<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997.
REGISTRATION NO. 333-33653
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METROMEDIA FIBER NETWORK, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4813 11-3168327
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
110 East 42nd Street
Suite 1502
New York, NY 10017
(212) 687-9177
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
STEPHEN A. GAROFALO
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
METROMEDIA FIBER NETWORK, INC.
110 EAST 42ND STREET
SUITE 1502
NEW YORK, NY 10017
(212) 687-9177
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
JAMES M. DUBIN, ESQ. JOHN W. WHITE, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON CRAVATH, SWAINE & MOORE
1285 AVENUE OF THE AMERICAS WORLDWIDE PLAZA
NEW YORK, NEW YORK 10019-6064 825 EIGHTH AVENUE
(212) 373-3000 NEW YORK, NEW YORK 10019-7475
(212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED OFFERING PRICE (1)(2) REGISTRATION FEE(3)
<S> <C> <C>
Class A Common Stock, par value $.01 per share.............. $115,000,000 $34,848.48
</TABLE>
(1) Includes shares which may be purchased by the Underwriters solely to cover
over-allotments, if any.
(2) Estimated solely for purposes of calculating the registration fee.
(3) Calculated pursuant to Rule 457(o). The registration fee was wired to the
Securities and Exchange Commission in connection with the initial filing.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than underwriting
discounts and commissions, in connection with the issuance and distribution of
the securities registered hereby. All the amounts shown are estimates, except
for the Securities and Exchange Commission registration fee, the NASD filing fee
and the Nasdaq National Market listing fee. All of the following fees and
expenses will be paid by the Company.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................ $ 34,849
NASD filing fee................................................................ 12,000
Nasdaq National Market listing fee............................................. 50,000
Printing and engraving expenses................................................ 250,000
Legal fees and expenses........................................................ 400,000
Accounting fees and expenses................................................... 200,000
Blue Sky fees and expenses (including counsel fees and expenses)............... 25,000
Transfer Agent and Registrar fees and expenses................................. 25,000
Miscellaneous.................................................................. 3,151
----------
Total...................................................................... $1,000,000
----------
----------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against expenses actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted under similar standards, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine that despite
the adjudication of liability, such person is fairly and reasonably entitled to
be indemnified for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue, or
matter therein, he shall be indemnified against expenses actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and
II-1
<PAGE>
that the corporation may purchase and maintain insurance on behalf of a director
or officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under such Section 145.
Section 102(b)(7) of the General Corporation Law provides that a corporation
in its original certificate of incorporation or an amendment thereto validly
approved by stockholders may eliminate or limit personal liability of members of
its board of directors or governing body for breach of a director's fiduciary
duty. However, no such provision may eliminate or limit the liability of a
director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating a law, paying a
dividend or approving a Stock repurchase which was illegal, or obtaining an
improper personal benefit. A provision of this type has no effect on the
availability of equitable remedies, such as injunction or rescission, for breach
of fiduciary duty. The Company's Charter contains such a provision.
The Company's Charter further provides that the Company shall indemnify its
officers and directors and, to the extent authorized by the Board, employees and
agents of the Company, to the fullest extent permitted by and in the manner
permissible under the laws of the State of Delaware.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the Company has issued the following
securities, none of which have been registered under the Securities Act.
As of December 31, 1995, the Company owed its majority shareholder $896,979.
Pursuant to an agreement dated May 21, 1996, the Company issued 152,100 shares
of its Class A Common Stock to the majority shareholder in consideration for the
cancellation of a portion of the outstanding balance.
The Company engaged the services of an electrical contractor controlled by
the Company's majority shareholder in connection with the construction of the
fiber optic network. As of December 31, 1995, the entire $692,887 was owed to
this related company. In May 1996, the Company and the assignee of this related
party entered into an agreement whereby the full amount of this indebtedness was
satisfied by the issuance of 456,300 shares of the Company's Class A Common
Stock.
On May 1, 1995, the Company issued Option Warrants to Realprop for 207,883
shares of Class A Common Stock at $.01 per share, exercisable prior to February
1, 1999. The warrants were redeemed by the Company as part of the Katz
Securities.
On March 16, 1995, the Company entered into the Rubin Loan Agreement with
one of the Company's directors for $500,000 bearing interest at 10% per annum
due on March 16, 1996. As an inducement for entering into this loan agreement,
the Company issued to the director 155,994 shares of Class A Common Stock.
On April 18, 1995, the Company entered into a loan agreement with a customer
for $500,000 bearing interest at 11% per annum, originally due 120 days from the
date of this loan. Pursuant to a supplemental agreement dated January 12, 1996,
the parties agreed to extend the maturity date of this loan to November 18,
1996. Pursuant to a second supplemental agreement dated March 1997, the parties
agreed to extend the maturity date to June 30, 1997. On February 16, 1995, the
Company issued to this party a warrant entitling the holder to purchase a total
of 669,167 shares of the Company's Class A Common Stock. This warrant was
cancelled and replaced by a new warrant issued on February 13, 1997 for 456,300
nonassessable shares of Class A Common Stock at a purchase price of $4.85 per
share. The new warrant expires on February 13, 2000.
On April 16, 1996, the Company entered into an agreement with US ONE for the
lease of exclusive usage rights for 8 to 12 fibers on the Company's fiber optic
transmission network. On April 30, 1997, the Company amended this agreement.
Concurrent with the execution of the original lease agreement, the
II-2
<PAGE>
Company and US ONE entered into a bridge financing agreement. Concurrent with
the execution of the aforementioned lease and bridge financing agreements, the
Company entered into a letter agreement with US ONE providing for the sale of a
warrant to purchase Class A Common Stock of the Company. Under this agreement,
the warrant is exercisable for a number of shares to be determined at the
Company's discretion subject to a minimum number of 76,050 shares and a maximum
number of 456,300 shares. The per share exercise price is to be determined
pursuant to a formula, but in no event shall the aggregate purchase price exceed
$1,250,000.
On September 24, 1996, the Company entered into a loan agreement with
Sterling Capital, LLC ("Sterling") for $550,000. As an incentive for the loan,
MFN issued to Sterling warrants to purchase 94,302 shares of Class A Common
Stock at an exercise price of the lesser of $5.92 per share, the price at which
the Company shall issue its securities in the future less $5.92, or one half the
price at which the Class A Common Stock of the Company is offered in an initial
public offering. The warrants can be exercised at the later of (i) the third
anniversary or (ii) twelve months and 90 days after the Company has completed a
public offering.
On February 13, 1996, the Company entered into an investment agreement with
an individual, Patrice Knobel (the "Investor"), pursuant to which the Company
borrowed $1,000,000 in consideration for the issuance of 12% senior subordinated
promissory notes maturing on November 1, 1996. The notes were convertible at a
price of $2.62 per unit for each $1,000 of principal outstanding. Each unit
consists of the following: (i) .507 shares of Class A Common Stock, and (ii) one
warrant to purchase one share of Class A Common Stock at $5.27 per share. As an
inducement for entering into the investment agreement, the Company issued to the
investor the following: (i) 381,087 paid shares of Class A Common Stock, and
(ii) a warrant to purchase 381,087 shares of Class A Common Stock at $5.27 per
share, exercisable for a five year period beginning August 15, 1997 and ending
August 15, 2002. On March 19, 1996, a supplemental investment agreement was
executed with the same investor providing for an additional advance of $500,000
with the same maturity date, interest rate, conversion rights, and guaranty
features as the initial $1,000,000 investment. This advance was subsequently
repaid, along with interest on April 16, 1996. In connection with this
supplemental agreement, the Company issued a warrant to purchase 190,543 shares
of Class A Common Stock at $5.27 per share, exercisable for a five year period
beginning on August 15, 1997 and expiring August 15, 2002. The Company also
issued a warrant to purchase an additional 190,543 shares at $.006 per share
(the "Penny Warrants"), exercisable for a period beginning August 15, 1997 and
expiring August 15, 2002. On April 11, 1996, a memorandum of understanding was
entered into between the parties pursuant to which the warrants issued on
February 13, 1996 to purchase 381,087 shares at $5.27 per share and the warrants
issued on March 19, 1996 to purchase 190,543 shares at $5.27 per share were
surrendered by the investor to the Company in consideration for the issuance of
228,150 shares of the Company's Class A Common Stock. In April and July 1996,
the investor purchased 152,100 and 38,443 shares of Class A Common Stock,
respectively, at $.006 per share in connection with an exercise of the Penny
Warrants. The Company granted the investor the right to exercise prior to the
stated exercise period. Further, in accordance with the investment agreement an
additional 38,025 shares of Class A Common Stock was issued to the investor in
compliance with the anti-dilutive requirements in the agreement.
In August 1995, the Company initiated a $600,000 private offering of
subordinated notes. Those notes were scheduled to mature in March 1996 and bear
interest at an annual rate of 15%, payable quarterly in arrears. Concurrent with
the issuance of these notes, warrants were issued by the Company to the
noteholders which were exercisable for common shares of the Company in an amount
equal to 0.7% of the outstanding shares of Class A Common Stock immediately
following an initial public offering of the Company's Class A Common Stock, at
an exercise price equal to 60% of the initial public offering price. These
warrants are exercisable over a three-year period beginning on the effective
date of such initial public offering. In April 1996, the Company offered the
warrant holders fully paid shares of Class A Common Stock equal to 0.7% of the
Class A Common Stock then issued and outstanding, in exchange
II-3
<PAGE>
for the surrender and cancellation of the outstanding warrants, and in
consideration for the extension of the maturity date of the notes through June
30, 1996. All of the warrant holders accepted this offer and accordingly, the
Company issued a total of 59,359 shares of the Company's Class A Common Stock.
In October 1995, the Company initiated a private offering of $858,000 of
convertible subordinated notes. Through December, 1995, $783,000 of convertible
notes were sold pursuant to this offering, and an additional $75,000 of notes
were sold during January and February of 1996. These notes were scheduled to
mature during the period October 1996 through February 1997 and bear interest at
an annual rate of 15%, payable at maturity. The notes are convertible, at the
Company's option, at any time into shares of Class A Common Stock at a rate of
1.521 shares of Class A Common Stock per $1,000 of note principal, at a
conversion price equal to 60% of the per share price of an initial public
offering of the Company's Class A Common Stock. Concurrently with the issuance
of these notes, warrants were issued by the Company to the noteholders which are
exercisable at a rate of 15,210 shares of Class A Common Stock per $100,000 of
note principal. Such warrants, entitling the holders to purchase an aggregate of
130,502 shares, are exercisable at a price equal to 50% of the per share price
of an initial pubic offering of Class A Common Stock over a three-year period
beginning on the effective date of such public offering.
In December 1996, the Company offered the private placement noteholders
Common Stock purchase warrants to purchase 107,078 shares of its Class A Common
Stock exercisable at one half of the price for which shares are sold in an
initial public offering for a period of three years following such offering in
exchange for the extension of the due dates of the notes. All of the noteholders
accepted this offer.
In March 1997, the Company issued purchase warrants to private placement
noteholders to purchase 57,682 shares of common stock exercisable at one half of
the price for which shares are sold in an initial public offering for a period
of three years following such offering in exchange for the extension of the due
dates of the notes.
On January 12, 1996, the Company entered into an agreement with its then
legal counsel which called for the issuance by the Company of Class A Common
Stock as additional consideration for legal services provided. Pursuant to this
agreement, and a subsequent amendment dated April 16, 1996, the Company issued a
total of 491,105 shares during March and April of 1996.
In June 1996, the Company sold a total of 38,025 shares of Class A Common
Stock to two individuals for total proceeds of $100,000. Concurrent with the
issuance of these shares, warrants were issued by the Company to these
shareholders entitling the holders to purchase a total of 38,025 shares at $2.62
per share for a three year period. In the event of an initial public offering of
the Company's Class A Common Stock during the exercise period, the exercise
price will be reduced to the lesser of $2.62 or 50% of the per share price of
the initial public offering.
In July 1996, the Company issued 12,168 shares of Class A Common Stock as
consideration for consulting services. In addition, the Company issued 150,579
shares to three employees for services rendered. The transaction was later
rescinded and the shares were returned to the Company.
In August 1996, the Company issued 182,520 shares of Class A Common Stock
for consulting services to Marc Pelson.
In September 1996, the Company sold 10,935 shares of Class A Common Stock to
three individuals for total proceeds of $23,500.
On April 15, 1996, the Company entered into a stock purchase agreement with
VCNY. Pursuant to this agreement, the Company issued 1,521,000 shares of Class A
Common Stock to VCNY as consideration for services provided by VCNY.
II-4
<PAGE>
In June 1996, the Company granted 152,100 Class A Common Stock purchase
warrants to the Company's legal counsel exercisable at $.07 per share for a
period of four years as additional consideration for legal services provided.
This warrant was exercised in January 1997.
On December 13, 1996, the Company issued and sold to Penny Lane Partners,
L.P. ("Penny Lane"), for aggregate cash consideration of $2,025,000, (i) 150,000
shares of 10% cumulative convertible preferred Stock (the "Series A Preferred
Stock") bearing dividends at a rate of $1.35 per share per annum, (ii) warrants
to purchase 114,075 shares of Class A Common stock at an exercise price of $4.93
per share (the "Penny Lane Warrants") and (iii) a contingent Stock subscription
warrant to purchase a number of shares of Class A Common Stock (such number to
be determined based on certain future events) at an exercise price of $.02 per
share (the "Contingent Warrants"), In March 1997, Penny Lane agreed to permit
the Series A Preferred Stock and the Contingent Warrants to be redeemed at an
aggregate redemption price of $2,115,000 (which includes accrued but unpaid
dividends on the Series A Preferred Stock) and in connection therewith the
number of Penny Lane Warrants was increased from 114,075 to 228,150.
Through April 30, 1997, Metromedia loaned the Company an aggregate of
$4,000,000. The Metromedia Loan bore interest at the prime rate announced by The
Chase Manhattan Bank and was convertible into Class A Common Stock based on a
formula if the principal and interest was not repaid in full by August 31, 1997.
On April 30, 1997, the Metromedia Loan was repaid with a portion of the proceeds
from the Metromedia Investment.
On April 30, 1997, the Company sold an aggregate of 8,403.325 shares of
Series B Preferred Stock to Metromedia and certain of its affiliates, for an
aggregate price of $32.5 million. The shares of Series B Preferred Stock were
exchanged for shares of Class B Common Stock in the Series B Reclassification.
Each of the foregoing transactions was effected without registration under
the Securities Act in reliance on the exemption from registration provided
pursuant to Section 4(2) and Regulation D promulgated thereunder.
II-5
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of Metromedia Fiber Network, Inc.
3.2* Amended and Restated Bylaws of Metromedia Fiber Network, Inc.
4.1* Specimen Class A Common Stock Certificate of Metromedia Fiber Network,
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
10.1* Metromedia Fiber Network, Inc. 1997 Incentive Stock Plan.
10.2* Employment Agreement by and between National Fiber Network, Inc. and Stephen A. Garofalo, dated as of
February 26, 1997.
10.3* Employment Agreement by and between National Fiber Network, Inc. and Howard Finkelstein, dated as of
April 30, 1997.
10.4* Agreement made as of April 30, 1997, as amended by a Modification Agreement made as of October , 1997
by and among Metromedia Company, Stuart Subotnick, Arnold Wadler, Silvia Kessel, Stephen A. Garofalo
and National Fiber Network, Inc.
10.5** Franchise Agreement between The City of New York and National Fiber Network, Inc., dated as of December
20, 1993.
10.6** Conduit Occupancy Agreement by and between New York Telephone Company and National Fiber Network, Inc.,
dated as of May 1993.
10.7* Consulting Agreement between National Fiber Network and Realprop Capital Corporation, dated as of
February 1, 1996.
10.8** Letter Agreement from National Fiber Network, Inc. to Peter Sahagen dated February 11, 1997.
10.9** Office Lease by and between National Fiber Network, Inc. and 110 East 42nd Street Associates, dated as
of March 19, 1997.
10.10** Office Lease by and between National Fiber Network, Inc. and 110 East 42nd Street, dated as of June
1997.
10.11** Trademark License Agreement by and between Metromedia Company and Metromedia Fiber Network, Inc., dated
as of August 14, 1997.
10.12 Fiber Optic Use Agreement between National Fiber Network, Inc. and a confidential party, dated as of
June 3, 1997.
10.13 Amended and Restated Agreement for the Provision of a Fiber Optic Transmission Network dated as of the
Effective Date by and between US ONE Communications of New York, Inc. and National Fiber Network, Inc.
11.1** Statement Re Computation of Per Share Earnings.
21.1* List of Subsidiaries of Metromedia Fiber Network, Inc.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<S> <C>
23.1* Consent of Paul, Weiss, Rifkind, Wharton & Garrison (contained in the opinion filed as Exhibit 5.1
hereto).
23.2** Consent of Ernst & Young, LLP
23.3** Consent of M. R. Weiser & Co., LLP
23.4** Consent of Richard A. Eisner & Company, LLP
23.5** Consent of David Rockefeller.
23.6** Consent of Leonard White.
24.1** Power of Attorney from officers and directors (contained on signature page).
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
(b) Financial Statement Schedules.
None.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification for such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To provide to the Underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to each
purchaser.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on October 17, 1997.
<TABLE>
<S> <C> <C>
By: /s/ STEPHEN A. GAROFALO
-----------------------------------------
Stephen A. Garofalo
CHAIRMAN, CHIEF EXECUTIVE OFFICER &
SECRETARY
</TABLE>
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURES TITLE OR CAPACITIES DATE
- ------------------------------ --------------------------- -------------------
* Chairman of the Board,
- ------------------------------ Chief Executive Officer October 17, 1997
Stephen A. Garofalo and Secretary
/s/ HOWARD M. FINKELSTEIN President, Chief Operating
- ------------------------------ Officer and Director
Howard M. Finkelstein October 17, 1997
Attorney-in-fact
* Chief Financial Officer and
- ------------------------------ Chief Accounting Officer October 17, 1997
Stephen W. Ellis
* Senior Vice President--
- ------------------------------ Business Development and October 17, 1997
Vincent A. Galluccio Director
* Director
- ------------------------------ October 17, 1997
John W. Kluge
* Director
- ------------------------------ October 17, 1997
Silvia Kessel
* Director
- ------------------------------ October 17, 1997
Stuart Subotnick
* Director
- ------------------------------ October 17, 1997
Arnold L. Wadler
- ------------------------
<TABLE>
<S> <C> <C>
/s/ HOWARD M. FINKELSTEIN
-----------------------------------------
Howard M. Finkelstein
*By: ATTORNEY-IN-FACT
</TABLE>
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of National Fiber Network, Inc.
3.2* Amended and Restated Bylaws of Metromedia Fiber Network, Inc.
4.1* Specimen Class A Common Stock Certificate of Metromedia Fiber Network, Inc.
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
10.1* Metromedia Fiber Network, Inc. 1997 Incentive Stock Plan.
