property installed or located in or on the Premises. If
any such taxes, assessments, license fees, or public charges are not levied,
assessed or imposed separately upon such property, a fair and equitable
allocation of such taxes, assessments, license fees or public charges shall be
made between such property included in the same tax assessment or other bill.
28. LATE CHARGES
A charge equivalent to five percent (5%) of the payment amount will be due for
any rent received after the 7th day of the month. Notwithstanding the above
charges, this Lease shall be considered in default if payment is not received
within ten (10) days of receipt of notice from Landlord that such payment is
due.
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<PAGE> 13
29. COMMON AREAS
(A) Common areas and facilities furnished by Landlord shall include
parking area, access driveways, and such other areas, facilities, and exterior
utilities as may be furnished by Landlord and designated for the benefit of the
Tenants, all of which areas and facilities shall be subject to exclusive control
and management by Landlord. Landlord shall have the right from time to time to
establish, modify and enforce all reasonable rules and regulations in respect to
such areas, facilities and exterior utilities and use thereof
(B) Tenant shall pay to Landlord as additional rent a portion (as
determined pursuant to Paragraph (C) hereof) of each year's cost of the snow
plowing for the parking areas and sidewalks, landscaping, lawn maintenance,
driveway maintenance and exterior utilities.
(C) At the termination of each maintenance year for snow plowing,
landscaping, lawn maintenance, driveway maintenance and exterior utilities, the
Landlord shall submit to Tenant a statement of the operating cost for such
services. Tenant shall pay as Tenant's portion of annual operation cost of the
common area an amount equal to the product obtained by multiplying the estimate
by a fraction, the numerator of which is the square foot area of the Premises
demised by this Lease and the denominator of which is the square foot area of
the total leasable area of the building of which the Premises are a part.
30. HOLDING OVER
Any holding over after the expiration of the term hereof, with the consent of
the Landlord, shall be construed to be a tenancy from month to month at the
rents herein specified (pro-rated on a monthly basis) and shall otherwise be on
the terms and conditions herein specified so far as applicable.
31. BANKRUPTCY
In order to more effectively secure to the Landlord the rent and other terms
herein provided, it is agreed as a further condition of this Lease that the
filing of any petition in bankruptcy, or assignment for the benefit of creditors
by or against the Tenant or any guarantor of Tenant's obligations hereunder
shall be deemed to constitute a breach of this Lease, and thereupon ipso
facto and without entry or any other action by the Landlord this Lease shall
become and be terminated and notwithstanding any other provision of this Lease
the damages for such breach in an amount equal to the amount of the rent
reserved in this Lease for the residue to the term hereof, less the fair rental
value of the Premises for the residue of said term plus all costs of rerenting.
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<PAGE> 14
32. SIGNS
Tenant shall not place, erect or install any signs on the outside or the inside
or upon the roof of the building or allow printed displays or show window
lettering in such manner as to be seen from the exterior of building without
prior written approval by Landlord. Any such sign permitted shall comply with
sign regulations which shall be established by Landlord. All such signs shall be
maintained in good and safe condition and appearance by the Tenant at its own
expense. Tenant shall repair damage to the Premises, either inside or outside,
resulting from the erection, maintenance or removal of said signs. Landlord
shall allow Tenant to place a building mounted sign similar to the sign for
Erdman Anthony Engineers on the building located at 2165 Brighton Henrietta
Townline Road. Landlord to approve sign plans prior to installation.
33. VENDING MACHINES
Tenant may, if Tenant so elects, install on the Premises and operate vending
machines to dispense hot and cold beverages, ice cream, candy and cigarettes.
Such machines shall be maintained in a neat and sanitary condition and shall
comply with all applicable laws and ordinances. Any contract entered into by
Tenant with third parties or the installation and/or maintenance of such vending
machines shall provide that Landlord shall have no liability in connection
therewith.
34. RULES
In the event that Landlord receives written notification that the Premises do
not conform to applicable requirements of law, requirements of duly constituted
authority, or any Board of Underwriters, Landlord shall cause the Premises to be
brought into compliance with said laws or regulations. In the event that Tenant
receives written notice that it is not in full compliance with all applicable
statutes, ordinances, rules and regulations pertaining to Tenant's use of the
Premises, or to any Tenant's alterations or additions to the Premises, then
Tenant shall fully comply with all such applicable statutes or rules.
35. REMEDIES CUMULATIVE
The rights given to Landlord herein are in addition to any rights that may be
given to Landlord by any statute or otherwise.
36. WAIVER OF RIGHT OF REDEMPTION
Tenant, for itself and for all persons claiming through or under it, hereby
expressly waives any and all rights which are or may be conferred upon Tenant by
a present or future law to redeem
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<PAGE> 15
said Premises, or to any new trial in any action of ejectment under any
provision of law, after reentry thereupon by Landlord. If Landlord shall acquire
possession of said Premises by summary proceedings, or in any other lawful
manner without judicial proceedings, it shall be deemed a reentry within the
meaning of that word as used in this Lease.
37. SECURITY DEPOSIT
Tenant has deposited with Landlord the sum of $9,116.67 as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this Lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this Lease, including,
but not limited to, the payment of rent and additional rent, Landlord may at its
option use, apply or retain the whole or any part of the security so deposited
to the extent required for the payment of any rent and additional rent or any
sum as to which Tenant is in default or for any sum which Landlord may expend or
may be required to expend by reason of Tenant's default in respect of any of the
terms, covenants and conditions of this Lease, including but not limited to, any
damages or deficiency in the reletting of the Premises whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Landlord. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this Lease, the security
shall be returned, with interest as required under New York Law, to Tenant after
the date fixed as the end of the Lease and within a reasonable time after
delivery of entire possession of the demised Premises to Landlord. In the event
of a sale of the land and building or leasing of the buildings, of which the
demised Premises form a part, Landlord shall have the right to transfer the
security to the vendee or lessee, and Landlord shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Landlord solely for the return of said security; and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new Landlord. Tenant further covenants that it will
not assign or encumber or attempt to assign or encumber the monies deposited
herein as security and that neither Landlord nor its successors or assigns shall
be bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
38. SUBORDINATION TO MORTGAGES
This lease is and shall be subject and subordinate to any mortgage or mortgages
and to any extensions or modifications thereof now in force or which shall at
any time be placed upon the Premises or any part thereof or the building of
which the Premises is a part of. The Tenant agrees that it will, upon demand,
execute and deliver such instruments as necessary to effect more fully such
subordination of this lease to the lien of any such mortgage or mortgages as
shall be desired by any mortgagee or proposed mortgagee and in the event of the
failure of the lessee
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<PAGE> 16
to execute such instrument, the Lessee hereby nominates and appoints the Lessor
attorney-in-fact for the purpose of executing any such instrument of
subordination.
39. COVENANT OF QUIET ENJOYMENT
If and so long as Tenant pays the rent and additional rent reserved by this
Lease, and performs and observes all the covenants and provisions hereof, Tenant
shall quietly enjoy the Premises, subject, however, to the terms of this Lease.
40. ENTIRE AGREEMENT
This instrument contains all the agreements and conditions made between the
parties hereto and supersedes all prior or other leases, agreements and
representations in connection with the Premises and may not be modified orally
or in any other manner than by an agreement in writing, signed by all the
parties hereto or their respective successors in interest. The receipt of rent
by Landlord, with knowledge of any breach of this Lease by Tenant or of any
default on the part of Tenant in this observance or performance of any of the
conditions or covenants of this Lease shall not be deemed to be a waiver of any
provision of this Lease. If the Tenant makes any payment of any amount less than
that due hereunder, Landlord, without notice, may accept the same as a payment
on account; Landlord shall not be bound by any notation on any check involving
such payment or any statement in any accompanying letter. No failure on the part
of Landlord to enforce any covenant herein contained nor any waiver of any right
thereunder by Landlord, unless in writing, shall discharge or invalidate such
covenant or provision or affect that right of Landlord to enforce the same in
the event of any subsequent breach or default. The receipt by Landlord of rent
or any other sum of money or any other consideration hereunder paid by Tenant
after the termination, in any matter of the term herein demised shall not
reinstate, continue, or extend the term herein demised, or destroy, or in any
manner impair the efficiency of any such notice of termination as may have been
give hereunder by Landlord or Tenant prior to the receipt of any such sum of
money or other consideration, unless so agreed to in writing and signed by
Landlord. Neither acceptance of the keys nor any other act or thing done by
Landlord or any agent or employee during the term herein demised shall be deemed
to be an acceptance of a surrender of said Premises, excepting only an agreement
in writing signed by Landlord accepting or agreeing to accept such a surrender.
41. EFFECT OF CONVEYANCE
The term "Landlord" as used in this Lease, means only the present Owner of the
Premises so that, in the event of any sale of the Premises or in the event of a
lease by Landlord of the Premises subject to this Lease or assignment by
Landlord of this Lease, Landlord shall be and hereby is entirely freed and
relieved of all covenants and obligations of the Landlord hereunder
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<PAGE> 17
arising subsequent to any such transfer and provided any such transferee assumes
in writing the obligations of Landlord hereunder and a copy of such assumption
is delivered to Tenant, and it shall be deemed and construed without further
agreement between the parties or between the parties and the purchaser at any
such sale or the new lessee of the Premises or assignee of this Lease that such
purchaser or said new lessee, or said assignee has assumed and agreed to carry
out any and all covenants and obligations of Landlord hereunder. If any landlord
named herein be acting in a fiduciary or representative capacity, the
termination, in whole or in part, of such capacity shall be deemed a transfer
within the meaning of this paragraph.
42. TOWN REGULATIONS AND OBLIGATIONS
Tenant shall have full responsibility of complying with all Town regulations
including but not limited to, use as described by zoning ordinances.
43. CONSTRUCTION OF LEASE
Words of any gender used in the Lease shall be held to include any other gender,
and words in the singular number shall be held to include the plural, when the
sense requires. Consents required of Landlord hereunder shall not be
unreasonably withheld or delayed.
44. RIGHTS OF SUCCESSORS AND ASSIGNS
The covenants and agreements contained in the within Lease shall apply to, inure
to the benefit of, and be binding upon the parties hereto and upon their
respective successors in interest and legal representatives, except as expressly
otherwise hereinabove provided.
45. LEASE RENEWAL
Lease may be extended for an additional term of five (5) years upon the same
terms, covenants and conditions herein except this clause relating to renewal
and to rental (the "renewal term"). Lease rent shall be adjusted from year I
using CPI Index or a 15% increase, whichever is less. This adjustment shall be
for years 8 through 12. Notification of the Lease extension shall be 180 days
prior to Lease termination date, by written notice from Tenant to Landlord and
provided Tenant at the time of such notice shall not be in default in the terms
hereof.
46. ENVIRONMENTAL LAWS
(A). Tenant covenants and agrees as follows:
(1). Tenant shall keep the Premises free of all Hazardous Substances and
shall not knowingly cause or permit the Premises or any part thereof to be used
for the treatment, generation, transportation,
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<PAGE> 18
processing, production, disposal, storage or handling of any hazardous
substances, and shall promptly remove from the Premises and shall dispose of all
Hazardous Substances by-products, arising from Tenant's use of the Premises, in
compliance with all applicable Environmental Laws.
(2). Tenant shall comply with all applicable Environmental Laws and shall
obtain and comply with all Environmental Permits relating to Tenant's use of the
demised premises.
(3). Tenant shall not cause or permit any change to be made in the present
or intended use of the demised premises which would (1) involve the storage,
treatment, generation, transportation, processing, handling, production or
disposal of any Hazardous Substance or the use of the demised premises as a
landfill or other waste disposal site or for military, manufacturing or
industrial purposes or for the storage of petroleum or petroleum based products,
(2) violate any applicable Environmental Law, (3) constitute non-compliance with
any Environmental Permit.
(4). Each party hereto agrees to provide the other with a copy of all
notifications which it gives or receives with respect to any past or present
release or the threat of a release of any Hazardous Substance on, at or from the
demised premises given by or on behalf of Tenant to any federal, state or local
governmental agencies or authorities or received by or on behalf of Tenant from
any source whatsoever.
(5). Tenant shall at all times allow Landlord and its officers, employees,
agents, representatives, contractors and subcontractors reasonable access to the
demised premises for the purpose of ascertaining site conditions, including, but
not limited to, subsurface conditions.
(6). If at any time Tenant obtains any evidence or information which
suggests that potential environmental problems may exist at the demised premises
arising directly from Tenant's use of the demised premises, Landlord may require
that a full or supplemental environmental inspection and audit report with
respect to the demised premises of a scope and level of detail satisfactory to
Landlord be prepared by an environmental engineer or other qualified person
acceptable to Landlord, at Tenant's sole cost and expense. If said audit report
indicates the presence of any Hazardous Substance or a release or the threat of
a release on, at or from the demised premises arising from Tenant's use of the
demised premises, Tenant shall promptly undertake and diligently pursue to
completion all necessary, appropriate and legally authorized investigative,
containment, removal, clean up and other remedial action, using methods
recommended by the environmental engineer or other person who prepared said
audit report and acceptable to the appropriate federal, state and local
regulatory authorities.
(B). (1). Tenant covenants and agrees, at its sole cost and expense, to
indemnify, protect, defend and save harmless Landlord from and against any and
all damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, actions,
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<PAGE> 19
proceedings, costs, disbursements and/or expenses (including, without
limitation, attorneys' and experts' fees, expenses and disbursements) of any
kind or nature whatsoever which may at any time be imposed upon, incurred by or
asserted or awarded against Landlord and Tenant relating to, resulting from or
arising out of(i) Tenant's use of the demised premises for the storage,
treatment, generation, transportation, processing, handling, production or
disposal of any Hazardous Substance or as a landfill or other waste disposal
site or for military, manufacturing or industrial purposes or for the storage of
petroleum or petroleum based products, (ii) the presence of any Hazardous
Substance or a Release or the threat of a release on, at or from the demised
premises arising directly from Tenant's use of the demised premises, (iii) the
failure to promptly undertake and diligently pursue to completion all necessary,
appropriate and legally authorized investigative, containment, removal, clean up
and other remedial actions with respect to a Release or the threat of a Release
on, at or from the demised premises arising from Tenant's use of the demised
premises, (iv) human exposure to any Hazardous Substance, noises, vibrations or
nuisances of whatever kind to the extent the same arise from the use and
operation of the demised premises, (v) a violation by Tenant of any applicable
Environmental Law, (vi) noncompliance by Tenant with any Environmental Permit or
(vii) a material misrepresentation or inaccuracy in any representation or
warranty or a material breach of or failure to perform any covenant made by
Tenant in this Paragraph 46.
(2). Landlord covenants and agrees, at its sole cost and expense, to
indemnify and hold Tenant harmless from and against any and all damages, losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
judgment, suits, actions, proceedings, costs, disbursements and/or expenses
(including, without limitation, attorneys' and experts' fees, expenses and
disbursements) of any kind or nature whatsoever which may at any time be imposed
upon, incurred by or asserted or award against Landlord and Tenant arising out
of (I) the presence or release of any Hazardous Substance on or about the
Premises as of the date hereof; or (ii) the presence of any Hazardous Substance
on or about the Premises as result of any act or omission by Landlord or any
third party.
(C). All capitalized terms used in this Section and not heretofore defined
shall have the meanings set forth below.
"Environmental Laws" means all federal, state and laws, statutes,
ordinances and codes governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of hazardous
substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities promulgated with respect thereto.
"Environmental Permits" means all permit, licenses, approvals,
authorizations, consents or registrations required by any applicable
Environmental Law in connection with the ownership, use and/or operation of the
demised premises for the storage, treatment, generation,
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transportation, processing, handling, production or disposal of hazardous
substances or the sale, transfer or conveyance of the demised premises.
"Hazardous Substance" means, without limitation, any flammable explosive,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyl's, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials,
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section
6901, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
2601, et seq.), Articles 15 and 27 of the New York State Environmental
Conservation Law or any other applicable Environmental Law and the regulations
promulgated thereunder.
"Release" has the same meaning as given to that term in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Section 9601, et seq.), and the regulations promulgated thereunder.
47. RIGHT OF FIRST OFFER
Tenant shall have a right of first offer to lease the adjacent space to the
south of their existing space, should this space become available during the
term of the lease
(a). Exercise of Right to Lease REQ Premises. Landlord shall give Tenant
written notice ("Landlord's Notice") at the time that Landlord intends to offer
the REQ Premises for lease. Landlord's Notice shall set forth the rent
applicable to such RFO Premises, the improvements to the REQ Premises which
Landlord intends to make, the commencement date for the RFO Premises and the
expiration date for the REQ Premises. Tenant shall have the right, exercisable
upon written notice given to Landlord within ten (10) days after the giving of
Landlord's Notice, to lease the REQ Premises. If Tenant fails to give such
notice in the time period set forth herein, Tenant shall have no further right
to lease the REQ premises pursuant to this Section 47.
(b) Lease Provisions Applying to REQ Premises. The leasing to Tenant of
the REQ Premises shall be upon all of the terms and conditions of this Lease
unless stated otherwise in Landlord's Notice and except that the REQ Premises
shall be delivered by Landlord and accepted by Tenant in accordance with the
terms set forth in Landlord's Notice.
(c) Execution of Lease Amendments. Notwithstanding the fact that Tenant's
exercise of the above-described right of first offer to lease REQ Premises shall
be self-executing, the parties hereby agree promptly to execute a lease
amendment reflecting the addition of the REQ Premises, the adjustments in rent
as well as any modifications of the provisions of the Lease as
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shall be necessary to properly include the RFO Premises within the terms and
conditions of this Lease.
48. NOTICES
All notices shall be sent by registered mail, return receipt requested, to the
following address:
LANDLORD
Mr. Richard R. LeFrois
1020 Lehigh Station Road
P.O. Box 230
Henrietta, New York 14467
TENANT
Fibernet Telecom, Inc.
121 Erie Canal Drive
Rochester, New York 14626
Any notice shall be considered to have been given, in the case of letter, at
5:00 p.m. local time on the date set forth on the post mark appearing on the
envelope.
49. PAYMENTS
All payments shall be sent by to the following address:
MR. RICHARD R. LEFROIS, P.O. Box 92878, Department No. 102, Rochester, New
York 14692
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the
day and year first above written.
RICHARD R. LEFROIS
LANDLORD By: /s/ Richard R. LeFrois
---------------------------------
Mr. Richard R. LeFrois, Landlord
3-19-98
---------------------------------
Date
WITNESS By: /s/ [ILLEGIBLE]
---------------------------------
3-18-98
---------------------------------
Date
FIBERNET TELECOM, INC.
TENANT By: /s/ [ILLEGIBLE]
---------------------------------
3-17-98
---------------------------------
Date
WITNESS By: /s/ [ILLEGIBLE]
---------------------------------
3-17-98
---------------------------------
Date
22
<PAGE> 1
GENERAL AGREEMENT
BETWEEN
LOCAL FIBER. LLC
AND
LUCENT TECHNOLOGIES INC.
<PAGE> 2
The mailing, delivery or negotiation of this Agreement by Lucent or its
agent or attorney shall not be deemed an offer by Lucent to enter into any
transaction or to enter into any other relationship, whether on the terms
contained herein or on any other terms. This Agreement shall not be binding upon
Lucent, nor shall Lucent have any obligations or liabilities or Customer any
rights with respect thereto, or with respect to the transactions contemplated by
the Agreement, unless and until the Agreement has been approved by the executive
officers and/or Board of Directors of Lucent and Lucent has executed and
delivered this Agreement. Until such execution and delivery of this Agreement,
Lucent may terminate all negotiation and discussion of the subject matter
hereof, without cause and for any reason, without recourse or liability.
<PAGE> 3
TABLE OF CONTENTS
GENERAL AGREEMENT
Section Page
- ------- ----
1. ARTICLE I GENERAL TERMS AND CONDITIONS ____________________________________ 1
1.1 DEFINITIONS: ____________________________________________________________ 1
1.2 TERM OF AGREEMENT: ______________________________________________________ 3
1.3 SCOPE: __________________________________________________________________ 3
1.4 CUSTOMER RESPONSIBILITY: ________________________________________________ 4
1.5 ORDERS: _________________________________________________________________ 4
1.6 CHANGES IN CUSTOMER'S ORDERS: ___________________________________________ 6
1.7 CHANGES IN PRODUCTS: ____________________________________________________ 6
1.8 PRICES: _________________________________________________________________ 7
1.9 INVOICES AND TERMS OF PAYMENT: __________________________________________ 7
1.10 PURCHASE MONEY SECURITY INTEREST: _______________________________________ 8
1.11 TAXES: __________________________________________________________________ 9
1.12 TRANSPORTATION AND PACKING: _____________________________________________ 9
1.13 TITLE AND RISK OF LOSS: _________________________________________________ 9
1.14 WARRANTY: _______________________________________________________________ 9
1.15 INFRINGEMENT: __________________________________________________________ 12
1.16 CUSTOMER'S REMEDIES: ___________________________________________________ 13
1.17 USE OF INFORMATION: ____________________________________________________ 14
1.18 DOCUMENTATION: _________________________________________________________ 14
1.19 5ESS(R) DOCUMENTATION: _________________________________________________ 15
1.20 NOTICES: _______________________________________________________________ 15
1.21 CANCELLATION OF ORDERS FOR CONVENIENCE: ________________________________ 15
1.22 FORCE MAJEURE: _________________________________________________________ 16
1.23 ASSIGNMENT: ____________________________________________________________ 16
1.24 TERMINATION OF AGREEMENT FOR BREACH: ___________________________________ 17
1.25 ARBITRATION: ___________________________________________________________ 17
1.26 NON-SOLICITATION: ______________________________________________________ 18
1.27 INDEPENDENT CONTRACTOR: ________________________________________________ 18
1.28 RELEASES VOID: _________________________________________________________ 18
1.29 PUBLICITY: _____________________________________________________________ 18
1.30 CONFIDENTIALITY OF AGREEMENT: __________________________________________ 19
<PAGE> 4
1.31 AMENDMENTS: ____________________________________________________________ 19
1.32 SEVERABILITY: __________________________________________________________ 19
1.33 WAIVER: ________________________________________________________________ 19
1.34 SURVIVAL: ______________________________________________________________ 19
1.35 SECTION HEADINGS: ______________________________________________________ 19
1.36 CHOICE OF LAW: _________________________________________________________ 20
1.37 AMBIGUITIES: ___________________________________________________________ 20
2. ARTICLE II PROVISIONS APPLICABLE TO LICENSED MATERIALS ___________________ 21
2.1 LICENSE FOR LICENSED MATERIALS: ________________________________________ 21
2.2 CHANGES IN LICENSED MATERIALS: _________________________________________ 21
2.3 CANCELLATION OF LICENSE: _______________________________________________ 22
2.4 OPTIONAL SOFTWARE FEATURES: ____________________________________________ 22
2.5 ADDITIONAL RIGHTS IN LICENSED MATERIALS: _______________________________ 22
2.6 INSTALLATION OF SOFTWARE: ______________________________________________ 22
2.7 SOFTWARE ACCEPTANCE: ___________________________________________________ 22
2.8 MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES: __________________ 23
2.9 ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS _______ 23
3. ARTICLE III PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND
OTHER SERVICES ______________________________________________________________ 25
3.1 SITE REQUIREMENTS: _____________________________________________________ 25
3.2 ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER: ___________________________ 26
3.3 ITEMS TO BE FURNISHED BY SELLER ________________________________________ 29
3.3.1 ENGINEERING: ________________________________________________________ 29
3.3.2 INSTALLATION: _______________________________________________________ 29
3.4 ACCEPTANCE ______________________________________________________________ 33
3.5 WORK OR SERVICES PERFORMED BY OTHERS: ___________________________________ 33
4. ARTICLE IV ENTIRE AGREEMENT: _____________________________________________ 37
4.1 ENTIRE AGREEMENT ________________________________________________________ 37
<PAGE> 5
This General Agreement Number LNM970929RPLF (hereinafter "General Agreement" or
"Agreement") is made effective as of the 17th day of December, 1997 ("Effective
Date") by and between Local Fiber, LLC, a New York Limited Liability Company
Pursuant to Section 203 of the Limited Liability Company Act of the State of New
York, with offices located at 121 Erie Canal Drive, Suite A, Rochester, New York
14626 (hereinafter "Customer"), and Lucent Technologies Inc., a Delaware
corporation, acting through its Network Systems Group, with offices located at
600 Mountain Avenue, Murray Hill, New Jersey 07974 (hereinafter "Seller").
WHEREAS, Seller desires to supply to Customer and Customer desires to procure
from Seller the products and services described herein, pursuant to the terms
and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties intending to be lawfully bound agree as
follows:
1. ARTICLE I
GENERAL TERMS AND CONDITIONS
1.1 DEFINITIONS:
For the purpose of this Agreement, the following definitions will apply:
(a) "Affiliate" of a corporation means its Subsidiaries, any company of which
it is a Subsidiary, and other Subsidiaries of such company.
