<PAGE>
ELECTRIC LIGHTWAVE, INC.
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to__________
Commission file number 0-23393
ELECTRIC LIGHTWAVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-1035711
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4400 NE 77th Avenue
Vancouver, Washington 98662
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (360)892-1000
8100 NE Parkway Drive, Suite 150, Vancouver, WA 98662 (Former
name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
The number of shares outstanding of the registrant's class of common stock as of
April 22, 1998 were:
Common Stock Class A 8,520,711
Common Stock Class B 41,165,000
<PAGE>
ELECTRIC LIGHTWAVE, INC.
Index to Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Page No.
Part I. Financial Information
Balance Sheets at March 31, 1998 and December 31, 1997 2
Statements of Operations for the Three Months Ended March 31, 1998 and 1997 3
Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997 4
Notes to Financial Statements 5
Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Part II. Other Information 12
Signature 13
1
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
ELECTRIC LIGHTWAVE, INC.
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 21,849 $ 26,531
Trade receivables, net 12,393 12,569
Other receivables 7,573 7,688
Other current assets 1,619 844
-------------- -------------
Total current assets 43,434 47,632
-------------- -------------
Property, plant and equipment 352,062 328,664
Less accumulated depreciation and amortization ( 28,247) (25,791)
-------------- -------------
Property, plant and equipment, net 323,815 302,873
-------------- -------------
Other assets 6,125 9,457
-------------- -------------
Total assets $ 373,374 $ 359,962
============== =============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 30,610 $ 50,237
Taxes other than income taxes 3,783 3,136
Due to Citizens Utilities Company 7,281 944
Other current liabilities 3,743 3,102
-------------- -------------
Total current liabilities 45,417 57,419
-------------- -------------
Deferred credits and other 1,720 1,800
Deferred income taxes payable 13,892 16,918
Capital lease obligation 12,732 10,511
Long-term debt 100,000 60,000
-------------- -------------
Total liabilities 173,761 146,648
-------------- -------------
Shareholders' Equity:
Common stock issued, $.01 par value
Class A 85 85
Class B 412 412
Additional paid-in-capital 317,802 316,731
Deficit (118,686) (103,914)
-------------- -------------
Total shareholders' equity 199,613 213,314
-------------- -------------
Total liabilities and shareholders' equity $ 373,374 $ 359,962
============== =============
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
2
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Revenues $ 20,057 $ 10,519
------------ -----------
Operating expenses:
Network access 9,212 4,930
Sales and marketing 4,940 2,906
Depreciation and amortization 3,884 2,817
Other operating expenses 15,681 9,937
------------ -----------
Total operating expenses 33,717 20,590
------------ -----------
Loss from operations (13,660) (10,071)
Interest expense (net of capitalized interest of $1,788 for 1998 and $345 for 1997) 911 91
Interest income 167 -
------------ -----------
Net loss before income taxes and cumulative effect of change in accounting
principle (14,404) (10,162)
Income tax benefit (2,449) -
------------ -----------
Net loss before cumulative effect of change in accounting principle (11,955) (10,162)
Cumulative effect of change in accounting principle (net of $577 income tax benefit) 2,817 -
------------ -----------
Net loss $ (14,772) $ (10,162)
============ ===========
Net loss before cumulative effect of change in accounting principle per common share:
Basic $ (.24) $ (.24)
Diluted $ (.24) $ (.24)
Net loss per common share:
Basic $ (.30) $ (.24)
Diluted $ (.30) $ (.24)
Weighted average shares outstanding 49,685 41,685
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
3
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(In thousands)
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Net cash used for operating activities $ (6,541) $ (5,562)
--------------- ---------------
Cash flows used for investing activities:
Capital expenditures (38,028) (20,354)
--------------- ---------------
Cash flows from financing activities:
Debt borrowings 40,000 -
Citizens fundings - 26,518
Principle payments on capital lease obligation (113) -
--------------- ---------------
Net cash provided by financing activities 39,887 26,518
--------------- ---------------
Net increase (decrease)in cash (4,682) 602
Cash at January 1, 26,531 611
--------------- ---------------
Cash at March 31, $ 21,849 $ 1,213
=============== ===============
Supplemental cash flow information:
Cash paid for interest $ 1,153 $ -
Other non-cash transactions with Citizens:
Deferred income taxes $ - $ 1,559
Capitalized interest $ 630 $ 345
Other non-cash transaction from modification of capital lease:
Increase in capital lease asset $ 2,174 $ -
Increase in capital lease obligation $ 2,174 $ -
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
4
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
(a) BASIS OF PRESENTATION AND USE OF ESTIMATES These unaudited
financial statements of Electric Lightwave, Inc.(the Company)
have been prepared in accordance with generally accepted
accounting principles (GAAP). The financial statements include
all adjustments and recurring accruals necessary to present
fairly the results for the interim periods shown. The preparation
of financial statements in conformity with GAAP requires
management to make estimates and assumptions which affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting periods. Certain information and footnote
disclosures have been condensed pursuant to Securities and
Exchange Commission rules and regulations. The results of the
interim periods are not necessarily indicative of the results for
the full year. Certain reclassifications of balances previously
reported have been made to conform to current presentation.
(b) COMPREHENSIVE INCOME In June 1997 the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards 130 (SFAS 130) "Reporting Comprehensive Income". This
statement requires that changes in the amounts of items such as
foreign currency translation and gains/losses on certain
securities are to be displayed in a financial statement, as
prominently as other financial statements. This statement is
effective for financial statements issued for periods beginning
after December 15, 1997 and requires reclassification of earlier
financial statements for comparative purposes. The Company
adopted SFAS 130 on January 1, 1998. The Company currently has no
items of "other comprehensive income" as defined in the
Statement.
(c) NET LOSS PER SHARE The Company follows the provisions of SFAS
128, "Earnings Per Share" which requires presentation of both
basic and diluted earnings per share (EPS) on the face of the
income statement. Basic EPS is computed using the weighted
average number of common shares outstanding during the period.
Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were
exercised or converted into common stock at the beginning of the
period. Certain common stock equivalents arising from stock
options outstanding during the first quarter 1998 have been
omitted from diluted EPS as the effect would be anti-dilutive.
Weighted average shares outstanding have been adjusted for the
effects of application of Securities and Exchange Commission
Staff Accounting Bulletin (SAB) No. 98. Pursuant to SAB No. 98,
all stock issued for nominal consideration should be treated as
outstanding for all periods presented even though the effect is
to reduce the net loss per share. The application of SAB No. 98
had the effect of increasing outstanding shares by 520,000 for
the first quarter 1997.
5
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
(2) Change in Accounting Principle
On April 3, 1998, the Accounting Standards Executive Committee of the AICPA
released Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of
Start-Up Activities". The SOP, which is effective for periods beginning after
December 15, 1998, requires that at the beginning of the fiscal year of
adoption, the unamortized portion of deferred start-up costs be written off and
reported as a change in accounting principle. Future costs of start-up
activities should then be expensed as incurred.
The Company elected to early adopt SOP 98-5, effective January 1, 1998. Certain
third party direct costs incurred in connection with negotiating and securing
initial rights-of-way and developing network design for new market clusters or
locations had been capitalized by the Company in previous years, and were being
amortized over five years. The net book value of these deferred amounts was
$3,394,000 which has been reported as a cumulative effect of a change in
accounting principle in the statements of operations for the first quarter 1998,
net of income tax benefit of $577,000.
(3) Commitments and Contingencies
Effective March 20, 1998, the Company amended two previous lease agreements for
long-haul routes interconnecting Portland, Oregon and Seattle and Spokane,
Washington. The previous capital lease agreement which became operational in
February 1997 provided for rental payments based on a percentage of the
Company's monthly leased traffic over such route with a minimum required monthly
payment of $105,000. The previous operating lease provided for rental payments
based on a percentage of the Company's leased traffic and was to become
operational in the second quarter of 1998. Under the amended lease, a third
route from Seattle to Spokane, Washington was added and both previous leases
were combined into a capital lease with a 20 year term. The amended lease calls
for rental payments based on a percentage of the Company's leased traffic over
such routes with a minimum required monthly payment of $105,000. The effect of
the amended lease was to increase the book value of the capital lease asset and
obligation by $2,174,000.
Effective May 7, 1998, the Company entered into an operating lease with a third
party for a long-haul route. The agreement has a 20 year term and provides for
rental payments based on a percentage of the Company's quarterly leased traffic
over the route. The route is expected to become operational in the first
quarter of 1999.
(4) Related Party Transactions
A summary of the activity in the amount due to Citizens for the quarter ended
March 31, 1998 is as follows:
($ in thousands)
Balance beginning of period $ 944
Guarantee fees 1,747
Administrative services and other items 4,590
---------
Balance end of period $ 7,281
=========
6
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
(5) Income Taxes
Income taxes for the first quarter 1998 decreased $3,026,000 as compared
with the prior year period primarily due to the recognition of a portion of
the operating loss benefit which is not offset with a valuation allowance.
The effective income tax rate for the first quarter is 17% compared to 0%
for the prior year period. The change in the effective income tax rate is
due to the full valuation allowance reducing the tax benefit of the
operating loss for the prior year period compared to a partial valuation
allowance for the current year period based on the estimated effective
annual income tax benefit rate. A full valuation allowance was necessary in
the prior period due to the uncertainty of realizing the benefit of those
operating losses in the future as well as Citizens policy not to reimburse
the Company for the tax benefits that were contributed to the consolidated
tax return of Citizens for any operating losses prior to the IPO date. For
the post IPO period, which includes the first quarter 1998, the tax benefit
of the Company's operating losses can be recognized to the extent of net
deferred income tax liabilities. The existence of net deferred income tax
liabilities gives assurance that the income tax benefit related to the net
operating losses will be realized through future turnaround of the
temporary differences that have given rise to the deferred income tax
liabilities.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This quarterly report on Form 10-Q may contain forward-looking statements
that are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed or implied in the
statements. All forward-looking statements (including oral representations)
are only predictions or statements of current plans, which are constantly
under review by the Company. All forward-looking statements may differ from
actual future results due to, but not limited to, changes in the local and
overall economy, the nature and pace of technological changes, the number
and effectiveness of competitors in the Company's markets, success in
overall strategy, changes in legal and regulatory policy, relations with
RBOCs and their ability to provide delivery of services including
interoffice trunking, implementation of back office service delivery
systems, the Company's ability to identify future markets and successfully
expand existing ones and the mix of products and services offered in the
Company's target markets. Readers should consider these important factors
in evaluating any statement contained herein and/or made by the Company or
on its behalf. The following information is unaudited and should be read in
conjunction with the financial statements and related notes to financial
statements included in this report. The Company has no obligation to update
or revise forward-looking statements to reflect the occurrence of future
events or circumstances.
The Company is a facilities-based integrated communications provider
(ICP) providing a broad range of communications services in five major
market clusters in the western United States including: Portland, Oregon;
Seattle, Washington; Salt Lake City, Utah; Sacramento, California; and
Phoenix, Arizona (hub cities) and their respective surrounding areas. The
Company provides state-of-the-art voice and data communications services
to retail customers, primarily large- and medium-sized communications-
intensive businesses, and wholesale customers. The Company was
incorporated in 1990 and is a subsidiary of Citizens Utilities Company
(Citizens).
(a) Liquidity and Capital Resources
For the three months ended March 31, 1998 the Company used the remaining
proceeds from its initial public offering and proceeds from a credit
facility to fund operating and capital expenditures.
The Company has a five-year $400,000,000 revolving bank credit facility.
Citizens has guaranteed all of the Company's obligations under this
credit facility. The Company drew $40,000,000 on its line of credit
during the first quarter 1998, and as of March 31, 1998, $100,000,000 was
outstanding under this facility.
7
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
The capital expenditures of the Company associated with the installation,
development and expansion of its existing and new communications networks
are substantial, and a significant portion of these expenditures generally
are incurred before any revenues are realized. The Company's gross
property, plant and equipment has grown to $352 million at March 31, 1998
from $329 million at December 31, 1997. These expenditures, together with
associated initial operating expenses, have resulted in operating losses
and negative operating cash flow and will continue to do so until an
adequate customer base and revenue stream for these networks have been
established. The Company expects to incur net losses for the foreseeable
future as it continues to install, develop and expand its new and existing
communications networks. There can be no assurance that an adequate revenue
base will be established or that the Company will achieve or sustain
profitability or generate sufficient positive cash flow to fund its
operating and capital requirements and/or service debt.
The Company continues to evaluate potential acquisitions that are
consistent with its long-range business plans of generating revenue growth
through the expansion of its network and customer base. If any acquisitions
are consummated, the Company expects that additional debt or equity
financing would be required. The Company believes that it can attract such
financing at reasonable terms.
8
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
(b) Results of Operations
REVENUES
Revenues increased $9.5 million, or 91%, over the first quarter 1997 due to
the build out of the five market clusters in which the Company has a
presence. The Company added 365 customers and 26,600 access line
equivalents (42% and 181% increases over first quarter 1997, respectively).
For the three months
ended March 31
--------------------------------------------
($ in thousands)
%
1998 1997 Increase
--------- ------------- --------
Dedicated services $ 9,107 $ 6,081 50%
Local dial tone services 6,024 1,245 384%
Long distance services 1,822 1,501 21%
Enhanced services 3,104 1,692 83%
---------- --------------
Total $ 20,057 $ 10,519 91%
========== ==============
Dedicated services revenues increased $3.0 million, or 50%, over the first
quarter of 1997 primarily due to a 42% increase in customers and an
increase in route miles of 69% over the first quarter 1997.
Local dial tone services revenues increased $4.8 million, or 384%, over the
first quarter of 1997 primarily due to a 181% increase in access line
equivalents. The successful sales and marketing of the ISDN product
generated $1.3 million of increased revenue in the first quarter 1998 over
the first quarter 1997. Carrier and local access revenue increased $3.2
million over the first quarter of 1997, which included $1.1 million of
revenue related to the reversal of an allowance previously provided for
access fees that had been disputed by a carrier.
Long distance services revenues increased $.3 million, or 21%, over the
first quarter of 1997 primarily due to a $.6 million increase in Advantage
Long Distance, the Company's retail long distance service. The increase is
attributable to an overall expansion of the Company's sales force and the
Company's success in its product bundling strategy. The increase in retail
long distance was partially offset by decreases in prepaid services and
wholesale long distance.
Enhanced services revenues increased $1.4 million, or 83%, over the first
quarter of 1997 primarily due to increased sales of the frame relay and
Internet products.
9
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
OPERATING EXPENSES
Operating expenses increased $13.1 million, or 64% over the first quarter
1997 due to the Company's rapid network and customer growth as reflected in
revenues, offset in part by economies of scale from infrastructure and
network development.
For the three months
ended March 31
--------------------------------------------
($ in thousands)
%
1998 1997 Increase
---------- -------------- -----------
Network access $ 9,212 $ 4,930 87%
Sales and marketing 4,940 2,906 70%
Depreciation & amortization 3,884 2,817 38%
Other operating expenses 15,681 9,937 58%
---------- --------------
$ 33,717 $ 20,590 64%
========== ==============
Network access expenses increased $4.3 million, or 87%, over the first
quarter of 1997 primarily due to the Company's expansion of its frame relay
and internet products, and its customer base.
Sales and marketing expenses increased $2.0 million, or 70%, over the first
quarter of 1997 primarily due to the Company's continued focus on expanding
direct retail sales in the markets it had entered as of the first quarter
1997, as well as additional sales and marketing activities to support its
entry into new markets such as Boise, Idaho; Los Angeles and San Francisco,
California; and Spokane, Washington.
Depreciation and amortization expense increased $1.1 million, or 38%, over
the first quarter of 1997 primarily due to higher plant in service balances
for newly completed communications network facilities and electronics.
Other operating expenses increased $5.7 million, or 58%, over the first
quarter of 1997 primarily due to increases in salaries and related expenses
to support the expanded delivery of services, new product development, and
an expanded customer service organization.
10
<PAGE>
PART 1. FINANCIAL INFORMATION(Continued)
ELECTRIC LIGHTWAVE, INC.
INTEREST EXPENSE / INTEREST INCOME
For the three months
ended March 31
--------------------------------------------
($ in thousands)
%
1998 1997 Increase
----------- ------------- -----------
Interest expense $ 911 $ 91 901%
Interest income 167 - N/A
Interest expense (net of capitalized interest of $1.8 million and $.3
million for 1998 and 1997, respectively) increased $.8 million, or 901%,
over the first quarter of 1997 primarily due to interest and guarantee fees
associated with the Company's borrowings against its credit facility and
construction agency agreement.
Interest income increased $.2 million over the first quarter of 1997
primarily due to interest earned on cash and investments maintained in a
money market fund.
INCOME TAX BENEFIT
For the three months
ended March 31
--------------------------------------------
($ in thousands)
%
1998 1997 Increase
---------- -------------- -----------
Income tax benefit $ 2,449 $ - N/A
Income tax benefit increased $3.0 million, including $.6 million netted
against cumulative effect of change in accounting principle, over the first
quarter of 1997 primarily due to net operating loss carryforwards.
11
<PAGE>
PART II. OTHER INFORMATION
ELECTRIC LIGHTWAVE, INC.
Item 1. Legal Proceedings
The Company is party to various legal proceedings arising in the normal
course of business. The outcome of individual matters is not
predictable. However, management believes that the ultimate resolution
of all such matters, after considering its level of insurance coverage,
will not have a material adverse effect on the Company's financial
position, results of operations, or its cash flows.
Item 6. Exhibits and Reports on Form 8-K
a) The exhibits below are filed as part of this report:
Exhibit No. Description
10.14.1 Amendment number one to the Pre-construction IR4
Agreement between the Company and FTV Communications,
LLC dated November 14, 1997.
10.16* License Agreement between the Company and the United
States of America Department of Energy acting by and
through the Bonneville Power Administration dated
March 20, 1998.
10.17* License Agreement between the Company and the United
States of America Department of Energy acting by and
through the Bonneville Power Administration dated
January 8, 1998.
10.18* Optical Fiber Installation and IRU Agreement between
the Company and Pacific Gas and Electric Company dated
December 31, 1997.
10.18.1* First Amendment to Optical Fiber Installation and IRU
Agreement between the Company and Pacific Gas and
Electric Company dated March 9, 1998.
27.1 Financial Data Schedule for periods ended
March 31, 1998 and March 31, 1997.
- ---------------
* Material has been omitted pursuant to a request for confidential treatment.
b) Reports on Form 8-K
The Company filed on Form 8-K dated February 19, 1998, under Item 7,
"Exhibits" the executed copies of certain agreements, the forms of
which had been filed as exhibits to the registration statement
relating to the Company's initial public offering. The Company also
filed on Form 8-K dated March 23, 1998, under Item 5, "Other Events"
quarterly financial information for 1997.
12
<PAGE>
ELECTRIC LIGHTWAVE, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELECTRIC LIGHTWAVE, INC.
(Registrant)
By: /s/ Kerry D. Rea
Kerry D. Rea
Vice President and Controller
May 15, 1998
<PAGE>
EXHIBIT 10.14.1
AMENDMENT NUMBER ONE
TO THE
PRE-CONSTRUCTION IRU AGREEMENT
BETWEEN
FTV COMMUNICATIONS LLC
AND
ELECTRIC LIGHTWAVE, INC.
THIS AMENDMENT NUMBER ONE ("Amendment") to the Pre-Construction IRU
Agreement, dated October 16, 1997, between FTV Communications LLC ("FTV") and
Electric Lightwave, Inc. ("ELI") ("Agreement") constitutes the first Amendment
to the Agreement. Except as otherwise defined herein, all terms used in this
Amendment shall have the meanings specified in the Agreement.
WHEREAS, the parties are desirous of modifying certain terms of the
Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties hereto agree
as follows:
1. Article A(1) is deleted in its entirety and is replaced with the following:
On or before December 1, 1997, Twenty-five percent (25%) of the estimated
IRU payment [based on the estimated 1,620 Route Miles] plus interest in the
amount of Prime plus 3% accruing from November 15, 1997 until date of
payment and such payment shall be paid in immediately available funds;
2. Except as amended by this Amendment, all other provisions of the Agreement
shall remain in full force and effect and except as expressly provided
herein, no waiver or modification of the terms and provisions of the
Agreement is intended or is to be inferred.
IN WITNESS WHEREOF, the Parties have each caused this Amendment to the
Agreement to be duly executed by their respective officers duly authorized as of
the date set forth below.
FTV COMMUNICATIONS, LLC ELECTRIC LIGHTWAVE INC.
By: /s/ Diane D. Whitaker By: /s/ David B. Sharkey
Date: 11/14/97 Date: 11/14/97
<PAGE>
EXHIBIT 10.16
CONTRACT NO. 98TX-10143
MARCH 20, 1998
LICENSE AGREEMENT
EXECUTED BY THE
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ACTING BY AND THROUGH THE
BONNEVILLE POWER ADMINISTRATION
AND
ELECTRIC LIGHTWAVE, INC.
INDEX TO SECTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1. DEFINITIONS............................................................ 4
2. TERM................................................................... 10
3. EXHIBITS............................................................... 12
4. AMENDMENTS............................................................. 12
5. MILESTONE SCHEDULE..................................................... 12
6. OWNERSHIP.............................................................. 13
7. LICENSE................................................................ 14
8. PERFORMANCE CRITERIA................................................... 15
9. CAPITAL SPENDING....................................................... 18
10. BPA TERMINAL EQUIPMENT................................................. 19
11. BUSINESS PLAN.......................................................... 20
12. MARKET PRICE ASSESSMENT................................................ 20
13. PAYMENT................................................................ 22
14. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE...................... 24
15. REGENERATOR BUILDING(S)................................................ 29
16. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE............................ 30
17. RELOCATION OF THE CABLE................................................ 36
18. REPRESENTATIONS AND WARRANTIES......................................... 37
19. AUDIT PROCEDURES....................................................... 41
20. INSURANCE.............................................................. 42
21. DEFAULT................................................................ 47
22. TERMINATION............................................................ 51
23. INDEMNIFICATION; WAIVER OF DAMAGES..................................... 52
24. DISPUTE RESOLUTION..................................................... 54
25. GENERAL................................................................ 56
</TABLE>
Exhibit A (Cable Route)
Exhibit B (Payment Specifications)
Exhibit C (Fiber Specifications)
Exhibit D (Acceptance Testing Standards)
Exhibit E (Detailed Restoration Plans)
Exhibit F (Terminal Equipment Requirements)
<PAGE>
This LICENSE AGREEMENT (Agreement), was executed March 20, 1998, by the
UNITED STATES OF AMERICA (Government), Department of Energy, acting by and
through the BONNEVILLE POWER ADMINISTRATION (BPA), and ELECTRIC LIGHTWAVE, INC.
(ELI), a corporation organized and existing under the laws of the State of
Delaware. Both BPA and ELI may be referred to herein individually as "Party"
and collectively as "Parties."
W I T N E S S E T H :
A. BPA and ELI previously entered into a License Agreement, dated March
26, 1996, Contract No. 96MS-95240, pursuant to which BPA granted to ELI an
exclusive License to use the Commercial Fiber and to manage the Diverse Fibers
in the Cable along a Cable Route extending from BPA's Keeler Substation in
Portland, Oregon to its Covington Substation in Seattle, Washington.
B. BPA and ELI also entered into a License Agreement, dated November 27,
1996, Contract No. 97TX-10014, pursuant to which BPA granted to ELI an exclusive
License to use the Commercial Fiber in the Cable along a Cable Route extending
from BPA's Ross Substation in Portland, Oregon to its Bell Substation in
Spokane, Washington.
C. BPA is about to design and install additional Cable along a proposed
Cable Route extending from BPA's Bell Substation in Spokane, Washington to its
Covington Substation in Seattle, Washington.
-2-
<PAGE>
D. ELI desires to obtain an exclusive License to use the Commercial Fiber
in the proposed Cable Route from BPA's Bell Substation in Spokane, Washington to
its Covington Substation in Seattle, Washington.
E. BPA desires to grant such License to ELI, on the terms, covenants and
conditions contained in this Agreement.
F. BPA and ELI desire to supersede existing Contract Nos. 96MS-9520 and
97TX-10014 by the terms of this Agreement, thereby establishing a single
contract for a SONET ring fiber optic network connecting Portland, Oregon;
Seattle, Washington; and Spokane, Washington.
NOW, THEREFORE, in consideration of the premises and of the mutual
obligations and agreements herein contained, the Parties hereby agree as
follows:
1. DEFINITIONS
The following terms, when used in this Agreement, shall have the meanings
set forth in this Section:
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(a) "BPA Capital Cost" means the direct and indirect costs BPA incurs,
using prudent electric utility practices, to develop and construct the
Cable. Direct costs include, but are not limited to, environment,
surveying and mapping, design, land, material, construction, and
labor.
(b) "BPA Facilities" means all BPA-owned and/or leased structures,
buildings, land, access roads, and equipment along the Cable Route.
(c) "BPA Fiber" means 12 dark optical fibers within the Cable designated
for BPA's exclusive use and control.
(d) "BPA Terminal Equipment" means that equipment set forth in Exhibit F.
(e) "Cable" means a BPA-owned single-mode, nondispersion shifted cable
installed and, to be installed along the Cable Route. The Cable shall
contain 72 optical fibers for the entire Cable Route, except the
Portland-to-Spokane Route which contains 36 optical fibers.
(f) "Cable Accessories" means the equipment necessary for the attachment
of the Cable to the BPA Facilities, including splice boxes.
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(g) "Cable Route" means Cable path as described on Exhibit A, comprising
the Portland-to-Seattle Route, the Portland-to-Spokane Route and the
Spokane-to-Seattle Route.
(h) "Cable Specifications" means the drawings and specifications regarding
the Cable hardware and materials incorporated into the construction
project.
(i) "Commercial Fiber" means the 60 dark optical fibers within the Cable
licensed to ELI under this License Agreement, except for the Portland-
to-Spokane Route in which the Commercial Fiber consists of 24 dark
optical fibers.
(j) "Dark Fiber Lease Value" means the sum of all dark fiber lease
payments received by ELI for Commercial Fiber.
(k) "Detailed Restoration Plans" means the restoration plans applicable to
the Cable and the Cable Accessories developed and to be developed by
BPA and ELI as described in Section 14(b) and attached to this
Agreement as Exhibit E.
(l) "Diverse Fibers" means 4 dark optical fibers within the Commercial
Fiber along the Portland-to-Seattle Route reserved for diverse
switching paths for a SONET ring in order to achieve optimum network
robustness and reliability.
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(m) "Effective Date" means the date stated in the opening paragraph of
this Agreement.
(n) "ELI Transport Service(s)" means Transport Service(s) used by ELI in
the delivery of End-User Service(s).
(o) "ELI Transport Service Value(s)" means the sum of the values for all
the ELI Transport Service(s) within the Commercial Fiber.
(p) "End-User" means the customer(s) of ELI.
(q) "End-User Service(s)" means services provided to the End-User, other
than Transport Service(s) and Other Transport Service(s).
(r) "End-User Transport Service Value(s)" means the sum of all payments
received by ELI from End-User(s) for Transport Service sales.
(s) "Fiber Specifications" means the performance attributes of the fiber
within the Cable as described in Exhibit C.
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(t) "Gross Revenue Value(s) (GRV)" means the annual sum of ELI Transport
Service Value(s) plus End-User Transport Service Value(s) plus Dark
Fiber Lease Value(s) plus Other Transport Service Value(s).
(u) "Interest Rate" means .05 percent per day (18.25 percent per annum) to
be compounded daily on the unpaid balance.
(v) "License" means the License granted to ELI in Section 7(a).
(w) "Originating and Terminating Markets" means the areas in and around
the cities along the Cable Route. The cities in Oregon include
Portland, The Dalles, as well as other cities adjacent to the Cable
Route. The cities in Washington include Seattle, Tacoma, Olympia,
Yakima, Spokane, Wenatchee, Ellensburg, Pasco, Richland, Kennewick, as
well as other cities adjacent to the Cable Route.
(x) "Other Transport Service(s)" means any service sold over the
Commercial Fiber which is not a Transport Service, an End-User Service
or an ELI Transport Service.
(y) "Other Transport Service Value(s)" means the sum of all payments
received by ELI for Other Transport Services.
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(z) "Performance Criteria" means those minimum annual Gross Revenue Values
described in Section 8 and calculated in Exhibit B, page 2 of 2.
(aa) "Portland-to-Seattle Route" means that portion of the Cable Route
which extends from BPA's Keeler Substation in Portland, Oregon to its
Covington Substation in Seattle, Washington.
(bb) "Portland-to-Spokane Route" means that portion of the Cable Route
which extends from BPA's Ross Substation in Portland, Oregon to its
Bell Substation in Spokane, Washington.
(cc) "Regenerator Building(s)" means the building(s) along the Cable Route,
owned and operated by ELI, that house the terminal and regenerator
equipment including any optronics or electronics required by ELI to
make use of the ELI Fibers. For the purpose of this Agreement, the
Regenerator Building(s) include conduit and fiber-optic cable from the
Regenerator Building(s) up to the nearest fiber-optic splice box on
the Cable Route or the nearest substation fence, at BPA's discretion.
(dd) "Service Ready Date" means the date when the Commercial Fiber is fully
installed and meets ELI's Acceptance Testing Standards, which
acceptance will be provided
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by ELI to BPA in writing. ELI's Acceptance Testing Standards are set
forth in Exhibit D.
(ee) "Spokane-to-Seattle Route" means that portion of the Cable Route which
extends from BPA's Bell Substation in Spokane, Washington to its
Covington Substation in Seattle, Washington.
(ff) "Transport Services" means individual DS0, DS1, and DS3 circuits used
or sold as bulk transport by ELI for long-haul traffic on the
Commercial Fiber as described below:
(1) "Digital Signal Zero (DS0)" means: one (1) 64-Kilobits-per-
second (Kbps) or 56-Kbps digital, pulse-coded modulated voice
channel;
(2) "Digital Signal One (DS1)" means: (A) in the U.S. Digital
hierarchy, digital signal level 1 indicates a 1.544 megabytes
per second (Mbps) data signal; and (B) also referred to as a T1
in the U.S. time-division multiplexing hierarchy, digital
signal level 1 (DS1) indicates the first level of multiplexing.
It is defined as 24 DS0 (64 Kbps) circuits multiplexed into a
1.544 Mbps data signal; and
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(3) "Digital Signal Level Three (DS3)" means: (A) In the U.S.
Digital hierarchy, digital signal level 3 indicates a 44.736
Mbps data signal, often delivered to customers via optical
fiber systems, also referred to as T3; (B) in the U.S. time-
division multiplexing hierarchy, digital signal level 3 (DS3)
indicates the third level of multiplexing. It is defined as 28
DS1 (1.544 Mbps) signals, with added overhead bits, multiplexed
onto a 44.736 Mpbs data signal; and (C) high capacity access
service that provides capacity equivalent to 28 DS1 circuits, 7
DS2 channels, or 672 voice grade special access circuits; also
used generically to describe digital data transmission services
operating over fiber-optic lines at transmission speed of 44.6
Mbps.
2. TERM
(a) This Agreement shall be effective on the Effective Date and shall
continue in effect for a period of 20 years after Service Ready Date,
unless sooner terminated or extended in accordance with the terms of
this Agreement.
(b) The term of this Agreement shall be extended only by written mutual
agreement of the Parties. The Agreement may be extended for one 10-
year renewal period. Either Party shall notify the other Party at
least 90 days prior to the expiration date
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of this Agreement if the notifying Party seeks to renew the Agreement.
The Parties shall have 45 calendar days from the notifying Party's
notice in which to reach written agreement on renewal. The terms and
conditions of this Agreement applicable to the initial 20-year period
may be modified or renegotiated before the renewal period upon written
mutual agreement of the Parties.
(c) This Agreement amends, restates and supersedes in their entirety
Contract No. 96MS-95240, dated March 26, 1996, and Contract No. 97TX-
10014, dated November 27, 1996, previously entered into by BPA and ELI
relating to the Portland-to-Seattle Route and the Portland-to-Spokane
Route, respectively. As of the Effective Date, the rights, duties and
obligations of BPA and ELI with respect to such prior contracts and
such portions of the Cable Route shall be governed by and construed
under the terms of this Agreement.
3. EXHIBITS
Exhibit A (Cable Route); Exhibit B (Payment Specifications); Exhibit C
(Fiber Specifications); Exhibit D (Acceptance Testing Standards); Exhibit E
(Detailed Restoration Plans); and Exhibit F (Terminal Equipment Standards) are
incorporated into and made a part of this Agreement.
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4. AMENDMENTS
This Agreement may be amended upon the written agreement of both Parties.
5. MILESTONE SCHEDULE
(a) The Service Ready Date for the Portland-to-Seattle Route occurred
December 13, 1996.
(b) The Service Ready Date for the Portland-to-Spokane Route is currently
scheduled for March 30, 1998.
(c) The Service Ready Date for the Spokane-to-Seattle Route is currently
scheduled for January 31, 1999.
(d) BPA and ELI shall complete an evaluation of the milestones required to
complete the construction and Service Ready Date for each remaining
portion of the Cable Route and for the entire Cable Route. The
evaluation shall be used by the Parties to determine whether
milestones will be revised to reflect an earlier, or later, Service
Ready Date.
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6. OWNERSHIP
(a) Each Party shall own its own electronic and optronic devices necessary
to transmit signals over the fibers each Party controls as specified
in this Agreement.
(b) Except as otherwise provided in Section 6(c) below, BPA shall own all
structures, improvements, and components obtained for or installed on
BPA Facilities along the Cable Route in accordance with this
Agreement; including, without limitation, the BPA Terminal Equipment.
(c) Title and ownership of the Cable Accessories, Regenerator Building(s),
and related equipment within the Regenerator Building(s) furnished by
ELI shall be and remain the property of ELI, except that BPA shall
gain title to and ownership of such equipment that cannot be removed
without damage to BPA Facilities at termination of this Agreement.
(d) BPA shall retain the right to use the BPA Fiber only for its own
internal electric system network and utility business purposes.
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7. LICENSE
(a) EXCLUSIVITY
Except as provided in Section 8, BPA hereby grants to ELI an exclusive
License to use the Commercial Fiber and the Diverse Fibers during the
term of this Agreement.
(b) ACCESS TO THE CABLE ROUTE
ELI shall have escorted access to the Cable Route for the purposes of
performing its rights and obligations under this Agreement. BPA shall
have the right to use the Cable Route, or any portion thereof,
together with the right to enter upon the Cable Route, or any portion
thereof, at all times, for any and all purposes.
(c) NO PROPERTY INTEREST
This Agreement shall not confer upon ELI any ownership or possessory
interest in the Cable Route or other property owned by BPA except as
provided herein, and ELI agrees that it shall never make any claim of
such interest based upon this Agreement.
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8. PERFORMANCE CRITERIA
(a) MINIMUM ANNUAL GROSS REVENUE PERFORMANCE REQUIREMENTS
(1) ELI shall maintain sales at a minimum annual GRV equal to or
greater than 50 percent of the annual revenues described in
ELI's revenue forecast (Table A "Performance Criteria").
The annual GRV shall equal the sum of the actual monthly
GRVs over a given 12-month period.
(2) In the event that the actual annual GRV is below the
applicable Performance Criteria described in Table A, BPA
may invoke its rights under Subsection (b)(1) below
regarding the exclusivity of the Commercial Fiber.
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(b) BPA RIGHTS
(1) BPA shall have the right to make a performance audit within 60
days of the conclusion of each annual period described in Table
A. If BPA determines that ELI has failed to meet the annual
Performance Criteria, BPA shall give written notice of such
failure to ELI. ELI shall have 10 working days after receipt of
written notice from BPA in which to review the results of BPA's
audit and provide any new information or data that might alter
BPA's audit conclusions. If at the end of such 10-day period, BPA
determines that the Performance Criteria have not been met, BPA,
at its discretion, may determine the License to be nonexclusive
and BPA shall have the right to use any unused portion of the
Commercial Fiber for any purpose. Nothing contained in this
paragraph shall prevent either Party from seeking a resolution of
any dispute hereunder pursuant to the provisions of Section 23 of
this Agreement.
(2) In the event ELI's License becomes nonexclusive, ELI shall
cooperate with BPA to allow co-location of other users of the
Commercial Fiber in ELI's Regenerator Buildings, based on
available space. The Parties shall agree to the amount of
reasonable compensation to be charged to the co-locating users.
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- --------------------------------------------------------------------------------
TABLE A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YEAR* REVENUE FORECAST* PERFORMANCE CRITERIA*
* Confidential material has been omitted pursuant to a request for confidential
treatment. Such material has been filed separately with the Securities and
Exchange Commission.
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(c) ELI RIGHTS
In the event ELI's License is determined to be nonexclusive under the
provisions of this Section 8, this Agreement shall not terminate, but
shall continue in force and effect. ELI shall have the right, subject
to the terms of Agreement, including, without limitation, the payments
described in Section 12, to continue its use of the Commercial Fiber
then being used by ELI to provide End-User Services, Other Transport
Services, and Transport Services. In addition, to the extent BPA has
unused dark fiber capacity along the Cable Route, ELI shall have the
right of first refusal to lease such additional dark fiber capacity on
the same pricing terms and conditions offered by BPA to other
carriers.
9. CAPITAL SPENDING
(a) BPA CAPITAL SPENDING
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BPA Capital Cost shall include direct costs incurred by BPA up to 12
months after the Service Ready Date. Indirect costs (overheads)
associated with included direct costs shall also be included as part
of BPA Capital Cost and applied at a fixed rate of 45 percent to all
direct costs. Interest costs, implicit or otherwise, will be
excluded. BPA shall use its best efforts to manage the cost of
development and construction of the Cable to, or below, $ *.
(b) ELI CAPITAL SPENDING
ELI shall make capital investments to provision the Commercial Fiber
with electronics, optronics, buildings, other infrastructure, and
fiber connectivity with Local Exchange Carrier networks and Inter-
Exchange Carrier networks, at a sufficient level to meet the Revenue
Forecast listed in Table A of Section 8.
* Confidential material has been omitted pursuant to a request for confidential
treatment. Such material has been filed separately with the Securities and
Exchange Commission.
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10. BPA TERMINAL EQUIPMENT
(a) ELI shall purchase and provide for the installation and testing of BPA
SONET Terminal Equipment at 9 sites along the Spokane-to-Seattle
Route, including the Bell, Creston, Grand Coulee, Columbia, St.
Andrews, Schultz, Easton, Raver and Covington Substations. ELI shall
provide OC3 electronics at six of the substation sites, and OC12
electronics at three of the substation sites. Upon BPA's acceptance
of the Terminal Equipment, title shall transfer to BPA, no later than
180 days following the Service Ready Date.
(b) The Terminal Equipment to be provided to BPA is identified in Exhibit
F. BPA will notify ELI of the 9 sites upon which to install and test
the Terminal Equipment. The amount to be paid by ELI for the Terminal
Equipment shall not exceed $ *. ELI shall have the option of
purchasing the Terminal Equipment using BPA's existing contract number
95AM50206 "SONET Microwave Radio and Fiber Optic Project."
* Confidential material has been omitted pursuant to a request for confidential
treatment. Such material has been filed separately with the Securities and
Exchange Commission.
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11. BUSINESS PLAN
ELI has developed and BPA has approved a Business Plan that describes ELI's
proposal for marketing, managing, and utilizing the Cable. ELI shall use
its best efforts, consistent with reasonable commercial practices, to
maximize the GRV generated pursuant to the License.
12. MARKET PRICE ASSESSMENT
(a) BPA shall procure, under separate agreement, the services of a market
assessment consultant(s) to assess market prices of bulk transport
services and provide reports to BPA.
(b) BPA and ELI agree to equally share in the costs of procuring the
services described above.
(c) The market assessment consultant(s) shall be responsible for acquiring
quotes, calculating an average, and delivering market assessment
reports to BPA at some planned interval, using the methodology agreed
to by BPA and ELI. BPA and ELI shall, within 120 calendar days from
execution of this Agreement, make their best effort to agree to the
methodology.
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(d) BPA agrees to allow ELI to participate in the development of the
methodology for assessing market price(s) to be used under this
Agreement.
(e) ELI agrees to use the current data provided to BPA by the market
assessment consultant as a basis for setting ELI Transport Service
Value(s) for each ELI Transport Service, depending on when the ELI
Transport Service is placed in service by ELI. The ELI Transport
Service Value for any specific ELI Transport Service will remain in
effect for a period of 36 months, after which the ELI Transport
Service must be re-valued based on the current market assessment data.
(f) The agreed-to methodology may be changed by mutual agreement of BPA
and ELI.
13. PAYMENT
(a) Beginning with the month in which the Effective Date occurs, ELI
agrees to pay BPA monthly, according to the Payment Specifications
described in Exhibit B. In addition to ELI's monthly payment to BPA,
ELI shall include a monthly report of all transactions. The report
will allow BPA to account for the GRV generated each month. Both
Parties shall agree on a reporting format to be used prior to ELI's
first payment to BPA.
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(b) For the purposes of determining the monthly payment required under
this Agreement, any Transport Services originating in the Originating
and Terminating Markets will be included in the accounting to
determine GRV.
(c) Unless otherwise agreed to by the Parties, accounting of the GRV shall
begin 30 calendar days following the Service Ready Date for any of the
three portions of the Cable Route identified in the definition of the
term "Cable Route" given in Section 1(g) above. Payment shall be
received by BPA from ELI by the last day of each month for GRV
calculated on the previous calendar months' transactions (the Due
Date). Payments shall be sent to the address identified in (f) below.
(d) Payments to BPA for revenue generated by ELI from use of the
Commercial Fiber (or portion thereof) shall be based on the GRV of
such services and calculated using the * Payment Factor until
ELI's cumulative monthly payments to BPA exceed the BPA Capital Costs,
after which the Payment Factor will equal * for the remainder
of the Agreement.
(e) ELI shall pay by wire or ACH transfer, using procedures established by
BPA's Financial Services Group. ELI may pay its bill by mail,
provided that BPA receives full payment by the Due Date.
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commision.
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ELI shall include the following information in the description field
of each transfer: BPA contract number, Revenue PL6, and End Item Code.
If ELI is paying by mail, payments shall be mailed to:
BPA Accounting Operation - CRO
P.O. Box 6040
Portland, OR 97228-6040
ELI shall include the following information in the documentation sent
with each check: BPA Contract Number, Revenue PL6, and End Item Code.
(f) Payments not received by the Due Date shall bear interest at the
Interest Rate from the Due Date until the date payment is received by
BPA.
(g) BPA may purchase from ELI any commercial telecommunications service
ELI generally offers business customers. The price charged by ELI for
any such service shall be the lowest price then charged by ELI to
similarly situated commercial customers for a similar service or group
of services, taking into account similar terms and volumes.
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14. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE
(a) Maintenance of the Cable
(1) During the term of this Agreement, BPA shall be responsible for the
physical routine maintenance of the Cable and the Cable Accessories.
BPA shall maintain the Cable and the Cable Route at all times in good
working order and in a safe condition, in conformity with the Cable
Specifications and all applicable laws and regulations.
(2) BPA shall pay all costs associated with the routine maintenance of the
Cable.
(3) ELI shall be responsible for maintenance of its property, including
the Regenerator Building(s) along the Cable Route.
(b) Detailed Restoration Plans
(1) Restoration activities will be integral to ensuring successful
implementation of this Agreement. Timely restoration is dependent upon
the timely coordination and implementation between BPA and ELI.
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(2) The Parties have previously developed Detailed Restoration Plans for
the Portland-to-Seattle Route and the Portland-to-Spokane Route,
copies of which are attached to this Agreement as Exhibit E.
(3) The Parties agree to jointly, by September 20, 1998, develop a
Detailed Restoration Plan for the Spokane-to-Seattle Route, which
shall upon its completion become part of Exhibit E to this Agreement.
(4) The following provisions described in Sections (c) and (d) below shall
form the principles and basis for the development of a Detailed
Restoration Plan.
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(c) RESTORATION PRIORITIES AND GENERAL REQUIREMENTS
(1) BPA's obligation to maintain and repair the Cable and any activities
incidental thereto shall be subordinate to, and shall not conflict
with, BPA's rightful use and operation of its transmission facilities.
In the event both BPA's transmission facilities and the Cable require
maintenance or repair, the restoration of the Cable shall be at all
times subordinate to the restoration of BPA's transmission facilities,
unless otherwise agreed to in writing by BPA in advance. The
restoration of BPA's telecommunications system shall take priority
over restoration activities related to the Commercial Fiber. In the
event that ELI's License becomes nonexclusive pursuant to Section 8,
the Commercial Fiber used by ELI shall take priority over restoration
activities related to any fibers used by any other users of the
Commercial Fiber.
(2) A BPA representative must be on-site during all repair and restoration
work to perform functions such as safety watch, protection of BPA's
transmission facilities, and the obtaining of line clearances.
(3) The Party performing the repair and restoration shall use prudent
business methods to acquire the most cost-effective restoration
procedures and
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materials available given the Cable Specifications, Fiber
Specifications, and current industry standards.
(4) Any and all BPA, ELI representatives, or other users of the Commercial
Fiber that construct, install, repair, replace, or otherwise handle
the Cable, Cable Accessories, Commercial Fiber, BPA Fiber, or any
related materials and equipment shall be properly trained and equipped
to perform work that meets all current telecommunication industry
standards. BPA shall require all employees or agents of ELI or any
other users of the Commercial Fiber who work near BPA's transmission
facilities to demonstrate that they have been properly trained and
equipped to perform the work. The Parties shall agree in advance what
constitutes proper training and reasonable costs. The costs of agreed-
upon training of ELI employees, agents of ELI, or other users of the
Commercial Fiber shall be borne by ELI.
(5) A BPA representative shall have the authority to stop any work
activities or equipment functions for reasons that he or she
determines in good faith to involve potential health hazards, safety
concerns, and potential disruption to BPA's operating system. BPA will
make reasonable efforts to coordinate with ELI in case of such events.
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(d) RESTORATION OF THE CABLE
(1) Except as provided in Section 13(c)(1), BPA shall immediately, upon
notification from ELI of interruption in service, failure, disrepair,
impairment, or other need for repair or restoration of the Commercial
Fiber, begin to mobilize BPA crews and make its best effort to achieve
such necessary repair or restoration, including making its best effort
to have maintenance personnel at the affected site within 4 hours
after receipt of such notice, PROVIDED, HOWEVER, that in the event any
of ELI's rights are interrupted pursuant to Section 23(a), repairs and
restoration shall be made as expeditiously as possible. ELI recognizes
that the 4-hour response time represents optimal conditions, and may
be impossible to achieve when responding to certain remote locations.