10.2* Employment Agreement by and between National Fiber Network, Inc. and Stephen A. Garofalo,
dated as of February 26, 1997.
10.3* Employment Agreement by and between National Fiber Network, Inc. and Howard Finkelstein, dated
as of April 30, 1997.
10.4* Agreement made as of April 30, 1997, as amended by a Modification Agreement made as of October
, 1997 by and among Metromedia Company, Stuart Subotnick, Arnold Wadler, Silvia Kessel,
Stephen A. Garofalo and National Fiber Network, Inc.
10.5** Franchise Agreement between The City of New York and National Fiber Network, Inc., dated as of
December 20, 1993.
10.6** Conduit Occupancy Agreement by and between New York Telephone Company and National Fiber
Network, Inc., dated as of May 1993.
10.7* Consulting Agreement between National Fiber Network and Realprop Capital Corporation, dated as
of February 1, 1996.
10.8** Letter Agreement from National Fiber Network, Inc. to Peter Sahagen dated February 11, 1997.
10.9** Office Lease by and between National Fiber Network, Inc. and 110 East 42nd Street Associates,
dated as of March 19, 1997.
10.10** Office Lease by and between National Fiber Network, Inc. and 110 East 42nd Street, dated as of
June 1997.
10.11** Trademark License Agreement by and between Metromedia Company and Metromedia Fiber Network,
Inc., dated as of August 14, 1997.
10.12 Fiber Optic Use Agreement between National Fiber Network, Inc. and a confidential party, dated
as of June 3, 1997.
10.13 Amended and Restated Agreement for the Provision of a Fiber Optic Transmission Network dated
as of the Effective Date by and between US ONE Communications of New York, Inc. and National
Fiber Network, Inc.
11.1** Statement Re Computation of Per Share Earnings.
21.1* List of Subsidiaries of Metromedia Fiber Network, Inc.
23.1* Consent of Paul, Weiss, Rifkind, Wharton & Garrison (contained in the opinion filed as Exhibit
5.1 hereto).
23.2** Consent of Ernst & Young, LLP
23.3** Consent of M. R. Weiser & Co., LLP
23.4** Consent of Richard A. Eisner & Company, LLP
23.5** Consent of David Rockefeller.
23.6** Consent of Leonard White.
24.1** Power of Attorney from officers and directors (contained on signature page).
27.1** Financial Data Schedule.
</TABLE>
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* To be filed by amendment.
** Previously filed.
<PAGE>
Exhibit 10.12
CONFIDENTIAL TREATMENT (1)
Fiber Optic Use Agreement
by and between
National Fiber Network, Inc.
and
*
June 3, 1997
- --------------
(1)Redacted portions have been marked with an asterisk (*).
<PAGE>
FIBER OPTIC USE AGREEMENT
This AGREEMENT ("Agreement") made and entered into as of the
day of June, 1997, by and between National Fiber Network, Inc., a Delaware
corporation ("NFN") and * ("*"), a * limited liability company (either NFN or
* a "Party," and collectively the "Parties").
WHEREAS NFN constructs and maintains a fiber optic cable network (the
"NFN System") and desires to provide * with long term exclusive use of a
portion of this network subject to the terms and conditions of this
Agreement;
WHEREAS * desires to acquire certain long term rights to use portions
of the NFN System as described herein, subject to the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the Parties and the Guarantor hereby
expressly agree as follows.
ARTICLE I
DEFINITIONS
For purposes of this Agreement words and phrases spelled with
initial capital letters (other than proper names, section headings, and
the beginnings of sentences) shall have the defined meanings set forth in
the applicable provisions of this Agreement or in this Article I.
"Central Office" shall mean a NYNEX end office or tandem office
facility where traffic may, through the related entrance facility, be
connected to the NYNEX network.
"Leased Fibers" shall mean the * Fibers together with any additional
fibers that * may lease from NFN pursuant to this Agreement. With regard
to any * Extension, Leased Fibers shall terminate at the point along such
Extension at which * connects fibers or other facilities of its own.
"* Extension" shall mean a fiber optic cable leased from NFN
connecting the * Fibers and a * Location.
"* Fibers" shall mean the fibers leased by * from NFN pursuant to this
Agreement, as described in Exhibit A hereto and more fully defined in
Subarticle 2.1 herein.
<PAGE>
"* Locations" shall mean a building or buildings specified by * and
set forth in the initial Exhibit F hereto, which premises shall begin at the
exterior demising walls of such buildings, or specific "splice points" as
mutually agreed upon by the Parties on or before the second anniversary of
this Agreement. A * Location may be a Central Office or other commercial
or residential building or a splice point not thin a building.
"NFN System" shall mean the fiber optic network controlled and
operated by NFN in New York City with a connection to Jersey City, New
Jersey, on the date of this Agreement.
"Pro Rata" shall mean the percentage of the total count of optical
fiber strands and other cables within relocated conduit under the control of
NFN that is represented by the Leased Fibers.
ARTICLE II
TERM AND LEASE
2.1 Unless sooner terminated in accordance with the terms of this
Agreement, NFN hereby grants to * a lease of the exclusive use of *
fiber-miles of optical fiber, provided as those contiguous strands of fiber
within the NFN System as described in Exhibit A to this Agreement and as
other fibers (the "Banked Fiber") at locations within the NFN System in
Manhattan as * may choose to utilize up to the total of * fiber-miles of
optical fiber (such fiber together with * Extensions to those * Locations
listed in the initial Exhibit F hereto, hereinafter, "* Fibers"), for an
initial term commencing on the date of this Agreement and terminating on
December 19, 2008 (the "Initial Term"), and a first additional term of one
hundred and two (102) months, commencing immediately upon the expiration of
the Initial Term.
2.2 Banked Fiber may be used from time to time during the term of
this Agreement pursuant to the provisions of this Subarticle. * shall
proposed the utilization of Banked Fiber by completing a Banked Fiber Request
Form as provided by NFN. Upon receipt of a completed Request Form, NFN shall
evaluate *'s request and either (i) make such Banked Fiber available for use
by * within thirty (30) days or (ii) notify * within five (5) days that
Banked Fiber is not available at the location requested. Banked Fiber may
also be used for new * Extensions pursuant to Subarticle 2.5(b), in which
case Additional Fiber Charges shall not be assessed to the extent that
fiber-miles of Banked Fiber are available; Monthly Recurring Charges pursuant
to Subarticle 3.2, however, shall be required for * Extensions employing
Banked Fiber.
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<PAGE>
2.3 * may, at its sole discretion, elect a second additional term
of ten (10) years, commencing immediately upon the expiration of the first
additional term (either the first or the second additional terms hereinafter
an "Additional Term"). Any Additional Term shall be subject to such terms
and conditions that may be imposed by the franchise granted to NFN by the
City of New York for the period of such Additional Term. * shall provide
written notice to NFN of its intention to exercise the option to make use of
such second Additional Term no later than six (6) months but no more than
twelve (12) months prior to the expiration of the first Additional Term.
2.4 NFN shall, as soon as practicable, but no later than nine (9)
months after the date of this Agreement, provide access to * for the
installation of its originating and terminating equipment on the * Extensions
at the points listed in Exhibit F hereto.
(a) NFN shall test all Leased Fibers in accordance with the
procedures specified in Exhibit D ("Fiber Acceptance Testing") to verify that
the Leased Fibers are installed and operating in accordance with the
specifications described in Exhibit D. Fiber Acceptance Testing shall
progress span by span along each segment as cable splicing progresses, so
that test results may be reviewed in a timely manner. NFN shall provide *
at least five (5) days advance notice of the date and time of each Fiber
Acceptance Testing (each of which shall take place during normal business
hours) such that * shall have the right, but not the obligation, to have a
person or persons present to observe NFN Fiber Acceptance Testing. When
NFN has determined that the results of the Fiber Acceptance Testing with
respect to a particular span show that the Leased Fibers so tested are
installed and operating substantially in conformity with the applicable
specifications set forth in Exhibit D, NFN shall promptly provide * with a
copy of such test results.
(b) When NFN reasonably determines the Leased Fibers with
respect to an entire segment are installed and operating substantially in
conformity with the applicable specifications set forth in Exhibit D, NFN
shall promptly provide written notice of completion to * (a "Completion
Notice"). * shall, within seven (7) days of receipt of the Completion
Notice, either reject the Completion Notice specifying the defect or
failure in such Fiber Acceptance Testing or give NFN written notice of
acceptance of such Fiber Acceptance Testing (the period from the date of
*'s receipt of the Completion Notice to the date of NFN's receipt of *'s
notice of rejection or acceptance being referred to herein as the "Review
Period". In the event * rejects the Completion Notice, NFN shall
promptly, and not later than seven (7) days after receipt of *'s notice of
rejection, and at no cost to *, commence to remedy the defect or failure.
Thereafter, NFN shall again give * a Completion Notice with respect to
such * Fibers. The foregoing procedure shall apply again and successively
thereafter for a total of two attempts to remedy the defect or failure. If
NFN fails to adequately remedy or complete the defect or failure after two
attempts, * shall have the right to proceed promptly and in an
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<PAGE>
economically efficient manner to cure such defects or failures at NFN's
cost and expense, which shall be paid by NFN to * upon demand, or at the
election of * offset from any payment by * to NFN under this Agreement.
No acceptance of, or failure by * to reject, the Completion Notice shall
be deemed to be a waiver of any rights or remedies of * under this
Agreement; provided that, any failure by * to timely reject as set forth
above shall operate as a constructive acceptance for purposes of this
Agreement. The date when * accepts or is deemed to have accepted a
Completion Notice or cures such defects at NFN'S cost and expense as
provided above with respect to any portion of the Leased Fibers is herein
defined as the "Acceptance Date".
2.5 (a) During the first five (5) years of the Initial Term, at *'s
request and to the extent available, NFN shall make available to *
additional fibers on the NFN System ("Additional Fiber") not including the
Banked Fiber, up to a maximum of * additional fiber miles, for *'s use
during the time remaining in such Initial Term and any first Additional
Term subject to the payment of Additional Fiber Charges as set forth
herein. The maximum of * additional fiber miles shall apply to the total
of fiber provided under this Subarticle and Subarticle 2.5(c).
(b) During the first five (5) years of the Initial Term, at
*'s request and where technically and logistically feasible, NFN shall
construct and maintain * Extensions limited to a length of * or less from
the NFN fiber network as it exists at the time such * Extension is
requested, subject to Additional Fiber Charges and charges for
construction and installation as set forth herein. Upon completion of the
construction of a * Extension to a * Location and subject to approval by
the owners of underlying property and rights-of-way and advance notice to
NFN, * may have access to that portion of such * Extension as shall begin
with the "negative-one manhole," with respect to a Central Office, and the
"point of entry" manhole, with respect to other * Locations, (as such
terms are commonly defined in the industry) to connect its equipment and
fiber to such * Extensions. Beginning with the point on the fiber optic
cable at which * connects such equipment and fiber, NFN shall have no
further obligation to monitor or maintain such * Extension.
(c) During the first five (5) years of the Initial Term, *,
shall have the option to lease fiber on major expansions (greater than two
route miles) to NFN's fiber network in New York, at the then current
Additional Fiber Rate, as set forth in Exhibit B hereto, subject to
adjustments for expansion zones that will be disclosed at the time such
major expansions are undertaken, up to the maximum of * additional fiber
miles.
(d) No other leases of fiber are covered under this Agreement.
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<PAGE>
(e) All commitments by NFN to provide fiber or services
pursuant to this Subarticle 2.4 shall expire on the earlier of (i) the
expiration of the period during which NFN has agreed to provide such fiber
or services in this Subarticle, (ii) the date on which * receives a
franchise to provide high capacity telecommunications services in the City
of New York, or (iii) the date on which * first begins construction
(directly or through contractors or agents) of fiber optic cables of its
own other than construction of not more than an aggregate of five (5)
miles on private rights of way.
2.6 NFN shall, at the request of * and to the extent available,
provide such construction and installation services as are necessary or
useful to the construction of * Extensions and the connection of *'s
origination and termination equipment to the * Fibers or * Extensions.
Such services shall be provided at rates set forth in Exhibit B hereto,
or, if no applicable rate is included in Exhibit B, at such rates as the
Parties may subsequently agree upon. If the Parties fail to agree upon
rates for such services within six (6) months of the receipt by NFN of a
request for such services by *, the issue of such rates shall be submitted
for arbitration in accordance with Article XX herein. Charges for
construction and installation services initiated by NFN contractors and
suppliers shall be due and payable thirty (30) days from the receipt by * of
invoices for such charges. Charges for associated NFN management and
administration fees shall be due and payable ten (10) days from the
Acceptance Date for the * Location associated with such services. NFN
shall not be obligated to furnish construction and installation services
under this Agreement at any time following the date that is the earlier
of: (i) the fifth anniversary of this Agreement, (ii) the date on which *
receives a franchise to provide high capacity telecommunications services
in the City of New York, or (iii) the date on which * first begins
construction (directly or through contractors or agents) of fiber optic
cables of its own other than construction of not more than an aggregate of
five (5) miles on private rights of way.
2.7 Exhibit F may be amended from time to time by agreement of the
Parties to add or remove * Locations. Any such amended Exhibit F shall be
incorporated into this Agreement only when signed by the Parties. NFN
agrees to consider in good faith amendments to Exhibit F proposed by *
from time to time after the date of this Agreement and to assent to such
amendments unless (i) it is prohibited from doing so by applicable law or
binding agreement or (ii) the proposed amendment would require the
construction of an extension in a manner that is not technically feasible.
The rates and charges for construction and use of fiber associated with
such amendments to Exhibit F shall be the same as those set forth in
Subarticles 2.6, 3.2, and 3.3 herein for such * Locations. No further
amendments to Exhibit F shall be made following the date that is the
earlier of: (i) the fifth anniversary of this Agreement, (ii) the date on
which * receives a franchise to provide high capacity telecommunications
services in the City of New York, or (iii) the date on which * first
begins construction (directly or through contractors or agents) of fiber
5
<PAGE>
optic cables of its own other construction of not more than an aggregate
of * miles on private rights of way
2.8 If, at the request of * NFN provides available space in such
cages, conduits, or buildings as may be necessary or useful to the
installation and operation of * equipment, * shall pay NFN an annual rent
for such space as set forth in Exhibit B hereto. or, if no applicable rent
is included in Exhibit B, at such rental rates as the Parties may
subsequently agree upon. The payment of rent shall be subject to the
terms and conditions for such payments under this Agreement and the lease
of spare under this Subarticle shall be subject to all relevant terms and
conditions of this Agreement.
2.9 Upon the expiration of the lease provided for in this
Agreement, or any earlier termination of this Agreement, * shall exercise
commercially reasonable efforts to remove all * property from the NFN
System and reroute *'s traffic within (60) days from such expiration or
termination and shall complete such removal in a manner that does not
interfere with or damage the NFN System. In the event that * fails to
remove its property within such period, NFN may remove and store the *
property at *'s expense.
ARTICLE III
TERMS OF PAYMENT
3.1 * shall pay NFN upfront payments as set forth in Exhibit B
hereto, as consideration for the Initial Term and the first Additional Term
of the lease of the * Fibers described in Exhibit A hereto (the "Upfront
Payments"). These Upfront Payments shall be due according to the payment
schedule set forth in Exhibit B. Charges for a second Additional Term shall
be at market rates at the time * elects to secure such second Additional
Term pursuant to Subarticle 2.3 above. If the Parties fail to reach an
agreement with regard to market rates for such second Additional Term, the
issues remaining open shall be submitted to arbitration pursuant to
Article XX of this Agreement.
3.2 * shall Pay NFN a Monthly Recurring Charge per terminated fiber
and, as set forth in Exhibit B, for each * Extension other than those
extensions to the * Locations set forth in Exhibit F hereto. The Monthly
Recurring Charge shall be adjusted for inflation annually as set forth in
Exhibit B hereto and shall be adjusted to accommodate new Taxes pursuant
to Subarticle 11.2 herein. The first Monthly Recurring Charge, along with
any rent pursuant to Subarticle 2.8, shall be payable on the Acceptance
Date for the * Location associated with such Monthly Recurring Charge and
rent. Subsequent Monthly Recurring Charges and rent shall be due on the
first day of each month during the Initial Term and any Additional Term.
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<PAGE>
3.3 Within five (5) days of the Acceptance Date for any Additional
Fiber, * shall pay a one-time Additional Fiber Charge as set forth in
Exhibit B hereto, which charge shall be based on the length and number of
strands that comprise the Additional Fiber and the number of months
remaining in the Initial Term and any first Additional Term.
3.4 If a first Additional Term is unavailable because NFN's
franchise is not renewed, NFN shall refund the upfront payment for such
first Additional Term within thirty (30) days of the expiration of the
Initial Term.
3.5 In any circumstances under this Agreement in which NFN
contracts with third parties for maintenance or construction services the
charges for which are to be passed through to *, with or without the
addition of any management, administration, or other fees as set forth
herein, NFN shall secure bids for such maintenance or construction
services from not fewer than two and not more than three independent
contractors chosen by NFN and the amount billable to * shall be the lowest
of the bids submitted (plus any costs necessary to the project that are
not included in the bid and a * Management and Administration fee),
regardless of whether NFN actually selects the lowest bidding contractor
to perform the service.
3.6 Escrow. On the date of the execution of this Agreement the
Parties shall enter an Escrow Agreement substantially in conformance with the
form of agreement attached as Exhibit G hereto pursuant to which agreement
* shall deposit * in an escrow account with First National Association
(the "Escrow Agent"). The escrow agreement shall authorize the Escrow
Agent to remit the Upfront Payments to NFN pursuant to the Schedule of
Rates and Charges in Exhibit B hereto, when the conditions precedent to
such payments, as provided herein, are satisfied.
ARTICLE IV
MAINTENANCE AND REPAIR OF THE LEASED FIBERS
4.1 Routine Maintenance. Routine maintenance and repair of the
Leased Fibers described in this section ("Scheduled Maintenance") shall be
performed at NFN's expense by or under the direction of NFN, at NFN's
reasonable discretion or at *'s request. Scheduled Maintenance shall
commence with respect to each segment upon the Acceptance Date for such
segment.
4.2 Unscheduled Maintenance. Non-routine maintenance and repair of
the Leased Fibers which is not included as Scheduled Maintenance
("Unscheduled Maintenance"), shall be performed at NFN's expense (except
To the extent caused by the acts or omissions of *) by or under the
direction of NFN. Unscheduled Maintenance shall commence with respect to
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<PAGE>
each segment upon the Acceptance Date for such segment. Unscheduled
Maintenance shall consist of:
(a) "Emergency Unscheduled Maintenance" in response to an
alarm identification by NFN's Operations Center, notification by * or
notification by any third party of any failure, interruption or impairment
in the operation of the Leased Fibers, or any event imminently likely to
cause the failure, interruption or impairment in the operation of the
Leased Fibers.
(b) "Non-Emergency Unscheduled Maintenance" in response to any
potential service-affecting situation to prevent any failure, interruption
or impairment in the operation of the Leased Fibers.