(b) "Bill and Hold Products" means Products, Licensed Materials, and/or parts
thereof, which the Customer requests and Seller agrees to inventory or
warehouse, at a price mutually agreed to by the parties, until final
delivery to the Customer.
(c) "Customer Price List" means Seller's published "Ordering and Price Guides"
or other price notification releases furnished by Seller for the purpose
of communicating Seller's prices or pricing related information to
Customer; however, this does not include firm price quotations.
(d) "Cutover" means, the verification by Seller and Customer of actual usage
over the installed Products. This function occurs after Turnover and is
not performed by Seller unless specifically requested by Customer and is
usually covered under a separate Professional Services Agreement.
(e) "Delivery Date" means the date required under this Agreement by which all
deliverables ordered by Customer are to be delivered to the destination
specified in the order.
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<PAGE> 6
(f) "Designated Processor" means the Product for which licenses to Use
Licensed Materials are granted.
(g) "Firmware" means a combination of (1) hardware and (2) Software
represented by a pattern of bits contained in such Hardware.
(h) "Fit" means physical size or mounting arrangement (e.g., electrical or
mechanical connections).
(i) "Form" means physical shape.
(j) "Function" means the operation the Product performs.
(k) "Hazardous Materials" means material designated as a "hazardous chemical
substance or mixture" pursuant to Section 6 of the Toxic Substance Control
Act; a "hazardous material" as defined in the Hazardous Materials
Transportation Act (49 U.S.C. 1801, et seq.); "hazardous substance" as
defined in the Occupational Safety and Health Act Hazard Communication
Standard (29 CFR 1910.1200) or as defined in the Comprehensive
Governmental Response, Compensation and Liability Act, 42 U.S.C. 9601
(14), or other pollutant or contaminant.
(l) "Installation Complete Date" means the date on which OS Software or
transmission systems Software is installed by Seller at the location
specified in the order and determined by Seller to be ready for Use by
Customer.
(m) "Licensed Materials" means the Software and Related Documentation for
which licenses are granted by Seller under this Agreement; no Source Code
versions of Software are included in Licensed Materials.
(n) "OS Software" means the object code Software, for operations systems,
embodied in any medium, including firmware.
(o) "Product" means equipment hardware, and parts thereof, but the term does
not mean Software whether or not such Software is part of Firmware.
(p) "Related Documentation" means materials useful in connection with Software
such as, but not limited to, flowcharts, logic diagrams and listings,
program descriptions and Specifications.
(q) "Seller's Standard Charges" means Seller's applicable rates and charges
for labor and materials as determined from Seller's Customer Price Lists
and other pricing information provided by Seller to Customer, less any
discounts applicable thereto.
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<PAGE> 7
(r) "Services" means any engineering, installation or repair services to be
performed by Seller under this Agreement, but the term "Services" does not
include any services provided by the Professional Services Division of
Seller's Network Systems Group unless otherwise expressly agreed to in
writing by the parties.
(s) "Software" means a computer program consisting of a set of logical
instructions and tables of information that guide the functioning of a
processor. Such program may be contained in any medium whatsoever,
including hardware containing a pattern of bits, representing such
program. However, the term "Software" does not mean or include such
medium.
(t) "Source Code" means any version of Software incorporating high-level or
assembly language that generally is not directly executable by a
processor.
(u) "Specifications" means Seller's or its vendor's technical specifications
for particular Products or Software furnished hereunder.
(v) "Statement of Work" (SOW) means the detailed description of the actual
Services to be performed.
(w) "Subsidiary" of a company means a corporation the majority of whose shares
or others securities entitled to vote for election of directors is now or
hereafter owned or controlled by such company either directly or
indirectly, but such corporation shall be deemed to be a Subsidiary of
such company only as long as such ownership or control exists.
(x) "Turnover" means, with respect to Products and Software to be installed by
Seller, the point at which Seller has completed the installation and
notifies Customer that the installation is completed and that Seller has
confirmed that the installed Product and/or Software comply with Seller's
specifications. This term does not mean Cutover which is separately
defined herein.
(y) "Use," with respect to Licensed Materials means loading the Licensed
Materials, or any portion thereof, into a Designated Processor for
execution of the instructions and tables contained in such Licensed
Materials.
1.2 TERM OF AGREEMENT:
The term of this Agreement shall commence on the Effective Date and shall
continue in effect thereafter for a period of three (3) years ("Term").
1.3 SCOPE:
(a) The parties acknowledge that Customer intends to obtain financing from [GE
Capital] for its anticipated procurements from Seller under this Agreement (the
"Financing"). Notwithstanding anything contained in this Agreement to the
contrary, this Agreement and the effectiveness hereof are subject to the closing
of the Financing. Until such time as the financing
Lucent Technologies Proprietary
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<PAGE> 8
facility is closed, Customer agrees not to place any purchase orders under this
Agreement and no such orders shall be accepted by Seller. In the event the
Financing is not closed by January 31, 1998, Seller reserves the right to
immediately terminate this Agreement by notifying Customer thereof and,
thereupon, this Agreement shall be null and void and of no further force and
effect.
(b) The terms and conditions of this Agreement shall apply to all transactions
occurring during the Term whereby Products, Licensed Materials or Services are
provided by Seller's Network Systems Group to Customer. Except as expressly
stated in this Agreement, this Agreement shall not apply to any products,
licensed materials or services offered for supply by any of the following
business units or divisions of Seller: Microelectronics, Consumer Products,
Business Communications Systems, Network Wireless division of Network Systems
Group, or the Professional Services division of Network Systems Group. By
placing orders with Seller, including change and/or addition orders, or using
any Products, Licensed Materials, or Services provided hereunder, Customer
agrees to be bound to the terms of this Agreement. Customer understands and
agrees that all Products, Licensed Materials, or Services furnished by Seller to
Customer pursuant to this Agreement shall be for Customer's own internal use in
the United States only. Products, Licensed Materials or Services furnished under
this Agreement are not being supplied for resale and shall not be resold by
Customer.
(c) All firm price quotes made by Seller to Customer shall incorporate the terms
and conditions of this Agreement. Any conflicting terms and conditions of a firm
price quote, signed by an authorized representative of Seller and Customer and
dated after the effective date of this Agreement, will supersede the comparable
terms of this Agreement.
1.4 CUSTOMER RESPONSIBILITY:
Customer shall, at no charge to Seller, provide Seller with such technical
information, data, technical support or assistance as may reasonably be required
by Seller to fulfill its obligations under this Agreement, any subordinate
agreement or order. If Customer fails to provide the technical information,
data, support or assistance, Seller shall be discharged from any such
obligation.
1.5 ORDERS:
All orders submitted by Customer for Products, Licensed Materials, and Services
shall incorporate and be subject to the terms and conditions of this Agreement.
Any order submitted pursuant to a firm price quotation shall include such firm
price quotation number. All orders, including electronic orders, shall contain
the information as detailed below:
(i) Complete and correct ship to and bill to address;
(ii) The quantity and type of Products, Licensed Materials, and Services
being ordered;
(iii) The price;
(iv) The requested Delivery Date in accordance with Seller's standard
interval for the Products, Licensed Materials, and Services being
ordered. In the event a non
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<PAGE> 9
standard interval has been mutually agreed to by the parties,
reference to the specific document agreeing to the interval needs to
be included;
(v) The requested completion date in accordance with Seller's standard
interval for the Products, Licensed Materials, and Services being
ordered;
(vi) Reference to this Agreement;
(vii) If an order is for Bill and Hold Products, the phrase "Bill and
Hold" must be clearly and conspicuously stated in the order.
The requested Delivery Date of any order must be in accordance with Seller's
published standard order intervals in effect on the date of receipt of order by
Seller. The current standard order interval is contained herein. Seller reserves
the right to change such standard order intervals without notification to
Customer but only with respect to future orders. Such change shall not affect
orders accepted by Seller prior to the change to the standard order intervals.
Electronic orders shall be binding on Customer notwithstanding the absence of a
signature. All orders are subject to acceptance by Seller. Seller reserves the
right to place any order on hold, delay shipment, and/or reject any order due
to, but not limited to the breach or default by Customer of its obligations
under this Agreement or Customer's insufficient credit limits. Terms and
conditions on Customer's purchase order which are inconsistent with the
provisions of this Agreement and any pre-printed terms and conditions on
Customer's purchase order shall be ineffective, void and of no force and effect.
Orders shall be sent to the following address:
Lucent Technologies Inc.
Customer Service
6701 Roswell Road
Building D - 3rd Floor
Atlanta, GA 30328-2501
(b) If an order is for Bill and Hold Products, the phrase "Bill and Hold" must
clearly and conspicuously appear on the Order. In the event Customer orders Bill
and Hold Products, Seller will defer final shipment of such Product(s) until the
final ship date indicated on the purchase order or such final ship date as is
mutually agreed between the parties provided that in no event shall Seller be
obligated to hold Bill and Hold Products longer than one (1) year from the date
of the applicable purchase order. Customer agrees to pay to Seller a monthly
stocking fee for any Bill and Hold Products held beyond the final ship date
indicated on the purchase order or otherwise mutually agreed to date.
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE STANDARD ORDERING
INTERVALS (Furnish Only)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
Switching Systems Products Twenty Two Weeks
- --------------------------------------------------------------------------------
Central Office Power Equipment Twenty Two Weeks
- --------------------------------------------------------------------------------
Transmission Systems Products:
- --------------------------------------------------------------------------------
DACS-IV 2000 Two Weeks
- --------------------------------------------------------------------------------
FT-2000 OC-48 Two Weeks
================================================================================
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE STANDARD ORDERING
INTERVALS (Furnish Only)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
DDM-2000 OC-3/OC-12 Two Weeks
- --------------------------------------------------------------------------------
DDM-2000 FIBER REACH Two Weeks
- --------------------------------------------------------------------------------
SLC 2000 Access System One Week
- --------------------------------------------------------------------------------
SLC 2000 MSDT One Week
- --------------------------------------------------------------------------------
SLC Series 5 (System and Plug In) Two Weeks
- --------------------------------------------------------------------------------
Other Transmission Products (i.e., One Week
DDM Plus, Repeater Cases)
- --------------------------------------------------------------------------------
Network Cable Systems Products Contact Lucent Sales Person
- --------------------------------------------------------------------------------
All Other Products Contact Lucent Sales Person
- --------------------------------------------------------------------------------
Software:
- --------------------------------------------------------------------------------
Switching System Software Same as associated Product
- --------------------------------------------------------------------------------
Transmission Systems Software Same as associated Product
- --------------------------------------------------------------------------------
Operations Systems Software Same as associated Product
- --------------------------------------------------------------------------------
All other Software Contact Lucent Sales Person
================================================================================
</TABLE>
1.6 CHANGES IN CUSTOMER'S ORDERS:
Changes by Customer to an order which has been previously accepted by
Seller (a "Change Order") are subject to acceptance by Seller. Change Orders
shall be treated as a separate order and shall follow Seller's change order
process. In the event Seller accepts a Change Order and such change affects
Seller's ability to meet its obligations under the original order, any price (or
discount, if applicable), shipment date or Services completion date quoted by
Seller with respect to such original order is subject to change. Seller will
provide to Customer written quotations and expected completion dates for any
requested Change Orders.
1.7 CHANGES IN PRODUCTS:
Prior to shipment, Seller may at any time make changes in Products. Seller
may modify the Product(s) drawings and Specifications or substitute Products of
later design. Seller agrees that such modifications or substitutions will not
impact upon Form, Fit, or Function under normal and proper use of the ordered
Product as provided in Seller's Specifications. With respect to changes,
modifications, and substitutions that do impact the Form, Fit, or Function of
the ordered Product, Seller shall notify Customer in writing thirty (30) days
prior to the date the changes become effective. In the event the Customer
objects to the change, Customer shall notify Seller within thirty (30) days from
the date of notice. Upon receipt of notice, Seller shall not furnish modified
Products to Customer on any orders in process.
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<PAGE> 11
1.8 PRICES:
(a) To the extent Customer's order is subject to a firm price quotation made
by Seller, prices, fees and charges (hereinafter "Prices") shall be as set
forth in Seller's firm price quotation.
(b) Except as expressly stated in this Agreement, in all other cases, Prices
shall be those contained in Seller's Customer Price Lists. The applicable
Customer Price List shall be the issue that is in effect on the date of
Seller's receipt of the order. The requested Delivery Date of such order
must be in accordance with Seller's published shipping or planning
interval or thirty (30) days from the date of order receipt, whichever is
longer. Prices for Products and license fees for Licensed Materials to be
shipped, or Services to be performed beyond the published shipping
interval will be based upon the date required for order entry by Seller in
accordance with Customer's requested date and applying the price from the
Customer Price List as of that date.
(c) Seller may amend its Prices, other than those subject to firm price
quotations and, except when applicable Prices are adjusted for changes in
raw material prices, Seller agrees to provide thirty (30) days written
notice of any increase in Prices contained in Seller's Customer Price
Lists. When prices contained in Seller's Customer Price Lists are adjusted
for changes in raw material prices, Seller's new Prices will be revised
effective the first day of any given month. The basis for raw material
adjustments will be provided to Customer upon request.
1.9 INVOICES AND TERMS OF PAYMENT
(a) Payment for Products, Licensed Materials and Services (including
transportation charges and taxes, if applicable) will be billed by Seller when
shipped, or as soon thereafter as practicable. Engineering will be billed upon
main shipment of Products. If Seller is responsible for installation, the final
payment will be invoiced upon Turnover or as soon thereafter as practical. For
furnish only orders the final payment will be invoiced upon shipment or as soon
as practical thereafter. In either case the payment is due for receipt by Seller
within thirty (30) days of the date of the invoice. In the event that Customer
enters into a loan agreement with lender (GE Capital) to finance the procurement
of the Products, Licensed Materials and Services, under this Agreement, then
Seller agrees to accept payment from lender (GE Capital) in satisfaction of
Customer's payment obligation hereunder; however, that the Terms of Payment set
forth in this Section 1.9 shall be complied in full.
(b) For Products, Licensed Materials and Services (including transportation
charges and taxes, if applicable) that are not required to be paid in advance
Seller will invoice Customer, all amounts due for Products and Licensed
Materials upon shipment and all amounts due for Services, upon completion of
Services or, in either event, as soon as practical thereafter. Customer shall
pay such invoiced amounts for receipt by Lucent within thirty (30) days of the
invoice date. Bill and Hold Products will be invoiced by Seller upon the earlier
of (i) completion of assembly at Seller's facility or (ii) upon stocking at
Customer's designated location. Such invoice will serve as Seller's notification
that Bill and Hold Products are complete and ready to be
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<PAGE> 12
released by Customer for final shipment. A sample invoice is provided in Exhibit
1 for informational purposes only.
(c) Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT") whether amounts have been invoiced by Seller or are due as
advance payments. EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager Cash Operations at 770-750-4288.
Chase Manhattan Bank
New York, New York
Account Name: Lucent Technologies Inc.
ACCT. 910144-9099
ABA 021000021
(d) If Customer fails to pay any invoiced amount when due, the invoiced amount
will be subject to a late payment charge at the rate of one and one half percent
(1-1/2%) per month, or portion thereof, of the amount due (but not to exceed the
maximum lawful rate). Customer agrees to pay Seller's attorneys' fees and other
costs incurred by Seller in the collection of any amounts invoiced hereunder.
(e) Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and, notify Seller of any billing discrepancies within thirty (30) days
of receipt of the applicable invoice. Such inquiries can be directed to Seller
in writing or by telephone. Inquiries shall be made to the telephone number or,
if in writing, to the address identified on the invoice.
1.10 PURCHASE MONEY SECURITY INTEREST:
(a) Seller reserves and Customer agrees that Seller shall have a purchase money
security interest in all Products and Licensed Materials heretofore supplied or
hereafter supplied to Customer by Seller under this Agreement until any and all
payments and charges due Seller under this Agreement including, without
limitation, shipping and installation charges, are paid in full. Seller shall
have the right, at any time during the Term and without notice to Customer, to
file in any state or local jurisdiction such financing statements (e.g., UCC-I
financing statements) as Seller deems necessary to perfect its purchase money
security interest hereunder. Upon request by Seller, Customer hereby agrees to
execute all documents necessary to secure Seller's purchase money security
interest including without limitation, UCC-1 or such other documents Seller
deems reasonably necessary. Notwithstanding the foregoing obligation of Customer
to execute. Customer hereby irrevocably appoints Seller as its attorney-in-fact
for purposes of executing and filing such financing statements and such other
documents prepared by Seller or its designated agent for purposes of perfecting
Seller's security interest hereunder. Customer also agrees that this Agreement
may be filed by Seller in any state or local jurisdiction as a financing
statement (or as other evidence of the Seller's purchase money security
interest).
(b) In addition to any other remedy available to Seller as provided herein, by
common law and by statute, Seller may exercise its right to reclaim all Products
and Licensed Materials sold
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<PAGE> 13
to Customer pursuant to UCC-702 or such other applicable provision as it may
exist from state to state, upon discovery of Customer's insolvency, provided
Seller demands in writing reclamation of such goods before ten (10) days after
receipt of such goods by Customer, or if such ten (10) day period expires after
the commencement of a bankruptcy case, before twenty (20) days after receipt of
such goods by the Customer.
1.11 TAXES:
Customer shall be liable for all taxes and related charges, however
designated, imposed upon or based upon the provision, sale, license or Use of
Products, Licensed Materials or Services levied upon the sale, excluding taxes
on Seller's net income, unless Customer provides Seller with a valid tax exempt
certificate. Seller's failure to collect taxes in accordance herewith shall not
be deemed to be an authorization to resell Products or Services or sublicense
Licensed Materials.
1.12 TRANSPORTATION AND PACKING:
Seller, in accordance with its normal practices, shall arrange for prepaid
transportation to destinations in the contiguous United States and shall invoice
transportation charges to Customer. Premium transportation will be used only at
Customer's request. Seller shall pack Products for delivery in the contiguous
United States, in accordance with its standard practices for domestic shipments.
Where, in order to meet Customer's requests, Seller packs Products in other than
its normal manner or for destinations outside the contiguous United States,
Customer shall pay the additional charges for such packing and transportation.
1.13 TITLE AND RISK OF LOSS:
Title to Products only and risk of loss to Products and Licensed Materials
shall pass to Customer upon delivery to the Customer. Title to all Licensed
Materials (whether or not part of Firmware) furnished by Seller, and all copies
thereof made by Customer, including translations, compilations, and partial
copies are, and shall remain, the property of Seller. Title to Products only and
risk of loss for Products and Licensed Material for Bill and Hold Products shall
pass to Customer upon stocking at Seller's facility or Customer's designated
location, whichever occurs earlier. Customer shall notify Seller promptly of any
claim with respect to loss which occurs while Seller has the risk of loss and
shall cooperate in every reasonable way to facilitate the settlement of any
claim. For purposes of this section, "delivery" shall mean the point at which
Seller or Seller's supplier or agent turns over possession of the Product or
Licensed Materials to Customer, Customer's employee, Customer's designated
carrier, Customer's warehouse, or other Customer's agent and not necessarily the
final destination shown on the order.
1.14 WARRANTY
(a) Seller warrants to Customer only, that during the applicable Warranty
Periods set forth below (i) Seller's manufactured products (exclusive of
Software) will be free from defects in
Lucent Technologies Proprietary
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<PAGE> 14
material and workmanship and will conform to Seller's Specifications for such
Products; (ii) Software developed by Seller will be free from those defects
which materially affect performance in accordance with Seller's Specifications;
and (iii) Services will be performed in a workmanlike manner and in accordance
with good usage and accepted practices in the community in which Services are
provided. With respect to Products or Software or partial assembly of Products
furnished by Seller but neither manufactured by Seller nor purchased by Seller
pursuant to its procurement specifications ("Vendor Items"), Seller, to the
extent permitted, does hereby assign to Customer the warranties given to Seller
by its vendor(s) of such Vendor Items.