Actual response times will be influenced by factors such as the
terrain, weather conditions present at the time the request is made,
and the actual mileage from BPA's dispatch station to the fault site.
(2) For purposes of this Section, best efforts means activities and
performance consistent with prudent utility practice, existing
contract provisions for BPA's hourly employees ("Collective Agreement
between BPA and Columbia Power Trades Council"), and response times
that do not
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jeopardize the health and safety of BPA employees or agents or ELI
employees or agents.
(3) The Detailed Restoration Plan shall set forth the roles and
responsibilities of the respective Parties, and shall address issues
regarding logistical considerations, response interval factors,
communication between the Parties, sequential activity requirements,
and other related items that would impact response time and
restoration intervals. The aforementioned issues will be taken into
consideration in the determination of whether BPA has used its best
efforts in such restoration or repair activities. The Detailed
Restoration Plan will also set forth financial penalties, if any, to
be paid to ELI by BPA for failure to use its best efforts on any
repair or restoration, including the mobilization effort as set forth
above.
15. REGENERATOR BUILDING(S)
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(a) ELI shall have sole responsibility for the expense and
acquisition of any electric power and/or property necessary for
its equipment along the Cable Route. ELI and BPA have entered
into separate leases for space to house ELI equipment at certain
BPA substations for the Portland-to-Seattle Route and the
Portland-to-Spokane Route. With respect to the Spokane-to-Seattle
Route, if space is available at BPA substations, such space shall
be provided to ELI at BPA's "bare land" lease rate under a
separate agreement. In the event ELI requires additional space to
house equipment along the Cable Route, such space shall be
provided to ELI at BPA's "bare land" lease rate under separate
agreement.
(b) ELI shall provide and own, except as provided in Section 6, Cable
Accessories, splice boxes, and other components necessary for the
operation of the Commercial Fiber.
(c) ELI shall have sole responsibility for the physical maintenance
and environmental compliance associated with the Regenerator
Building(s) and the grounds underneath and around the Regenerator
Building(s).
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16. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE
(a) GENERAL
(1) In the event that ELI sells Other Transport Services along the
Cable Route, BPA and ELI shall agree in writing on how those
transactions are priced.
(2) ELI shall not use Commercial Fiber for commercial activities not
accounted for in this Agreement.
(3) ELI agrees to utilize the Commercial Fiber for all ELI capacity
needs, existing or arising along the Cable Route and between the
Originating and Terminating Markets, except for diversity needs,
and subject to ELI's existing contractual obligations. ELI shall
use its best efforts to transition as quickly as possible from
existing contractual obligations in satisfying the requirements
of the preceding sentence.
(b) PERMITS
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(1) BPA shall acquire all necessary regulatory or governmental
permits and approvals required for construction of the Cable, and
ELI shall, at its cost, cooperate and provide BPA with such
information as BPA may reasonably request from ELI in connection
with such permits and approvals. ELI shall acquire all necessary
regulatory or governmental permits and approvals necessary for
ELI's use of the Commercial Fiber for telecommunications
services, including Transport Service(s) and Dark Fiber Leases,
and any permits and/or approvals that may be required for the
Regenerator Building(s). ELI shall not rely upon BPA to acquire
from any other Federal agency any necessary regulatory or
governmental permits and approvals required by ELI.
(2) When feasible, BPA shall, at its cost, cooperate and provide ELI
with such information as ELI may reasonably request from BPA in
connection with acquiring permits, easements, or additional
rights-of-way for the Regenerator Building(s); provided that ELI
indemnifies and holds harmless BPA from any future liability
resulting from such actions.
(c) TAXES, MECHANIC'S LIENS, AND ENCUMBRANCES
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ELI shall pay its own income taxes, as well as all franchise fees and
other fees and taxes resulting from ELI's License or use of the
Commercial Fiber. ELI shall keep the Cable Route free and clear from
all liens and encumbrances resulting from ELI's use of the Commercial
Fiber. If ELI does not pay the foregoing taxes and fees when such
become due, and such nonpayment results in the imposition of a lien
on, or encumbrance of, the Cable Route, then BPA shall have the right,
but not the obligation, to pay all amounts due and discharge such lien
or encumbrance, upon 30 calendar days' prior written notice to ELI.
In the event BPA causes such liens or encumbrances to be discharged,
ELI shall reimburse BPA upon demand together with interest thereon at
the Interest Rate, accruing from the date that BPA makes payment
discharging such liens or encumbrances until the date BPA receives
full reimbursement from ELI. ELI shall have the absolute right to
dispute or challenge any tax or fee assessed on its use of the
Commercial Fiber.
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(d) ACCESS ROADS
ELI may use BPA's access roads to access the Regenerator Building(s),
provided that heavy vehicles or other equipment being used on the
access road will not at any time impair the use of the access road by
BPA. Access to the roads shall be limited to the times and frequency
required for maintenance and operation of the Regenerator Building(s)
and equipment, and any repair and restoration of the Cable pursuant to
Section 14. ELI shall, at ELI's expense, repair any damage to the
access roads caused as a result of ELI use of the access roads. ELI
shall acquire access easements to the Regenerator Building(s) where
BPA access roads are not available.
(e) ENVIRONMENTAL COMPLIANCE ACTIVITIES
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(1) BPA shall be responsible for compliance with the National
Environmental Policy Act (NEPA) and shall acquire all necessary
permits associated with the project operations, maintenance, and
construction of the Cable. ELI shall, at its expense, cooperate
and provide BPA with such information as BPA may reasonably
request in connection with such compliance and permits. The
project activities will be limited to construction and operation
of cable, hardware, Regenerator Building(s), access roads, and
distribution lines if needed for Regenerator Building(s). If any
mitigation measures are required along the Cable Route as part of
the NEPA compliance activities, these measures will be performed
by BPA at the sole cost of BPA. Contacts with the local
landowners will be performed by BPA-appointed representatives.
Any landowner compensation required as part of the NEPA and
project activities will be made by BPA. All of the compliance and
permitting activities undertaken by BPA pursuant to this
paragraph (e) shall be at the cost and expense of BPA.
(2) BPA and ELI agree neither they nor anyone acting on their behalf
will bring, keep, or use Hazardous Materials at or on the Cable
Route (including regenerators) except for those necessary for use
in their respective businesses, in which case they are to be
handled, stored, used, and disposed of in compliance with
applicable laws, regulations, and ordinances.
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(3) BPA agrees to indemnify and hold ELI harmless from any and all
claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous
Materials at or on the Cable Route (including regenerators) if
BPA or its agent, contractor, employees, or invitees is
responsible for the introduction of the Hazardous Materials. This
indemnity shall specifically include, without limitation, any and
all costs due to Hazardous Materials that flow, diffuse, migrate,
or percolate into, onto or under the property, or from the
property to neighboring property or groundwater after the
Agreement commences; however, it shall not include the cost of
repairing ELI's equipment.
(4) ELI agrees to indemnify and hold BPA harmless from any and all
claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous
Materials at or on the Cable Route (including regenerators) if
ELI or its agent, contractor, employee, or invitees is
responsible for the introduction of the Hazardous Materials. This
indemnity shall specifically include, without limitation, any and
all costs due to Hazardous Materials that flow, diffuse, migrate,
or percolate into, onto or under the property, or from the
property to neighboring property
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or groundwater after the Agreement commences; however, it shall
not include the cost of repairing BPA's equipment.
(5) 'Hazardous Materials', as used herein, shall mean all materials
that have been determined to be hazardous to health or the
environment by virtue of being: (A) a hazardous waste as defined
by the Resource Conservation and Recovery Act; (B) a hazardous
substance as defined in the Comprehensive Environment,
Compensation, and Liability Act; (C) a substance regulated by the
Toxic Substances Control Act; and (D) substances regulated by the
Federal Insecticide, Fungicide, and Rodenticide Act in accordance
with the applicability provisions of such Act. Reference to
specific statutes include amendments as they are made from time-
to-time, as well as the regulations promulgated thereunder.
17. RELOCATION OF THE CABLE
In the event the Cable requires relocation or replacement during the term
of this Agreement, the cost of such relocation or replacement shall be
allocated as follows:
(a) If requested by ELI, ELI shall pay all such costs;
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(b) If requested by BPA due to requirements necessary to provide
economical and reliable electric power, BPA shall pay all such costs;
(c) If the Cable must be relocated due to the order of any court,
governmental agency, or in conjunction with the operational needs of
BPA, BPA shall, in consultation with ELI, designate a new route for
the Cable. The costs associated with such required relocation that
are not paid by a third party shall be paid by BPA. ELI shall be
responsible for any relocation costs associated with ELI's Regenerator
Building(s), ELI-owned cable, and ELI-owned terminal equipment.
18. REPRESENTATIONS AND WARRANTIES
(a) ELI
ELI represents and warrants to BPA as follows:
(1) ELI is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware. ELI is
duly qualified to do business and is in good standing in the
States of Oregon and Washington. ELI covenants that it will
maintain any necessary Federal, State, or local compliance needed
to continue to do business in the States
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of Oregon and Washington. ELI has full power and authority to
execute, deliver, and perform its obligations under this
Agreement. The execution of this Agreement by ELI has been duly
and validly authorized by all necessary action on the part of
ELI. This Agreement is a legal, valid, and binding obligation of
ELI, enforceable against ELI in accordance with its terms,
subject, however, to limitations imposed by bankruptcy laws of
the United States, insolvency, reorganization, arrangement,
moratorium, or other laws relating to or affecting the
enforceability of creditor's rights generally. The execution and
delivery of this Agreement by ELI and the performance of the
terms, covenants, and conditions contained herein will not
violate the articles of the corporation, or bylaws of ELI, or any
applicable law or regulation or any order of court or arbitrator,
and will not conflict with and will not constitute a material
breach of, or default under, the provisions of any contract by
which ELI is bound. Except for approvals and authorizations
required to perform services on the Cable (such as franchise and
building permit applications and approvals), or as otherwise
stated herein, no approval, authorization, or other action by any
governmental authority or filing with any such authority which
has not been obtained or accomplished is required in connection
with the execution, delivery, and performance by ELI of this
Agreement.
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(2) Any assignment of the License of this Agreement to parties not
owned by Citizens Utilities Company shall be with the written
consent of BPA. Such consent shall not be unreasonably withheld.
(3) There are no known actions, suits, or proceedings pending or
overtly threatened against ELI before any court or administrative
agency that would materially impair ELI's performance of its
obligations under this Agreement.
(4) ELI has made no other representations or warranties outside of
this Agreement, and BPA acknowledges and agrees that it is not
relying on any other representations or warranties.
(b) BPA
BPA represents and warrants to ELI as follows:
(1) BPA is duly authorized to execute this Agreement. This Agreement
constitutes a legal and valid obligation of BPA, enforceable in
accordance with its terms to the full extent provided by law.
The enforceability of this Agreement is qualified as to:
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Limitations imposed by bankruptcy laws of the United States,
insolvency, reorganization, arrangement, moratorium, or other
laws relating to or affecting the enforcement of creditor's
rights generally.
(2) Upon execution of this Agreement, BPA warrants that there are no
known conflicts with this Agreement and that this Agreement does
not constitute a material breach of or a default under any
constitutional provision, law, or administrative regulation; or
violate any judgment, decree, or other instrument, or any other
contract related to the Cable Route to which BPA is a Party or to
which BPA or any of its property or assets is subject.
(3) BPA has made no other representations or warranties outside of
this Agreement, and ELI acknowledges and agrees that it is not
relying on any other representations or warranties.
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(c) NO BPA WARRANTY CONCERNING CABLE ROUTE
BPA makes no representation or warranty whatsoever concerning the
physical characteristics of the Cable Route. ELI acknowledges that
neither BPA nor any of BPA's officers, employees, representatives,
contractors, or subcontractors or agents have made any such
representation, nor is BPA or ELI entering into this Agreement in
reliance upon any such representation or warranty.
19. AUDIT PROCEDURES
(a) RECORDS
The Parties shall maintain true and correct sets of records in
connection with the performance of this Agreement. ELI shall retain
records of all transactions with supporting documentation related
thereto for a period of not less than 3 years after the term of a
specific transaction has expired and receipt of final payment by ELI
to BPA. The records in connection with each financial transaction
shall include an accounting of gross revenues, revenue shares, and
billing and collection. BPA shall retain all documents relative to
BPA Capital Cost for a period of at least 3 years after BPA incurs the
Capital Cost.
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(b) AUDIT RIGHTS
Either Party shall have the right to perform an audit of each other's
books, records, and documents used in or relating to the costs to
construct, repair, and maintain the site and improvements under this
Agreement. Such audit may be performed within 36 months after the
date that either Party renders a bill or refund voucher. Each Party
shall be responsible for all expenses incurred by such Party in the
performance of an audit pursuant to this Section. In the event that
the Parties agree that the Auditing Party's audit is determined to be
correct, the Non-Auditing Party shall reimburse the Auditing Party the
agreed upon amount. In the event that the Non-Auditing Party
disagrees with the results of the other Party's audit, and resolution
is not reached between the Parties, the Parties agree to resolve the
dispute pursuant to Section 24 of this Agreement.
(c) TECHNICAL AUDITS
BPA reserves the right to conduct technical audits, including physical
inspection of the number, type, and use of circuits, including
Transport Service(s) sold, used, and administered by ELI using the
Commercial Fiber.
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20. INSURANCE
(a) GENERAL
At all times during the term of this Agreement and the License term,
ELI, at its own cost and expense, shall provide the insurance
specified by this Section.
(b) EVIDENCE REQUIRED
On the Effective Date of this Agreement, ELI shall provide BPA with a
certificate of insurance (Certificate of Insurance) executed by an
authorized representative of the insurer(s) evidencing that ELI
insurance complies with this Section. A copy of all required
endorsements shall be attached to and form a part of the Certificate
of Insurance.
(c) NOTICE OF CANCELLATION, REDUCTION, OR MATERIAL CHANGE IN COVERAGE
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Policies shall be endorsed to provide BPA with 30 calendar days' prior
written notice of any cancellation, reduction, or material change in
coverage. If insurance coverage is due to be canceled, reduced, or
materially changed, ELI shall, within 30 calendar days before the
effective date of such cancellation, reduction, or material change,
obtain the coverage required under this Section 20 and provide to BPA
documentation evidencing such coverage. ELI shall be responsible for
the costs of any damage, liability, or injury occurring during any
period of cancellation, reduction, or material change in insurance
coverage to the extent such costs are not otherwise covered by
insurance; provided that ELI shall not be responsible for the costs of
any damage, liability, or injury occurring during any such period if
such damage, liability, or injury was caused by BPA's gross negligence
or willful misconduct.
(d) QUALIFYING INSURERS
Policies shall be issued by companies which hold a current
policyholders alphabetic and financial size category rating of not
less than A:X according to Best's Insurance Reports.
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(e) INSURANCE REQUIRED
(1) LIABILITY
Commercial general liability insurance for bodily injury
(including death) and property damage shall provide limits of not
less than $10 million per occurrence.
(A) Coverage included shall be:
(i) premises and operations;
(ii) broad form property damage;
(iii) products and completed operations;
(iv) blanket contractual liability;
(v) personal injury liability;
(vi) cross-liability and severability of interests; and
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(vii) independent contractors liability.
(B) Coverage shall be endorsed to include the following:
(i) inclusion of BPA, its officers, representatives,
agents, and employees as an additional insured as
respects services or operations in connection with
this Agreement; and
(ii) stipulation that the insurance is primary insurance
and that no insurance or self-insurance of BPA will be
called upon to contribute to a loss.
(2) BUSINESS AUTOMOBILE LIABILITY INSURANCE
Business Automobile Liability Insurance for bodily injury
(including death) and property damage shall provide total limits
of not less than $2 million combined single limit per occurrence
to all owned, non-owned, and hired vehicles.
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(3) WORKERS' COMPENSATION/EMPLOYER'S LIABILITY INSURANCE
Statutory Workers' Compensation and Employer's Liability
Insurance for not less than $1 million per occurrence shall apply
to employer's liability coverage for all employees engaged in
services or operations under this Agreement. The policy shall
include broad form all-States/ other States coverage.
(f) SPECIAL PROVISIONS
(1) The foregoing requirements as to the types and limits of
insurance coverage to be maintained by ELI, and any approval of
said insurance by BPA or ELI, are not intended to and shall not
in any manner limit or qualify the liabilities and obligations
otherwise assumed by ELI pursuant to this Agreement, including,
but not limited to, the provisions concerning indemnification.
(2) BPA acknowledges that some insurance requirements contained in
this Section 20 may be fulfilled by a funded self-insurance
program of ELI or its parent company, Citizens Utilities Company.
However, this shall not
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in any way limit liabilities assumed by ELI under this Agreement.
Any self-insurance program must be first approved in writing by
BPA.
21. DEFAULT
(a) EVENTS OF DEFAULT
If either Party is in material breach or default (Defaulting Party),
under this Agreement, the other Party (Non-Defaulting Party) may
notify in writing the Defaulting Party that it is in material breach
or default, such notice to be effective upon its receipt by the
Defaulting Party. Material breach or default under this Agreement
shall include, but is not limited to the following:
(1) failure to make any payment when due hereunder; with the
exception of payments that become payable during periods of Force
Majeure as provided in Section 24(a)(2).
(2) failure to perform any obligations required to be observed or
performed hereunder;
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(3) any representation or warranty made by one Party to the other
herein proving incorrect in any material respect as of the date
of the making thereof;
(4) ELI files a voluntary petition in bankruptcy, or a petition in
bankruptcy is filed against ELI and not dismissed within 60 days,
or ELI is adjudicated as bankrupt or insolvent, or files any
petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any present or future Federal, State, or
other statute, law, or regulation relating to bankruptcy,
insolvency, or other relief for debtors, or seeks or consents to
or acquiesces in the appointment of any trustee, receiver,
custodian, liquidator, or similar official of ELI, or makes any
general assignment for the benefit of creditors;
(5) material interference by a Party to the other Party's operations;
or
(6) failure to make restitution for any damage to a Party's real
property or equipment caused as a result of the negligent or
willful acts or omissions of the other Party when such damage
causes material interference to a Party's operations.
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(b) REMEDIES
(1) DEFAULTING PARTY'S RIGHT TO CURE
The Defaulting Party shall have the right to cure any material
breach or default under this Agreement within 30 calendar days
after the receipt by the Defaulting Party of notification of such
material breach or default. In the case of any material breach
or default which may not reasonably be cured within 30 calendar
days, other than in the case of a breach of Section 21(a)(1), the
Defaulting Party shall have the right to provide the Non-
Defaulting Party with a plan for the appropriate actions to cure
such material breach or default, which plan shall be subject to
the approval of the Non-Defaulting Party, which approval shall
not be unreasonably withheld. Within 30 calendar days of
submission of the plan, the Defaulting Party must commence
diligently pursuing appropriate action under the plan to cure the
material breach or default, and unless otherwise agreed to by the
Parties, such material breach or default shall be cured within 90
calendar days of submission of the plan, failing which the Non-
Defaulting Party may forthwith and without further notice
terminate this Agreement.
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(2) RIGHTS AND REMEDIES UPON TERMINATION
Any Party terminating this Agreement under Section 22 shall have
the additional right to cure any material breach or default of
the Defaulting Party to preserve the Non-Defaulting Party's
rights that may be prejudiced as a result of such material breach
or default and exercise and pursue all other rights and remedies
available to it under applicable law.
(3) RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided in this Agreement, any right or
remedy afforded to either ELI or BPA under any provision of this
Agreement is in addition to, and not in lieu of, all rights or
remedies afforded either ELI or BPA under any other provision of
this Agreement, by law or otherwise.
22. TERMINATION
(a) Termination of this Agreement may occur in the following instances:
(1) By the Non-Defaulting Party, after the time period for the
Defaulting Party to cure a material breach or default has
expired;
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(2) By either Party, if the Party claiming Force Majeure has not
satisfactorily performed any obligations delayed due to the Force
Majeure within 1 year of the notice of the Force Majeure event;
or
(3) Pursuant to Partial Invalidity terms, Section 25(d) of this
Agreement.
(b) Subject to Section 21(b), the Terminating Party shall give the other
Party 30 calendar days advance written notice of Termination, which
Termination shall become effective 30 calendar days after the receipt
of such notice by the other Party.
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23. INDEMNIFICATION; WAIVER OF DAMAGES
(a) INDEMNIFICATION BY ELI
(1) To the extent allowed by law, ELI shall release and indemnify,
defend, and hold harmless BPA and each of its directors,
officers, agents, representatives, subcontractors, and employees
(the "BPA Indemnitees") from and against any and all claims: (A)
for injury to or death of a person, including an employee of BPA
or an ELI Indemnity; or (B) for loss of or damage to property
resulting directly or indirectly from ELI's performance or
nonperformance of this Agreement; or (C) for any Claims against
BPA by customers of ELI or others doing business with ELI, except
in the cases of clauses (A) and (B) only, to the extent that such
Claim is the result of the gross negligence or willful misconduct
of a BPA Indemnitee.
(2) If gross negligence or willful misconduct of a BPA Indemnitee has
contributed to a Claim, ELI shall not be obligated to indemnify
the BPA Indemnitees for the proportionate share of such Claims
caused by such negligence or willful misconduct. BPA shall have
the right, at its own cost, to retain counsel, and to monitor, or
participate in the defense of any Claim that is covered by ELI's
indemnity hereunder.
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(b) INDEMNIFICATION BY BPA
(1) To the extent allowed under the Federal Tort Claims Act, BPA
shall release and indemnify, defend, and hold harmless ELI
and each of its directors, officers, agents,
representatives, subcontractors, and employees (the "ELI
Indemnitees") from and against any and all claims for injury
to or death of a person, including an employee of BPA or an
ELI Indemnitee, or for loss of or damage to property
resulting directly or indirectly from BPA's performance or
nonperformance of this Agreement, except to the extent that
such claim is the result of the gross negligence or willful
misconduct of a ELI Indemnitee. In no event shall BPA be
required to indemnify ELI Indemnities against claims against
ELI by customers of ELI or others doing business with ELI.
(2) If gross negligence or willful misconduct of an ELI
Indemnitee has contributed to a claim, BPA shall not be
obligated to indemnify the ELI Indemnitees for the
proportionate share of such claims caused by such negligence
or willful misconduct. ELI shall have the right, at its own
cost, to retain counsel, to monitor, or to participate in
the defense of any claim that is covered by BPA's indemnity
hereunder.
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(c) WAIVER OF CERTAIN DAMAGES
Each Party hereby waives any right to consequential, incidental,
special or indirect damages, or damages for lost profits or exemplary
damages with respect to any claim arising out of or related to this
Agreement. The Parties acknowledge that the foregoing waiver shall
not prejudice the right of indemnity respecting any claim under this
Section 23.
24. DISPUTE RESOLUTION
(a) Pending resolution of a disputed matter, the Parties shall continue
performance of their respective obligations hereunder, provided that
neither Party shall be required to take any action pending such
resolution which it has been advised by counsel, or which it
reasonably believes, is unlawful or not permitted pursuant to
applicable regulations or permit requirements. Any controversy between
the Parties rising out of this Agreement or breach thereof, or out of
performance under this Agreement, is subject to the mediation process
described below. If not resolved by mediation, then the matter must be
submitted to the American Arbitration Association ("AAA") for
arbitration before a sole arbitrator.
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(b) A meeting will be held promptly between the Parties to attempt in good
faith to negotiate a resolution of the dispute. The meeting will be
attended by individuals with decision-making authority regarding the
dispute. If within 30 calendar days after such meeting the Parties
have not succeeded in resolving the dispute, within 30 calendar days
thereafter, upon the written notice from either Party to the other
Party, they shall submit the dispute to a mutually acceptable third-
party mediator who is acquainted with dispute resolution methods. The
mediation shall be non-binding. If the dispute is not resolved by
mediation, either Party may initiate an arbitration with the AAA, upon
the written notice from either Party to the other Party. The dispute
shall be resolved by arbitration under the rules and administration of
the AAA (except that service of process, pleadings, motions and orders
on BPA shall be as prescribed by the Federal Rules of Civil
Procedure), and judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. Neither Party
is entitled to seek or recover punitive damages in considering or
fixing any award under these proceedings.
(c) The costs of mediation and arbitration, including any mediator's fees,
AAA administration fee, the arbitrator's fee, and costs for the use of
facilities during the hearings, shall be borne equally by the Parties.
Reasonable attorneys' fees may be awarded to the prevailing Party
(provided such a Party can clearly be
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determined from the proceedings) at the discretion of the arbitrator.
Each Party's other costs and expenses will be borne by the Party
incurring them.
25. GENERAL
(a) FORCE MAJEURE
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(1) As used in this Agreement, the term "Force Majeure" means acts of God
(including but not limited to, earthquakes, fires, floods, windstorms,
landslides, and ice storms); strikes, lockouts, or other labor
disputes; acts of public enemy; wars, riots, and insurrection;
epidemics; civil disturbances; explosions; train derailments;
breakdown or failure of machinery or facilities (excluding the Cable
and Cable Accessories); accidents to machinery or equipment (excluding
the Cable and Cable Accessories), and delay in delivery of equipment
to the extent such occurrences are beyond the reasonable control of
the Parties; electrical disturbance originating in or transmitted
through such Party's electrical system or equipment or any electrical
system with which such Party's system or equipment is interconnected;
and any other event, cause, or condition beyond the Party's reasonable
control, which, by the exercise of reasonable diligence, prevents the
operation of the Cable and prevents the Party claiming Force Majeure
from performing its obligations under this Agreement.
(2) If either Party is unable to carry out its obligations under this
Agreement as a result of an event, cause, or condition of Force
Majeure, the Party claiming Force Majeure shall give notice and full
particulars of such Force Majeure in writing to the other Party within
5 calendar days after the
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occurrence of the Force Majeure event, cause, or condition. Any
obligations that such Party claims it is unable to perform due to an
event, cause, or condition of Force Majeure shall be suspended during
the continuance of such event of Force Majeure. The Party claiming
Force Majeure shall use reasonable efforts to remedy and minimize the
effects of such event of Force Majeure with all reasonable dispatch.
For purposes of this Agreement, the Parties are obligated to make
payments during periods of Force Majeure; PROVIDED, HOWEVER, ELI shall
not be obligated to make payments during periods of Force Majeure when
ELI is unable to provide service under the terms of the agreement with
ELI's customers. Interest shall not accrue on payments that become
payable to either Party during the period of any Force Majeure.
(3) Neither Party shall be liable under this Agreement for, or considered
to be in material breach or default under, this Agreement on account
of any delay in or failure of performance due to Force Majeure unless
specifically stated in this Agreement. In the event that ELI continues
to receive revenue from End-Users under this Agreement during a Force
Majeure event, ELI will not be excused from performing its payment
under this Agreement.
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(b) NOTICES
All notices and other communications under this Agreement shall be properly
given only if made in writing; and
(1) mailed by certified mail, return receipt requested, postage prepaid;
or
(2) delivered by facsimile transmission followed by certified mail to the
Party's at the address or facsimile number set forth in this Section
25(b) or such other address or facsimile number as such Party may
designate by notice to the other Party. Such notices and other
communications shall be effective on the date of receipt. If any such
notice or communication is not received or cannot be delivered due to
a change in the address of the receiving Party of which notice was not
previously given to the sending Party or due to a refusal to accept by
the receiving Party, such notice or other communication shall be
effective on the date delivery is attempted.
If to BPA: The Bonneville Power Administration
P.O. Box 3621
Portland, OR 97208-3621
Attn: To be identified under separate letter
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with a copy to: The Bonneville Power Administration
P.O. Box 3621
Portland, OR 97208-3621
Attn: To be identified under separate letter
If to ELI: Electric Lightwave, Inc.
8100 NE. Parkway Drive, Suite 150
Vancouver, WA
Attn: Legal Affairs
Phone: (360) 892-1000
FAX: (360) 253-4425
(c) ASSIGNMENT
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ELI shall not sell, assign, lease, sublease, sub-license or otherwise
allow use of ELI's License under this Agreement to any person or
entity without BPA's written approval; which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, ELI may assign
in writing its rights and responsibilities under this Agreement to a
corporate parent, subsidiary, or commonly owned affiliate, upon
written notification to BPA, and a guarantee by its parent company,
Citizens Utilities Company, to perform the obligation of ELI under
this Agreement. Any permitted assignment or other transfer of rights
hereunder shall be in writing and shall specify that the assignee or
other transferee is bound by the terms and conditions of this
Agreement to the same extent as if it were the original named party
instead of ELI hereunder. In the event that ELI sells, assigns,
leases, subleases, or otherwise allows use of ELI's License under this
Agreement, ELI or its assigned entity shall designate a single point-
of-contact to BPA for all activities relating to this Agreement. A
sale, transfer, or distribution (by way of a dividend or otherwise) in
one or a series of transactions of 50 percent or more of the capital
stock of the entity that holds the License shall be deemed to be an
assignment of the License.
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(d) PARTIAL INVALIDITY
If any provision of this Agreement is determined by a proper court to be
invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect the performance of other provisions of
this Agreement, and this Agreement shall remain in full force and effect
without such invalid, illegal, or unenforceable provision; provided that if
any such invalid, illegal, or unenforceable provision results in
frustration of this Agreement, such that ELI cannot perform under Section
14, BPA shall have the right to terminate in accordance with Section 22.
(e) GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
Federal law.
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(f) TERMS GENERALLY
The defined terms in this Agreement shall apply equally to both the
singular and the plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine,
feminine, and neuter forms. The term "person" includes individuals,
corporations, partnerships, trusts, other legal entities, organizations and
associations, and any Government or governmental agency or authority. The
words "include," "includes," and "including," shall be deemed to be
followed by the phrase "without limitation." The words "approval,"
"consent," and "notice," shall be deemed to be preceded by the word
"written."
(g) RELATIONSHIP OF THE PARTIES
Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, or joint venture relationship between or among the
Parties hereto. The performance by the Parties of all duties and
obligations hereunder shall be as independent contractors and not as agents
of the other Party, and no persons employed or utilized by a performing
Party shall be considered employees or agents of the other.
-66-
<PAGE>
(h) WAIVERS
No waiver of any provision or breach of this Agreement shall be effective
unless such waiver is in writing and signed by the waiving Party and any
such waiver shall not be deemed a waiver of any other provision of this
Agreement or any other breach of this Agreement.
(i) CONFIDENTIALITY
-67-
<PAGE>
If and to the extent any information or documents furnished by one
Party to the other under this Agreement is confidential or proprietary
to the furnishing Party, the receiving Party shall treat such
information or documents as confidential and proprietary and shall
take reasonable steps to protect against the unauthorized use or
disclosure of such information or documents; PROVIDED, HOWEVER, that
such information and documents are conspicuously marked or otherwise
clearly identified as confidential or proprietary when furnished; and
PROVIDED, FURTHER, that this Section 25(i) shall not apply to
information or documents in the public domain or to information or
documents required to be disclosed by any law, rule, regulation,
order, or other requirement of any governmental authority having
jurisdiction. If a Freedom of Information Act, or Congressional,
request is received by BPA for such written information or documents,
BPA must promptly notify ELI of such request and will, further, notify
ELI if BPA is required to disclose such written information or
documents.
-68-
<PAGE>
(j) NO THIRD-PARTY BENEFICIARIES
This Agreement creates rights and obligations only between the Parties
hereto. The Parties hereto expressly do not intend to create any
obligations or promise of performance to any other third person or entity,
nor have the Parties conferred any rights or remedy upon any third person
or entity other than the Parties hereto, their respective successor or
assigns to enforce this Agreement.
(k) MISCELLANEOUS
Neither Party shall make public announcement of this Agreement or the
transactions contemplated by this Agreement without the prior consent of
the other Party, unless such public announcement is necessary to comply
with applicable law. This Agreement shall benefit and bind ELI and BPA and
their respective permitted successors and assigns. Time is of the essence
of this Agreement. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one and the
same Agreement. This Agreement may not be amended or modified except by a
written instrument signed by ELI and BPA.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in two
counterparts.
UNITED STATES OF AMERICA
-69-
<PAGE>
Department of Energy
BPA Power Administration
Name /s/ Kevin A. Ward for
-----------------------------------
Charles E. Meyer
Vice President, Transmission
Marketing & Sales
Date 3/23/98
-----------------------------------
ACCEPTED:
ELECTRIC LIGHTWAVE, INC.
By /s/ David B. Sharkey
------------------------------
Name David B. Sharkey
------------------------------
(Print/Type)
Title President
------------------------------
Date March 23, 1998
------------------------------
-70-
<PAGE>
EXHIBIT 10(16)(a)
Exhibit A, Page 1 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
ROUTE DESCRIPTION: PORTLAND-TO-SEATTLE ROUTE
The southern terminus of the route begins at BPA's Keeler Substation
located 8 miles west of Portland. The cable is attached to the St. Johns-
Keeler No. 2 wood pole line and deadends at St. Johns Substation located 10
miles northwest of Portland. The cable is then attached to the Ross-St.
Jones No. 1 steel tower line, crosses the Columbia River and deadends at
Ross Substation located 12 miles north of Portland. Going north out of Ross
Substation the cable is attached to the Ross-Lexington No. 1 steel tower
line and deadends at Lexington substation located a few miles north of
Longview. The cable is then attached to the Lexington-Longview No. 1 wood
pole line that deadends at Longview substation located in the west part of
Longview. The cable then is attached from a point 2 miles north of
Lexington out of Longview on the Longview-Chehalis No. 1 steel tower line
and deadends at Chehalis substation located 4 miles south of Chehalis. The
cable then goes north out of Chehalis for 11 miles on the Chehalis-
Covington steel tower lime and then is attached to the Paul-Allston No. 2
for the last 3 miles going into Paul substation located 3 miles northeast
of Chehalis. The cable goes north out of Paul on the Paul-Satsop No. 1
steel tower line and deadends on the wood pole lines south of Olympia
substation located in the southwest part of Olympia. The cable then goes
west and north on the Olympia-Grand Coulee No. 1, the Olympia-White River
No. 1 and the Chehalis-Covington No. 1 steel tower lines until it
terminates at Covington substation. The total length of the route is
approximately 192 miles and requires 5 regeneration stations located near
BPA facilities along the way.
A-1
<PAGE>
Exhibit A, Page 2 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
ROUTE DESCRIPTION: PORTLAND-TO-SPOKANE ROUTE
ROSS-FRANKLIN FIBER ROUTE SEGMENT
- ------------------------------------------------------------------------
ROSS SUBSTATION TO NORTH BONNEVILLE SUBSTATION - 36.0 MILES
- ------------------------------------------------------------------------
Dittmer Control Center
- ------------------------------------------------------------------------
North Bonneville - Ross No. 2
AFB 187 (37/2) To AFX 1 (1/1)
- ------------------------------------------------------------------------
Hanford - Ostrander No. 1
FY 703 (151/5)
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 4 (1/1A)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 11, 230 kV Switchyard
North Bonneville Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
NORTH BONNEVILLE SUBSTATION TO BIG EDDY SUBSTATION - 50.2 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 13, 230 kV Switchyard
North Bonneville Substation
- ------------------------------------------------------------------------
North Bonneville - Midway No. 1
AS 1 (1/1) To HB 152 (29/2)
- ------------------------------------------------------------------------
Fiber Optic Wood Pole Parallel to McNary - Ross No. 1
AMV 5 (116/3) To AMV 88 (97/4A)
- ------------------------------------------------------------------------
Spearfish Tap To Chenoweth - Goldendale No. 1
4/3 To 1/1
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 89 (2/4A) To AMV 90 (2/4B)
- ------------------------------------------------------------------------
Big Eddy - Midway No. 1
AN 5 (2/3) To AN 2 ( 1/2)
- ------------------------------------------------------------------------
The Dalles Powerhouse - Big Eddy Switchyard Line No. 1
EN 3 (1/3) To EN 4 (1/4)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 10, 115 kV Switchyard
Big Eddy Substation
- ------------------------------------------------------------------------
A-2
<PAGE>
Exhibit A, Page 3 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
- ------------------------------------------------------------------------
BIG EDDY SUBSTATION TO JOHN DAY SUBSTATION - 18.9 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 35, 230 kV Switchyard
Big Eddy Substation
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 130 (1/1) To AMV 131 ( 1/2)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 9E, 500 kV Switchyard
Big Eddy Substation
- ------------------------------------------------------------------------
John Day - Big Eddy No. 2
BG 79 (19/4) To BG 1 (1/1)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 11 W, 500 kV Switchyard
John Day Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
JOHN DAY SUBSTATION TO SLATT SUBSTATION - 30.3 MILES
- ------------------------------------------------------------------------
Substation Dean End Structure
Bay 6E, 500 kV Switchyard
John Day Substation
- ------------------------------------------------------------------------
Slatt - John Day No. 1
CD 658 (31/1) To CD 521A (1/1)
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 92 (46/1A)
Slatt Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
SLATT SUBSTATION TO MCNARY SUBSTATION - 45.5 MILES
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 92 (46/1A)
Slatt Substation
- ------------------------------------------------------------------------
McNary - Slatt No. 1
CD 520A (46/1) To CD 394 (19/5)
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 94 (19/4A) To AMV 96 (19/4C)
- ------------------------------------------------------------------------
McNary - Slatt No. 1
CV 393 (19/3) To CD 312 (2/2)
- ------------------------------------------------------------------------
A-3
<PAGE>
Exhibit A, Page 4 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 98 (2/1A)
- ------------------------------------------------------------------------
McNary - Roundup No. 1
TL 9 (2/8) To TL 1 (1/1)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 10, 230 kV Switchyard
McNary Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
MCNARY SUBSTATION TO FRANKLIN SUBSTATION - 26.5 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 2, 69 kV Switchyard
McNary Substation
- ------------------------------------------------------------------------
Fiber Optic Wood Pole
AMV 99 (1/7A) To AMV 100 (1/7B)
- ------------------------------------------------------------------------
McNary - Franklin No. 2
SN 7 (1/7) To SN 149R (20/8)
- ------------------------------------------------------------------------
Fiber Optic Wood Pole Parallel To McNary - Franklin No. 2
AMV 101 (21/1) To AMV 119 (24/5)
- ------------------------------------------------------------------------
McNary - Franklin No. 2
Sh 4 (24/6) To ABH 1 (27/7)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 5, 230 kV Switchyard
Franklin Substation
- ------------------------------------------------------------------------
FRANKLIN - BELL FIBER ROUTE SEGMENT
- ------------------------------------------------------------------------
FRANKLIN SUBSTATION TO BENTON SUBSTATION - 21.0 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 9, 115 kV Switchyard
Franklin Substation
- ------------------------------------------------------------------------
Benton - Franklin No. 1
UH 150 (21/13) To UH 1 (1/1)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 5, 115 kV Switchyard
Benton Substation
- ------------------------------------------------------------------------
A-4
<PAGE>
Exhibit A, Page 5 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
- ------------------------------------------------------------------------
BENTON SUBSTATION TO ASHE SUBSTATION - 3.9 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 19, 230 kV Switchyard
Benton Substation
- ------------------------------------------------------------------------
Midway - Benton No. 2
AFA 143 (29/6) To AFA 130 (27/4)
- ------------------------------------------------------------------------
Lower Monumental - Ashe No. 1
ACF 183 (39/2) To ACF 191 (40/5)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 8, 500 kV Switchyard
Ashe Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
ASHE SUBSTATION TO HANFORD SUBSTATION - 19.6 MILES
- ------------------------------------------------------------------------
Midway - Benton No. 2
AFA 130 (27/4) To AFA 74 (15/3)
- ------------------------------------------------------------------------
Ashe - Hanford No. 1
AAV 54 (11/3) To CA 261 (18/4)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 4, 500 kV Switchyard
Hanford Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
HANFORD SUBSTATION TO MIDWAY SUBSTATION - 14.3 MILES
- ------------------------------------------------------------------------
Midway - Benton No. 2
AFA 74 (15/3) To AFA 10 (2/3)
- ------------------------------------------------------------------------
Midway Benton No. 1
TV 11 (2/3) To TV 1 (1/1)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 7, 115 kV Switchyard
Midway Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
MIDWAY SUBSTATION TO MOXEE SUBSTATION - 34.0 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 4, 115 kV Switchyard
Midway Substation
- ------------------------------------------------------------------------
Midway - Moxee No. 1
- ------------------------------------------------------------------------
A-5
<PAGE>
Exhibit A, Page 6 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
- ------------------------------------------------------------------------
YC 1A (1/1) To YC 222 (34/8)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 4, 115 kV Switchyard
Moxee Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
MOXEE SUBSTATION TO SCHULTZ SUBSTATION - 40.0 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 9, 114 kV Switchyard
Moxee Substation
- ------------------------------------------------------------------------
Columbia - Moxee No. 1
YD 1 (66/10) To FF 388A (26/5)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 5W (26/4), 500 kV Switchyard
Schultz Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
SCHULTZ SUBSTATION TO COLUMBIA SUBSTATION - 26.0 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 5E (26/3), 500 kV Switchyard
Schultz Substation
- ------------------------------------------------------------------------
Columbia - Moxee No. 1
FF 389A (26/2) To FF 442 (19/1)
- ------------------------------------------------------------------------
Olympia - Grand Coulee No. 1
AF 664 (137/5) To AF 736 (155/3)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 17, 230 kV Switchyard
Columbia Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
COLUMBIA SUBSTATION TO VALHALLA SUBSTATION - 5.4 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 5, 230 kV Switchyard
Columbia Substation
- ------------------------------------------------------------------------
Rocky Reach - Columbia No. 1
AC 98 (21/3) To AC 79 (17/3)
- ------------------------------------------------------------------------
Columbia - Valhalla No. 1
NJ 34 (4/9) To NJ 47 (5/12)
- ------------------------------------------------------------------------
Substation Dead End Structure
- ------------------------------------------------------------------------
A-6
<PAGE>
Exhibit A, Page 7 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
- ------------------------------------------------------------------------
Bay 5, 115 kV Switchyard
Valhalla Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
VALHALLA SUBSTATION TO SICKLER SUBSTATION - 16.7 MILES
- ------------------------------------------------------------------------
Rocky Reach - Columbia No. 1
AC 79 (17/3) To AC 7 (2/2)
- ------------------------------------------------------------------------
Sickler - Schultz No. 1
DL 14 (2/1) To DL 10 (1/1)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 3, 500 kV Switchyard
Sickler Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
SICKLER SUBSTATION TO CHIEF JOSEPH SUBSTATION - 44.6 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 4, 500 kV Switchyard
Sickler Substation
- ------------------------------------------------------------------------
Chief Joseph - Sickler No. 1
GU 221 (45/6) To GU 10 (2/3)
- ------------------------------------------------------------------------
Grand Coulee - Chief Joseph No. 1
FB 257 (33/1) To FB 261 (33/5)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay 10, 230 kV Switchyard
Chief Joseph Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
CHIEF JOSEPH SUBSTATION TO GRAND COULEE SUBSTATION - 31.7 MILES
- ------------------------------------------------------------------------
Grand Coulee - Chief Joseph No. 1
FB 257 (33/1) To FB 1R (1/1)
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay Y25, 230 kV Switchyard
Grand Coulee Substation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
GRAND COULEE SUBSTATION TO MONROE CONTROL CENTER - 82.9 MILES
- ------------------------------------------------------------------------
Substation Dead End Structure
Bay Y19, 230 kV Switchyard
Grand Coulee Substation
========================================================================
A-7
<PAGE>
Exhibit A, Page 8 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
- ------------------------------------------------------------------------
Grand Coulee - Bell No. 5
AH 14R (1/1) to AH 413 (82/4)
- ------------------------------------------------------------------------
Grand Coulee - Bell
ZC 717 (82/8) To ZC 729 (84/2)
- ------------------------------------------------------------------------
Monroe Control Center
- ------------------------------------------------------------------------
A-8
<PAGE>
Exhibit A, Page 9 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
ROUTE DESCRIPTION: SPOKANE-TO-SEATTLE ROUTE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
BELL TO COVINGTON (SOUTHERN ROUTE)
3/19/98
- ------------------------------------------------------------------------------------------------
Station or Line
- ------------------------------------------------------------------------------------------------
(Tower Ser. #) Distance Operational Line Name Comments
- ------------------------------------------------------------------------------------------------
(miles)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bell
- ------------------------------------------------------------------------------------------------
52 Grand Coulee - Bell no. 2 115 kv
- ------------------------------------------------------------------------------------------------
Creston
- ------------------------------------------------------------------------------------------------
30 Grand Coulee - Bell no. 2 115 kv
- ------------------------------------------------------------------------------------------------
Grand Coulee
- ------------------------------------------------------------------------------------------------
9 Columbia - Grand Coulee no. 3 230 kv
- ------------------------------------------------------------------------------------------------
Str. 66/2
- ------------------------------------------------------------------------------------------------
0 Transition
- ------------------------------------------------------------------------------------------------
Str. 66/1
- ------------------------------------------------------------------------------------------------
21 Columbia - Grand Coulee no. 1 230 kv
- ------------------------------------------------------------------------------------------------
St. Andrews (regen)
- ------------------------------------------------------------------------------------------------
44 Columbia - Grand Coulee no. 1
- ------------------------------------------------------------------------------------------------
Columbia
- ------------------------------------------------------------------------------------------------
26 Olympia - Grand Coulee no. 1 230 kv
- ------------------------------------------------------------------------------------------------
Schultz
- ------------------------------------------------------------------------------------------------
38 Olympia - Grand Coulee no. 1 287 kv (Dbl. Cir.)
- ------------------------------------------------------------------------------------------------
Easton R.S. (regen) Splice at structure 92/2
- ------------------------------------------------------------------------------------------------
2 Olympia - Grand Coulee no. 1
- ------------------------------------------------------------------------------------------------
Str. 90/3
- ------------------------------------------------------------------------------------------------
Transition
- ------------------------------------------------------------------------------------------------
Str. 80/3
- ------------------------------------------------------------------------------------------------
8 Schultz - Raver no. 4 Stampede Pass
- ------------------------------------------------------------------------------------------------
Str. 89/1
- ------------------------------------------------------------------------------------------------
Transition
- ------------------------------------------------------------------------------------------------
Str. 81/5
- ------------------------------------------------------------------------------------------------
11 Olympia - Grand Coulee no. 1 287 kv (Dbl. Cir.)
- ------------------------------------------------------------------------------------------------
Str. 70/6
- ------------------------------------------------------------------------------------------------
0 Transition
- ------------------------------------------------------------------------------------------------
Str. 27/3
- ------------------------------------------------------------------------------------------------
15 Covington - Columbia no. 3 230 kv
- ------------------------------------------------------------------------------------------------
Str. 12/1
- ------------------------------------------------------------------------------------------------
0 Transition
- ------------------------------------------------------------------------------------------------
</TABLE>
A-9
<PAGE>
Exhibit A, Page 10 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Str. 4/1
- ------------------------------------------------------------------------------------------------
3 Raver - Echo Lake no. 1 500 kv
- ------------------------------------------------------------------------------------------------
Raver
- ------------------------------------------------------------------------------------------------
10 Raver - Covington no. 2 500 kv
- ------------------------------------------------------------------------------------------------
Covington
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Total distance 268
- ------------------------------------------------------------------------------------------------
Notes:
- ------------------------------------------------------------------------------------------------
1. All cable is 72 count.
- ------------------------------------------------------------------------------------------------
</TABLE>
A-10
<PAGE>
Exhibit A, Page 11 of 11
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
CABLE ROUTE
[MAP]*
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commision.