* shall immediately report the need for Unscheduled Maintenance to
NFN in accordance with procedures promulgated by NFN from time to time.
NFN will log the time of *'s report, verify the problem and will dispatch
personnel immediately to take corrective action.
4.3 Operations Centers. NFN shall operate and maintain one or
more Operations Centers ("OCs") staffed twenty-four hours a day, seven (7)
days a week by trained and qualified personnel beginning with the earliest
Acceptance Date under this Agreement. Qualified maintenance personnel
shall be available for dispatch twenty-four (24) hours a day, seven (7)
days week. NFN shall use its best efforts to have its first maintenance
representative at the site requiring Emergency Unscheduled Maintenance
activity within two (2) hours after the time NFN becomes aware of an event
requiring Emergency Unscheduled Maintenance. NFN shall maintain a
telephone number through which * may contact personnel at an OC without
toll from the New York metropolitan area. NFN's OC personnel shall
dispatch maintenance and repair personnel along the system to handle and
repair problems detected in the Leased Fibers, (i) through *'s remote
surveillance equipment and upon notification by * to NFN, or (ii) upon
notification by a third party.
4.4 Cooperation and Coordination. * shall utilize an Operations
Escalation List, as updated from time to time, to report and seek immediate
initial redress of exceptions noted in the performance of NFN in meeting
maintenance service objectives. * will, as necessary, arrange for escorted
access for NFN to all sites of the Leased Fibers, subject to applicable
contractual underlying real property and other third-party limitations and
restrictions. In performing its services hereunder, NFN shall take
workmanlike care to prevent impairment to the signal continuity and
performance of the Leased Fibers. The precautions to be taken by NFN
shall include notification to *. In addition, NFN shall reasonably
cooperate with * in sharing information and analyzing the disturbances
regarding the cable and/or fibers. In the event that any Scheduled or
Unscheduled Maintenance hereunder requires a traffic roll or
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<PAGE>
reconfiguration involving cable, fiber, electronic equipment or regeneration
or other facilities of *, then * shall, at NFN's reasonable request, make
such personnel of * available as may be necessary in order to accomplish
such maintenance, which personnel shall coordinate and cooperate with NFN
in performing such maintenance as required of NFN hereunder. NFN shall
use its best efforts to notify * at least [five] business days prior to
the date of any Scheduled Maintenance on any * Extensions and as soon as
possible after becoming aware of the need for Unscheduled Maintenance. *
shall have the right to be present during the performance of any Scheduled
Maintenance on any * Extensions or Unscheduled Maintenance so long as this
requirement does not interfere with NFN's ability to perform its
obligations under this Agreement. In the even that Scheduled Maintenance
is canceled or delayed for whatever reason as previously notified, NFN
shall notify * at NFN's earliest opportunity, and will comply with the
provisions of the previous sentence to reschedule any delayed activity.
4.5 Facilities. NFN shall maintain the Leased Fibers in a manner
which will permit *'s use, in accordance with the terms and conditions of
this Agreement, of the Leased Fibers and associated facilities required to be
provided under the terms of this Agreement. Except to the extent otherwise
expressly provided in this Agreement, * will be solely responsible for
providing and paying for any and all maintenance of all electronic, optronic
and other equipment, materials and facilities used by * in connection with
the operation of the Leased Fibers, none of which is included in the
maintenance services to be provided hereunder.
4.6 Cable/Fibers. NFN shall perform appropriate Scheduled
Maintenance on the cable contained in the Leased Fibers in accordance with
NFN's then current preventative maintenance procedures as agreed to by *
which shall not substantially deviate from standard industry practice. NFN
shall maintain sufficient capability to teleconference with * during an
Emergency Unscheduled Maintenance in order to provide regular communication
during the repair process. When correcting or repairing cable discontinuity
or damage, including but not limited to in the event of Emergency Unscheduled
Maintenance, NFN shall use reasonable efforts to repair traffic affecting
discontinuity within four (4) hours after the NFN maintenance employee's
arrival at the problem site. In order to accomplish such objective, it is
acknowledged that the repairs so effected may be temporary in nature. In
such event, within twenty-four (24) hours after completion of any such
Emergency Unscheduled Maintenance, NFN shall commence its planning for
permanent repair, and thereafter promptly shall notify * of such plans, and
shall implement such permanent repair within an appropriate time thereafter.
Restoration of open fibers on fiber strands not immediately required for
service shall be completed on a mutually agreed-upon schedule. If the fiber
is required for immediate service, the repair shall be scheduled for the next
available Planned Service Work Period ("PSWP"). In performing repairs, NFN
shall comply with the splicing specifications as set forth in Exhibit D. NFN
shall provide to * any modifications to these specifications as may be
necessary or
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<PAGE>
appropriate in any particular instance for *'s approval, which approval shall
not be unreasonably withheld. NFN's representatives that are responsible for
initial restoration of a cut cable shall carry on their vehicles the
typically appropriate equipment that would enable a temporary splice, with
the objective of restoring operating capability in as little time as
possible. NFN shall maintain and supply an inventory of spare cable in
storage facilities supplied and maintained by NFN at strategic locations to
facilitate timely restoration.
4.7 Planned Service Work Period ("PSWP"). Scheduled Maintenance
which is reasonably expected to produce any signal discontinuity must be
coordinated between the parties. Generally, this work should be scheduled
after midnight and before 6:00 a.m. local time. Major system work such as
fiber rolls and hot cuts will be scheduled for PSWP weekends. A calendar
showing approved PSWP will be agreed upon in the last quarter of every year
for the year to come. The intent is to avoid jeopardy work on the first and
last weekends of the month and high-traffic holidays.
4.8 Restoration. NFN shall use its best efforts to respond to any
interruption of service or a failure of the Leased Fibers to operate in
accordance with the specifications set forth in Exhibit D (in any event, an
"Outage") as quickly as possible in accordance with the procedures set forth
herein. When restoring a cut cable in the Leased Fibers, the parties agree
to work together to restore all traffic as quickly as possible. NFN,
promptly upon arriving on the site of the cut, shall determine the course of
action to be taken to restore the cable and shall begin restoration efforts.
NFN shall splice fibers tube by tube or ribbon by ribbon, rotating between
tubes or ribbons operated by any fiber lessees or holders of IRUs
(collectively, "Interest Holders"), including *, in accordance with the
following described priority and rotation mechanics; provided that, lit
fibers in all buffer tubes or ribbons shall have priority over any dark
fibers in order to allow transmission systems to come back on line; and
provided further that NFN will continue such restoration efforts until all
lit fibers in all buffer tubes or ribbons are spliced and all traffic
restored. In general, priority among Interest Holders affected by a cut
shall be determined on a rotating restoration-by-restoration and
segment-by-segment basis, to provide fair restoration to all Interest
Holders. However, NFN shall establish a Priority Customer Grouping ("PCG")
which will receive, whenever possible, priority in the restoration of tubes
or ribbons that affect their use of NFN facilities. All members of the PCG
shall receive equal treatment. NFN shall include * in its PCG. The goal of
emergency restoration splicing shall be to restore service as quickly as
possible. This requires the use of some of mechanical splice, such as the
"3M Fiber Lock" to complete the temporary restoration. Permanent
restorations will take place as soon as possible after the temporary splice
is complete.
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4.9 Subcontracting. NFN may subcontract any of the maintenance
services hereunder; provided that NFN shall require the subcontractor(s)
to perform in accordance with the requirement and procedures set forth
herein. The use of any such subcontractor shall not relieve NFN of any of
its obligations hereunder.
4.10 Fiber Replacement. In the event all or any part of the Leased
Fibers shall require replacement during the term of this Agreement, such
replacement shall be made as soon as reasonably practical, at NFN's sole
cost and expense; except, however, if the replacement of the Leased Fibers
is required as a result of the acts or omissions of *, NFN shall make such
replacement at *'s cost and expense on a time and materials basis.
4.11 Outages. During the Term of this Agreement, NFN shall credit
to * against the next due Monthly Recurring Charge, the amounts set forth
in Exhibit E hereto, as compensation for "Outages." For the purposes of
this Agreement, an Outage is the complete interruption of service over any
fiber circuit at any * Location, whether or not due to the physical damage
or severance of such fiber circuit; except that no interruption of service
caused in whole or in part by the negligent act or omission or willful
misconduct of * shall constitute an Outage.
4.12 Replacement Maintenance. For any isolated incident wherein NFN
has failed to cure an Outage Within twenty-four (24) hours of the onset of
service interruption at a specific location, * may secure the services of
the contractor selected in advance by NFN for the purposes of repairing
and maintaining the Leased Fibers at such location at NFN's expense.
ARTICLE V
PERMITS, ACCESS, AND REQUIRED RIGHTS-OF-WAY
5.1 NFN represents and warrants that it has obtained or will obtain
all regulatory approvals, franchises, permits, orders, consents, and
rights-of-way, either by contract or through a franchise, and all other
rights necessary to be obtained by NFN to enable its provision of the
Leased Fibers (all of which are herein collectively referred to as the
"Rights-of-Way"). On or before the Acceptance Date for each * Location
NFN shall provide * with a copy or a detailed summary of all Rights-of-Way
applicable to the segment of the NFN System or the * Extension associated
with such * Location. NFN shall use commercially reasonable efforts to
cause such Rights-of-Way to remain effective through the Initial Term and
the Additional Term of this Agreement and in the event that any
Rights-of-Way are discontinued and not replaced and the loss of such
Rights-of-Way adversely affects the use of the * Fibers, NFN shall issue a
rebate to * of a portion of the upfront payment for any Term of this
Agreement in which such loss of Right-of-Way has an effect, such rebate to
be in
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proportion to the number of fiber-miles affected and the duration of any
disruption in service caused by such loss of Right-of-Way.
5.2 * shall provide, obtain, and maintain in full force and effect,
all necessary approvals, licenses, or leases for building entrance
facilities at * Locations and the placement of intra-building conduits and
equipment through which the Leased Fibers may pass into *'s Locations. *
shall provide NFN with 24-hour-per-day, 7-day-per-week escorted access to
fix * Locations with notice by NFN reasonable under the circumstances for
which access is required. * shall provide at no cost to NFN all
electricity, sanitary facilities, and other utilities at the * Locations
as NFN may reasonably require to provide safe and convenient working
conditions during the construction and installation of * Extensions.
ARTICLE VI
RELOCATION OF THE NFN SYSTEM
AND THE * FIBERS
6.1 If NFN receives notice of any request, intent, or plan by any
third party, including, but not limited to, a governmental entity, to
relocate any segment of NFN's fiber network used in the provision of the
Leased Fibers, NFN shall notify * of such request, intent, or plan and
shall consult with * regarding proceedings and negotiations involving such
proposed relocation and communicate with * regarding the status of such
proceedings and negotiations. If NFN is required by any such third party
to relocate any segment of NFN's fiber network used in providing the
Leased Fibers, NFN shall give * at least sixty (60) days' (or such lesser
period of notice that NFN may have received) prior written notice of any
such relocation ("Relocation Notice"). Along with the Relocation Notice,
NFN shall provide an estimate of the cost of such relocation, NFN shall
relocate the Leased Fibers and, to the extent NFN is not reimbursed for
the cost of such relocation by a third party, governmental entity or
otherwise, * shall pay its Pro Rata share of the costs associated with the
relocation of the Leased Fibers; except, however, to the extent that the
factors causing such relocation are under NFN's control. NFN shall use
its reasonable best efforts to secure an agreement for reimbursement from
any third party, governmental entity or otherwise, requiring any
relocation of the NFN System and the Leased Fibers.
ARTICLE VII
CONDEMNATION
7.1 In the event any portion of the NFN System and/or the Leased
Fibers, or the Rights-of-Way in or upon which they shall have been
installed, become the subject of a condemnation proceeding which is not
dismissed within one hundred
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eighty (180) days of the date of filing of such proceeding and which could
reasonably be expected to result in a taking by any governmental agency or
other party cloaked with the power of eminent domain for public purpose or
use, both parties shall be entitled to the extent permitted under
applicable law, to participate in any condemnation proceedings to seek to
obtain compensation by either joint or separate awards for the economic
value of their respective interests in the portion of the NFN System
subject to such condemnation.
7.2 Upon its receipt of a formal notice of condemnation or taking,
NFN shall notify * immediately of any condemnation proceeding filed
against the NFN System, including the Leased Fibers, or the Rights-of-Way
in or upon which the Leased Fibers shall have been installed. NFN shall
also notify * of any similar threatened condemnation proceeding and agrees
not to sell the Leased Fibers or Rights-of-Way to such acquiring agency,
authority or other party in lieu of condemnation without prior written
notice of five (5) business days to *.
ARTICLE VIII
USE OF THE LEASED FIBERS
8.1 * shall not, by itself or by or through any agent or
contractor, make any repair or replacement of the Leased Fibers or any
other equipment owned by NFN except as provided in Subarticle 4.12 herein.
8.2 * shall not use the Leased Fibers in any way which fails to
comply with any applicable federal, state or local code, ordinance, law,
rule, regulation or restriction or any policy of insurance.
8.3 * shall not, directly or indirectly, sublease, condo,
sublicense, or wholesale to any third party dark fiber optic capacity on
any Leased Fiber. * shall no directly or indirectly, sublease, condo,
sublicense, or wholesale to any third party lit fiber optic capacity on
any Leased Fiber unless such lit fiber optic capacity is distributed
through *'s transmission and switching equipment.
ARTICLE IX
OWNERSHIP OF THE LEASED FIBERS
9.1 * shall have an undivided exclusive leasehold interest in the
Leased Fibers. NFN shall have undivided, absolute legal title to
ownership in the NFN System, including the Leased Fibers.
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9.2 Except as otherwise provided in this Agreement, * shall not
represent to any third party that any party other than NFN is the legal
owner of the Leased Fibers.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 NFN represents that the Leased Fibers have been constructed
substantially as represented in Exhibit A hereto and warrants that for
the Term of this Agreement, the NFN System shall, at all times during the
Term of this Agreement: (a) be in full compliance with and operate within
the parameters of the specifications set forth in Exhibit D hereto, and
(b) be fit to perform as an optical fiber system; provided, however, that
such warranties shall in no way be deemed to be a limitation on or in
derogation of NFN's obligations under Article IV herein.
10.2 EXCEPT AS EXPRESSLY PROVIDED IN THE FOREGOING SUBARTICLE 10.1,
NFN MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
FIBER OPTIC SYSTEM AND THE LEASED FIBERS, DEMAND MAINTENANCE, AND
SCHEDULED MAINTENANCE THEREON. IN NO EVENT SHALL EITHER PARTY HERETO BE
LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY INDIRECT,
SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, INCLUDING THOSE BASED ON
LOSS OF REVENUES, PROFITS, OR BUSINESS OPPORTUNITIES, WHETHER OR NOT SUCH
PARTY HAD OR SHOULD HAVE HAD ANY KNOWLEDGE, ACTUAL OR CONSTRUCTIVE, THAT
SUCH DAMAGES MIGHT BE INCURRED.
10.3 NFN represents and warrants to * that it has full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by NFN have been duly and validly authorized by all
necessary corporate action on the part of NFN.
10.4 * represents and warrants to NFN that it has full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by * have been duly and validly authorized by all
necessary corporate action on the part of *.
10.5 NFN represents and warrants to * that NFN is in compliance in
all material respects with all laws and regulations applicable to its
operation of the
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NFN System, including its franchise to operate within the City of New
York. NFN has obtained and holds all permits, licenses, and approvals
necessary to conduct the operation of the NFN System as presently
conducted and as contemplated by this Agreement, in accordance with
applicable law. Neither the execution or performance of this Agreement
nor the delivery of the leased fibers contemplated hereby conflict with or
result in a breach or violation of any provision of NFN's franchise or
applicable law. There is no action, suit, investigation, claim,
arbitration, or litigation pending, or to NFN's knowledge, threatened
against, affecting, or involving NFN or the operation of the NFN System at
law or in equity or before any court, arbitrator, or governmental
authority that is reasonably likely to result in a material adverse effect
on the operation of the NFN System. NFN is not in default in any material
respect of any contract with a third party that is reasonably likely to
result in a material adverse effect upon the operation of the NFN System.
10.6 * represents and warrants to NFN that * is in compliance in all
material respects with all laws and regulations applicable to the
operation of the business it intends to pursue through the use of the NFN
Fiber. * has obtained or intends to obtain all permits, licenses, and
approvals necessary to conduct its business as contemplated by this
Agreement, in accordance with applicable law. Neither the execution or
performance of this Agreement nor the acceptance of the leased fibers
contemplated hereby conflict with or result in a breach or violation of
any provision of applicable law. There is no action, suit, investigation,
claim, arbitration, or litigation pending, or to *'s knowledge, threatened
against, affecting, or involving * at law or in equity or before any
court, arbitrator, or governmental authority that is reasonably likely to
result in a material adverse effect on *'s performance under this
Agreement. * is not in default in any material respect of any contract
with a third party that is reasonably likely to result in a material
adverse effect upon *'s performance under this Agreement.
ARTICLE XI
TAXES
11.1 * shall be responsible for and shall timely pay any and all
Taxes imposed with respect to this Agreement upon *. For the purposes of
this Agreement, Taxes shall include license, permit, or franchise fees
imposed by a government entity, including any New York City or New York
State Sales and Use Taxes or any Taxes assessed on the Monthly Recurring
Charge payable by * to NFN. NFN shall be responsible for and shall timely
pay any and all Taxes imposed with respect to this Agreement upon NFN
including any fees assessed by the City of New York on NFN as compensation
for its Franchise for Local High Capacity Telecommunication Service.
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11.2 If at any time during the Initial Term a federal, state or
local governmental authority seeks to impose any new Taxes on NFN because
of NFN's provision of the Leased Fibers pursuant to this Agreement, NFN
shall be responsible, at its sole expense, for paying such Taxes either
with or without a protest to the appropriate administrative jurisdiction
or administrative forum; provided, however that if the amount of such new
Taxes exceeds * of the amount of the Monthly Recurring Charge (on an
annualized basis) during any year of the Term of this Agreement, the
Monthly Recurring Charge for the next year shall be increased by the
amount of such new Taxes that exceeds * of such Monthly Recurring Charge
in addition to the adjustment for inflation set forth in Exhibit B hereto.
11.3 If at any time during the Term of this Agreement, any Taxes are
imposed on or assessed against *, directly or through NFN, on the basis of
revenue received by * or on the basis of its use of the Leased Fibers, *
shall have the right to protest, by appropriate proceedings, the
imposition or assessment of any such Taxes. In such event, * shall be
responsible for such payments and shall indemnify and hold NFN harmless
from any expense, legal action or cost, including reasonable attorney's
fees, resulting from the exercise of its rights under this Subarticle
11.3. In the event of any refund, rebate, reduction, or abatement to * of
any such Taxes, * shall be entitled to receive the entire benefit of such
refund, rebate, reduction, or abatement.