(b) For purposes of this Agreement the term "Warranty Period" means the period
of time listed below which, unless otherwise stated, commences on date of
shipment or, if installed by Seller the earliest of either: (i) acceptance by
Customer; or (ii) thirty (30) days from the date Seller submits its notice of
completion of its installation; or (iii) the date Customer first puts Products
and/or Licensed Materials into service. For Bill and Hold Products the warranty
will commence upon the date of stocking at Seller's facility or Customer's
designated location. The Warranty Period for any Product or Software (or part
thereof) repaired or replaced under this Section 1.14 is the period listed in
the right column below or the unexpired portion of the new Product Warranty
Period, whichever is longer.
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
WARRANTY PERIOD
- --------------------------------------------------------------------------------
Base Repaired
---- --------
Period Product or
------ ----------
New Part
--- ----
Product
-------
- --------------------------------------------------------------------------------
<S> <C> <C>
Switching Systems Products 24 Months 6 Months
- --------------------------------------------------------------------------------
Central Office Power Equipment:
- --------------------------------------------------------------------------------
Associated with Switching Systems 24 Months 6 Months
- --------------------------------------------------------------------------------
Not Associated with Switching Systems 12 Months 6 Months
- --------------------------------------------------------------------------------
Transmission Systems Products:
- --------------------------------------------------------------------------------
DACS-IV 2000, 60 Months 6 Months
- --------------------------------------------------------------------------------
FT-2000 OC-48 60 Months 6 Months
- --------------------------------------------------------------------------------
DDM-2000 OC-3/OC-12 60 Months 6 Months
- --------------------------------------------------------------------------------
DDM-2000 FIBER REACH 60 Months 6 Months
- --------------------------------------------------------------------------------
SLC 2000 Access System 60 Months 6 Months
- --------------------------------------------------------------------------------
SLC 2000 MSDT 60 Months 6 Months
- --------------------------------------------------------------------------------
SLC Series 5 (System and Plug In) 60 Months 6 Months
- --------------------------------------------------------------------------------
Other Transmission Products (i.e., DDM 24 Months 6 Months
Plus Repeater Cases)
- --------------------------------------------------------------------------------
Network Cable Systems Products 12 Months 3 Months
- --------------------------------------------------------------------------------
All Other Products 2 Months 2 Months
- --------------------------------------------------------------------------------
Software:
================================================================================
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
WARRANTY PERIOD
- --------------------------------------------------------------------------------
Base Repaired
---- --------
Period Product or
------ ----------
New Part
--- ----
Product
-------
- --------------------------------------------------------------------------------
<S> <C> <C>
Switching System Software 12 Months 6 Months
- --------------------------------------------------------------------------------
Transmission Systems Software 12 Months 6 Months
- --------------------------------------------------------------------------------
Operations Systems Software 3 Months 1 Month
- --------------------------------------------------------------------------------
All Other Software 3 Months 1 Month
================================================================================
</TABLE>
(c) If, under normal and proper use, a defect or non-conformity appears in
Seller's manufactured products or Software during the applicable Warranty Period
and Customer promptly notifies Seller in writing of such defect or
non-conformance and follows Seller's instructions regarding return of defective
or non-conforming Product or Software, Seller, at its option, will either
repair, replace or correct the same without charge at its manufacturing or
repair facility or provide a refund or credit based on the original purchase
price or license fee. If engineering or installation Services prove not to be
performed as warranted within a six (6) month period commencing on the date of
completion of the Services, Seller, at its option, either will correct the
defect or non-conforming Services or render a full or pro-rated refund or credit
based on the original charges for the Services. No Product or Software will be
accepted for repair or replacement without the written authorization of and in
accordance with instructions of Seller. Removal and reinstallation expenses as
well as transportation expenses associated with returning such Product or
Software to Seller shall be borne by Customer. Seller shall pay the costs of
transportation of the repaired or replacing Product or Software to any United
States destination designated by Customer. If Seller determines that returned
Product or Software is not defective, Customer shall pay Seller's costs of
handling, inspecting, testing and transportation and, if applicable, travel and
related expenses. In repairing or replacing any Product, part of Product, or
Software medium under this warranty, Seller may use either new, remanufactured,
reconditioned, refurbished or functionally equivalent Products or parts.
Replaced Products or parts shall become Seller's property.
(d) With respect to Seller's manufactured products which Seller has ascertained
are not readily returnable for repair, Seller, at its option, may elect to
repair or replace the Products at Customer's site. Customer, at its expense,
shall make the Products accessible for repair or replacement and shall restore
the site after Seller has completed its repairs or replacement.
(e) Seller makes no warranty with respect to defective conditions or
non-conformities resulting from any of the following: Customer's modifications,
misuse, neglect, accident or abuse; improper wiring, repairing, splicing,
alteration, installation, storage or maintenance; use in a manner not in
accordance with Seller's or its vendor's Specifications, or operating
instructions or failure of Customer to apply previously applicable Seller's
modifications or corrections. In addition, Seller makes no warranty with respect
to Products which have had their serial numbers
Lucent Technologies Proprietary
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<PAGE> 16
or month and year of manufacture removed, altered and with respect to expendable
items, including, without limitation, fuses, light bulbs, motor brushes and the
like. No warranty is made that Software will run uninterrupted or error free,
and in addition Seller makes no warranty with respect to defects related to
Customer's data base errors.
(f) THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER EXPRESS
AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO REPAIR, REPLACE, CREDIT, OR
REFUND AS SET FORTH ABOVE IN THIS WARRANTY.
1.15 INFRINGEMENT:
(a) In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with Seller's Specifications, of any Product or Licensed Materials
furnished by Seller to Customer under this Agreement. Seller, at its expense,
will defend Customer, subject to the conditions and exceptions stated below.
Seller will reimburse Customer for any cost, expense or attorneys' fees,
incurred at Seller's written request or authorization, and will indemnify
Customer against any liability assessed against Customer by final judgment on
account of such infringement or violation arising out of such use.
(b) If Customer's use shall be enjoined or in Seller's opinion is likely to be
enjoined, Seller will, at its expense and at its option, either (1) replace the
enjoined Product or Licensed Materials furnished pursuant to this Agreement with
a suitable substitute free of any infringement; (2) modify it so that it will be
free of the infringement; or (3) procure for Customer a license or other right
to use it. If none of the foregoing options are practical, Seller will remove
the enjoined Product or Licensed Materials and refund to Customer any amounts
paid to Seller therefor less a reasonable charge for any actual period of use by
Customer.
(c) Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume the sole defense thereof,
including appeals, and to settle same. Customer shall, upon Seller's request and
at Seller's expense, furnish all information and assistance available to
Customer and cooperate in every reasonable way to facilitate the defense and/or
settlement of any such claim, action, proceeding or suit.
(d) No undertaking of Seller under this section shall extend to any such alleged
infringement or violation to the extent that it: (1) arises from adherence to
design modifications, specifications, drawings, or written instructions which
Seller is directed by Customer to follow, but only if such alleged infringement
or violation does not reside in corresponding commercial Product or Licensed
Materials of Seller's design or selection; or (2) arises from adherence to
instructions to apply Customer's trademark, trade name or other company
identification; or (3) resides in a Product or Licensed Materials which are not
of Seller's origin and which are
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furnished by Customer to Seller for use under this Agreement; or (4) relates to
uses of Product or Licensed Materials provided by Seller in combinations with
other Product or Licensed Materials, furnished either by Seller or others, which
combination was not installed, recommended or otherwise approved by Seller. In
the foregoing cases numbered (1) through (4), Customer will defend and save
Seller harmless, subject to the same terms and conditions and exceptions stated
above, with respect to the Seller's rights and obligations under this section.
(e) The liability of Seller and Customer with respect to any and all claims,
actions, proceedings or suits by third parties alleging infringement of patents,
trademarks or copyrights or violation of trade secrets or proprietary rights
because of, or in connection with, any Products or Licensed Materials furnished
pursuant to this Agreement shall be limited to the specific undertakings
contained in this section.
1.16 CUSTOMER'S REMEDIES:
a) CUSTOMER'S EXCLUSIVE REMEDIES AND THE ENTIRE LIABILITY OF SELLER, ITS
AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS FOR ANY CLAIM,
LOSS, DAMAGE OR EXPENSE OF CUSTOMER OR ANY OTHER ENTITY ARISING OUT OF THIS
AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, OR
SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY, SHALL BE AS FOLLOWS:
1) FOR INFRINGEMENT -- THE REMEDY SET FORTH IN THE "INFRINGEMENT" SECTION;
2) FOR THE NON-PERFORMANCE OF PRODUCTS, SOFTWARE, AND SERVICES DURING THE
WARRANTY PERIOD -- THE REMEDY SET FORTH IN THE APPLICABLE "WARRANTY"
SECTION;
3) FOR TANGIBLE PROPERTY DAMAGE AND PERSONAL INJURY CAUSED BY SELLER'S
NEGLIGENCE -- THE AMOUNT OF THE PROVEN DIRECT DAMAGES;
4) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE -- THE AMOUNT OF THE
PROVEN DIRECT DAMAGES NOT TO EXCEED $100,000 PER OCCURRENCE INCLUDING
AWARDED COUNSEL FEES AND COSTS.
b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, SELLER, ITS AFFILIATES
AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS SHALL NOT BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS, REVENUES OR
SAVINGS ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT,
LICENSED MATERIALS, OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, TORT,
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INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS SECTION, 1.16(B), SHALL SURVIVE
FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY.
c) CUSTOMER SHALL GIVE SELLER PROMPT WRITTEN NOTICE OF ANY CLAIM. ANY ACTION OR
PROCEEDING AGAINST SELLER MUST BE BROUGHT WITHIN TWENTY-FOUR (24) MONTHS AFTER
THE CAUSE OF ACTION ACCRUES.
1.17 USE OF INFORMATION:
All technical and business information in whatever form recorded which
bears a legend or notice restricting its use, copying, or dissemination or, if
not in tangible form, is described as being proprietary or confidential at the
time of disclosure and is subsequently summarized in a writing so marked and
delivered to the receiving party within thirty (30) days of disclosure to the
receiving party (all hereinafter designated "Information") shall remain the
property of the furnishing party. The furnishing party grants the receiving
party the right to use such Information only for purposes expressly permitted in
this section. Such Information (1) shall not be reproduced or copied, in whole
or part, except for use as authorized in this Agreement; and (2) shall, together
with any full or partial copies thereof, be returned or destroyed when no longer
needed. Moreover, when Seller is the receiving party, Seller shall use such
Information only for the purpose of performing under this Agreement, and when
Customer is the receiving party, Customer shall use such Information only (1) to
order; (2) to evaluate Seller's Products, Licensed Materials and Services; or
(3) to install, operate and maintain the particular Products and Licensed
Materials for which it was originally furnished. Unless the furnishing party
consents in writing, such Information, except for that part, if any, which is
known to the receiving party free of any confidential obligation, or which
becomes generally known to the public through acts not attributable to the
receiving party, shall be held in confidence by the receiving party. The
receiving party may disclose such Information to other persons, upon the
furnishing party's prior written authorization, but solely to perform acts which
this section expressly authorizes the receiving party to perform itself and
further provided such other person agrees in writing (a copy of which writing
will be provided to the furnishing party at its request) to the same conditions
respecting use of Information contained in this section and to any other
reasonable conditions requested by the furnishing party. Customer may provide
Confidential Information to Customer's bankers and investors with a need to know
for the purposes of consummating the transactions contemplated by this
Agreement, under the same conditions respecting use of Confidential Information
contained in this clause, provided such bankers and investors have signed a
Non-Disclosure Agreement reasonably acceptable to Seller.
1.18 DOCUMENTATION:
Seller shall furnish to Customer, at no additional charge, one (1) copy of
the documentation for Products and/or one (1) copy of the Related Documentation
for Software licensed to Customer. Such documentation shall be that which is
customarily provided by Seller to its Customers at no additional charge. Such
documentation shall be sufficient to enable Customer to operate and maintain
such Products and Software in accordance with Seller's
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<PAGE> 19
specifications. Such documentation shall be provided either prior to, included
with, or shortly after shipment of Products and/or Software from Seller to
Customer. Additional copies of such documentation are available at prices set
forth in Sellers Customer Price Lists.
1.19 5ESS(R) DOCUMENTATION:
Seller will provide to Customer at no charge one (1) copy each of the most
recent text and drawing CD-ROM or one (1) login to the 5ESS(R) Switch
Documentation Dial-Up Service for each new host/standalone Switch site. No
documentation will be provided to RSMs (Remote Site Module) or ORMs (Optical
Remote Module). In addition, Seller will provide updates at no charge to the
host/standalone site for a period of two (2) years following Switch Turnover.
After the initial two (2) year update period, Customer may purchase an update
subscription at the standard subscription rate.
1.20 NOTICES:
(a) Any notice, demand or other communication (other than an order) required, or
which may be given, under this Agreement shall, unless specifically otherwise
provided in this Agreement, be in writing and shall be given or made by
nationally recognized overnight courier service, confirmed facsimile, or
certified mail, return receipt requested and shall be addressed to the
respective parties as follows:
If to Seller:
Lucent Technologies Inc.
Global Commercial Markets
5440 Millstream Road, E2N32
1-85 & Mt. Hope Church Road
Mc Leansville, North Carolina 27301
Attn: Contract Manager
If to Customer:
Local Fiber, LLC
121 Erie Canal Drive, Suite A
Rochester, New York 14626
Attn: Comptroller
(b) Any such notice shall be effective upon receipt. Each party may change its
designated representative who is to receive communications and notices and/or
the applicable address for such communications and notices by giving notice
thereof to the other party provided herein.
1.21 CANCELLATION OF ORDERS FOR CONVENIENCE:
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(a) Customer may, upon prior written notice to Seller and payment to Seller of
the cancellation fee set forth in this Section, cancel an order under this
Agreement or a portion thereof except with respect to Products and Licensed
Materials that have already been shipped and Services that have already been
performed. For Services in process, Customer agrees to pay a cancellation fee
equal to the price for all Services rendered to date, plus Seller's incurred
expenses, including a reasonable profit, for those Services ordered by Customer
and subsequently canceled. For those Products and Licensed Materials not shipped
Customer agrees that it will pay Seller an order cancellation fee as described
below.
<TABLE>
<CAPTION>
================================================================================
Calendar Days Prior to Percent(%) of Purchase Percent(%) of Purchase
Shipment Price Charged for Products Price Charged for Products
that are NOT Customized that ARE Customized
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Day of Shipment Full Purchase Price Full Purchase Price
- --------------------------------------------------------------------------------
<S> <C> <C>
09-01 50% 60%
- --------------------------------------------------------------------------------
19-10 35% 50%
- --------------------------------------------------------------------------------
29-20 25% 35%
- --------------------------------------------------------------------------------
39-30 20% 30%
- --------------------------------------------------------------------------------
49-40 15% 25%
- --------------------------------------------------------------------------------
54-50 10% 20%
- --------------------------------------------------------------------------------
60-55 No Charge 10%
================================================================================
</TABLE>
1.22 FORCE MAJEURE:
Except for payment obligations, neither party shall be held responsible
for any delay or failure in performance to the extent that such delay or failure
is caused by fires, strikes, embargoes, explosions, earthquakes, floods, wars,
water, the elements, labor disputes, government requirements, civil or military
authorities, acts of God or by the public enemy, inability to secure raw
materials or transportation facilities, acts or omissions of carriers or
suppliers, or other causes beyond its control whether or not similar to the
foregoing.
1.23 ASSIGNMENT:
Except as provided in this clause, neither party shall assign this
Agreement or any right or interest under this Agreement, nor delegate any work
or obligation to be performed under this Agreement (any such assignment or
delegation constituting an "Assignment") without the prior written consent of
the other party, which shall not be unreasonably conditioned, delayed or
withheld. Any attempted assignment in contravention of the provisions of this
paragraph shall be void and ineffective. Nothing shall preclude a party from
employing a subcontractor in carrying out its obligations under this Agreement;
but a party's use of such subcontractor shall not release or discharge the party
from its obligations under this Agreement.
Notwithstanding the foregoing, nothing herein shall preclude an Assignment
by either party to [an Affiliate] an entity controlling, controlled by or under
common control with, or which acquires or succeeds to ownership of substantially
all of the assets and operations of, such
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party, without the consent of the other party (any such Assignment constituting
a "Permitted Assignment"); provided, however, that (a) a party seeking to
perform a Permitted Assignment is not in breach or default of this Agreement and
(b) with respect to a Permitted Assignment by Customer, the assignee is not (i),
in the reasonable opinion of Seller, [materially] inferior in creditworthiness
to Customer or (ii), an entity principally engaged in the manufacture or sale of
telecommunications products or services in competition with Seller.
In no event shall a Permitted Assignment supersede, or operate to diminish
the rights or increase the obligations of Seller under this Agreement or any
existing agreement between Seller and the assignee for purchase of the Products,
Licensed Materials or Services available for procurement by Customer under this
Agreement ("Preexisting Agreement"). Notwithstanding anything herein contained
to the contrary, no Assignment or Permitted Assignment shall act to release or
discharge Customer or any assignee of its obligations with respect to any
purchase commitment contained in this Agreement or any Preexisting Agreement
("Purchase Commitment") or to modify the terms of such Purchase Commitment. In
the event of a Permitted Assignment to an assignee with a Preexisting Agreement,
the parties agree that upon the full satisfaction of any Purchase Commitments
the assignee shall elect and may thereafter only procure Products, License
Materials, and Services from Seller under this Agreement or the Preexisting
Agreement, but not both. A party that makes any Permitted Assignment shall
provide prompt notice thereof to the other party. For purposes of this clause,
the term "Agreement" includes this Agreement, any subordinate agreement placed
under this Agreement and any order placed under this Agreement or subordinate
agreement.
1.24 TERMINATION OF AGREEMENT FOR BREACH:
In the event either party is in material breach or default of the terms of
this Agreement and such breach or default continues for a period of ten (10)
days with respect to payment obligations or thirty (30) days with respect to any
other obligations after the receipt of written notice from the other party, then
the party not in breach or default shall have the right to terminate this
Agreement without any charge, obligation or liability except for Products or
Licensed Materials already delivered and Services already performed. The party
not in breach or default shall provide full cooperation to the other party in
every reasonable way to facilitate the remedy of the breach or default hereunder
within the applicable cure period. Notwithstanding the foregoing, if the nature
of the material breach or default is such that it is not a payment obligation
and it is incapable of cure within the foregoing thirty (30) day period, then
the thirty (30) day cure period may be extended for a reasonable period of time
(in no event to exceed an additional thirty (30) days), provided that the party
in breach or default is proceeding diligently and in good faith to effectuate a
cure.
1.25 ARBITRATION:
If a dispute arises out of or relates to this Agreement, or its breach,
the parties agree to escalate such dispute to their respective senior executives
for good faith negotiations seeking a mutually agreeable resolution. This demand
for escalation shall be in writing and notice shall be
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<PAGE> 22
served in accordance with the notice provision of this Agreement. If the dispute
is not resolved through such escalation within fifteen (15) days after the date
of escalation, either party shall have the right to submit the dispute to a sole
mediator selected by the parties or, at any time at the option of a party, to
mediation by the American Arbitration Association ("AAA"). If not thus resolved,
it shall be referred to a sole arbitrator selected by the parties within thirty
(30) days of the mediation or, in the absence of such selection, to AAA
arbitration which shall be governed by the United States Arbitration Act, and
judgment on the award may be entered in any court having jurisdiction. The
arbitrator may determine issues of arbitrability, but may not award punitive
damages or limit, expand or otherwise modify the terms of this Agreement. The
parties, their representatives, other participants and the mediator and
arbitrator shall hold the existence, content and result of mediation and
arbitration in confidence, except as such disclosure may be necessary for the
purpose of recording or otherwise acting upon the arbitrator's award.
1.26 NON-SOLICITATION:
During the term of this Agreement and for a period of one (1) year from
the termination of this Agreement or a Statement of Work, the parties agree not
to employ, make an offer of employment to, or enter into a consulting
relationship with any employee, subcontractors or consultant of the other party
who is directly involved with the delivery of Services under this Agreement,
except upon the prior written consent of the affected party.
1.27 INDEPENDENT CONTRACTOR:
All work performed by either party under this Agreement shall be performed
as an independent contractor and not as an agent of the other, and no persons
furnished by the performing party shall be considered the employees or agents of
the other.
1.28 RELEASES VOID:
Neither party shall require releases or waivers of any personal rights
from representatives or employees of the other in connection with visits to its
premises, nor shall such parties plead such releases or waivers in any action or
proceeding.
1.29 PUBLICITY:
Neither party shall issue or release for publication any articles,
advertising, or publicity material relating to Products, Licensed Materials, or
Services under this Agreement or mentioning or implying the name, trademarks,
logos, trade name, service mark or other company identification of the other
party or any of its Affiliates or any of its personnel without the prior written
consent of the other party.
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<PAGE> 23
1.30 CONFIDENTIALITY OF AGREEMENT:
Notwithstanding the obligations contained in Section 1.17 (Use of
Information) of this Agreement the parties shall keep all provisions of this
Agreement and any order submitted hereunder (including, without limitation,
prices and pricing related information) confidential except as reasonably
necessary for performance by the parties hereunder and except to the extent
disclosure may be required by applicable laws or regulations, in which latter
case, the party required to make such disclosure shall promptly inform the other
prior to such disclosure in sufficient time to enable such other party to make
known any objections it may have to such disclosure. The disclosing party shall
take all reasonable steps and exercise all reasonable efforts directed by Seller
to secure a protective order, seek confidential treatment, or otherwise assure
that this Agreement and/or any order will be withheld from the public record.
1.31 AMENDMENTS:
Any supplement, modification or waiver of any provision of this Agreement
must be in writing and signed by authorized representatives of both parties.
1.32 SEVERABILITY:
If any portion of this Agreement is found to be invalid or unenforceable,
the parties agree that the remaining portions shall remain in effect. The
parties further agree that in the event such invalid or unenforceable portion is
an essential part of this Agreement, they will immediately begin negotiations
for a replacement.
1.33 WAIVER:
If either party fails to enforce any right or remedy available under this
Agreement, that failure shall not be construed as a waiver of any right or
remedy with respect to any other breach or failure by the other party.