A-11
<PAGE>
EXHIBIT 10(16)(b)
Exhibit B, Page 1 of 2
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
PAYMENT SPECIFICATIONS
ELI's MONTHLY PAYMENT to BPA will equal GRV multiplied by the Payment Factor.
The PAYMENT FACTOR equals * (*) until ELI's cumulative monthly payments to BPA
exceed BPA Capital Costs, after which the Payment Factor will equal * (*) for
the remainder of the Agreement.
The GRV will be determined using the following formula:
GRV = ELITSV + EUTSV + DFLV + OTSV
Where:
GRV = GROSS REVENUE VALUE
ELITSV = ELI TRANSPORT SERVICE VALUE(S)
EUTSV = END-USER TRANSPORT SERVICE VALUE(S)
DFLV = DARK FIBER LEASE VALUE(S)
OTSV = OTHER TRANSPORT SERVICE VALUE(S)
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commision.
B-1
<PAGE>
Exhibit B, Page 2 of 2
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
PAYMENT SPECIFICATIONS
<TABLE>
<CAPTION>
Combined Washington BPA Routes
----------------------------------------------------------------------------------------------------------
1997* 1998* 1999* 2000* 2001* 2002* 2003* 2004* 2005* 2006* 2007*
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue Forecast
- ----------------
Revenue Growth yrs 6-10*
Revenue Growth yrs 11-20*
Portland to Seattle*
Portland to Tacoma*
Seattle to Tacoma*
Portland to Olympia*
Seattle to Olympia*
Portland to Tri Cities*
Portland to Spokane*
Portland to Yakima*
Spokane to Yakima*
Spokane to Tri Cities*
Yakima to Tri Cities*
Seattle to Spokane*
Seattle to Yakima*
Seattle to Tri Cities*
Seattle route revenues*
Spokane route revenues*
Embedded Revenue*
Sonet Ring Revenue Increase*
Total Revenue*
Revenue Split:
BPA Revenue split percentage*
Until capital is repaid*
After capital is repaid*
BPA Annual Revenues*
BPA Cumulative Revenues*
Guaranteed Fee Value 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260
BPA Revenues*
Total BPA Revenues*
Capital Investment
- ------------------
Number of Miles*
Outside Plant*
BPA Miles*
Seattle Outside Plant*
BPA Miles*
Spokane Outside Plant*
BPA Miles*
Seattle to Spokane Outside Plant*
BPA Miles*
Seattle to Spokane Outside Plant*
BPA
Cash Flow:
- ---------
Capital Expenditures*
Revenue*
BPA Cash Flow*
</TABLE>
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
B-2
<PAGE>
<TABLE>
<CAPTION>
Combined Washington BPA Routes
----------------------------------------------------------------------------------------------------------
2008* 2009* 2010* 2011* 2012* 2013* 2014* 2015* 2016* 2017* 2018*
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue Forecast
- ----------------
Revenue Growth yrs 6-10*
Revenue Growth yrs 11-20*
Portland to Seattle*
Portland to Tacoma*
Seattle to Tacoma*
Portland to Olympia*
Seattle to Olympia*
Portland to Tri Cities*
Portland to Spokane*
Portland to Yakima*
Spokane to Yakima*
Spokane to Tri Cities*
Yakima to Tri Cities*
Seattle to Spokane*
Seattle to Yakima*
Seattle to Tri Cities*
Seattle route revenues*
Spokane route revenues*
Embedded Revenue*
Sonet Ring Revenue Increase*
Total Revenue*
Revenue Split:
BPA Revenue split percentage*
Until capital is repaid*
After capital is repaid*
BPA Annual Revenues*
BPA Cumulative Revenues*
Guaranteed Fee Value 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260
BPA Revenues*
Total BPA Revenues*
Capital Investment
- ------------------
Number of Miles*
Outside Plant*
BPA Miles*
Seattle Outside Plant*
BPA Miles*
Spokane Outside Plant*
BPA Miles*
Seattle to Spokane Outside Plant*
BPA Miles*
Seattle to Spokane Outside Plant*
BPA
Cash Flow:
- ---------
Capital Expenditures*
Revenue*
BPA Cash Flow*
</TABLE>
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
B-3
<PAGE>
EXHIBIT 10(16)(c)
Exhibit C, Page 1 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
COMMERCIAL FIBER SPECIFICATIONS
SINGLE-MODE OPTICAL FIBER
GENERAL
The fiber is optimized for use in the 1310 nm wavelength region. The
information-carrying capacity of the fiber is at its highest in this
transmission window; it is also where dispersion is the lowest. The fiber can
also be effectively used in the 1550 nm wavelength region.
The fiber coating is optimized for use in many single and multi-fiber cable
designs including loose tube, ribbon, slotted core and tight buffer cables. The
fiber coating shall provide fiber protection and must be easy to work with. The
fiber coating must be capable of mechanical stripping with an outside diameter
of at least 245 micro m.
The fiber is manufactured using the Outside Vapor Deposition (OVD) process,
which produces a totally synthetic, ultra-pure fiber. As a result, the fiber
has consistent geometric properties, high strength and low attenuation.
GENERAL FEATURES AND BENEFITS
. Versatility in 1310 nm and 1550 nm applications.
. Geometrical properties that allow for low splice loss and high splice
yields.
. OVD manufacturing reliability and product consistency.
. Optimized for use in ribbon, loose tube and other common cable designs.
<PAGE>
Exhibit C, Page 2 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
OPTICAL SPECIFICATIONS
ATTENUATION
- -----------------------------------
UNCABLED FIBER ATTENUATION CELLS POINT DISCONTINUITY
- -----------------------------------
Attenuation Cells No point of discontinuity greater than
(dB/km) 0.10 dB at either 1310 nm or 1550 nm.
- -----------------------------------
Wavelength (nm) Standard
- -----------------------------------
1310 Less than or ATTENUATION AT THE WATER PEAK
equal to 0.40
- -----------------------------------
1550 Less than or The attenuation at 1383 + 3 nm shall not
equal to 0.30 exceed 2.1 dB/km. -
- -----------------------------------
- ----------------------------------
ATTENUATION VS. WAVELENGTH
- ----------------------------------
Range Ref.L Max Increase The attenuation in a given wavelength
(nm) (nm) A(dB/km) range does not exceed the attenuation of
- ---------------------------------- the reference wavelength (L) by more
1285-1330 1310 0.05 than the value A.
- ----------------------------------
1525-1575 1550 0.05
- --------------------------------------------------------------------------------
- --------------------------------------------------
ATTENUATION WITH BENDING
- --------------------------------------------------
Mandrel Number of Wavelength Induced The induced attenuation due
Diameter Turns (nm) Attenuation to fiber wrapped around a
(nm) (dB) mandrel of a specified
- --------------------------------------------------
32 1 1550 Less than or diameter.
equal to 0.50
- --------------------------------------------------
75 100 1310 Less than or
equal to 0.05
- --------------------------------------------------
75 100 1550 Less than or
equal to 0.10
- --------------------------------------------------------------------------------
. CABLE CUTOFF WAVELENGTH (L\ccf\) . MODE-FIELD DIAMETER
(L\ccf\) Less than 1260 micro m 9.30 + 0.50 micro m at 1310 nm
10.50 + 1.00 micro m at 1550 nm
. DISPERSION
C-2
<PAGE>
Exhibit C, Page 3 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
Zero Dispersion Wavelength (Lo): 1301.5 nm less than or equal to (Lo) less
than or equal to 1321.5 nm
Zero Dispersion Slope (So): less than or equal to 0.092 ps/(nm/2/ . km)
Fiber Polarization Mode Dispersion Coefficient (PMD): less than or equal to
0.5 psec divided by km
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
DISPERSION CALCULATION
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Dispersion = D (L): approximately So [L - Lo4] ps/ (nm.km), for 1200 nm less than or equal to L
-- --- less than
4 [ L3] or equal to L = Operating Wavelength
1600 nm
- ----------------------------------------------------------------------------------------------------
</TABLE>
ENVIRONMENTAL SPECIFICATIONS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
ENVIRONMENTAL TEST INDUCED Operating Temperature Range
CONDITION ATTENUATION -60C to +85C
(DB/KM)
- ---------------------------------------------------------------------
<S> <C> <C>
1310 nm 1550 nm
- ---------------------------------------------------------------------
Temperature Dependence Less than or Less than or
- -60 degrees to +85 degrees C equal to 0.05 equal to 0.05
- ---------------------------------------------------------------------
Temperature-Humidity Cycling Less than or Less than or
- -10C to +85C, up to 98% RH equal to 0.05 equal to 0.05
- ---------------------------------------------------------------------
Water Immersion, 23C Less than or Less than or
equal to 0.05 equal to 0.05
- ---------------------------------------------------------------------
Heat Aging, 85C Less than or Less than or
equal to 0.05 equal to 0.05
- ---------------------------------------------------------------------
</TABLE>
DIMENSIONAL SPECIFICATIONS
STANDARD LENGTH (KM/REEL): 2.2 - 25.0
C-3
<PAGE>
Exhibit C, Page 4 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
GLASS GEOMETRY COATING GEOMETRY
Fiber Curl: greater than or equal 2.0 m Coating Diameter: 245 + 10 micro m
radius of curvature -
Cladding Diameter: 125.0 + 1.0 micro m Coating-Cladding Concentricity:
- less than 12 micro m
Core-Clad Concentricity: less than
or equal to 0.8 micro m
Cladding Non-Circularity: less than 1.0%
[ Min. Cladding Diameter ]
Defined as: [1 - ---------------------- ] x 100
[ Max. Cladding Diameter ]
MECHANICAL SPECIFICATIONS
PROOF TEST:
The entire length of fiber is subjected to a tensile proof stress greater than
or equal to 100 kpsi (0.7 GOOSEBERRY/NARROWS PROJECT/m/2/)
PERFORMANCE CHARACTERIZATIONS
Characterized parameters must be typical values.
CORE DIAMETER: REFRACTIVE INDEX DIFFERENCE:
8.3 micro m 0.36%
NUMERICAL APERTURE: EFFECTIVE GROUP INDEX OF REFRACTION (NeP):
0.13 1.4675 at 1310 nm
NA measured at the one 1.4681 at 1550 nm
percent power angle of a
one-dimensional far-field
scan at 1310 nm.
ZERO DISPERSION WAVELENGTH (L.): FATIGUE RESISTANCE PARAMETER nd:
1312 nm Greater than or equal to 20
ZERO DISPERSION SLOPE (S.): COATING STRIP FORCE:
0.090 ps/(nm/2/.km) Dry: 0.7 lbs. (3.2 N)
Wet: 14 days room temperature: 0.7 lbs.
(3.2 N)
C-4
<PAGE>
EXHIBIT 10(16)(d)
Exhibit D, Page 1 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
ACCEPTANCE TESTING STANDARDS
BPA shall meet or exceed the Acceptance Testing Standards set forth below. In
the event BPA's performance requirements for its communications system requires
BPA to exceed the standards and requirements specified in this Exhibit D, BPA
shall apply the higher standard.
ELI Network Span and Final Acceptance Requirements:
1.0 Design Criteria:
- -------------------
The number of cable splices at the time of original construction must be
designed to an average of 4 km between splices. Due to cable cuts, and cable
relocation, additional splices are allowed. The number of splices must be
closely monitored to insure attenuation and reflection tolerances are
maintained.
Construction:
- ------------
Cable must be constructed in accordance with sound commercial practices. The
National Electrical Code shall be followed in every case except where local
regulations are more stringent, in which case local regulations shall govern.
2.0 Typical Fiber Cable Information:
- -----------------------------------
Single mode fiber specifications may vary, depending on the fiber manufacturer.
Typical concatenated levels of 0.35 dB per km @ 1310nm and 0.25 per km @ 1550nm
are expected.
3.0 Span Requirements:
- ---------------------
Span documentation must be performed using the two following methods: OTDR
(optical time domain reflectometer) and insertion loss (stabilized light source
and power meter) measurement in each direction at 1550nm wavelength.
. Maximum total span loss must not exceed 35.0 dB at 1550nm.
----------
. Maximum dB/Km loss must not exceed 0.35 dB/Km at 1550nm.
-----
D-1
<PAGE>
Exhibit D, Page 2 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
ACCEPTANCE TESTING STANDARDS
. In no case shall a fiber show a point discontinuity greater than 0.1dB.
Discontinuities (known as steps, splices, or attenuation non-uniformities)
shall be measured with an optical time domain reflectometer (OTDR) to
determine the loss of the localized attenuation. The lease squares fit
method of measurement must be used to determine the magnitude of the loss
of a point discontinuity.
. Typical span scenarios 30.0 dB=120 Km x .25 dB/Km.
----
. Maximum fiber loss scenario 35.0 dB=100 Km x .35 dB/Km. (depends on
----------
regeneration huts).
. Maximum span dispersion = 2250 ps/mn/Km.
---------------
. Performance levels at the time of acceptance must be maintained at all times.
. Test data including OTDR hard copies or electronic data must be submitted to
Common System Engineering before Final Acceptance. ELI, at its discretion,
may choose to physically monitor any or all testing associated with Final
Acceptance of the Commercial Fiber.
In the event the measured span measured values exceeds the calculated values,
BPA will perform corrective maintenance as required to restore the Commercial
Fiber to the calculated values.
4.0 Splice Loss:
- ---------------
The splice loss will average 0.10dB. All splicing will be performed by the
proprietor pursuant to fibers leased agreement. Further, no individual splice
will exceed 0.50dB. Splices shall be measured using bi-directional methods to
average absolute splice loss. All fiber splicing must be fusion type.
--------------------------------------
5.0 Compliance:
- --------------
Customer, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of the Commercial Fiber. Test data including OTDR
hard copies or electronic data must be submitted to ELI for review. Customer
has the option to waive any specifications and/or requirements listed in the
technical specification criteria (limited to ELI receiving a hard copy of their
fiber only).
D-2
<PAGE>
Exhibit D, Page 3 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
ACCEPTANCE TESTING STANDARDS
6.0 Waivers:
- -----------
The proprietor must provide Fibers with attenuation of not greater than 0.35
loss per .km @ 1550nm and will not be required to perform corrective maintenance
under .25dB to reduce span attenuation.
7.0 Key Optical Performance Characteristics Required for Single-Mode Optical
- ----------------------------------------------------------------------------
Cables:
- ------
7.1 Attenuation Single Mode Non-Shifted:
- ---------------------------------------
. The attenuation must not exceed 0.30 dB/Km when measured at a wavelength of
1.55 microns (1550nm) using the two point measurement.
. The attenuation must not exceed 0.40 dB/Km when measured at a wavelength of
1.30 microns (1310nm) using the two point measurement.
7.2 Attenuation Single Mode Dispersion Shifted:
- ----------------------------------------------
. The attenuation must not exceed 0.25 dB/Km when measured at a wavelength of
1.55 microns (1550nm) using the two joint measurement.
7.3 Attenuation versus Wavelength Single-Mode and Dispersion Shifted:
- --------------------------------------------------------------------
. The attenuation for the wavelength region form 1525 nm to 1575 nm must not
exceed the attenuation at 1550 nm by more than 0.05 dB/Km.
7.4 Chromatic Dispersion Non-Dispersion Shifted (ps/nm-km):
- ----------------------------------------------------------
. For conventional single mode fibers, the zero dispersion wavelength must be
1301.5 to 1321.5nm. The maximum dispersion slope (SoMAX) must be no greater
than 0.092ps/(km-nm/2)/. The nominal zero dispersion wavelength must be
near 1310nm zero dispersion range. The dispersion between 1530 and 1570 nm
must be less than or equal to 18 ps/(nm km).
7.5 Cutoff Wavelength:
- ---------------------
. The cutoff wavelength of cabled fiber must be less than 1260 nm.
D-3
<PAGE>
Exhibit D, Page 4 of 4
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
ACCEPTANCE TESTING STANDARDS
7.6 Core Diameter:
- -----------------
. The core diameter must be typically 8.3+0.13.
-
7.7 Temperature:
- ---------------
. Operating Temperature Range -60 C to +85 C.
BPA will insure that the Cable and related appurtenances meet all of the above
optical performance characteristics operating systems power level.
D-4
<PAGE>
EXHIBIT 10(16)(e)
Exhibit E, page 1 of 39
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
DETAILED RESTORATION PLANS
FIBER OPTIC RESTORATION PLAN
BONNEVILLE POWER ADMINISTRATION &
ELECTRIC LIGHTWAVE, INC.
CONTENTS SECTION
General 1.0
Safety 2.0
Training 3.0
Fault Identification/Location 4.0
Emergency Call-out Procedure 5.0
Equipment and Materials 6.0
Response Time 7.0
Priority of Fiber Optic Cable Restoration 8.0
Restoration Procedures and Emergency Splicing 9.0
Final Repairs 10.0
Records/Documentation 11.0
Appendix 12.0
A: Emergency Contact List
B: Nonelectrical Worker Card Requirements
C: Emergency Tools, Equipment, and Materials List
D: Emergency Restoration Procedure
<PAGE>
Chapter 1.0
General
This plan specifies general guidelines and procedures for restoring damaged
fiber optic cable on Bonneville's transmission line right-of-way, between
Bonneville's Keller and Covington substations as quickly and safely as possible.
Timely restoration depends upon coordination and cooperation between Bonneville
and Electric Lightwave (ELI). Bonneville will use its best efforts in all
restoration activities concerning these facilities. These efforts will be
consistent with prudent utility practice, and will comply with existing contract
provisions between Bonneville and the Columbia Power Trades Council (CPTC). In
addition all applicable safety rules in the Bonneville Accident Prevention
Manual (APM) will be followed so as to not jeopardize the health and safety of
Bonneville employees, agents of Bonneville, ELI employees, agents of ELI, or the
general public.
Page 2
<PAGE>
Chapter 2.0
Safety
Protection of the general public and utility personnel shall be the first
consideration before starting any aspect of restoration. ELI employees, agents
and contractors who will be working on the fiber optic cable will be required to
follow all the rules in Bonneville's Accident Prevention Manual (APM). Due to
the possibility of electrical contact, it is essential that a minimum of two
Bonneville - qualified electrical workers, knowledgeable of the tasks and
hazards involved, be at the restoration site prior to commencing any activities
where workers could come in contact with a potential energized conductor or
fiber optic cable. The majority of cable chosen for this project is all
dielectric, self supporting (ADSS). Even though it is an all dielectric cable,
some conductivity may result from moisture on the cable or from contamination in
the surrounding air. As a precaution, it is recommended that the installed
cable be grounded as close to the work site as possible prior to any worker
contacting the cable.
The minimum approach distance (MAD), as described in the BPA APM, and grounding
requirements for fiber optic cable have not been established. Therefore, at
this time it is recommended that the minimum approach distance and grounding
requirements described in the APM for insulated overhead groundwire Rule M-1 be
followed for the fiber optic cable. The Bonneville Safety Office is presently
working on both grounding requirements and the minimum approach distance for
fiber optic cable. When this information is established, Bonneville will
schedule the necessary training sessions to update personnel.
Page 3
<PAGE>
Under no circumstances shall any member of an ELI field crew or an ELI
contractor approach downed transmission lines, cable, guy wires or structures,
climb or attempt to climb any structure or take any action which might result in
contact with or exposure to any part of Bonneville's electrical transmission
system prior to authorization by Bonneville's designated electrical worker in
charge of restoration. Bonneville's representative in charge will have the
authority to stop all work that involves the potential for health hazard or
safety concerns.
Page 4
<PAGE>
Chapter 3.0
Training
It is important that all personnel involved with troubleshooting and restoration
of fiber optic systems be thoroughly and properly trained. All Bonneville and
ELI representatives that will construct, install, repair, replace or otherwise
handle the cable or related materials and equipment shall be properly trained
and equipped to meet all current industry standards. If any restoration
activities will involve the potential to expose an employee to lasers, the
employees must first be trained in laser awareness.
All restoration technicians or representatives of ELI who will be involved with
any restoration activities involving the fiber optic cable on Bonneville's
transmissions line right-of-way must attend a power line safety orientation
presented by Bonneville. Attendees will receive appropriate instructions and
will be required to demonstrate a level of understanding necessary to safely
perform the work required. Part of the procedures will require employees or
representatives of ELI to obtain a "Contractor Nonelectric Worker Card". See
Appendix B.
The Bonneville Safety Office will, upon request answer any questions on subject
matter covered in the Accident Prevention Manual (APM). Make available or do
any training on the hazards associated with working in the proximity of high
voltage lines, facilities and right-of-ways. The Bonneville Safety Office may
be reached at any time through the Bonneville Dispatcher or during normal
business hours in Vancouver, Washington at (360) 418-2397.
Page 5
<PAGE>
Chapter 4.0
Fault Identification/Location
ELI is responsible for monitoring their fibers and determining the accurate
location of the fault within ten meters of the actual fault. To aid in fault
location, Bonneville will provide ELI with plan and profile maps with will
include a mapping system of the fiber optic cable indicating the length of the
cable in relationship to the Bonneville structure numbering sequence of the
transmission line. These maps will be available to both Bonneville and ELI. In
identifying the fault location ELI will identify the nearest structure by its
Bonneville designated number and identify how many feet from this structure and
in which direction from this structure the fault is located.
BPA will provide ELI with documentation to assist in fault location.
Page 6
<PAGE>
Chapter 5.0
Emergency Call-out Procedure
ELI is responsible for monitoring the ELI fiber optic cable, and upon knowledge
of a failure, will contact the Bonneville Dispatch Center. ELI will provide the
Bonneville Dispatch Center with time, location of the fault and any other
information that will help on the location and restoration efforts. The
Bonneville Dispatch Center will follow normal call-out procedures to assemble a
crew from the Transmission Line Maintenance (TLM) District closest to the site
of the suspected fault. If the BPA Dispatcher is unable to contact a minimum of
two qualified electrical workers, the Dispatcher will call for additional help
from the next closest TLM District and also will contact the Regional Manager or
Regional Field Services Specialist to develop a course of action. "As soon as
delay of maintenance personnel is determined to exceed the four hour arrival
time and it is determined that a full crew cannot respond as referenced in the
License Agreement on p. 15 (see 12(d), 1, line 6), the BPA dispatch Center will
notify ELI.
Bonneville will inform ELI in the event they will need assistance or that it
will be necessary for ELI to make the entire repair with minimal assistance
from Bonneville personnel. In the event ELI will be making the repair,
Bonneville will dispatch a minimum of two electrical workers to safety watch,
---------------------------------
take any necessary hold orders or clearances on the transmission lines, escort
ELI personnel onto the transmission line right-of-way, and lower the fiber optic
cable for repairs. BPA will reimburse ELI for all reasonable repair-related
costs upon submission of an invoice by ELI. The exact location may or may not
be available at the time ELI makes the initial call notifying Bonneville of the
fault, but as soon as it becomes available it must be relayed to the restoration
crew.
The Bonneville Dispatch Center will assist ELI and Bonneville personnel with
contacting each other to determine a course of action and locations where the
two companies can meet to access the fault location site. Depending upon the
location of the fault and other factors that may affect access to the fault
site, Bonneville
Page 7
<PAGE>
shall, at its discretion , determine the best place to meet ELI personnel. In
some cases, depending upon the situation at the time, Bonneville may direct ELI
personnel to wait for Bonneville personnel on public access roads and allow
Bonneville personnel to escort ELI to the fault site. In other instances it may
be determined by Bonneville that the Parties shall meet at the actual fault
site.
Both Bonneville and ELI's call-out list, as well as a list of designated meeting
points, can be found in Appendix A. The parties will meet periodically, as
needed by either party, to tour facilities and review the APM, contact lists,
meeting points, route information, and training requirements.
Page 8
<PAGE>
Chapter 6.0
Equipment and Materials
Bonneville will store and maintain all required tools, equipment and materials
for the emergency restoration of the fiber optic cable. All of the materials,
tools and equipment used to perform a restoration repair must meet current
industry standards at the time of the repair. It is essential that all tools
and equipment be kept in proper working condition and safe-guarded at each
District Headquarters. To insure that components will be available when needed
in the event of an emergency, all of the restoration materials will be kept in a
locked container that can be quickly and easily loaded into a vehicle in the
event of an emergency.
The Transmission Line Maintenance Districts will assemble a restoration kit that
contains sufficient tools, materials, and enough emergency restoration cable to
perform an emergency restoration repair to the longest span of fiber optic cable
within their districts. The tools and equipment that Bonneville assembles for
emergency restoration will be inventoried and reviewed frequently to insure
sufficient and proper materials are on hand and current with industry standards.
ELI, upon Bonneville's request for assistance, will have access to necessary
tools, equipment, and materials at designated restoration sites coordinated by
the BPA representative in charge of restoration. It may be necessary for BPA
and ELI personnel to jointly utilize materials, fiber restoration equipment, and
designated restoration sites.
Tools, materials, and equipment are listed in Appendix C.
Page 9
<PAGE>
Chapter 7.0
Response Time
Bonneville will begin restoration efforts immediately upon notification by ELI
of a failure. Once Bonneville has been notified by ELI of a fault or failure of
the cable, they have one hour to determine if they can assemble sufficient crew
members to perform restoration repairs. the line crew supervisor of the
district where the fault has occurred will decide if Bonneville will make the
actual repair or restoration. In the event that the Bonneville Dispatch Center
is unable to reach a line crew supervisor for a decision or sufficient crew
members to form a restoration crew, they then will call the Regional Manager for
a decision whether Bonneville or ELI will be making the repairs. The Bonneville
Dispatch Center will inform ELI's Network Operations Center (NOC) of the
decision. In the event that Bonneville decides that it is unable to make the
repairs or restoration they will still dispatch a minimum of two electrical
workers as outlined in Chapter 5.0 to assist ELI with access to the transmission
line and restoration efforts.
It is understood that both parties will make a best effort to repair and
complete the required restoration as soon as possible. It is also understood
that an assessment of the actual restoration time will not be known until the
circumstances of the failure are known.
Page 10
<PAGE>
Chapter 8.0
Priority of Fiber Optic Cable Restoration
In the event of a major failure to either the fiber optic cable and-or
Bonneville's transmission line, the following procedure will be implemented.
Bonneville's first obligation is to restore critical electric transmission
facilities followed by the restoration of fibers deemed critical to Bonneville.
Then repairs will be made to ELI's active fibers. When authorized by
Bonneville, ELI's portion of the cable may be repaired simultaneously by ELI
personnel while Bonneville crews are repairing Bonneville's transmission line or
its fibers, provided that ELI's activities do not interfere with Bonneville's
restoration efforts. ELI will determine the individual priority of their fibers
for restoration at the time of the outage. Priority of ELI fiber will be
determined by ELI's NOC supervisor on duty at the time of the outage, within 30
minutes of the reported fiber outage.
Page 11
<PAGE>
Chapter 9.0
Restoration Procedures
A Bonneville representative at the site will coordinate who performs what tasks
of the restoration effort. The Bonneville Dispatch Center will be the primary
contact for communications between the Bonneville restoration crew and any ELI
personnel or representatives. When restoration assistance has been requested
and if ELI technicians are unable to contact Bonneville's restoration crew, the
Bonneville Dispatch Center will coordinate communications. After the two work
groups meet, the Bonneville crew will escort ELI representatives onto the
transmission line right-of-way.
Upon locating the fault, the Bonneville crew supervisor will assess the
situation and determine whether or not a transmission line clearance or hold
order are necessary for the safety of the workers. After any necessary
clearances or hold orders have been issued, the Bonneville crew supervisor will
develop a course of action. If it is determined that ELI's help is needed, the
two utilities will form one or more common work groups. Restoration will
proceed according to the Restoration Procedure in Appendix D, unless otherwise
stated in this restoration plan.
To prevent vandalism or disturbance of any temporary cable, the cable will be
positioned in as secure location as practicable. Temporary fiber which is left
on the ground should only be left in locations which minimize its exposure.
These procedures may vary depending on the severity of the outage, the
conditions prevailing at the time of the outage and subsequent restoration
efforts. From time to time, Bonneville and ELI may amend existing procedures or
establish additional procedures for dealing with outages.
Page 12
<PAGE>
Emergency Splicing
The Bonneville crew supervisor will be in charge of restoration and will take
the lead in coordinating and organizing the restoration repair. After
Bonneville has insured that the work area is safe, the Bonneville workers will
lower the cable or splice boxes to the ground or locate the cable ends so that
restoration on the fiber optic cable can begin. All splicing of the fiber optic
cable will be performed or supervised by Bonneville. All work will be performed
following industry standards and all of Bonneville's safety rules.
Emergency splices will be mechanical , but it is recognized that fusion splices
may be needed to fully restore the cable capability. Fusion splices will be
performed as soon as possible after emergency restoration. All required splices
will be checked by BPA and ELI to the satisfaction of both parties.
Page 13
<PAGE>
Chapter 10.0
Final Repairs
Final repair to restore the cable to as close to its original condition as
possible will be performed or supervised by Bonneville personnel. Both
Bonneville and ELI will coordinate this effort according to system needs and
taking advantage of the most opportune time to make final repairs. After final
repairs have been completed ELI will perform any testing to insure integrity of
the splices and provide Bonneville with a copy of the results. BPA will remove
all temporary facilities.
Page 14
<PAGE>
Chapter 11.0
Records/Documentation
Bonneville will maintain, at each district maintenance headquarters, test
records for the fiber optic cable. This will include test data taken upon the
initial energization of the fiber and any testing done after the splicing.
Either Party that performs testing on the fiber optic cable shall make the
results available to the other upon request. Bonneville will provide ELI
current plan and profile drawings with the fiber optic cable identified and
locate in feet/meters in relationship to Bonneville structures. Each party must
also have documentation showing ownership changes.
Page 15
<PAGE>
Appendix A:
Emergency Contact List:
The Emergency Contact List will be reviewed annually by both Parties. Each
Party is responsible for informing the other Party of changes to the list.
The following list is an emergency contact, call-out list of ELI and Bonneville
personnel. All contacts from ELI regarding initial notification that a fault
-----------------------------------------------------------------
has occurred on the fiber optic cable will be made to the Bonneville Dispatch
- -----------------------------------------------------------------------------
Center. This facility is staffed 24 hours a day and is presently the contact
- ------
center for all of Bonneville's transmission line work.
ELI Escalation List:
Level 1 - Immediate contact:
ELI Network Operations Center
24 hour operations
800.622-4354
If response is inadequate after 30 minutes, go to LEVEL 2 Escalation:
NOC Supervisor
Brad Solomon
Office 800.622-4354
Pager 360.690-3050
If response is inadequate after 30 minutes, go to LEVEL 3 Escalation:
Director -NOC
Ahmad Shokri
Office 360.891-3765
Pager 800.759-7243 pin 555-2167
or
Page 16
<PAGE>
Director-Field Operations
Chuck Petersen
Office 503.417-8559
Pager 800.759-7243 pin 544-3741
If response is inadequate after 30 minutes, go to LEVEL 4:
Vice President-Operations
Ernie Yates
Office 360.604-5322
Pager 503.237.6379
BPA Contact List:
LEVEL 1 - Immediate contact
Bonneville Dispatch Center
5411 NE HWY 99
PO Box 491
Vancouver, WA 98666-0491
1.800.392.0861, if busy call 503.283.2501
LEVEL 2 - If no response to Level 1 contact, immediately call the appropriate
district near the fault as listed below.
Ross Maintenance District
Walt Banker, District Transmission Line Maintenance Foreman III
Don Swanson, Lineman Foreman I
5411 NE HWY 99
PO Box 491
Vancouver, WA 98666-0491
work 360.418.2590 or 360.418.2591
cell 360.921.3059
fax 360.418.2592
Page 17
<PAGE>
Chehalis Maintenance District
Darrel Underwood, District Transmission Line Maintenance Foreman III
Tom Grover, Lineman Foreman III
1140 State Highway 603
Chehalis, WA 98532
work 360.748.6575
cell 360.520.6575
fax 360.748.0991
Olympia Maintenance District
5240 Trosper St. SW
Olympia, WA 98512
Gary Westling, District Transmission Line Maintenance Foreman III
Charlie Pursiful, Lineman Foreman I
work 360.352.1155
Cell 360.951.2245
fax 360.943.4070
Covington Maintenance District
28401 Covington Way SE
Kent, WA 98041
Dave Norgaard, District Transmission Line Maintenance Foreman III
Dennis Hoxworth, Lineman Foreman I
work 206.631.9151
Cell 206.660.1539
fax 206.631.9155
Page 18
<PAGE>
Snohomish Maintenance District
914 Avenue D
PO Box 889
Snohomish, WA 98219-0889
Bob Sweet, District Transmission Line Maintenance Foreman III
Steve Scott, Lineman Foreman III
work 206.631.9151
Cell 206.660.1539
fax 206.631.9155
Olympia Maintenance Region
1835 Black Lake Bvd SW
Olympia, WA 98512-5623
Orion Albro, Regional Manager
work 360.753.9045
Cell 360951.2587
fax 360.753.9028
pager 206.907.4840
home 360.951.2587
Snohomish Maintenance Region
914 Avenue D
Dennis Sjoquist, Regional Manager
work 360.568.4962
Cell 206.660.1494
fax 360.563.0504
Home 206.485.5651
Meeting points: To be agreed upon at a later date.
Page 19
<PAGE>
Appendix B:
Contractor Nonelectrical Worker Card Requirements
The procedure and requirements for obtaining such a card are as follows:
1. ELI employees and their representatives shall receive the pamphlet entitled
Rules of conduct for Persons Entering Substations.
2. After studying the pamphlet these individuals will be given the Combined
Worker Examination and, if necessary, a switchyard orientation tour by a Chief
Substation Operator.
3. The Chief Substation Operator, or designee, will give the Combined Worker
Examinations and when all of the requirements have been met will sign the
application form and mail it to Substation Operations-TFDB in Vancouver, WA.
4. This card will be valid for 2 years. They are renewed at the beginning of
even numbered calendar years.
5. Bonneville will provide all of the necessary materials including a
Bonneville Accident Prevention Manual and location where the training will be
held. ELI will be responsible for any ELI, or representatives of ELI employee
expenses. Bonneville's System Operations will keep all of the necessary records
associated with this training, will notify ELI when employees and representative
are to renew their training, and return cards to the ELI Network Operation
Center for issue to appropriate personnel.
Page 20
<PAGE>
Appendix C:
Emergency Tools, Materials, and Equipment List
Restoration reels of fiber optic cable appropriate for the route (OPGW and ADSS)
Armor Rods appropriate for the restoration cables.
Deadends appropriate for the restoration cables
Fusion Splicing Sleeves
2 Optical fiber cleavers
Portable generator and work table
Temporary mechanical splices appropriate for SMF 28 fiber
Fiber cleaning kit
Fiber stripping tools
Splice box with splice trays
ADSS cable preparation tools
OPGW cable preparation tools
Waterproof, lockable box for storing equipment
Tent to erect over worksite
Supplemental lighting for worksite.
Page 21
<PAGE>
Appendix D:
Fiber Optic Cable
Emergency Restoration Procedure
Contents:
General 1
Safety Precautions 2
Fault Location 3
Cable Repair 4
Restoration Report 5
Records 6
1.0 General
1.01 This practice describes generally accepted procedures to isolate faults
and repair damaged fiber optic cable. It is generic, in that the practice can
be equally applied to aerial, buried or underground fiber optic cables. The
methods and instructions provided is this practice are intended as guidelines as
each system design will be influenced by local conditions, customer's existing
procedures and requirements.
1.02 It is imperative that all personnel involved in the trouble shooting and
restoration of fiber optic systems be thoroughly trained in basic fiber optic
safety before attempting any of the following procedures.
1.03 Planning and preparation for an emergency restoration is essential for an
effective restoration program.
1.04 There are three segments in restoring a fiber optic system. First, the
restoration plan must be implemented by notifying responsible personnel.
Second, the system fault must be identified and located. Third, the fault must
be rapidly and effectively repaired.
2.0 Safety Precautions
2.01 Safety is a primary concern during any restoration process. All telco and
utility company safety rules for personnel, vehicles, and work area protection
must be strictly adhered to. Prior to proceeding through this practice, read
and fully understand the Appendix A, Laser Awareness Information, attached to
the end of this practice. Both ADSS & OPGW should be considered conductive
since ADSS will become contaminated after it has been in use. Portable ground
cables must be installed prior to touching the ADSS, which could hold a voltage
induced from the power line. The portable grounds must be installed by BPA TLM
personnel.
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2.01 Work Area Precautions.
a. Protection of the general public and utility personnel shall be the first
consideration before starting any aspect of a fiber optic emergency restoration.
b. Fiber optic cable failures can occur in hazardous locations and during
abnormal weather conditions. Special precautions shall be taken when major
hazards such as; lightning, highway traffic, downed power lines, fire, etc. are
present. Refer to internal company practices for applicable safety rules and
precautions under these types of conditions.
2.02 Fiber Optic System Precautions.
a. Laser Safety glasses must be worn when working on fiber optic cable.
b. When working with fibers powered by a Class III laser source, disconnect the
terminal equipment laser source (if operative) before removing a fiber
connector, handling bare fiber, or handling fiber splices.
CAUTION: Never look into the end of a fiber without first-hand verification that
the laser is disconnected. If unable to disconnect or de-energize the laser, all
employees shall wear the appropriately rated laser safety glasses when
performing any work within the proximity of an uncoupled laser or connector.
c. Cleaved fibers are very sharp and can become imbedded in the skin or eyes
easily. Use tweezers to pick up cut or broken pieces of fiber and place them on
a piece of tape kept for that purpose. When splicing is completed, properly
dispose of the fiber to assure no personnel can come in contact. Good
housekeeping is very important. A dark mat is recommended as a work surface to
make finding the ends of the fiber easier.
d. Some tools used in fiber system restoration and installation are very sharp,
use caution during their use.
e. Read and follow safety warning labels on all chemicals used. If additional
information is needed, contact the chemical manufacturer or distributor for the
Material Safety Data Sheets (MSDS).
2.03 Due to the aforementioned considerations, only trained personnel should be
allowed to work on fiber optic cables and systems.
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3.0 FAULT LOCATION
It is recommended that the system laser be de-energized by disconnecting the
optical transmitter card each time an access or test jumper is connected or
disconnected. However, some terminal equipment must be completely shut down in
order to de-energize the laser. In such cases, the transmitter must be operating
while measuring the transmitter output power. Whenever laser radiation is
likely, it is important that the proper laser safety goggles be worn and all
safety rules adhered to. if an intermittent problem exists, the optical terminal
should be transferred and locked on the standby or main system not being tested.
Remember to unlock the same standby or main system when all tests are complete
and service is restored.
3.01 When a fiber optic transmission system fails, a series of alarms and
indicators are usually set off at the terminal equipment locations that signal
the need for repair. The majority of equipment now in service have indicators
that provide detailed diagnostics, indicating the type of failure such as lower
receiver power or transmitter failure.
When available, these indicators should be analyzed before proceeding with any
troubleshooting procedures. This can help immediately identify the fault point
and save time consuming steps in the restoration process. When this information
is limited or diagnostic attempts have failed, a step-by-step fault locating
sequence shoal be implemented. The flow chart outlining such a sequence,
Appendix B., is shown in the back of this section.
With the variety of fiber optic terminal equipment that may be deployed, all
with different degrees of alarms, it is important that the terminal equipment
technician have access to current troubleshooting manuals for each terminal
type.
3.02 The Network Management System remotes will send information to the
BPADispatch Center.
3.03 OTDR Cable System Test. The Network Management System will provide
information to locate the faulted line segment to the Dittmer Control System
Monitor, who will notify the Dispatcher. The Dispatcher will call out the
District SPC Engineer and notify the TLM foreman III. An NMS remote or an OTDR
must be used to locate and isolate cable system faults. Some of the typical
cable system faults are as follows:
Fault Cause
1. Defective Connector Dirt or physical damage
2. Defective access jumper Kinked or broken fiber
3. Localized attenuation Micro or macro bending of fiber
4. Distributed cable attenuation Fiber problem or excessive fiber
tension/strain
5. Excessive splice loss Splice degradation
6. Cut fiber Dig-in or accident
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3.04 Test Transmit Fiber Connector Assembly and Pigtail. The first OTDR
troubleshooting test should be made on the cable pigtail, connector, and end
splice of the transmit fiber. The steps are as follows:
a. Transfer and lock the fiber optic terminal to the main or standby system not
being tested. De-energize the laser on the system being tested.
b. Visually inspect the pigtail and fusion splice (normally located in the patch
panel) for any physical defects. Be sure the connector and barrel assembly is
clean and free of contaminates. It is important to follow proper handling
procedures for connectors and barrel assemblies. Refer to the manufacturer's
literature.
c. Clean the connector and barrel assembly. Then, reconnect the pigtail and
attempt to restore the system to service. If this does not correct the problem
proceed with the following test.
d. Set up the OTDR at the host location.
e. Transfer and lock the fiber optic terminal to the main or standby system not
being tested.
f. Disconnect the access jumper from the patch panel or transmitter.
g. Connect a pulse suppresser, or "dead zone box", 1000 meters or longer to the
OTDR. This pulse suppresser can be purchased commercially or made locally with a
spool of bare fiber. This allows the OTDR to display the first several hundred
meters of the system which would normally not be seen due to the initial back
reflection or OTDR dead zone.
h. Connect the other end of the pulse suppresser to the fiber being tested at
the optical patch panel.
I. Turn the OTDR on and optimize the display trace. Refer to the OTDR operating
manual for the proper procedures.
j. View the initial launch condition to assure accurate measurements. Note: A
good launch condition assures the OTDR laser has coupled sufficient energy into
the fiber under test that the full length of the fiber viewed is well above the
noise floor of the OTDR>
k. If the connector and the end splice attenuation is greater than 3 dB, re-
clean the connectors and re-examine the pigtail for damage.
l. After cleaning, reconnect and retest the fiber.
m. If the attenuation is still greater than 3 dB, the pigtail should be replaced
and spliced again.
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3.05 Test Transmit Fiber Cable Plant With OTDR. Measuring receive and transmit
power levels can usually isolate access jumper and terminal equipment problems.
However, if the fault is located elsewhere within the cable system, an OTDR must
be used to locate and isolate the problem. The second OTDR test is used to
diagnose the entire cable route on the transmit fiber.
a. Change the distance scale on the OTDR until the entire cable route is
displayed. This will probably require the pulse width of the OTDR to be
increased to a long pulse. If the span length is very long (greater then 35
krn), some older OTDRs may not have an adequate range to test the cable system
end-to-end. If this is the case, the cable will have to be tested from both
ends. The long pulse suppresser can be removed and replaced by short jumper to
provide some additional range.
b. Compare the OTDR signature traces with the original cable acceptance
records.
c. If a fault is identified, locate its position by following the procedure for
OTDR cable fault location. Be sure to subtract the length of the access jumper
from the measured distance and allow for the cable length verses fiber length or
correction factor, see paragraph 3.10.
d. If a catastrophic outage has occurred and a fault is not found on the
transmit fiber, repeat the procedures list above in a, b, and c on the redundant
system transmit fiber.
3.06 Test Receive Fiber Connector Assembly and Pigtail. If no fault can be
found on the transmit fiber or the redundant system transmit fiber, repeat the
procedures listed above in 3.08 a, b, c, and d on the receive fiber. However,
there are two important changes when making OTDR test on the receive fibers:
1. The optical transmitter at the opposite end must be de-energized on the
receive fiber being tested. The OTDR will not operate properly and may be
damaged if the transmit laser is operating simultaneously on the opposite end.
2. If a connector barrel attenuator is present in the optical patch panel, it
may be necessary to remove and replace the attenuator with a "0" dB attenuator
barrel.
3.07 Test Receive Fiber Cable Plant With OTDR. In fault locating efforts,
determining the exact location of the fault is important. This can be
accomplished by using an as-built schematic of the cable route and the bare
fiber OTDR measurements. The schematic should have all original and maintenance
splices with their respective sheath distances and cable sequential meter/feet
markings recorded.
The accuracy of any distance measurement is a percentage of the actual distance
involved. Short distance measurements will be more accurate than those made
over long distances. The overall uncertainty in distance measurements can be
reduced by locating features relatively close to
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nearby system "landmarks" (such as known splice points) rather than making
absolute measurements from the OTDR location. Other factors that affect
distance measurements are the proper fiber refractive index, OTDR launch
conditions, and cursor positions. For example, on some fiber faults the glass
may have been shattered, causing a poor back reflection on the OTDR trace. This
condition makes it difficult to determine the exact fault location due to a lack
of a reflective end pulse. If a shattered end is encountered, it is recommended
that measurements be made from both ends in order to determine the actual length
of fiber damage. For comparison purposes, other fibers in the cable should be
tested when this condition exists.
After bare fiber distance measurements are made utilizing an OTDR, a calculation
must be made to determine the actual sheath distance to the fault point. Due to
the effects of the loose coiling of the optical fiber within the protective
buffer tube or tubes, the length of the optical fiber in a given section of
cable is greater than the length of the cable jacket itself. The correction
factor is normally not more than 2% on most fiber cables, and on some of the
newer single buffer fiber cables, the correction factor is less than 5%.
The correction factor is best determined by calibrating to a known cable sheath
length between two splice points and comparing it to the measured fiber length
between the same splice points. When this technique is used, most sources of
error resulting from the cable design and the OTDR margin of error are
compensated for. The equation for calculating the correction factor is as
follows:
Correction Factor = Cable Length/Fiber Length
Cable Length = Fiber Length X Correction Factor
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Figure 2 is an example of locating a fault using the correction factor:
(This figure illustrates the method to measure a fault)
Figure 2. Fault Locating Schematic
a. Using the cable schematic shown above, determine the sheath or cable
distance between splice number 2 and number 3 (4782 meters)
b. Utilizing the OTDR, measure the bare fiber distance to splice number 2
(11,612 meters). Measure the bare fiber distance to splice number 3 (16,467).
c. Calculate the bare fiber distance between splice number 2 and number 3
(16,467 - 11,612 = 4,855 meters).
d. Calculate the correction factor by utilizing this equation.