ARTICLE XII
LIABILITY
12.1 Neither * nor NFN shall be liable to the other for any
indirect, special, punitive, or consequential damages (including, but not
limited to, any claim from any customer for loss of services) arising
under this Agreement or from any breach or partial breach of the
provisions of this Agreement or arising out of any act or omission of
either Party hereto, its employees, servants, contractors and/or agents.
Both NFN and * shall use their reasonable best efforts to include in any
agreement with any third party relating to the use of the NFN System or
the Leased Fibers a waiver by such third party of any claim for indirect,
special, punitive, or consequential damages (including, but not limited
to, any claim from any client or customer for loss of services) arising
out of or as a result of any act or omission by either Party hereto, its
employees, servants, contractors and/or agents.
12.2 Each Party agrees to indemnify, defend, protect and save the
other harmless from and against any claim, damage, loss, liability, cost
and expense (including reasonable attorney's fees) in connection with any
personal injury, including death, loss, or damage to any property or
facilities of any party (including NFN, *, or any other party operating or
using any part of the NFN System or the Leased Fibers) arising out of or
resulting in any way from the acts or omissions to act, negligent or
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otherwise, of such party, its employees, servants. contractors, and/or
agents in connection with the exercise of its rights and obligations under
the terms of this Agreement or any breach by such party of any obligation
contained herein.
12.3 Nothing contained herein shall operate as a limitation on the
right of either Party hereto to bring an action for damages, including
consequential damages, against any third party based on any acts or
omissions of such third party as such acts or omissions may affect the
construction, operation, or use of the NFN System or the Leased Fibers;
provided ' however, that each Party hereto shall assign such rights or
claims, execute such documents, and do whatever else may be reasonably
necessary to enable the injured Party to pursue any such action against
such third party.
ARTICLE XIII
INSURANCE
13.1 Each Party shall, at its own expense, secure and maintain in
force, throughout the term of this Agreement, general liability insurance,
with competent and qualified issuing insurance companies, such that the
total available limits to all insureds will not be less than * in respect
of injuries to or death of any one person and not less than * in respect
of injuries to or death of any number of persons aggregated for any one
occurrence and not less than * in respect of damage to or loss of use of
property in any one occurrence, and worker's compensation and employer's
liability insurance as required by the laws of the State of New York and
any other applicable governmental entity. Such insurance may be provided
in policy or policies, primary and excess, including the so-called
umbrella or catastrophe forms. The undertaking with respect to insurance
shall not relieve either Party of its obligation in Article XII.
ARTICLE XIV
FORCE MAJEURE
14.1 The obligations of the Parties hereto are subject to force
majeure and neither Party shall be in default under this Agreement if any
failure or delay in performance is caused by strike or other labor
problems; accidents; acts of God; fire; flood; adverse weather conditions;
material or facility shortages or unavailability not resulting from such
Party's failure to timely place orders therefor; lack of transportation;
the imposition of any governmental codes, ordinances, laws, rules,
regulations or restrictions; condemnation or the exercise of rights of
eminent domain; war or civil disorder; or any other cause beyond the
reasonable control of either Party hereto.
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ARTICLE XV
DEFAULT
15.1 Neither Party shall be in default under this Agreement, or in
breach of any provision hereof unless and until the other Party shall have
given it written notice of such breach and it shall have failed to cure
the same within thirty (30) days after receipt of such notice; provided,
however, that where such breach cannot reasonably be cured ,within such
thirty (30) day period, if the defaulting Party shall proceed promptly to
cure the same and prosecute such curing with due diligence, the time for
curing such breach shall be extended for such period of time as may be
necessary to complete such curing. Upon the failure by the defaulting
Party to timely cure any such breach after notice thereof from the other
Party, the non-defaulting Party shall have the right, in its sole
discretion, to take such action is it may determine to be necessary to
cure the breach or to terminate this Agreement upon written notice to the
defaulting Party. If this Agreement is terminated by NFN pursuant to the
preceding sentence prior to the end of the Initial Term pursuant to
Article II, * shall immediately pay to NFN an amount equal to the present
value of the aggregate unpaid Monthly Recurring Charges payable to NFN for
the remainder of the Initial Term (calculated using a discount rate equal
to ten percent (10%)). NFN shall refund to * the portion of the Monthly
Recurring Charges paid pursuant to this Subarticle that relates to fiber
that NFN is subsequently able to lease to a third party for the remainder
of the Initial Term. If this Agreement is terminated by * pursuant to
this Subarticle, * may cease payment of any charges that would thereafter
become payable under this Agreement.
15.2 No remedy provided for herein is intended to be exclusive, but
each remedy shall be cumulative and in addition to and may be exercised
concurrently with any other remedy available to NFN or * at law or in
equity.
ARTICLE XVI
CONFIDENTIALITY
16.1 The Parties acknowledge and agree that the information each
Party has provided or will provide in connection with this Agreement,
including, without limitation, the terms and conditions of this Agreement,
are and shall be confidential and proprietary to the Party providing such
information (the "Providing Party"). The Party in receipt of confidential
information (the "Receiving Party") agrees not to use or disclose to any
third party the confidential information of the Providing Party except as
required for performance of its obligations under this Agreement. Each
Party shall restrict dissemination of confidential information to only
those persons in its respective organization who must have access to such
confidential information in order to perform its obligations under this
Agreement. Neither Party
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shall be required to hold confidential any information which becomes
publicly available other than through the Receiving Party; which is
independently developed by the Receiving Party; which becomes available to
the Receiving Party without restriction from a third party; with respect
to which the Providing Party consents to the disclosure by the Receiving
Party; or with respect to which a court, administrative agency, or other
governmental body with jurisdiction over the Receiving Party orders the
disclosure, provided that in such circumstances the Receiving Party first
provides the Providing Party with notice of such required disclosure and
takes reasonable steps to allow the Providing Party to seek a protective
order with respect to the confidential information. The Receiving Party
will cooperate and assist the Providing Party in connection with such
protective order at the Providing Party's request.
16.2 The provisions of this Article XVI shall be subject to and
superseded by any separate confidentiality agreement between the Parties,
whether now existing or later entered into.
16.3 Notwithstanding the other provisions of this Article XVI and
without waiver of any obligations hereunder, NFN may disclose the identity
of * as a customer of NFN and * may disclose the identity of NFN as a
supplier of *, and each Party may disclose the length of the term of this
Agreement, the number of fibers and route miles provided pursuant to this
Agreement, and the fact that such fibers are being provided in Manhattan
or the New York metropolitan area, all without any additional consent from
the other.
ARTICLE XVII
NOTICES
17.1 Unless otherwise provided herein, all notices and
communications concerning this Agreement shall be in writing and addressed
as follows:
IF to NFN:
National Fiber Network, Inc.
110 East 42nd Street
New York, New York 10018
Fax: (212) 687-9188
Attention: Chief Executive Officer
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If to *
*
or at such other address as may be designated in writing to the other Party.
17.2 Unless otherwise provided herein, notices shall be sent by
certified U.S. Mail, return receipt requested, or by commercial overnight
delivery service, or by facsimile, and shall be deemed delivered: if sent
by U.S. Mail, five (5) days after deposit; if sent by facsimile, upon
verification of receipt; or, if sent by commercial overnight delivery
service, one (1) business day after deposit.
ARTICLE XVIII
ASSIGNMENT; SUCCESSION
18.1 Except as provided in this Subarticle 18.1, * shall not assign
or otherwise transfer this Agreement in whole or in part to any other
party without the prior written consent of NFN, which consent shall not be
unreasonably withheld or delayed. * shall remain secondarily liable for
all payments due under this Agreement after assignment. Without such
consent, * shall have the right to assign, sublet, or otherwise transfer
this Agreement, in whole or in part, to any parent, subsidiary or
affiliate of * which shall control, be under the control of, or be under
common control with *, any entity that purchases all or substantially all
of the assets of *, or any entity formed by the merger of * and another
entity.
18.2 NFN shall retain the right to assign this Agreement, in whole
or in part, to any other party subject to the prior written consent of *,
which consent shall not be unreasonably withheld or delayed; provided,
however, that without such consent, NFN shall have the right to assign or
otherwise transfer this Agreement to any parent, subsidiary or affiliate
of NFN which shall control, be under the control of, or be under common
control with NFN, any entity which purchases all or substantially all of
the assets of NFN, or any entity formed by the merger of NFN and another
entity.
18.3 Subject to the provisions of this Article XVIII, this
Agreement, and each of the Parties' respective rights and obligations
hereunder, shall be binding upon and shall inure to the benefit of the
Parties hereto and each of their respective permitted successors and
assigns.
ARTICLE XIX
GOVERNING LAW
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19.1 This Agreement shall be interpreted and construed in accordance
with the internal laws of the State of New York without giving effect to its
principles of conflicts of laws.
ARTICLE XX
DISPUTE RESOLUTION
20.1 Any claims or disputes arising under the terms and provisions
of this Agreement, or any claims or disputes which the Parties are unable
to resolve to their mutual satisfaction within thirty (30) calendar days
(or such longer period as may be mutually agreed upon) from the date that
either Party notifies the other in writing that such claim or dispute
exists, shall be settled in New York, New York, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in
effect at the time of the dispute. The written notice shall contain a
concise statement of the claim or issue in dispute, together with relevant
facts and data to support the claim. The arbitrator(s) shall be bound by
the limits on damages set forth in this Agreement. The decision of the
arbitrator(s) shall be final and binding upon the Parties if based upon
written findings of law and fact. The arbitrator(s) shall be empowered to
order injunctive relief and judgment may be obtained on the decision of
the arbitrator(s) by either Party in a court of competent jurisdiction.
Each Party shall bear the cost of preparing and presenting its own case.
The cost of the arbitration, including the fees and expenses of the
arbitrator(s), will be shared equally by the parties hereto unless the
award otherwise provides.
20.2 During arbitration proceedings under this Article, NFN shall
continue to provide the Leased Fibers pursuant to this Agreement and *
shall continue to make payments in accordance with this Agreement.
ARTICLE XXI
ENTIRE AGREEMENT
21.1 This Agreement, and any Exhibits attached hereto or to be
attached hereto, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede any and all
prior negotiations, understandings, and agreements with respect hereto,
whether oral or written.
ARTICLE XXII
MISCELLANEOUS
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22.1 The headings of the Articles in this Agreement are strictly for
convenience and shall not in any way be construed as amplifying or
limiting any of the terms, provisions, or conditions of this Agreement.
22.2 In the event any term of this Agreement shall be held invalid,
illegal, or unenforceable in whole or in part, neither the validity of the
remaining part of such term nor the validity of the remaining terms of
this Agreement shall in any way be affected thereby.
22.3 This Agreement may be amended only by a written instrument
executed by the Parties.
22.4 No failure to exercise and no delay in exercising, on the part
of either party hereto, any right, power, or privilege hereunder shall
operate as a waiver hereof, except as expressly provided herein.
22.5 This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement
the day and year fist above written.
NATIONAL FIBER NETWORK, INC. *
Howard Finkelstein *
President President
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Exhibit A - The * Fibers
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Exhibit A
NEW YORK NETWORK - FIBER SIZING
[Insert graphic - map]
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Exhibit B - Schedule of Rates and Charges
Upfront Payment for the Initial Term: *
Upfront Payment for the first Additional Term: *
Schedule for Upfront Payments
Within five (5) business days of the date of the execution of this Agreement,
a payment of * shall be due and payable by * and * shall deposit the amount
of * into the Escrow Account, from which account the following Upfront
Payments shall be made.
A payment of * for each of three groups of * Locations, as set forth in
Exhibit F, shall be due and payable by * within five (5) days of the date at
which NFN completes construction to the "negative one manhole" (for Central
Offices) or the "point of entry manhole" (for other * Locations) of all *
Locations within such group.
A fourth payment of * shall be due and payable on the date that is nine (9)
months following the date of the execution of this Agreement; provided,
however, that NFN has performed all construction obligations under this
Agreement to the extent that * has made * Locations available to NFN. In the
event that NFN has not fully performed its construction obligations nine
months after the execution of this Agreement, * shall pay this fourth payment
within five (5) days of the completion of such construction; except, however,
that if NFN has not fully performed its construction obligations because *
has not made * Locations available to NFN, * shall pay the fourth payment as
scheduled and NFN's construction obligations shall continue until all such
construction has been completed.
Seventeen (17) payments of * each shall be due and payable by * within five
business days of the Acceptance Date for each of the seventeen (17) *
Locations listed in Exhibit F hereto; except, however, that any of these
seventeen payments that have not been paid prior to the first anniversary of
the date of this Agreement shall be due and payable on that first anniversary.
Initial Monthly Recurring Charge for Terminated Fibers
Monthly Recurring Charge is based on the number of fiber strands
terminated at * Locations other than those * Locations set forth in the
initial Exhibit F hereto. (See Exhibit B, Figure #2)
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For each month in the year beginning with the date of Agreement:
Strands Cost per Strand
1 *
2
4
6
8
10
12
Annual Adjustment to Monthly Recurring Charge
For each subsequent year of the Initial Term or any Additional Term of
this Agreement ("Term"), the Monthly Recurring Charge from the previous year
for each * Location, other than those * Locations set forth in the initial
Exhibit F hereto, shall be increased by a factor equal to the difference
between the Consumer Price Index ("CPI" as defined below) from the month
preceding by two months the beginning of the next year of the Term and the
CPI for the month preceding by one year and two months the beginning of the
next year of the Term.
Example: Acceptance Date: April 1, 1996
second year of Term begins: April 1, 1997
CPI for February, 1997: 166.2
CPI for February, 1996: 161.7
Difference: 4.5
Monthly Recurring Charge for year
ending March 1997 *
Monthly Recurring Charge for year
beginning April 1997
* *
CPI shall mean the Consumer Price Index published by the Bureau of Labor
Statistics ("BLS") of the United States Department of Labor for Urban Wage
Earners and Clerical Workers for All Items for the New York Metropolitan Area
(New York - Northern New Jersey - Long Island), or shall mean the successor
thereto. In the event the BLS Consumer Price Index is converted to a
different standard reference base (current base period: 1982-84 = 100) or
otherwise revised, the determination of Monthly Recurring Charge increase
shall be made with the use of such conversion factor, formula, or table for
converting the BLS Consumer Price Index as may be
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published by the BLS, or if the BLS should fail to publish the BLS Consumer
Price Index, then with the use of such conversion factor, formula, or table
for converting the BLS Consumer Price Index as may be published by Prentice
Hall, Inc. or any other nationally recognized publisher of similar
statistical information. If the BLS Consumer Price Index ceases to be
published and there is no successor thereto, such other index as NFN and *
may agree upon shall be substituted for the BLS Consumer Price Index. If the
Parties are unable to agree upon such substitution, the dispute shall be
settled pursuant to Article XX of this Agreement.
Additional Fiber Charge
NFN shall provide Additional Fiber (Fiber other than that described in
Exhibit A hereto, made available for *'s use on a date after the date of this
Agreement) for a one-time charge that shall be calculated by multiplying the
number of fiber miles (rounded off to the nearest hundredth of a mile) by the
number of months remaining in the Initial Term, by the Additional Fiber Rate,
which rate shall depend upon the year of the Initial Term in which the
Additional Fiber is made available to * according to the schedule below, and
adding the total of the monthly first Additional Term Fiber Charges for the
entire first Additional Term. (See Exhibit B, Figure #3).
Year of Initial Term Additional Fiber Rate
1 *
2
3
4
5
6
7
8
9
10
11
12
First Additional Term
Fiber Charge
(Per Month, Per Fiber-
Mile of Additional Fiber)
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Construction and Installation Services
NFN shall construct * Extensions at the actual cost to NFN of materials
and services provided by NFN's vendors for such construction plus a
Management and Administration Fee of * thereof.
The construction charges for the * Extensions to the seventeen (17) *
Locations set forth in Exhibit F hereto shall not exceed *, including
Management and Administration Fees.
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Exhibit C - Notification Procedures for Emergency Maintenance
Any trouble with the Leased Fibers should be promptly reported to:
*
This number will be answered 24 hours per day, 7 days per week.
NFN may, from time to time, change this notification procedure with advance
notice to *.
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Exhibit D - Technical Specifications
DOCUMENTATION
Not later than ninety (90) days after the Acceptance Date for each segment,
NFN shall provide * with the following documentation:
(a) As built drawings for such segment in accordance with the
following requirements:
Survey information (either from existing data or new information)
will be put on drawings.
Drawing will contain cable information, splice locations, assist
point locations with permanent structures, landowner information,
conduit information, regen locations and optical distances to
each regen from each splice location.
Drawings will be updated with actual field data during and after
construction.
Metro areas scale shall not exceed 1 inch = 200 feet.
Cable information shall include manufacturer and type of fiber,
and manufacturer and style of cable.
Red line drawings will be provided at the time of acceptance.
(b) Technical specifications of the optical fiber cable and
associated splices and other equipment placed in that segment.
FIBER CABLE SPLICING
1. All splices will be performed with an industry accepted fusion
splicing machine. NFN will perform two stages of testing during the
construction of a new fiber cable route. Initially, OTDR tests will be taken
from one direction. As soon as fiber connectivity has been achieved to both
regen sites, NFN will verify and record the continuity of all fibers. NFN will
take and record power level readings on all fibers at both wavelengths in both
directions. NFN will perform bidirectional OTDR tests on all Leased Fibers.
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2. If during the initial construction it is only possible to measure
the fiber from one direction, splices will be qualified during initial
construction with an OTDR from only one direction. The profile alignment system
or light injection detection system on the fusion splicer may be used to qualify
splices as long as a close correlation to OTDR is established. All measurements
at this stage in construction will be taken at * nm. As splice joints are
completed, unidirectional OTDR measurements of the splice losses will be made
and recorded.
3. After NFN has provided end-to-end connectivity on the fibers,
bidirectional end-to-end testing will be done. These measurements must be made
after the splice manhole or handhole is closed in order to check for
macro-bending problems. Continuity tests will be done to verify that no fibers
have been "frogged" or crossed in any of the splice points. Once the pigtails
have been spliced, loss measurements will be recorded using an industry accepted
laser source and a power meter. OTDR traces will be taken and splice loss
measurements will be recorded. NFN will also store OTDR traces on diskette and
on data sheets. Laser Precision format will be used on all traces. NFN will
provide three copies of all data sheets and tables, and one set of diskettes
with all traces.
(a) The power loss measurements shall be made at both *, and
performed bi-directionally.
(b) OTDR traces shall be taken in both directions at both *.
4. The splicing standards are as follows:
(a) The loss value of the pigtail connector and its associated
splice will not exceed * dB. This value does not include the inherent loss in
the pigtail or its connector, nor the insertion loss from its connection to the
FDP. For values greater than this, the splice will be broken and respliced
until an acceptable loss value is achieved. If, after five attempts, * is not
able to produce a loss value less than * dB, the splice will be marked as
Out-of-Space ("OOS") on the data sheet. Each splicing attempt shall be
documented on the data sheet.
(b) During initial unidirectional OTDR testing, the objective
for each splice is a loss of * dB or less. If, after three attempts, NFN is not
able to produce a loss value of less than * dB, then * dB will be acceptable.