1.34 SURVIVAL:
The rights and obligations of the parties which by their nature would
continue beyond the termination cancellation, or expiration of this Agreement,
shall survive such termination, cancellation or expiration.
1.35 SECTION HEADINGS:
The section headings in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this Agreement.
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<PAGE> 24
1.36 CHOICE OF LAW:
The construction and interpretation of, and the rights and obligations of
the parties pursuant to this Agreement, shall be governed by the laws of the
State of New York without regard to its conflict of laws provision.
1.37 AMBIGUITIES:
The parties represent that they are sophisticated businesses with access
to their own legal, financial and business advisors and that each party has had
the opportunity to consult with advisors and that each party has had the
opportunity to consult with advisors of their own choosing before entering into
this Agreement. The parties therefore acknowledge and agree that the rule of law
that ambiguities are construed against the drafter shall not apply to the
interpretation of this Agreement.
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<PAGE> 25
2. ARTICLE II
PROVISIONS APPLICABLE TO LICENSED MATERIALS
2.1 LICENSE FOR LICENSED MATERIALS:
(a) Upon delivery of Licensed Materials pursuant to this Agreement, Seller
grants to Customer a personal, nontransferable, and nonexclusive license to Use
Licensed Materials on a Designated Processor in the United States for its own
business operations. No license is granted to Customer to Use the Licensed
Materials outside the United States or to sublicense such Licensed Materials
furnished by Seller. Customer shall not reverse engineer, decompile or
disassemble Software furnished as object code to generate corresponding Source
Code. Unless otherwise agreed in writing by Seller, Customer shall not modify
Software furnished by Seller under this Agreement. If the Designated Processor
becomes temporarily inoperative, Customer shall have the right to Use the
Licensed Materials temporarily on a backup processor until operable status is
restored and processing on the backup processor is completed.
(b) Customer shall not copy Software embodied in Firmware. Customer shall not
make any copies of any other Licensed Materials except as necessary in
connection with the rights granted hereunder. Customer shall reproduce and
include any Seller copyright and proprietary notice on all such necessary copies
of the Licensed Materials. Customer shall also mark all media containing such
copies with a warning that the Licensed Materials are subject to restrictions
contained in an agreement between Seller and Customer and that such Licensed
Materials are the property of Seller. Customer shall maintain records of the
number and location of all copies of the Licensed Materials. Customer shall take
appropriate action, by instruction, agreement, or otherwise, with the persons
permitted access to the Licensed Materials so as to enable Customer to satisfy
its obligations under this Agreement. If Customer's license is canceled or
terminated, or when the Licensed Materials are no longer needed by Customer,
Customer shall return all copies of such Licensed Materials to Seller or follow
written disposition instructions provided by Seller.
2.2 CHANGES IN LICENSED MATERIALS:
Prior to shipment, Seller at its option may at any time modify the
Specifications relating to its Licensed Materials, provided the modifications,
under normal and proper Use, do not materially adversely affect the Use,
function, or performance of the ordered Licensed Materials. Unless otherwise
agreed in writing, such substitution shall not result in any additional charges
to Customer with respect to licenses for which Seller has quoted fees to
Customer.
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<PAGE> 26
2.3 CANCELLATION OF LICENSE:
Notwithstanding any other section in this Agreement to the contrary, if
Customer fails to comply with any of the material terms and conditions of this
Agreement with respect to the Use of Licensed Materials, and such failure is not
corrected within ten (10) days of receipt of written notice thereof by Customer,
Seller, upon written notice to Customer, may cancel any affected license for
Licensed Materials without further notification.
2.4 OPTIONAL SOFTWARE FEATURES:
Software provided to Customer under this Agreement may contain optional
features which are separately licensed and priced. Customer understands and
agrees that such optional features will not be activated without written
authorization from Seller and Customer's payment of the appropriate license
fees. If, in spite of Customer's best efforts to comply with this restriction,
such features are activated, Customer agrees to so notify Seller within five (5)
business days from the date of Customer's knowledge that such features were
activated and to pay Seller the current license fees charged by Seller for the
activated features, as well as the reasonable cost of money for the period in
which such features were activated.
2.5 ADDITIONAL RIGHTS IN LICENSED MATERIALS:
(a) Upon thirty (30) days advance written notice, Customer may relocate the
Software permanently to a new processor of Customer. This new processor shall
then become the Designated Processor in lieu of the former Designated Processor.
(b) Customer may retain an archival copy of the Software for as long as such
Software is relevant to Customer's operations.
2.6 INSTALLATION OF SOFTWARE:
(a) Where Customer is responsible for Software installation, Seller's sole
responsibility is to deliver the Software to Customer on or before the scheduled
Delivery Date agreed to by Seller. However, if the order specifies that Seller
is responsible for such installation, Seller shall deliver the Software to
Customer in sufficient time for it to be installed on or before the scheduled
Installation Complete Date agreed to by Seller, and Seller shall complete its
installation and associated testing on or before such date.
(b) Where Customer has assumed responsibility for the installation of newly
licensed Software and in the event that Customer encounters installation
difficulties, at Customer's request, Seller will, at the standard rate in effect
at the time of the request, provide technical assistance.
2.7 SOFTWARE ACCEPTANCE:
(a) Prior to Software acceptance by Customer, Customer has the right to operate
the Software furnished by Seller on the Designated Processor solely for the
purpose of conducting
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<PAGE> 27
an Acceptance Test (means the test which may be performed by Customer during the
Acceptance Test Period to determine whether Software will be free from defects
which materially affect performance in accordance with the Seller's
Specifications). Unless otherwise agreed by the parties, the Acceptance Test
Period (means the period of time in days agreed to by the parties and specified
in this section) for Software shall be thirty (30) consecutive calendar days
from the ship date if Customer performs installation or from the Installation
Complete Date if Seller performs installation. The Software shall be deemed
accepted by Customer unless Customer notifies Seller in writing to the contrary
within the applicable Acceptance Test Period described above. If Seller receives
written notice from Customer during the Acceptance Test Period that the Software
failed the Acceptance Test, the Acceptance Date (the date on which the Software
successfully completes the Acceptance Test) shall be extended on a day-to-day
basis until such time as the Software passes the Acceptance Test.
(b) If Customer elects in the order not to perform Acceptance Tests for any
Software, the Acceptance Date for such Software shall be the Delivery Date if
not installed by Seller or the Installation Complete Date if installed by
Seller, as applicable.
(c) For any Acceptance Test conducted by Customer on newly licensed Software,
and in the event that Customer encounters difficulties, Seller will, at
Customer's request and for the standard rate in effect at the time of the
request, provide technical assistance to Customer.
(d) If Customer performs installation and elects to perform applicable tests for
any Software, the warranty for such Software shall commence on the Delivery
Date.
2.8 MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES:
Customer may add to, delete from, or modify user controlled Software
modules or menus as contemplated in the Seller's Related Documentation. Such
changes or modifications, however extensive, shall not affect Seller's title to
the licensed Software. Seller shall have no liability for Customer's errors in
making such changes or modifications.
2.9 ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS
The following provisions also apply to the granting of licenses by Seller
to Customer for 5ESS(R) Switch Licensed Materials.
(a) Customer may transfer its right-to-use 5ESS(R) Switch Software furnished
under this Agreement without the payment of an additional right-to-use fee by
transferee, except where size sensitive units are a factor. Such transfer can be
made to an end user for their own internal use and only under the following
conditions:
(i) Such software shall be used only within the United States; however,
Seller will not unreasonably withhold its consent to Use outside the
United States provided that, in
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the sole opinion of the Seller, the proprietary information
associated with the Use can be adequately protected and any other
reasonable concerns of Seller are adequately addressed;
(ii) Except as otherwise provided in the agreement, the right to use such
Software may be transferred only together with the 5ESS(R) Switch
Product with which customer has a right to use such Software, and
such right to use the Software shall continue to be limited to Use
with such Product;
(iii) Before any such Software shall be transferred, Customer shall notify
Seller of such transfer and the transferee shall have agreed in
writing (a copy of which will be provided to Seller at its request)
to keep such Software in confidence and to comply with corresponding
conditions respecting Use of Licensed Materials as those imposed on
customer; and
(iv) Within the United States, the transferee shall have the same right
to Software warranty or Software maintenance for such Software as
the transferor, provided the transferee continues to pay the fees,
if any, associated with such Software or Software maintenance.
(v) In no event shall such transfer be made to any competitor of Seller
who is in the business of manufacturing comparable systems or to any
other party who presents a competitive or strategic conflict to
Seller.
(b) Upon advance written notice to Seller, Customer may remove 5ESS(R) Switch
Software or optional feature packages, which Customer has the right to Use under
this Agreement from one Customer-owned 5ESS(R) Switch Product and relocate them
to another Customer-owned 5ESS(R) Switch Product within the same company as
Customer. Customer shall not be required to pay additional right-to-use fees as
a result of such relocation, except where size sensitive units are a factor.
Seller may charge customer for services requested by customer in support of such
relocation. Such Software shall not be used or transferred to Customer's
affiliate that is a manufacturer of telecommunication products in direct
competition with Seller.
(c) If Seller ceases to maintain a standard, supported version of Software for
the 5ESS(R) Switch Product furnished pursuant to this Agreement, and these
support services are not available from another entity (either working with or
independently from Seller), then Seller shall furnish Customer, under a
confidentiality agreement acceptable to Seller, Seller's then existing Software
Source Code, Software development programs, and associated documentation for
such standard version to the extent necessary for Customer to maintain and
enhance for its own use the standard version of that Software which it has the
right to use under this Agreement.
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3. ARTICLE III
PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND OTHER SERVICES
GENERAL: The provisions of this Article III shall apply to the Services
ordered by Customer and furnished by Seller under this Agreement.
3.1 SITE REQUIREMENTS:
(a) Customer is solely responsible for ensuring that the installation site is
compliant with any site requirements identified by Seller for the installation
and/or operation of any Products, Licensed Materials, or Services furnished by
Seller under this Agreement. Such site requirements shall include, without
limitation, those site requirements set forth in this Section 3.1 below. Seller
agrees to cooperate with Customer to ensure compliance with all site
requirements, provided that such cooperation shall not require Seller to incur
any out-of-pocket costs unless the parties expressly agree otherwise in writing.
(b) Customer shall be solely responsible for ensuring that the installation site
complies with all applicable laws, orders, and regulations of federal, state and
local governmental entities including, without limitation, those relating to
environmental conditions.
(c) Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no liability to Customer, its employees, agents, and customers for
any delay by Seller in completion of any installation or other Service to be
provided by Seller under this Agreement if such delay is attributable to the
failure by Customer to comply with any site requirements or to provide any other
items which are the responsibility of Customer under this Article III.
(d) The site requirements which are solely the Customer's responsibility shall
include but are not limited to the following:
(i) Participate in a joint site survey with Seller
(ii) Interior Space -Clears ten feet (10') from floor to bottom of
lowest obstruction
(iii) Floor Loading (minimum requirements) Structural Analysis always
required
(iv) Power Room 150 lb. per sq. ft
(v) Switch Room 100 lb. per sq. ft.
(vi) Floor Thickness: In accordance with local seismic requirements for
the equipment
(vii) Conduit access to all floors in building
(viii) Local exchange carrier cable available
(ix) Commercial electrical current
(x) Existing building grounding is 5 ohm or less metered
(xi) Battery room ventilation in accordance with local requirements
(xii) Fire suppression system
(xiii) Freight access for a 48' trailer off loading equipment.
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<PAGE> 30
3.2 ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER:
(a) Customer will also be responsible for furnishing the items described in
this Section 3.2 as required by the conditions of the particular
installation or other on-site Service at no cost to Seller and such items
are not included in Seller's price for the Services. Seller shall have the
right to invoice Customer for any costs or expenses incurred by Seller as
a result of Customer's failure to provide any of these items described in
this Section 3.2 and all such invoices shall be paid by Customer in
accordance with this Agreement.
(i) Access to Building and Work Site Customer shall provide employees of
Seller and its subcontractors free access to premises and facilities
at all hours during the scheduled Service or at such other times as
are requested by Seller. Customer shall obtain for Seller's
employees and its subcontractors' employees any identification and
clearance credentials which are necessary to enable Seller and its
subcontractors to have access to the work site.
(ii) Site Coordination At Seller's request Customer shall coordinate with
Customer's sub contractors, property managers, Regional Bell
Operating Company, Local Exchange Carrier and any other parties and
tenants having rights to the work site or whose participation is
necessary in order for Seller to perform the applicable Services.
(iii) Environmental Conditions Prior to the Services start date, Customer
shall insure that the premises will be dry and free from dust and
Hazardous Materials, including but not limited to asbestos, and that
the premises are in such condition as not to be injurious to
Seller's or its subcontractors' employees or to the Products and
Licensed Materials to be installed. Prior to Services start date and
during the performance of the Services, Customer shall, if requested
by Seller, provide Seller with sufficient data to assist Seller and
its subcontractors in evaluating the environmental conditions at the
work site (including without limitation, the presence of Hazardous
Materials). The price quoted by Seller for Services does not include
the cost of removal or disposal of the Hazardous Materials from the
work site. Customer is responsible for the removal and disposal in
accordance with applicable laws, rules and regulation of the
Hazardous Materials, including but not limited to asbestos, prior to
commencement of Services.
(iv) Sensitive Equipment Prior to the Services start date, Customer shall
inform Seller of the presence of any sensitive equipment at the work
site (e.g., equipment sensitive to static electricity or light).
(v) Repairs to Buildings Prior to the Services start date, Customer
shall make such alterations and repairs to the work site as are
necessary for proper installation of Products and Licensed
Materials.
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(vi) Building Readiness Prior to the Services start date, Customer shall
provide extraordinary hauling and hoisting services such as, rigging
or crane services, if applicable, and shall arrange for traffic
control, if necessary for the delivery of Products.
(vii) Openings in Buildings - Customer shall furnish suitable openings in
buildings, including, without limitation, elevators and windows as
needed to allow Products to be placed in position, and shall provide
necessary openings and ducts for cable and conductors in floors and
walls as designated on engineering drawings furnished by Seller.
Customer shall fireproof (with steel covers and as otherwise
required by applicable laws, rules, regulations, and codes) all
unopened paths throughout such buildings.
(viii) Surveys Prior to the Services start date, Customer shall provide to
Seller (and, if requested by Seller, to Seller's subcontractors)
surveys (describing the physical characteristics, legal limitations,
and utility locations for the work site) and a legal description of
the site.
(ix) Electrical Current, Heat, Light, and Water Customer shall, in
amounts no less than that ordinarily furnished for similar purposes
in a working office, provide electric power, run all leads to
Seller's power board; provide temperature control and general
illumination (regular and emergency) in rooms in which services are
to be performed or Products stored, provide exit lights; and provide
water and other necessary utilities for the proper execution of
Services.
(x) Building Evacuation Prior to the Services start date, Customer shall
provide building evacuation plans in case of a fire or other
emergency.
(xi) Material Furnished by Customer Unless expressly stated to the
contrary, Seller's prices do not include costs for any Customer
furnished material nor do they include any Seller charges for
engineering, installation, modification, or repair Services to
Customer furnished material. New or used material furnished by
Customer shall be in such condition that it requires no repair and
no adjustment or test effort in excess of that normal for new
equipment. Customer assumes all responsibility for the proper
functioning of such material. Customer shall also provide the
necessary technical assistance and information for Seller to
properly install such material.
(xii) Floor Space and Storage Facilities Customer shall provide, for the
duration of Services, suitable and easily accessible floor space and
storage facilities to permit storing of Products and other material,
tools and other property of Seller and its subcontractors in close
proximity to where they will be used. Where the Services are to be
performed outside of a building or in a building under construction,
Customer shall, in addition to the above requirements, permit or
secure any necessary
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<PAGE> 32
permission for Seller and its subcontractors to maintain at the work
site, storage facilities for Products, material, tools, and
equipment needed to complete the Services. As appropriate Customer
shall provide Seller's and its subcontractors' personnel access to
toilet facilities.
(xiii) Easements, Permits, and Rights of Way Customer shall secure prior
to the Services start date and shall maintain for the duration of
the Services all rights-of-way, easements, licenses, and permits and
such other rights and approvals as are necessary to enable Seller to
perform the Services including, without limitation, all construction
and building permits for work to be performed at the work site and
other areas ancillary to the work site such as sidewalks, streets,
alleys, and highways.
(xiv) Security Service Customer shall provide such levels of security as
are necessary to prevent admission of unauthorized persons to
building and other areas where installation Services are performed
and to prevent unauthorized removal of the Products and other
materials. Seller will inform Customer as to which storage
facilities at the work site Seller will keep locked. Such storage
facilities will remain closed to Customer's building surveillance.
(xv) Access to Existing Equipment Customer shall permit Seller reasonable
use of such portions of the existing equipment as are necessary for
the proper completion of such tests as require coordination with
existing equipment. Such use shall not interfere with the Customer's
normal maintenance of equipment.
(xvi) Grounds Customer shall provide access to suitable and isolated
building ground as required for Seller's standard grounding of
equipment. Where installation is performed outside or in a building
under construction, Customer shall also furnish lightning protection
ground.
(xvii) Requirements for Customer Designed Circuits Customer shall furnish
information covering the proper test and readjust requirements for
apparatus and shall furnish requirements for circuit performance
associated with circuits designed by Customer or standard circuits
modified by Customer's drawings such as alarm and environmental
circuits.
(xviii) Cross-Connecting Main Distributing Frames and Installing Heat
Coils Customer shall install such cross-connections and heat coils
as are necessary in connection with the Services.
(xix) Clearing Equipment for Modifications Customer shall remove
cross-connections, transfer service on trunks and sundry working
equipment, and make other arrangements required to permit Seller to
modify existing equipment.
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<PAGE> 33
(b) In the event the joint site survey conducted by the parties pursuant to
Section 3.3.2(a) determines that the necessary requirements are not met at the
commencement of the installation of the Products and the Customer needs to
arrange for alterations and/or repairs, the order will be placed on hold until
such time as requirements are met. During such interval, Seller reserves the
right to determine any schedule and price impacts, to treat such product as Bill
and Hold, or to cancel such order. Customer shall be responsible for and agrees
to pay the applicable cancellation fee if such order is canceled by Seller.
3.3 ITEMS TO BE FURNISHED BY SELLER
3.3.1 ENGINEERING:
(a) General Review Seller will review the following items as Seller deems
appropriate; switching Products (Products and Software); transmission Products
(Products and Software); power/energy equipment hardware; engineering drawings;
site survey; grounding of the switch; appliance outlets; front and rear aisle
lighting as required; timing cables; distributing frame engineering and
equipment; cable rack and hardware; stanchions; end guards auxiliary framing;
existing cable holes; fiber cable protection systems.
(b) Needs Analysis Seller will perform a needs analysis of the Telephone
Equipment Order (TEO) and the Customer's specified requirements to determine the
equipment solution that meets those requirements.
(c) Records Upon Installation Complete, Seller will turn over to Customer a
complete set of records. Such records include but are not limited to wiring
lists, front equipment drawings, assignment drawings, and interface schematics.
3.3.2 INSTALLATION:
(a) Site Survey Prior to the commencement of installation Services, Seller and
Customer will perform a joint site survey to determine whether the installation
site meets the site requirements referenced in Section 3.1 and whether Customer
has provided the items in Section 3.2. Should Seller determine that the site
does not comply with such site requirements or that Customer has not provided
any item required under Section 3.2, Seller shall specify such deficiencies to
Customer in writing. Seller and Customer shall jointly agree on a course of
action to correct such deficiencies prior to the start of installation Services.
During the joint site survey, Seller and Customer shall also jointly agree upon
the layouts and arrangements for the Products and Licensed Materials to be
installed. Upon the start of installation all changes shall be subject to
additional charges.
(b) Method of Procedure Seller shall prepare a detailed Method of Procedure
("MOP") and review with Customer before starting work. Customer shall review the
MOP prepared by Seller and shall give Seller written acceptance of the MOP by
signing a copy thereof prior to the
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<PAGE> 34
Services start date. Any changes to the MOP requested by Customer shall be
agreed upon subject to the Change Order process.
The MOP shall contain the following details:
(i) A concise statement that covers the installation Services to be
performed including the equipment that will be affected and the
hours that such Services are to be performed;
(ii) Specific responsibilities of Seller and Customer;
(iii) Service protection procedures that include, general service
protection rules and special service precautions for the specific
project;
(iv) A time and release schedule of the work operations involving working
equipment and/or circuits in service and;
(v) A method of identifying equipment and cabling to ensure that the
circuits are "cleared" before start of work
(vi) A detailed account of the work operations that the installer will
follow
(vii) The methodology to be used to halt installation Services if trouble
occurs and a general procedure to correct/resume work operations;
(viii) Provide environmental safety concerns, if applicable;
(ix) Obtain Customer signature.
(c) Warehousing, Delivery, Receipt & On-site Storage of Equipment, and General
Cleaning Seller will stage the delivery of Products. Seller's personnel will be
on-site at the time the Products are delivered. Such personnel will accept the
Products, unpack for inventory purposes and inspect such Products for damage.
Seller will resolve all shipping errors inventory discrepancies and damage
issues. This function shall be performed in an area previously designated for
the storage and unpacking of equipment and Product(s). Such area will be
selected based on a location that minimizes movement of material and personnel
through the work site. In the event storage is limited or inadequate, as
determined by Seller, temporary storage facilities such as trailers or
containers may be required. Any fees associated with the procurement of
temporary storage facilities are not included in Seller's quoted prices and
shall be solely the responsibility of the Customer. Materials such as plywood or
masonite will be utilized as necessary, to prevent cable reels, iron work and
other heavy objects from damaging floors, walls and doors. Seller shall perform
general cleaning of the equipment and storage areas (e.g. clearing floors of
debris, packing material, etc.) on a regular basis throughout the installation
period. Rubbish shall be disposed of at Seller's expense and in compliance with
local requirements.
(d) Hardware Assembly Hardware assemblies and overhead cable rack, iron work and
conduit (collectively "Components") will be delivered for specific bays and
cabinets as identified in the firm price quote provided or in the Statement of
Work, attached hereto. Unless included in the SOW, additions of these components
to provide access to other locations (i.e. power rooms, computer rooms,
distributing frames not located with Products, or Products located on separate
floors) will be specifically excluded from the installation Services. Such
additions will only be included in the installation Services for an additional
charge. Seller will place and secure all
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<PAGE> 35
ordered Products in the location specified in the engineering specifications.