Correction factor = 4782/4855= 0.985
e. Utilizing the OTDR, measure the bare fiber distance to the fault (18,697
meters) and subtract the bare fiber distance to splice number 3 (16,467 meters).
18,697m - 16,467m = 2,230 meters
f. Calculate the sheath distance from splice number 3 to the fault using the
cable length equation.
Cable length (Y) = Bare fiber distance X Correction Factor
Cable length (Y) = 2230m X 0.985 = 2196 sheath meter.
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g. Add the cable length (y) to the cumulative sheath distance at splice number
3.
16,219m + 2196m = 18,415 sheath meters to patch panel
3.08 Once the sheath distance has been determined, pinpoint the location from
the records package and proceed to that location in the field. A final
determination of the fault location is usually confirmed by some physical
evidence of damage to the cable jacket at the indicated sheath distance.
Several techniques are useful in making the final determination.
a. If the cable is buried or in underground conduit, typically there will be
evidence of disturbed soil, i.e. excavation, new mail box or sign post, new
culvert or driveway. If the cable has a metallic shield or steel strength
member use a copper cable sheath fault locator with a transmitter at the nearest
splice point and the hand held detector to look for loss of metallic continuity.
Note: Due to the long reel lengths used in fiber optic systems, the grounds, at
the splice locations, on both sides of the suspected fault will have to be
removed for isolation. Otherwise the tone may bleed off before the suspected
fault point.
b. If the cable is aerial, typically there will be evidence of cable damage,
i.e. a downed structure, phase conductors, or a tree laying over the span. This
is not always the case. Sometimes it may be necessary to view the cable with a
pair of binoculars to look for sheath damage caused by projectiles or external
contact.
The aforementioned techniques will find the fault point most of the time.
Typically the OTDR will identify the fault location within several meters if the
records are accurate, so efforts should be focused within 20 meters of the OTDR
indicated fault point. After repairing the fault, the identified faults section
of the fiber system will have to be verified a second time to assure there are
not multiple faults in a given section.
4.0 Cable Repair
4.01 Repair of damaged fiber or fiber optic requires reliable splicing devices
and repair methods that can be utilized under a wide range of field conditions.
4.02 Mechanical Splicing. Mechanical splicing can be utilized for emergency
restoration because more personnel can be trained and equipped for a lower
investment than with fusion splicing. The more personnel that are trained and
equipped to respond to a system outage, the quicker the response time and the
less likely that the key restoration personnel will be unavailable. Other
variables that influence such a decision are that since the cost of a fusion
splicer is high, company will typically only have one to a given area. Should
the fusion splicer fail, there would not be a contingency plan to support
restoration. There are several high quality mechanical splicing
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systems. Recommendations of the type of system a specific company should use
are based on the utility's experience level and future network size.
4.03 Fusion Splicing. Fusion Splicing can also be used as a tool for emergency
restorations. Although more susceptible to operating conditions such as dust,
moisture, altitude, and extreme temperature variations, fusion splices yield low
loss splices that are mechanically strong and exhibit low reflectance. Another
factor that affects fusion splice quality is the quality of the fiber end
cleave. Studies have shown that the end cleave must be two degrees or less of
the cleave surface, in relation to being perpendicular to the fiber axis, to
yield a 0.2 dB splice loss. AFL recommends that if fusion splicing is utilized
that a second fiber cleaver to procured per tool kit as a backup.
4.04 Repair Methods. The type of fiber optic system outage, partial or
complete, will dictate the available time and the type of repair method used
when repairing a damaged fiber optic cable. The primary objective to any
emergency restoration program is restore service as quickly as possible.
Most fiber optic systems have redundancy in their electronics, this means that
the type of outages that typically require the most time are cable cuts or other
damage to the cable plant. The basic method for repairing a damaged fiber optic
cable is determined by the time constraints and how extensive is the system
outage.
4.05 Restoration Kit Method. The restoration kit method is the method used for
most cable cuts. The majority of cable cuts produce only localized damage that
extends 3 to 5 meters on each side of the cable damage area and causes a
complete system outage of the primary and protect fiber transmission system.
The restoration kit is made up of 300 feet of cable that is spooled on a quick
deployment reel and packaged in a carry case with all the necessary tools, as
seen in Figure 3. The advantage of the kit is that it enables restoration
personnel to visit the site of the cable fault without stopping first at the
shop or reel.
(graphic showing stored vs. ready for service position of restoration kit cable
spool. When stored, the spool is within the carry case, and when ready for
service, is raised out of the carry case.)
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Figure 3. Fiber Optic Restoration Kit
The purpose of the jump kit is to provide a lightweight portable means of
restoring continuity of the fiber cable without having to deploy large bulky
spare cable reels and locating organizer/closure systems with their associated
tools. After the fiber system is reestablished, a permanent replacement of the
damaged cable section with permanent closures and cable are initiated with no
concern for time restriction. After the permanent restoration is completed the
restoration kit is recharged with consumables that were utilized in the
restoration and relocated back with the rest of the restoration equipment.
A. Restoration Kit Operational steps (Full System outage):
1. Expose the damaged fiber optic cable by excavating if buried, or lowering
several spans to the ground if aerial, or accessing the nearest manhole if
underground. In direct buried situations, the he cable should be excavated 15
feet past both sides of the suspected damage area to allow for needed fiber and
free cable movement. Identify the proposed work areas where the splicing will
be accomplished.
2. Place the restoration kit at a reasonably flat working area at either of the
identified work area locations. Assure that the work area is safe from any
potential hazards such as power conductors, highway traffic etc. Open the kit,
remove the tool pouches, and place the deployment reel on the arbor shad that
has been secured in the bottom of the kit.
3. Take the free end of the cable with the closure/organizer attached and begin
to smoothly deploy the restoration jump cable to the other identified work area.
The cable will spool off the reel with very little pulling tension required. Do
not exceed 150 lbs. pulling tension. As the cable is payed out, assure to lay
cable out of work area to minimize any potential for jump cable damage by
vehicles or other heavy equipment.
4. The fiber optic system cable should be carefully cleaned and inspected to
identify the extent of the longitudinal damage. Mark the system cable at 3 to 5
meters on each side of the damage area with the vinyl tape provided. If the
system cable has evidence of excessive tension, such a accordion like marks on
the jacket the taping point may need to be extended greater than 5 meters past
the visible damage area.
5. Two splicers should now start the cable preparation of the damaged system
cable by cutting the cable at the tape markers and then stripping back 60 inches
of cable and buffer to expose the fiber. Be sure to leave a few inches of
buffer for binder identification purposes.
6. Select the appropriate size of grip block based on the cable diameter of the
damaged
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system cable. Install the grip block to the edge of where the system cable
outer jacket has been removed. Slide the grip block and cable into the slot and
on to the stud provided in the jump kit and secure with nut.
7. The two splicers are now ready to splice in concert each fiber staring with
the high priority fibers first. Strip the fiber length per the mechanical
splice manufacturers recommendation and complete the splicing procedure for the
first two fibers.
8. Once the splicing is complete on one pair of fibers, the splicer should-
contact the PSC District Engineer or Craftsman operating the terminal equipment
to test the fiber for continuity and verify minimum attenuation requirements are
met.
9. The corresponding fiber optic terminal should be reset and returned to
service with the protect side locked out. This procedure should continue until
all primary fibers are restored and traffic is being carried. The protect
system fibers should then be restored using the same procedures.
10. When all restoration splicing has been completed and tested for continuity
and attenuation levels, the restoration closure should be closed on each end.
The restoration closure and cable should be located in a safe and secure
location until the permanent cable repair.
B. Restoration Kit Operational Steps (Partial System Outage):
1. At either terminal end of the fiber optic system, lock out the non-working
side of the systems so the system will not attempt a transfer if the working
systems is slightly disturbed during the restoration process.
2. Expose the damaged fiber optic cable by excavating if buried, or lowering
several spans to the ground if aerial, or accessing the nearest manhole if
underground. In direct buried situations, the cable should be excavated 15 feet
past both sides of the suspected damage area to allow for needed fiber and free
cable movement. Identify the proposed work areas where the splicing will be
accomplished.
3. Place the restoration jump kit at a reasonably flat working area at either
of the identified work area locations. Assure that the work area is safe from
any potential hazards such a power conductors, highway traffic etc. Open the
kit, remove the tool pouches, and place the deployment reel on the arbor shaft
that has been secured in the bottom of the kit.
4. Take the free end of the cable with the closure/organizer attached and begin
to smoothly deploy the restoration jump cable to the other identified work area.
The cable will spool off the reel with very little pulling tension required. Do
not exceed 150 lbs. pulling tension. As the cable is payed out, assure to lay
cable out of work area
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to minimize any potential for jump cable damage by vehicles or other heavy
equipment.
5. The fiber optic system cable should be carefully inspected to identify the
extent of the longitudinal damage. Mark the system cable at 3 to 5 meters on
each side of the damage area with the vinyl tape. If the system cable has
evidence of excessive tension, such accordion like marks on the jacket the
taping point may need to be extended greater than 5 meters past the visible
damage area.
6. Anchor the system cable, to a vehicle or ground stake etc., to remove any
tension that may remain on each side of the restoration segment. Select the
appropriate size of grip block based on the cable diameter of the damaged system
cable. Install the grip block to the edge of where the system cable outer
jacket will be removed as indicated by the vinyl tape.
7. The sheath and buffer tubes must be removed with extreme care, without
disturbing the fiber, at the marked tape locations at each end of the
restoration splice locations. Once the outer sheath has been removed and the
buffers tubes exposed, slide the grip block and cable into the slot at the
bottom of the organizer and on to the stud provided in the jump kit and secure
with nuts. Begin stripping buffers. On buffers that contain working and non-
working fibers, this will require slitting the buffers longitudinally between
two sheath ring cuts of the buffer tubers to expose the fiber.
8. The non-working fibers and spare fiber of the damaged system cable must
first be trimmed to their appropriate length at the designated patching splice
location and then spliced to the jump kit cable fibers until all broken and
spare fiber are routed through the patching cable. Test with OTDR or power
meter and light source to assure continuity and acceptable attenuation levels of
these restored fibers. If acceptable continue, if unacceptable resplice or
identify problem area and repair.
9. The original working system fibers must now be transferred one by one at the
optic terminal transfer switch to the new path through the restoration jump kit.
After this is complete, lock out the remaining system fibers, cut to length and
splice to jump kit fibers. Test with OTDR or power meter and light source to
assure continuity and acceptable attenuation levels. If acceptable, reset the
terminals to normal mode, if unacceptable resplice or identify the problem are
and repair.
4.06 Permanent Repair. Now that the system has been restored the Foreman III
and Regional Manager can coordinate with local construction forces to determine
the best method of a permanent repair. This can now be accomplished without the
pressure of trying to restoring service. After the permanent restoral is
complete, the records package identified in paragraph 6, shall be revised to
reflect any changes in the system. This revised package shall be redistributed
to the appropriate parties and the old records package properly disposed of.
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5.0 RESTORATION REPORT.
5.01 Assessing Effectiveness. Once the permanent repairs have been completed,
the Foreman III should complete a restoration report to be provided to the
Regional Manager. This report should contain information that identifies the
following:
. Description of the type system outage.
. Geographical area affected.
. Effects of customer base.
. Time sequence of complete restoration effort.
. Equipment and Training Problems.
. List of replacement consumable or needed new equipment.
. Overall effectiveness of team.
. Suggestions for improved readiness and effectiveness.
5.02 This report will provide important information about the outage and the
problems incurred during the restoration attempt. This information will be
analyzed to improve restoration strategies and techniques, improve engineering
and design of new fiber systems, and update records documentation identified in
paragraph 6.
6.0 RECORDS
6.01 General. Records are an integral part of the equipment required to
maintain and restore a fiber optic system. During an outage condition, having a
records package readily available eliminates unnecessary delays locating and
accumulation information required for the restoration process.
6.02 Coordination. Due to the number of departments involved in the design,
construction, turn-up, and maintenance of fiber optic systems, records are many
times lost or misplaced after the initial installation of the fiber optic
system. This can be a catastrophe during a system outage, because this
information is necessary for comparison against troubleshooting information.
6.03 Documentation. It is recommended that for each fiber optic system the
following information be included in a records documentation package.
a. Key Map. The key map is a geographical map showing the system route
in-relation to roads and highways. Its purpose is to provide general bearings
to quickly access key areas
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of the system as filed splice points and major road crossing. Sheath meter
marks should be indicated on the map for splice points, road crossing, river
crossings, etc.
b. Composite Schematic. The composite schematic is a straight line
schematic identifying the construction sequence of cable reels, meter
markings to major construction points such as splice points, and major road
crossings. The cable reel section length and a cumulative cable length
should be marked each of these points. Also, the cable and fiber type and
count shall be identified for each reel section.
c. As-Built Construction Sheets. The construction sheets identify the
actual apparatus units at each structure. Other information such as, the
structure type and dimensions, cumulative distance to each termination point
from the structure, any grounding or bonding detail, etc. These sheets are
typically the construction detail sheets that have been corrected to reflect
any changes during construction.
d. Circuit Diagram. The circuit diagram is a schematic that identifies the
actual fiber circuits, system number, working and protect fibers,
fiber/buffer colors, priority sequence during restoration and other
pertinent information such as transposed fibers.
e. Test Acceptance Sheets. The test acceptance sheets are the recorded
values of the transmitter output power, receiver input power, and measured
attenuation levels at the receiver. Other information to be included in the
test acceptance package are the Optical Time Domain Reflectometer (OTDR)
plots or photographs of each fiber and its terminated pigtail, shot in both
directions at both 1300nm and 1550nm. Other recommended documentation
include the bi-directional average of the loss of each splice, including
pigtail splices.
f. Manufacturer Provided Documentation. The manufacturer provided
documentation would include, cable data sheets of each cable reel,
documentation provided on the fiber, equipotential plots of the field
strength levels relative to different structure types, and sag and tension
charts provided for construction.
6.04 Index this record package and place it in a binder. The original copy
should be maintained by Transmission Engineering and a copy distributed to the
maintenance group. One copy of the records package should be placed at each
location where there is terminal equipment for the fiber optic system.
When changes in the system are required due to supplemental construction or
emergency restoration the records package should be revised and redistributed.
6.05 Annual System Check. Periodically, the system attenuation level shall be
verified against the turn-up attenuation measurement. If this attenuation level
has changed more than 3 dB, it is recommended that the cause be investigated and
corrective action taken.
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LASER AWARENESS INFORMATION
Increasing use of lasers within the Industry requires a need to become familiar
with potential laser safety hazards. Safety awareness can best be understood by
grouping lasers into classes. Users can then best determine which rules are
relevant to their particular situation (e.g., most OTDRs are classified as CLASS
I laser products, while terminal equipment are generally CLASS m.) Check with
the supplier or manufacturer's literature for correct classification before
implementing safety rules.
CLASS I LASERS:
Considered "exempt" lasers. By definition, a CLASS I is a very low powered
laser that would not be considered hazardous even if all of its output were
directed into the pupil of an eye, or focused on a 1 mm spot on the skin for 24
hours. The manufacturer is required to provide a warning label. Optical time
domain reflectometers, OTDRs, are typical CLASS I laser devices.
CLASS II LASERS:
Considered "low power" lasers. By definition, a Class II laser is a visible
laser that is incapable of causing eye injury within the duration of a blink (or
aversion response) of the eye. However, a physical visual hazard can exist when
a person overcomes this natural aversion response to bright light and stares
directly into the laser beam. The manufacturer is required to provide both a
warning label and a light that indicates the laser is activated. Visible HeNe
lasers sources are typical CLASS II lasers.
The operating safety rules for Class II lasers are:
. At work locations, warn all persons of hazardous conditions by placing at
least two warning signs identifying the area as laser hazardous. See example
warning sign in Figure 1.
. Do not permit a person to stare at the laser source.
. Do not point the laser at a person's eyes.
CLASS III LASERS
Considered "Medium Power" lasers. By Definition, Class III laser usually
presents a potential for serious eye injury from intra-beam viewing. It does
not generally present diffuse reflection, skin (from momentary exposure), or
fire hazards. Therefore, the safety measures
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concentrate on eliminating the possibility of intra-beam viewing. The
manufacture is required to provide both a warning label and a light that
indicates the laser is activated. Optical transmitters in the terminal
equipment are typical Class III lasers.
The operating safety rules for Class III lasers are:
. At work locations, warn all person of hazardous conditions by placing at
least two warning signs identifying the area as laser hazardous. See example
warning sign in Figure 1.
. Permit only properly trained personnel to operate the laser. Do not leave
laser unattended in an unsecured area.
. Never aim a fiber optic laser beam at a person's eyes or skin.
. De-energize the laser when working on fiber system. If this is not possible,
use proper laser safety eyeware.
. Make certain that individuals do not look directly into a fiber or connector
with an optical viewer (loupe) until that system has been powered down and
verified with an optical power meter.
<PAGE>
Page 17 of 18
Basic Fiber Optic System Troubleshooting Flowchart
(in descending order of steps to be applied)
Measure Received Power is Acceptable:
* test optical patch panel access jumper
* if ok, diagnose rx and/or electronics
* if not ok, replace optical patch panel access jumper
Measure Transmitter Output Power is too low:
* measure received power
* if fault identified, replace optical patch panel access jumper
* if ok, diagnose tx and/or electronics
* calculate (tx-rx) db, if ok, stop, if too high, go to next step
Calculate (tx-rx) db
Test Connector at Tx with OTDR
* if fault identified, take corrective action
Diagnose Cable with OTDR at Tx
* if fault identified, take corrective action
Test Connector at Rx with OTDR
* if fault identified, take corrective action
Diagnose Cable with OTDR at Rx
* if fault identified, take corrective action
<PAGE>
Page 18 of 18
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
EXHIBIT 10(16)(f)
Exhibit F, Page 1 of 2
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
TERMINAL EQUIPMENT REQUIREMENTS
GENERAL
ELI agrees to Lucent Technologies SONET terminal equipment and turnkey
installation for a collapsed ring system for 9 sites. Procurement of this SONET
system shall be in accordance with the specifications of the BPA/Harris-
Farinon/Lucent 10-year indefinite quantity contract no. 95AM50206.
EQUIPMENT
The equipment shall be Lucent Technologies DDM-2000 OC-3 (equipped with OC-12
optics) as specified below.
DESCRIPTION QTY
Shelf Assembly 16 ea.
Heat Baffle 16 ea.
Timing Generator 32 ea.
OC-12 OLIU (1310nm) 16 ea.
OC-12 OLIU (1550nm)* 16 ea.
SYSCTRL 16 ea.
OHCTRL 16 ea.
MXRVO BBG2 32 ea.
DS1 Card BBFIB 32 ea.
Retainer Card 177B 64 ea.
OC-3 Software 16 ea.
Fiber Jumpers/Cables 16 lot
9' x 23" Equipment Rack 9 ea. (actual rack heights to be determined later)
Fuse and Alarm Panel 9 ea.
DS1 Jackfield Assy. 9 ea.
Service Chan/Orderwire 9 ea.
DVA Remote Alarm 9 ea.
Fiber Termination Panel 9 ea.
DDM-2000 Manuals 9 set
DDM-2000 Schematics 9 set
Factory setup & test 1 job
In addition, the following spares are required:
DESCRIPTION QTY
OC-12 OLIU (1310nm) 1 ea.
OC-12 OLIU (1550nm)* 1 ea.
SYSCTRL 1 ea. (with software loaded)
OHCTRL 1 ea. (with software loaded)
OC-3 Software 1 ea. (set of diskettes)
Fiber Jumpers/Cables 4 lot
Service Chan/Orderwire 1 ea. (Premisys IMACS 600 shelves & Harris-Farinon
DVSII's)
F-1
<PAGE>
Exhibit F, Page 2 of 2
Contract No. 98TX-10143
Electric Lightwave, Inc.
Effective on the Effective Date
TERMINAL EQUIPMENT REQUIREMENTS
DDM-2000 Manuals 2 set
DDM-2000 Schematics 2 set
* As of December 15, 1997 the 1550nm OC-12 OLIU for the OC-3 DDM-2000 shelf is
in development. BPA anticipates Lucent Technologies will have this module
commercially available by July 1998.
F-2
<PAGE>
EXHIBIT 10.17
Contract No. 97TX-10080
January 8, 1998
LICENSE AGREEMENT
executed by the
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
acting by and through the
BONNEVILLE POWER ADMINISTRATION
and
ELECTRIC LIGHTWAVE, INC.
Index to Sections
- --------------------------------------------------------------------------------
Section Page
1. Definitions........................................ 2
2. Term............................................... 6
3. Exhibits........................................... 7
4. Amendments......................................... 7
5. Milestone Schedule................................. 7
6. Ownership.......................................... 7
7. License............................................ 8
8. Performance Criteria............................... 8
9. ELI Capital Spending............................... 11
10. BPA Terminal Equipment............................. 11
11. Business Plan...................................... 11
12. Market Price Assessment............................ 12
13. Payment............................................ 13
14. Maintenance, Repair, and Restoration of the Cable.. 14
15. Regenerator Building(s)............................ 17
16. Rights and Obligations Concerning the Cable........ 18
17. Relocation of the Cable............................ 22
18. Representations and Warranties..................... 22
19. Audit Procedures................................... 25
20. Insurance.......................................... 26
21. Default............................................ 28
22. Termination........................................ 30
23. Indemnification; Waiver of Damages................. 31
23. Dispute Resolution................................. 32
25. General............................................ 34
Exhibit A (Route)
Exhibit B (Payment Specifications)
Exhibit C (Revenue Sharing Route)
Exhibit D (Fiber Specifications)
Exhibit E (Acceptance Testing Standards)
Exhibit F (Terminal Equipment Standards)
<PAGE>
This LICENSE AGREEMENT (Agreement), was executed January 8, 1998, by the
UNITED STATES OF AMERICA (Government), Department of Energy, acting by and
through the BONNEVILLE POWER ADMINISTRATION (BPA), and Electric Lightwave,
Incorporated (ELI), a corporation organized and existing under the laws of the
State of Delaware. Both BPA and ELI may be referred to herein individually as
"Party" and collectively as "Parties."
W I T N E S S E T H :
WHEREAS BPA owns the Cable and Cable accessories; and
WHEREAS BPA currently needs only 8 of the 72 fibers in the Cable for its
own operational use, which will give BPA fiber-optic cable capacity in excess of
that which is needed to operate its transmission communications along the Cable
Route; and
WHEREAS BPA desires to grant a license for a period of time to ELI
respecting the Commercial Fiber along the Cable Route under the terms and
conditions contained herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
obligations and agreements herein contained, the Parties hereby agree as
follows:
1. DEFINITIONS
The following terms, when used in this Agreement, shall have the meanings
set forth in this section:
(a) "BPA Capital Cost" means the direct and indirect costs BPA incurs
,using prudent electric utility practices, to develop and construct
the Cable. Direct costs include, but are not limited to, environment,
surveying and mapping, design, land, material, construction, and
labor. Such direct costs incurred up to 12 months after the Service
Ready Date shall be included in BPA Capital Cost. Indirect costs
(overheads) shall be included as part of BPA Capital Cost and applied
at a fixed rate of 45 percent to all direct costs. Interest costs,
implicit or otherwise, will be excluded. BPA shall use its best
efforts to manage the cost of development and construction of the
Cable to, or below, $* .
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
2
<PAGE>
(b) "BPA Facilities" means all BPA-owned and/or leased structures,
buildings, land, access roads, and equipment along the Cable Route.
(c) "BPA Fiber" means 8 dark optical fibers within the Cable designated
for BPA's exclusive use and control.
(d) "BPA Terminal Equipment" means that equipment set forth in Exhibit F.
(e) "Cable" means a BPA-owned cable, containing 72 optical fibers, single-
mode, nondispersion shifted, to be installed along the Cable Route.
(f) "Cable Accessories" means the equipment necessary for the attachment
of the Cable to the BPA Facilities, including splice boxes.
(g) "Cable Route" means the Cable path described in Exhibit A.
(h) "Cable Specifications" means the drawings and specifications regarding
the Cable hardware and materials incorporated into the construction
project.
(i) "Commercial Fiber" means the 64 dark optical fibers within the Cable
licensed to ELI under this License Agreement.
(j) "Dark Fiber Lease Value" means the sum of all dark fiber lease
payments received by ELI for Commercial Fiber.
(k) "Diverse Fibers" means 4 dark optical fibers within the Cable and
constituting a portion of the Commercial Fiber reserved for diverse
switching paths for a SONET ring in order to achieve optimum network
robustness and reliability.
(l) "ELI Transport Service(s)" means Transport Service(s) used by ELI in
the delivery of End-User Service(s).
3
<PAGE>
(m) "ELI Transport Service Value(s)" means the sum of the values for all
the ELI Transport Service(s) within the Commercial Fiber as described
in Exhibit B.
(n) "End-User" means the customer(s) of ELI.
(o) "End-User Service(s)" means services provided to the End-User, other
than Transport Service(s) and Other Transport Service(s).
(p) "End-User Transport Service Value(s)" means the sum of all payments
received by ELI from End-User(s) for Transport Service sales.
(q) "Fiber Specifications" means the performance attributes of the fiber
within the Cable as described in Exhibit D.
(r) "Gross Revenue Value(s) (GRV)" means the annual sum of ELI's Transport
Service Value(s) plus End-User Transport Service Value(s) plus Dark
Fiber Lease Value(s) plus Other Transport Service Value(s) provided
over the Revenue Sharing Route.
(s) "Interest Rate" means .05 percent per day (18.25 percent per annum) to
be compounded daily on the unpaid balance.
(t) "License" means the License granted to ELI in section
7(a).t"Originating and Terminating Markets" means the areas in and
around the cities along the Route, including Portland, Vancouver, The
Dalles, Madras, Redmond, and Bend.
(u) "Other Transport Service(s)" means services sold over the Commercial
Fiber at the Optical Carrier level (e.g., OC1, OC3, OC12, OC48).
(v) "Other Transport Service Value(s)" means the sum of all payments
received by ELI for Other Transport Services.
(w) "Performance Criteria" means those minimum Annual Gross Revenues
described in Section 8 and calculated in Exhibit B, page 2 of 2.
4
<PAGE>
(x) "Regenerator Building(s)" means the building(s) along the Cable Route,
owned and operated by ELI, that house the terminal and regenerator
equipment including any optronics or electronics required by ELI to
make use of the ELI Fibers. For the purpose of this Agreement, the
Regenerator Building(s) include conduit and fiber-optic cable from the
Regenerator Building(s) up to the nearest fiber-optic splice box on
the Cable Route or the nearest substation fence, at BPA's discretion.
(y) "Revenue Sharing Route" means the cable path described in Exhibit C.
(z) "Route" means the Cable path as described in Exhibit A.
(aa) "Service Ready" means the time when the Commercial Fiber is fully
installed and meets ELI's Acceptance Testing Standards, which
acceptance will be provided by ELI to BPA in writing. ELI's
Acceptance Testing Standards are set forth in Exhibit E.
(bb) "Transport Services" means individual DS0, DS1, and DS3 circuits used
or sold as bulk transport by ELI for long-haul traffic on the
Commercial Fiber as described below:
(1) "Digital Signal Zero (DS0)" means: one (1) 64-Kilobits-per-
second (Kbps) or 56-Kbps digital, pulse-coded modulated voice
channel;
(2) "Digital Signal One (DS1)" means: (A) in the U.S. Digital
hierarchy, digital signal level 1 indicates a 1.544 megabytes per
second (Mbps) data signal; and (B) also referred to as a T1 in
the U.S. time-division multiplexing hierarchy, digital signal
level 1 (DS1) indicates the first level of multiplexing. It is
defined as 24 DS0 (64 Kbps) circuits multiplexed into a 1.544
Mbps data signal; and
(3) "Digital Signal Level Three (DS3)" means: (A) In the U.S.
Digital hierarchy, digital signal level 3 indicates a 44.736 Mbps
data signal, often delivered to customers via optical fiber
systems, also referred to as T3; (B) in the U.S. time-division
multiplexing hierarchy, digital signal level 3 (DS3) indicates
the third level of multiplexing. It is defined as 28 DS1 (1.544
Mbps) signals, with added overhead bits, multiplexed onto a
44.736 Mpbs data signal; and (C) high capacity access service
that provides capacity equivalent to 28 DS1 circuits, 7 DS2
5
<PAGE>
channels, or 672 voice grade special access circuits; also used
generically to describe digital data transmission services
operating over fiber-optic lines at transmission speed of 44.6
Mbps.
2. TERM
(a) This Agreement shall be effective at 2400 hours on the date of
execution by both Parties (Effective Date) and shall continue in
effect for a period of 20 years after Service Ready Date, unless
sooner terminated or extended in accordance with the terms of this
Agreement.
(b) The term of this Agreement shall be extended only by written mutual
agreement of the Parties. The Agreement may be extended for one
separate 10-year renewal period. Either Party shall notify the other
Party at least 90 days prior to the expiration date of this Agreement
if the notifying Party seeks to renew the Agreement. The Parties
shall have 45 calendar days from the notifying Party's notice in which
to reach written agreement on renewal. The terms and conditions of
this Agreement applicable to the initial 20-year period may be
modified or renegotiated before each renewal period(s) upon written
mutual agreement of the Parties.
3. EXHIBITS
Exhibit A (Cable Route); Exhibit B (Payment Specifications); Exhibit C
(Revenue Sharing Route); Exhibit D (Fiber Specifications); Exhibit E
(Acceptance Testing Standards); and Exhibit F (Terminal Equipment
Standards) are incorporated into and made a part of this Agreement.
4. AMENDMENTS
This Agreement may be amended upon the written agreement of both Parties.
5. MILESTONE SCHEDULE
Service Ready Date of the Cable is currently scheduled for December 31,
1998. On or before June 1, 1998, BPA and ELI agree to complete an
evaluation of the milestones required to complete
6
<PAGE>
construction and Service Ready Date of the Cable. The evaluation shall be
used by the Parties to determine whether milestones will be revised to
reflect an earlier, or later, Service Ready Date.
6. OWNERSHIP
(a) Each Party shall own its own electronic and optronic devices necessary
to transmit signals over the fibers each Party controls as specified
in this Agreement.
(b) Except as otherwise provided in section 6(c) below, BPA shall own all
structures, improvements, and components obtained for or installed on
BPA Facilities along the Cable Route in accordance with this
Agreement.
(c) Title and ownership of the Cable Accessories, Regenerator Building(s),
and related equipment within the Regenerator Building(s) furnished by
ELI shall be and remain the property of ELI, except that BPA shall
gain title to and ownership of such equipment that cannot be removed
without damage to BPA Facilities at termination of this Agreement.
7. LICENSE
(a) EXCLUSIVITY
BPA hereby grants to ELI an exclusive License to use the Commercial
Fiber and to manage the Diverse Fibers. During the term of this
Agreement, Tthis right shall remain exclusive with respect to 4
optical fibers of the Commercial Fiber, and exclusive with respect to
the remaining 60 optical fibers of the Commercial Fiber as long as ELI
meets or exceeds the Performance Criteria described in section 8.
(b) ACCESS TO THE CABLE ROUTE
ELI shall have escorted access to the Cable Route for the purposes of
performing its rights and obligations under this Agreement. BPA shall
have the right to use the Cable Route, BPA Fiber, or any portion
thereof, together with the right to enter upon the Cable Route, or any
portion thereof, at all times, for any and all purposes. BPA shall
retain the right to
7
<PAGE>
use the BPA Fiber for its own internal electric system network and
utility business purposes.
(c) NO PROPERTY INTEREST
This Agreement shall not confer upon ELI any ownership or possessory
interest in the Cable Route or other property owned by BPA except as
provided herein, and ELI agrees that it shall never make any claim of
such interest based upon this Agreement.
8. PERFORMANCE CRITERIA
(a) MINIMUM ANNUAL GROSS REVENUE PERFORMANCE REQUIREMENTS
ELI shall maintain sales at a minimum annual GRV equal to or greater
than 50 percent of the annual revenues described in ELI's revenue
forecast (Table A). The Annual GRV shall equal the sum of the monthly
GRVs over a given 12-month period. Unless otherwise agreed to by the
Parties, the first 12-month period (Year 1) shall commence 30 calendar
days following the Service Ready Date.
In the event that the Annual GRV is below the minimum described
herein, BPA may invoke its rights under subsection (b)(1) below
regarding the exclusivity of the Commercial Fiber.
(b) BPA RIGHTS
(1) BPA shall have the right to make a performance audit within 60
days of the conclusion of each annual period. If BPA determines
that ELI has failed to meet the annual Performance Criteria, BPA
shall give written notice of such failure to ELI. ELI shall have
10 working days after receipt of written notice from BPA in which
to review the results of BPA's audit and provide any new
information or data that might alter BPA's audit conclusions. If
at the end of such 10-day period, BPA determines that the
Performance Criteria have not been met, BPA, at its discretion,
may determine the License to be nonexclusive and BPA shall have
the right to use any unused portion 60 optical fibers of the
Commercial Fiber for any purpose. Nothing
8
<PAGE>
contained in this paragraph shall prevent either Party from
seeking a resolution of any dispute hereunder pursuant to the
provisions of Section 23 of this Agreement.
(2) In the event ELI's License becomes nonexclusive, ELI shall
cooperate with BPA to allow co-location of other users of the
Commercial Fiber in ELI's Regenerator Buildings, based on
available space. The Parties shall agree to the amount of
reasonable compensation to be charged to the co-locating users.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
TABLE A ($000)
- -----------------------------------------------------------------------------------------------------
YEAR* REVENUE FORECAST* PERFORMANCE CRITERIA*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
</TABLE>
(c) ELI RIGHTS
In the event ELI's License is determined to be nonexclusive under
the provisions of this Section 8, this Agreement shall not
terminate, but shall continue in force and effect. ELI shall have
the right, subject to the terms of Agreement, including, without
limitation, the payments described in Section 12, to continue its
use of the Commercial Fibers then being used by ELI to provide
End-User Services, Other Transport Services, and Transport
Services. In addition, to the extent BPA has unused dark fiber
capacity along the Cable Route, ELI shall have the right to lease
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
9
<PAGE>
such additional dark fiber capacity on the same terms offered by
BPA to other carriers.
9. ELI CAPITAL SPENDING
ELI shall make capital investments to provision the Commercial Fiber with
electronics, optronics, buildings, other infrastructure, and fiber
connectivity with Local Exchange Carrier networks and Inter-Exchange
Carrier networks, at a sufficient level to meet the Revenue Forecast listed
in Table A of section 8.
10. BPA TERMINAL EQUIPMENT
ELI shall purchase and provide for the installation and testing of BPA
SONET Terminal Equipment at 14 sites along the Cable Route. Upon BPA's
acceptance of the Terminal Equipment, title shall transfer to BPA, no later
than 180 days following the Service Ready Date.
The Terminal Equipment to be provided to BPA is identified in Exhibit F.
BPA will notify ELI of the 14 sites upon which to install and test the
Terminal Equipment. The amount to be paid by ELI for the Terminal
Equipment shall not exceed $*. ELI shall have the option of purchasing the
Terminal Equipment using BPA's existing contract number 95AM50206 "SONET
Microwave Radio and Fiber Optic Project."
11. BUSINESS PLAN
ELI shall develop a Business Plan that describes ELI's proposal for
marketing, managing, and utilizing the Cable. The Business Plan shall
include, but not be limited to, ELI's marketing strategy for
telecommunications service(s) along the Cable Route; customer service;
sales strategy for all Transport Services; accounting, billing and
collections standards; strategy for maintaining ELI fibers; and plan for
maintaining compliance with all regulatory requirements or relevant State
regulatory authorities and the Federal Communications Commission. Unless
otherwise agreed to by the Parties, ELI shall complete the Business Plan 6
months from the date of execution of this Agreement. Prior to finalization
of the Business Plan, BPA shall have the right to review ELI's Business
Plan for consistency with this Agreement; however, BPA shall not be
involved in ELI's
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
10
<PAGE>
decisions regarding the marketing, pricing, managing, and use of the
Commercial Fiber. ELI shall use its best efforts, consistent with
reasonable commercial practices, to maximize the GRV generated pursuant to
the License.
12. MARKET PRICE ASSESSMENT
(a) BPA shall procure, under separate agreement, the services of a market
assessment consultant(s) to assess market prices of bulk transport
services and provide reports to BPA.
(b) BPA and ELI agree to equally share in the costs of procuring the
services described above.
(c) The market assessment consultant(s) shall be responsible for acquiring
quotes, calculating an average, and delivering market assessment
reports to BPA at some planned interval, using the methodology agreed
to by BPA and ELI. BPA and ELI shall, within 120 calendar days from
execution of this Agreement, make their best effort to agree to the
methodology.
(d) BPA agrees to allow ELI to participate in the development of the
methodology for assessing market price(s) to be used under this
Agreement.
(e) ELI agrees to use the current data provided to BPA by the market
assessment consultant as a basis for setting ELI Transport Service
Value(s) for each ELI Transport Service, depending on when the ELI
Transport Service is placed in service by ELI. The ELI Transport
Service Value for any specific ELI Transport Service will remain in
effect for a period of 36 months, after which the ELI Transport
Service must be re-valued based on the current market assessment data.
(f) The agreed-to methodology may be changed by mutual agreement of BPA
and ELI.
13. PAYMENT
11
<PAGE>
(a) ELI agrees to pay BPA monthly, according to the Payment Specifications
described in Exhibit B. In addition to ELI's monthly payment to BPA,
ELI shall include a monthly report of all transactions. The report
will allow BPA to account for the GRV generated each month. Both
Parties shall agree on a reporting format to be used prior to ELI's
first payment to BPA.
(b) For the purposes of determining the monthly payment required under
this Agreement, any Transport Services along the Revenue Sharing Route
will be included in the accounting to determine GRV.
(c) Unless otherwise agreed to by the Parties, accounting of the GRV shall
begin 30 calendar days following the Service Ready Date. Payment
shall be received by BPA from ELI by the last day of each month for
GRV calculated on the previous calendar months' transactions (the Due
Date). Payments shall be sent to the address identified in (f) below.
(d) Payments to BPA for revenue generated by ELI from use of the
Commercial Fiber (or portion thereof) before the Service Ready Date
shall be based on the GRV of such services and calculated using the 20
percent and the 10 percent Payment Factors, as described in Exhibit B.
All payments, including payments based on Early Service Revenues,
shall be credited toward ELI's accumulative monthly payments to BPA to
determine Payment Factor.
(e) Early Service Revenues: Revenues generated by ELI, using the
Commercial Fibers, before Service Ready (as described in section 8),
shall be accumulated as a credit against the Performance Criteria in
Year 1.
(f) ELI shall pay by wire or ACH transfer, using procedures established by
BPA's Financial Services Group. ELI may pay its bill by mail,
provided that BPA receives full payment by the Due Date.
ELI shall include the following information in the description field
of each transfer: BPA contract number, Revenue PL6, and End Item Code.
12
<PAGE>
If ELI is paying by mail, payments shall be mailed to:
BPA Accounting Operation - CRO
P.O. Box 6040
Portland, OR 97228-6040
ELI shall include the following information in the documentation sent
with each check: BPA Contract Number, Revenue PL6, and End Item Code.
(g) Payments not received by the Due Date shall bear interest at the
Interest Rate from the Due Date until the date payment is received by
BPA.
(h) BPA may purchase from ELI any commercial telecommunications service
ELI generally offers business customers. The price charged by ELI for
any such service shall be the lowest price then charged by ELI to
similarly situated commercial customers for a similar service or group
of services, taking into account similar terms and volumes.
14. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE
(a) MAINTENANCE OF THE CABLE
(1) During the term of this Agreement, BPA shall be responsible for
the physical routine maintenance of the Cable and the Cable
Accessories. BPA shall maintain the Cable and the Cable Route at
all times in good working order and in a safe condition, in
conformity with the Cable Specifications and all applicable laws
and regulations.
(2) BPA shall pay all costs associated with the routine maintenance
of the Cable.
(3) ELI shall be responsible for maintenance of its property,
including the Regenerator Building(s) along the Cable Route.
(b) DETAILED RESTORATION PLAN
(1) Restoration activities will be integral to ensuring successful
implementation of this Agreement. Timely restoration is dependent
upon the timely coordination and implementation between BPA and
ELI.
13
<PAGE>
(2) The Parties agree to jointly, by December 31, 1998, develop a
Detailed Restoration Plan, which shall upon its completion become
part of this Agreement.
(3) The following provisions described in sections (c) and (d) below
shall form the principles and basis for the development of a
Detailed Restoration Plan.
14
<PAGE>
(c) RESTORATION PRIORITIES AND GENERAL REQUIREMENTS
(1) BPA's obligation to maintain and repair the Cable and any
activities incidental thereto shall be subordinate to, and shall
not conflict with, BPA's rightful use and operation of its
transmission facilities. In the event both BPA's transmission
facilities and the Cable require maintenance or repair, the
restoration of the Cable shall be at all times subordinate to the
restoration of BPA's transmission facilities, unless otherwise
agreed to in writing by BPA in advance. The restoration of BPA's
telecommunications system shall take priority over restoration
activities related to the Commercial Fiber. In the event that
ELI's License becomes nonexclusive pursuant to section 8, the
Commercial Fiber used by ELI shall take priority over restoration
activities related to any fibers used by any other users of the
Commercial Fiber.
(2) A BPA representative must be on-site during all repair and
restoration work to perform functions such as safety watch,
protection of BPA's transmission facilities, and the obtaining of
line clearances.
(3) The Party performing the repair and restoration shall use prudent
business methods to acquire the most cost-effective restoration
procedures and materials available given the Cable
Specifications, Fiber Specifications, and current industry
standards.
(4) Any and all BPA, ELI representatives, or other users of the
Commercial Fiber that construct, install, repair, replace, or
otherwise handle the Cable, Cable Accessories, Commercial Fiber,
BPA Fiber, or any related materials and equipment shall be
properly trained and equipped to perform work that meets all
current telecommunication industry standards. BPA shall require
all employees or agents of ELI or any other users of the
Commercial Fiber who work near BPA's transmission facilities to
demonstrate that they have been properly trained and equipped to
perform the work. The Parties shall agree in advance what
constitutes proper training and reasonable costs. The costs of
agreed-upon training of ELI employees, agents of ELI, or other
users of the Commercial Fiber shall be borne by ELI.
15
<PAGE>
(5) A BPA representative shall have the authority to stop any work
activities or equipment functions for reasons that he or she
determines in good faith to involve potential health hazards,
safety concerns, and potential disruption to BPA's operating
system. BPA will make reasonable efforts to coordinate with ELI
in case of such events.
(d) RESTORATION OF THE CABLE
(1) Except as provided in section 13(c)(1), BPA shall immediately,
upon notification from ELI of interruption in service, failure,
disrepair, impairment, or other need for repair or restoration of
the Commercial Fiber, begin to mobilize BPA crews and make its
best effort to achieve such necessary repair or restoration,
including making its best effort to have maintenance personnel at
the affected site within 4 hours after receipt of such notice,
PROVIDED, HOWEVER, that in the event any of ELI's rights are
interrupted pursuant to section 23(a), repairs and restoration
shall be made as expeditiously as possible. ELI recognizes that
the 4-hour response time represents optimal conditions, and may
be impossible to achieve when responding to certain remote
locations. Actual response times will be influenced by factors
such as the terrain, weather conditions present at the time the
request is made, and the actual mileage from BPA's dispatch
station to the fault site.
(2) For purposes of this section, best efforts means activities and
performance consistent with prudent utility practice, existing
contract provisions for BPA's hourly employees ("Collective
Agreement between BPA and Columbia Power Trades Council"), and
response times that do not jeopardize the health and safety of
BPA employees or agents or ELI employees or agents.
(3) The Detailed Restoration Plan shall set forth the roles and
responsibilities of the respective Parties, and shall address
issues regarding logistical considerations, response interval
factors, communication between the Parties, sequential activity
requirements, and other related items that would impact response
time and restoration intervals. The aforementioned issues will
be taken into consideration in the determination of whether BPA
has used its best efforts in such restoration or repair
activities. The Detailed Restoration Plan will also set forth
financial
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penalties, if any, to be paid to ELI by BPA for failure to use
its best efforts on any repair or restoration, including the
mobilization effort as set forth above.
15. REGENERATOR BUILDING(S)
(a) ELI shall have sole responsibility for the expense and acquisition of
any electric power and/or property necessary for its equipment along
the Cable Route. If space is available at BPA substations, such space
shall be provided to ELI at BPA's "bare land" lease rate under a
separate agreement.
(b) ELI shall provide and own, except as provided in section 6, Cable
Accessories, splice boxes, and other components necessary for the
operation of the Commercial Fiber.
(c) ELI shall have sole responsibility for the physical maintenance and
environmental compliance associated with the Regenerator Building(s)
and the grounds underneath and around the Regenerator Building(s).
16. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE
(a) GENERAL
In the event that ELI requires services from BPA (other than Transport
Service(s)) along the Cable Route, BPA and ELI shall agree in writing
on how those transactions shall be valued.
ELI shall not use Commercial Fiber for commercial activities not
accounted for in this Agreement.
ELI agrees to utilize the Commercial Fiber for all ELI capacity needs,
existing or arising along the Cable Route and Revenue Sharing Route,
except for diversity needs, and subject to ELI's existing contractual
obligations. ELI shall use its best efforts to transition as quickly
as possible from existing contractual obligations in satisfying the
requirements of the preceding sentence.
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(b) PERMITS
BPA shall acquire all necessary regulatory or governmental permits and
approvals required for construction of the Cable, and ELI shall, at
its cost, cooperate and provide BPA with such information as BPA may
reasonably request from ELI in connection with such permits and
approvals. ELI shall acquire all necessary regulatory or governmental
permits and approvals necessary for ELI's use of the Commercial Fiber
for telecommunications services, including Transport Service(s) and
Dark Fiber Leases, and any permits and/or approvals that may be
required for the Regenerator Building(s). ELI shall not rely upon BPA
to acquire from any other Federal agency any necessary regulatory or
governmental permits and approvals required by ELI.