If, after two additional attempts, a value of less than * dB is not achievable,
then the splice will be marked as OOS on the data sheet. Each splicing attempt
shall be documented on the data sheet.
(c) During the end-to-end testing of a span (a span shall be FDP
to FDP), the objective for each splice is a bidirectional average of * dB or
less.
31
<PAGE>
(d) The objective for all splices of all fibers within a span
shall be an average loss of * dB or less.
5. The entire NFN fiber-optic cable system shall be properly
protected from foreign voltage and grounded with an industry accepted system.
6. Leased Fibers will be consecutive in count and in a separate
buffer tube (or ribbon) from others. The maximum number of fibers within a
single buffer tube shall be *,
32
<PAGE>
Exhibit E - Outage Credits
* shall receive a credit against the Monthly Recurring Charges for Outages
according to the following schedule:
For each Outage at a site:
Less than or equal to 4 hours *
greater than 4 hours but less than 24 hours *
greater than or equal to 24 hours *
All Outages shall be rounded to the nearest hour.
33
<PAGE>
Exhibit F - Initial * Locations
34
<PAGE>
*INITIAL EXHIBIT F
<TABLE>
<CAPTION>
MAP_KEY SWITCH ADDRESS CITY OCN_NAME NXX_BLKS DESCRIPTION CD MFS TCG TWC NFN TOT_LINE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
*
</TABLE>
35
<PAGE>
EXHIBIT G
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of , 1997, by
and among *, a * limited liability company ("*") and National Fiber Network,
Inc., a Delaware corporation, ("NFN"), and First Trust National Association,
as escrow agent (the "Escrow Agent").
BACKGROUND
NFN and * entered into a Fiber Optic Use Agreement, dated June , 1997
(the "Fiber Agreement"), relating to the long-term lease of certain fiber
optic cable and related matters.
The terms of the Fiber Agreement contemplate that * shall place in
escrow * (collectively, the "Escrow Deposit"), the Escrow Deposit to be
released upon satisfaction of certain terms and conditions stated in the
Fiber Agreement. The parties wish to specify the terms and conditions on
which the Escrow Deposit, together with all interest accrued thereon will be
held, invested and disbursed.
THEREFORE, in consideration of the mutual undertakings and covenants
contained in this Agreement, the parties agree as follows:
AGREEMENTS
Section 1. Definitions. All terms used and not otherwise defined in
this Agreement shall have the meanings given to them in the Fiber Agreement.
Section 2. Obligation of Escrow Agent. Promptly after the execution of
this Agreement by *, NFN and Escrow Agent, * shall deposit in escrow with the
Escrow Agent the Escrow Deposit. The Escrow Agent agrees to hold and dispose
of the Escrow Deposit pursuant to the terms and conditions of this Agreement.
Any additional deposits shall constitute part of the Escrow Deposit and
shall be held and disbursed by Escrow Agent in accordance with the terms of
this Agreement.
Section 3. Payment of Interest; Investment. The Escrow Agent shall
distribute the interest received on all amounts held by Escrow Agent under
this Agreement, less the fees paid to Escrow Agent pursuant to Section 14, to
* unless * otherwise instructs the Escrow Agent in writing. The payment of
accrued interest to date shall be made at the time all or any portion of the
Escrow Deposit is disbursed under this Agreement. The Escrow Agent shall
<PAGE>
invest all funds held by Escrow Agent under this Agreement as directed in
writing by the * in one or more of the following: (a) in marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof; (b) in open market commercial paper currently
having the highest rating obtainable from either Standard & Poors Corporation
or Moody's Investors Service, Inc.; (c) in certificates of deposit issued by
commercial banks or savings institutions incorporated under the laws of the
United States of America, having total assets of not less than
$100,000,000.00; (d) any money market fund which invests exclusively in
direct obligations of the United States of America; or (e) in such other
investments or interest bearing accounts as shall be directed in writing to
the Escrow Agent signed by *. If there are insufficient funds held by Escrow
Agent to make the disbursements to NFN that are required under this
Agreement, * shall pay to NFN and it shall have no duty to review investments
to determine if they are eligible or permitted under this paragraph. Escrow
Agent shall not be liable for any loss resulting from the selection or sale
of any investment directed by *. All entities entitled to receive interest
from the escrow shall provide Escrow Agent with a W-8 or W-9 prior to
disbursement of interest. If voting rights apply to any investment
hereunder, * shall be responsible for exercising such voting rights.
Section 4. Disposition of Documents and Escrow Deposit. Promptly upon
receipt by Escrow Agent of a certificate in the form attached to this
Agreement as Exhibit A (the "Escrow Release Certificate"), executed by *,
Escrow Agent shall deliver to NFN the Upfront Payments pursuant to the terms
and conditions of Exhibit B to the Fiber Agreement; provided, however, that
Escrow Agent shall not disburse any amount identified by * as being subject
to a good faith dispute, in a certificate in the form attached to this
Agreement as Exhibit B (the "Holdback Certificate"), unless and until Escrow
Agent either receives joint written instructions from * and NFN or receives
written payment instructions from an arbitrator pursuant to Section 22.
Escrow Agent shall comply with such joint written instructions of the parties
or such written direction from the arbitrator. With respect to any subsequent
deposits of funds in escrow by * under this Agreement, Escrow Agent shall
comply with *'s written directions for disbursement.
Section 5. Conditions to Execution and Delivery of Escrow Release
Certificate. * agrees to execute and to deliver to Escrow Agent the Escrow
Release Certificate upon satisfaction (or waiver by *) of the conditions set
forth in the Fiber Agreement.
Section 6. Termination of Escrow. If the Escrow Agent has not received
all of the executed Escrow Release Certificates by June 1, 1998, the Escrow
shall terminate, Escrow Agent shall wire transfer to * the full amount of the
Escrow Deposit and wire transfer to * the interest on the Escrow Deposit less
the amount of Escrow Agent's fees. After doing so, Escrow Agent shall have
no further obligations under this Escrow Agreement.
2
<PAGE>
Section 7. Payment of Escrow Deposit.
a. The Escrow Agent shall make no disbursements of the Escrow
Deposit, except as permitted pursuant to Sections 4 or 6 above.
b. Any amounts payable by the Escrow Agent hereunder shall be
paid by wire transfer of immediately available funds, unless otherwise
designated in a written notice to the Escrow Agent by the payee.
c. Upon disbursement in full of the Escrow Deposit, and
interest thereon, this Agreement shall terminate and the Escrow Agent shall
be released and discharged from any further obligations or liability
hereunder.
Section 8. Wire Transfer Instructions. Wire transfers by the Escrow
Agent under this Agreement shall be directed to an account designated in
writing to the Escrow Agent by * with respect to funds it is to receive and
by NFN with respect to funds it is to receive. All wire transfer fees shall
be deducted from the amount of the transfer. The parties hereto agree that
the wire transfer security procedures identified on the attached Exhibit C to
this Agreement are commercially reasonable. The parties hereto further agree
that Escrow Agent should use these procedures to detect unauthorized wire
transfer payment requests prior to executing such requests and further agree
that any request acted upon by the Escrow Agent in compliance with these
security procedures, whether or not authorized, shall be treated as an
authorized request. The parties hereto agree that the Escrow Agent has the
right to change the wire transfer security procedures from time to time and
that use of any changed procedures evidences the acceptance of the commercial
reasonability of such change.
Section 9. Duties of Escrow Agent. This Agreement states the entire
agreement between the parties hereto and merges all prior negotiations,
agreements and understandings, if any, and states in full the representations
and warranties which have induced the agreement, there being no
representations or warranties, other than those herein stated, with respect
to the escrow property (except as stated in the Fiber Agreement as between *
and NFN). Escrow Agent's rights, duties and obligations are strictly limited
to those expressly set forth in this Agreement and Escrow Agent shall be
under no implied obligation or subject to any implied liability hereunder.
Escrow Agent shall not be required to take notice of any default or any other
matter, nor be bound nor required to give notice or demand, nor required to
take any action whatever except as herein expressly provided. Escrow Agent
shall not be liable for any loss or damage unless caused by its own gross
negligence or willful misconduct. Escrow Agent may act in reliance upon any
instrument of signature believed to be genuine and may assume that any person
purporting to give any notice or make any statement in connection with the
provisions hereof has been duly authorized to do so. Escrow Agent is
requested and authorized, but not obligated, to rely upon and act in
3
<PAGE>
accordance with any communication which may be given by telephone, facsimile,
telex, or other electronic transmission. Escrow Agent shall be entitled, but
not bound, to treat such communication as fully authorized by and binding and
shall be entitled to take such steps in connection with or in reliance on
such communication.
Section 10. Indemnification. In consideration of its acceptance of the
appointment as the Escrow Agent, * and NFN jointly and severally agree to
indemnify and hold the Escrow Agent harmless from any loss, damages, claims
or liability incurred by it to any person, firm or corporation by reason of
its having accepted the same or in carrying out any of the terms of this
Agreement, and to reimburse the Escrow Agent for all its reasonable expenses,
including, among other things, counsel fees and court costs, including
reasonable attorneys' fees and costs at trial and on any appeal, incurred by
reason of its position hereunder or actions taken pursuant to this Agreement.
This indemnity shall survive the termination of this Agreement for any
reason.
Section 11. No Additional Duties. The Escrow Agent shall have no
duties except those which are expressly set forth herein, and it shall not be
bound by any notice of a claim for payment, or demand with respect thereto,
or any waiver, modification, amendment, termination or rescission of this
Agreement, unless received by it in writing.
Section 12. Amendments. This Agreement may be amended, and observance
of any term of the Agreement may be waived, with (and only with) the written
consent of the parties hereto.
Section 13. Resignation of Escrow Agent. The Escrow Agent, and any
successor Escrow Agent, may resign at any time as Escrow Agent by giving at
least (30) calendar days written notice to NFN and *. Upon such resignation
and the appointment of a successor Escrow Agent, the resigning Escrow Agent
shall be absolved from any and all liability in connection with the exercise
of its powers and duties as Escrow Agent. Upon their receipt of notice of
resignation from the Escrow Agent, * and NFN shall use their best efforts
jointly to designate a successor Escrow Agent. In the event * and NFN do not
agree upon a successor Escrow Agent within thirty (30) calendar days after
the receipt by * and NFN of such notice, the Escrow Agent so resigning may
petition any court of competent jurisdiction for the appointment of a
successor Escrow Agent or other appropriate relief, including delivery of any
assets to a court in an interpleader action, and any such resulting
appointment shall be binding upon all parties to this Agreement. By mutual
agreement, * and NFN shall have the right at any time upon not less than
seven (7) calendar days written notice to terminate their appointment of the
Escrow Agent or successor Escrow Agent, as Escrow Agent. The Escrow Agent or
successor Escrow Agent shall continue to act as Escrow Agent until a
4
<PAGE>
successor is appointed and qualified to act as Escrow Agent; provided Escrow
Agent shall have the right to interplead the Escrow Deposit as provided in
this Agreement, if * and NFN do not jointly appoint a successor escrow agent
within 30 days after Escrow Agent's receipt of such notice.
Section 14. Fees of the Escrow Agent. The Escrow Agent shall be
entitled to compensation in accordance with the schedule set forth in Exhibit
D. The cost of such compensation and expenses shall be paid out of the
interest earned on amounts held by Escrow Agent under this Agreement. In the
event that the interest earned (but not yet distributed under Section 3
above) on the funds held by Escrow Agent under this Agreement is insufficient
to pay the compensation and expenses owing to the Escrow Agent, the excess of
such compensation and expenses over the interest earned but unpaid shall be
paid by *, upon demand. In the event that Escrow Agent brings an action in
interpleader or in the event the conditions of this Agreement are not
promptly fulfilled, or Escrow Agent is required to render any service not
provided for in the Agreement or in Exhibit D, or there is any assignment of
the interest of this escrow or any modification hereof, Escrow Agent shall be
entitled to reasonable compensation for such extraordinary services and
reimbursement for all fees, costs, liability and expenses, including attorney
fees. Such compensation and reimbursement shall be paid by *.
Section 15. Miscellaneous. The Escrow Agent may execute any of its
powers or responsibilities hereunder and exercise any rights hereunder either
directly or by or through its agents or attorneys. Nothing in this Agreement
shall be deemed to impose upon the Escrow Agent any duty to qualify to do
business or to act as fiduciary or otherwise in any jurisdiction other than
the State of Washington. The Escrow Agent shall not be responsible for and
shall not be under a duty to examine or pass upon the validity, binding
effect, execution or sufficiency of this Agreement, of any agreement or
document deposited in escrow, or of any agreement amendatory or supplementary
hereto. If any controversy arises between the parties to this Agreement or
with a third person relating to this Agreement, Escrow Agent shall not be
required to resolve the controversy but may, at its discretion, institute an
interpleader or other proceeding as it reasonably deems proper. Escrow Agent
may rely on any joint written instructions as to the disposition of funds or
documents held in escrow.
Section 16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 17. Notices. Any notices to be given hereunder shall be
sufficiently given if in writing and delivered personally, or mailed by
registered or certified mail, return receipt requested, postage prepaid, to
the following addresses or to such other addresses as the parties may from
time to time designate in writing delivered in accordance with this Section
17:
5
<PAGE>
a. If to *:
*
With a copy to:
*
b. If to NFN:
National Fiber Network, Inc.
110 East 42nd Street
New York, New York 10018
Attn: Chief Executive Officer
With a copy to:
Gregory A. Fernicola
Skadden Arps Slate Meagher & Flom
919 Third Avenue
New York, New York 10022
c. If to Escrow Agent:
First Trust National Association
Global Escrow Depository Services
PO Box 24425
Seattle, WA 98124
Any notices to be given hereunder shall be deemed received (a) on the date
delivered, if delivered personally or (b) on the third business day after the
date such notice was sent, if sent by registered or certified mail.
Section 18. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and permitted assigns. * and NFN may not assign their respective obligations
hereunder without the prior written consent of the other parties. Any
assignment in contravention of this provision shall be void. No assignment
shall release * or NFN from any obligation or liability under this Agreement.
6
<PAGE>
Section 19. Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to its principles of conflict of laws.
Section 20. Dispute Resolution. * and NFN desire to resolve disputes
arising out of this Agreement without litigation. Accordingly, except for
action seeking a temporary restraining injunction related to the purposes of
this Agreement, or suit to compel compliance with this dispute resolution
process, * and NFN agree to use the dispute resolution procedures set forth
in Sections 20 through 22 as their sole remedy with respect to any
controversy or claim arising out of or relating to this Agreement or its
breach. Escrow Agent shall not be subject to the provisions of Sections 20
through 22.
At the written request of either * or NFN, the parties will appoint a
knowledgeable, responsible representatives to meet and negotiate in good
faith to resolve any dispute arising under this Agreement. The parties
intend that these negotiations be conducted by non-lawyer, business
representatives. The location, format, frequency, duration and conclusion of
these discussions shall be left to the discretion of the representatives.
Discussion and correspondence among the representatives for purposes of these
negotiations shall be treated as confidential information developed for
purposes of settlement, exempt from discovery and production, which shall not
be admissible in the arbitration described below. Documents identified in or
provided with such communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be
admitted in evidence in the arbitration or lawsuit.
Section 21. Mediation. If the negotiations set forth in Section 20 do
not resolve the dispute within sixty (60) days of the initial written
request, the parties agree to work in good faith to settle the dispute by
mediation under the commercial mediation rules of the American Arbitration
Association. The parties will attempt to agree on a mediator. If they are
unable to do so, the mediation will be referred to the New York office of the
American Arbitration Association for mediation which will appoint a qualified
mediator to serve. The mediation shall take place in New York. Unless the
parties agree otherwise, the first mediation session shall take place no
later than ninety (90) days after the initial written request to negotiate.
The mediation shall continue until the dispute is resolved or until such time
as the mediator makes a good faith determination that the likelihood of
resolution is sufficiently remote that continuation of the mediation is not
warranted.
Section 22. Arbitration. If a determination is made pursuant to
Section 21 that continuation of the mediation process is not warranted, the
dispute shall be submitted to binding arbitration by a panel of three
arbitrators pursuant to the Commercial Arbitration Rules of the American
7
<PAGE>
Arbitration Association. Either * or NFN may demand such arbitration in
accordance with the procedures set out in those rules. Each party shall have
the right to take the deposition of one individual, and any expert witness
designated by the other party. Each party shall also have the right to
request production of relevant documents, the scope and enforcement of which
shall be governed by the arbitrator. Additional discovery may be only by
order of the arbitrator, and only upon a showing of substantial need. The
arbitrator shall rule on the dispute by issuing be authorized to issue
subpoenas for the purpose of requiring attendance of witnesses at
depositions. The arbitration hearing shall be commenced within sixty (60)
days of the determination that mediation is not going to be successful. The
arbitration shall be held in New York, New York, or such other location as
mutually agreed upon by the parties. The arbitrator shall control the
scheduling so as to process the matter expeditiously. The parties may submit
written briefs. The arbitrator shall rule on the dispute by issuing a
written opinion within thirty (30) days after the close of hearings. The
times specified in this section may be extended upon mutual agreement of the
parties or by the arbitrator upon a showing of good cause. The award
rendered by arbitration shall be final, binding and nonappealable judgment
and the award may be entered in any court of competent jurisdiction in the
United States. No special consequential or punitive damages shall be awarded
by the arbitrator.
Section 23. Confidentiality. * and NFN agree that all communications
and negotiations between the parties during the dispute resolution process,
any settlements agreed upon during the dispute resolution process and any
information regarding the other party obtained during the dispute resolution
process (that are not already pubic knowledge) are confidential and may be
disclosed only to employees and agents of * and NFN who shall have a "need to
know" the information and who shall have been made aware of the
confidentiality obligations set forth in this Section, unless the party is
required by law to disclose such information.
Section 24. Fees and Expenses. * and NFN shall equally split the fees
of the mediator and the arbitrator. Any party found by the arbitrator to have
breached this Agreement shall pay all other cost and expenses, including
reasonable attorneys' fees and expenses, of the other party incurred in
connection with the dispute resolution process. The costs and expenses shall
also include the attorneys' fees and other reasonable costs and expenses
incurred by the Escrow Agent arising from the dispute. If the arbitrator
does not find that any party has reached this Agreement, then each party
shall bear its own costs and expenses, including attorneys' fees and expenses.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
*
By:
-------------------------------------------
Its:
-------------------------------------------
NATIONAL FIBER NETWORK, INC.
By:
-------------------------------------------
Its:
-------------------------------------------
FIRST TRUST NATIONAL ASSOCIATION
By:
-------------------------------------------
Its:
-------------------------------------------
9
<PAGE>
EXHIBIT A
ESCROW RELEASE CERTIFICATE
To: First Trust National Association
Global Escrow Depository Services
PO Box 24425, 5th Floor
Seattle, WA 98124
The undersigned hereby certifies that all conditions set forth in
the Fiber Agreement have been satisfied, or waived by *, and you are
authorized to make disbursements and deliveries as provided in the Escrow
Agreement among *, National Fiber Network, Inc. and First Trust National
Association.