Such activity includes but is not limited to:
(i) Mark and drill floors
(ii) Assemble and place floor mounted Products
(iii) Assemble distribution frames
(iv) Erect frames
(v) Align and junction frames
(vi) Install end guards and covers
(vii) Assemble and install fiber protection ductwork
(viii) Mount units and apparatus
(ix) Place batteries
Seller will also erect supporting hardware compatible with purchased
Products. Such activity includes but is not limited to:
(i) Fabricate and install cable racks, bars, rod or stations as
identified in Statement of Work attached hereto
(ii) Erect ladder rack and ladders
(iii) Open and close existing cable holes and slots. Any new cable to
facilitate Products designs the responsibility of the Customer
(iv) Fabricate and install framing aisle lighting conduit and fittings
In addition, Seller will place and designate connecting appliances (MDF
terminal blocks, DSX panels, etc.) provided with order. Such as but not limited
to:
(i) Stamp and/or affix aisle, shelf and unit designations
(ii) Mount and stencil terminal strips
Seller will also extend lighting, A/C circuits and grounding to include
added Products if Products is ordered in job specification. Such activities
include but are not limited to:
(i) Assemble and install lighting fixtures
(ii) Install switches and receptacles
(e) Cable and Wire For cable and wire to be installed by Seller, Seller will
run, tag, and secure metallic and fiber optic cables in an unobstructed
environment a maximum of one hundred (100) feet and power cables a maximum of
fifty (50) feet for the Products and apparatus (this specifically excludes
primary power cables, except on power equipment orders) identified in the
Product order or Statement of Work attached hereto. Seller will wire, attach,
terminate and affix all cable and wire including fiber optic cables supplied
with purchased Products. This may include but is not limited to mechanical wire
wrapping, soldering, crimping, plugging in of pre-terminated cables or polishing
of fiber optics for purchased Product. Seller will run alarm cabling, terminate
and test for the identified equipment including Customer provided
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<PAGE> 36
environmental scan points of fire detection and door entry which are less than
fifty (50) feet away and pre-terminated. Seller will verify all copper wiring
placed by the Seller for continuity to detect and analyze opens, shorts,
reversals, and incorrect wiring. Where pairs, quads or groupings are indicated,
the grouping will be verified. Seller will ensure the functionality and
integrity of all fiber directly associated with the installed Products and the
fiber optic cables installed by Seller within the building structure. Seller
will "Dress" all cabling and wiring and provide physical protection. Seller will
properly protect cables at all "break-off" locations, such as the vertical turns
from the overhead cable rack to bay frame work.
(f) Testing Specific test procedures are dependent upon the type of Product
installed and are identified in the installation guide for the particular
product. To ensure that technical design and performance criteria are being met,
testing shall be performed by Seller to obtain an evaluation of the functional,
operational, electrical and mechanical integrity of all Products installed by
Seller. In general the following tests are required for all Product types
furnished and installed by Seller: Seller's activities associated with testing
will include, but not be limited to the following:
(i) Turn on and verify power to installed Products
(ii) Load product software and default parameters required to conduct
local unit loop-back testing to demarcation points.
(iii) Run and connect test specific cross-connects. Remove upon completion
of test(s).
(iv) Perform all unit and system-level tests to ensure Products pass
system and technician evoked diagnostics
(v) Test functionality of circuit packs required by job, at time of
original installation, within the installed unit. Testing of spares
is specifically excluded and will be included only for an additional
charge.
(vi) Test functionality and integrity of Seller installed local alarms.
(vii) Resolve troubles encountered with Products purchased on order. Refer
to Customer any trouble found in Customer provided equipment.
(viii) Maintain test logs and trouble reports and turn over to Customer.
(g) Seller will perform the following Turnover procedures for all installation
Services provided by Seller:
(i) Inform Customer of completion of installation cycle
(ii) Provide Customer with all drawings, invoices, logs and test results
per the contract.
(iii) Remove from Customer premises tools and scrap generated from
installation effort.
(iv) Issue job completion notice to Customer.
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<PAGE> 37
3.4 ACCEPTANCE
(a) All installation Services shall be considered complete and ready for
acceptance by Customer on Turnover. Upon completion of the installation, Seller
will submit to Customer a notice of completion or, if Customer has elected
advance-Turnover of subsystems, a notice of completion of advance-Turnover.
(b) Customer shall promptly make its final inspection of substantial conformance
with the Specifications and do everything necessary to expedite acceptance of
the job. Seller will promptly correct any defects for which it is responsible.
All work will be considered as fully accepted unless Seller receives
notification to the contrary within thirty (30) days after submitting its notice
of completion. Notwithstanding the foregoing, Customer shall be deemed to have
accepted any Products and Licensed Materials upon the placement of the same into
service.
3.5 WORK OR SERVICES PERFORMED BY OTHERS:
Work or services performed at the site by Customer or its other vendors or
contractors shall not interfere with Seller's performance of Services. Seller
shall have no responsibility or liability with respect to such work or Services
performed by others. If Customer or its other vendors or contractors fail to
timely complete the site readiness or if Customer's or its other vendors' or
contractors' work interferes with Seller's performance, the scheduled completion
date of Seller's Services under this Agreement shall be extended as necessary to
compensate for such delay or interference.
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<PAGE> 38
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<PAGE> 39
STATEMENT OF WORK
IMPLEMENTATION SCHEDULE
The parties recognize that the following milestones must be met in order
to keep the project on schedule. Each party agrees to adhere to this schedule
and in the event a circumstance arises that will cause a delay the party
knowledgeable of the delay will notify the other party and the schedule will be
adjusted accordingly.
<TABLE>
<CAPTION>
================================================================================
Milestone Stakeholder Expected Completion
Date
- --------------------------------------------------------------------------------
<S> <C> <C>
Develop Implementation
Plan
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Identify Project Site
- --------------------------------------------------------------------------------
Receive Customer
Purchase Order
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Site Ready
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Switch Software
Questionnaire Complete
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Installation and Testing
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Turnover/Acceptance
================================================================================
</TABLE>
If separately ordered by Customer the following will be included in the
implementation.
<TABLE>
<CAPTION>
================================================================================
Milestone Stakeholder Expected Completion
Date
- --------------------------------------------------------------------------------
<S> <C> <C>
Network Planning
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cutover
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Monitor
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Maintenance
================================================================================
</TABLE>
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<PAGE> 40
EXHIBIT 1
INVOICE
INVOICE NUMBER______________
INVOICE DATE________________
ACCOUNT NUMBER______________
PAGE NUMBER_________________
Lucent Technologies [LOGO]
Bell Labs Innovations
SHIP TO: BILL TO:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
CUSTOMER P.O. # LUC REFERENCE # CUSTOMER CODE TERMS CONTRACT # FOB
- -------------------------------------------------------------------------------------------------------------------------------
ITEM LUCENT BILL OF QUANTITY QUANTITY
NO. ORDER SHIP DATE SHIP METH LADING # PART NUMBER/DESCRIPTION ORDERED SHIPPED UNIT PRICE PM TOTAL PRICE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 J7888KK 2/2/00 5ESS Material 1 $25,000.00 E $25,000.00
2 J7888KK 2/2/00 Spares 1 $5,000.00 E $5,000.00
3 J7888KK 2/2/00 Engineering $2,000.00 $2,000.00
4 J7888KK 2/2/00 Installation $4,000.00 $4,000.00
5 J7888KK 2/2/00 Transportation $1,000.00 $1,000.00
- -------------------------------------------------------------------------------------------------------------------------------
-------------------------
QUESTIONS ABOUT YOUR ACCOUNT? MAKE CHECK PAYABLE TO: INVOICES ARE PAYABLE SUBTOTAL $36,000.00
CALL: Lucent Technologies Inc. IN U.S. CURRENCY AND LESS ADVANCE PAYMENT $9,250.00
P.O. Box 100317 OVERDUE AMOUNT SHALL TRANSPORTATION $1,000.00
REMARKS Atlanta, GA 30384-0317 BEAR INTEREST AT A REASONABLE TAX
Attn: Accounts Receivable RATE OR IS SUBJECT TO LATE TOTAL DUE $27,750.00
------------------------- PAYMENT CHARGES PER AGREEMENT
</TABLE>
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<PAGE> 41
4. ARTICLE IV
ENTIRE AGREEMENT:
4.1 ENTIRE AGREEMENT
The terms and conditions contained in this General Agreement supersede all
prior oral or written understandings between the parties with respect to the
subject matter hereof and constitute the entire agreement between the parties
with respect to such subject matter. The preprinted terms and conditions on
Customer's purchase orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an order which are consistent with the terms of this
General Agreement along with the terms of this General Agreement shall
constitute the entire Agreement between the parties relating to said order.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives on the date(s) indicated.
LUCENT TECHNOLOGIES INC. FIBERNET EQUAL ACCESS, LLC
By: /s/ C.L. Naylor By: /s/ J.J. Marchaesi
------------------------ ------------------------
Name: C.L. Naylor Name: John J. Marchaesi
Title: AVP-CLEC Title: VP Administration
Date: 12/30/97 Date: 12/19/97
Lucent Technologies Proprietary
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<PAGE> 1
GENERAL AGREEMENT
BETWEEN
FIBERNET EQUAL ACCESS, LLC
AND
LUCENT TECHNOLOGIES INC.
<PAGE> 2
The mailing, delivery or negotiation of this Agreement by Lucent or its
agent or attorney shall not be deemed an offer by Lucent to enter into any
transaction or to enter into any other relationship, whether on the terms
contained herein or on any other terms. This Agreement shall not be binding upon
Lucent, nor shall Lucent have any obligations or liabilities or Customer any
rights with respect thereto, or with respect to the transactions contemplated by
the Agreement, unless and until the Agreement has been approved by the executive
officers and/or Board of Directors of Lucent and Lucent has executed and
delivered this Agreement. Until such execution and delivery of this Agreement,
Lucent may terminate all negotiation and discussion of the subject matter
hereof, without cause and for any reason, without recourse or liability.
<PAGE> 3
TABLE OF CONTENTS
GENERAL AGREEMENT
Section Page
- ------- ----
1. ARTICLE I GENERAL TERMS AND CONDITIONS ____________________________________ 1
1.1 DEFINITIONS: ____________________________________________________________ 1
1.2 TERM OF AGREEMENT: ______________________________________________________ 3
1.3 SCOPE: __________________________________________________________________ 3
1.4 CUSTOMER RESPONSIBILITY: ________________________________________________ 4
1.5 ORDERS: _________________________________________________________________ 4
1.6 CHANGES IN CUSTOMER'S ORDERS: ___________________________________________ 6
1.7 CHANGES IN PRODUCTS: ____________________________________________________ 6
1.8 PRICES: _________________________________________________________________ 7
1.9 INVOICES AND TERMS OF PAYMENT: __________________________________________ 7
1.10 PURCHASE MONEY SECURITY INTEREST: _______________________________________ 8
1.11 TAXES: __________________________________________________________________ 9
1.12 TRANSPORTATION AND PACKING: _____________________________________________ 9
1.13 TITLE AND RISK OF LOSS: _________________________________________________ 9
1.14 WARRANTY: _______________________________________________________________ 9
1.15 INFRINGEMENT: __________________________________________________________ 12
1.16 CUSTOMER'S REMEDIES: ___________________________________________________ 13
1.17 USE OF INFORMATION: ____________________________________________________ 14
1.18 DOCUMENTATION: _________________________________________________________ 14
1.19 5ESS(R) DOCUMENTATION: _________________________________________________ 15
1.20 NOTICES: _______________________________________________________________ 15
1.21 CANCELLATION OF ORDERS FOR CONVENIENCE: ________________________________ 15
1.22 FORCE MAJEURE: _________________________________________________________ 16
1.23 ASSIGNMENT: ____________________________________________________________ 16
1.24 TERMINATION OF AGREEMENT FOR BREACH: ___________________________________ 17
1.25 ARBITRATION: ___________________________________________________________ 17
1.26 NON-SOLICITATION: ______________________________________________________ 18
1.27 INDEPENDENT CONTRACTOR: ________________________________________________ 18
1.28 RELEASES VOID: _________________________________________________________ 18
1.29 PUBLICITY: _____________________________________________________________ 18
1.30 CONFIDENTIALITY OF AGREEMENT: __________________________________________ 19
<PAGE> 4
1.31 AMENDMENTS: ____________________________________________________________ 19
1.32 SEVERABILITY: __________________________________________________________ 19
1.33 WAIVER: ________________________________________________________________ 19
1.34 SURVIVAL: ______________________________________________________________ 19
1.35 SECTION HEADINGS: ______________________________________________________ 19
1.36 CHOICE OF LAW: _________________________________________________________ 20
1.37 AMBIGUITIES: ___________________________________________________________ 20
2. ARTICLE II PROVISIONS APPLICABLE TO LICENSED MATERIALS ___________________ 21
2.1 LICENSE FOR LICENSED MATERIALS: ________________________________________ 21
2.2 CHANGES IN LICENSED MATERIALS: _________________________________________ 21
2.3 CANCELLATION OF LICENSE: _______________________________________________ 22
2.4 OPTIONAL SOFTWARE FEATURES: ____________________________________________ 22
2.5 ADDITIONAL RIGHTS IN LICENSED MATERIALS: _______________________________ 22
2.6 INSTALLATION OF SOFTWARE: ______________________________________________ 22
2.7 SOFTWARE ACCEPTANCE: ___________________________________________________ 22
2.8 MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES: __________________ 23
2.9 ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS _______ 23
3. ARTICLE III PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND
OTHER SERVICES ______________________________________________________________ 25
3.1 SITE REQUIREMENTS: _____________________________________________________ 25
3.2 ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER: ___________________________ 26
3.3 ITEMS TO BE FURNISHED BY SELLER ________________________________________ 29
3.3.1 ENGINEERING: ________________________________________________________ 29
3.3.2 INSTALLATION: _______________________________________________________ 29
3.4 ACCEPTANCE ______________________________________________________________ 33
3.5 WORK OR SERVICES PERFORMED BY OTHERS: ___________________________________ 33
4. ARTICLE IV ENTIRE AGREEMENT: _____________________________________________ 37
4.1 ENTIRE AGREEMENT ________________________________________________________ 37
<PAGE> 5
This General Agreement Number LNM971217RPEA (hereinafter "General Agreement" or
"Agreement") is made effective as of the 17th day of December, 1997 ("Effective
Date") by and between FiberNet Equal Access, a New York Limited Liability
Company Pursuant to Section 203 of the Limited Liability Company Act of the
State of New York, with offices located at 121 Erie Canal Drive, Suite A,
Rochester, New York 14626 (hereinafter "Customer"), and Lucent Technologies
Inc., a Delaware corporation, acting through its Network Systems Group, with
offices located at 600 Mountain Avenue, Murray Hill, New Jersey 07974
(hereinafter "Seller").
WHEREAS, Seller desires to supply to Customer and Customer desires to procure
from Seller the products and services described herein, pursuant to the terms
and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties intending to be lawfully bound agree as
follows:
1. ARTICLE I
GENERAL TERMS AND CONDITIONS
1.1 DEFINITIONS:
For the purpose of this Agreement, the following definitions will apply:
(a) "Affiliate" of a corporation means its Subsidiaries, any company of which
it is a Subsidiary, and other Subsidiaries of such company.
(b) "Bill and Hold Products" means Products, Licensed Materials, and/or parts
thereof, which the Customer requests and Seller agrees to inventory or
warehouse, at a price mutually agreed to by the parties, until final
delivery to the Customer.
(c) "Customer Price List" means Seller's published "Ordering and Price Guides"
or other price notification releases furnished by Seller for the purpose
of communicating Seller's prices or pricing related information to
Customer; however, this does not include firm price quotations.
(d) "Cutover" means, the verification by Seller and Customer of actual usage
over the installed Products. This function occurs after Turnover and is
not performed by Seller unless specifically requested by Customer and is
usually covered under a separate Professional Services Agreement.
(e) "Delivery Date" means the date required under this Agreement by which all
deliverables ordered by Customer are to be delivered to the destination
specified in the order.
Lucent Technologies Proprietary
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<PAGE> 6
(f) "Designated Processor" means the Product for which licenses to Use
Licensed Materials are granted.
(g) "Firmware" means a combination of (1) hardware and (2) Software
represented by a pattern of bits contained in such Hardware.
(h) "Fit" means physical size or mounting arrangement (e.g., electrical or
mechanical connections).
(i) "Form" means physical shape.
(j) "Function" means the operation the Product performs.
(k) "Hazardous Materials" means material designated as a "hazardous chemical
substance or mixture" pursuant to Section 6 of the Toxic Substance Control
Act; a "hazardous material" as defined in the Hazardous Materials
Transportation Act (49 U.S.C. 1801, et seq.); "hazardous substance" as
defined in the Occupational Safety and Health Act Hazard Communication
Standard (29 CFR 1910.1200) or as defined in the Comprehensive
Governmental Response, Compensation and Liability Act, 42 U.S.C. 9601
(14), or other pollutant or contaminant.
(l) "Installation Complete Date" means the date on which OS Software or
transmission systems Software is installed by Seller at the location
specified in the order and determined by Seller to be ready for Use by
Customer.
(m) "Licensed Materials" means the Software and Related Documentation for
which licenses are granted by Seller under this Agreement; no Source Code
versions of Software are included in Licensed Materials.
(n) "OS Software" means the object code Software, for operations systems,
embodied in any medium, including firmware.
(o) "Product" means equipment hardware, and parts thereof, but the term does
not mean Software whether or not such Software is part of Firmware.
(p) "Related Documentation" means materials useful in connection with Software
such as, but not limited to, flowcharts, logic diagrams and listings,
program descriptions and Specifications.
(q) "Seller's Standard Charges" means Seller's applicable rates and charges
for labor and materials as determined from Seller's Customer Price Lists
and other pricing information provided by Seller to Customer, less any
discounts applicable thereto.
Lucent Technologies Proprietary
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<PAGE> 7
(r) "Services" means any engineering, installation or repair services to be
performed by Seller under this Agreement, but the term "Services" does not
include any services provided by the Professional Services Division of
Seller's Network Systems Group unless otherwise expressly agreed to in
writing by the parties.
(s) "Software" means a computer program consisting of a set of logical
instructions and tables of information that guide the functioning of a
processor. Such program may be contained in any medium whatsoever,
including hardware containing a pattern of bits, representing such
program. However, the term "Software" does not mean or include such
medium.
(t) "Source Code" means any version of Software incorporating high-level or
assembly language that generally is not directly executable by a
processor.
(u) "Specifications" means Seller's or its vendor's technical specifications
for particular Products or Software furnished hereunder.
(v) "Statement of Work" (SOW) means the detailed description of the actual
Services to be performed.
(w) "Subsidiary" of a company means a corporation the majority of whose shares
or others securities entitled to vote for election of directors is now or
hereafter owned or controlled by such company either directly or
indirectly, but such corporation shall be deemed to be a Subsidiary of
such company only as long as such ownership or control exists.
(x) "Turnover" means, with respect to Products and Software to be installed by
Seller, the point at which Seller has completed the installation and
notifies Customer that the installation is completed and that Seller has
confirmed that the installed Product and/or Software comply with Seller's
specifications. This term does not mean Cutover which is separately
defined herein.
(y) "Use," with respect to Licensed Materials means loading the Licensed
Materials, or any portion thereof, into a Designated Processor for
execution of the instructions and tables contained in such Licensed
Materials.
1.2 TERM OF AGREEMENT:
The term of this Agreement shall commence on the Effective Date and shall
continue in effect thereafter for a period of three (3) years ("Term").
1.3 SCOPE:
(a) The parties acknowledge that Customer intends to obtain financing from [GE
Capital] for its anticipated procurements from Seller under this Agreement (the
"Financing"). Notwithstanding anything contained in this Agreement to the
contrary, this Agreement and the effectiveness hereof are subject to the closing
of the Financing. Until such time as the financing
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<PAGE> 8
facility is closed, Customer agrees not to place any purchase orders under this
Agreement and no such orders shall be accepted by Seller. In the event the
Financing is not closed by January 31, 1998, Seller reserves the right to
immediately terminate this Agreement by notifying Customer thereof and,
thereupon, this Agreement shall be null and void and of no further force and
effect.
(b) The terms and conditions of this Agreement shall apply to all transactions
occurring during the Term whereby Products, Licensed Materials or Services are
provided by Seller's Network Systems Group to Customer. Except as expressly
stated in this Agreement, this Agreement shall not apply to any products,
licensed materials or services offered for supply by any of the following
business units or divisions of Seller: Microelectronics, Consumer Products,
Business Communications Systems, Network Wireless division of Network Systems
Group, or the Professional Services division of Network Systems Group. By
placing orders with Seller, including change and/or addition orders, or using
any Products, Licensed Materials, or Services provided hereunder, Customer
agrees to be bound to the terms of this Agreement. Customer understands and
agrees that all Products, Licensed Materials, or Services furnished by Seller to
Customer pursuant to this Agreement shall be for Customer's own internal use in
the United States only. Products, Licensed Materials or Services furnished under
this Agreement are not being supplied for resale and shall not be resold by
Customer.
(c) All firm price quotes made by Seller to Customer shall incorporate the terms
and conditions of this Agreement. Any conflicting terms and conditions of a firm
price quote, signed by an authorized representative of Seller and Customer and
dated after the effective date of this Agreement, will supersede the comparable
terms of this Agreement.
1.4 CUSTOMER RESPONSIBILITY:
Customer shall, at no charge to Seller, provide Seller with such technical
information, data, technical support or assistance as may reasonably be required
by Seller to fulfill its obligations under this Agreement, any subordinate
agreement or order. If Customer fails to provide the technical information,
data, support or assistance, Seller shall be discharged from any such
obligation.
1.5 ORDERS:
All orders submitted by Customer for Products, Licensed Materials, and Services
shall incorporate and be subject to the terms and conditions of this Agreement.