When feasible, BPA shall, at its cost, cooperate and provide ELI with
such information as ELI may reasonably request from BPA in connection
with acquiring permits, easements, or additional rights-of-way for the
Regenerator Building(s); provided that ELI indemnifies and holds
harmless BPA from any future liability resulting from such actions.
(c) TAXES, MECHANIC'S LIENS, AND ENCUMBRANCES
ELI shall pay its own income taxes, as well as all franchise fees and
other fees and taxes resulting from ELI's License or use of the
Commercial Fiber. ELI shall keep the Cable Route free and clear from
all liens and encumbrances resulting from ELI's use of the Commercial
Fiber. If ELI does not pay the foregoing taxes and fees when such
become due, and such nonpayment results in the imposition of a lien
on, or encumbrance of, the Cable Route, then BPA shall have the right,
but not the obligation, to pay all amounts due and discharge such lien
or encumbrance, upon 30 calendar days' prior written notice to ELI. In
the event BPA causes such liens or encumbrances to be discharged, ELI
shall reimburse BPA upon demand together with interest thereon at the
Interest Rate, accruing from the date that BPA makes payment
discharging such liens or encumbrances until the date BPA receives
full reimbursement from ELI. ELI shall have the absolute right to
dispute or challenge any tax or fee assessed on its use of the
Commercial Fiber.
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(d) ACCESS ROADS
ELI may use BPA's access roads to access the Regenerator Building(s),
provided that heavy vehicles or other equipment being used on the
access road will not at any time impair the use of the access road by
BPA. Access to the roads shall be limited to the times and frequency
required for maintenance and operation of the Regenerator Building(s)
and equipment, and any repair and restoration of the Cable pursuant to
section 13. ELI shall, at ELI's expense, repair any damage to the
access roads caused as a result of ELI use of the access roads. ELI
shall acquire access easements to the Regenerator Building(s) where
BPA access roads are not available.
(e) ENVIRONMENTAL COMPLIANCE ACTIVITIES
(1) BPA shall be responsible for compliance with the National
Environmental Policy Act (NEPA) and shall acquire all necessary
permits associated with the project operations, maintenance, and
construction of the Cable. ELI shall, at its expense, cooperate
and provide BPA with such information as it may reasonably
request in connection with such compliance and permits. The
project activities will be limited to construction and operation
of cable, hardware, Regenerator Building(s), access roads, and
distribution lines if needed for Regenerator Building(s). If any
mitigation measures are required along the Cable Route as part of
the NEPA compliance activities, these measures will be performed
by BPA at the sole cost of BPA. Contacts with the local
landowners will be performed by BPA-appointed representatives.
Any landowner compensation required as part of the NEPA and
project activities will be made by BPA. All of the compliance and
permitting activities undertaken by BPA pursuant to this
paragraph (e) shall be at the cost and expense of BPA.
(2) BPA and ELI agree neither they nor anyone acting on their behalf
will bring, keep, or use Hazardous Materials at or on the Cable
Route (including regenerators) except for those necessary for use
in their respective businesses, in which case they are to be
handled, stored, used, and disposed of in compliance with
applicable laws, regulations, and ordinances.
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(3) BPA agrees to indemnify and hold ELI harmless from any and all
claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous
Materials at or on the Cable Route (including regenerators) if
BPA or its agent, contractor, employees, or invitees is
responsible for the introduction of the Hazardous Materials. This
indemnity shall specifically include, without limitation, any and
all costs due to Hazardous Materials that flow, diffuse, migrate,
or percolate into, onto or under the property, or from the
property to neighboring property or groundwater after the
Agreement commences; however, it shall not include the cost of
repairing ELI's equipment.
(4) ELI agrees to indemnify and hold BPA harmless from any and all
claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous
Materials at or on the Cable Route (including regenerators) if
ELI or its agent, contractor, employee, or invitees is
responsible for the introduction of the Hazardous Materials. This
indemnity shall specifically include, without limitation, any and
all costs due to Hazardous Materials that flow, diffuse, migrate,
or percolate into, onto or under the property, or from the
property to neighboring property or groundwater after the
Agreement commences; however, it shall not include the cost of
repairing BPA's equipment.
(5) 'Hazardous Materials', as used herein, shall mean all materials
that have been determined to be hazardous to health or the
environment by virtue of being: (A) a hazardous waste as defined
by the Resource Conservation and Recovery Act; (B) a hazardous
substance as defined in the Comprehensive Environment,
Compensation, and Liability Act; (C) a substance regulated by the
Toxic Substances Control Act; and (D) substances regulated by the
Federal Insecticide, Fungicide, and Rodenticide Act in accordance
with the applicability provisions of such Act. Reference to
specific statutes include amendments as they are made from time-
to-time, as well as the regulations promulgated thereunder.
17. RELOCATION OF THE CABLE
In the event the Cable requires relocation or replacement during the term
of this Agreement, the cost of such relocation or replacement shall be
allocated as follows:
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(a) If requested by ELI, ELI shall pay all such costs;
(b) If requested by BPA due to requirements necessary to provide
economical and reliable electric power, BPA shall pay all such costs;
(c) If the Cable must be relocated due to the order of any court,
governmental agency, or in conjunction with the operational needs of
BPA, BPA shall, in consultation with ELI, designate a new route for
the Cable. The costs associated with such required relocation that
are not paid by a third party shall be paid by BPA. ELI shall be
responsible for any relocation costs associated with ELI's Regenerator
Building(s), ELI-owned cable, and
ELI-owned terminal equipment.
18. REPRESENTATIONS AND WARRANTIES
(a) ELI
ELI represents and warrants to BPA as follows:
(1) ELI is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware. ELI is
duly qualified to do business and is in good standing in the
States of Oregon and Washington. ELI covenants that it will
maintain any necessary Federal, State, or local compliance needed
to continue to do business in the States of Oregon, Washington,
and California. ELI has full power and authority to execute,
deliver, and perform its obligations under this Agreement. The
execution of this Agreement by ELI has been duly and validly
authorized by all necessary action on the part of ELI. This
Agreement is a legal, valid, and binding obligation of ELI,
enforceable against ELI in accordance with its terms, subject,
however, to limitations imposed by bankruptcy laws of the United
States, insolvency, reorganization, arrangement, moratorium, or
other laws relating to or affecting the enforceability of
creditor's rights generally. The execution and delivery of this
Agreement by ELI and the performance of the terms, covenants, and
conditions contained herein will not violate the articles of the
corporation, or bylaws of ELI, or any applicable law or
regulation or any
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order of court or arbitrator, and will not conflict with and will
not constitute a material breach of, or default under, the
provisions of any contract by which ELI is bound. Except for
approvals and authorizations required to perform services on the
cable (such as franchise and building permit applications and
approvals), or as otherwise stated herein, no approval,
authorization, or other action by any governmental authority or
filing with any such authority which has not been obtained or
accomplished is required in connection with the execution,
delivery, and performance by ELI of this Agreement.
(2) Any assignment of the License of this Agreement to parties not
owned by Citizens Utilities shall be with the written consent of
BPA. Such consent shall not be unreasonably withheld.
(3) There are no known actions, suits, or proceedings pending or
overtly threatened against ELI before any court or administrative
agency that would materially impair ELI's performance of its
obligations under this Agreement.
(4) ELI has made no other representations or warranties outside of
this Agreement, and BPA acknowledges and agrees that it is not
relying on any other representations or warranties.
(b) BPA
BPA represents and warrants to ELI as follows:
(1) BPA is duly authorized to execute this Agreement. This Agreement
constitutes a legal and valid obligation of BPA, enforceable in
accordance with its terms to the full extent provided by law.
The enforceability of this Agreement is qualified as to:
Limitations imposed by bankruptcy laws of the United States,
insolvency, reorganization, arrangement, moratorium, or other
laws relating to or affecting the enforcement of creditor's
rights generally.
(2) Upon execution of this Agreement, BPA warrants that there are no
known conflicts with this Agreement and that this Agreement does
not constitute a material breach of or a default under any
constitutional provision, law, or
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administrative regulation; or violate any judgment, decree, or
other instrument, or any other contract related to the Cable
Route to which BPA is a Party or to which BPA or any of its
property or assets is subject.
(3) BPA has made no other representations or warranties outside of
this Agreement, and ELI acknowledges and agrees that it is not
relying on any other representations or warranties.
(c) NO BPA WARRANTY CONCERNING CABLE ROUTE
BPA makes no representation or warranty whatsoever concerning the
physical characteristics of the Cable Route. ELI acknowledges that
neither BPA nor any of BPA's officers, employees, representatives,
contractors, or subcontractors or agents have made any such
representation, nor is BPA or ELI entering into this Agreement in
reliance upon any such representation or warranty.
19. AUDIT PROCEDURES
(a) RECORDS
The Parties shall maintain true and correct sets of records in
connection with the performance of this Agreement. ELI shall retain
records of all transactions with supporting documentation related
thereto for a period of not less than 3 years after the term of a
specific transaction has expired and receipt of final payment by ELI
to BPA. The records in connection with each financial transaction
shall include an accounting of gross revenues, revenue shares, and
billing and collection. BPA shall retain all documents relative to BPA
Capital Cost for a period of at least 3 years after BPA incurs the
Capital Cost.
(b) AUDIT RIGHTS
Either Party shall have the right to perform an audit of each other's
books, records, and documents used in or relating to the costs to
construct, repair, and maintain the site and improvements under this
Agreement. Such audit may be performed within 36 months after the
date that either Party renders a bill or refund voucher. Each Party
shall be responsible for all expenses incurred by such Party in the
performance of an audit pursuant to this
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section. In the event that the Parties agree that the Auditing Party's
audit is determined to be correct, the Non-Auditing Party shall
reimburse the Auditing Party the agreed upon amount. In the event that
the Non-Auditing Party disagrees with the results of the other Party's
audit, and resolution is not reached between the Parties, the Parties
agree to resolve the dispute pursuant to section 23 of this Agreement.
(c) TECHNICAL AUDITS
BPA reserves the right to conduct technical audits, including physical
inspection of the number, type, and use of circuits, including
Transport Service(s) sold, used, and administered by ELI using the
Commercial Fiber.
20. INSURANCE
(a) GENERAL
At all times during the term of this Agreement and the License term,
ELI, at its own cost and expense, shall provide the insurance
specified by this section.
(b) EVIDENCE REQUIRED
On the Effective Date of this Agreement, ELI shall provide BPA with a
certificate of insurance (Certificate of Insurance) executed by an
authorized representative of the insurer(s) evidencing that ELI
insurance complies with this section. A copy of all required
endorsements shall be attached to and form a part of the Certificate
of Insurance.
(c) NOTICE OF CANCELLATION, REDUCTION, OR MATERIAL CHANGE IN COVERAGE
Policies shall be endorsed to provide BPA with 30 calendar days' prior
written notice of any cancellation, reduction, or material change in
coverage. If insurance coverage is due to be canceled, reduced, or
materially changed, ELI shall, within 30 calendar days before the
effective date of such cancellation, reduction, or material change,
obtain the coverage required under this section 19 and provide to BPA
documentation evidencing such coverage. ELI shall be responsible for
the costs of any damage, liability, or injury occurring during any
period of cancellation, reduction, or material change in insurance
coverage to the extent such costs are not otherwise covered by
insurance; provided that
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ELI shall not be responsible for the costs of any damage, liability,
or injury occurring during any such period if such damage, liability,
or injury was caused by BPA's gross negligence or willful misconduct.
(d) QUALIFYING INSURERS
Policies shall be issued by companies which hold a current
policyholders alphabetic and financial size category rating of not
less than A:X according to Best's Insurance Reports.
(e) INSURANCE REQUIRED
(1) LIABILITY
Commercial general liability insurance for bodily injury
(including death) and property damage shall provide limits of not
less than $10 million per occurrence.
(A) Coverage included shall be:
(i) premises and operations;
(ii) broad form property damage;
(iii) products and completed operations;
(iv) blanket contractual liability;
(v) personal injury liability;
(vi) cross-liability and severability of interests; and
(vii) independent contractors liability.
(B) Coverage shall be endorsed to include the following:
(i) inclusion of BPA, its officers, representatives,
agents, and employees as an additional insured as
respects services or operations in connection with
this Agreement; and
(ii) stipulation that the insurance is primary insurance
and that no insurance or self-insurance of BPA will
be called upon to contribute to a loss.
(2) BUSINESS AUTOMOBILE LIABILITY INSURANCE
Business Automobile Liability Insurance for bodily injury
(including death) and property damage shall provide total limits
of not less than $2 million combined single limit per occurrence
to all owned, non-owned, and hired vehicles.
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(3) WORKERS' COMPENSATION/EMPLOYER'S LIABILITY INSURANCE
Statutory Workers' Compensation and Employer's Liability
Insurance for not less than $1 million per occurrence shall apply
to employer's liability coverage for all employees engaged in
services or operations under this Agreement. The policy shall
include broad form all-States/ other States coverage.
(f) SPECIAL PROVISIONS
(1) The foregoing requirements as to the types and limits of
insurance coverage to be maintained by ELI, and any approval of
said insurance by BPA or ELI, are not intended to and shall not
in any manner limit or qualify the liabilities and obligations
otherwise assumed by ELI pursuant to this Agreement, including,
but not limited to, the provisions concerning indemnification.
(2) BPA acknowledges that some insurance requirements contained in
this section 19 may be fulfilled by a funded self-insurance
program of ELI or its parent company, Citizens Utilities.
However, this shall not in any way limit liabilities assumed by
ELI under this Agreement. Any self-insurance program must be
first approved in writing by BPA.
21. DEFAULT
(a) EVENTS OF DEFAULT
If either Party is in material breach or default (Defaulting Party),
under this Agreement, the other Party (Non-Defaulting Party) may
notify in writing the Defaulting Party that it is in material breach
or default, such notice to be effective upon its receipt by the
Defaulting Party. Material breach or default under this Agreement
shall include, but is not limited to the following:
(1) failure to make any payment when due hereunder; with the
exception of payments that become payable during periods of Force
Majeure as provided in section 24(a)(2).
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(2) failure to perform any obligations required to be observed or
performed hereunder;
(3) any representation or warranty made by one Party to the other
herein proving incorrect in any material respect as of the date
of the making thereof;
(4) ELI files a voluntary petition in bankruptcy, or a petition in
bankruptcy is filed against ELI and not dismissed within 60 days,
or ELI is adjudicated as bankrupt or insolvent, or files any
petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any present or future Federal, State, or
other statute, law, or regulation relating to bankruptcy,
insolvency, or other relief for debtors, or seeks or consents to
or acquiesces in the appointment of any trustee, receiver,
custodian, liquidator, or similar official of ELI, or makes any
general assignment for the benefit of creditors;
(5) material interference by a Party to the other Party's operations;
or
(6) failure to make restitution for any damage to a Party's real
property or equipment caused as a result of the negligent or
willful acts or omissions of the other Party when such damage
causes material interference to a Party's operations.
(b) REMEDIES
(1) DEFAULTING PARTY'S RIGHT TO CURE
The Defaulting Party shall have the right to cure any material
breach or default under this Agreement within 30 calendar days
after the receipt by the Defaulting Party of notification of such
material breach or default. In the case of any material breach or
default which may not reasonably be cured within 30 calendar
days, other than in the case of a breach of section 20(a)(1), the
Defaulting Party shall have the right to provide the Non-
Defaulting Party with a plan for the appropriate actions to cure
such material breach or default, which plan shall be subject to
the approval of the Non-Defaulting Party, which approval shall
not be unreasonably withheld. Within 30 calendar days of
submission of the plan, the Defaulting Party must commence
diligently pursuing appropriate action under the plan to cure the
material breach or default, and unless otherwise agreed to by the
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Parties, such material breach or default shall be cured within 90
calendar days of submission of the plan, failing which the Non-
Defaulting Party may forthwith and without further notice
terminate this Agreement.
(2) RIGHTS AND REMEDIES UPON TERMINATION
Any Party terminating this Agreement under section 21 shall have
the additional right to cure any material breach or default of
the Defaulting Party to preserve the Non-Defaulting Party's
rights that may be prejudiced as a result of such material breach
or default and exercise and pursue all other rights and remedies
available to it under applicable law.
(3) RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided in this Agreement, any right or
remedy afforded to either ELI or BPA under any provision of this
Agreement is in addition to, and not in lieu of, all rights or
remedies afforded either ELI or BPA under any other provision of
this Agreement, by law or otherwise.
22. TERMINATION
(a) Termination of this Agreement may occur in the following instances:
(1) By the Non-Defaulting Party, after the time period for
the Defaulting Party to cure a material breach or
default has expired;
(2) By either Party, if the Party claiming Force Majeure has
not satisfactorily performed any obligations delayed due
to the Force Majeure within 1 year of the notice of the
Force Majeure event; or
(3) Pursuant to Partial Invalidity terms, section 24(d) of
this Agreement.
(b) Subject to section 20(b), the Terminating Party shall give the other
Party 30 calendar days advance written notice of Termination, which
Termination shall become effective 30 calendar days after the receipt
of such notice by the other Party.
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23. INDEMNIFICATION; WAIVER OF DAMAGES
(a) INDEMNIFICATION BY ELI
(1) To the extent allowed by law, ELI shall release and indemnify,
defend, and hold harmless BPA and each of its directors,
officers, agents, representatives, subcontractors, and employees
(the "BPA Indemnitees") from and against any and all claims: (A)
for injury to or death of a person, including an employee of BPA
or an ELI Indemnity; or (B) for loss of or damage to property
resulting directly or indirectly from ELI's performance or
nonperformance of this Agreement; or
(C) for any Claims against BPA by customers of ELI or others
doing business with ELI, except in the cases of clauses (A) and
(B) only, to the extent that such Claim is the result of the
gross negligence or willful misconduct of a BPA Indemnity.
(2) If gross negligence or willful misconduct of a BPA Indemnity has
contributed to a Claim, ELI shall not be obligated to indemnify
the BPA Indemnitees for the proportionate share of such Claims
caused by such negligence or willful misconduct. BPA shall have
the right, at its own cost, to retain counsel, and to monitor, or
participate in the defense of any Claim that is covered by ELI's
indemnity hereunder.
(b) INDEMNIFICATION BY BPA
(1) To the extent allowed under the Federal Tort Claims Act, BPA
shall release and indemnify, defend, and hold harmless ELI and
each of its directors, officers, agents, representatives,
subcontractors, and employees (the "ELI Indemnitees") from and
against any and all claims for injury to or death of a person,
including an employee of BPA or an ELI Indemnity, or for loss of
or damage to property resulting directly or indirectly from BPA's
performance or nonperformance of this Agreement, except to the
extent that such claim is the result of the gross negligence or
willful misconduct of a ELI Indemnity. In no event shall BPA be
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required to indemnify ELI Indemnities against claims against ELI
by customers of ELI or others doing business with ELI.
(2) If gross negligence or willful misconduct of an ELI Indemnity has
contributed to a claim, BPA shall not be obligated to indemnify
the ELI Indemnitees for the proportionate share of such claims
caused by such negligence or willful misconduct. ELI shall have
the right, at its own cost, to retain counsel, to monitor, or to
participate in the defense of any claim that is covered by BPA's
indemnity hereunder.
(c) WAIVER OF CERTAIN DAMAGES
Each Party hereby waives any right to consequential, incidental,
special or indirect damages, or damages for lost profits or exemplary
damages with respect to any claim arising out of or related to this
Agreement. The Parties acknowledge that the foregoing waiver shall not
prejudice the right of indemnity respecting any claim under this
section 22.
24. DISPUTE RESOLUTION
(a) Pending resolution of a disputed matter, the Parties shall continue
performance of their respective obligations hereunder, provided that
neither Party shall be required to take any action pending such
resolution which it has been advised by Counsel, or which it
reasonably believes, is unlawful or not permitted pursuant to
applicable regulations or permit requirements. Any controversy
between the Parties rising out of this Agreement or breach thereof, or
out of performance under this Agreement, is subject to the mediation
process described below. If not resolved by mediation, then the
matter must be submitted to the American Arbitration Association
("AAA") for arbitration before a sole arbitrator.
(b) A meeting will be held promptly between the Parties to attempt in good
faith to negotiate a resolution of the dispute. The meeting will be
attended by individuals with decision-making authority regarding the
dispute. If within 30 calendar days after such meeting the Parties
have not succeeded in resolving the dispute, within 30 calendar days
thereafter, upon the written notice from either Party to the other
Party, they shall submit the dispute
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to a mutually acceptable third-party mediator who is acquainted with
dispute resolution methods. The mediation shall be non-binding. If the
dispute is not resolved by mediation, either Party may initiate an
arbitration with the AAA, upon the written notice from either Party to
the other Party. The dispute shall be resolved by arbitration under
the rules and administration of the AAA (except that service of
process, pleadings, motions and orders on BPA shall be as prescribed
by the Federal Rules of Civil Procedures), and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Neither Party is entitled to seek or recover
punitive damages in considering or fixing any award under these
proceedings.
(c) The costs of mediation and arbitration, including any mediator's fees,
AAA administration fee, the arbitrator's fee, and costs for the use of
facilities during the hearings, shall be borne equally by the Parties.
Reasonable attorneys' fees may be awarded to the prevailing Party
(provided such a Party can clearly be determined from the proceedings)
at the discretion of the arbitrator. Each Party's other costs and
expenses will be borne by the Party incurring them.
25. GENERAL
(a) FORCE MAJEURE
(1) As used in this Agreement, the term "Force Majeure" means acts of
God (including but not limited to, earthquakes, fires, floods,
windstorms, landslides, and ice storms); strikes, lockouts, or
other labor disputes; acts of public enemy; wars, riots, and
insurrection; epidemics; civil disturbances; explosions; train
derailments; breakdown or failure of machinery or facilities
(excluding the Cable and Cable Accessories); accidents to
machinery or equipment (excluding the Cable and Cable
Accessories), and delay in delivery of equipment to the extent
such occurrences are beyond the reasonable control of the
Parties; electrical disturbance originating in or transmitted
through such Party's electrical system or equipment or any
electrical system with which such Party's system or equipment is
interconnected; and any other event, cause, or condition beyond
the Party's
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reasonable control, which, by the exercise of
reasonable diligence, prevents the operation of the Cable and
prevents the Party claiming Force Majeure from performing its
obligations under this Agreement.
(2) If either Party is unable to carry out its obligations under this
Agreement as a result of an event, cause, or condition of Force
Majeure, the Party claiming Force Majeure shall give notice and
full particulars of such Force Majeure in writing to the other
Party within 5 calendar days after the occurrence of the Force
Majeure event, cause, or condition. Any obligations that such
Party claims it is unable to perform due to an event, cause, or
condition of Force Majeure shall be suspended during the
continuance of such event of Force Majeure. The Party claiming
Force Majeure shall use reasonable efforts to remedy and minimize
the effects of such event of Force Majeure with all reasonable
dispatch. For purposes of this Agreement, the Parties are
obligated to make payments during periods of Force Majeure;
PROVIDED, HOWEVER, ELI shall not be obligated to make payments
during periods of Force Majeure when ELI is unable to provide
service under the terms of the agreement with ELI's customers.
Interest shall not accrue on payments that become payable to
either Party during the period of any Force Majeure.
(3) Neither Party shall be liable under this Agreement for, or
considered to be in material breach or default under, this
Agreement on account of any delay in or failure of performance
due to Force Majeure unless specifically stated in this
Agreement. In the event that ELI continues to receive revenue
from End-Users under this Agreement during a Force Majeure event,
ELI will not be excused from performing its payment under this
Agreement.
(b) NOTICES
All notices and other communications under this Agreement shall be properly
given only if made in writing; and
(1) mailed by certified mail, return receipt requested, postage
prepaid; or
(2) delivered by facsimile transmission followed by certified mail to
the Party's at the address or
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facsimile number set forth in this section 24(b) or such other
address or facsimile number as such Party may designate by notice
to the other Party. Such notices and other communications shall
be effective on the date of receipt. If any such notice or
communication is not received or cannot be delivered due to a
change in the address of the receiving Party of which notice was
not previously given to the sending Party or due to a refusal to
accept by the receiving Party, such notice or other communication
shall be effective on the date delivery is attempted.
If to BPA: The Bonneville Power Administration
P.O. Box 3621
Portland, OR 97208-3621
Attn: To be identified under separate letter
with a copy to: The Bonneville Power Administration
P.O. Box 3621
Portland, OR 97208-3621
Attn: To be identified under separate letter
If to ELI: Electric Lightwave, Inc.
8100 NE. Parkway Drive, Suite 150
Vancouver, WA
Attn: Legal Affairs
Phone: (360) 892-1000
FAX: (360) 253-4425
(c) ASSIGNMENT
ELI shall not sell, assign, lease, sublease, sub-license or otherwise
allow use of ELI's License under this Agreement to any person or
entity without BPA's written approval; which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, ELI may assign
in writing its rights and responsibilities under this Agreement to a
corporate parent, subsidiary, or commonly owned affiliate, upon
written notification to BPA, and a guarantee by its parent company,
Citizens Utilities, to perform the obligation of ELI under this
Agreement. Any permitted assignment or other transfer of rights
hereunder shall be in writing and shall specify that the assignee or
other transferee is bound by the terms and conditions of this
Agreement to the same extent as if it were the original named party
instead of ELI hereunder. In the event that ELI sells, assigns,
leases, subleases, or
33
<PAGE>
otherwise allows use of ELI's License under this Agreement, ELI or its
assigned entity shall designate a single point-of-contact to BPA for
all activities relating to this Agreement. A sale, transfer, or
distribution (by way of a dividend or otherwise) in one or a series of
transactions of 50 percent or more of the capital stock of the entity
that holds the License shall be deemed to be an assignment of the
License.
(d) PARTIAL INVALIDITY
If any provision of this Agreement is determined by a proper court to
be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect the performance of other provisions
of this Agreement, and this Agreement shall remain in full force and
effect without such invalid, illegal, or unenforceable provision;
provided that if any such invalid, illegal, or unenforceable provision
results in frustration of this Agreement, such that ELI cannot perform
under section 13, BPA shall have the right to terminate in accordance
with section 21.
(e) GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
Federal law.
(f) TERMS GENERALLY
The defined terms in this Agreement shall apply equally to both the
singular and the plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine, and neuter forms. The term "person" includes
individuals, corporations, partnerships, trusts, other legal entities,
organizations and associations, and any Government or governmental
agency or authority. The words "include," "includes," and
"including," shall be deemed to be followed by the phrase "without
limitation." The words "approval," "consent," and "notice," shall be
deemed to be preceded by the word "written."
(g) RELATIONSHIP OF THE PARTIES
Nothing in this Agreement is intended or shall be deemed to constitute
a partnership, agency, or joint venture relationship between or among
the Parties hereto. The performance by the Parties of all duties and
obligations hereunder shall be as independent
34
<PAGE>
contractors and not as agents of the other Party, and no persons
employed or utilized by a performing Party shall be considered
employees or agents of the other.
(h) WAIVERS
No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the waiving
Party and any such waiver shall not be deemed a waiver of any other
provision of this Agreement or any other breach of this Agreement.
(i) CONFIDENTIALITY
If and to the extent any information or documents furnished by one
Party to the other under this Agreement is confidential or proprietary
to the furnishing Party, the receiving Party shall treat such
information or documents as confidential and proprietary and shall
take reasonable steps to protect against the unauthorized use or
disclosure of such information or documents; PROVIDED, HOWEVER, that
such information and documents are conspicuously marked or otherwise
clearly identified as confidential or proprietary when furnished; and
PROVIDED, FURTHER, that this section 24(g) shall not apply to
information or documents in the public domain or to information or
documents required to be disclosed by any law, rule, regulation,
order, or other requirement of any governmental authority having
jurisdiction. If a Freedom of Information Act, or Congressional,
request is received by BPA for such written information or documents,
BPA must promptly notify ELI of such request and will, further, notify
ELI if BPA is required to disclose such written information or
documents.
(j) NO THIRD-PARTY BENEFICIARIES
This Agreement creates rights and obligations only between the Parties
hereto. The Parties hereto expressly do not intend to create any
obligations or promise of performance to any other third person or
entity, nor have the Parties conferred any rights or remedy upon any
third person or entity other than the Parties hereto, their respective
successor or assigns to enforce this Agreement.
(k) MISCELLANEOUS
35
<PAGE>
Neither Party shall make public announcement of this Agreement or the
transactions contemplated by this Agreement without the prior consent
of the other Party, unless such public announcement is necessary to
comply with applicable law. This Agreement shall benefit and bind ELI
and BPA and their respective permitted successors and assigns. Time
is of the essence of this Agreement. This Agreement may be executed
in counterparts, each of which shall be an original, but all of which
shall constitute one and the same Agreement. This Agreement may not
be amended or modified except by a written instrument signed by ELI
and BPA.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in two
counterparts.
UNITED STATES OF AMERICA
Department of Energy
BPA Power Administration
/s/ Kevin A. Ward for
Name ___________________________
Charles E. Meyer
Vice President, Transmission
Marketing & Sales
January 8, 1998
Date ___________________________
ACCEPTED:
ELECTRIC LIGHTWAVE, INC.
/s/ David Sharkey
By __________________________
David B. Sharkey
Name __________________________
(Print/Type)
President
Title __________________________
January 8, 1998
Date __________________________
36
<PAGE>
Exhibit A, Page 1 of 1
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
<TABLE>
<CAPTION>
ROUTE DESCRIPTION
- ---------------------------------------------------------------------------------------------------
STATION OR (TOWER LINE DISTANCE LINE COMMENTS
SERIAL NO.) (MILES) NAME
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ross
- -------------------------------------------------------------------------------------------------------------
14.7 North Bon. - Ross No. 1 From Ross to structure
AFX 113A
- -------------------------------------------------------------------------------------------------------------
(AFX 113A) Line Transition
- -------------------------------------------------------------------------------------------------------------
6.7 North Bon.- Troutdale From Structure
No. 2 AFX 113A to Troutdale
- -------------------------------------------------------------------------------------------------------------
Troutdale
- -------------------------------------------------------------------------------------------------------------
53.4 Big Eddy-Troutdale No. 1
- -------------------------------------------------------------------------------------------------------------
Parkdale
- -------------------------------------------------------------------------------------------------------------
24.0 Big Eddy - Troutdale No. 1
- -------------------------------------------------------------------------------------------------------------
Big Eddy
- -------------------------------------------------------------------------------------------------------------
29.4 Big Eddy - Redmond No. 1
- -------------------------------------------------------------------------------------------------------------
Maupin
- -------------------------------------------------------------------------------------------------------------
68.0 Big Eddy - Redmond No. 1
- -------------------------------------------------------------------------------------------------------------
Redmond
- -------------------------------------------------------------------------------------------------------------
15.1 Redmond - Pilot Butte No. 1
- -------------------------------------------------------------------------------------------------------------
Pilot Butte
- -------------------------------------------------------------------------------------------------------------
29.6 Pilot Butte - LaPine No. 1
- -------------------------------------------------------------------------------------------------------------
LaPine
- -------------------------------------------------------------------------------------------------------------
45.5 LaPine - Fort Rock No. 1
- -------------------------------------------------------------------------------------------------------------
(ALC 308) From LaPine to str. 46/3
(Serial No. ALC 308)
- -------------------------------------------------------------------------------------------------------------
0.1 Line Transition
- -------------------------------------------------------------------------------------------------------------
(CG 406) Starting point on Grizzly
- Captain Jack (86/5)
- -------------------------------------------------------------------------------------------------------------
1.5 Grizzly - Captain Jack No. 1
- -------------------------------------------------------------------------------------------------------------
Fort Rock BPA Compensation Station
- -------------------------------------------------------------------------------------------------------------
28.5 Grizzly - Captain Jack No. 1
- -------------------------------------------------------------------------------------------------------------
Sycan
- -------------------------------------------------------------------------------------------------------------
60.0 Grizzly - Captain Jack No. 1
- -------------------------------------------------------------------------------------------------------------
Captain Jack
- -------------------------------------------------------------------------------------------------------------
7.4 Captain Jack - Malin No. 1
- -------------------------------------------------------------------------------------------------------------
Malin
- -------------------------------------------------------------------------------------------------------------
Total Miles = 383.9
- ------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
Exhibit B, Page 1 of 2
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
PAYMENT SPECIFICATIONS
ELI's MONTHLY PAYMENT to BPA will equal GRV multiplied by the Payment Factor.
The PAYMENT FACTOR equals * (*) until ELI's accumulative monthly
payments to BPA exceed BPA Capital Costs, after which the Payment Factor will
equal * (*) for the remainder of the contract.
The GRV will be determined using the following formula:
GRV = ELITSV + EUTSV + DFLV + OSV
Where:
GRV = GROSS REVENUE VALUE
ELITSV = ELI TRANSPORT SERVICE VALUE(S)
EUTSV = END-USER TRANSPORT SERVICE VALUE(S)
DFLV = DARK FIBER LEASE VALUE(S)
OSV = OTHER SERVICE VALUE(S)
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
1
<PAGE>
Exhibit B, Page 2 of 2
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
ELECTRIC LIGHTWAVE, INC.
PORTLAND - SACRAMENTO - SAN FRANCISCO - LOS ANGELES
($000)
<TABLE>
<CAPTION>
Calendar Years 1998* 1999* 2000* 2001* 2002* 2003* 2004* 2005* 2006* 2007* 2008* 2009* 2010* 2011*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue Forecast:
- -----------------
Revenue Growth yrs 6-10*
Revenue Growth yrs 11-20*
Portland to Sacramento*
Portland to San Francisco*
Portland to Los Angeles*
Sacramento to Los Angeles*
San Francisco to Los Angeles*
Sacramento to San Francisco*
Dark Fiber Lease*
Total ELI Revenue*
Revenue Split:
BPA Revenue split percentage
Until capital is repaid*
After capital is repaid*
BPA Annual Revenues*
BPA Cumulative Revenues*
BPA Revenues*
Capital Investment:
- -------------------
Number of Miles*
BPA Miles*
BPA Outside Plant($000)*
BPA
Cash Flow:
- ----------
Capital Expenditures*
Revenue*
BPA Cash Flow*
</TABLE>
- ----------
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
<PAGE>
Exhibit C, Page 1 of 1
Contract No. 97TX-10080
ELI Telecommunications Corporation
Effective on the Effective Date
EXHIBIT C
REVENUE SHARING ROUTE
The revenue sharing route originates in the Portland, Oregon area and
terminates in Los Angeles, California, passing though Sacramento and San
Francisco, California.
<PAGE>
Exhibit D, Page 1 of 4
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
COMMERCIAL FIBER SPECIFICATIONS
CORNING/(R)/ SMF-28 CPC6
SINGLE-MODE OPTICAL FIBER
GENERAL
Corning/(R)/ SMF-28 single-mode fiber is considered the "standard" optical fiber
for telephony, cable television, submarine, and private network applications in
the transmission of data, voice, and/or video services. Corning SMF-28 fiber is
manufactured to the most demanding specifications in the industry.
SMF-28 fiber is optimized for use in the 1310 nm wavelength region. The
information-carrying capacity of the fiber is at its highest in this
transmission window; it is also where dispersion is the lowest. SMF-28 fiber
can also be effectively used in the 1550 nm wavelength region.
Corning's enhanced, dual layer acrylate CPC6 coating provides excellent fiber
protection and is easy to work with. CPC6 can be mechanically stripped and has
an outside diameter of 245 um. CPC6 is optimized for use in many single and
multi-fiber cable designs including loose tube, ribbon, slotted core, and tight
buffer cables.
SMF-28 fiber is manufactured using the Outside Vapor Deposition (OVD) process,
which produces a totally synthetic, ultra-pure fiber. As a result, Corning SMF-
28 has consistent geometric properties, high strength, and low attenuation.
Corning SMF-28 fiber can be counted on to deliver excellent performance and high
reliability, reel after reel.
FEATURES AND BENEFITS
. Versatility in 1310 nm and 1550 nm applications.
. Outstanding geometrical properties for low splice loss and high splice
yields.
. OVD manufacturing reliability and product consistency.
. Optimized for use in ribbon, loose tube, and other common cable designs.
1
<PAGE>
Exhibit D, Page 2 of 4
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
OPTICAL SPECIFICATIONS
ATTENUATION
<TABLE>
<CAPTION>
UNCABLED FIBER ATTENUATION CELLS POINT DISCONTINUITY
- ---------------------------------------
<S> <C> <C>
Attenuation Cells No point of discontinuity greater than 0.10 dB at either 1310 nm or 1550
(dB/km) nm.
- ---------------------------------------
Wavelength (nm) Standard
- ---------------------------------------
1310 less than or equal to 0.40 ATTENUATION AT THE WATER PEAK
- ---------------------------------------
1550 less than or equal to 0.30 The attenuation at 1383 plus/minus 3 nm shall not exceed 2.1 dB/km.
- ---------------------------------------
</TABLE>
*Lower attenuation available in limited quantities.
<TABLE>
<CAPTION>
ATTENUATION VS. WAVELENGTH
- ---------------------------------------
<S> <C> <C> <C>
Range Ref.L Max Increase The attenuation in a given wavelength range
(nm) (nm) A(dB/km) does not exceed the attenuation of the reference
1285-1330 1310 0.05 wavelength (L) by more than the value A.
- ---------------------------------------
1525-1575 1550 0.05
- ---------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ATTENUATION WITH BENDING
- --------------------------------------------------------------------
Mandrel Number of Turns Wavelength Induced The induced attenuation due to fiber
Diameter (nm) Attenuation wrapped around a mandrel of a specified
(mm) (dB) diameter.
<S> <C> <C> <C> <C>
32 1 1550 less than or equal to 0.50
- --------------------------------------------------------------------
75 100 1310 less than or equal to 0.05
- --------------------------------------------------------------------
75 100 1550 less than or equal to 0.10
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
. CABLE CUTOFF WAVELENGTH (Lccf) . MODE-FIELD DIAMETER
Lccf less than 1260 nm 9.30 plus/minus 0.50 micro m at 1310 nm
10.50 plus/minus 1.00 micro m at 1550 nm
. DISPERSION
Zero Dispersion Wavelength (L\o\): 1301.5 nm less than or equal to Lo less than or equal to 1321.5 nm
Zero Dispersion Slope (S\o\): less than or equal to 0.092 ps/(nm/2/ . km)
Fiber Polarization Mode Dispersion Coefficient (PMD): less than or equal to 0.5 psec/ divided by km
</TABLE>
<TABLE>
<CAPTION>
DISPERSION CALCULATION
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
S\o\ [ L\o\ to the 4th power]
Dispersion = D (L): ~ ---- [ L - ---------------------] ps/(nm.km), for 1200 nm less than or equal to L
4 [ L to the 3rd power ] less than or equal to 1600 nm L = Operating Wavelength
</TABLE>
ENVIRONMENTAL SPECIFICATIONS
2
<PAGE>
Exhibit D, Page 3 of 4
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
<TABLE>
<CAPTION>
INDUCED
ENVIRONMENTAL TEST CONDITION ATTENUATION
(DB/KM)
- ------------------------------------------------------------------------------------ Operating Temperature Range
<S> <C> <C> -60C to +85C
1310 nm 1550 nm
- ------------------------------------------------------------------------------------
Temperature Dependence less than or equal to 0.05 less than or equal to 0.05
- -60 to +85C
- ------------------------------------------------------------------------------------
Temperature-Humidity Cycling less than or equal to 0.05 less than or equal to 0.05
- -10C to +85C, up to 98% RH
- ------------------------------------------------------------------------------------
Water Immersion, 23C less than or equal to 0.05 less than or equal to 0.05
Heat Aging, 85C less than or equal to 0.05 less than or equal to 0.05
- ------------------------------------------------------------------------------------
</TABLE>
DIMENSIONAL SPECIFICATIONS
STANDARD LENGTH (KM/REEL): 2.2 - 25.0
*Longer spliced lengths available at a premium.
<TABLE>
<CAPTION>
GLASS GEOMETRY COATING GEOMETRY
<S> <C>
Fiber Curl: greater than or equal to 2.0 m radius of curvature Coating Diameter: 245 plus/minus 10 micro m
Cladding Diameter: 125.0 plus/minus 1.0 micro m Coating-Cladding Concentricity: less than 12 micro m
Core-Clad Concentricity: less than or equal to 0.8 micro m
Cadding Non-Circularity: less than 1.0%
</TABLE>
[ Min. Cladding Diameter ] x 100
Defined as: 1 - ----------------------
[ Max. Cladding Diameter ]
MECHANICAL SPECIFICATIONS
PROOF TEST:
The entire length of fiber is subjected to a tensile proof stress greater than
or equal to 100 kpsi (0.7 GN/m/2/)*
*Higher proof test available at a premium.
3
<PAGE>
Exhibit D, Page 4 of 4
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
PERFORMANCE CHARACTERIZATIONS
Characterized parameters are typical values.
<TABLE>
<CAPTION>
CORE DIAMETER: REFRACTIVE INDEX DIFFERENCE:
<S> <C>
8.3 micro m 0.36%
NUMERICAL APERTURE: EFFECTIVE GROUP INDEX OF REFRACTION (Neff):
0.13 1.4675 at 1310 nm
NA was measured at the one percent power 1.4681 at 1550 nm
angle of a one-dimensional far-field scan
at 1310 nm.
ZERO DISPERSION WAVELENGTH (Lo): FATIGUE RESISTANCE PARAMETER (nd):
1312 nm greater than or equal to 20
ZERO DISPERSION SLOPE (So): COATING STRIP FORCE:
0.090 ps/(nm/2/.km) Dry: 0.7 lbs. (3.2 N)
Wet: 14 days room temperature: 0.7 lbs. (3.2 N)
</TABLE>
COATINGS
SMF-28 optical fiber also is available with CSB4 500 micro m coating.
4
<PAGE>
Exhibit E, Page 1 of 3
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
EXHIBIT E
ELI FIBER ACCEPTANCE TESTING STANDARDS
Bonneville shall meet or exceed these specifications. In the event that
Bonneville's performance requirements for its communication system requires
Bonneville to exceed the standards and requirements specified in this Exhibit D,
Bonneville shall apply the higher standard.
ELI Network Span and Final Acceptance Requirements:
1.0 Design Criteria:
- --------------------
The number of cable splices at the time of original construction must be
designed to an average of 4 km between splices. Due to cable cuts, and cable
relocation, additional splices are allowed. The number of splices must be
closely monitored to insure attenuation and reflection tolerances are
maintained.
Construction:
- -------------
Cable must be constructed in accordance with sound commercial practices. The
National Electrical Code shall be followed in every case except where local
regulations are more stringent, in which case local regulations shall govern.
2.0 Typical Fiber Cable Information:
- ------------------------------------
Single mode fiber specifications may vary, depending on the fiber manufacturer.
Typical concatenated levels of 0.35 dB per km @ 1310nm and 0.25 per km @ 1550nm
are expected.
3.0 Span Requirements:
- ----------------------
Span documentation must be performed using the two following methods: OTDR
(optical time domain reflectometer) and insertion loss (stabilized light source
and power meter) measurement in each direction at 1550nm wavelength.
. Maximum total span loss must not exceed 35.0 dB at 1550nm.
----------
. Maximum dB/Km loss must not exceed 0.35 dB/Km at 1550nm.
-----
. In no case shall a fiber show a point discontinuity greater than 0.1dB.
Discontinuities (know as steps, splices, or attenuation non-uniformities)
shall be measured with an optical time domain reflectometer (OTDR) to
determine the loss of the localized attenuation. The lease squares fit method
of measurement must be used to determine the magnitude of the loss of a point
discontinuity.
. Typical span scenario 30.0 dB=120 Km X .25 dB/Km.
----
1
<PAGE>
Exhibit E, Page 2 of 3
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
. Maximum fiber loss scenario 35.0 dB= 100 Km X ..35 dB/Km. (depends on
----------
regeneration huts)
. Maximum span dispersion = 2250 ps/mn/Km.
---------------
. Performance levels must be maintained as accepted during the entire duration
of the agreement.
. Test data including OTDR hard copies or electronic data must be submitted to
Common System Engineering before Final Acceptance. ELI, at its discretion,
may choose to physically monitor any or all testing associated with Final
Acceptance of the ELI Fibers.
In the event the measured span measured values exceeds the calculated values,
Bonneville will perform corrective maintenance as required to restore the ELI
Fibers to the calculated values.
4.0 Splice Loss:
------------
the splice loss will average 0.10dB. All splicing will be performed by
proprietor pursuant to fibers leased agreement. Further, no individual splice
will exceed 0.50dB. Splices shall be measured using bi-directional methods to
average absolute splice loss. All fiber splicing must be fusion type.
---------------------------------------
5.0 Compliance:
-----------
Customer, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of Fibers. Test data including OTDR hard copies or
electronic data must be submitted to the customer for review. Customer has the
option to vainer any specifications and/or requirements listed in the technical
specification criteria. (limited to ELI receiving a hard copy of their fiber
only.)
6.0 Waivers:
--------
the proprietor must provide Fibers with attenuation of not greater than 0.35
loss per. km @ 1550nm and will not be required to perform corrective maintenance
under .25dB to reduce span attenuation.
7.0 Key optical performance Characteristics Required For Single-Mode Optical
- ----------------------------------------------------------------------------
Cables:
- -------
7.1 Attenuation Single Mode Non-Shifted:
- ----------------------------------------
. The attenuation must not exceed 0.30 dB/Km when measured at a wavelength of
1.55 microns (1550nm) using the two point measurement.
. The attenuation must not exceed 0.40 dB/Km when measured at a wavelength of
1.30 microns (1310nm) using the two point measurement.
2
<PAGE>
Exhibit E, Page 3 of 3
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
7.2 Attenuation Single Mode Dispersion Shifted:
- -----------------------------------------------
. The attenuation must not exceed 0.25 dB/Km when measured at a wavelength of
1.55 microns (1550nm) using the two joint measurement.
7.3 Attenuation Versus Wavelength Single-Mode and Dispersion Shifted:
- ---------------------------------------------------------------------
. The attenuation for the wavelength region form 1525 nm to 1575 nm must not
exceed the attenuation at 1550 nm by more than 0.05 dB/Km.
7.4 Chromatic Dispersion Non-Dispersion Shifted (ps/nm-km):
- -----------------------------------------------------------
. For conventional single mode fibers, the zero dispersion wavelength must be
1301.5 to 1321.5nm. The maximum dispersion slope (SoMAX) must be no greater
than 0.092 ps/(km-nm /2 /). The nominal zero dispersion wavelength must be
near 1310nm zero dispersion range. The dispersion between 1530 and 1570 nm
must be less than or equal to 18 ps/(nm km).