*
By:
Its:
Date:
<PAGE>
EXHIBIT B
HOLDBACK CERTIFICATE
To: First Trust National Association
Global Escrow Depository Services
PO Box 24425, 5th Floor
Seattle, WA 98124
The undersigned hereby certifies that * claims in good faith that a
dispute exists with respect to the disbursement of $ from the
Escrow Deposit held by you pursuant to the Escrow Agreement among *, National
Fiber Network, Inc. and First Trust National Association. Consequently, you
are hereby directed to continue to hold such amount in escrow pending receipt
of joint written instructions from * and NFN or receipt of written direction
from an arbitrator pursuant to Section 22 of the Escrow Agreement.
*
By:
Its:
Date:
<PAGE>
EXHIBIT C
Wire Transfer Security Procedures
[See Attached]
<PAGE>
EXHIBIT D
Escrow Agent's Compensation
[See Attached]
<PAGE>
Exhibit 10.13
CONFIDENTIAL TREATMENT (1)
AMENDED AND RESTATED AGREEMENT
FOR THE PROVISION OF A FIBER OPTIC TRANSMISSION NETWORK
This AMENDED AND RESTATED AGREEMENT FOR THE PROVISION OF A FIBER
OPTIC TRANSMISSION NETWORK (this "Agreement") is made and entered into
effective as of the Effective Date (as hereinafter defined), by and between
National Fiber Network, Inc., a Delaware corporation ("NFN"), and US ONE
Communications of New York, Inc., a Delaware corporation ("US ONE").
RECITALS:
A. US ONE and NFN entered into that certain Agreement for the
Provision of a Fiber Optic Transmission Network, dated as of April 16, 1996
(the "Original Agreement"), whereby NFN agreed to, among other things,
provide US ONE exclusive long-term use, as described below, of certain
dedicated capacity on NFN's fiber optic cable network and certain extensions
thereof, as more particularly described below;
B. US ONE and NFN have agreed to amend and restate the Original
Agreement pursuant to the terms hereof;
C. US ONE desires to use such dedicated capacity on such fiber
optic cable network upon the terms and subject to the conditions set forth in
this Agreement;
D. NFN is the holder of a franchise (the "Franchise") granted
pursuant to that certain Franchise Agreement between the City of New York
(the "City") and National Fiber Network, Inc., dated as of December 20, 1993,
as amended (the "Franchise Agreement"), pursuant to which NFN has the right
to install, operate, repair, maintain, remove and replace cable, wire, fiber
or other transmission medium in order to provide telecommunications services
and high capacity fiber optic transmission facilities in the City;
- -------------------------------
(1)Redacted portions have been marked with an asterisk (*).
<PAGE>
E. NFN, through its wholly-owned subsidiary, National Fiber
Network of New Jersey, Inc., is the holder of a license granted by the City
of Jersey City to construct a fiber optic system within the City of Jersey
City; and
F. Pursuant to the terms of the Franchise Agreement, NFN has
constructed a fiber optic cable transmission network consisting of * route
miles of fiber optic cable in and around the City (as set forth on the map
attached hereto as Exhibit A, the "Existing Network") and plans the
construction of additional route miles of fiber optic cable and other
construction constituting the Extended Network (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms have the respective
meanings set forth below:
"Additional Fiber" shall have the meaning set forth in Section 3.2
of this Agreement.
"Affected Party" shall have the meaning set forth in Section 14 of
this Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with that Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether by way of
equity ownership, contract or otherwise.
"Colocation Point" shall mean a point designated by US ONE that is
physically in, or virtually colocated in, a particular NYNEX serving wire
center or central office and at which US ONE will interconnect the portion of
the US ONE network to be provided over the facilities leased hereunder from
NFN to the NYNEX local loops or other NYNEX communications network facilities.
"Colocation Agreements" shall mean colocation agreements between
NYNEX and US ONE allowing US ONE to establish Colocation Points for the
purposes of this Agreement.
"Common Stock Equivalents" shall have the meaning assigned to such
term in the Warrant.
2
<PAGE>
"Consumer Price Index" as used herein shall mean the Consumer Price
Index published by the bureau of Labor Statistics of the United States
Department of Labor for Urban Wage Earners and Clerical Workers for All Items
for the New York/Metropolitan area, or shall mean the successor thereto.
"CLEC" shall mean a certified local exchange company other than a LEC.
"Current Market Value" shall mean, with respect to a share of common
stock, par value $.01 per share (the "Common Stock"), of NFN as of any date
(i) the fair market value per share of Common Stock, as reasonably determined
in good faith by the Board of Directors of NFN, using an appropriate
valuation method, assuming an arms' length sale to an independent party of
all of the Common Stock of NFN, without giving regard to the lack of
liquidity of the Common Stock or any discount for minority interests and
assuming the conversion or exchange of all Common Stock Equivalents,
including the Warrants, then outstanding and exercisable (whether at the time
of determination or with the passage of time), or (ii) if there shall be a
public market for the Common Stock, the average of the daily market prices
for each day during the 30 consecutive trading days commencing 45 business
days before such date as of which such a price can be established in the
manner set forth below. The market price for each such business day shall be
the last sale price on such day as reported in the Consolidated List Sale
Reporting System or as quoted in the National Association of Securities
Dealers Automated Quotation System, or if such last sale price is not
available, the average of the closing bid and asked prices as reported in
either such system, or in any other case the higher bid price quoted for such
day as reported by The Wall Street Journal (or any successor publication) and
the National Quotation Bureau pink sheets.
"Effective Date" shall mean the date on which NFN shall complete the
sale of common stock and/or other securities convertible into common stock
for an aggregate purchase price of $30,000,000 or more.
"Existing Central Offices" shall mean the Colocation Points located
at * (which have been completed as of the date hereof).
"Existing Network" shall have the meaning set forth in the recitals
hereto.
"Expiration Date" shall have the meaning set forth in Section 3.1 of
this Agreement.
3
<PAGE>
"Extended Network" shall mean collectively the Existing Network,
plus the fiber loops to the Existing Central Offices that have been extended
off of the Network, and the Network Buildout.
"Extended Term" shall mean an extension of the Initial Term for an
additional term of 13 years, commencing on December 21, 2008 and ending on
December 20, 2021.
"Fiber Mile" shall mean one fiber strand transversing one linear mile.
"Force Majeure" shall have the meaning set forth in Section 14 of
this Agreement.
"Initial Term" shall mean the term of this Agreement, commencing
on April 16, 1996 and ending on December 20, 2008.
"LEC" shall mean an incumbent local exchange carrier or operating
telephone company.
"Lump Sum Payment Option" shall have the meaning set forth in
Section 4.2 of this Agreement.
"Lump Sum Price" shall have the meaning set forth in Section 4.2 of
this Agreement.
"More Favorable Terms" shall have the meaning set forth in Section
16.18 of this Agreement.
"Most Favored Nations" shall mean the most favorable terms and
lowest price offered to any customer on the relevant system at the time of
determination.
"Network Affiliate" shall mean any Person who, directly or
indirectly, controls, is controlled by, or is under common control with NFN.
As used in this definition, "control" means (i) the possession, directly or
indirectly, of the power to elect at a majority of the board of directors or
other similar governing body of such Person or (ii) the beneficial ownership
of at least a majority of the voting capital stock or other beneficial
interests with voting rights of such Person; provided, that notwithstanding
the foregoing, a Network Affiliate shall be deemed to include any Person as
to which NFN and/or Stephen Garofalo have the effective ability, directly or
indirectly, to cause such Person to lease or otherwise grant the right to use
such Person's fiber optic cable network to another Person.
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"Network Buildout" shall mean such expansion of the Existing Network
as NFN may in its sole discretion build through the counties of Westchester,
New York, Nassau, New York, and Suffolk, New York.
"Note" shall have the meaning set forth in Section 4.1(b)(i) of this
Agreement.
"NYNEX Cages" (sometimes referred to as "Cage") shall mean
Colocation Points.
"Other Party" shall have the meaning set forth in Section 14 of this
Agreement.
"Outage" shall have the meaning set forth in Section 12 of this
Agreement.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, corporation, trust, unincorporated organization,
association, institution, public benefit corporation, entity, or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof) and shall for all purposes include Stephen A. Garofalo and members
of his immediate family, including his parents, siblings, spouse and
children.
"Term" shall mean the Initial Term and, if this Agreement is
extended, the Extended Term.
"Termination Point" shall mean any location where US ONE facilities
begin and NFN facilities end.
"US ONE POP" shall mean a specific geographical location designated
by US ONE at which customers of US ONE may, through the related entrance
facility, connect to the portion of the US ONE network to be provided over
the facilities leased hereunder from NFN.
"US ONE 12 Fiber Network" shall have the meaning set forth in
Section 4.1(a) of this Agreement.
"Warrant" shall mean a warrant to be dated April 16, 1996
substantially in the form of Exhibit A attached to that certain Amended and
Restated Letter Agreement regarding Purchase and Sale of Warrant dated as of
the date hereof by and between NFN and US ONE Communications Corp., a
Delaware corporation.
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2. LEASE
2.1 NFN shall lease to US ONE, for the exclusive use of US ONE and
its customers, an aggregate of * Fiber Miles, of which (i) * Fiber Miles
represent current availability of * strands of dark fiber per linear mile on
the Existing Network and (ii) * additional Fiber Miles may be designated by
US ONE at any time during the Initial Term, either within the Existing
Network or in any part of the Extended Network, in each case pursuant to
technical specifications which will meet or exceed those attached hereto as
Exhibit B.
2.2 The lateral extension policy attached hereto as Exhibit C shall
be utilized to afford US ONE Most Favored Nations treatment with respect to
fiber loops off of the Extended Network to commercial sites and to Colocation
Points in addition to the Existing Central Offices requested by US ONE during
the Term. US ONE shall be entitled to the benefits of any subsequent lateral
extension policy so that it will always be afforded Most Favored Nations
treatment with respect to such fiber loops. Notwithstanding the foregoing,
in the event US ONE elects to install any additional Colocation Points which
are designated in Section C of Schedule I attached hereto, NFN shall complete
construction of such Colocation Points at the prices set forth on such
schedule. Linear mileage comprising such fiber loops shall be counted for
purposes of calculating the * Fiber Miles provided for in Section 2.1 and the
* Fiber Miles provided for in Section 5.1.
2.3 NFN shall cause the buildout, if any, of the Extended Network
to be performed in compliance with technical specifications that meet or
exceed the technical specifications set forth on Exhibit B attached hereto.
3. TERM
3.1 Initial Term. Subject to Section 4, NFN leases, grants and
conveys to US ONE the exclusive use of (i) * Fiber Miles (that is, the *
Fiber Miles on the Existing Network as currently constituted plus * Fiber
Miles that may be designated by US ONE from time to time pursuant to Section
2.1 hereof) plus any Option Fiber (as hereinafter defined) as to which the
Option (as hereinafter defined may be exercised (as determined pursuant to
Section 5.1), plus (ii) the fiber loops that have been extended off of the
Existing Network to the Existing Central Offices on the Extended Network for
a term commencing as of April 16, 1996 and terminating on December 20, 2008
(the "Expiration Date"), unless extended as provided in this Agreement. All
rights and privileges granted to US ONE under this Agreement shall be
irrevocable until the Expiration Date (unless extended).
3.2 Extended Term. US ONE shall have the option to extend the
Initial Term for an additional term of up to 13 years, which option shall be
exercised
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by notice to NFN at least six months, but not more than 12 months, prior to
the end of the Initial Term. In the event the Franchise is not extended for
the entire Extended Term and US ONE has exercised its option to extend the
Initial Term for the entire Extended Term, NFN shall, for such portion of the
Extended Term as the Franchise shall not be in effect, provide US ONE, with
an equivalent number of strands of additional fiber (Fiber Mile for Fiber
Mile) ("Additional Fiber") on such portion of the Extended Network (or, at
the option of US ONE, on any other NFN networks (including networks belonging
to or controlled by Network Affiliates) which have been developed as of that
point in time) outside the Franchise territory as shall be designated by US
ONE for the Extended Term to compensate US ONE for the loss of its * strands
of fiber in the Franchise territory.
4. LEASE PAYMENTS
4.1 Payment for Initial Term. In consideration of the exclusive
right to the long term use of * Fiber Miles on the Extended Network (as
determined pursuant to Section 2.1 hereof), plus the fiber loops to the
Existing Central Offices, US ONE shall prepay its lease payments for the
Initial Term to NFN in accordance with the following:
(a) As of April 16, 1996, US ONE has paid an advance lease
payment to NFN in the sum of *.
(b) Upon written notification from NFN that the conditions
precedent for the determination of the Effective Date have taken place, such
written notification to be delivered to US ONE at least one business day
prior to the Effective Date, on the date which shall be two business days
after the Effective Date, US ONE shall (A) prepay additional lease payments
aggregating * and (B) pay * for the cost of installation of fiber loops to
Colocation Points at *. Such payments shall be made and satisfied by the
simultaneous delivery and exchange of the following:
(i) US ONE shall deliver to NFN (A) that certain
promissory note (the "Note") dated April 16, 1996 from NFN to US ONE in the
principal amount of *, marked "Canceled," together with delivery and release
of all security instruments pledged or filed with respect thereto and (B)
that certain stock subscription warrant (the "Subscription Warrant") dated
December 13, 1996 from NFN to US ONE for the purchase of up to * Warrant
Shares (as defined in the Subscription Warrant); and
(ii) NFN shall return to US ONE the balance of * in cash
by wire transfer of immediately available funds to an account designated in
writing by US ONE.
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(c) Payments to be made by US ONE pursuant to Section 4.l(b)
above shall be applied as a prepayment of this Agreement entitling US ONE to
the full and unfettered use, pursuant to this Agreement for the Initial Term
(and the Extended Term to the extent US ONE exercises its right to so
extend), of * Fiber Miles on the Extended Network, plus the fiber loops to
the Existing Central Offices as set forth in Section 2.1 hereto, without any
further obligation by US ONE in respect of such portion of the network
whatsoever, whether under the terms of this Agreement or otherwise.
4.2 Payments for Extended Term. Lease payments for the Extended
Term shall be payable, at the option of US ONE, either (i) monthly at a rate
per fiber mile equal to the lowest rate per fiber mile charged by NFN to any
lessee of "dark" fiber optic capacity on the Extended Network at the time US
ONE exercises its option to extend for the Extended Term, or, alternatively,
if US ONE shall opt to lease fiber on other NFN networks (including networks
owned or controlled by Network Affiliates) in the Extended Term pursuant to
Section 3.2 hereof, the lowest lease rate per fiber mile then charged to any
lessee of dark fiber optic capacity on such network, or (ii) in a lump sum
payment (the "Lump Sum Payment Option") equal to the present value of the
lease payments described in Section 4.2(i) (which present shall be based upon
discounting in accordance with standard financial procedures at an implied
interest rate of 15% per annum, calculated monthly) (the "Lump Sum Price");
provided, that such present value payment shall not exceed an amount equal to
* plus the percentage by which the Consumer Price Index as of December 2008
shall have increased over the Consumer Price Index as of April 1996 (the
"Lump Sum Cap"); provided, further, that in the event NFN has not completed a
minimum of * route miles of the Network Buildout at such time as US ONE
elects to pay the Lump Sum Price, then the Lump Sum Cap shall be reduced to
an amount equal to * times a fraction, the numerator of which is the number
of Fiber Miles which are leased by US ONE as of the end of the Initial Term
and the denominator of which is *. In the event US ONE elects to make
payments pursuant to Section 4.2(i) hereof, the Extended Term shall continue
for the entire Extended Term unless terminated by US ONE upon 30 days written
notice to NFN. In the event US ONE elects the Lump Sum Payment Option, US
ONE shall have the option, within 30 days after the exercise of such Lump Sum
Payment Option, to put the Warrant or the securities issuable thereunder to
NFN (assuming the Warrant has been issued) for a price equal to the greater
of the Lump Sum Price or the Current Market Value of the securities
underlying such Warrant. In the event US ONE elects to exercise the put
option and the Current Market Value of the securities underlying the Warrant
exceeds the Lump Sum Price, US ONE shall be entitled to receive from NFN in
cash any excess of the Current Market Value over the Lump Sum Price. In the
event the Consumer Price Index is converted to a different standard reference
base or otherwise revised, the determination of the Lump Sum Price shall be
made with the use of such conversion factor, formula or table for converting
the Consumer Price Index as may be published by the Bureau of Labor
Statistics, or if
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the Bureau of Labor Statistics should fail to publish same, then with the use
of such conversion factor, formula or table for converting the Consumer Price
Index as may be published by Prentice Hall, Inc., or any other nationally
recognized publisher of similar statistical information. If the Consumer
Price Index ceases to be published and there is no successor thereto, such
other index as NFN and US ONE may agree upon shall be substituted for the
Consumer Price Index. If the parties hereto are unable to agree, then such
matter shall be submitted to arbitration.
4.3 Maintenance and Repair. NFN shall be responsible for, and
shall provide directly, all maintenance and repair on the Existing Network
and the Extended Network in a diligent, expeditious, good and workmanlike
manner, using first class workmanship and materials, and NFN shall use its
best efforts to cause the Extended Network to remain in good working order
and condition at all times. US ONE shall always be entitled to the benefit
of the highest standard of redundancy, surveillance, maintenance and repair,
including, without limitation, in regard to response time, alarm and
monitoring and other surveillance systems, network redundancy and technical
innovation, then provided to any customer of NFN. Notwithstanding the prior
sentence, US ONE shall at a minimum be entitled to the surveillance,
maintenance and repair standards set forth on Exhibit D hereto. No charge
shall be made by NFN for maintenance, surveillance, general system redundancy
or repair on the NFN fiber optic network. NFN agrees that it shall at all
times maintain remote monitoring of the fiber cable for surveillance purposes
in substantial compliance with the specifications set forth on Exhibit D
hereto and to ensure the integrity of such cable. The monitoring shall be
accomplished through a remote optical test system connected to the fiber
strands. Any fiber strands necessary for such fiber monitoring program shall
be in addition to, and not deducted from, the fiber strands leased by US ONE
hereunder.