Any order submitted pursuant to a firm price quotation shall include such firm
price quotation number. All orders, including electronic orders, shall contain
the information as detailed below:
(i) Complete and correct ship to and bill to address;
(ii) The quantity and type of Products, Licensed Materials, and Services
being ordered;
(iii) The price;
(iv) The requested Delivery Date in accordance with Seller's standard
interval for the Products, Licensed Materials, and Services being
ordered. In the event a non
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<PAGE> 9
standard interval has been mutually agreed to by the parties,
reference to the specific document agreeing to the interval needs to
be included;
(v) The requested completion date in accordance with Seller's standard
interval for the Products, Licensed Materials, and Services being
ordered;
(vi) Reference to this Agreement;
(vii) If an order is for Bill and Hold Products, the phrase "Bill and
Hold" must be clearly and conspicuously stated in the order.
The requested Delivery Date of any order must be in accordance with
Seller's published standard order intervals in effect on the date of receipt of
order by Seller. The current standard order interval is contained herein. Seller
reserves the right to change such standard order intervals without notification
to Customer but only with respect to future orders. Such change shall not affect
orders accepted by Seller prior to the change to the standard order intervals.
Electronic orders shall be binding on Customer notwithstanding the absence of a
signature. All orders are subject to acceptance by Seller. Seller reserves the
right to place any order on hold, delay shipment, and/or reject any order due
to, but not limited to the breach or default by Customer of its obligations
under this Agreement or Customer's insufficient credit limits. Terms and
conditions on Customer's purchase order which are inconsistent with the
provisions of this Agreement and any pre-printed terms and conditions on
Customer's purchase order shall be ineffective, void and of no force and effect.
Orders shall be sent to the following address:
Lucent Technologies Inc.
Customer Service
6701 Roswell Road
Building D - 3rd Floor
Atlanta, GA 30328-2501
(b) If an order is for Bill and Hold Products, the phrase "Bill and Hold" must
clearly and conspicuously appear on the Order. In the event Customer orders Bill
and Hold Products, Seller will defer final shipment of such Product(s) until the
final ship date indicated on the purchase order or such final ship date as is
mutually agreed between the parties provided that in no event shall Seller be
obligated to hold Bill and Hold Products longer than one (1) year from the date
of the applicable purchase order. Customer agrees to pay to Seller a monthly
stocking fee for any Bill and Hold Products held beyond the final ship date
indicated on the purchase order or otherwise mutually agreed to date.
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE STANDARD ORDERING
INTERVALS (Furnish Only)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
Switching Systems Products Twenty Two Weeks
- --------------------------------------------------------------------------------
Central Office Power Equipment Twenty Two Weeks
- --------------------------------------------------------------------------------
Transmission Systems Products:
- --------------------------------------------------------------------------------
DACS-IV 2000 Two Weeks
- --------------------------------------------------------------------------------
FT-2000 OC-48 Two Weeks
================================================================================
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE STANDARD ORDERING
INTERVALS (Furnish Only)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
DDM-2000 OC-3/OC-12 Two Weeks
- --------------------------------------------------------------------------------
DDM-2000 FIBER REACH Two Weeks
- --------------------------------------------------------------------------------
SLC 2000 Access System One Week
- --------------------------------------------------------------------------------
SLC 2000 MSDT One Week
- --------------------------------------------------------------------------------
SLC Series 5 (System and Plug In) Two Weeks
- --------------------------------------------------------------------------------
Other Transmission Products (i.e., One Week
DDM Plus, Repeater Cases)
- --------------------------------------------------------------------------------
Network Cable Systems Products Contact Lucent Sales Person
- --------------------------------------------------------------------------------
All Other Products Contact Lucent Sales Person
- --------------------------------------------------------------------------------
Software:
- --------------------------------------------------------------------------------
Switching System Software Same as associated Product
- --------------------------------------------------------------------------------
Transmission Systems Software Same as associated Product
- --------------------------------------------------------------------------------
Operations Systems Software Same as associated Product
- --------------------------------------------------------------------------------
All other Software Contact Lucent Sales Person
================================================================================
</TABLE>
1.6 CHANGES IN CUSTOMER'S ORDERS:
Changes by Customer to an order which has been previously accepted by
Seller (a "Change Order") are subject to acceptance by Seller. Change Orders
shall be treated as a separate order and shall follow Seller's change order
process. In the event Seller accepts a Change Order and such change affects
Seller's ability to meet its obligations under the original order, any price (or
discount, if applicable), shipment date or Services completion date quoted by
Seller with respect to such original order is subject to change. Seller will
provide to Customer written quotations and expected completion dates for any
requested Change Orders.
1.7 CHANGES IN PRODUCTS:
Prior to shipment, Seller may at any time make changes in Products. Seller
may modify the Product(s) drawings and Specifications or substitute Products of
later design. Seller agrees that such modifications or substitutions will not
impact upon Form, Fit, or Function under normal and proper use of the ordered
Product as provided in Seller's Specifications. With respect to changes,
modifications, and substitutions that do impact the Form, Fit, or Function of
the ordered Product, Seller shall notify Customer in writing thirty (30) days
prior to the date the changes become effective. In the event the Customer
objects to the change, Customer shall notify Seller within thirty (30) days from
the date of notice. Upon receipt of notice, Seller shall not furnish modified
Products to Customer on any orders in process.
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<PAGE> 11
1.8 PRICES:
(a) To the extent Customer's order is subject to a firm price quotation made
by Seller, prices, fees and charges (hereinafter "Prices") shall be as set
forth in Seller's firm price quotation.
(b) Except as expressly stated in this Agreement, in all other cases, Prices
shall be those contained in Seller's Customer Price Lists. The applicable
Customer Price List shall be the issue that is in effect on the date of
Seller's receipt of the order. The requested Delivery Date of such order
must be in accordance with Seller's published shipping or planning
interval or thirty (30) days from the date of order receipt, whichever is
longer. Prices for Products and license fees for Licensed Materials to be
shipped, or Services to be performed beyond the published shipping
interval will be based upon the date required for order entry by Seller in
accordance with Customer's requested date and applying the price from the
Customer Price List as of that date.
(c) Seller may amend its Prices, other than those subject to firm price
quotations and, except when applicable Prices are adjusted for changes in
raw material prices, Seller agrees to provide thirty (30) days written
notice of any increase in Prices contained in Seller's Customer Price
Lists. When prices contained in Seller's Customer Price Lists are adjusted
for changes in raw material prices, Seller's new Prices will be revised
effective the first day of any given month. The basis for raw material
adjustments will be provided to Customer upon request.
1.9 INVOICES AND TERMS OF PAYMENT
(a) Payment for Products, Licensed Materials and Services (including
transportation charges and taxes, if applicable) will be billed by Seller when
shipped, or as soon thereafter as practicable. Engineering will be billed upon
main shipment of Products. If Seller is responsible for installation, the final
payment will be invoiced upon Turnover or as soon thereafter as practical. For
furnish only orders the final payment will be invoiced upon shipment or as soon
as practical thereafter. In either case the payment is due for receipt by Seller
within thirty (30) days of the date of the invoice. In the event that Customer
enters into a loan agreement with lender (GE Capital) to finance the procurement
of the Products, Licensed Materials and Services, under this Agreement, then
Seller agrees to accept payment from lender (GE Capital) in satisfaction of
Customer's payment obligation hereunder; however, that the Terms of Payment set
forth in this Section 1.9 shall be complied in full.
(b) For Products, Licensed Materials and Services (including transportation
charges and taxes, if applicable) that are not required to be paid in advance
Seller will invoice Customer, all amounts due for Products and Licensed
Materials upon shipment and all amounts due for Services, upon completion of
Services or, in either event, as soon as practical thereafter. Customer shall
pay such invoiced amounts for receipt by Lucent within thirty (30) days of the
invoice date. Bill and Hold Products will be invoiced by Seller upon the earlier
of (i) completion of assembly at Seller's facility or (ii) upon stocking at
Customer's designated location. Such invoice will serve as Seller's notification
that Bill and Hold Products are complete and ready to be
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<PAGE> 12
released by Customer for final shipment. A sample invoice is provided in Exhibit
1 for informational purposes only.
(c) Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT") whether amounts have been invoiced by Seller or are due as
advance payments. EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager Cash Operations at 770-750-4288.
Chase Manhattan Bank
New York, New York
Account Name: Lucent Technologies Inc.
ACCT. 910144-9099
ABA 021000021
(d) If Customer fails to pay any invoiced amount when due, the invoiced amount
will be subject to a late payment charge at the rate of one and one half percent
(1-1/2%) per month, or portion thereof, of the amount due (but not to exceed the
maximum lawful rate). Customer agrees to pay Seller's attorneys' fees and other
costs incurred by Seller in the collection of any amounts invoiced hereunder.
(e) Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and, notify Seller of any billing discrepancies within thirty (30) days
of receipt of the applicable invoice. Such inquiries can be directed to Seller
in writing or by telephone. Inquiries shall be made to the telephone number or,
if in writing, to the address identified on the invoice.
1.10 PURCHASE MONEY SECURITY INTEREST:
(a) Seller reserves and Customer agrees that Seller shall have a purchase money
security interest in all Products and Licensed Materials heretofore supplied or
hereafter supplied to Customer by Seller under this Agreement until any and all
payments and charges due Seller under this Agreement including, without
limitation, shipping and installation charges, are paid in full. Seller shall
have the right, at any time during the Term and without notice to Customer, to
file in any state or local jurisdiction such financing statements (e.g., UCC-I
financing statements) as Seller deems necessary to perfect its purchase money
security interest hereunder. Upon request by Seller, Customer hereby agrees to
execute all documents necessary to secure Seller's purchase money security
interest including without limitation, UCC-1 or such other documents Seller
deems reasonably necessary. Notwithstanding the foregoing obligation of Customer
to execute. Customer hereby irrevocably appoints Seller as its attorney-in-fact
for purposes of executing and filing such financing statements and such other
documents prepared by Seller or its designated agent for purposes of perfecting
Seller's security interest hereunder. Customer also agrees that this Agreement
may be filed by Seller in any state or local jurisdiction as a financing
statement (or as other evidence of the Seller's purchase money security
interest).
(b) In addition to any other remedy available to Seller as provided herein, by
common law and by statute, Seller may exercise its right to reclaim all Products
and Licensed Materials sold
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<PAGE> 13
to Customer pursuant to UCC-702 or such other applicable provision as it may
exist from state to state, upon discovery of Customer's insolvency, provided
Seller demands in writing reclamation of such goods before ten (10) days after
receipt of such goods by Customer, or if such ten (10) day period expires after
the commencement of a bankruptcy case, before twenty (20) days after receipt of
such goods by the Customer.
1.11 TAXES:
Customer shall be liable for all taxes and related charges, however
designated, imposed upon or based upon the provision, sale, license or Use of
Products, Licensed Materials or Services levied upon the sale, excluding taxes
on Seller's net income, unless Customer provides Seller with a valid tax exempt
certificate. Seller's failure to collect taxes in accordance herewith shall not
be deemed to be an authorization to resell Products or Services or sublicense
Licensed Materials.
1.12 TRANSPORTATION AND PACKING:
Seller, in accordance with its normal practices, shall arrange for prepaid
transportation to destinations in the contiguous United States and shall invoice
transportation charges to Customer. Premium transportation will be used only at
Customer's request. Seller shall pack Products for delivery in the contiguous
United States, in accordance with its standard practices for domestic shipments.
Where, in order to meet Customer's requests, Seller packs Products in other than
its normal manner or for destinations outside the contiguous United States,
Customer shall pay the additional charges for such packing and transportation.
1.13 TITLE AND RISK OF LOSS:
Title to Products only and risk of loss to Products and Licensed Materials
shall pass to Customer upon delivery to the Customer. Title to all Licensed
Materials (whether or not part of Firmware) furnished by Seller, and all copies
thereof made by Customer, including translations, compilations, and partial
copies are, and shall remain, the property of Seller. Title to Products only and
risk of loss for Products and Licensed Material for Bill and Hold Products shall
pass to Customer upon stocking at Seller's facility or Customer's designated
location, whichever occurs earlier. Customer shall notify Seller promptly of any
claim with respect to loss which occurs while Seller has the risk of loss and
shall cooperate in every reasonable way to facilitate the settlement of any
claim. For purposes of this section, "delivery" shall mean the point at which
Seller or Seller's supplier or agent turns over possession of the Product or
Licensed Materials to Customer, Customer's employee, Customer's designated
carrier, Customer's warehouse, or other Customer's agent and not necessarily the
final destination shown on the order.
1.14 WARRANTY
(a) Seller warrants to Customer only, that during the applicable Warranty
Periods set forth below (i) Seller's manufactured products (exclusive of
Software) will be free from defects in
Lucent Technologies Proprietary
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<PAGE> 14
material and workmanship and will conform to Seller's Specifications for such
Products; (ii) Software developed by Seller will be free from those defects
which materially affect performance in accordance with Seller's Specifications;
and (iii) Services will be performed in a workmanlike manner and in accordance
with good usage and accepted practices in the community in which Services are
provided. With respect to Products or Software or partial assembly of Products
furnished by Seller but neither manufactured by Seller nor purchased by Seller
pursuant to its procurement specifications ("Vendor Items"), Seller, to the
extent permitted, does hereby assign to Customer the warranties given to Seller
by its vendor(s) of such Vendor Items.
(b) For purposes of this Agreement the term "Warranty Period" means the period
of time listed below which, unless otherwise stated, commences on date of
shipment or, if installed by Seller the earliest of either: (i) acceptance by
Customer; or (ii) thirty (30) days from the date Seller submits its notice of
completion of its installation; or (iii) the date Customer first puts Products
and/or Licensed Materials into service. For Bill and Hold Products the warranty
will commence upon the date of stocking at Seller's facility or Customer's
designated location. The Warranty Period for any Product or Software (or part
thereof) repaired or replaced under this Section 1.14 is the period listed in
the right column below or the unexpired portion of the new Product Warranty
Period, whichever is longer.
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
WARRANTY PERIOD
- --------------------------------------------------------------------------------
Base Repaired
---- --------
Period Product or
------ ----------
New Part
--- ----
Product
-------
- --------------------------------------------------------------------------------
<S> <C> <C>
Switching Systems Products 24 Months 6 Months
- --------------------------------------------------------------------------------
Central Office Power Equipment:
- --------------------------------------------------------------------------------
Associated with Switching Systems 24 Months 6 Months
- --------------------------------------------------------------------------------
Not Associated with Switching Systems 12 Months 6 Months
- --------------------------------------------------------------------------------
Transmission Systems Products:
- --------------------------------------------------------------------------------
DACS-IV 2000, 60 Months 6 Months
- --------------------------------------------------------------------------------
FT-2000 OC-48 60 Months 6 Months
- --------------------------------------------------------------------------------
DDM-2000 OC-3/OC-12 60 Months 6 Months
- --------------------------------------------------------------------------------
DDM-2000 FIBER REACH 60 Months 6 Months
- --------------------------------------------------------------------------------
SLC 2000 Access System 60 Months 6 Months
- --------------------------------------------------------------------------------
SLC 2000 MSDT 60 Months 6 Months
- --------------------------------------------------------------------------------
SLC Series 5 (System and Plug In) 60 Months 6 Months
- --------------------------------------------------------------------------------
Other Transmission Products (i.e., DDM 24 Months 6 Months
Plus Repeater Cases)
- --------------------------------------------------------------------------------
Network Cable Systems Products 12 Months 3 Months
- --------------------------------------------------------------------------------
All Other Products 2 Months 2 Months
- --------------------------------------------------------------------------------
Software:
================================================================================
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
================================================================================
SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
WARRANTY PERIOD
- --------------------------------------------------------------------------------
Base Repaired
---- --------
Period Product or
------ ----------
New Part
--- ----
Product
-------
- --------------------------------------------------------------------------------
<S> <C> <C>
Switching System Software 12 Months 6 Months
- --------------------------------------------------------------------------------
Transmission Systems Software 12 Months 6 Months
- --------------------------------------------------------------------------------
Operations Systems Software 3 Months 1 Month
- --------------------------------------------------------------------------------
All Other Software 3 Months 1 Month
================================================================================
</TABLE>
(c) If, under normal and proper use, a defect or non-conformity appears in
Seller's manufactured products or Software during the applicable Warranty Period
and Customer promptly notifies Seller in writing of such defect or
non-conformance and follows Seller's instructions regarding return of defective
or non-conforming Product or Software, Seller, at its option, will either
repair, replace or correct the same without charge at its manufacturing or
repair facility or provide a refund or credit based on the original purchase
price or license fee. If engineering or installation Services prove not to be
performed as warranted within a six (6) month period commencing on the date of
completion of the Services, Seller, at its option, either will correct the
defect or non-conforming Services or render a full or pro-rated refund or credit
based on the original charges for the Services. No Product or Software will be
accepted for repair or replacement without the written authorization of and in
accordance with instructions of Seller. Removal and reinstallation expenses as
well as transportation expenses associated with returning such Product or
Software to Seller shall be borne by Customer. Seller shall pay the costs of
transportation of the repaired or replacing Product or Software to any United
States destination designated by Customer. If Seller determines that returned
Product or Software is not defective, Customer shall pay Seller's costs of
handling, inspecting, testing and transportation and, if applicable, travel and
related expenses. In repairing or replacing any Product, part of Product, or
Software medium under this warranty, Seller may use either new, remanufactured,
reconditioned, refurbished or functionally equivalent Products or parts.
Replaced Products or parts shall become Seller's property.
(d) With respect to Seller's manufactured products which Seller has ascertained
are not readily returnable for repair, Seller, at its option, may elect to
repair or replace the Products at Customer's site. Customer, at its expense,
shall make the Products accessible for repair or replacement and shall restore
the site after Seller has completed its repairs or replacement.
(e) Seller makes no warranty with respect to defective conditions or
non-conformities resulting from any of the following: Customer's modifications,
misuse, neglect, accident or abuse; improper wiring, repairing, splicing,
alteration, installation, storage or maintenance; use in a manner not in
accordance with Seller's or its vendor's Specifications, or operating
instructions or failure of Customer to apply previously applicable Seller's
modifications or corrections. In addition, Seller makes no warranty with respect
to Products which have had their serial numbers
Lucent Technologies Proprietary
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<PAGE> 16
or month and year of manufacture removed, altered and with respect to expendable
items, including, without limitation, fuses, light bulbs, motor brushes and the
like. No warranty is made that Software will run uninterrupted or error free,
and in addition Seller makes no warranty with respect to defects related to
Customer's data base errors.
(f) THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER EXPRESS
AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO REPAIR, REPLACE, CREDIT, OR
REFUND AS SET FORTH ABOVE IN THIS WARRANTY.
1.15 INFRINGEMENT:
(a) In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with Seller's Specifications, of any Product or Licensed Materials
furnished by Seller to Customer under this Agreement. Seller, at its expense,
will defend Customer, subject to the conditions and exceptions stated below.
Seller will reimburse Customer for any cost, expense or attorneys' fees,
incurred at Seller's written request or authorization, and will indemnify
Customer against any liability assessed against Customer by final judgment on
account of such infringement or violation arising out of such use.
(b) If Customer's use shall be enjoined or in Seller's opinion is likely to be
enjoined, Seller will, at its expense and at its option, either (1) replace the
enjoined Product or Licensed Materials furnished pursuant to this Agreement with
a suitable substitute free of any infringement; (2) modify it so that it will be
free of the infringement; or (3) procure for Customer a license or other right
to use it. If none of the foregoing options are practical, Seller will remove
the enjoined Product or Licensed Materials and refund to Customer any amounts
paid to Seller therefor less a reasonable charge for any actual period of use by
Customer.
(c) Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume the sole defense thereof,
including appeals, and to settle same. Customer shall, upon Seller's request and
at Seller's expense, furnish all information and assistance available to
Customer and cooperate in every reasonable way to facilitate the defense and/or
settlement of any such claim, action, proceeding or suit.
(d) No undertaking of Seller under this section shall extend to any such alleged
infringement or violation to the extent that it: (1) arises from adherence to
design modifications, specifications, drawings, or written instructions which
Seller is directed by Customer to follow, but only if such alleged infringement
or violation does not reside in corresponding commercial Product or Licensed
Materials of Seller's design or selection; or (2) arises from adherence to
instructions to apply Customer's trademark, trade name or other company
identification; or (3) resides in a Product or Licensed Materials which are not
of Seller's origin and which are
Lucent Technologies Proprietary
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<PAGE> 17
furnished by Customer to Seller for use under this Agreement; or (4) relates to
uses of Product or Licensed Materials provided by Seller in combinations with
other Product or Licensed Materials, furnished either by Seller or others, which
combination was not installed, recommended or otherwise approved by Seller. In
the foregoing cases numbered (1) through (4), Customer will defend and save
Seller harmless, subject to the same terms and conditions and exceptions stated
above, with respect to the Seller's rights and obligations under this section.
(e) The liability of Seller and Customer with respect to any and all claims,
actions, proceedings or suits by third parties alleging infringement of patents,
trademarks or copyrights or violation of trade secrets or proprietary rights
because of, or in connection with, any Products or Licensed Materials furnished
pursuant to this Agreement shall be limited to the specific undertakings
contained in this section.
1.16 CUSTOMER'S REMEDIES:
a) CUSTOMER'S EXCLUSIVE REMEDIES AND THE ENTIRE LIABILITY OF SELLER, ITS
AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS FOR ANY CLAIM,
LOSS, DAMAGE OR EXPENSE OF CUSTOMER OR ANY OTHER ENTITY ARISING OUT OF THIS
AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, OR
SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY, SHALL BE AS FOLLOWS:
1) FOR INFRINGEMENT -- THE REMEDY SET FORTH IN THE "INFRINGEMENT" SECTION;
2) FOR THE NON-PERFORMANCE OF PRODUCTS, SOFTWARE, AND SERVICES DURING THE
WARRANTY PERIOD -- THE REMEDY SET FORTH IN THE APPLICABLE "WARRANTY"
SECTION;
3) FOR TANGIBLE PROPERTY DAMAGE AND PERSONAL INJURY CAUSED BY SELLER'S
NEGLIGENCE -- THE AMOUNT OF THE PROVEN DIRECT DAMAGES;
4) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE -- THE AMOUNT OF THE
PROVEN DIRECT DAMAGES NOT TO EXCEED $100,000 PER OCCURRENCE INCLUDING
AWARDED COUNSEL FEES AND COSTS.
b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, SELLER, ITS AFFILIATES
AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS SHALL NOT BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS, REVENUES OR
SAVINGS ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT,
LICENSED MATERIALS, OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, TORT,
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INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS SECTION, 1.16(B), SHALL SURVIVE
FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY.
c) CUSTOMER SHALL GIVE SELLER PROMPT WRITTEN NOTICE OF ANY CLAIM. ANY ACTION OR
PROCEEDING AGAINST SELLER MUST BE BROUGHT WITHIN TWENTY-FOUR (24) MONTHS AFTER
THE CAUSE OF ACTION ACCRUES.