7.5 Cutoff Wavelength:
- ----------------------
. The cutoff wavelength of cabled fiber must be less than 1260 nm.
7.6 Core Diameter:
- ------------------
. The core diameter must be typically 8.3 + or - 0.13.
7.7 Temperature:
- ----------------
. Operating Temperature Range -60 C to +85 C
Bonneville will insure that the Cable and related appurtenances meet all of the
above optical performance characteristics operating systems power level.
3
<PAGE>
Exhibit F, Page 1 of 2
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
EXHIBIT F
TERMINAL EQUIPMENT REQUIREMENTS
GENERAL
ELI agrees to purchase, in exchange for four (4) fibers between Portland and the
CA-OR border, Lucent Technologies SONET terminal equipment and turnkey
installation of a collapsed ring system for 14 sites. Procurement of this SONET
system shall be in accordance with the specifications of the BPA/Harris-
Farinon/Lucent 10-year indefinite quantity contract no. 95AM50206.
EQUIPMENT
The equipment shall be Lucent Technologies DDM-2000 OC-3 as specified below.
DESCRIPTION QTY
Shelf Assembly 26 ea.
Heat Baffle 26 ea.
Timing Generator 52 ea.
OC-12 OLIU (1310 nm) 32 ea.
OC-12 OLIU (1550 nm)* 20 ea.
SYSCTRL 26 ea.
OHCTRL 26 ea.
MXRVO BBG2 52 ea.
DS1 Card BBFIB 52 ea.
Retainer Card 177B 156 ea.
OC-3 Software 26 ea.
Fiber Jumpers/Cables 26 lot
9' x 23" Equipment Rack 14 ea. (actual rack heights to be
determined later)
Fuse and Alarm Panel 14 ea.
DS1 Jackfield Assy. 14 ea.
Service Chan/Orderwire 14 ea.
DVA Remote Alarm 14 ea.
Fiber Termination Panel 14 ea.
DDM-2000 Manuals 14 set
DDM-2000 Schematics 14 set
Factory setup & test 1 job
1
<PAGE>
Exhibit F, Page 2 of 2
Contract No. 97TX-10080
Eli Telecommunications Corporation
Effective on the Effective Date
In addition, the following spares are required:
<TABLE>
<CAPTION>
DESCRIPTION QTY
<S> <C> <C>
OC-12 OLIU (1310 nm) 3 ea.
OC-12 OLIU (1550 nm)* 3 ea.
SYSCTRL 2 ea. (with software loaded)
OHCTRL 2 ea. (with software loaded)
OC-3 Software 1 ea. (set of diskettes)
Fiber Jumpers/Cables 4 lot
Service Chan/Orderwire 1 ea. (ROSS-FRAN used Premisys IMACS 600 shelves & Harris-Farinon DVSII's)
DDM-2000 Manuals 2 set
</TABLE>
DDM-2000 Schematics 2 set
* As of December 15, 1997 the 1550 nm OC-12 OLIU for the OC-3 DDM-2000 shelf is
in development. BPA anticipates Lucent Technologies will have this module
commercially available by July 1998.
2
<PAGE>
<PAGE>
EXHIBIT 10.18
OPTICAL FIBER INSTALLATION
AND IRU AGREEMENT
BETWEEN
PACIFIC GAS AND ELECTRIC COMPANY
AND
ELECTRIC LIGHTWAVE, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS......................................................... 2
ARTICLE II GRANT OF LICENSES FOR INSTALLATION AND CONSTRUCTION................. 6
---------------------------------------------------
2.1 Grant of Revocable License..................................... 6
--------------------------
2.2 Regulatory Approval............................................ 7
-------------------
2.3 Conversion from Revocable License to Irrevocable License....... 7
--------------------------------------------------------
2.4 Nonexclusive Use............................................... 7
----------------
2.5 Reservation of Certain PG&E Rights............................. 7
----------------------------------
2.6 PG&E Utility Operations........................................ 8
-----------------------
2.7 No Property or Possessory Interest............................. 8
----------------------------------
2.8 Right of Entry................................................. 8
--------------
2.9 Entry Conditions............................................... 9
----------------
2.10 Memorandum of Agreement........................................ 9
-----------------------
2.11 Disclaimer..................................................... 9
----------
ARTICLE III RIGHTS IN AND TO THE CABLE.......................................... 9
--------------------------
3.1 Reservation of IRU............................................. 9
------------------
3.2 Lease of Dark Fibers........................................... 10
--------------------
3.3 Use of ELI Fibers.............................................. 10
-----------------
3.4 Use of Dark Fibers............................................. 10
------------------
3.5 PG&E Purchase of ELI Telecommunications Services............... 10
------------------------------------------------
ARTICLE IV TERM................................................................ 11
----
4.1 Term........................................................... 11
----
4.2 Extension of Term.............................................. 11
-----------------
4.3 Effect of Extension............................................ 11
-------------------
4.4 Quit and Surrender............................................. 11
------------------
4.5 Holdover....................................................... 11
--------
4.6 Termination of Agreement by ELI................................ 12
-------------------------------
ARTICLE V FEES................................................................ 12
----
5.1 Annual Fee..................................................... 12
----------
5.2 Annual Dark Fiber Lease Payment................................ 13
-------------------------------
5.3 Reimbursement of Maintenance Fees.............................. 14
---------------------------------
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.4 Reimbursement of Costs......................................... 14
----------------------
5.5 Fee Payment Procedure.......................................... 15
---------------------
5.6 Late Fees...................................................... 15
---------
ARTICLE VI SYSTEM DESIGN....................................................... 15
-------------
6.1 Design Responsibility.......................................... 15
---------------------
6.2 PG&E Information............................................... 16
----------------
6.3 Notice of Adverse Claims....................................... 17
------------------------
6.4 Working Drawings............................................... 17
----------------
6.5 Construction Schedule.......................................... 18
---------------------
6.6 Warranty of Work............................................... 18
----------------
ARTICLE VII CONSTRUCTION........................................................ 18
------------
7.1 Scope of Work.................................................. 18
-------------
7.2 Regeneration Facility Sites.................................... 18
---------------------------
7.3 Work Standards................................................. 19
--------------
7.4 Time........................................................... 19
----
7.5 Permits and Approvals.......................................... 20
---------------------
7.6 System Materials............................................... 20
----------------
7.7 Interface between PG&E and ELI................................. 20
------------------------------
7.8 Title and Risk of Loss......................................... 20
----------------------
7.9 System Warranties.............................................. 21
-----------------
7.10 Use of Contractors............................................. 21
------------------
7.11 PG&E Inspection of Construction................................ 21
-------------------------------
7.12 As-Built Drawings.............................................. 22
-----------------
7.13 Completion of System Construction.............................. 23
---------------------------------
7.14 Warranty of Work............................................... 23
----------------
ARTICLE VIII MAINTENANCE, REPAIR AND RESTORATION................................. 23
-----------------------------------
8.1 PG&E Maintenance Responsibilities.............................. 23
---------------------------------
8.2 Maintenance of Regeneration Facilities and System Electronics.. 24
-------------------------------------------------------------
8.3 Detailed Restoration Plan...................................... 24
-------------------------
ARTICLE IX PROPERTY RIGHTS AND OBLIGATIONS..................................... 26
-------------------------------
9.1 Avoidance of Encumbrances...................................... 26
-------------------------
9.2 Maintain Property Rights....................................... 26
------------------------
9.3 Payment of Ad Valorem Taxes.................................... 26
---------------------------
9.4 Defense of Property Interest................................... 27
----------------------------
</TABLE>
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<TABLE>
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9.5 Property Interest Documentation................................ 28
-------------------------------
9.6 Incremental Property Rights Costs.............................. 28
---------------------------------
9.7 Franchise Rights and Licensing Costs........................... 28
------------------------------------
9.8 Liens 29
-----
9.9 Discontinuance or Relocation................................... 30
----------------------------
9.10 Relocation of Cable............................................ 30
-------------------
ARTICLE X REPRESENTATIONS, WARRANTIES AND COVENANTS............................ 31
-----------------------------------------
10.1 Representations, Warranties and Covenants of ELI............... 31
------------------------------------------------
10.2 Representations, Warranties and Covenants of PG&E.............. 32
-------------------------------------------------
10.3 Confidentiality................................................ 33
---------------
10.4 Cooperation.................................................... 35
-----------
10.5 Regulatory Compliance.......................................... 36
---------------------
10.6 Certificates................................................... 36
------------
10.7 Independent Status............................................. 36
------------------
10.8 Transactions with Affiliates................................... 36
----------------------------
10.9 Further Assurances............................................. 36
------------------
10.10 Damage and Destruction......................................... 36
----------------------
10.11 Audit Rights................................................... 37
------------
10.12 Interference................................................... 37
------------
10.13 Independent System Operator.................................... 37
---------------------------
ARTICLE XI INSURANCE............................................................ 37
---------
11.1 Required Insurance Coverage.................................... 37
---------------------------
11.2 General Conditions............................................. 38
------------------
11.3 Evidence of Insurance.......................................... 38
---------------------
11.4 Blanket Policies............................................... 39
----------------
11.5 Self-Insurance................................................. 39
--------------
ARTICLE XII ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS........................... 39
------------------------------------------
12.1 Transfers...................................................... 39
---------
12.2 PG&E or ELI Financing.......................................... 40
---------------------
12.3 PG&E and ELI Recognition of Transferees........................ 40
---------------------------------------
12.4 No Assumption or Release....................................... 40
------------------------
12.5 Mergers and Acquisitions....................................... 40
------------------------
ARTICLE XIII CONDEMNATION......................................................... 41
------------
13.1 Taking 41
------
</TABLE>
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<TABLE>
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13.2 Taking Awards.................................................. 41
-------------
13.3 Notice of Taking............................................... 41
----------------
ARTICLE XIV ENVIRONMENTAL HAZARD LIABILITY....................................... 41
------------------------------
14.1 Responsibilities of Parties.................................... 41
---------------------------
14.2 Alternate Locations............................................ 42
-------------------
14.3 Warning........................................................ 42
-------
14.4 Condition of Premises.......................................... 42
---------------------
ARTICLE XV LIABILITY AND INDEMNITY.............................................. 42
-----------------------
15.1 PG&E Indemnity................................................. 42
--------------
15.2 ELI Indemnity.................................................. 43
-------------
15.3 No Consequential Damages....................................... 43
------------------------
15.4 Waiver of Subrogation.......................................... 43
---------------------
15.5 Defense of Claims.............................................. 43
-----------------
15.6 Third-Party Claims............................................. 44
------------------
15.7 Survival....................................................... 44
--------
15.8 Applicability of Liability Limitations......................... 44
--------------------------------------
15.9 Claims Against Third-Parties................................... 44
----------------------------
ARTICLE XVI FORCE MAJEURE........................................................ 44
-------------
16.1 Excuse of Performance.......................................... 44
---------------------
16.2 Definition..................................................... 44
----------
16.3 Continuance after Force Majeure Event.......................... 45
-------------------------------------
ARTICLE XVII BREACH AND TERMINATION............................................... 46
----------------------
17.1 Termination Events............................................. 46
------------------
17.2 Actions Following Occurrence of Termination Event.............. 47
-------------------------------------------------
17.3 Rights of PG&E and ELI Upon Termination........................ 48
---------------------------------------
17.4 Amounts Due Upon Termination................................... 48
----------------------------
17.5 No Release..................................................... 48
----------
ARTICLE XVIII DISPUTE RESOLUTION.................................................. 49
------------------
18.1 Dispute Resolution............................................. 49
------------------
18.2 Negotiation and Mediation...................................... 49
-------------------------
</TABLE>
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18.3 Confidentiality................................................ 49
---------------
18.4 Injunctive Relief.............................................. 49
-----------------
18.5 Continuing Obligation.......................................... 49
---------------------
18.6 Failure of Mediation........................................... 49
--------------------
ARTICLE XIX TAX INDEMNITY........................................................ 50
-------------
19.1 Income Taxes................................................... 50
------------
19.2 Sales and Use Taxes............................................ 52
-------------------
19.3 Indemnification Conditions..................................... 53
--------------------------
ARTICLE XX MISCELLANEOUS........................................................ 53
-------------
20.1 Amendments..................................................... 53
----------
20.2 Binding Effect................................................. 53
--------------
20.3 Waivers........................................................ 53
-------
20.4 Notices........................................................ 53
-------
20.5 Severability................................................... 54
------------
20.6 Interpretation................................................. 54
--------------
20.7 Governing Law and Choice of Forum.............................. 55
---------------------------------
20.8 Commissions.................................................... 55
-----------
20.9 Counterparts................................................... 55
------------
20.10 Attorney Fees.................................................. 55
-------------
20.11 Costs.......................................................... 55
-----
20.12 No Third-Party Beneficiaries................................... 55
----------------------------
20.13 Entire Agreement............................................... 55
----------------
20.14 Conflict of Interest/Business Ethics........................... 55
------------------------------------
20.15 Survival....................................................... 56
--------
20.16 Exhibits....................................................... 56
--------
</TABLE>
-v-
<PAGE>
EXHIBITS
- --------
Exhibit "A" Cable Route
Exhibit "B" Cable Specifications
Exhibit "C" Detailed Restoration Plan
Exhibit "D" PG&E Safety Rules
-vi-
<PAGE>
OPTICAL FIBER INSTALLATION AND IRU AGREEMENT
THIS OPTICAL FIBER INSTALLATION AND IRU AGREEMENT ("Agreement") is
made and entered into effective as of the 31st day of December, 1997, by and
between PACIFIC GAS AND ELECTRIC COMPANY, a California corporation ("PG&E"), and
ELECTRIC LIGHTWAVE, INC., a Delaware corporation ("ELI").
R E C I T A L S :
- - - - - - - -
A. PG&E is a public utility regulated by, among others, the California
Public Utilities Commission and the Federal Energy Regulatory Commission. PG&E
owns electric transmission towers, and owns and holds easements and other rights
or interests in real properties in connection with the transmission of natural
gas and electricity to its customers throughout northern and central California.
B. PG&E expects in the future to cede operational control of its electric
transmission system to an independent system operator who will have, among other
powers, authority to direct the operation of all facilities under its control
that affect the reliability of the electric transmission system and to approve
requests to take electric transmission equipment out of service.
C. ELI is a provider of telecommunications services and holds a
certificate of public convenience and necessity to provide such services in the
State of California, and that authorizes ELI to use government rights of way for
purposes of installing fiber optic cable in, under and along public streets and
roads in the State of California.
D. PG&E desires to construct an optical fiber communications system along
certain rights of way owned or controlled by PG&E, for its own internal
communications needs and to provide ancillary communications services to its
electric power and natural gas customers.
E. ELI, upon the terms, covenants and conditions contained in this
Agreement, is willing to construct an optical fiber communications system, and
desires to reserve to itself an indefeasible right to use the optical fibers in
the completed system to provide telecommunications services to ELI's customers.
In addition, ELI is willing to lease to PG&E a portion of the optical fibers in
the completed system for the purposes set forth above.
F. PG&E, upon the terms, covenants and conditions contained in this
Agreement, is willing to: (1) grant to ELI a license to enter upon certain
rights of way held by PG&E for the purpose of installing the optical fiber
communications system; (2) take bare legal title to the system subject to ELI's
reservation of an indefeasible right to use the optical fibers in the system to
provide telecommunications services to ELI's customers; and (3) lease from ELI a
portion of the optical fibers in the system for use in connection with PG&E's
own internal communications needs and to provide ancillary communications
services to PG&E's electric power and natural gas customers.
<PAGE>
G. For all purposes other than PG&E's bare legal title, ELI will be
considered the owner of the System.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, and for other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, PG&E and ELI agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the meanings
specified below:
"Acceptance of Construction" means the written notification from PG&E
to ELI, pursuant to Section 7.11, that specified work has been inspected by PG&E
and found to have been performed substantially in accordance with the
requirements of this Agreement.
"Ad Valorem Taxes" means ad valorem property taxes, special
assessments, local improvement district levies and other levies assessed against
the System or the Right of Way.
"Affected Portion" means any portion of the System that is or may:
(1) be affected by a Taking; (2) become the subject of a lien or transfer; or
(3) be damaged or destroyed as the result of the occurrence of an event of
casualty.
"Affiliate" means, with respect to either PG&E or ELI, any corporation
or other entity that controls such party, is controlled by such party, or is
with such party under common control of another entity.
"Annual Dark Fiber Lease Payment" means the annual payment PG&E shall
make to ELI under the terms of this Agreement for the lease of the Dark Fibers.
"Annual Fee" means the annual payment ELI shall make to PG&E under the
terms of this Agreement for the Revocable License or the Irrevocable License (as
applicable).
"Approvals" means all permits, approvals and licenses from all
government authorities having jurisdiction or approval rights with respect to:
(1) the construction and installation of the System; and (2) the use and
occupation of the Right of Way along the Cable Route where the System is to be
located or to be constructed.
"Approved System Segment" means a System Segment for which Working
Drawings have been approved under the terms of this Agreement for construction
and installation of the Cable, the Cable Accessories and, as applicable,
Regeneration Facilities, System Electronics and other facilities and equipment
associated with the Approved System Segment.
<PAGE>
"Cable" means a single optical fiber telecommunications cable
containing 72 single mode, nondispersion shifted optical fibers (or two optical
fiber cables containing a total of 72 such optical fibers) to be installed along
the Cable Route pursuant to the terms of this Agreement.
"Cable Accessories" means all hardware and appurtenances necessary for
the attachment of the Cable to the Towers.
"Cable Route" means the corridor in which the Cable for the System
will be deployed. An approximate location of the Cable Route is described on
Exhibit "A."
"Cable Specifications" means the drawings and specifications regarding
the Cable, the Cable Accessories, and related hardware and materials to be
employed in the installation of the Cable. A copy of the Cable Specifications
is attached to and incorporated by reference in this agreement as Exhibit "B."
"Chief Engineer" means with respect to PG&E or ELI, as applicable, the
person designated to be responsible for managerial decision making with respect
to the System and this Agreement and to give technical or managerial advice.
"Consumer Price Index" means the Consumer Price Index, U.S. City
Average, All Items Index (1982-1984 = 100), All Urban Consumer Sub-Index, San
Francisco-Oakland-San Jose Metropolitan Statistical Area (CPI-U), as published
by the U.S. Department of Labor, Bureau of Labor Statistics. In the event the
Consumer Price Index is discontinued or no longer published, PG&E and ELI shall
agree to the use of a comparable successor index for use in connection with the
calculation of the Annual Fee.
"Contractor" means FOCAS, Inc., a Delaware corporation, or another
qualified contractor that acts as ELI's general contractor for the installation
of the Cable along the Cable Route in accordance with the terms, covenants,
conditions and specifications stated in this Agreement.
"CPUC" means the California Public Utilities Commission.
"Dark Fibers" means the 8 single mode, nondispersion shifted optical
fibers in the Cable along the entirety of each Developed System Segment that ELI
leases to PG&E for the purposes and on the terms described in this Agreement.
"Detailed Restoration Plan" means the restoration plan applicable to
the System to be developed by PG&E and ELI as described in Section 8.3. The
Detailed Restoration Plan shall
-3-
<PAGE>
follow the priorities and general requirements set forth in Section 8.3 and,
when completed, shall be attached to and incorporated by reference in this
Agreement as Exhibit "C."
"Developed System Segment" means a System Segment on which all
construction and installation work has been completed and regarding which an
Acceptance of Construction has been issued.
"Effective Date" means the date of execution of this Agreement by PG&E
and ELI.
"ELI Fibers" means the 64 single mode, nondispersion shifted optical
fibers in the Cable along the entirety of each Developed System Segment in which
ELI, pursuant to the terms, covenants and conditions of this Agreement, reserves
an exclusive IRU.
"Force Majeure Event" shall have the meaning given in Section 16.2.
"Hazardous Substances" means any waste, pollutant (as that term is
defined in 42 U.S.C. (S) 9601(33) or in 33 U.S.C. (S) 1362(13) or any successor
statutes thereto), hazardous substance (as that term is defined in 42 U.S.C. (S)
9601(14) or any successor statute thereto), hazardous chemical (as that term is
defined by 29 CFR Part 1910.1200(c) or any successor regulation thereto), toxic
substance, hazardous waste (as that term is defined in 42 U.S.C. (S) 6901 or any
successor statute thereto), radioactive material, special waste, petroleum,
including crude oil or any other hydrocarbon based substance, waste, or
breakdown or decomposition product thereof, or any constituent of any such
substance or waste, including, but not limited to polychlorinated biphenyls, and
asbestos.
"Independent System Operator" means the entity or agency to which
PG&E, in the future, expects to cede operational control of its electric
transmission system. The Independent System Operator will have, among other
powers, authority to direct the operation of all facilities under its control
that affect the reliability of the electric transmission system and to approve
requests to take electric transmission equipment out of service.
"Irrevocable License" means the nonexclusive and nonpossessory
irrevocable right to use the Towers, the Substation Sites, and the Right of Way
to install and operate the System granted by PG&E to ELI under the terms of this
Agreement.
"IRU" means the exclusive indefeasible right to use the Cable and the
optical fibers contained therein reserved by ELI under the terms of this
Agreement.
"Maintenance" means: (1) routine visual inspection, repair and
maintenance of the Cable, the Cable Accessories, the Towers and the Right of
Way; and (2) disaster restoration.
-4-
<PAGE>
"Maps" means any drawings or maps that either PG&E or ELI is required
to prepare, update or submit to any state or federal regulatory agency as
required by applicable statute, rule or regulation.
"PG&E System Integrity" means the operation of PG&E's electric system
in a manner that is deemed to minimize the risk of injury to persons and
property and enable PG&E to provide adequate and reliable electric service to
its customers, as determined by PG&E.
"PG&E Utility Operations" means the procurement, generation,
transmission, distribution, management or monitoring by PG&E of electricity,
natural gas, water, or any combination thereof, including, without limitation,
consulting and advising with respect to the use thereof and providing all
related equipment and services.
"Regeneration Facilities" means each building along the Cable Route
housing any System Electronics used by ELI to operate the System, including
terminal and regenerator equipment. For purposes of this Agreement, ELI shall
own or lease the physical structure comprising a Regeneration Facility, and all
and System Electronics used in connection with the Regeneration Facility.
"Revocable License" means the nonexclusive and revocable right to use
the Towers, the Substation Sites and the Right of Way to install and operate the
System granted by PG&E to ELI under the terms of this Agreement.
"Right of Way" means PG&E's real property and rights related thereto
created pursuant to a grant, easement, lease, license or other agreement which
are used for the Cable Route.
"Route Miles" means the actual miles traversed by the Cable (including
spurs) based on the "as-built" drawings described in Section 7.12.
"Substation Sites" means those areas on or near the Right of Way where
PG&E owns the land in fee simple and maintains electric transmission or
distribution equipment and on which ELI, pursuant to the terms of this
Agreement, may locate Regeneration Facilities.
"System" means all of the ELI Fibers, the Dark Fibers, the
Regeneration Facilities, the System Electronics and other improvements and
equipment forming a part of the telecommunications network constructed or
installed pursuant to the terms of this Agreement.
"System Electronics" means all items of equipment, hardware, software,
electronics, optronics and any components thereof owned by ELI that are used to
transmit or monitor telecommunications services over the System, including,
without limitation, routers,
-5-
<PAGE>
access nodes, MSDTs, channel banks, digital system cross connect equipment,
fiber optic terminals, multiplexers, terminal and regenerator equipment, and
switches.
"System Materials" means all Cable, Cable Accessories, System
Electronics, and other equipment and materials obtained by PG&E or ELI under the
terms of this Agreement to construct or equip any portion of the System.
"System Segment" means a portion of the System with defined beginning
and end points.
"Taking" means the exercise of the power of eminent domain by any
public or quasi-public authority.
"Term" means: (1) the period of time beginning on the effective date
of this Agreement and terminating on the twenty-first (21st) anniversary of the
Effective Date; and (2) any extensions of the original Term as described in
Section 4.2.
"Tower" means a tower or pole along the Cable Route: (1) erected for
electric power transmission, including all attendant equipment, structures and
power sources; or (2) used for the attachment of electrical power transmission
facilities.
"Tower Sites" means those areas on the Right of Way on which Towers
are located.
"Transferee" means any individual or entity to which either PG&E or
ELI, pursuant to Article XII, transfers or assigns any interest in this
Agreement.
"Working Drawings" means the construction plans for the installation
of the System along the Cable Route.
ARTICLE II
GRANT OF LICENSES FOR
----------------------
INSTALLATION AND CONSTRUCTION
-----------------------------
2.1 Grant of Revocable License. PG&E hereby grants the Revocable
--------------------------
License to ELI on the terms, covenants and conditions set forth in this
Agreement to utilize the Right of Way for the design, engineering, construction,
installation, inspection, testing, Maintenance, repair, replacement, operation,
relocation and removal of the Cable, the Regeneration Facilities and the System
Electronics. Until such time as the Revocable License is converted to the
Irrevocable License (as provided in Section 2.3), ELI's rights to the Towers,
the Substation Sites and the Right of Way shall consist only of a revocable
right to use and shall be subject to all
-6-
<PAGE>
terms, covenants and conditions applicable to the Revocable License as contained
in this Agreement.
2.2 Regulatory Approval. PG&E and ELI shall jointly apply to the
-------------------
CPUC under Section 851 of the California Public Utilities Code for an Approval
authorizing PG&E to enter into the Irrevocable License with ELI for the use and
operation of the Cable, and the related use of the Towers, the Substation Sites
and the Right of Way by ELI. PG&E shall exercise reasonable business efforts to
pursue and secure such an Approval. ELI shall cooperate fully with PG&E's
efforts by providing, at ELI's sole cost and expense, any information, personnel
or other resources PG&E may reasonably request from time to time. ELI's
cooperation shall include assisting in the preparation of applications,
discovery and testimony and making available to PG&E, the CPUC and other
relevant authorities all necessary and appropriate ELI information and
personnel. PG&E makes no representation or warranty concerning its ability to
secure any such Approval, the nature or extent of any conditions or limitations
which may be imposed thereby, how long the application or approval process may
take, or the costs that may be incurred in such process.
2.3 Conversion from Revocable License to Irrevocable License. If and
--------------------------------------------------------
when PG&E secures a final nonreviewable Approval from the CPUC to enter into the
Irrevocable License with ELI for the purposes and on the terms set forth in this
Agreement, the Revocable License shall be converted into and shall become the
Irrevocable License. Except as specifically described in this Agreement, the
Irrevocable License shall be on the same terms, covenants and conditions as the
Revocable License. Such conversion shall be evidenced by a written notice from
PG&E to ELI specifying the conversion and the effective date thereof.
Thereafter, ELI's use of the Towers, the Substation Sites and the Right of Way
shall be in accordance with the terms of the Irrevocable License contemplated by
this Agreement.
2.4 Nonexclusive Use. Use of the Revocable License and the
----------------
Irrevocable License by ELI is expressly made nonexclusive, and neither the
payment of any amount under this Agreement by ELI or any other provision of this
Agreement shall impair in any way PG&E's right or ability to negotiate with any
third-party with respect to the use by such third-party of the Towers, the
Substation Sites or the Right of Way, except to the extent of the rights
specifically granted to ELI under this Agreement.
2.5 Reservation of Certain PG&E Rights. PG&E reserves for itself,
----------------------------------
its successors and assigns, the right to use the Towers, the Substation Sites
and the Right of Way, or any portion thereof, for any purpose that PG&E may find
necessary, together with the right to enter upon or into the Towers, the
Substation Sites and the Right of Way, or any portion thereof, at all times, and
for any and all purposes. These rights may be exercised by PG&E without any
notice to or consent from ELI and without payment of any compensation to ELI;
provided that PG&E shall indemnify and hold ELI harmless from and against any
and all liability,
-7-
<PAGE>
cost and damages to the System that result from the exercise by PG&E, its
agents, successors and assigns of the rights reserved by PG&E under this Section
2.5.
2.6 PG&E Utility Operations. If during the term of the Revocable
-----------------------
License, PG&E determines that the Towers, the Substation Sites, or the Right of
Way over, upon or through which the System is installed, or any portion thereof,
is or are necessary to conduct PG&E Utility Operations, PG&E shall provide ELI
with twelve (12) months' prior written notice. The notice shall be accompanied
with an alternate route plan for the Affected Portion of the System, to the
extent any such alternate route plan can be made available. The foregoing right
shall not be available after the Revocable License converts to the Irrevocable
License as provided in Section 2.3.
2.7 No Property or Possessory Interest. Neither the Revocable
----------------------------------
License, the Irrevocable License nor ELI's exercise of its rights under this
Agreement, shall confer upon ELI any property interest in any of the Towers,
the Substation Sites (other than those portions of the Substation Sites that,
pursuant to the terms of this Agreement, are designated as the Regeneration
Facilities), or the Right of Way, whether or not owned in fee simple by PG&E or
a third-party. Notwithstanding the generality of the foregoing sentence, ELI
shall have the contractual rights granted under the terms of the Revocable
License and the Irrevocable License, as applicable, to enter upon the Towers,
the Substation Sites and the Right of Way to install the Cable and the Cable
Accessories, the Regeneration Sites and the System Electronics and to use the
System subject to the terms, covenants and conditions of this Agreement.
2.8 Right of Entry. The Revocable License or the Irrevocable License
--------------
(as applicable) to use the Towers, the Substation Sites and the Right of Way
shall include the right of entry by ELI's employees, agents and contractors in
order to exercise ELI's rights under this Agreement. ELI shall notify PG&E when
exercising such right of entry pursuant to the following notice requirements:
(a) ELI shall give not less than seventy-two (72) hours prior
notice by telephone to PG&E at (916) 923-7115 before entering any Right of
Way for the purpose of surveying and inspecting or making such engineering
and other tests as may be necessary or desirable for ELI to complete the
Working Drawings, including, without limitation, engineering, design and
installation plans and costs estimates for the work contemplated by this
Agreement.
(b) ELI shall give not less than one week's prior telephone
notice at (916) 923-7115 before entering any Right of Way for the
performance of any construction to be performed by ELI or by others
consistent with and under the terms of Section 7.10.
-8-
<PAGE>
(c) ELI shall give not less than forty-eight (48) hours prior
telephone notice to PG&E at (916) 923-7115 (or such other relevant local
office telephone number as PG&E may from time to time specify by notice to
ELI) before entering any Right of Way for the purpose of inspection,
testing, Maintenance, repair or exercise of any other right of ELI under
this Agreement with respect to any portion of the System not attached to
the Towers. A PG&E representative shall accompany ELI pursuant to Section
8.3(b)(3).
(d) In cases of emergency with respect to any portion of the
installed Cable, ELI shall provide as much prior telephone notice as
possible to PG&E at (707) 423-2436.
2.9 Entry Conditions. PG&E, from time to time by written notice to
----------------
ELI, may specify additional entry conditions or requirements arising out of the
PG&E relationship with a particular land owner, including, without limitation,
prior telephone notice to the land owner, no entry unless accompanied by PG&E
personnel, and entry only through a specific route. ELI's right of entry to the
Towers, the Substation Sites and the Right of Way is further subject to the
conditions that: (a) ELI shall comply with PG&E's established safety rules, a
copy of which is attached to and incorporated by reference in this Agreement as
Exhibit "D," when working around the Towers, cables or other elements of the
PG&E electric power transmission system; and (b) ELI shall indemnify PG&E with
respect to such entry as further provided in Section 15.2 of this Agreement. If
entry by ELI is scheduled to last more than one consecutive day, a single
telephone notice describing the scope and duration of the entry shall be
sufficient notice. If such scope or duration changes, additional notice
consistent with the requirements of Section 2.8 shall be given.
2.10 Memorandum of Agreement. Upon request of ELI and at ELI's
-----------------------
expense, PG&E shall execute in form appropriate for recordation a Memorandum or
Short Form of the Revocable License or the Irrevocable License granted by this
Agreement (or similar document appropriately styled to permit recordation) to
give notice of the existence of the rights of ELI under this Agreement. Such a
recordation may be made in each County in which the Cable Route or some portion
of the Cable is located. Such document shall not be styled as a grant of an
easement or a possessory lease.
2.11 Disclaimer. PG&E makes no representation or warranty whatsoever
----------
(including no warranty of merchantability or fitness for a particular purpose)
concerning the nature, adequacy or suitability of the Towers, the Substation
Sites, or the Right of Way for the purposes intended by ELI. ELI acknowledges
that neither PG&E nor any of PG&E's officers, employees or agents has made, nor
is ELI entering into this Agreement in reliance upon, any such representation or
warranty.
ARTICLE III
-9-
<PAGE>
RIGHTS IN AND TO THE CABLE
--------------------------
3.1 Reservation of IRU. Effective as of the date legal title to any
------------------
Developed System Segment passes to PG&E (as described in Section 7.8(a)), ELI,
upon the terms, covenants and conditions contained in this Agreement, shall
reserve to itself an exclusive IRU in and to the Cable contained in the entire
length of such Developed System Segment for the remainder of the Term.
3.2 Lease of Dark Fibers. Concurrently with the effective date of
--------------------
the reservation of an IRU for any Developed System Segment, ELI hereby grants to
PG&E a lease to use the Dark Fibers contained in and associated with length of
such Developed System Segment. ELI acknowledges and agrees that ELI has no
right to use the Dark Fibers during the Term. In order to allow PG&E to use the
Dark Fibers, PG&E may access to the Dark Fibers at prearranged splice points
along each Developed System Segment designated by PG&E and agreed to by ELI in
connection with the approval of the Working Drawings for such System Segment, as
described in Section 6.4. Any such interconnection shall be made, and all
related equipment shall be acquired and installed, at PG&E's cost and expense.
3.3 Use of ELI Fibers. ELI may use the ELI Fibers for any lawful
-----------------
purpose, including, without limitation, the sale of telecommunications services
to other telecommunications services providers at wholesale, and to retail
commercial and residential telecommunications services users. PG&E acknowledges
and agrees that PG&E has no right to use the ELI Fibers during the Term. ELI
warrants that its use of the ELI Fibers and the System shall comply in all
material respects with applicable government codes, ordinances, laws, rules,
regulations and restrictions.
3.4 Use of Dark Fibers. PG&E and its Affiliates may use the Dark
------------------
Fibers solely for internal communications and for any other purpose ancillary or
incidental to the management, provisioning, use and conservation of energy
associated with PG&E's energy-related operations. Such capacity may not be
provided, donated, traded, bartered or resold to any third-party by PG&E or its
Affiliates without ELI's prior written approval. Nothing in this Section 3.4 is
intended to prohibit PG&E from using the Dark Fibers for two-way communications
between or among itself and other operating natural gas and electrical power
companies with which PG&E engages in energy-related transactions. In addition,
nothing in this Section 3.4 prohibits PG&E from providing new or existing
services to its customer base for purposes ancillary or incidental to the
management, provisioning, use and conservation of energy associated with PG&E's
energy-related operations.
3.5 PG&E Purchase of ELI Telecommunications Services. During the
------------------------------------------------
Term, to the extent it is economically and technically feasible, PG&E and its
Affiliates may purchase unbundled network elements, facilities or functions from
ELI for use in connection with their use
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of the Dark Fibers. The price charged by ELI to PG&E and it Affiliates for such
services and network elements shall be at the lowest prices then charged by ELI
to similarly situated commercial telecommunications services customers for a
similar service or group of services using similar volumes.
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ARTICLE IV
TERM
----
4.1 Term. The Term of this Agreement shall commence on the effective
----
date of this Agreement and shall continue, unless sooner terminated pursuant to
the terms of this Agreement and subject to extension as provided in Section 4.2,
until midnight Pacific time on the twenty-first (21st) anniversary of the
Effective Date.
4.2 Extension of Term. ELI shall have the option to extend the Term
-----------------
for two additional terms of five years each. ELI shall exercise the option to
extend by providing PG&E written notice of ELI's election to extend the Term or
any extension thereof, which notice must be given at least one hundred eighty
(180) days prior to the scheduled expiration date of the Term (as previously
extended, if applicable). In the event ELI does not give notice of its election
to extend the Term (if such an extension is then available) within the time
period specified above, ELI shall be deemed to have elected not to extend the
Term.
4.3 Effect of Extension. The terms, covenants and conditions of this
-------------------
Agreement shall continue in force throughout any extension of the Term.
However, the Annual Fee shall increase from year to year in the manner described
in Section 5.1.
4.4 Quit and Surrender. Within forty-five (45) days after the
------------------
expiration of this Agreement, PG&E may: (a) request that ELI, at ELI's sole cost
and expense, remove all of the System and other personal property and fixtures
installed for ELI on the Towers, the Substation Sites and the Right of Way, at
which time title to the Cable and the Cable Accessories shall pass to ELI, and
to restore the Towers, the Substation Sites and the Right of Way to as good an
order and condition as they were at the time immediately prior to their removal;
(b) remove all of the System and other personal property or fixtures in
accordance with removal policies provided by ELI, and charge ELI for all
reasonable costs associated with such removal, which costs ELI shall pay within
thirty (30) days after receipt of invoices therefor at which time title to the
Cable and the Cable Accessories shall pass to ELI; or (c) request that ELI leave
the System in place, at which time title to the same shall pass to PG&E and PG&E
shall pay to ELI the difference between the lower of market value or depreciated
book value thereof and the estimated cost of removing the System installed for
ELI on Towers, Substation Sites and Right of Way, if such difference is greater
than zero, which cost PG&E shall pay to ELI within thirty (30) days after the
end of the Term.
4.5 Holdover. If ELI continues to occupy or otherwise use the
--------
Towers, the Substation Sites or the Right of Way after the expiration of this
Agreement or earlier termination of the Term, such use or holding over will
unless otherwise agreed to by PG&E in writing, constitute and be construed to be
a month-to-month use of the Towers, the Substation Sites and the Right of Way at
a monthly fee equal to one-eighth (1/8th) of the Annual Fee in effect
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immediately prior to such expiration or termination, plus any other fees due
under the terms of this Agreement. Notwithstanding the foregoing, any period
when the System is being removed pursuant to Section 4.4 shall not be deemed a
holdover.
4.6 Termination of Agreement by ELI. Within ten (10) days' prior
-------------------------------
written notice to PG&E during the first ninety (90) day period following the
Effective Date, ELI may terminate this Agreement if by such date:
(a) ELI, in ELI's reasonable discretion determines that the
operating requirements, protocols, rules or policies of the Independent
System Operator, and the transfer of operational control of electric
transmission systems to the Independent System Operator make it
economically infeasible for ELI: (1) to design or construct the System; or
(2) to use the System for the purposes contemplated by this Agreement;
(b) ELI, after good faith efforts to negotiate and execute a
contract with the Contractor or another qualified Contractor, has not
entered into a contract with the Contractor or another qualified contractor
acceptable to PG&E; or
(c) The Detailed Restoration Plan in form and content reasonably
acceptable to PG&E and ELI has not been completed.
Upon any such termination, ELI shall reimburse PG&E for any actual and direct
costs, including fully loaded labor costs (calculated at two times base
compensation), incurred by PG&E under the terms of this Agreement through the
date of the notice of termination. ELI shall make such reimbursement payment to
PG&E within thirty (30) days after receipt from PG&E of an invoice detailing
PG&E's reimbursable costs as provided in this Section 4.6
ARTICLE V
FEES
----
5.1 Annual Fee. Throughout the Term, ELI shall pay PG&E the Annual
----------
Fee. The Annual Fee represents compensation to PG&E for the Revocable License
or the Irrevocable License (following conversion of the Revocable License to the
Irrevocable License). Except as provided in Section 5.1(a) below, the Annual
Fee shall be calculated on a base price of TWO THOUSAND SEVEN HUNDRED TWENTY-SIX
DOLLARS ($2,726.00) per Route Mile, payable as follows:
(a) The first Annual Fee shall be calculated on a base price of
TWO THOUSAND ONE HUNDRED FIFTY DOLLARS ($2,150.00) per Route Mile and shall
be in the amount of ONE MILLION FOUR HUNDRED FORTY-FOUR THOUSAND
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EIGHT HUNDRED DOLLARS ($1,444,800.00) (based on an estimated 672 Route
Miles), which shall be due and payable ninety (90) days after the Effective
Date.
(b) The second Annual Fee shall be in an amount equal to the
actual Route Miles of the Cable multiplied by the base price per mile
stated above in this Section 5.1, which payment shall be due and payable
within thirty (30) days after the first anniversary of the Effective Date.
At the time the second Annual Fee is paid, an adjustment to the first
Annual Fee shall be made (if necessary) to reflect the actual number of
Route Miles of the installed Cable. Any resulting increase or decrease
shall be reflected in the amount of the second Annual Fee.
(c) All subsequent Annual Fees shall be paid within thirty (30)
days of each anniversary of the Effective Date. The amount of each such
subsequent Annual Fee shall be calculated based on the actual number of
Route Miles of the Cable multiplied by the base price per Route Mile stated
above in this Section 5.1. However, at the time each Annual Fee under this
Section 5.1(c) is calculated, the base price per Route Mile shall be
subject to increase as follows:
(1) The base price per Route Mile shall be increased by an
amount equal to the aggregate percentage increase (if any) in the
amount of the Consumer Price Index since the Effective Date (rounded
to the nearest whole month).
(2) Notwithstanding the foregoing, in no event shall the
base price per Route Mile increase by more than five percent (5%) over
the prior year, nor shall a decrease in the Consumer Price Index
result in a decrease in the amount of such base price.
5.2 Annual Dark Fiber Lease Payment. Throughout the Term, PG&E shall
-------------------------------
pay ELI the Annual Dark Fiber Lease Payment for the use of the Dark Fibers. The
Annual Dark Fiber Lease Payment shall be calculated on a base price of FIVE
HUNDRED SEVENTY-SIX DOLLARS ($576.00) per Route Mile, payable as follows:
(a) The first Annual Dark Fiber Lease Payment shall be in an
amount equal to the actual number of Route Miles of the Cable in Developed
System Segments in place as of the first anniversary of the Effective Date
multiplied by the base rate stated above in this Section 5.2, which payment
shall be due and payable within thirty (30) days after the first
anniversary of the Effective Date.
(b) All subsequent Annual Dark Fiber Lease Payments shall be paid
within thirty (30) days of each anniversary of the Effective Date. The
amount of each
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such subsequent Annual Dark Fiber Lease Payments shall be calculated based
on the actual number of Route Miles of the Cable in Developed System
Segments multiplied by the base price per Route Mile stated above in this
Section 5.2. However, at the time each Annual Dark Fiber Lease Payment
under this Section 5.2(b) is calculated, the base price per Route Mile
shall be subject to increase as follows:
(1) The base price per Route Mile shall be increased by an
amount equal to the aggregate percentage increase (if any) in the
amount of the Consumer Price Index since the Effective Date (rounded
to the nearest whole month).
(2) Notwithstanding the foregoing, in no event shall the
base price per Route Mile increase by more than five percent (5%) over
the prior year, nor shall a decrease in the Consumer Price Index
result in a decrease in the amount of such base price.
5.3 Reimbursement of Maintenance Fees. ELI shall pay or reimburse
---------------------------------
PG&E a prorated portion of the reasonable costs incurred by PG&E with respect to
the Maintenance of the Cable and the Cable Accessories as described in Article
VIII. Maintenance fees shall be prorated between ELI and PG&E based on the
numbers of the ELI Fibers and the Dark Fibers in the Cable. For purposes of
this Section 5.3, "incurred" means the actual and reasonable payments made by
PG&E to contractors, vendors, suppliers and other third-parties, as well as
reasonable expenses booked or recorded by PG&E for costs relating to its own
personnel, materials and supplies charged to such work, including actual and
direct costs including fully loaded labor costs (calculated at two times base
compensation). PG&E shall invoice ELI on a quarterly basis for the Maintenance
fees payable by ELI. ELI shall pay the Maintenance fees within thirty (30) days
after receipt of the invoice from PG&E. If ELI disputes any amount invoiced by
PG&E under this Section 5.3 for Maintenance fees, the amount not in dispute
shall be paid as provided above. Any dispute that is not resolved by mutual
agreement shall be resolved as provided in Section 18.2. Any disputed amount
that is ultimately determined to have been payable may be assessed a late fee in
the amount described in Section 5.6.
5.4 Reimbursement of Costs. On or before the twentieth (20th)
----------------------
working day of each calendar month, PG&E shall prepare and submit to ELI an
invoice for all identified reimbursable costs pursuant to Articles VI, VII and
IX and Sections 14.4 and 15.2 incurred by or for the account of PG&E during the
immediately preceding calendar month, together with all other identified
reimbursable costs previously incurred by PG&E and not previously invoiced. For
purposes of this Section 5.4, "incurred" shall have meaning given in Section
5.3. The full amount of each such invoice shall be due and payable by ELI
within thirty (30) days
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of the date of such invoice. If ELI disputes any amount invoiced by PG&E
hereunder, the amount not in dispute shall be promptly paid by ELI and any
disputed amount that is ultimately determined to have been payable, plus a late
fee in the amount described in Section 5.6, shall be paid by ELI. Any dispute
that is not resolved by mutual agreement of the parties shall be resolved in
accordance with Article XVIII.
5.5 Fee Payment Procedure. Any fees payable to PG&E or ELI under
---------------------
this Article V shall be made by check payable to PG&E or ELI, as applicable, and
sent to the following addresses:
Director, Business Development
Pacific Gas & Electric Company
77 Beale Street, Mail Code B23A
P.O. Box 770000
San Francisco, California 94177
Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may, at its option, and upon not less than five (5) working days
prior written notice to the other, change the method or place of payment
described above.
5.6 Late Fees.
---------
(a) If any installment of the Annual Fee or any other payment due
from ELI to PG&E under the terms of this Agreement is not received by PG&E
within ten (10) days after the date it becomes due, ELI shall pay to PG&E,
in addition to the amount due, a late fee charge in an amount equal to five
percent (5%) of the amount due.
(b) If any Annual Dark Fiber Lease Payment or any other payment
due from PG&E to ELI under the terms of this Agreement is not received by
ELI within ten (10) days after the date it becomes due, PG&E shall pay to
ELI, in addition to the amount due, a late fee charge in an amount equal to
five percent (5%) of the amount due.