5. ADDITIONAL FIBER CAPACITY
5.1 In addition to the * Fiber Miles described in Section 2.1, US
ONE shall have the option (the "Option") to lease from NFN, at any time
during the Initial Term, up to * Fiber Miles (the "Option Fiber") on the
Extended Network (pursuant to technical specifications which will meet or
exceed those attached hereto as Exhibit B) for a term which will commence
upon the date the Option is exercised and terminate on the last day of the
Initial Term. US ONE shall exercise the Option by delivery of (i) a written
notice to NFN and (ii) a prepayment of the lease for any such additional
Fiber Miles as to which the Option is being exercised at the rate of * per
Fiber Mile for each Option Fiber Mile that has been constructed and is
operational. Notwithstanding the prior sentence, US ONE may exercise the
Option for Option Fiber Miles that have not yet been constructed but as to
which NFN offers, in its discretion, to US ONE as a result of a planned
build-out (the "Offer"), but shall not be required to prepay for any such
Fiber Mile until it has been constructed and is operational. US ONE may
rescind an exercised Option for any unconstructed Option Fiber Mile unless
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construction has begun in respect of such Option Fiber Mile or is irrevocably
scheduled to begin within 90 days of the date of rescission, as certified by
an executive officer of NFN. Notwithstanding anything to the contrary herein
contained, in the event that (i) NFN notifies US ONE that construction on any
such Option Fiber Miles subject to the Offer has been halted or terminated or
(ii) construction on any such Option Fiber Miles subject to the Offer is not
substantially completed on the date which is 180 days after US ONE elects to
purchase such Option Fiber Miles from NFN (each, a "Triggering Event"), then
such number of Option Fiber Miles shall be subject to the Option for a period
of 120 days after the occurrence of any such Triggering Event. Any Fiber
Miles as to which the Option may be exercised pursuant to this Section 5.1
shall consist of a minimum of * fibers and a maximum of 48 fibers per route
mile, which number of fibers and location on the Extended Network of such
Fiber Miles shall be designated by US ONE upon its exercise of the Option.
The Option shall expire on November 1, 1998. Notwithstanding the foregoing,
in the event that NFN has not completed a minimum of * route miles of the
Network Buildout (the "Minimum Condition") by November 1, 1998, the term of
the Option shall be extended until such time as US ONE receives written
notice from NFN that NFN has satisfied the Minimum Condition and for a period
of 30 days thereafter.
5.2 Commencing on the earlier of (i) the date on which US ONE
exercises the Option in full pursuant to Section 5.1 hereof or (ii) November
1, 1998 if NFN has not completed the Minimum Condition and continuing for a
period of 18 months thereafter, US ONE may, at its option, acquire additional
fiber optic capacity on any NFN network (including networks belonging to or
controlled by Network Affiliates), and NFN shall provide US ONE with such
additional fiber optic capacity on a Most Favored Nations basis on such NFN
network. Upon commencement of the installation by NFN of other fiber optic
networks (including networks belonging to or controlled by Network
Affiliates) during the Term, NFN shall, upon the request of US ONE, negotiate
in good faith a lease to US ONE for a portion of such network, such lease to
be provided for on a basis substantially the same as the lease provided under
this Agreement. NFN agrees that it will not, nor will any of its Affiliates,
take any action the purpose or effect of which would be to contravene the
benefits which would otherwise accrue to US ONE from this Section 5.
6. TERMINATION OF FRANCHISE
NFN shall use its best efforts to enter into an agreement with the
City whereby, in the event of the termination of the Franchise for any
reason, the City will agree to honor, and will cause (i) any subsequent
holder or holders of the Franchise, or (ii) any entity that purchases
substantially all of NFN's hard assets to honor, this Agreement. NFN agrees
to use its best efforts to enter into such an agreement with the City within
six months after commencement of the Initial Term.
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7. PROHIBITION ON RESALE
During the Term, US ONE shall not, directly or indirectly, sublease,
condo, sublicense or wholesale to any third party fiber optic capacity on
NFN's network unless such fiber such fiber optic capacity is distributed
through US ONE's transmission system.
8. REMEDIES ON DEFAULT
In the event (i) NFN defaults materially under this Agreement
including, without limitation, any representations or warranties set forth in
Section 15 hereof, and (ii) such default or defaults results in the loss or
substantial diminution of effective use of the Extended Network to US ONE as
contemplated by this Agreement, then after notice from US ONE and the
expiration of any applicable grace periods, NFN shall provide US ONE with
additional fiber optic capacity on NFN's then existing Extended Network
(and/or, at US ONE's option, other NFN networks, including networks belonging
to or controlled by Network Affiliates) equivalent to the aggregate number of
fiber miles US ONE would have been entitled to receive had no default
occurred. In addition to the relief specified in the preceding sentence, NFN
shall provide US ONE with two dedicated fiber strands to each commercial or
residential property then accessed by any of NFN's networks. Attached hereto
as Exhibit E is a list of ten office complexes into which NFN currently has
spur connections.
Notwithstanding anything contained in the first paragraph of this
Section 8, NFN shall not be deemed to be in default under this Agreement if
such default is the result of an event of Force Majeure (as hereinafter
defined), provided, however, that NFN shall use its best efforts to resume
and/or provide service to US ONE as soon as reasonably practicable after the
occurrence of an event of Force Majeure.
9. TAXES
US ONE agrees to pay any customer sales, use, gross receipts,
excise, excess, bypass, or any other local, state, or federal taxes or
charges to the extent such charges are imposed upon or based upon US ONE's
purchase and use of the services and products provided herein. US ONE shall
not pay any amounts to the extent such amounts are related to (i) NFN or the
Extended Network, (ii) employees, contractors, subcontractors, agents, or
representatives of NFN, or (iii) the Franchise Agreement, all of which shall
remain the sole responsibility of NFN.
10. INSURANCE
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Each of NFN, any contractor and any subcontractor shall procure and
maintain, at its own cost and expense, the following types of insurance and
coverage during the Term of this Agreement:
Type of Insurance Minimum Amount
(1) Worker's compensation and all As required by State law
occupational disease
(2) Employer's liability including all * per occurrence
occupational disease when not
so covered by Worker's compensation
above
(3) Commercial General Liability * per occurrence
(comprehensive) including contractual and annual aggregate
liability, product and completed
operations, business interruption,
bodily injury and property damage
combined
Type Of Insurance Minimum Amount
(4) Automobile liability (comprehensive), * per occurrence
bodily injury and property damage
combined
(5) Umbrella liability * per occurrence and
annual aggregate
NFN shall issue US ONE an insurance certificate and a copy of such policies,
naming US ONE as an additional insured as to (3) and (5) above. All such
insurance policies shall be issued by an insurer duly licensed and authorized
to conduct insurance business in New York and having a policyholder's and
financial rating of "AIX" or better. At least thirty (30) days prior to the
expiration of any policy, NFN shall furnish paid receipts and other evidence
satisfactory to US ONE that such policy has been renewed or replaced. In
addition, all policies shall be written so as to require ten (10) days' prior
written notice delivered to US ONE for any cancellation or termination.
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US ONE shall maintain Commercial General Liability Insurance
(comprehensive) of at least * per occurrence and annual aggregate, which
shall name NFN as an additional insured.
11. INSTALLATION OF DARK FIBER OPTIC CABLE NETWORK
If NFN's use of the Existing Network and the Extended Network
results in the necessity of additional construction, installation,
maintenance or repair in order to comply with NFN's obligations hereunder,
NFN at all times shall remain responsible for all costs and expenses of same
and shall proceed with such additional construction promptly and in a
diligent and workmanlike manner consistent with the technical and engineering
standards contemplated herein.
NFN shall terminate the fiber at an identified fiber termination
panel at each Termination Point and shall not be responsible in any manner
whatsoever, including for maintenance, repair or replacement for any
extensions into US ONE facilities from any Termination Point. NFN shall in
no way be responsible for any damages or losses caused by its fiber cable
except as a result of the negligent act or omission or deliberate misconduct
of NFN or NFN's employees, agents, contractors or subcontractors.
12. MAINTENANCE OF FIBER OPTIC CABLE NETWORK
As used in this Agreement, in supplement to the standard of care
described in Section 4.3 hereof, NFN's obligation to maintain fiber cable and
transmission equipment in good working order and condition shall mean in
accordance with best industry practices but in any event the fiber optic
cable splice loss shall not exceed * dB. Projected dB losses for each route
are presented on Exhibit F attached hereto.
In the event of physical damage or severance to, or a break in, any
Fiber Span, NFN shall respond directly, promptly, diligently and as
expeditiously as practicable, not to exceed two (2) hours, and shall restore
such Fiber Span within four (4) hours. Service will be provided seven (7)
days a week, twenty-four (24) hours a day. "Fiber Span" as used herein shall
mean the fiber optic cable originating from a fiber patch panel and
terminating at another fiber patch panel. "Outage" as used herein means
Complete Interruption of Service for one (1) or more particular circuits. A
"Complete Interruption of Service" as used herein shall mean an interruption
of US ONE's traffic over any circuit resulting from the interruption of US
ONE's traffic over any Fiber Span, whether or not due to the physical damage
or severance of, or breaks in, such Fiber Span, which is not prevented within
50 milliseconds by means of physical or electronic protection that reroutes
such traffic over another Fiber Span. NFN shall pay to US ONE the sum of (i)
* per hour for each Outage of greater than
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four (4) but less than or equal to 12 hours; (ii) * per hour for each Outage
of greater than 12 but less than or equal to 24 hours; and (iii) * per hour
for each Outage of greater than 24 hours. *
If NFN is required to relocate any section of the Existing Network
or the Extended Network, NFN will be solely responsible for the cost and
implementation of such relocation. NFN will give US ONE a minimum of six
months written notice of any such relocation. Any such relocation will not
cause any change in the performance of the network to US ONE. Any US ONE
Outages caused by such relocation will not exceed one hour.
NFN will maintain a reasonable and customary inventory of spare
cable in the event cable repair is needed.
Upon prior written request a reasonable time in advance, NFN shall
have the right to inspect US ONE's use of the fiber cable during normal
business hours (9 a.m. to 5 p.m.) on business days. Such inspection shall be
conducted only to comply with applicable regulatory requirements or as part
of maintenance or repair related to this Agreement, and NFN shall use its
best efforts to effectuate inspection urgently, expeditiously and with no
interruption of US ONE's operations and security.
It is expressly understood, acknowledged and agreed that NFN is
and remains the owner of the Extended Network, except in the event that
NYNEX policies toward CLEFs or regulatory authorities require ownership of
cable inside the NYNEX wire centers, the parties hereto agree that US ONE
shall obtain ownership of such cable from NFN as joined at a theoretical
splice point to be determined in accordance with the applicable policy or
regulation. It shall be the responsibility of US ONE to maintain all cable
that it shall be required to own as provided in immediately preceding
sentence; provided, that NFN shall incorporate such US ONE owned portions of
the Extended Network into its full network control fault isolation and
diagnostic system and shall cooperate fully with US ONE in detection, fault
isolation and diagnosis of cable within the US ONE owned portions of the
Extended Network. Except as set forth in the immediately preceding sentence,
nothing in this Agreement shall be construed as conveying to US ONE any
ownership right, title or ownership interest in the fiber.
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13. TERMINATION OF AGREEMENT
If one or more of the following events of default shall occur, US ONE
shall have the right to immediately terminate this Agreement:
(a) NFN materially breaches its obligations under the second
paragraph of Section 12 of this Agreement dealing with Outages; or
(b) NFN breaches any other material term or condition of this
Agreement in any material respect with the exception of a breach for which a
remedy is available under Section 8 hereof, and such breach remains uncured (i)
as to maintenance and repair obligations, three (3) days, and (ii) otherwise
twenty (20) days after NFN has received notice of such uncured breach; provided,
however, that if the breach is of a nature or involves circumstances reasonably
taking more than three (3) days or twenty (20) days, respectively, to cure, the
time period shall be extended for so long as may be required, as long as NFN
shall proceed urgently and expeditiously to cure same; or
(c) NFN becomes insolvent or applies for or consents to the
appointment of a receiver, trustee or similar officer for it or any substantial
part of its property or assets, or any such appointment is made without such
consent by NFN and remains undischarged for a period of sixty (60) days; or
(d) NFN consents to the institution of a petition, application,
answer, consent, default or otherwise of any bankruptcy, insolvency or
reorganization, or any such proceeding is involuntarily instituted against NFN
and remains undischarged for a period of sixty (60) days.
Notwithstanding any other remedies available to US ONE upon the
occurrence of an event of default by NFN, US ONE, its officers, attorneys,
accountants and other authorized representatives, upon reasonable notice to NFN,
shall be afforded reasonable access during normal business hours to the
employees, assets, facilities and the books and records of NFN so as to afford
US ONE full opportunity to make such review, examination and investigation of
the business as US ONE may desire to make in verifying that it has been afforded
Most Favored Nations treatment in accordance herewith. US ONE will be permitted
to make extracts from or to make copies of such books and records as may be
reasonably necessary in connection therewith.
14. FORCE MAJEURE
Neither NFN nor US ONE shall be considered in breach of this Agreement
or liable for any expense, loss or damage resulting from delay or prevention
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of performance caused by any act attributable to an occurrence of an event of
Force Majeure. Neither party shall, however, be relieved of liability for
failure of performance due to a claimed Force Majeure hereunder if such failure
is due to causes arising out of its own negligence or to removable or remediable
causes that it fails to remove or remedy with reasonable dispatch.
The term "Force Majeure" shall mean any cause beyond the control of
the party affected which by exercise of due foresight such party could not
reasonably have been expected to avoid and, which by exercise of due diligence,
such party shall be unable to overcome during the period while such party shall
continue to exercise such due diligence, including, but not limited to, failures
of facilities, changes in laws except tax laws, rules, regulations, etc., flood,
earthquake, storm except for weather conditions normal to the area, fire,
lightning, epidemic, war, riot, civil disturbance, sabotage, inability due to
the previously mentioned conditions to obtain material, fuel or supplies in
adequate quantities, or restraint by court order or public authority. Nothing
contained herein, however, shall be construed to require either party to prevent
or settle a strike (other than a strike by employees of a contractor) against
its will.
Any party affected by an event of Force Majeure (the "Affected Party")
shall notify such other party (the "Other Party") promptly of any occurrence or
condition which in the Affected Party's opinion warrants an extension of time.
Such notice must be submitted in writing to the Other Party within five days or
such sooner date as is practicable after such delay is known to the Affected
Party, or shall, in the exercise of reasonable diligence, become known. Such
notice shall specify in detail the anticipated length of delay, the cause of the
delay, and a timetable by which any remedial measures shall be implemented.
Failure to provide such notice within such period shall constitute a waiver by
the Affected Party of any request for extension applicable to any period prior
to the date such notice is actually received by the Other Party. The Other
Party shall acknowledge receipt of the Affected Party's notice within ten (10)
days of its receipt advising of its acceptance or rejection or further
consideration. If the Other Party reasonably requires further information in
order to consider the request, the Affected Party shall supply such information
within ten (10) days and, if the Affected Party fails to provide such
information, the Affected Party's original notice shall be deemed not to have
been given.
15. WARRANTIES AND INDEMNITIES
NFN represents and warrants to US ONE that
(a) NFN has obtained or will obtain, when and if required by any
regulatory agency or court of law, all regulatory approvals, permits, orders or
consents
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necessary to be obtained by NFN to timely effectuate the terms and provisions of
this Agreement, including the timely completion of the Network Buildout; and
(b) NFN shall comply with all applicable laws, rules and regulations
related to the performance of its obligations under this Agreement; and
(c) NFN is bound hereunder through its duly authorized signatory
below and is duly formed, validly existing and in good standing under the laws
of the State of Delaware; and
(d) this Agreement is not prohibited or in violation of or
inconsistent with the charter or bylaws of NFN or any other agreement signed by
NFN or which binds NFN and no such agreement will adversely affect US ONE's use
and enjoyment of the fiber for US ONE's purposes; and
(e) a default by NFN under this Agreement will cause trouble harm and
loss to US ONE for which US ONE may lack an adequate remedy at law (e.g., money
damages). Consequently, NFN agrees that US ONE may seek, and be entitled to
obtain, restraints and/or injunctions against NFN from any court of competent
jurisdiction to protect US ONE's business operations without same constituting
an election of remedies available hereunder or otherwise at law or in equity.
In addition, NFN acknowledges and agrees that in the event of a default by NFN
hereunder, US ONE shall be entitled to specific performance; and
(f) NFN acknowledges and agrees that this Agreement, to the extent
it is subject to regulation by the Federal Communications Commission, is an
agreement that is not subject to the filing requirements of Section 211 (a) of
the Local Telephone Network Act of 1934 (47 U.S.C. Section 211 (a)) as
implemented in 47 C.F.R. Section 43.51, and NFN is not a carrier as such term is
used in such Act;
(g) no representation or warranty by NFN contained in this
Agreement, and no statement in any document (included, without limitation, all
documents executed in connection with any other transaction or transactions
consummated substantially concurrently with this Agreement), list, certificate
or other instrument or to be furnished by or on behalf of NFN or any Affiliate
thereof to US ONE or any of its representatives in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was or will be made, in order to
make the statements herein or therein not misleading or necessary in order fully
and fairly to provide the information required to be provided in any such
document, list, certificate or other instrument. NFN has not failed to disclose
to US ONE any fact which would reasonably be determined to have a
17
<PAGE>
material adverse effect on the business, financial condition, results of
operations or prospects of the business, or which is otherwise material to the
business; and
(h) there are no presently existing federal, state or local
regulatory fees or penalties, including fees under the Franchise, to which US
ONE will be subjected as a result of the execution and delivery of this
Agreement and the related transactions.
US ONE shall indemnify, defend and hold NFN, its directors, officers,
agents, representatives and employees ("NFN Parties") harmless from and against
any claims, demands, losses, costs, damages, expenses and foes of any kind or
nature whatsoever arising from or related to death, personal injury or property
damage, and for reasonable legal fees to the extent asserted by persons other
than the NFN Parties arising from or out of US ONE's performance of or failure
to perform any term, condition or obligation of US ONE under this Agreement.
NFN hereby agrees to indemnify, defend and hold harmless US ONE and US
ONE's partners, directors, officers, agents, representatives and employees from
and against any and all claims, demands, losses, costs, damages, expenses and
fees of any kind or nature whatsoever arising from or related to death, personal
injury or property damage, and for reasonable legal fees arising from or out of
NFN's obligations or NFN's performance of or failure to perform any term,
condition or obligation of NFN under this Agreement or any related act or
omission of NFN. This Indemnity includes, without limitation, acts or omissions
of NFN's officers, agents, contractors, subcontractors, licensees, invitees,
representatives and employees.
The above indemnities shall survive the expiration or earlier
termination of this Agreement.
16. MISCELLANEOUS
16.1 Status of Parties. The parties to this Agreement expressly
state, and understand, that the obligations and rights hereunder in no way
constitute them as partners, joint venturers or otherwise related in any way,
and that neither has any power under this Agreement to bind or commit the
other in any way to any third party or parties.
16.2 Amendments, Alterations and Modifications. Agreement shall
not be amended, altered or modified except by an instrument in writing duly
executed by both parties.
16.3 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and
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<PAGE>
permitted assigns. It is the explicit intention of the parties hereto that
no person or entity, other than the parties hereto, is or shall be entitled
to bring any action to enforce any provision of this Agreement against either
of the parties hereto, and that the covenants, undertakings, and agreements
set forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective successors or
permitted assigns.
16.4 Special and Consequential Damages. In no event shall either
party be liable to the other for special or consequential damages as a result
of its performance or nonperformance of this Agreement, and each party hereby
waives and releases the other from those specific types of damages.