1.17 USE OF INFORMATION:
All technical and business information in whatever form recorded which
bears a legend or notice restricting its use, copying, or dissemination or, if
not in tangible form, is described as being proprietary or confidential at the
time of disclosure and is subsequently summarized in a writing so marked and
delivered to the receiving party within thirty (30) days of disclosure to the
receiving party (all hereinafter designated "Information") shall remain the
property of the furnishing party. The furnishing party grants the receiving
party the right to use such Information only for purposes expressly permitted in
this section. Such Information (1) shall not be reproduced or copied, in whole
or part, except for use as authorized in this Agreement; and (2) shall, together
with any full or partial copies thereof, be returned or destroyed when no longer
needed. Moreover, when Seller is the receiving party, Seller shall use such
Information only for the purpose of performing under this Agreement, and when
Customer is the receiving party, Customer shall use such Information only (1) to
order; (2) to evaluate Seller's Products, Licensed Materials and Services; or
(3) to install, operate and maintain the particular Products and Licensed
Materials for which it was originally furnished. Unless the furnishing party
consents in writing, such Information, except for that part, if any, which is
known to the receiving party free of any confidential obligation, or which
becomes generally known to the public through acts not attributable to the
receiving party, shall be held in confidence by the receiving party. The
receiving party may disclose such Information to other persons, upon the
furnishing party's prior written authorization, but solely to perform acts which
this section expressly authorizes the receiving party to perform itself and
further provided such other person agrees in writing (a copy of which writing
will be provided to the furnishing party at its request) to the same conditions
respecting use of Information contained in this section and to any other
reasonable conditions requested by the furnishing party. Customer may provide
Confidential Information to Customer's bankers and investors with a need to know
for the purposes of consummating the transactions contemplated by this
Agreement, under the same conditions respecting use of Confidential Information
contained in this clause, provided such bankers and investors have signed a
Non-Disclosure Agreement reasonably acceptable to Seller.
1.18 DOCUMENTATION:
Seller shall furnish to Customer, at no additional charge, one (1) copy of
the documentation for Products and/or one (1) copy of the Related Documentation
for Software licensed to Customer. Such documentation shall be that which is
customarily provided by Seller to its Customers at no additional charge. Such
documentation shall be sufficient to enable Customer to operate and maintain
such Products and Software in accordance with Seller's
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specifications. Such documentation shall be provided either prior to, included
with, or shortly after shipment of Products and/or Software from Seller to
Customer. Additional copies of such documentation are available at prices set
forth in Sellers Customer Price Lists.
1.19 5ESS(R) DOCUMENTATION:
Seller will provide to Customer at no charge one (1) copy each of the most
recent text and drawing CD-ROM or one (1) login to the 5ESS(R) Switch
Documentation Dial-Up Service for each new host/standalone Switch site. No
documentation will be provided to RSMs (Remote Site Module) or ORMs (Optical
Remote Module). In addition, Seller will provide updates at no charge to the
host/standalone site for a period of two (2) years following Switch Turnover.
After the initial two (2) year update period, Customer may purchase an update
subscription at the standard subscription rate.
1.20 NOTICES:
(a) Any notice, demand or other communication (other than an order) required, or
which may be given, under this Agreement shall, unless specifically otherwise
provided in this Agreement, be in writing and shall be given or made by
nationally recognized overnight courier service, confirmed facsimile, or
certified mail, return receipt requested and shall be addressed to the
respective parties as follows:
If to Seller:
Lucent Technologies Inc.
Global Commercial Markets
5440 Millstream Road, E2N32
I-85 & Mt. Hope Church Road
Mc Leansville, North Carolina 27301
Attn: Contract Manager
If to Customer:
FiberNet Equal Access, LLC
121 Erie Canal Drive, Suite A
Rochester, New York 14626
Attn: Comptroller
(b) Any such notice shall be effective upon receipt. Each party may change its
designated representative who is to receive communications and notices and/or
the applicable address for such communications and notices by giving notice
thereof to the other party provided herein.
1.21 CANCELLATION OF ORDERS FOR CONVENIENCE:
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(a) Customer may, upon prior written notice to Seller and payment to Seller of
the cancellation fee set forth in this Section, cancel an order under this
Agreement or a portion thereof except with respect to Products and Licensed
Materials that have already been shipped and Services that have already been
performed. For Services in process, Customer agrees to pay a cancellation fee
equal to the price for all Services rendered to date, plus Seller's incurred
expenses, including a reasonable profit, for those Services ordered by Customer
and subsequently canceled. For those Products and Licensed Materials not shipped
Customer agrees that it will pay Seller an order cancellation fee as described
below.
<TABLE>
<CAPTION>
================================================================================
Calendar Days Prior to Percent(%) of Purchase Percent(%) of Purchase
Shipment Price Charged for Products Price Charged for Products
that are NOT Customized that ARE Customized
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Day of Shipment Full Purchase Price Full Purchase Price
- --------------------------------------------------------------------------------
<S> <C> <C>
09-01 50% 60%
- --------------------------------------------------------------------------------
19-10 35% 50%
- --------------------------------------------------------------------------------
29-20 25% 35%
- --------------------------------------------------------------------------------
39-30 20% 30%
- --------------------------------------------------------------------------------
49-40 15% 25%
- --------------------------------------------------------------------------------
54-50 10% 20%
- --------------------------------------------------------------------------------
60-55 No Charge 10%
================================================================================
</TABLE>
1.22 FORCE MAJEURE:
Except for payment obligations, neither party shall be held responsible
for any delay or failure in performance to the extent that such delay or failure
is caused by fires, strikes, embargoes, explosions, earthquakes, floods, wars,
water, the elements, labor disputes, government requirements, civil or military
authorities, acts of God or by the public enemy, inability to secure raw
materials or transportation facilities, acts or omissions of carriers or
suppliers, or other causes beyond its control whether or not similar to the
foregoing.
1.23 ASSIGNMENT:
Except as provided in this clause, neither party shall assign this
Agreement or any right or interest under this Agreement, nor delegate any work
or obligation to be performed under this Agreement (any such assignment or
delegation constituting an "Assignment") without the prior written consent of
the other party, which shall not be unreasonably conditioned, delayed or
withheld. Any attempted assignment in contravention of the provisions of this
paragraph shall be void and ineffective. Nothing shall preclude a party from
employing a subcontractor in carrying out its obligations under this Agreement;
but a party's use of such subcontractor shall not release or discharge the party
from its obligations under this Agreement.
Notwithstanding the foregoing, nothing herein shall preclude an Assignment
by either party to [an Affiliate] an entity controlling, controlled by or under
common control with, or which acquires or succeeds to ownership of substantially
all of the assets and operations of, such
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party, without the consent of the other party (any such Assignment constituting
a "Permitted Assignment"); provided, however, that (a) a party seeking to
perform a Permitted Assignment is not in breach or default of this Agreement and
(b) with respect to a Permitted Assignment by Customer, the assignee is not (i),
in the reasonable opinion of Seller, [materially] inferior in creditworthiness
to Customer or (ii), an entity principally engaged in the manufacture or sale of
telecommunications products or services in competition with Seller.
In no event shall a Permitted Assignment supersede, or operate to diminish
the rights or increase the obligations of Seller under this Agreement or any
existing agreement between Seller and the assignee for purchase of the Products,
Licensed Materials or Services available for procurement by Customer under this
Agreement ("Preexisting Agreement"). Notwithstanding anything herein contained
to the contrary, no Assignment or Permitted Assignment shall act to release or
discharge Customer or any assignee of its obligations with respect to any
purchase commitment contained in this Agreement or any Preexisting Agreement
("Purchase Commitment") or to modify the terms of such Purchase Commitment. In
the event of a Permitted Assignment to an assignee with a Preexisting Agreement,
the parties agree that upon the full satisfaction of any Purchase Commitments
the assignee shall elect and may thereafter only procure Products, License
Materials, and Services from Seller under this Agreement or the Preexisting
Agreement, but not both. A party that makes any Permitted Assignment shall
provide prompt notice thereof to the other party. For purposes of this clause,
the term "Agreement" includes this Agreement, any subordinate agreement placed
under this Agreement and any order placed under this Agreement or subordinate
agreement.
1.24 TERMINATION OF AGREEMENT FOR BREACH:
In the event either party is in material breach or default of the terms of
this Agreement and such breach or default continues for a period of ten (10)
days with respect to payment obligations or thirty (30) days with respect to any
other obligations after the receipt of written notice from the other party, then
the party not in breach or default shall have the right to terminate this
Agreement without any charge, obligation or liability except for Products or
Licensed Materials already delivered and Services already performed. The party
not in breach or default shall provide full cooperation to the other party in
every reasonable way to facilitate the remedy of the breach or default hereunder
within the applicable cure period. Notwithstanding the foregoing, if the nature
of the material breach or default is such that it is not a payment obligation
and it is incapable of cure within the foregoing thirty (30) day period, then
the thirty (30) day cure period may be extended for a reasonable period of time
(in no event to exceed an additional thirty (30) days), provided that the party
in breach or default is proceeding diligently and in good faith to effectuate a
cure.
1.25 ARBITRATION:
If a dispute arises out of or relates to this Agreement, or its breach,
the parties agree to escalate such dispute to their respective senior executives
for good faith negotiations seeking a mutually agreeable resolution. This demand
for escalation shall be in writing and notice shall be
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<PAGE> 22
served in accordance with the notice provision of this Agreement. If the dispute
is not resolved through such escalation within fifteen (15) days after the date
of escalation, either party shall have the right to submit the dispute to a sole
mediator selected by the parties or, at any time at the option of a party, to
mediation by the American Arbitration Association ("AAA"). If not thus resolved,
it shall be referred to a sole arbitrator selected by the parties within thirty
(30) days of the mediation or, in the absence of such selection, to AAA
arbitration which shall be governed by the United States Arbitration Act, and
judgment on the award may be entered in any court having jurisdiction. The
arbitrator may determine issues of arbitrability, but may not award punitive
damages or limit, expand or otherwise modify the terms of this Agreement. The
parties, their representatives, other participants and the mediator and
arbitrator shall hold the existence, content and result of mediation and
arbitration in confidence, except as such disclosure may be necessary for the
purpose of recording or otherwise acting upon the arbitrator's award.
1.26 NON-SOLICITATION:
During the term of this Agreement and for a period of one (1) year from
the termination of this Agreement or a Statement of Work, the parties agree not
to employ, make an offer of employment to, or enter into a consulting
relationship with any employee, subcontractors or consultant of the other party
who is directly involved with the delivery of Services under this Agreement,
except upon the prior written consent of the affected party.
1.27 INDEPENDENT CONTRACTOR:
All work performed by either party under this Agreement shall be performed
as an independent contractor and not as an agent of the other, and no persons
furnished by the performing party shall be considered the employees or agents of
the other.
1.28 RELEASES VOID:
Neither party shall require releases or waivers of any personal rights
from representatives or employees of the other in connection with visits to its
premises, nor shall such parties plead such releases or waivers in any action or
proceeding.
1.29 PUBLICITY:
Neither party shall issue or release for publication any articles,
advertising, or publicity material relating to Products, Licensed Materials, or
Services under this Agreement or mentioning or implying the name, trademarks,
logos, trade name, service mark or other company identification of the other
party or any of its Affiliates or any of its personnel without the prior written
consent of the other party.
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1.30 CONFIDENTIALITY OF AGREEMENT:
Notwithstanding the obligations contained in Section 1.17 (Use of
Information) of this Agreement the parties shall keep all provisions of this
Agreement and any order submitted hereunder (including, without limitation,
prices and pricing related information) confidential except as reasonably
necessary for performance by the parties hereunder and except to the extent
disclosure may be required by applicable laws or regulations, in which latter
case, the party required to make such disclosure shall promptly inform the other
prior to such disclosure in sufficient time to enable such other party to make
known any objections it may have to such disclosure. The disclosing party shall
take all reasonable steps and exercise all reasonable efforts directed by Seller
to secure a protective order, seek confidential treatment, or otherwise assure
that this Agreement and/or any order will be withheld from the public record.
1.31 AMENDMENTS:
Any supplement, modification or waiver of any provision of this Agreement
must be in writing and signed by authorized representatives of both parties.
1.32 SEVERABILITY:
If any portion of this Agreement is found to be invalid or unenforceable,
the parties agree that the remaining portions shall remain in effect. The
parties further agree that in the event such invalid or unenforceable portion is
an essential part of this Agreement, they will immediately begin negotiations
for a replacement.
1.33 WAIVER:
If either party fails to enforce any right or remedy available under this
Agreement, that failure shall not be construed as a waiver of any right or
remedy with respect to any other breach or failure by the other party.
1.34 SURVIVAL:
The rights and obligations of the parties which by their nature would
continue beyond the termination cancellation, or expiration of this Agreement,
shall survive such termination, cancellation or expiration.
1.35 SECTION HEADINGS:
The section headings in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this Agreement.
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1.36 CHOICE OF LAW:
The construction and interpretation of, and the rights and obligations of
the parties pursuant to this Agreement, shall be governed by the laws of the
State of New York without regard to its conflict of laws provision.
1.37 AMBIGUITIES:
The parties represent that they are sophisticated businesses with access
to their own legal, financial and business advisors and that each party has had
the opportunity to consult with advisors and that each party has had the
opportunity to consult with advisors of their own choosing before entering into
this Agreement. The parties therefore acknowledge and agree that the rule of law
that ambiguities are construed against the drafter shall not apply to the
interpretation of this Agreement.
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<PAGE> 25
2. ARTICLE II
PROVISIONS APPLICABLE TO LICENSED MATERIALS
2.1 LICENSE FOR LICENSED MATERIALS:
(a) Upon delivery of Licensed Materials pursuant to this Agreement, Seller
grants to Customer a personal, nontransferable, and nonexclusive license to Use
Licensed Materials on a Designated Processor in the United States for its own
business operations. No license is granted to Customer to Use the Licensed
Materials outside the United States or to sublicense such Licensed Materials
furnished by Seller. Customer shall not reverse engineer, decompile or
disassemble Software furnished as object code to generate corresponding Source
Code. Unless otherwise agreed in writing by Seller, Customer shall not modify
Software furnished by Seller under this Agreement. If the Designated Processor
becomes temporarily inoperative, Customer shall have the right to Use the
Licensed Materials temporarily on a backup processor until operable status is
restored and processing on the backup processor is completed.
(b) Customer shall not copy Software embodied in Firmware. Customer shall not
make any copies of any other Licensed Materials except as necessary in
connection with the rights granted hereunder. Customer shall reproduce and
include any Seller copyright and proprietary notice on all such necessary copies
of the Licensed Materials. Customer shall also mark all media containing such
copies with a warning that the Licensed Materials are subject to restrictions
contained in an agreement between Seller and Customer and that such Licensed
Materials are the property of Seller. Customer shall maintain records of the
number and location of all copies of the Licensed Materials. Customer shall take
appropriate action, by instruction, agreement, or otherwise, with the persons
permitted access to the Licensed Materials so as to enable Customer to satisfy
its obligations under this Agreement. If Customer's license is canceled or
terminated, or when the Licensed Materials are no longer needed by Customer,
Customer shall return all copies of such Licensed Materials to Seller or follow
written disposition instructions provided by Seller.
2.2 CHANGES IN LICENSED MATERIALS:
Prior to shipment, Seller at its option may at any time modify the
Specifications relating to its Licensed Materials, provided the modifications,
under normal and proper Use, do not materially adversely affect the Use,
function, or performance of the ordered Licensed Materials. Unless otherwise
agreed in writing, such substitution shall not result in any additional charges
to Customer with respect to licenses for which Seller has quoted fees to
Customer.
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<PAGE> 26
2.3 CANCELLATION OF LICENSE:
Notwithstanding any other section in this Agreement to the contrary, if
Customer fails to comply with any of the material terms and conditions of this
Agreement with respect to the Use of Licensed Materials, and such failure is not
corrected within ten (10) days of receipt of written notice thereof by Customer,
Seller, upon written notice to Customer, may cancel any affected license for
Licensed Materials without further notification.
2.4 OPTIONAL SOFTWARE FEATURES:
Software provided to Customer under this Agreement may contain optional
features which are separately licensed and priced. Customer understands and
agrees that such optional features will not be activated without written
authorization from Seller and Customer's payment of the appropriate license
fees. If, in spite of Customer's best efforts to comply with this restriction,
such features are activated, Customer agrees to so notify Seller within five (5)
business days from the date of Customer's knowledge that such features were
activated and to pay Seller the current license fees charged by Seller for the
activated features, as well as the reasonable cost of money for the period in
which such features were activated.
2.5 ADDITIONAL RIGHTS IN LICENSED MATERIALS:
(a) Upon thirty (30) days advance written notice, Customer may relocate the
Software permanently to a new processor of Customer. This new processor shall
then become the Designated Processor in lieu of the former Designated Processor.
(b) Customer may retain an archival copy of the Software for as long as such
Software is relevant to Customer's operations.
2.6 INSTALLATION OF SOFTWARE:
(a) Where Customer is responsible for Software installation, Seller's sole
responsibility is to deliver the Software to Customer on or before the scheduled
Delivery Date agreed to by Seller. However, if the order specifies that Seller
is responsible for such installation, Seller shall deliver the Software to
Customer in sufficient time for it to be installed on or before the scheduled
Installation Complete Date agreed to by Seller, and Seller shall complete its
installation and associated testing on or before such date.
(b) Where Customer has assumed responsibility for the installation of newly
licensed Software and in the event that Customer encounters installation
difficulties, at Customer's request, Seller will, at the standard rate in effect
at the time of the request, provide technical assistance.
2.7 SOFTWARE ACCEPTANCE:
(a) Prior to Software acceptance by Customer, Customer has the right to operate
the Software furnished by Seller on the Designated Processor solely for the
purpose of conducting
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an Acceptance Test (means the test which may be performed by Customer during the
Acceptance Test Period to determine whether Software will be free from defects
which materially affect performance in accordance with the Seller's
Specifications). Unless otherwise agreed by the parties, the Acceptance Test
Period (means the period of time in days agreed to by the parties and specified
in this section) for Software shall be thirty (30) consecutive calendar days
from the ship date if Customer performs installation or from the Installation
Complete Date if Seller performs installation. The Software shall be deemed
accepted by Customer unless Customer notifies Seller in writing to the contrary
within the applicable Acceptance Test Period described above. If Seller receives
written notice from Customer during the Acceptance Test Period that the Software
failed the Acceptance Test, the Acceptance Date (the date on which the Software
successfully completes the Acceptance Test) shall be extended on a day-to-day
basis until such time as the Software passes the Acceptance Test.
(b) If Customer elects in the order not to perform Acceptance Tests for any
Software, the Acceptance Date for such Software shall be the Delivery Date if
not installed by Seller or the Installation Complete Date if installed by
Seller, as applicable.
(c) For any Acceptance Test conducted by Customer on newly licensed Software,
and in the event that Customer encounters difficulties, Seller will, at
Customer's request and for the standard rate in effect at the time of the
request, provide technical assistance to Customer.
(d) If Customer performs installation and elects to perform applicable tests for
any Software, the warranty for such Software shall commence on the Delivery
Date.
2.8 MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES:
Customer may add to, delete from, or modify user controlled Software
modules or menus as contemplated in the Seller's Related Documentation. Such
changes or modifications, however extensive, shall not affect Seller's title to
the licensed Software. Seller shall have no liability for Customer's errors in
making such changes or modifications.
2.9 ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS
The following provisions also apply to the granting of licenses by Seller
to Customer for 5ESS(R) Switch Licensed Materials.
(a) Customer may transfer its right-to-use 5ESS(R) Switch Software furnished
under this Agreement without the payment of an additional right-to-use fee by
transferee, except where size sensitive units are a factor. Such transfer can be
made to an end user for their own internal use and only under the following
conditions:
(i) Such software shall be used only within the United States; however,
Seller will not unreasonably withhold its consent to Use outside the
United States provided that, in
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the sole opinion of the Seller, the proprietary information
associated with the Use can be adequately protected and any other
reasonable concerns of Seller are adequately addressed;
(ii) Except as otherwise provided in the agreement, the right to use such
Software may be transferred only together with the 5ESS(R) Switch
Product with which customer has a right to use such Software, and
such right to use the Software shall continue to be limited to Use
with such Product;
(iii) Before any such Software shall be transferred, Customer shall notify
Seller of such transfer and the transferee shall have agreed in
writing (a copy of which will be provided to Seller at its request)
to keep such Software in confidence and to comply with corresponding
conditions respecting Use of Licensed Materials as those imposed on
customer; and
(iv) Within the United States, the transferee shall have the same right
to Software warranty or Software maintenance for such Software as
the transferor, provided the transferee continues to pay the fees,
if any, associated with such Software or Software maintenance.
(v) In no event shall such transfer be made to any competitor of Seller
who is in the business of manufacturing comparable systems or to any
other party who presents a competitive or strategic conflict to
Seller.
(b) Upon advance written notice to Seller, Customer may remove 5ESS(R) Switch
Software or optional feature packages, which Customer has the right to Use under
this Agreement from one Customer-owned 5ESS(R) Switch Product and relocate them
to another Customer-owned 5ESS(R) Switch Product within the same company as
Customer. Customer shall not be required to pay additional right-to-use fees as
a result of such relocation, except where size sensitive units are a factor.
Seller may charge customer for services requested by customer in support of such
relocation. Such Software shall not be used or transferred to Customer's
affiliate that is a manufacturer of telecommunication products in direct
competition with Seller.
(c) If Seller ceases to maintain a standard, supported version of Software for
the 5ESS(R) Switch Product furnished pursuant to this Agreement, and these
support services are not available from another entity (either working with or
independently from Seller), then Seller shall furnish Customer, under a
confidentiality agreement acceptable to Seller, Seller's then existing Software
Source Code, Software development programs, and associated documentation for
such standard version to the extent necessary for Customer to maintain and
enhance for its own use the standard version of that Software which it has the
right to use under this Agreement.
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3. ARTICLE III
PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND OTHER SERVICES
GENERAL: The provisions of this Article III shall apply to the Services
ordered by Customer and furnished by Seller under this Agreement.