ARTICLE VI
SYSTEM DESIGN
-------------
6.1 Design Responsibility. ELI, at ELI's cost and expense, shall
---------------------
design and engineer the System, including the Cable and the Cable Accessories,
and all System Electronics,
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to follow the Cable Route and any modifications to the Towers, the Substation
Sites or the Right of Way necessary to accommodate the System. The System design
shall include only those modifications to the Towers needed to accommodate
installation of the System. ELI shall not be required to upgrade Towers solely
to meet PG&E's internal design specifications for electric transmission
facilities. ELI shall furnish PG&E with copies of any computer models, analyses,
and design specifications developed for modifications to the Towers. ELI shall
also design and engineer all Regeneration Facilities. In fulfilling its
responsibilities under this Section 6.1, ELI shall follow: (a) the Cable
Specifications; (b) PG&E's established procedures for working in and around the
Towers and PG&E's electric transmission facilities, including the safety rules
set forth on Exhibit "D" attached to this Agreement; (c) PG&E's design
specifications relating to the Dark Fibers and associated splicing points; (d)
PG&E's engineering standards and specifications for the Towers; and (e) ELI's
customary design and engineering standards and specifications. ELI shall
reimburse PG&E for any design, engineering, drawing review, or analysis that
PG&E performs for the System under the terms of this Agreement as provided in
Section 5.4.
6.2 PG&E Information. To facilitate ELI's design and engineering of
----------------
the System, PG&E shall furnish to ELI, if available, with reasonable promptness
after request from ELI, and upon the condition that ELI shall reimburse PG&E for
PG&E's reasonable cost of producing and delivering the same:
(a) Copies of all of PG&E's established procedures for working in
and around the Towers and copies of all of PG&E's transmission facilities
and PG&E's design specifications relating to the Dark Fibers and associated
splicing points.
(b) Copies of all available Maps, charts and other engineering
data and documentation pertaining to specified portions of the Right of Way
and the physical conditions thereof, including the location and nature of
all Towers, power stations, Substation Sites, and other improvements, as
well as all relevant engineering data and plans relating thereto;
(c) Copies of all available title documentation with respect to
specified sections of the Right of Way (including existing easements,
rights of use or other use or occupancy rights, if any, previously
granted), the Tower Sites, the Substation Sites and other existing
agreements respecting the Right of Way (including, without limitation,
utility crossings) and restrictions on the right to use and to occupy the
same for the purposes intended by this Agreement;
(d) Any available information on pending or planned relocation
projects by PG&E or others along specified sections of the Right of Way and
information regarding material scheduling restraints on obtaining temporary
clearances on particular System Segments along the Right of Way;
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(e) Maps and other available documentation sufficient to describe
the identity and location of other users of specified portions of the Right
of Way, the Tower Sites, the Substation Sites and the Towers, as well as
identification of areas within the Right of Way which might contain title
or possession problems due to the nature of the ownership, third-party
right of way ownership (including, without limitation, reversionary or
reentry rights of underlying fee owners) or third-party rights to use the
Towers; and
(f) A copy of each Map of any portion of the Cable Route each
year throughout the Term, when prepared and filed with any government
agency, and a copy of any amendments or supplements to each Map which may
be prepared and so filed from time to time.
6.3 Notice of Adverse Claims. PG&E shall promptly notify ELI in
------------------------
writing of any adverse claims, actual or threatened, affecting the Right of Way,
the Towers, the Tower Sites, the Substation Sites, the Regeneration Facilities,
or the Cable Route.
6.4 Working Drawings. When ELI has completed the design for any
----------------
System Segment, ELI shall either prepare, or cause the Contractor to prepare,
and submit to PG&E Working Drawings for the construction of that System Segment.
The Working Drawings shall include plans and specifications for the Cable, the
Cable Accessories and splicing points (including splicing points for the Dark
Fibers at locations designated by PG&E), and a site plan and ground grid design
for the Regeneration Facilities and the System Electronics. Within twenty (20)
working days of submission of the Working Drawings, PG&E shall approve the same
in whole or in part (which approval shall not be unreasonably withheld) or raise
any objections to the Working Drawings, which objections shall be stated in
writing and in reasonable detail and include a statement of the necessary
modifications required to obtain approval. If PG&E fails to respond within such
twenty (20) working day period, PG&E shall be deemed to have approved the
Working Drawings. Upon receipt of any objections to the Working Drawings, ELI
shall use its reasonable efforts to: (i) correct, or cause the Contractor to
correct, the Working Drawings with respect to which such objections were noted
by making appropriate changes thereto and to re-submit the same to PG&E for
approval or objection as stated above; or (ii) dispute such objection by
referring the matter in question for determination to the Chief Engineers of
PG&E and ELI (without thereby waiving any rights with respect to the matter in
controversy). Notwithstanding the foregoing:
(a) PG&E shall have sole authority for approval of the Working
Drawings with respect to the impact of the System on PG&E's electric
transmission system, including, but not limited to the Towers, the
Substation Sites and the Right of Way; and
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(b) ELI shall have sole authority and responsibility for
determining the fitness of the Cable, the Regeneration Facilities and the
System Electronics, as set forth in the Working Drawings, for use in
connection with the System and for approval of the Working Drawings with
respect to the operation and use of the System for telecommunications
purposes.
Approval by PG&E of Working Drawings submitted by ELI shall constitute PG&E's
approval solely with respect to PG&E's electric transmission system and shall in
no way be deemed to constitute an opinion of PG&E with respect to the adequacy
of the telecommunications aspects of the System.
6.5 Construction Schedule. Promptly after the Working Drawings for
---------------------
any System Segment have been approved, PG&E and ELI shall agree upon a detailed
schedule for completion of the construction of the Approved System Segment,
which schedule shall be consistent with the assumptions underlying the
applicable Working Drawings.
6.6 Warranty of Work. Each of PG&E and ELI shall cause their
----------------
respective contractors, subcontractors and agents who perform work to design or
engineer the System (including, without limitation, the Contractor) to warrant
their work in accordance with industry standards and practices and the terms of
this Agreement (including, without limitation, the Cable Specifications). In
addition, PG&E or ELI, as applicable, shall, at its own cost and expense,
enforce the provisions of such warranties following completion of the Work.
ARTICLE VII
CONSTRUCTION
------------
7.1 Scope of Work. ELI shall be responsible for the installation of
-------------
the Cable, the Cable Accessories, the construction of the Regeneration
Facilities, the construction of any modifications to the Towers, the Substation
Sites or the Right of Way necessary to accommodate the System, and the
installation of the System Electronics. The installation work shall be
performed by ELI or the Contractor (and applicable subcontractors). PG&E shall
have the right to approve the appointment and qualifications of the Contractor,
which consent shall not be unreasonably withheld or delayed. In order to permit
ELI to perform its work, PG&E shall allow ELI and the Contractor access to the
Right of Way, the Towers, the Tower Sites and the Substation Sites, subject to
the notice requirements of Sections 2.8 and 2.9. ELI shall reimburse PG&E for
any costs incurred by PG&E under the terms of this Article VII as provided in
Section 5.4.
7.2 Regeneration Facility Sites.
---------------------------
(a) At a one time, nonrecurring fee of ONE HUNDRED FIFTY THOUSAND
DOLLARS ($150,000.00) per site, PG&E, where feasible, shall allow ELI
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to construct the Regeneration Facilities and to install System Electronics
(in an area not to exceed 3,600 square feet at each location) on PG&E's
Substation Sites located near, on or adjacent to the Right of Way. Such fee
shall be due to PG&E by ELI on the date construction of each Regeneration
Facility site commences. The Regeneration Facilities shall be located every
60 to 80 miles along the Cable Route. PG&E makes no representations,
however, that such Substation Sites are or will be sufficient in number or
acreage to accommodate all Regeneration Facilities required for the System.
ELI acknowledges that it may be necessary for ELI to acquire for its own
account other properties along the Cable Route for the purpose of locating
Regeneration Facilities.
(b) The locations, configuration, fencing and access with respect
to all Regeneration Facilities on PG&E's Substation Sites shall be subject
to PG&E's prior written approval. All shelters and exterior fixtures
installed by ELI in conjunction with the Regeneration Facilities shall be
designed, constructed and operated by ELI in accordance with applicable
laws, regulations, permits, codes and standards, and shall be constructed
by ELI in accordance with the Working Drawings (as described in Section
6.4). The Regeneration Facilities shall be separately fenced and grounded
from PG&E's substation facilities, and ELI shall have twenty-four (24)
hour-a-day access to the Regeneration Facilities. However, except as
provided in Sections 2.8 and 2.9, ELI shall have no access or entry within
the perimeter fence of PG&E's substation facilities. The location and size
of any buildings, structures, towers, pole-mounted two-way radios or other
improvements to be erected on the Substation Sites as part of the
Regeneration Facilities shall not interfere with PG&E's use of such land,
or with PG&E's electric system or internal telecommunications system, and
shall be subject to PG&E's approval as part of the review and approval
process for Working Drawings.
(c) PG&E shall grant ELI, upon ELI's request, the necessary
rights with respect to each Regeneration Facility for access to the same
and for the installation, Maintenance, operation, repair, replacement and
removal, at ELI's sole cost and expense, of utilities required to service
each such Regeneration Facility, including without limitation, auxiliary
and primary power sources and water and sewer lines. In furtherance of the
foregoing, as and when required by the utility company or municipality
providing such services, PG&E shall grant necessary access rights to such
utility company or municipality. Power sources installed by or on behalf
of ELI under authority of this subsection shall adhere to all applicable
electrical safety code requirements, local ordinances and prudent utility
practice. ELI shall have the right to access all Regeneration Facilities
with any and all communications and networks, which link may be by pole-
mounted two-way radio.
7.3 Work Standards. All work to be performed hereunder by ELI shall
--------------
be performed in a good, workmanlike manner and in compliance with the
requirements of applicable
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electrical safety codes, prudent utility practice, and all applicable other
laws, ordinances, codes, regulations and Approvals of any government authority
having jurisdiction thereover. Work in areas adjacent to electrically energized
equipment shall be performed in accordance with PG&E's established safety rules
set forth on Exhibit "D" attached to this Agreement.
7.4 Time. Installation of the Cable and the Cable Accessories,
----
construction of the Regeneration Facilities and installation of the System
Electronics shall, to the extent practicable and within the reasonable control
of ELI, be carried out by ELI in accordance with the construction schedule
prepared pursuant to Section 6.5. The construction schedule shall be updated
and revised at regular intervals by ELI with the approval of PG&E, which
approval shall not be unreasonably withheld. Such updating and revision shall
include, without limitation, adjustment for delays caused by a Force Majeure
Event.
7.5 Permits and Approvals. ELI shall use its reasonable efforts to
---------------------
secure on a timely basis, at ELI's expense, all necessary Approvals from
government authorities having jurisdiction or approval rights with respect to
the installation of the Cable, the Cable Accessories and the System Electronics,
and the construction of the Regeneration Facilities. ELI shall indemnify and
save harmless PG&E from any and all claims, including the expense reasonably
incurred by PG&E to defend itself against such claims, resulting from or arising
out of the installation and operation of the System by ELI without first having
secured such Approvals. PG&E shall use reasonable efforts to obtain on a timely
basis all necessary Approvals from government authorities having jurisdiction or
approval rights with respect to the use and occupation of the Right of Way and
the Towers by the System. PG&E shall indemnify and save harmless ELI from any
and all claims, including the expense reasonably incurred by ELI to defend
itself against such claims, resulting from or arising out of PG&E's failure to
obtain such Approvals. In addition, before construction begins on an Approved
System Segment, PG&E shall send written notice to the underlying Right of Way
property owner or owners informing such owner or owners of the work to be
undertaken to install the Cable and the Cable Accessories on such portion of the
Right of Way. ELI shall review and approve the form of notice before it is sent
to the Right of Way property owners, which approval shall not be unreasonably
withheld or delayed. PG&E and ELI shall cooperate with each other to cause
their respective personnel to render all reasonable assistance in the
procurement of the Approvals.
7.6 System Materials. ELI, at its expense, shall provide all System
----------------
Materials necessary to install and operate the Cable, including all System
Electronics. All System Materials shall comply with the Cable Specifications
and shall meet the specifications described in the Working Drawings.
7.7 Interface between PG&E and ELI. PG&E and ELI shall cooperate and
------------------------------
mutually agree upon the respective responsibilities of each party with respect
to the interface or interconnection between the portion of the System for which
ELI has construction, installation and
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Maintenance responsibilities, and the portion of the System for which PG&E has
Maintenance responsibilities.
7.8 Title and Risk of Loss.
----------------------
(a) Cable and Cable Accessories. Upon the issuance of an
---------------------------
Acceptance of Construction with respect to any System Segment, bare legal
title to the Cable and the Cable Accessories shall pass to PG&E.
Notwithstanding such transfer to PG&E, because of the IRU retained by ELI
in and to the Cable, ELI will carry the Cable as an asset on ELI's books
and records. ELI shall be entitled to depreciate such asset for book,
regulatory and tax purposes. In addition, at all times during the Term,
ELI shall bear the risk of loss or damage with respect to the Cable and the
Cable Accessories.
(b) Regeneration Facilities and System Electronics. Title to and
----------------------------------------------
risk of loss associated with the Regeneration Facilities (other than to the
underlying real property) and the System Electronics shall remain with ELI
throughout the Term, and shall at no time pass to PG&E.
The provisions of this Section 7.8 shall survive the expiration or earlier
termination of this Agreement during the transition period described in Section
17.3.
7.9 System Warranties. In procuring and obtaining System Materials
-----------------
pursuant to Section 7.6, ELI shall use reasonable efforts to obtain from the
vendors and suppliers thereof, for the benefit of PG&E and ELI, warranties that
the System Materials shall be: (a) of the kind and quality described in the
applicable Working Drawings and the purchase orders and contracts therefor; (b)
free of defects in workmanship, material, design and title; (c) of good and
merchantable quality; and (d) where appropriate, fit for their intended purpose.
ELI shall administer for the benefit of PG&E and ELI the manufacturer's and
other warranties for the Cable and its associated hardware. If requested by
PG&E, ELI shall assign all such warranties for the Cable and its associated
hardware to PG&E. Following any such assignment, PG&E shall administer all such
warranties for the benefit of PG&E and ELI. ELI shall administer the
manufacturer's and other warranties with respect to the System Electronics both
before and after the issuance by PG&E of an Acceptance of Construction
associated with such System Segment.
7.10 Use of Contractors. ELI shall have the right, at its cost and
------------------
expense, to have any of the construction and installation work to be provided by
ELI under the terms of this Agreement performed by the Contractor, or one or
more other contractors or subcontractors; provided that the Contractor and each
such other contractor or subcontractor retained by ELI to install the Cable
shall be subject to the prior approval of PG&E, which approval shall not be
unreasonably withheld or delayed. No such contract or subcontract shall create
a contractual relationship between the Contractor or such other contractors or
subcontractors and PG&E, and
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ELI shall be solely responsible for the engagement and management of the
Contractor and each such other contractor or subcontractor.
7.11 PG&E Inspection of Construction. PG&E may perform routine
-------------------------------
inspections of construction while construction is in progress. A PG&E
representative may be on-site during all construction work to perform functions
such as safety watch, protection of PG&E's electric transmission system, and to
obtain clearances. Within ten (10) working days after the completion of the
installation of the Cable and the Cable Accessories along an Approved System
Segment, ELI shall notify PG&E of such completion and provide to PG&E a summary
of or a copy of the results of any testing with respect thereto performed by ELI
or the Contractor. PG&E shall have twenty (20) working days following receipt
of such notice from ELI to make an inspection of the Cable and the Cable
Accessories for conformance with the applicable Working Drawings and the other
construction requirements of this Agreement. Within ten (10) working days
following such inspection, PG&E shall furnish ELI with either: (i) an
Acceptance of Construction with respect to the installation of the Cable and the
Cable Accessories along such Approved System Segment; or (ii) a statement
setting forth in reasonable detail any objections to or defects in the
installation of the Cable or the Cable Accessories along such Approved System
Segment. Failure of PG&E to furnish a written notification within such ten (10)
day working period, shall be deemed to constitute an Acceptance of Construction
for purposes of this Agreement. Upon receipt of any such statement of
objections, ELI shall either: (x) correct, or cause the Contractor to correct,
the objections or defects, whereupon PG&E shall re-inspect the same within ten
(10) working days following receipt from ELI that the work has been corrected,
and if found corrected, issue an Acceptance of Construction as stated above; or
(y) dispute such statement of objections or defects by referring the disputed
issues for determination to the Chief Engineers of PG&E and ELI (without thereby
waiving any rights with respect to the issues in controversy). Notwithstanding
the foregoing:
(a) PG&E shall have sole authority for determining the fitness
and acceptance of the Cable Accessories, including, without limitation, the
attachment of the Cable to the Towers and other PG&E facilities as the same
may impact PG&E's electric transmission system, including, but not limited
to the Towers, the Substation Sites and the Right of Way; and
(b) ELI shall have sole authority and responsibility for
determining the fitness and acceptance of the construction with respect to
the operation and use of the System for telecommunications purposes.
Acceptance of the construction and installation work associated with the Cable
and the Cable Accessories for any System Segment by PG&E shall constitute PG&E's
approval solely with respect to PG&E's electric transmission system and shall in
no way be deemed to constitute an opinion of PG&E with respect to the adequacy
of the telecommunications aspects of the System.
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7.12 As-Built Drawings. Within twenty (20) working days following the
-----------------
issuance of an Acceptance of Construction for any System Segment, ELI, at ELI's
cost, shall submit, or cause the Contractor to submit, to PG&E "as-built"
drawings of the Cable and the Cable Accessories. Within ten (10) working days
following the delivery of the "as-built" drawings, PG&E shall inspect the Cable
and the Cable Accessories along such Developed System Segment for conformance
with the "as-built" drawings. Within ten (10) working days following such
inspection, PG&E shall furnish ELI with either: (a) an acceptance of the
drawings with respect to the Cable and the Cable Accessories; or (b) a statement
setting forth in reasonable detail any reasonable objections to or defects in
the drawings thereof. Failure of PG&E to issue written notification to ELI
within such ten (10) working day period shall be deemed to constitute acceptance
of such drawings by PG&E for purposes of this Agreement. Upon receipt of any
such statement of reasonable objections or defects, ELI shall either: (i)
promptly amend, or cause the Contractor to amend, the "as-built" drawings, if so
requested by PG&E; (ii) correct the defects, or cause the Contractor to correct
the defects, whereupon PG&E shall re-inspect the same within ten (10) working
days following notice from ELI that the work has been corrected and, if found
corrected, issue an acceptance of the drawings as provided above; or (iii)
dispute such statement of objections or defects by referring the disputed issues
for determination, without thereby waiving any rights with respect to the issues
in controversy, to the Chief Engineers of PG&E and ELI. Notwithstanding the
foregoing, PG&E's approval of any "as-built" drawings or statement of any
objections to such "as-built" drawings shall signify approval of or objections
with respect to PG&E's electric transmission system along such Developed System
Segment only and shall in no way be deemed to represent an opinion of PG&E with
respect to the adequacy of the telecommunications aspects of such Developed
System Segment.
7.13 Completion of System Construction. Installation of the entire
---------------------------------
System is scheduled for completion by January 31, 1999. If installation of the
System as contemplated by this Agreement is not completed by September 30, 1999,
provided the cause for the delay in completion is not attributable in whole or
in part to PG&E, the Independent System Operator or a Force Majeure Event, PG&E
shall have the option of reevaluating its manpower resources and performing some
or all of the remaining design, engineering and installation work in accordance
with the terms of, and as described in, this Agreement.
7.14 Warranty of Work. Each of PG&E and ELI shall cause their
----------------
respective contractors, subcontractors and agents who perform work to install
the System (including, without limitation the Contractor) to warrant their work
in accordance with industry standards and practices and the terms of this
Agreement (including, without limitation, the Cable Specifications). In
addition, PG&E or ELI, as applicable, shall, at its own cost and expense,
enforce the provisions of such warranties following completion of the work.
ARTICLE VIII
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MAINTENANCE, REPAIR AND RESTORATION
-----------------------------------
8.1 PG&E Maintenance Responsibilities. During the Term, PG&E shall
---------------------------------
be responsible for the Maintenance of the Cable, the Cable Accessories, the
Towers, the Substation Sites and the Right of Way. PG&E shall maintain the
Cable, the Cable Accessories, the Towers, the Substation Sites and the Right of
Way at all times in good working order and in a safe condition, in conformity
with the Cable Specifications and all applicable laws and regulations. ELI
shall reimburse PG&E for such Maintenance costs as described in Section 5.3.
8.2 Maintenance of Regeneration Facilities and System Electronics.
-------------------------------------------------------------
ELI, at ELI's cost, shall be responsible for the Maintenance of the Regeneration
Facilities and the System Electronics.
8.3 Detailed Restoration Plan.
-------------------------
(a) Development of Detailed Restoration Plan. Restoration
----------------------------------------
activities will be integral to ensuring successful implementation of this
Agreement. Timely restoration is dependent on timely coordination and
cooperation between PG&E and ELI. Within ninety (90) days after the
effective date of this Agreement, PG&E and ELI shall jointly develop a
Detailed Restoration Plan, which upon its completion shall attached to this
Agreement as Exhibit "C."
(b) Priorities and General Requirements. The Detailed
-----------------------------------
Restoration Plan shall contain the following priorities and general
requirements:
(1) PG&E's obligation to maintain and repair the Cable, the
Cable Accessories, the Towers, the Substation Sites and the Right of
Way and any activities incidental thereto shall be subordinate to, and
shall not conflict with, PG&E's rightful use and operation of its
electric transmission facilities. In the event both PG&E's electric
transmission facilities and PG&E's Maintenance obligations under this
Agreement require Maintenance or repair, PG&E shall use reasonable
efforts to repair its electric transmission facilities and the Cable
and the Cable Accessories concurrently. However, the restoration of
the Cable and the Cable Accessories shall be at all times subordinate
to the restoration of PG&E's electric transmission facilities.
(2) Any and all PG&E and ELI representatives that construct,
install, repair, replace or otherwise handle the Cable, the Cable
Accessories, the ELI Fibers, the Dark Fibers, or any related materials
and equipment shall be properly trained and equipped to meet all
current industry standards.
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(3) A PG&E representative may be on-site during all repair
and restoration work to perform functions such as safety watch,
protection of PG&E's electric transmission facilities, and to obtain
line clearances. PG&E shall make reasonable efforts to have a
representative arrive at the site requiring emergency Maintenance or
repair activity pursuant to Section 8.3(c)(1).
(4) PG&E and ELI, when performing repair and restoration
work, shall employ prudent utility practices and use the most cost-
effective restoration procedures and materials available given the
Cable Specifications and current industry standards.
(5) All employees and agents of ELI, including the
Contractor, who work near PG&E's electric transmission facilities
shall be properly trained and equipped to perform their work. The
Detailed Restoration Plan shall specify proper training requirements.
PG&E shall have the right to have a representative present when work
is conducted on or around the Towers.
(6) PG&E shall have the authority to stop any work
activities or equipment functions for reasons, determined in good
faith, to involve potential health hazards, safety concerns or
potential disruption to PG&E's electric transmission system. PG&E
shall make reasonable efforts to coordinate with ELI in case of such
events.
(c) Cable Restoration. The Detailed Restoration Plan shall
-----------------
include the following with respect to the restoration of the Cable:
(1) PG&E shall immediately, upon notification from ELI of
interruption of service, failure, disrepair, impairment or other need
for repair or restoration of the Cable and the location of the damaged
Cable, begin to mobilize PG&E crews and make its continuous reasonable
efforts to achieve such necessary repair or restoration, including,
without limitation, making reasonable efforts to have Maintenance
personnel at the affected site within four (4) hours after receipt of
such notice. Subject to the priorities described in Section
8.3(b)(1), in the event that ELI's use of the Cable is interrupted due
to the occurrence of a Force Majeure Event, repairs and restoration
shall be made as expeditiously as possible. ELI recognizes that the
four (4) hour response time represents optimal conditions, and may be
impossible to achieve when emergency restoration of PG&E's System
Integrity is required or when responding to certain remote locations.
Actual response times will be influenced by such factors as the
terrain, weather conditions present at the time the request is made,
and the actual mileage from PG&E's dispatch station to the fault site.
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(2) In the event PG&E is unable to restore the Cable and the
Cable Accessories concurrently with PG&E's electric transmission
facilities, ELI shall be given immediate notice. In addition, PG&E
shall use reasonable efforts to complete the restoration work within
the time frames established in the Detailed Restoration Plan either by
itself or through use of a qualified contractor.
(3) For purposes of Sections 8.3(b) and 8.3(c), "reasonable
efforts" means activities and performances consistent with prudent
utility practice, existing contract provisions for PG&E hourly
employees, preserving PG&E System Integrity, and response times that
do not jeopardize the health and safety of the employees and agents of
PG&E and ELI. In any event, PG&E shall have the sole discretion to
prioritize work in the event of an emergency.
(4) The Detailed Restoration Plan shall set forth the roles
and responsibilities of PG&E and ELI, and shall address issues
regarding logistical considerations, response interval factors,
communication between PG&E and ELI, sequential activity requirements,
and other related items which would impact response time and
restoration intervals. Such issues will be taken into consideration
in the determination of whether PG&E has used reasonable efforts in
such restoration or repair activities. The Detailed Restoration Plan
shall also contain mutually acceptable financial penalties (not to
exceed TEN THOUSAND DOLLARS ($10,000.00) per day), if any, to be paid
to ELI by PG&E for failure to use reasonable efforts on any repair or
restoration, including mobilization effort as described above.
ARTICLE IX
PROPERTY RIGHTS AND OBLIGATIONS
-------------------------------
9.1 Avoidance of Encumbrances. With respect to the Right of Way, the
-------------------------
Cable and the Cable Accessories, PG&E, throughout the Term, shall not create any
lien or other property interest the foreclosure or enforcement of which could
terminate or prevent the exercise of the rights of ELI under this Agreement.
9.2 Maintain Property Rights. With respect to any portion of the
------------------------
Right of Way, PG&E shall timely perform in accordance with all applicable terms
and conditions of the property conveyances by which PG&E holds its interest in
the Right of Way, and shall take such other actions as may reasonably be
necessary to prevent the lapse, forfeiture or termination of such property
interests.
9.3 Payment of Ad Valorem Taxes.
---------------------------
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(a) Right of Way. With respect to any portion of the Right of
------------
Way, PG&E shall timely pay any and all Ad Valorem Taxes the nonpayment of
which could result in a lien upon the Right of Way.
(b) Cable and Cable Accessories. Ad Valorem Taxes allocable to
---------------------------
the Cable and the Cable Accessories shall be prorated between PG&E and ELI
based on the numbers of the ELI Fibers and the Dark Fibers in the Cable.
The party receiving the Ad Valorem Tax bill shall deliver to the other
party copies of all relevant tax bills and supporting materials. The first
party shall also deliver to the other party a detailed calculation of the
portion of the tax bill to be paid by the other party. Subject to the
provisions of Section 9.3(d) below, the other party shall make such payment
to the first party within thirty (30) days following receipt of a copy of
such tax bill and supporting information. The other party may make such
payment under protest, in which event, the parties shall attempt to agree
upon a calculation of the amount payable by the other party under this
Agreement. If such agreement is not reached within sixty (60) days, either
party shall resolve the dispute as provided in Section 18.2.
(c) Regeneration Facilities and System Electronics. ELI shall
----------------------------------------------
timely pay any and all Ad Valorem Taxes assessed against the Regeneration
Facilities and the System Electronics.
(d) Contest of Ad Valorem Taxes. Notwithstanding the foregoing,
---------------------------
the named taxpayer shall consider in good faith a request by the other
party to contest an assessment of Ad Valorem Taxes that would be or have
been charged to the requesting party under this Agreement, upon the
requesting party's written request and provided the requesting party agrees
in writing to assume the full cost of such appeal. Any decision to appeal
an unfavorable administrative decision to a court of competent jurisdiction
shall be made by the taxpayer in its sole and absolute discretion. The
taxpayer shall afford the requesting party and its counsel an opportunity
to review written submissions and discuss case strategy prior to filing any
appeal. The taxpayer shall retain control of the administration of the tax
appeal process. If the contest is favorably resolved, in whole or in part,
upon receipt of a refund, the taxpayer shall promptly remit the requesting
party's share of such refund. To the extent the contest is not favorably
resolved, the requesting party shall not be entitled to any refund of any
costs incurred by the taxpayer.
9.4 Defense of Property Interest. Should ELI's right to utilize, in
----------------------------
accordance with the terms, covenants and conditions of this Agreement, any
portion of the Right of Way be challenged by the holder or alleged holder of a
property interest in such portion of the Right of Way, PG&E, subject to the
provisions of Section 9.6, shall defend ELI's right to utilize such Right of
Way. On an aggregate basis throughout the Term, PG&E shall bear the expense of
the
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first FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000.00) of all such defense
costs, including, but not limited to, any increased compensation or additional
costs or expenses, including litigation costs and expenses and all costs and
expenses of complying with any alternative, additional or modified Right of Way
provisions imposed on PG&E by any Right of Way granted as a result of this
Agreement. On an aggregate basis throughout the Term, ELI shall bear the expense
of such defense costs in excess of FOUR HUNDRED FIFTY THOUSAND DOLLARS
($450,000.00). PG&E shall confer with ELI regarding strategies and actions to be
taken to resolve the matter, and shall use reasonable efforts to resolve the
matter expeditiously and without litigation. PG&E and ELI shall cooperate with
each other to reach a mutually satisfactory resolution of all such matters with
the disputing Right of Way grantor or other holder of a property interest in the
Right of Way. Subject to the provisions of Section 9.6, PG&E shall take all
actions and execute such additional documents as ELI reasonably determines to be
necessary in connection with the establishment or defense of ELI's rights under
this Agreement.
9.5 Property Interest Documentation. From time to time upon request
-------------------------------
of ELI, PG&E, at ELI's expense, shall make available to ELI for ELI's review at
the PG&E main office all agreements and other documents in PG&E's possession
with respect to PG&E's right, title and interest in and to the Right of Way
along the Cable Route. In addition, from time to time throughout the Term, when
a property interest is in dispute or as necessary to design the System, PG&E
shall inform ELI of any facts relating to such property interest of which PG&E
has knowledge which are material to ELI's exercise or defense of the rights
granted to ELI under the terms of this Agreement.
9.6 Incremental Property Rights Costs. If at any time during the
---------------------------------
Term a third-party Right of Way grantor of PG&E makes a demand for additional
compensation or indicates its intent to reopen, renegotiate or terminate the
easement, license or other agreement establishing PG&E's rights in any portion
of the Right of Way as a direct result of the existence of this Agreement, PG&E
shall promptly notify ELI. After conferring with PG&E and allowing PG&E an
opportunity to resolve the issue, ELI may attempt, at ELI's expense, to resolve
the issue with such grantor through negotiation or settlement. Any decision to
commence litigation on behalf of or in the name of PG&E shall be in the sole
discretion of PG&E, and any subsequent litigation, whether brought by PG&E at
ELI's request or by such third-party Right of Way grantor, shall be conducted at
ELI's expense, but under PG&E's direction and control with respect to any issues
materially affecting PG&E's rights in the Right of Way. If the dispute is
resolved through negotiation or settlement approved by ELI, and such resolution
requires the payment of additional consideration by PG&E, ELI shall reimburse
PG&E for the amount of such additional consideration. If the dispute is
resolved through litigation in accordance with the foregoing and the resulting
judgment requires the payment of additional consideration by PG&E not covered
by the defense cost fund described in Section 9.4, ELI shall reimburse PG&E for
the amount of such additional consideration. If ELI possesses the power of
eminent domain within the relevant jurisdiction, ELI shall have the right, in
its sole discretion, independently of PG&E to seek
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resolution of such a dispute by exercising such power of eminent domain,
provided that ELI shall pay all costs of such exercise. The terms of any
settlement must be approved by both PG&E and ELI before it becomes binding.
9.7 Franchise Rights and Licensing Costs. PG&E and ELI shall each be
------------------------------------
responsible for all franchises and licenses required by government authorities
as may be necessary for their respective operations. If at any time during the
Term, a government authority having or asserting franchise or licensing
authority over PG&E makes a demand, as a direct result of the IRU reserved by
ELI under the terms of this Agreement, for a new franchise or license, for
additional compensation under an existing franchise or license, or indicates its
intent to reopen, renegotiate or terminate an existing franchise or license or
gives notice of a forfeiture thereof, PG&E shall promptly notify ELI in writing
of such demand. After conferring with each other and allowing PG&E an
opportunity to resolve the issue, ELI may attempt, at its expense, to resolve
the issue with such government authority through negotiation or settlement. Any
decision to commence litigation on behalf of or in the name of PG&E shall be in
the sole discretion of PG&E, and any subsequent litigation, whether brought by
PG&E at ELI's request or by such government authority, shall be conducted at
ELI's expense, but under PG&E's direction and control in coordination with ELI.
If the dispute is resolved through negotiation or settlement approved by ELI,
and such resolution requires the payment of additional consideration by PG&E, or
additional costs and expenses to comply with any alternative, additional or
modified franchise provisions imposed on PG&E by any government authority having
or asserting franchise authority, ELI shall reimburse PG&E for the amount of
such additional consideration, costs and expenses. If the dispute is resolved
through litigation in accordance with the foregoing and the resulting judgment
requires the payment of additional consideration by PG&E or additional costs and
expenses to comply with any alternative, additional or modified franchise
provisions imposed on PG&E by any government authority having or asserting
franchise authority, ELI shall reimburse PG&E for the amount of such additional
consideration, costs and expenses not attributable to PG&E's use of the Dark
Fibers. The terms of any settlement must be approved by both PG&E and ELI
before it becomes binding. ELI's obligation to reimburse PG&E for any
additional consideration, costs or expenses incurred prior to the expiration or
earlier termination of this Agreement shall survive the expiration or
termination of this Agreement.
9.8 Liens.
-----
(a) Release of Liens. In the event the System or any portion
----------------
thereof becomes subject to any mechanics', artisans' or materialmen's lien,
the following provisions shall apply:
(1) If such a lien is chargeable to or through PG&E, PG&E
shall promptly cause the same to be discharged and released of record
(by payment, posting of bond, court deposit or other means) without
cost to ELI. PG&E shall
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indemnify ELI against all costs and expenses (including reasonable
attorney fees) reasonably incurred in discharging and releasing such
lien. If any such lien is not so discharged and released within ninety
(90) days after notice thereof by ELI to PG&E, then ELI may pay or
secure the release or discharge thereof at the expense of PG&E.
(2) If such a lien is chargeable to or through ELI, ELI
shall promptly cause the same to be discharged and released of record
(by payment, posting of bond, court deposit or other means) without
cost to PG&E. ELI shall indemnify PG&E against all costs and expenses
(including reasonable attorney fees) reasonably incurred in
discharging and releasing such lien. If any such lien is not so
discharged and released within ninety (90) days after notice thereof
by PG&E to ELI, then PG&E may pay or secure the release or discharge
thereof at the expense of ELI.
(b) Contest of Liens. Nothing in this Agreement shall preclude
----------------
PG&E or ELI from contesting any lien described in subsection (a) above or
the contract or action upon which the same arose after the same shall have
been bonded or otherwise released of record, as provided above.
(c) Facilities as Collateral. Neither PG&E nor ELI shall pledge
------------------------
or encumber any of its interests in the System in any manner that impairs
or could impair the use and operation of the System for internal or
commercial telecommunications purposes.
9.9 Discontinuance or Relocation. PG&E shall be entitled to
----------------------------
discontinue its use of or to relocate any part of its electric transmission
system, including the Towers, or to discontinue use of any portion of the Right
of Way or the Substation Sites. However, PG&E shall not take any action to
release or relinquish voluntarily its underlying property interests along the
Right of Way without first notifying ELI. In the event of any such
discontinuance or relocation, PG&E shall give written notice to ELI as soon as
reasonably practicable. The notice of discontinuance or relocation shall be
accompanied by a plan of any alternative route, if available.
9.10 Relocation of Cable. In the event the Cable or the Cable Route
-------------------
requires relocation or replacement during the Term, the following shall apply:
(a) Allocation of Relocation Costs. The cost of such relocation
------------------------------
or replacement shall be allocated as follows:
(1) If requested by ELI, ELI shall pay all of PG&E's and
ELI's relocation costs.
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(2) If requested by PG&E, PG&E shall pay all of PG&E's and
ELI's relocation costs.
(3) If the relocation must be made due to the order of any
court or government agency or the Independent System Operator, PG&E,
in consultation with ELI, shall designate a replacement route for the
Cable. The costs associated with the relocation of the Cable that are
not paid by a third-party shall be prorated between ELI and PG&E based
on the numbers of the ELI Fibers and the Dark Fibers in the Cable.
ELI shall be responsible for any relocation costs associated with the
Regeneration Facilities and the System Electronics.
(b) Design and Installation of Replacement Facilities. The
-------------------------------------------------
design and installation of replacement facilities shall be coordinated and
conducted consistent with the requirements of Articles VI and VII.
ARTICLE X
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
10.1 Representations, Warranties and Covenants of ELI. ELI represents
------------------------------------------------
and warrants to PG&E, and covenants with PG&E, as follows:
(a) Authority. ELI is a corporation duly organized, validly
---------
existing and in good standing under the laws of the State of Delaware, and
has all requisite corporate power and authority to enter into this
Agreement and to perform according to the terms, covenants and conditions
contained in this Agreement.
(b) Restrictions. To the best of ELI's knowledge, the execution
------------
of this Agreement, any instrument or document required by this Agreement,
and the consummation of the transactions contemplated by this Agreement
will not violate any article, bylaw or other corporate restriction, or any
statute, ordinance, law, order, ruling, certificate or license, regulation
or demand of any court, regulatory agency or other tribunal to which ELI is
subject.
(c) Binding Obligation. This Agreement, when duly executed by
------------------
ELI, shall constitute a valid, legal and binding obligation of ELI, and
shall be enforceable in accordance with its terms, subject to the effect of
any bankruptcy, insolvency, reorganization, liquidation, moratorium,
receivership, conservatorship, readjustment of debts, or other similar laws
affecting the rights of creditors generally.
(d) Government Approvals. ELI has all necessary government
--------------------
approvals to enter into and to perform its obligations under this
Agreement, excepting
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approvals, if any, required from local government authorities regarding
ELI's use of the System located within the jurisdiction of any such
government authority, which approvals ELI shall use reasonable efforts to
obtain.
(e) Proceedings. Except for matters now pending or that may
-----------
hereafter be brought by or before the CPUC or other regulatory bodies
having jurisdiction over ELI and the activities contemplated by this
Agreement relating to the provision of telecommunications services, no
litigation or government proceeding is pending, or to ELI's knowledge,
threatened which might adversely affect this Agreement, the transactions
contemplated by this Agreement, or ELI's rights under, or ability to
perform pursuant to the terms of, this Agreement. ELI shall promptly
notify PG&E of any material adverse claims, actual or threatened, affecting
any part of the System or ELI's telecommunication's business in the State
of California.
(f) Conduct of Business. ELI will operate the System in a safe
-------------------
manner and will use reasonable efforts to comply in all material respects
with applicable laws, regulations and government orders.
(g) Compliance with Government Requirements. To its knowledge,
---------------------------------------
ELI has not violated any rule, order or regulation issued by any government
authority with respect to ELI, its business or operations which may
materially and adversely affect ELI's ability to execute and perform its
obligations under this Agreement.
(h) Financing Restrictions. This Agreement does not violate any
----------------------
terms, covenants, conditions or restrictions in any mortgages, bonds and
other indentures of ELI.
(i) Resources and Capacity. ELI possesses sufficient financial,
----------------------
managerial, and technical capacity and resources to perform its obligations
under the terms of this Agreement.
10.2 Representations, Warranties and Covenants of PG&E. PG&E
-------------------------------------------------
represents and warrants to ELI, and covenants with ELI, as follows:
(a) Authority. PG&E is corporation duly organized, validly
---------
existing and in good standing under the laws of the State of California,
and has all requisite corporate power and authority to enter into this
Agreement and to perform according to the terms, covenants and conditions
contained in this Agreement.
(b) Restrictions. To the best of PG&E's knowledge, the execution
------------
of this Agreement, any instrument or document required by this Agreement,
and the consummation of the transactions contemplated by this Agreement
will not violate any article,
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bylaw or other corporate restriction, or any statute, ordinance, law,
order, ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which PG&E is subject.
(c) Binding Obligation. This Agreement, when duly executed by
------------------
PG&E, shall constitute a valid, legal and binding obligation of PG&E, and
shall be enforceable in accordance with its terms, subject to the effect of
any bankruptcy, insolvency, reorganization, liquidation, moratorium,
receivership, conservatorship, readjustment of debts, or other similar laws
affecting the rights of creditors generally.
(d) Government Approvals. PG&E has all necessary government
--------------------
approvals to enter into and to perform its obligations under this
Agreement, excepting approval from the CPUC regarding conversion of the
Revocable License to the Irrevocable License.
(e) Proceedings. Except for matters now pending or that may
-----------
hereafter be brought by or before the CPUC or other regulatory bodies
having jurisdiction over PG&E or the activities contemplated by this
Agreement relating to the provisions of telecommunications services, no
litigation or governmental proceeding, including, without limitation,
before the CPUC, is pending, or to PG&E's knowledge, threatened which might
adversely affect this Agreement, the transactions contemplated by this
Agreement, or PG&E's rights under, or ability to perform pursuant to the
terms of, this Agreement. PG&E shall promptly notify ELI of any material
adverse claims, actual or threatened, affecting any portion of the System.
(f) Conduct of Business. PG&E will maintain the Towers, the
-------------------
Substation Sites and the Right of Way and will use reasonable efforts to
comply in all material respects with all applicable laws, regulations and
government orders.
(g) Compliance with Government Requirements. To its knowledge,
---------------------------------------
PG&E has not violated any rule, order or regulation issued by any
government authority with respect to any license, permit, franchise or
right of way which may materially and adversely affect ELI's use thereof or
PG&E's right to grant the Revocable License to ELI, or to execute and
perform this Agreement.
(h) Financing Restrictions. This Agreement does not violate any
----------------------
terms, covenants, conditions or restrictions in any mortgages, bonds and
other indentures of PG&E.
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(i) Resources and Capacity. PG&E possesses sufficient financial,
----------------------
managerial, and technical capacity and resources to perform its obligations
under the terms of this Agreement.
10.3 Confidentiality. For purposes of this Section 10.3, the term
---------------
"Information" shall mean all information furnished by PG&E and ELI to each
other, or by or to their respective representatives, including drafts and the
final form of this Agreement, whether or not reduced to writing or specifically
identified as intellectual property, non-public, confidential, or proprietary,
and all analyses, compilations, data, studies, or other documents prepared by
PG&E or ELI containing, or based in whole or in part on, any such furnished
information, or reflecting review of, or interest in, all or part of such
information. As used in this Agreement, a "representative" of PG&E or ELI, as
the case may be, shall mean any and all directors, officers, employees, agents
or representatives, including, without limitation, attorneys, accountants,
consultants and financial advisors of PG&E or ELI, as the case may be. In
consideration of being furnished with the Information, PG&E and ELI agree that:
(a) Nondisclosure. The Information will be kept confidential and
-------------
will not, without the prior written consent of the party providing the
information, be disclosed by the other party or any of its representatives,
in any manner whatsoever, in whole or in part, and will not be used by a
party or any of its representatives directly or indirectly for any purpose
other than activities contemplated by this Agreement. Moreover, PG&E and
ELI will transmit the Information only to those representatives who need to
know the Information for the purpose of performing or exercising each
party's obligations and rights under this Agreement.
(b) Authorized Disclosure. Without the prior written consent of
---------------------
the other party, neither party or its representatives will disclose to any
other person the fact that the Information has been made available, or any
of the terms, conditions or other facts with respect to this Agreement,
except as required by law and then only with prior written notice given, as
soon as possible, to the other party and in compliance with the provisions
of Section 20.4. The term "person" as used in this Agreement shall be
interpreted broadly to include, without limitation, any corporation,
company, group, partnership or individual.
(c) Nonconfidential Information. This Section 10.3 shall be
---------------------------
inoperative as to any portion of the Information which: (1) is or becomes
generally available to the public other than as a result of a disclosure by
a party or its representatives; (2) becomes available to a party in good
faith from a third-party not subject to a confidential obligation to the
party; or (3) was known to a party on a nonconfidential basis prior to its
disclosure by the other party or one of its representatives.
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(d) Compelled Disclosure. In the event that either party or
--------------------
anyone to whom the party transmits the Information relating to this
Agreement is requested or becomes legally compelled (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, or any similar process) to disclose any of the
Information, the party so compelled will provide prompt written notice of
such event to the other party so that the notified party may seek a
protective order or other appropriate remedy, waive compliance with the
provisions of this Agreement or both. In the event that such protective
order or other remedy is not obtained or that the notified party waives
compliance with the provisions of this Agreement, the legally compelled
party will furnish only that portion of the Information which is legally
required and will exercise reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded the Information.
(e) Public Records Law. It is understood that PG&E and ELI are
------------------
or may in the future be subject to public records disclosure laws, and that
these laws will govern the disclosure responsibilities of PG&E and ELI
notwithstanding the terms of this Agreement. To the extent reasonably
practical, PG&E and ELI will notify each other of any public records
requests of any part of the Information, and will give the other party a
reasonable opportunity to contest the public records request.
(f) Non-Waiver. The failure or delay by a party in exercising
----------
any rights, power or privilege under this Section 10.3 shall not operate as
a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise of any right, power or privilege hereunder.
(g) Public Communications. All press releases and other public
---------------------
communications of any sort relating to this Agreement or the transactions
described herein shall be subject to the prior approval of both PG&E and
ELI, which approval shall not be unreasonably withheld or delayed.
(h) Equitable Relief. A party shall be entitled to equitable
----------------
relief, including injunctive relief and specific performance, in the event
of any breach of the confidentiality provisions of this Agreement. Such
remedies shall not be deemed to be the exclusive remedies for a breach of
this Agreement by a party or its representatives, but shall be in addition
to all other remedies available by law or equity. A breach of the
provisions of this Section 10.3 may subject that party who has provided
Information to irreparable harm and injury.
(i) Ownership of Information. The Information acquired from the
------------------------
other party or any of its representatives shall be and shall remain the
exclusive property
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of the disclosing party. Neither the disclosure of Information, or the
execution of this Agreement shall be construed as a license to the party
receiving Information to make use of, or sell the Information or products
derived from the Information, or to make use of it in any way that damages
or competitively disadvantages the party disclosing the Information.