16.5 Confidentiality. Each of NFN and US ONE reaffirms and
rememorializes its respective confidentiality obligations related to this
Agreement as set forth on Exhibit G attached hereto.
16.6 Subsidiaries. NFN consents to the exercise by any subsidiary
of US ONE of the rights, and the performance by any such subsidiary of the
obligations, of US ONE hereunder.
16.7 Leasing other Facilities. This Agreement shall not prevent
US ONE from leasing the facilities of any other network provider, whatever
the location and whatever the terms thereof.
16.8 Notices. All demands, reports, approvals or other
communications which may be or are required to be given, served or sent
pursuant to this Agreement shall be in writing and shall be hand delivered or
sent by recognized overnight carrier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to NFN, to:
National Fiber Network, Inc.
110 East 42nd Street
New York, New York 10017
Attn: Stephen A. Garofalo
Howard Finkelstein
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Avenue, 32nd Floor
New York, New York 10022
19
<PAGE>
Attn: Greg Fernicola
If to US ONE, to:
US ONE Communications of New York, Inc.
One Lincoln Centre
5400 LBJ Freeway, Suite 700
Dallas, Texas 75240
Attn: James H. Sturges
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attn: Mary R. Korby
Notices shall be effective when properly sent and received, refused or
returned undeliverable. Either party can notify the other of an address
change pursuant to this notice provision.
16.9 Severability. If any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under any applicable law, same
shall be ineffective to the extent of such invalidity only, without in any
way affecting the remaining parts of said provision or the remaining
provisions of said Agreement. In such event, the parties shall negotiate in
good faith to amend this Agreement to comply with applicable law while
preserving, to the maximum extent feasible, the mutual benefits of this
Agreement.
16.10 Further Assurances. To the extent that any statute,
regulation or policy passed or adopted after the date hereof materially
alters in a negative manner the practical realization of the value of this
Agreement to US ONE, NFN agrees to modify this Agreement so as to preserve
the practical realization by US ONE of the value of this Agreement.
16.11 Exhibits. Exhibits are an integral part of this Agreement.
"Will" and "shall" have the same meaning in this Agreement. "Including" or
"include" shall mean "including without limitation."
16.12 Waiver. No failure or delay on the part of either party
hereto in exercising any right, power or privilege hereunder and no course of
dealing between the parties shall operate as a waiver thereof, nor shall any
single or partial exercise of
20
<PAGE>
any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
16.13 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the transactions contemplated
herein, and it supersedes all prior oral or written agreements, commitments
or understandings with respect to the matters provided herein.
16.14 Titles and Headings. Section headings contained in this
Agreement are inserted for convenience of reference only. Such headings
shall not be deemed to be a part of this Agreement for any purpose and shall
not in any way define or affect the meaning, construction, or scope of any of
the provisions hereof.
16.15 Governing Law. This Agreement shall be governed by the laws
of the State of New York without regard to any other state's choice of law
principles.
16.16 Execution in Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be required.
16.17 Publication. Neither NFN nor US ONE shall publicize or
disclose any aspect or contents of this Agreement or its relationship with
the other party to this Agreement, in any way, without the other party's
prior written consent and specific approval, in such party's sole discretion,
except as required by law, rule or regulation or to a lender or prospective
lender or bona fide investment banker. Such consent shall not be
unreasonably withheld as to a bona fide investor, partner or joint venturer.
16.18 Most Favored Nations. Notwithstanding anything in this
Agreement, NFN agrees to treat US ONE to Most Favored Nations status for the
Term of this Agreement. NFN warrants that all financial terms, warranties
and provisions regarding termination or expiration provided in this Agreement
are equivalent to or better, as a whole, than the terms and provisions
offered by NFN to its current customers. In addition, if during the Term of
this Agreement NFN enters into any other agreement(s) with any other
customer(s) providing such customer(s) with more favorable financial terms,
warranties or provisions regarding termination or expiration, taken as a
whole, then this Agreement shall be deemed appropriately amended to provide
such better terms ("More Favorable Terms") to US ONE, unless US ONE elects,
in writing, to reject such new term(s) or provision(s). NFN shall promptly
provide US ONE with any refund or credits thereby created.
16.19 Assignment. Neither NFN nor US ONE may assign this
Agreement, in whole or in part except by operation of law, without the prior
written
21
<PAGE>
consent of the other party, which consent shall not be unreasonably withheld
or delayed, and except as consistent with regulatory authorizations.
Notwithstanding the immediately preceding paragraph, US ONE may
assign this Agreement to any Affiliate or as a security interest to a lender
without NFN's consent. In addition, NFN shall be permitted to assign this
Agreement without US ONE's consent to a corporation of which it owns at least
a majority of the voting stock and controlling interest or any Affiliate.
Upon any assignment under this Section 16.19, the assignor shall remain
responsible for performance under this Agreement and shall guaranty any and
all continuing financial obligations hereunder. This guaranty shall be
primary, joint and several. Any assignee shall expressly assume all
liabilities hereunder prior to the effectiveness of such assignment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the Effective Date.
NATIONAL FIBER NETWORK, INC. US ONE COMMUNICATIONS OF NEW YORK, INC.
By:__________________________ By:____________________________________
Stephen A. Garofalo, James H. Stugres,
President President
23
<PAGE>
Exhibit A
Map of Manhattan, Brooklyn, Queens and New Jersey
<PAGE>
EXHIBIT B
Optical Fiber Properties
Fiber Type: *
Manufacturer: *
Construction
*
Optical Characteristics
*
<PAGE>
DRAFT
Mechanical Characteristics
*
System Constituents and Designations
*
<PAGE>
It is important to note that NFN's Fiber Monitoring Program will
consider the attached fiber trace with its associated attenuation, length,
etc., as the reference for surveillance purposes, thereby reacting to
variations from this reference for alarming and restoration notification.
The degree of variation from the reference trace necessary to generate an
alarm will be specified in this report. Fiber monitoring is conducted via
maintenance fiber(s) that emulate customer systems completely from one
Customer Fiber Distribution Panel (CFDP) to the next.
It is critical that the customer only utilize the ports on the CFDP
that are specified in this report as other ports may be under use by NFN's
monitoring program and for future provisioning. The use of these ports by the
customer would jeopardize NFN's ability to conduct surveillance on the system
under use and possibly other systems in the surrounding area.
NFN has provided patchcords for connection from the CFDP to the end
equipment as per the customer's request. These jumpers are of a length and with
specific end connector-types as specified in this report. While these
connectors have been supplied in the original packaging in which they were
received from the manufacturer, shipping and handling may cause dust and dirt to
accumulate on the connector endface, adversely affecting optical performance.
Therefore, prior to using any fiber connector, NFN recommends cleaning with
isopropyl alcohol of purity 95% or higher, via the following procedure: wipe
the ferrule sides and endface of the connector with an alcohol-dampened
lint-free cloth; wipe again with a dry lint-free cloth and finally, blow across
the ferrule with compressed air.
This report contains the following pertinent information:
- properties of the optical fiber.
- geographical map detailing each fiber system pictorially.
- routing and footages of each fiber system.
- OTDR trace of each fiber system with a table of optical events en
route.
- End-to-end attenuation for each fiber at both 1310nm and 1550nm
wavelengths.
- Loss thresholds that would generate alarming and notification
procedures.
- Specification of ports to be utilized by the customer at the
CFDP.
- Patchcord lengths provided with type of end connectors.
<PAGE>
DRAFT
System 1 - Span 1 - Fiber 1
*
<PAGE>
DRAFT
*
GRAPH
*
<PAGE>
*
GRAPH
*
<PAGE>
System 1 - Span 1 - Fiber 1
*
GRAPH
*
<PAGE>
*
GRAPH
*
<PAGE>
Loss Thresholds
This table represents the attenuation values that would generate an alarm on
each fiber as per NFN's Fiber Monitoring Program.
*
<PAGE>
EXHIBIT C TO LEASE AGREEMENT
BETWEEN
NATIONAL FIBER NETWORK, INC.
AND
US ONE COMMUNICATIONS CORP.
LATERAL EXTENSION POLICY OF NATIONAL FIBER NETWORK, INC.
The policy of NFN with respect to construction cost reimbursement and
monthly charges for extension from its Network Backbone to locations requested
by a customer is as follows
(i) The NFN customer requesting a fiber connection from the NFN
Network Backbone to a specific location shall pay to NFN the cost
which it incurs for such construction plus * thereof measured
from the Splice Point off of the Network Backbone to the point at
which the connection terminates (the "Termination Point") at the
subject premises (the "Lateral Extension"). The cost paid by the
customer for such construction is referred to herein as the
"Lateral Extension Cost";
(ii) Upon lease of fiber in the Lateral Extension to additional NFN
customers, each such additional customer shall pay to NFN a
portion of the Lateral Extension Cost equal to its pro rata
portion thereof (based upon the total number of customers leasing
fiber in the Lateral Extension). Such payments shall be
distributed equally by NFN to each prior NFN customer which has
already contributed to the construction of the Lateral Extension;
(iii) Customers utilizing the Lateral Extension shall pay to NFN a
monthly lease per fiber mile at the rate of * per fiber mile with
a minimum of two fibers measured from the Splice Point on the
Network Backbone to the Termination Point at the subject
premises;
(iv) All customers leasing fiber on the Lateral Extension shall pay
their respective pro rata cost of any easement, right of way, or
other similar charge incurred by NFN for the right to maintain
the Lateral Extension, as and when such charges are incurred.
<PAGE>
EXHIBIT D
ADMINISTRATION
NFN's Monitoring Program will provide standard procedures, such as the
cable and specific fiber IDs within each sheath and origin and destination of
each fiber, and OTDR traces of each fiber path (at both * wavelengths) will be
recorded along with the locations of all optical events (splices, connection
points, etc...) en route. The database will maintain a manhole progression for
each route which correlates optical distances obtained via the OTDR to physical
landmarks such as manholes, buildings, bridges, etc. Locations of slack coils
and ring cuts will also be indicated which facilitates expeditious response to
maintenance requirements.
CABLE MONITORING SYSTEM
NFN's monitoring system will at all times be based on state-of-the-art
OTDR technology with the capability of actively examining multiple fibers, each
with its own set of test parameters. The resultant traces will be linked to
physical landmarks in their path via a geographical graphical user interface
which facilitates a visual depiction of fiber routings.
NFN will monitor the complete routing of each customer system by
emulating its path in a maintenance fiber in the same sheath as the active
fiber. The full complement of maintenance fibers will be set in surveillance
mode at the OTDR, as described below, which entails continuous monitoring.
Testing of fibers will be conducted in three modes:
1. On-Demand Testing - This test will be used by a particular user
(Maintenance Center Analyzer) to exercise a test of a select fiber ID and
will return an OTDR trace and summary report of all pertinent information
in regard to the select fiber. The test results will be then be referenced
to an "as-built" trace. The On-Demand test will be performed in either
Fault Locate or Maintenance mode. The fault locate mode will be used to
locate "gross" problems (cable cuts) while Maintenance mode will be used to
perform a detailed analysis of selected fibers referenced to established
NFN thresholds.
2. Auto-Routining - This function will be used to execute a test of select
fibers at programmable times and dates. The scheduling time frames will be
hours, days or weeks with a multitude of scheduling parameters. This
function will be used to observe any degradation in the fiber under test
and will issue alarms if analysis indicates differences from threshold
settings.
<PAGE>
3. Local Surveillance - Will execute repetitive tests of selected fibers
(Maintenance fibers) continuously, comparing the resultant trace to the
stored reference trace, thereby establishing "full-time surveillance".
FAULT ISOLATION AND RESTORATION
NFN's Cable Monitoring System will immediately identify the location and
nature of a fault. This information will be automatically depicted on the
geographical interface of the system along with the nearest physical landmarks
surrounding the problem. NFN's restoration parameters will require a response
time of 2-4 hours. Within the 2-4 hour corridor, analysis, restoration
requirements and internal and external escalation notification procedures will
be completed. The following details the procedures:
1. Analysis - Once an alarm is received at the Maintenance Center, the
Analyzer will review the fiber in alarm and determine the nature of the
problem. The determination will either reflect a degradation or
catastrophic (cable cut) event. Degradation Alarm - the Analyzer will
determine the cause and the service affecting potential. If the trouble is
deemed service affecting, the Analyzer will contact his immediate
Supervisor and Maintenance personnel of the alarm and direct the
maintenance personnel to the fault location. Maintenance personnel will
ascertain the nature of the trouble and the Analyzer/Supervisor will be
notified of repair requirements and time required by the Field Supervisor.
The Maintenance Center Supervisor will apprise the Customer
Telecommunications Operations Supervisor of the nature of the trouble and
the proposed time frame for restoration. The NFN Maintenance Supervisor
will maintain continual communications with the Customer Telecommunications
Operations Supervisor until completion of final repair and acceptance to
the Customer. In the event the Degradation Alarm is not service affecting,
full time surveillance will be maintained for a period of 4 hours to
ascertain the conditions of the deterioration. Following the full time
surveillance period if degradation continues to exist, the Analyzer will
contact Maintenance personnel for dispatch to clear alarm generation.
Catastrophic Alarm - the Analyzer will retrieve the fiber under alarm and
determine trouble and location. The system at this juncture has initiated
multiple notification alarms (internally) to various levels of Supervision
within NFN. The Analyzer will be additionally responsible to ensure alarms
have been received by contacting the various designated personnel. The
Analyzer will inform the designated individuals of location, size and
number of Customers affected. Maintenance personnel will be dispatched
immediately to the location in order to determine cause and restoration
time frames. Maintenance Center Supervisor will contact all affected
Customers to apprise them of our efforts and determination of anticipated
time for restoration.
NOTE: ALL RESTORED FIBERS WILL CONFORM TO SPECIFICATION OF THE ORIGINAL
DESIGN.
<PAGE>
EXHIBIT E
NATIONAL FIBER NETWORK, INC.
POINT OF PRESENCE (POP)
NFN BLDG.
NFN BUILDING ADDRESS ID# STATUS
*
<PAGE>
EXHIBIT F
Network Properties and Statistics
Great care has been taken in selecting fiber & cable types so as to provide high
flexibility in cable deployment while allowing for rapid restorative ability.
Fusion splicing is the sole method of fiber connection used in the network with
strategically located slack loops for future provisioning and maintenance
purposes. Every attempt has been made to locate the cable in the lowest and
most central possible duct bank position in order to minimize the effect of any
disruptive activity from street work.
The technical parameters of customer systems that are currently on-line reflect
the impressive results that are attainable using the topology employed by NFN.
The average consumer system loss is * dB/km which includes cable loss, splice
loss and cross-connection insertion loss. It should be kept in mind that the
cable loss itself is rated at * dB/km with each system averaging over * km in
end-to-end length. The splice loss of these systems through their total lengths
reveal an average of * dB/splice with * dB being specified as the maximum
absolute splice loss with our contractors.
Customer systems may have either point-to-point or a ring-type configuration
depending on the specific requirements identified. NFN provides and encourages
complete route diversity if requested by a customer. This entails not only
identifying two separate street routings to link the customer locations, but
also providing two separate building entrances with independent risers so as to
achieve true redundancy in the fiber system. Thus, the only point of
commonality between the two routings would be at the termination, not at the
customer site.
<PAGE>
EXHIBIT G
CONFIDENTIALITY
Definitions
Parties: National Fiber Network, Inc. ("NFN")
US ONE Communications of New York, Inc. ("US ONE New York")
US ONE Communications Corp. ("US ONE")
Disclosing Party: The party providing Confidential Material to another party.
Receiving Party: The party receiving Confidential Material from a Disclosing
Party.
Loan
Documents: The "Loan Documents" as defined in a certain Amended and Restated
Master Agreement dated as of April 15, 1996 between NFN and US
ONE.
Confidential
Material: Information and documents exchanged between Parties in
connection with the performance of their respective
obligations pursuant to the Loan Documents with the
exception of information which (i) is or becomes generally
available to the public other than as the result of a
disclosure by the Receiving Party or its directors,
officers, employees, agents or representatives in violation
of this agreement, (ii) was available to the Receiving Party
prior to its disclosure to that party by the Disclosing
Party, or (iii) becomes available to the Receiving Party
from a source other than the Disclosing Party providing such
information, provided that such source is not bound by a
confidentiality agreement with respect to such confidential
material.
A Receiving Party will not use Confidential Material received for any
purpose except as shall be necessary to fulfill its respective obligations and
exercise its rights in accordance wit the terms of the Loan Documents. A
Receiving Party will not disclose (except as expressly provided herein) any
portion of the Confidential Material to any person without the prior written
consent of the Disclosing Party; provided, however, that any Receiving Party may
disclose any Confidential Material to its directors, officers, employees, agents
or representatives, it being understood that they shall be informed by the
Receiving Party of the confidential nature of such information
<PAGE>
and that by receiving such information they shall agree with the Receiving Party
to treat the Confidential Material accordance with this agreement.
In the event that a Party is requested or required by law, judicial or
governmental order, discovery request or other legal process or pronouncement to
disclose any Confidential Material which it has received from a Disclosing
Party, it will give the Disclosing Party prompt notice of such request so that
either Party may seek an appropriate protective order. If in the absence of a
protective order a Party is nonetheless required to disclose Confidential
Material, it may disclose such information without liability hereunder;
provided, however, that it gives the Disclosing Party written notice of the
information to be disclosed as far in advance of its disclosure as is
practicable and, upon request and at the Disclosing Party's expense, reasonably
cooperate with the Disclosing Party's efforts to obtain assurances that
confidential treatment will be accorded to such information.
The Parties agree that money damages would not be sufficient remedy
for any breach of this agreement, and that in addition to all such remedies, the
Parties shall be entitled (upon proof of all other necessary elements for such
relief) to specific performance and injunctive or other equitable relief as a
remedy for any such breach.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the Effective Date.
NATIONAL FIBER NETWORK, INC. US ONE COMMUNICATIONS OF NEW
YORK, INC.
By: By:
Stephen A. Garofalo, James H. Sturges,
President President
<PAGE>
SCHEDULE I
US ONE CONTRACT AMENDMENT
(PREPAYMENT REDUCED TO $3,530,000)
A. CURRENT * MILE NETWORK US ONE COST
1. * - Fiber Miles (FM) PREPAID
2. Credit for additional * Fiber Miles (FM) PREPAID
i. existing network = no minimum # strands
ii. future network = minimum of * strands
B. CENTRAL OFFICES ALREADY BUILT
1. (2)* PREPAID
2. * PREPAID
C. CO'S TO BE BUILT @ US ONE'S SOLE OPTION
CENTRAL OFFICE AVAILABLE
*
D. CO's TO BUILD UPON US ONE'S REQUEST, BUT AT NFN'S SOLE OPTION
CENTRAL OFFICE
*
E. OPTION FOR ADDITIONAL * FIBER MILES * PER STRAND PER FM
(* STRAND MINIMUM
PREPAID 10 YEAR
TERM
- ------------------------
(2)Single point of entry and non diverse path.