3.1 SITE REQUIREMENTS:
(a) Customer is solely responsible for ensuring that the installation site is
compliant with any site requirements identified by Seller for the installation
and/or operation of any Products, Licensed Materials, or Services furnished by
Seller under this Agreement. Such site requirements shall include, without
limitation, those site requirements set forth in this Section 3.1 below. Seller
agrees to cooperate with Customer to ensure compliance with all site
requirements, provided that such cooperation shall not require Seller to incur
any out-of-pocket costs unless the parties expressly agree otherwise in writing.
(b) Customer shall be solely responsible for ensuring that the installation site
complies with all applicable laws, orders, and regulations of federal, state and
local governmental entities including, without limitation, those relating to
environmental conditions.
(c) Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no liability to Customer, its employees, agents, and customers for
any delay by Seller in completion of any installation or other Service to be
provided by Seller under this Agreement if such delay is attributable to the
failure by Customer to comply with any site requirements or to provide any other
items which are the responsibility of Customer under this Article III.
(d) The site requirements which are solely the Customer's responsibility shall
include but are not limited to the following:
(i) Participate in a joint site survey with Seller
(ii) Interior Space -Clears ten feet (10') from floor to bottom of
lowest obstruction
(iii) Floor Loading (minimum requirements) Structural Analysis always
required
(iv) Power Room 150 lb. per sq. ft
(v) Switch Room 100 lb. per sq. ft.
(vi) Floor Thickness: In accordance with local seismic requirements for
the equipment
(vii) Conduit access to all floors in building
(viii) Local exchange carrier cable available
(ix) Commercial electrical current
(x) Existing building grounding is 5 ohm or less metered
(xi) Battery room ventilation in accordance with local requirements
(xii) Fire suppression system
(xiii) Freight access for a 48' trailer off loading equipment.
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3.2 ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER:
(a) Customer will also be responsible for furnishing the items described in
this Section 3.2 as required by the conditions of the particular
installation or other on-site Service at no cost to Seller and such items
are not included in Seller's price for the Services. Seller shall have the
right to invoice Customer for any costs or expenses incurred by Seller as
a result of Customer's failure to provide any of these items described in
this Section 3.2 and all such invoices shall be paid by Customer in
accordance with this Agreement.
(i) Access to Building and Work Site Customer shall provide employees of
Seller and its subcontractors free access to premises and facilities
at all hours during the scheduled Service or at such other times as
are requested by Seller. Customer shall obtain for Seller's
employees and its subcontractors' employees any identification and
clearance credentials which are necessary to enable Seller and its
subcontractors to have access to the work site.
(ii) Site Coordination At Seller's request Customer shall coordinate with
Customer's sub contractors, property managers, Regional Bell
Operating Company, Local Exchange Carrier and any other parties and
tenants having rights to the work site or whose participation is
necessary in order for Seller to perform the applicable Services.
(iii) Environmental Conditions Prior to the Services start date, Customer
shall insure that the premises will be dry and free from dust and
Hazardous Materials, including but not limited to asbestos, and that
the premises are in such condition as not to be injurious to
Seller's or its subcontractors' employees or to the Products and
Licensed Materials to be installed. Prior to Services start date and
during the performance of the Services, Customer shall, if requested
by Seller, provide Seller with sufficient data to assist Seller and
its subcontractors in evaluating the environmental conditions at the
work site (including without limitation, the presence of Hazardous
Materials). The price quoted by Seller for Services does not include
the cost of removal or disposal of the Hazardous Materials from the
work site. Customer is responsible for the removal and disposal in
accordance with applicable laws, rules and regulation of the
Hazardous Materials, including but not limited to asbestos, prior to
commencement of Services.
(iv) Sensitive Equipment Prior to the Services start date, Customer shall
inform Seller of the presence of any sensitive equipment at the work
site (e.g., equipment sensitive to static electricity or light).
(v) Repairs to Buildings Prior to the Services start date, Customer
shall make such alterations and repairs to the work site as are
necessary for proper installation of Products and Licensed
Materials.
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(vi) Building Readiness Prior to the Services start date, Customer shall
provide extraordinary hauling and hoisting services such as, rigging
or crane services, if applicable, and shall arrange for traffic
control, if necessary for the delivery of Products.
(vii) Openings in Buildings - Customer shall furnish suitable openings in
buildings, including, without limitation, elevators and windows as
needed to allow Products to be placed in position, and shall provide
necessary openings and ducts for cable and conductors in floors and
walls as designated on engineering drawings furnished by Seller.
Customer shall fireproof (with steel covers and as otherwise
required by applicable laws, rules, regulations, and codes) all
unopened paths throughout such buildings.
(viii) Surveys Prior to the Services start date, Customer shall provide to
Seller (and, if requested by Seller, to Seller's subcontractors)
surveys (describing the physical characteristics, legal limitations,
and utility locations for the work site) and a legal description of
the site.
(ix) Electrical Current, Heat, Light, and Water Customer shall, in
amounts no less than that ordinarily furnished for similar purposes
in a working office, provide electric power, run all leads to
Seller's power board; provide temperature control and general
illumination (regular and emergency) in rooms in which services are
to be performed or Products stored, provide exit lights; and provide
water and other necessary utilities for the proper execution of
Services.
(x) Building Evacuation Prior to the Services start date, Customer shall
provide building evacuation plans in case of a fire or other
emergency.
(xi) Material Furnished by Customer Unless expressly stated to the
contrary, Seller's prices do not include costs for any Customer
furnished material nor do they include any Seller charges for
engineering, installation, modification, or repair Services to
Customer furnished material. New or used material furnished by
Customer shall be in such condition that it requires no repair and
no adjustment or test effort in excess of that normal for new
equipment. Customer assumes all responsibility for the proper
functioning of such material. Customer shall also provide the
necessary technical assistance and information for Seller to
properly install such material.
(xii) Floor Space and Storage Facilities Customer shall provide, for the
duration of Services, suitable and easily accessible floor space and
storage facilities to permit storing of Products and other material,
tools and other property of Seller and its subcontractors in close
proximity to where they will be used. Where the Services are to be
performed outside of a building or in a building under construction,
Customer shall, in addition to the above requirements, permit or
secure any necessary
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<PAGE> 32
permission for Seller and its subcontractors to maintain at the work
site, storage facilities for Products, material, tools, and
equipment needed to complete the Services. As appropriate Customer
shall provide Seller's and its subcontractors' personnel access to
toilet facilities.
(xiii) Easements, Permits, and Rights of Way Customer shall secure prior
to the Services start date and shall maintain for the duration of
the Services all rights-of-way, easements, licenses, and permits and
such other rights and approvals as are necessary to enable Seller to
perform the Services including, without limitation, all construction
and building permits for work to be performed at the work site and
other areas ancillary to the work site such as sidewalks, streets,
alleys, and highways.
(xiv) Security Service Customer shall provide such levels of security as
are necessary to prevent admission of unauthorized persons to
building and other areas where installation Services are performed
and to prevent unauthorized removal of the Products and other
materials. Seller will inform Customer as to which storage
facilities at the work site Seller will keep locked. Such storage
facilities will remain closed to Customer's building surveillance.
(xv) Access to Existing Equipment Customer shall permit Seller reasonable
use of such portions of the existing equipment as are necessary for
the proper completion of such tests as require coordination with
existing equipment. Such use shall not interfere with the Customer's
normal maintenance of equipment.
(xvi) Grounds Customer shall provide access to suitable and isolated
building ground as required for Seller's standard grounding of
equipment. Where installation is performed outside or in a building
under construction, Customer shall also furnish lightning protection
ground.
(xvii) Requirements for Customer Designed Circuits Customer shall furnish
information covering the proper test and readjust requirements for
apparatus and shall furnish requirements for circuit performance
associated with circuits designed by Customer or standard circuits
modified by Customer's drawings such as alarm and environmental
circuits.
(xviii) Cross-Connecting Main Distributing Frames and Installing Heat
Coils Customer shall install such cross-connections and heat coils
as are necessary in connection with the Services.
(xix) Clearing Equipment for Modifications Customer shall remove
cross-connections, transfer service on trunks and sundry working
equipment, and make other arrangements required to permit Seller to
modify existing equipment.
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(b) In the event the joint site survey conducted by the parties pursuant to
Section 3.3.2(a) determines that the necessary requirements are not met at the
commencement of the installation of the Products and the Customer needs to
arrange for alterations and/or repairs, the order will be placed on hold until
such time as requirements are met. During such interval, Seller reserves the
right to determine any schedule and price impacts, to treat such product as Bill
and Hold, or to cancel such order. Customer shall be responsible for and agrees
to pay the applicable cancellation fee if such order is canceled by Seller.
3.3 ITEMS TO BE FURNISHED BY SELLER
3.3.1 ENGINEERING:
(a) General Review Seller will review the following items as Seller deems
appropriate; switching Products (Products and Software); transmission Products
(Products and Software); power/energy equipment hardware; engineering drawings;
site survey; grounding of the switch; appliance outlets; front and rear aisle
lighting as required; timing cables; distributing frame engineering and
equipment; cable rack and hardware; stanchions; end guards auxiliary framing;
existing cable holes; fiber cable protection systems.
(b) Needs Analysis Seller will perform a needs analysis of the Telephone
Equipment Order (TEO) and the Customer's specified requirements to determine the
equipment solution that meets those requirements.
(c) Records Upon Installation Complete, Seller will turn over to Customer a
complete set of records. Such records include but are not limited to wiring
lists, front equipment drawings, assignment drawings, and interface schematics.
3.3.2 INSTALLATION:
(a) Site Survey Prior to the commencement of installation Services, Seller and
Customer will perform a joint site survey to determine whether the installation
site meets the site requirements referenced in Section 3.1 and whether Customer
has provided the items in Section 3.2. Should Seller determine that the site
does not comply with such site requirements or that Customer has not provided
any item required under Section 3.2, Seller shall specify such deficiencies to
Customer in writing. Seller and Customer shall jointly agree on a course of
action to correct such deficiencies prior to the start of installation Services.
During the joint site survey, Seller and Customer shall also jointly agree upon
the layouts and arrangements for the Products and Licensed Materials to be
installed. Upon the start of installation all changes shall be subject to
additional charges.
(b) Method of Procedure Seller shall prepare a detailed Method of Procedure
("MOP") and review with Customer before starting work. Customer shall review the
MOP prepared by Seller and shall give Seller written acceptance of the MOP by
signing a copy thereof prior to the
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<PAGE> 34
Services start date. Any changes to the MOP requested by Customer shall be
agreed upon subject to the Change Order process.
The MOP shall contain the following details:
(i) A concise statement that covers the installation Services to be
performed including the equipment that will be affected and the
hours that such Services are to be performed;
(ii) Specific responsibilities of Seller and Customer;
(iii) Service protection procedures that include, general service
protection rules and special service precautions for the specific
project;
(iv) A time and release schedule of the work operations involving working
equipment and/or circuits in service and;
(v) A method of identifying equipment and cabling to ensure that the
circuits are "cleared" before start of work
(vi) A detailed account of the work operations that the installer will
follow
(vii) The methodology to be used to halt installation Services if trouble
occurs and a general procedure to correct/resume work operations;
(viii) Provide environmental safety concerns, if applicable;
(ix) Obtain Customer signature.
(c) Warehousing, Delivery, Receipt & On-site Storage of Equipment, and General
Cleaning Seller will stage the delivery of Products. Seller's personnel will be
on-site at the time the Products are delivered. Such personnel will accept the
Products, unpack for inventory purposes and inspect such Products for damage.
Seller will resolve all shipping errors inventory discrepancies and damage
issues. This function shall be performed in an area previously designated for
the storage and unpacking of equipment and Product(s). Such area will be
selected based on a location that minimizes movement of material and personnel
through the work site. In the event storage is limited or inadequate, as
determined by Seller, temporary storage facilities such as trailers or
containers may be required. Any fees associated with the procurement of
temporary storage facilities are not included in Seller's quoted prices and
shall be solely the responsibility of the Customer. Materials such as plywood or
masonite will be utilized as necessary, to prevent cable reels, iron work and
other heavy objects from damaging floors, walls and doors. Seller shall perform
general cleaning of the equipment and storage areas (e.g. clearing floors of
debris, packing material, etc.) on a regular basis throughout the installation
period. Rubbish shall be disposed of at Seller's expense and in compliance with
local requirements.
(d) Hardware Assembly Hardware assemblies and overhead cable rack, iron work and
conduit (collectively "Components") will be delivered for specific bays and
cabinets as identified in the firm price quote provided or in the Statement of
Work, attached hereto. Unless included in the SOW, additions of these components
to provide access to other locations (i.e. power rooms, computer rooms,
distributing frames not located with Products, or Products located on separate
floors) will be specifically excluded from the installation Services. Such
additions will only be included in the installation Services for an additional
charge. Seller will place and secure all
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<PAGE> 35
ordered Products in the location specified in the engineering specifications.
Such activity includes but is not limited to:
(i) Mark and drill floors
(ii) Assemble and place floor mounted Products
(iii) Assemble distribution frames
(iv) Erect frames
(v) Align and junction frames
(vi) Install end guards and covers
(vii) Assemble and install fiber protection ductwork
(viii) Mount units and apparatus
(ix) Place batteries
Seller will also erect supporting hardware compatible with purchased
Products. Such activity includes but is not limited to:
(i) Fabricate and install cable racks, bars, rod or stations as
identified in Statement of Work attached hereto
(ii) Erect ladder rack and ladders
(iii) Open and close existing cable holes and slots. Any new cable to
facilitate Products designs the responsibility of the Customer
(iv) Fabricate and install framing aisle lighting conduit and fittings
In addition, Seller will place and designate connecting appliances (MDF
terminal blocks, DSX panels, etc.) provided with order. Such as but not limited
to:
(i) Stamp and/or affix aisle, shelf and unit designations
(ii) Mount and stencil terminal strips
Seller will also extend lighting, A/C circuits and grounding to include
added Products if Products is ordered in job specification. Such activities
include but are not limited to:
(i) Assemble and install lighting fixtures
(ii) Install switches and receptacles
(e) Cable and Wire For cable and wire to be installed by Seller, Seller will
run, tag, and secure metallic and fiber optic cables in an unobstructed
environment a maximum of one hundred (100) feet and power cables a maximum of
fifty (50) feet for the Products and apparatus (this specifically excludes
primary power cables, except on power equipment orders) identified in the
Product order or Statement of Work attached hereto. Seller will wire, attach,
terminate and affix all cable and wire including fiber optic cables supplied
with purchased Products. This may include but is not limited to mechanical wire
wrapping, soldering, crimping, plugging in of pre-terminated cables or polishing
of fiber optics for purchased Product. Seller will run alarm cabling, terminate
and test for the identified equipment including Customer provided
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<PAGE> 36
environmental scan points of fire detection and door entry which are less than
fifty (50) feet away and pre-terminated. Seller will verify all copper wiring
placed by the Seller for continuity to detect and analyze opens, shorts,
reversals, and incorrect wiring. Where pairs, quads or groupings are indicated,
the grouping will be verified. Seller will ensure the functionality and
integrity of all fiber directly associated with the installed Products and the
fiber optic cables installed by Seller within the building structure. Seller
will "Dress" all cabling and wiring and provide physical protection. Seller will
properly protect cables at all "break-off" locations, such as the vertical turns
from the overhead cable rack to bay frame work.
(f) Testing Specific test procedures are dependent upon the type of Product
installed and are identified in the installation guide for the particular
product. To ensure that technical design and performance criteria are being met,
testing shall be performed by Seller to obtain an evaluation of the functional,
operational, electrical and mechanical integrity of all Products installed by
Seller. In general the following tests are required for all Product types
furnished and installed by Seller: Seller's activities associated with testing
will include, but not be limited to the following:
(i) Turn on and verify power to installed Products
(ii) Load product software and default parameters required to conduct
local unit loop-back testing to demarcation points.
(iii) Run and connect test specific cross-connects. Remove upon completion
of test(s).
(iv) Perform all unit and system-level tests to ensure Products pass
system and technician evoked diagnostics
(v) Test functionality of circuit packs required by job, at time of
original installation, within the installed unit. Testing of spares
is specifically excluded and will be included only for an additional
charge.
(vi) Test functionality and integrity of Seller installed local alarms.
(vii) Resolve troubles encountered with Products purchased on order. Refer
to Customer any trouble found in Customer provided equipment.
(viii) Maintain test logs and trouble reports and turn over to Customer.
(g) Seller will perform the following Turnover procedures for all installation
Services provided by Seller:
(i) Inform Customer of completion of installation cycle
(ii) Provide Customer with all drawings, invoices, logs and test results
per the contract.
(iii) Remove from Customer premises tools and scrap generated from
installation effort.
(iv) Issue job completion notice to Customer.
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STATEMENT OF WORK
IMPLEMENTATION SCHEDULE
The parties recognize that the following milestones must be met in order
to keep the project on schedule. Each party agrees to adhere to this schedule
and in the event a circumstance arises that will cause a delay the party
knowledgeable of the delay will notify the other party and the schedule will be
adjusted accordingly.
<TABLE>
<CAPTION>
================================================================================
Milestone Stakeholder Expected Completion
Date
- --------------------------------------------------------------------------------
<S> <C> <C>
Develop Implementation
Plan
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Identify Project Site
- --------------------------------------------------------------------------------
Receive Customer
Purchase Order
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Site Ready
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Switch Software
Questionnaire Complete
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Installation and Testing
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Turnover/Acceptance
================================================================================
</TABLE>
If separately ordered by Customer the following will be included in the
implementation.
<TABLE>
<CAPTION>
================================================================================
Milestone Stakeholder Expected Completion
Date
- --------------------------------------------------------------------------------
<S> <C> <C>
Network Planning
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cutover
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Monitor
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Maintenance
================================================================================
</TABLE>
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EXHIBIT 1
INVOICE
INVOICE NUMBER______________
INVOICE DATE________________
ACCOUNT NUMBER______________
PAGE NUMBER_________________
Lucent Technologies [LOGO]
Bell Labs Innovations
SHIP TO: BILL TO:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
CUSTOMER P.O. # LUC REFERENCE # CUSTOMER CODE TERMS CONTRACT # FOB
- -------------------------------------------------------------------------------------------------------------------------------
ITEM LUCENT BILL OF QUANTITY QUANTITY
NO. ORDER SHIP DATE SHIP METH LADING # PART NUMBER/DESCRIPTION ORDERED SHIPPED UNIT PRICE PM TOTAL PRICE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 J7888KK 2/2/00 5ESS Material 1 $25,000.00 E $25,000.00
2 J7888KK 2/2/00 Spares 1 $5,000.00 E $5,000.00
3 J7888KK 2/2/00 Engineering $2,000.00 $2,000.00
4 J7888KK 2/2/00 Installation $4,000.00 $4,000.00
5 J7888KK 2/2/00 Transportation $1,000.00 $1,000.00
- -------------------------------------------------------------------------------------------------------------------------------
-------------------------
QUESTIONS ABOUT YOUR ACCOUNT? MAKE CHECK PAYABLE TO: INVOICES ARE PAYABLE SUBTOTAL $36,000.00
CALL: Lucent Technologies Inc. IN U.S. CURRENCY AND LESS ADVANCE PAYMENT $9,250.00
P.O. Box 100317 OVERDUE AMOUNT SHALL TRANSPORTATION $1,000.00
REMARKS Atlanta, GA 30384-0317 BEAR INTEREST AT A REASONABLE TAX
Attn: Accounts Receivable RATE OR IS SUBJECT TO LATE TOTAL DUE $27,750.00
------------------------- PAYMENT CHARGES PER AGREEMENT
</TABLE>
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<PAGE> 40
4. ARTICLE IV
ENTIRE AGREEMENT:
4.1 ENTIRE AGREEMENT
The terms and conditions contained in this General Agreement supersede all
prior oral or written understandings between the parties with respect to the
subject matter hereof and constitute the entire agreement between the parties
with respect to such subject matter. The preprinted terms and conditions on
Customer's purchase orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an order which are consistent with the terms of this
General Agreement along with the terms of this General Agreement shall
constitute the entire Agreement between the parties relating to said order.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives on the date(s) indicated.
LUCENT TECHNOLOGIES INC. LOCAL FIBER, LLC
By: /s/ C.L. Naylor By: /s/ J.J. Marchaesi
------------------------ ------------------------
Name: C.L. Naylor Name: John J. Marchaesi
Title: AVP-CLEC Title: VP Administration
Date: 12/30/97 Date: 12/19/97
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<PAGE> 41
4. ARTICLE IV
ENTIRE AGREEMENT:
4.1 ENTIRE AGREEMENT
The terms and conditions contained in this General Agreement supersede all
prior oral or written understandings between the parties with respect to the
subject matter hereof and constitute the entire agreement between the parties
with respect to such subject matter. The preprinted terms and conditions on
Customer's purchase orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an order which are consistent with the terms of this
General Agreement along with the terms of this General Agreement shall
constitute the entire Agreement between the parties relating to said order.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives on the date(s) indicated.
LUCENT TECHNOLOGIES INC. FIBERNET EQUAL ACCESS, LLC
By: By: /s/ John J. Marchaesi
------------------------ ------------------------
Name: Name: John J. Marchaesi
----------------------
Title: Title: VP Administration
---------------------
Date: Date: 12/19/97
----------------------
Lucent Technologies Proprietary
37
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE THREE
MONTH FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND SIX MONTH FINANCIAL
STATEMENT AS OF DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JUN-30-1996 DEC-31-1998
<PERIOD-END> JUN-30-1997 MAR-31-1998
<CASH> 5,146,327 4,206,154
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 5,150,281 4,237,381
<PP&E> 94,065 367,849
<DEPRECIATION> 1,842 4,342
<TOTAL-ASSETS> 5,374,341 4,957,921
<CURRENT-LIABILITIES> 730,125 846,929
<BONDS> 0 0
0 0
0 0
<COMMON> 15,000 16,000
<OTHER-SE> 5,383,981 5,279,147
<TOTAL-LIABILITY-AND-EQUITY> 5,374,341 4,957,921
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 419,982 543,801
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (26,180) (49,279)
<INCOME-PRETAX> (393,802) (494,522)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (393,802) (494,522)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (370,562) (459,540)
<EPS-PRIMARY> (0.027) (0.030)
<EPS-DILUTED> (0.027) (0.030)
</TABLE>