10.4 Cooperation. PG&E and ELI shall cooperate with each other, in
-----------
good faith, and shall use reasonable efforts to:
(a) System Design and Deployment. Expeditiously complete the
----------------------------
design and installation of the System as provided in this Agreement;
(b) Conflicts Resolution. Negotiate reasonable and mutually
--------------------
beneficial resolutions to all conflicts that may arise between PG&E and ELI
relating to the design, installation, Maintenance, operation and use of the
System or any other duty, right or obligation of either of them relating to
or arising out of this Agreement; and
(c) Approvals and Consents. Obtain all regulatory, government,
----------------------
third-party and shareholder approvals, consents, permits and franchises as
may be necessary or prudent for the operation of the System as described in
this Agreement.
10.5 Regulatory Compliance. PG&E and ELI shall each be responsible to
---------------------
comply with the regulatory requirements relating to its own business practices
and operations.
10.6 Certificates. Upon request of either PG&E or ELI, at any time
------------
and from time to time, the other party without charge and within thirty (30)
days following receipt of such request, shall certify in writing to the
requesting party: (a) that this Agreement is in full force and effect and has
not been supplemented, modified or amended (or if there have been supplements,
modifications or amendments, specifying same); (b) whether, to the best
knowledge of the party issuing such certificate, any sums are then due and
payable by ELI to PG&E or by PG&E to ELI pursuant to any provisions of this
Agreement (and if such sums remain unpaid, the amount thereof); (c) whether, to
the best knowledge of the party issuing such certificate, the other party is in
default in the performance of any term, covenant or condition of this Agreement
(or, if defaults exist, specifying each particular in which it is asserted such
other party is in default); (d) if such certificate is issued in connection with
any financing of any portion of the System, the requesting party is authorized
to enter into the financing transaction and that the other party will adhere to
and perform its obligations under Article XII, following its receipt of notice
of the Transfer; and (e) as to other matters as the party requesting such
certificate may reasonably request.
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10.7 Independent Status. PG&E and ELI reserve no control whatsoever
------------------
over the employment, discharge, compensation of or services rendered by the
employees or contractors of each other, notwithstanding the ability of PG&E and
ELI to exercise certain rights to enforce the various standards and
specifications agreed upon pursuant to this Agreement. Nothing in this
Agreement shall be construed as inconsistent with the foregoing independent
status and relationship or as creating or implying a partnership or joint
venture between PG&E and ELI.
10.8 Transactions with Affiliates. All transactions with an Affiliate
----------------------------
involving the System entered into by either PG&E or ELI shall be at arm's-length
and shall comply with applicable regulatory requirements.
10.9 Further Assurances. PG&E and ELI, with reasonable promptness,
------------------
shall each execute and deliver such further instruments, documents, applications
and requests or petitions for authority as may be necessary or prudent to
implement or carry out more effectively the terms, covenants and conditions of
this Agreement.
10.10 Damage and Destruction. In the event any portion of the System
----------------------
is damaged or destroyed, PG&E or ELI, as applicable, shall give immediate notice
to the other party of the occurrence of such damage or destruction. PG&E and
ELI shall cooperate with each other to reroute or substitute services delivered
by means of the Affected Portion to allow for continued and uninterrupted
service to customers. Unless mutually agreed otherwise, PG&E and ELI shall use
any available insurance proceeds to repair or reconstruct the damaged or
destroyed Affected Portion and to restore the Affected Portion to its full and
proper use. PG&E and ELI shall coordinate efforts to minimize any disruption of
service that may result from the occurrence of the damage or destruction.
10.11 Audit Rights. ELI shall have the right to audit PG&E's books and
------------
records relating to PG&E's Maintenance costs, relocation expenses, taxes and
fees relating to the System, and other costs for which PG&E, under the terms of
this Agreement, seeks reimbursement or contribution from ELI, including any and
all records of PG&E and its subcontractors for the purpose of verifying
compliance with Section 20.14. PG&E shall have the right to audit ELI's books
and records relating to ELI's costs for which ELI, under the terms of this
Agreement, seeks reimbursement or contribution from PG&E, including any and all
records of ELI and its subcontractors for the purpose of verifying compliance
with Section 20.14. Any such audit shall be conducted: (a) by a reputable
public accountant or, as applicable, a member of the internal auditing staff of
PG&E or ELI; and (b) during reasonable business hours in such manner as not to
interfere with the normal business activities of the party being audited. PG&E
and ELI shall include the necessary provisions in their contracts and
subcontracts to ensure compliance with this Section 10.11.
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10.12 Interference. Whenever PG&E notifies ELI that the System or any
------------
portion thereof materially interferes with the operation of PG&E's equipment or
with existing equipment of current licensees, or constitutes a hazard to the
service rendered by PG&E or other licensee, or fails to comply with the codes or
regulations herein before referred to, ELI shall use reasonable efforts to
cooperate with and assist PG&E to remedy the interference or hazard. Under no
circumstances shall ELI, its employees or contractors or subcontractors disturb,
tamper with or contact any PG&E equipment, without PG&E's consent. ELI shall
avoid contact with PG&E's lines, wires and transformers, whether or not they
appear to be energized.
10.13 Independent System Operator. PG&E shall give ELI written notice
---------------------------
at least thirty (30) days in advance of the establishment of the Independent
System Operator and of PG&E's intent to cede operation control of its electric
transmission system to the Independent System Operator. PG&E shall provide ELI
with a copy of the organizational documents, protocols and operating policies of
the Independent System Operator when available.
ARTICLE XI
INSURANCE
---------
11.1 Required Insurance Coverage. Without limiting any of the
---------------------------
liabilities or other obligations of PG&E or ELI, both parties shall procure and
cause their respective contractors to procure and maintain in force at their own
cost and expense the following insurance coverages throughout the Term and
during the transition period following a termination (as provided in Section
17.3):
(a) Workers Compensation and Employers Liability Insurance.
------------------------------------------------------
Workers Compensation Insurance to cover obligations imposed by applicable
federal and state statutes and Employers Liability Insurance with a minimum
limit of $1,000,000.00 for injury or death for each accident.
(b) Commercial Liability Insurance. Commercial Liability
------------------------------
Insurance with a minimum combined single limit of $10,000,000.00 each
occurrence. The policy shall include coverage for bodily injury liability,
property damage liability, personal injury liability, products liability,
completed operations liability, and contractual liability for liability
assumed under this Agreement. The policy shall contain a severability of
interest provision.
(c) Automobile Liability Insurance. Automobile Liability
------------------------------
Insurance with a minimum combined single limit of $3,000,000.00 for each
accident for bodily injury and property damage, to include coverage for all
owned, non-owned and hired vehicles.
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(d) Professional Liability Insurance. Professional Liability
--------------------------------
Insurance for engineering activities performed by each party under the
terms of this Agreement. The limit of coverage shall not be less than
$1,000,000.00 for each claim.
11.2 General Conditions. The following general conditions apply to
------------------
the extent PG&E or ELI do not self-insure:
(a) PG&E Policies. The policies required to be maintained by
-------------
PG&E and its contractors pursuant to Sections 11.1(b), (c) and (d) shall:
(1) include ELI as an additional insured; (2) provide that ELI shall not by
reason of its inclusion as an additional insured, incur liability to the
insurer for payment of premiums for such insurance; and (3) provide that
such insurance is primary and not excess without right of contribution from
any other insurance which might be otherwise available to ELI.
(b) ELI Policies. The policies required to be maintained by ELI
------------
and its contractors pursuant to Sections 11.1(b), (c) and (d) shall: (1)
include PG&E as an additional insured; (2) provide that PG&E shall not by
reason of its inclusion as an additional insured, incur liability to the
insurer for payment of premiums for such insurance; and (3) provide that
such insurance is primary and not excess without right of contribution from
any other insurance which might be otherwise available to PG&E.
11.3 Evidence of Insurance. Prior to commencing work under the terms
---------------------
of this Agreement, PG&E, ELI and their respective contractors shall furnish a
certificate of insurance as evidence attesting that the insurance required under
this Article XI is in effect. Each policy of insurance required hereunder shall
state that coverage shall not be cancelled except after thirty (30) days' prior
written notice to the other party. The certificate of insurance must be signed
by a person authorized by that insurer to bind coverage on its behalf and shall
be submitted:
If to PG&E, to: Pacific Gas and Electric Company
Insurance Department
P.O. Box 770000
MC: B24H
San Francisco, California 94177
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
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Either party may inspect original policies or require complete certified copies
at any time. Upon request, each of PG&E and ELI shall furnish the other with
the same evidence of insurance for its contractors and subcontractors as
required by this Article XI.
11.4 Blanket Policies. Nothing in this Article XI shall be construed
----------------
to prevent either PG&E or ELI from satisfying its insurance obligations pursuant
to this Agreement under a blanket policy or policies of insurance which meet or
exceed the requirements of this Article XI.
11.5 Self-Insurance. Notwithstanding any provision in this Article XI
--------------
to the contrary, PG&E may self-insure and ELI, through its parent Citizens
Utilities Company, may self-insure all or any portion of the insurance required
under this Agreement.
ARTICLE XII
ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS
------------------------------------------
12.1 Transfers. This Agreement and the rights granted under this
---------
Agreement are being granted in reliance on the financial standing and technical
experience of PG&E and ELI and are thus granted personally to ELI by PG&E and to
PG&E by ELI. Neither PG&E nor ELI may assign any right under this Agreement,
whether in whole or in part, without the prior written consent of the other,
which consent shall not be unreasonably withheld. Notwithstanding the
generality of the foregoing:
(a) Either party may assign its rights in this Agreement in whole
or in part without the consent of the other party to a domestic Affiliate,
provided that such assignment shall not relieve the assigning party of any
of its obligations under this Agreement.
(b) ELI, without prior notice to or the prior consent of PG&E,
shall have the right to sell, lease, assign or swap rights in and to the
ELI Fibers to commercial users of telecommunications services and to other
telecommunications services providers. All such transactions shall be
subject to the terms of this Agreement, and no such transaction shall
relieve ELI of its obligations under this Agreement.
12.2 PG&E or ELI Financing. In the event that PG&E or ELI, after
---------------------
obtaining the consent of the other pursuant to Section 12.1, assigns its
interest under this Agreement pursuant to a sale-leaseback or other financing
transaction, the other party agrees that, upon written notice to it specifying:
(a) the name and address of the Transferee; and (b) the name and address of the
Transferee's agent who is entitled to receive notice on behalf of the
Transferee, the other party will simultaneously give to such agent any notices
required to be given to the financing party under this Agreement. PG&E and ELI
shall accept payment or performance by the
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Transferee's agent of any obligation of the other party provided such payment or
performance shall be made within the applicable cure periods allowed by this
Agreement. The Transferee's agent shall have the right to cure any default by
PG&E or ELI, as the case may be, within the applicable cure periods allowed by
this Agreement. Subject to the terms of this Section 12.2, the Transferee may
further assign or transfer any rights or interests it may have under this
Agreement from time to time, in whole or in part, with the prior written consent
of PG&E or ELI, as the case may be, which consent shall not be unreasonably
withheld or delayed.
12.3 PG&E and ELI Recognition of Transferees. If any such Transferee
---------------------------------------
shall obtain use of all or any part of the System, through enforcement of any
agreement with PG&E or ELI, then, so long as all of the obligations of the other
party under this Agreement are being performed and such Transferee agrees to be
bound by and to observe and perform the obligations of the financing party under
this Agreement with respect to the Affected Portion, the other party shall not
disturb the use of the Affected Portion by such Transferee and shall recognize
such Transferee's right to use thereof, subject to the terms of this Agreement.
12.4 No Assumption or Release. Except as set forth in Section 12.3,
------------------------
no assignment under this Article XII shall be deemed to be an assumption by the
Transferee of the obligations of PG&E or ELI under this Agreement. PG&E or ELI,
as the case may be, shall not in any event be released, relieved or discharged
of or from any of the obligations assumed under this Agreement unless
specifically agreed to by the other.
12.5 Mergers and Acquisitions. Notwithstanding any provision of this
------------------------
Agreement to the contrary, neither PG&E nor ELI shall be restricted or
prohibited by this Agreement from participating in or completing any mergers
with or acquisitions of businesses similar to or comparable in nature with the
business in which they are now engaged, provided that the successor by merger to
either PG&E or ELI shall be subject to the terms, covenants and conditions of
this Agreement and shall be deemed to have assumed all obligations of the
merging party hereunder.
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ARTICLE XIII
CONDEMNATION
------------
13.1 Taking. Should any portion of the Towers, the Substation Sites
------
or the Right of Way owned or controlled by PG&E, or any other interest belonging
to PG&E, be the subject of a Taking, the Revocable License or the Irrevocable
License granted to ELI under the terms of this Agreement, as then applicable, to
the extent appropriated by such Taking, shall terminate.
13.2 Taking Awards. In the proceeding for any such Taking (or an
-------------
involuntary discontinuance of the use of a portion of the Right of Way in
anticipation of a Taking), the interests of PG&E and ELI in and to the Affected
Portion shall be severed. Any awards resulting from the proceeding shall be
allocated between and payable in accordance with the respective interests of
PG&E and ELI (both physical and occupational, including any incremental value of
any property interest by virtue of the installation therein of the System). In
addition, PG&E and ELI shall each be entitled to claim and receive the portion
of the total award attributable to its interest in the System and may claim
damages payable on account of relocation or re-routing expenses relating to the
System.
13.3 Notice of Taking. PG&E and ELI shall each notify the other
----------------
immediately of any Taking threatened or filed against any portion of the Towers,
the Substation Sites or the Right of Way. In addition, PG&E shall not sell or
convey any portion of the Right of Way containing any of the Regeneration
Facilities or System Electronics to such acquiring authority in lieu of
condemnation without giving prior notice to and the opportunity to ELI to
participate in the negotiations with respect to such conveyance. Upon giving
any such notice of a proposed or pending Taking, PG&E, to the extent reasonably
available, shall procure alternate Right of Way within which the System may be
relocated following such Taking. PG&E and ELI shall share in the cost of
relocating the System affected by such relocation as described in Section 9.10.
ARTICLE XIV
ENVIRONMENTAL HAZARD LIABILITY
------------------------------
14.1 Responsibilities of Parties. If any Hazardous Substance is
---------------------------
unlawfully introduced or released by either PG&E or ELI which affects any
portion of the System, the responsible party shall defend, indemnify and hold
the other party harmless from and against any and all expenses, claims, fines
and actions arising out of the existence, introduction or release of any such
Hazardous Substance. In addition, the responsible party shall also bear all
costs of removing, neutralizing, containing or otherwise remediating any such
Hazardous Substance. In cases where both PG&E and ELI have caused or
contributed to the existence, introduction or release of any such Hazardous
Substance, each party shall be liable therefor and shall indemnify
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and hold the other harmless to the extent of such party's contribution to the
release or contamination.
14.2 Alternate Locations. Upon learning of the existence,
-------------------
introduction or release of Hazardous Substances on areas within which the System
is or is intended to be located, PG&E and ELI, to the extent available, shall
use alternate contiguous areas within which the System may be relocated to avoid
the contaminated areas.
14.3 Warning. The California Health and Safety Code requires
-------
businesses to provide warnings prior to exposing individuals to material listed
by the Governor of California as chemicals "known to the State of California to
cause cancer, birth defects or reproductive harm" PG&E uses chemicals on the
Governor's list at many of its facilities and locations. Accordingly, in
exercising its rights and performing the work or services contemplated by this
Agreement, ELI and its contractors and subcontractors and their respective
employees and agents may be exposed to chemicals on the Governor's list. ELI
shall be responsible for notifying all such persons that work performed
hereunder may result in exposures to chemicals on the Governor's list.
14.4 Condition of Premises. Once the locations of all Regeneration
---------------------
Facilities have been identified, PG&E shall conduct Phase I environmental
assessments on those PG&E Substation Sites where Regeneration Facilities will be
located. The cost of all such environmental assessment reports shall be borne
equally by PG&E and ELI. PG&E shall provide a copy of each such report to ELI
promptly after it becomes available. Before any such environmental assessments
are undertaken by PG&E, PG&E and ELI shall agree on the scope of the work to be
performed by the environmental engineers or consultants under the terms of this
Section 14.4. All assessment work shall be performed by qualified environmental
engineers or consultants.
ARTICLE XV
LIABILITY AND INDEMNITY
-----------------------
15.1 PG&E Indemnity. PG&E shall indemnify, defend and hold harmless
--------------
ELI, its parent corporation, officers, agents and employees of and from any
claim, demand, lawsuit, or action of any kind for injury to or death of persons,
including, but not limited to, employees of PG&E or ELI, and damage or
destruction of property, including, but not limited to, property of either PG&E
or ELI, arising out of: (a) negligent acts or omissions or willful misconduct
of PG&E, its agents, officers, directors, employees or contractors; or (b) the
breach by PG&E of any of its obligations under this Agreement. The obligation
to indemnify shall extend to and encompass all costs incurred by ELI in
defending such claims, demands, lawsuits or actions, including, but not limited
to, attorney, witness and expert witness fees, and any other litigation related
expenses. PG&E's obligations pursuant to this Section 15.1 shall not extend to
claims,
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demands, lawsuits or actions for liability to the extent attributable to the
negligence or willful misconduct of ELI, its parent corporation, directors,
officers, employees, contractors, successors or assigns, or the acts of third-
parties. PG&E shall pay any cost that may be incurred by ELI in enforcing this
indemnity, including reasonable attorney fees.
15.2 ELI Indemnity. ELI shall indemnify, defend and hold harmless
-------------
PG&E, its officers, agents and employees of and from any claim, demand, lawsuit,
or action of any kind for injury to or death of persons, including, but not
limited to, employees of PG&E or ELI, and damage or destruction of property,
including, but not limited to, property of either PG&E or ELI, arising out of:
(a) negligent acts or omissions or willful misconduct of ELI, its agents,
officers, directors, employees or contractors; or (b) the breach by ELI of any
of its obligations under this Agreement. The obligation to indemnify shall
extend to and encompass all costs incurred by PG&E in defending such claims,
demands, lawsuits or actions, including, but not limited to, attorney, witness
and expert witness fees, and any other litigation related expenses. ELI's
obligations pursuant to this Section 15.2 shall not extend to claims, demands,
lawsuits or actions for liability to the extent attributable to the negligence
or willful misconduct of PG&E, its directors, officers, employees, contractors,
successors or assigns, or the acts of third-parties. ELI shall pay any cost
that may be incurred by PG&E in enforcing this indemnity, including reasonable
attorney fees.
15.3 No Consequential Damages. NOTWITHSTANDING ANY PROVISION IN THIS
------------------------
AGREEMENT TO THE CONTRARY, NEITHER PG&E, ELI NOR THEIR RESPECTIVE CONTRACTORS OR
SUBCONTRACTORS SHALL BE LIABLE TO THE OTHER FOR INCIDENTAL, CONSEQUENTIAL,
SPECIAL, PUNITIVE OR INDIRECT DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF
USE, LOSS OF PROFITS OR REVENUE, COST OF CAPITAL OR INCREASED OPERATING COSTS,
ARISING OUT OF THIS TRANSACTION WHETHER BY REASON OF CONTRACT, INDEMNITY, STRICT
LIABILITY, NEGLIGENCE, INTENTIONAL CONDUCT, BREACH OF WARRANTY OR FROM BREACH OF
THIS AGREEMENT.
15.4 Waiver of Subrogation. To the extent that such insurance is in
---------------------
force and collectible and to the extent permitted by law, each of PG&E and ELI
hereby releases and waives all right of recovery against the other or anyone
claiming through or under each of them by way of subrogation or otherwise. The
foregoing release and waiver shall be in force and effect only if the releasing
party's insurance policies contain provisions to the effect that such a release
and waiver shall not invalidate the insurance, and each of PG&E and ELI shall
use its best efforts to secure such provisions in its policies.
15.5 Defense of Claims. Either PG&E or ELI as the indemnifying party
-----------------
hereunder shall have the right to defend the other by counsel of the
indemnifying party's selection
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reasonably satisfactory to the indemnified party, with respect to any claims
within the indemnification obligations of this Article XV. PG&E and ELI shall
give each other prompt notice of any asserted claims or actions indemnified
against, shall cooperate with each other in the defense of any such claims or
actions, and shall not settle any such claims or actions without the prior
written consent of the other.
15.6 Third-Party Claims. Except as set forth in Sections 12.2, 15.1
------------------
and 15.2, nothing in this Agreement shall be construed to create rights in, or
duties or liabilities to, or any standard of care with reference to, or to grant
remedies to, any person or entity not a party to this Agreement. PG&E and ELI
by entering into this Agreement do not hold themselves out as furnishing like or
similar services to any other person or entity.
15.7 Survival. The obligations of the respective parties under this
--------
Article XV shall survive the expiration or earlier termination of this
Agreement.
15.8 Applicability of Liability Limitations. The waivers and
--------------------------------------
disclaimers of liability, releases from liability, exclusive remedy provisions,
and (except as expressly stated to the contrary therein) indemnity and hold
harmless provisions expressed throughout this Agreement shall apply even in the
event of the fault, negligence (in whole or in part), strict liability, or
breach of contract of the party released or whose liability is waived,
disclaimed, limited, apportioned or fixed by such exclusive remedy provision, or
who is indemnified or held harmless, and shall extend to their respective
Affiliates and its and their parent corporations, directors, officers, employees
and agents. Such provisions shall continue in full force and effect
notwithstanding the completion, termination, suspension, cancellation or
rescission of this Agreement, or termination of the rights and privileges
granted by this Agreement. No officer, director, employee, agent or other
individual representative of either PG&E or ELI shall be personally responsible
for any liability arising under this Agreement.
15.9 Claims Against Third-Parties. Nothing contained herein shall
----------------------------
operate as a limitation on the right of either PG&E or ELI to bring an action
for damages against any third-party, including indirect, special or
consequential damages, based on any acts or omissions of such third-party as
such acts or omissions may affect the construction, operation or use of the ELI
Fibers, the Dark Fibers or the System. PG&E and ELI shall reasonably cooperate
with each other, including, without limitation, executing documents and doing
whatever else may be reasonably appropriate to enable the other to pursue any
such action against such third-party.
ARTICLE XVI
FORCE MAJEURE
-------------
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<PAGE>
16.1 Excuse of Performance. Notwithstanding anything in this
---------------------
Agreement to the contrary, neither PG&E or ELI shall be liable or responsible
for a delay or failure in performing or carrying out any of its obligations
(other than obligations to make payments) under this Agreement caused by a Force
Majeure Event (as defined below).
16.2 Definition. The term "Force Majeure Event" as used in this
----------
Agreement shall mean any cause beyond the reasonable control of PG&E or ELI, as
applicable, or beyond the reasonable control of any of their respective
contractors, subcontractors, suppliers or vendors, including without limitation:
(a) Acts of God. Acts of God, including, but not necessarily
-----------
limited to, lightning, earthquakes, adverse weather of greater duration or
intensity than normally expected for the job area and time of year, fires,
explosions, floods, other natural catastrophes, sabotage, acts of a public
enemy, acts of government or regulatory agencies, wars, blockades,
embargoes, insurrections, riots or civil disturbances;
(b) Labor Disputes. Labor disputes, including, but not
--------------
necessarily limited to, strikes, work slowdowns, work stoppages or labor
disruptions, labor or material shortages, or delays or disruptions of
transportation;
(c) Court Orders. Orders and judgments of any federal, state
------------
or local court, administrative agency or governmental body or the
Independent System Operator having operational control over PG&E's electric
transmission system;
(d) Change in Law. The adoption of or change in any federal,
-------------
state or local laws, rules, regulations, ordinances, permits or licenses,
or changes in the interpretation of such laws, rules, regulations,
ordinances, permits or licenses, by a court or public agency having
appropriate jurisdiction after the date of the execution of this Agreement;
or
(e) Government Approvals. Any suspension, termination,
--------------------
interruption, denial or failure to issue or renew by any government
authority or other party having approval rights of any Approval required or
necessary hereunder for the construction, installation or operation of the
System or for either party to perform its obligations hereunder, except
when such suspension, termination, interruption, denial or failure to issue
or renew results from the negligence or failure to act of the party
claiming the occurrence of a Force Majeure Event.
16.3 Continuance after Force Majeure Event. If either PG&E or ELI
-------------------------------------
cannot fulfill any of its obligations under this Agreement by reason of a Force
Majeure Event, such party
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<PAGE>
shall promptly notify the other and shall exercise due diligence to remove such
inability with all reasonable dispatch; provided, that nothing contained in this
Section 16.3 shall be construed as requiring PG&E or ELI to settle any strike,
work stoppage or other labor dispute in which it may be involved, or to accept
any permit, certificate, license or other Approval on terms deemed unacceptable
to such party, or to enter into any contract or other undertaking on terms which
the party deems to be unduly burdensome or costly.
-48-
<PAGE>
ARTICLE XVII
BREACH AND TERMINATION
----------------------
17.1 Termination Events. The occurrence and continuance of the
------------------
following events may result in the termination of this Agreement, subject to the
provisions of this Article XVII:
(a) Change of Conditions. A change of conditions under which
--------------------
PG&E, ELI or the System operates which is beyond the control of the parties
such that the System cannot continue to operate as contemplated by the
terms of this Agreement, including, without limitation:
(1) A change in the financial condition of PG&E or ELI that
materially and adversely affects the ability of PG&E or ELI to perform
in accordance with the terms, covenants and conditions of this
Agreement;
(2) The occurrence of an event of casualty which results in
the physical destruction of thirty percent (30%) or more of the
System.
(3) Changes in law or in the regulatory environment,
including, without limitation, actions by the Independent System
Operator, that materially and adversely affect the use of the System.
(4) The occurrence of a Force Majeure Event that renders
PG&E or ELI unable to perform its material obligations under this
Agreement for a continuous period of six (6) months.
(5) The inability of PG&E or ELI to obtain any required
material Approvals for the use and occupation of the Right of Way and
the Towers by the System.
(b) Breach or Default. A material breach or material default
-----------------
under the terms, covenants or conditions of this Agreement by either PG&E
or ELI, including, without limitation, the failure of either PG&E or ELI to
make any payment required under the terms of this Agreement when due.
(c) Intentional Termination. An intentional termination of this
-----------------------
Agreement by either PG&E or ELI, including, without limitation:
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<PAGE>
(1) Either PG&E or ELI announces to the other its intention
to terminate this Agreement for strategic or other reasons that are
unrelated to the parties' performance under this Agreement;
(2) The willful failure by either PG&E or ELI to perform
its obligations under the terms of this Agreement; or
(3) Either PG&E or ELI, by willful acts or omissions,
places either itself or the System in a position or condition which
breaches the terms, covenants and conditions of this Agreement or
effectively terminates this Agreement, including, without limitation,
a willful failure to cure a breach or default after having received
written notice thereof from the other party.
17.2 Actions Following Occurrence of Termination Event. Should any
-------------------------------------------------
termination event described in Section 17.1 occur, PG&E and ELI shall have the
following rights and obligations:
(a) Change of Conditions. If the termination event is a change
--------------------
in conditions described in Section 17.1(a), PG&E and ELI shall meet
expeditiously to discuss and negotiate in good faith the effect of the
changed condition on this Agreement, their respective performance
obligations hereunder, and their ability to perform under the terms,
covenants and conditions of this Agreement. By mutual consent, PG&E and
ELI may terminate this Agreement, or modify this Agreement to address and
account for the changed condition in a mutually acceptable manner. If PG&E
and ELI cannot agree on a solution to the effect of the changed condition,
either party, by written notice to the other, may elect to terminate this
Agreement.
(b) Breach or Default. If the termination event is a breach or
-----------------
default described in Sections 17.1(b) and 17.1(c), the nondefaulting party
shall give written notice of such occurrence to the defaulting party. The
defaulting party shall be given a reasonable time to cure any breach or
default as follows:
(1) In the case of a monetary default, the defaulting party
shall have thirty (30) days after receipt of the written notice in
which to effectuate a cure.
(2) In the case of a nonmonetary default, the defaulting
party shall have sixty (60) days after receipt of the written notice
in which to effectuate a cure. If the nonmonetary default cannot be
corrected within such sixty (60) day period, the defaulting party
shall have an additional reasonable time in which to
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<PAGE>
effectuate a cure, provided the defaulting party commences corrective
action within the original sixty (60) day period and thereafter
diligently prosecutes the corrective action to completion. If the
defaulting party does not timely cure the breach or default within the
time periods specified above, the nondefaulting party may elect to
terminate this Agreement by providing written notice of such election
to the defaulting party.
(3) Remedies. In the event of an uncured breach or default
--------
described in Section 17.1(b) or 17.1(c), the nondefaulting party, in
addition to the remedies and obligations set forth in Section 17.3, shall
have available to it all legal remedies available at law or in equity for
breach of contract, including, without limitation, general contract
damages.
17.3 Rights of PG&E and ELI Upon Termination. Upon the termination
---------------------------------------
of this Agreement, for any reason, PG&E and ELI shall continue to abide by the
terms of this Agreement for a transition period. The transition period shall
last a maximum of two years following the effective date of termination. During
such transition period, ELI may seek alternative suppliers for ELI's fiber and
services needs. ELI's right to use the ELI Fibers shall continue for the
duration of the transition period, however, the exclusivity of ELI's right to
use the ELI Fibers shall terminate. At the conclusion of the transition period
PG&E shall have the right to purchase the System Electronics from ELI at the
lower of market value or depreciated book value. If at the conclusion of the
transition period, ELI has not found replacement suppliers for the ELI Fibers,
ELI shall have the right to lease the ELI Fibers from PG&E, at then existing
market rates, terms and conditions, including, without limitation, length of
term, and with sufficient capacity to service, without interruption, ELI's
customers, but in no event shall this provision obligate PG&E to provide greater
capacity than the capacity being used by ELI at termination. At the conclusion
of the transition period, the Quit and Surrender provisions of Section 4.4 shall
apply. In no event shall the purchase and lease rights set forth in this
section extend beyond five (5) years following termination.
17.4 Amounts Due Upon Termination. If this Agreement is terminated
----------------------------
prior to the expiration of the Term, due to an intentional termination or
default by PG&E under this Agreement pursuant to Sections 17.1(b) and 17.1(c) or
due to the occurrence of a Force Majeure Event as described in Section
17.1(a)(4), the Annual Fee for the then current year at the conclusion of the
transition period shall be prorated based on the actual number of days elapsed.
The unearned portion of the Annual Fee shall be refunded to ELI within thirty
(30) days after the conclusion of the transition period. If this Agreement is
terminated prior to the expiration of the Term, due to an intentional
termination or default by ELI under this Agreement pursuant to Sections 17.1(b)
and 17.1(c), the Annual Dark Fiber Lease Payment for the then current year at
the conclusion of the transition period shall be prorated based on the actual
number of days
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<PAGE>
elapsed. The unearned portion of the Annual Dark Fiber Lease Payment shall be
refunded to PG&E within thirty (30) days after the conclusion of the transition
period. The provisions of this Section 17.4 are in addition to and not in lieu
of other remedies available under the terms of this Agreement.
17.5 No Release. No termination or expiration of this Agreement or
----------
the rights granted hereunder shall release either PG&E or ELI, as applicable,
from any liability or obligation (whether for the Annual Fee or other payments,
indemnity or otherwise) which may have become due, attached or accrued prior to,
or which become due, attach or accrue at the time or by reason of, such
termination or expiration.
ARTICLE XVIII
DISPUTE RESOLUTION
------------------
18.1 Dispute Resolution. Except as may otherwise be set forth
------------------
expressly herein, all disputes arising under this Agreement shall be resolved as
set forth in this Article XVIII.
18.2 Negotiation and Mediation. PG&E and ELI shall attempt in good
-------------------------
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiations between a Vice President of PG&E or his or her
designated representative and an executive of similar authority of ELI. Either
PG&E or ELI may give the other party written notice of any dispute. Within
twenty (20) days after delivery of such notice, the designated executives shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary to exchange information and to attempt to resolve the
dispute. If the matter has not been resolved within thirty (30) days of the
first meeting, either PG&E or ELI may initiate a mediation of the controversy.
The mediation shall be facilitated by a mediator that is acceptable to both
parties and shall conclude within sixty (60) days of its commencement, unless
PG&E and ELI agree to extend the mediation process beyond such deadline. Upon
agreeing on a mediator, PG&E and ELI shall enter into a written agreement for
the mediation services. The mediation shall be conducted in accordance with the
Commercial Mediation Rules of the American Arbitration Association.
18.3 Confidentiality. All negotiations and any mediation conducted
---------------
pursuant to Section 18.2 shall be confidential and shall be treated as
compromise and settlement negotiations, to which Section 1152.5 of the
California Evidence Code shall apply, which Section is incorporated in this
Agreement by reference.
18.4 Injunctive Relief. Notwithstanding the foregoing provisions,
-----------------
either PG&E or ELI may seek a preliminary injunction or other provisional
judicial remedy if in its judgment such action is necessary to avoid irreparable
damage or to preserve the status quo.
-52-
<PAGE>
18.5 Continuing Obligation. PG&E and ELI shall continue to perform
---------------------
their obligations under this Agreement pending final resolution of any dispute
arising out of or relating to this Agreement.
18.6 Failure of Mediation. If PG&E and ELI, after good faith
--------------------
efforts to mediate a dispute under the terms of this Agreement (as provided in
Section 18.2), cannot agree to a resolution of the dispute either party may
pursue whatever legal remedies may be available to such party, at law or in
equity, before a court of competent jurisdiction and with venue as provided in
Section 20.7.
ARTICLE XIX
TAX INDEMNITY
-------------
19.1 Income Taxes.
------------
(a) ELI shall provide a limited income tax indemnification to
PG&E relating to ELI's development, construction and installation of the
System pursuant to this Agreement as provided in this Section 19.1. The
limited tax indemnification shall be available to PG&E and its successors,
assigns, shareholders and members of any consolidated group of which any of
them is or becomes a member (each, a "Tax Indemnitee"). The limited income
tax indemnification shall be governed by the following:
(1) The limited income tax indemnification shall apply if:
(i) PG&E or another Tax Indemnitee is required or is
deemed to be required, as described below, by the Internal
Revenue Service (the "IRS") or any state taxing authority (each,
a "Taxing Authority") to make any Gross Income Transfer
Adjustment (as defined below); or
(ii) PG&E or another Tax Indemnitee elects to settle or
compromise any audit or review of its federal or state income tax
liability by agreeing to any Gross Income Transfer Adjustment.
(2) For purposes of this Section 19.1, the term "Gross
Income Transfer Adjustment" shall mean any adjustment to the reported
gross income of PG&E or any other Tax Indemnitee for federal or state
income tax purposes attributable to or arising from:
(i) any cash payment made by or on behalf of ELI with
respect to upgrades or modifications to the Towers to accommodate
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<PAGE>
the installation of the Cable or to the Substation Sites to
accommodate the construction and installation of the Regeneration
Facilities; or
(ii) any actual or deemed transfer of property by ELI
to PG&E pursuant to this Agreement.
Notwithstanding the foregoing, the term "Gross Income Transfer
Adjustment" shall not include any adjustment to gross income
attributable to or arising from ELI's payment of the Annual Fees, the
fees for the placement of Regeneration Facilities, or reimbursements
to PG&E for the Maintenance of the Cable or any gross income
attributable to any actual or deemed transfers of the Dark Fibers.
(3) The limited income tax indemnification shall apply only
to Gross Income Transfer Adjustments for the taxable years 1998 and
1999, or, if later, the calendar year in which the System becomes
fully operational.
(4) The amount of the limited income tax indemnification
shall be limited to an amount equal to the sum of:
(i) the amount determined by multiplying (A) the amount
of any such Gross Income Transfer Adjustment, reduced by
offsetting deductions for construction expenditures (excluding
depreciation or amortization deductions) attributable to the
System, exclusive of the Dark Fibers, that PG&E or any other Tax
Indemnitee determines to be allowable in such year of income
includability by (B) the CPUC gross-up rate applicable to
contributions in aid of construction, as provided in PG&E's
electric tariffs (which is currently thirty-five percent (35%)),
for the taxable year of such income includability; and
(ii) interest with respect to the amount described in
(i) above for the period during which statutory interest accrues
with respect to such Gross Income Transfer Adjustment under the
Internal Revenue Code at a rate equal to the rate attributable to
corporate deficiencies under Internal Revenue Code Section
6621(c).
The parties agree that the foregoing amount is a reasonable measure of
the economic loss that PG&E or another Tax Indemnitee would suffer
upon the occurrence of any of the events described in this Section
19.1(a).
-54-
<PAGE>
(b) PG&E shall pay, without right of indemnification by ELI, all
additional or incremental income taxes, if any, assessed against PG&E in
connection with the development, construction and installation of the
System and transfer of legal title thereto by ELI that is either: (1)
attributable to the Dark Fibers; or (2) assessed as a result of or with
respect to any event occurring after the period referred to in Section
19.1(a)(3) above.
(c) For purposes of Section 19.1(a), PG&E or any other Tax
Indemnitee shall be deemed to be required to recognize gross income for a
taxable year in connection with the development, construction and
installation of the System if: (i) an IRS Revenue Agent's Report is issued
which includes any adjustment attributable to such development,
construction and installation or an assessment is made by the IRS or any
Taxing Authority with respect to such gross income; or (ii) the IRS or any
Taxing Authority issues any ruling, notice or other administrative
pronouncement, or a court issues an opinion, which PG&E determines in good
faith requires recognition of such gross income for such taxable year
(individually or collectively an "Authoritative Precedent").
(d) If, during the course of any audit or other examination of
the tax returns of PG&E or any other Tax Indemnitee for a taxable year that
would give rise to an obligation of indemnity by ELI under Section 19.1(a),
the issue of the includability by PG&E or any other Tax Indemnitee of any
Gross Income Transfer Adjustment is raised or reviewed, or if PG&E or any
other Tax Indemnitee becomes aware of any Authoritative Precedent, PG&E or
any other Tax Indemnitee shall promptly give written notice thereof to ELI.
(e) Any amount payable to PG&E or any other Tax Indemnitee
pursuant to Section 19.1(a) shall be paid within 90 days after receipt by
ELI of a written demand therefor from PG&E or any other Tax Indemnitee
accompanied by a statement describing in reasonable detail the
circumstances giving rise to the claim for indemnity and the computation of
the amount payable.
(f) If in the course of an audit of PG&E or any Tax Indemnitee by
any Taxing Authority, there is a proposed adjustment which would result in
a requirement that ELI indemnify PG&E or any other Tax Indemnitee pursuant
to Section 19.1(a), PG&E or such other Tax Indemnitee shall promptly notify
ELI. If ELI requests PG&E or such other Tax Indemnitee contest or dispute
such proposed adjustment, all costs and expenses incurred by PG&E or such
other Tax Indemnitee in connection with such contest or dispute, including
all reasonable legal and accounting fees and disbursements, shall be borne
by ELI. If ELI requests PG&E or such other Tax Indemnitee contest or
dispute such proposed adjustment beyond the level of the Taxing Authority
audit, and PG&E
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<PAGE>
declines to do so, ELI's liability under Section 19.1(a)(4) shall be
reduced to one-half of the amount determined under Section 19.1(a)(4).
(g) PG&E and each other Tax Indemnitee shall in good faith use
reasonable efforts in filing its tax returns, and in dealing with Taxing
Authorities, to report and defend the payments and transfers in accordance
with the description of the form of this transaction and the intent of the
parties as described in this Agreement.
19.2 Sales and Use Taxes. ELI shall pay or cause to be paid, and
-------------------
shall indemnify and hold PG&E harmless from and against, all sales and use taxes
applicable to the development, construction and installation of the System by
ELI, including without limitation the purchase of all materials incorporated by
ELI into the System.
19.3 Indemnification Conditions. ELI's indemnification obligation
--------------------------
set forth in this Article XIX is expressly conditioned upon ELI receiving timely
notice of any tax liability or the possibility that there may a proposed
adjustment to any tax liability to which PG&E or any other Tax Indemnitee
believes this indemnity applies and, upon ELI receiving the opportunity to
request that PG&E contest or dispute any such adjustment or proposed adjustment
consistent with Section 19.1(f).
ARTICLE XX
MISCELLANEOUS
-------------
20.1 Amendments. Neither this Agreement nor any provisions hereof
----------
may be changed, waived, discharged or terminated orally and may only be modified
or amended by an instrument in writing, signed by both PG&E and ELI.
20.2 Binding Effect. This Agreement shall be binding upon and shall
--------------
inure to the benefit of PG&E, ELI and their respective successors and assigns.
20.3 Waivers. The failure by PG&E or ELI at any time or times
-------
hereafter to require strict performance by the other of any of the undertakings,
agreements or covenants contained in this Agreement shall not waive, affect or
diminish any right of PG&E or ELI under this Agreement to demand strict
compliance and performance therewith. None of the undertakings, agreements or
covenants of PG&E and ELI under this Agreement shall be deemed to have been
waived unless such waiver is evidenced by an instrument in writing signed by the
party to be charged specifying such waiver.
20.4 Notices. Unless otherwise specifically provided in this
-------
Agreement, any notice or other communication herein required or permitted to be
given shall be in writing and
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<PAGE>
may be personally served, telecopied, or sent by courier or United States
certified mail and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of a telecopy, or five (5) days after
deposit in the United States mail, with postage prepaid and properly addressed,
as follows:
If to PG&E, to: Pacific Gas and Electric Company
Mail Code N10A
Post Office Box 770000
San Francisco, California 94177
Attention: Supervisor, Land Rights Services
Telephone: (415) 973-3201
Facsimile: (415) 973-5790
With copy to: Pacific Gas and Electric Company
Mail Code B23A
Post Office Box 770000
San Francisco, California 94177
Attention: Director, Business Development
Telephone: (415) 973-1018
Facsimile: (415) 973-3884
If to PG&E by Pacific Gas and Electric Company
hand delivery: 245 Market Street
Room 1002
San Francisco, California 94106
With copy to: Pacific Gas and Electric Company
77 Beale Street
Room 2321
San Francisco, California 94106
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attention: Legal Department
Telephone: (360) 892-1000
Facsimile: (360) 816-3821
Such addresses may be changed by notice to the other party given in the same
manner as above provided.
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20.5 Severability. If any term or provision of this Agreement
------------
shall, to any extent, be determined by a court of competent jurisdiction to be
void, voidable or unenforceable, such void, voidable or unenforceable term or
provision shall not affect any other term or provision of this Agreement.
20.6 Interpretation. Whenever the context shall require, the plural
--------------
shall include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. The article, section and subsection
headings contained in this Agreement are for purposes of reference only and
shall not limit, expand or otherwise affect the construction of any provisions
hereof. All references in this Agreement to articles, sections and subsections,
unless expressly noted otherwise, are to articles, sections and subsections
contained in this Agreement. Unless the context requires otherwise, references
in this Agreement to "party" shall be to either PG&E or ELI, as applicable, and
references to "parties" shall be to both PG&E and ELI.
20.7 Governing Law and Choice of Forum. This Agreement and all
---------------------------------
matters relating hereto shall be governed by, construed and interpreted in
accordance with the laws of the State of California. Any mediation under this
agreement shall be held in the State of California, County of San Francisco.
Jurisdiction for any disputes arising out of this Agreement shall be exclusively
in the courts of the State of California, state or federal, and any litigation
shall be brought in San Francisco County, California.
20.8 Commissions. PG&E and ELI shall indemnify and hold each other
-----------
harmless (including attorney fees and costs) from and against any and all claims
for brokerage and finder's fees or commissions which may be asserted against the
other based on the actions or omissions of the indemnifying party. PG&E and ELI
shall each pay any fees or compensation due to their respective consultants as
advisors, if any, with respect to this transaction.
20.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
20.10 Attorney Fees. PG&E and ELI agree that should either of them
-------------
default in any of the covenants or agreements contained herein, the defaulting
party shall pay all costs and expenses, including reasonable attorney fees and
costs, incurred by the nondefaulting party to protect its rights hereunder,
regardless of whether an action is commenced or prosecuted to judgment.
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20.11 Costs. Except as otherwise set forth in this Agreement, PG&E
-----
and ELI shall each be responsible for its own costs, including legal fees,
incurred in negotiating and finalizing this Agreement.
20.12 No Third-Party Beneficiaries. Except as otherwise expressly
----------------------------
provided in this Agreement, the terms, covenants and conditions of this
Agreement, shall not be construed as being for the benefit of any person who is
not a signatory to this Agreement.
20.13 Entire Agreement. This Agreement expresses the entire
----------------
understanding of PG&E and ELI relating to the subject matter hereof. All prior
understandings, written or oral, with respect to such subject matter are hereby
merged herein and superseded.
20.14 Conflict of Interest/Business Ethics. Each party shall exercise
------------------------------------
reasonable care and diligence to prevent any actions or conditions which could
result in a conflict with the other party's interest. Each party or its
employees shall not offer substantial gifts, entertainment, payments, loans or
other considerations to the other party's employees, their families, vendors,
subcontractors and other third-parties for the purpose of influencing such
persons to act contrary to the party's interest. All financial statements,
reports, billings and other documents rendered shall properly reflect the facts
about all activities and transactions handled for the account for each party.
Each party shall immediately notify the other party of any and all violations of
this Section 20.14 upon becoming aware of such violation.
20.15 Survival. In addition to the survival provisions set forth
--------
elsewhere in this Agreement, those Articles or Sections of this Agreement which
by their nature should survive expiration or other termination of the Agreement,
include Section 4.4 (Quit and Surrender), Section 4.5 (Holdover), Section 10.3
(Confidentiality), Article XV (Liability and Indemnity), Section 17.2 (Actions
Following Occurrence of Termination Event), Section 17.3 (Rights of PG&E and ELI
Upon Termination), Section 17.4 (Amounts Due Upon Termination), Section 17.5 (No
Release) and Article XIX (Tax Indemnity).
20.16 Exhibits. The exhibits to this Agreement referenced above are
--------
an integral part of the agreement and understanding of the parties and are
incorporated in this Agreement by reference. Any exhibits referred to above in
this Agreement which are not attached hereto as of the Effective Date may be
attached to this Agreement following the Effective Date when approved as to form
by both PG&E and ELI. The omission of any of the exhibits from this Agreement
as of the Effective Date shall not affect the enforceability of this Agreement.
DATED effective as of the date first above written.
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PG&E:
PACIFIC GAS AND ELECTRIC COMPANY, a
California corporation
By:/s/ Stephan J. Metague
------------------------------------
Title: Mgr. Grid Customer Service
ELI:
ELECTRIC LIGHTWAVE, INC., a Delaware
corporation
By: /s/ David B. Sharkey
-----------------------------------
Title: President and COO
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EXHIBIT "A"
CABLE ROUTE
-----------
<PAGE>
<TABLE>
<CAPTION>
LINE NAME* KV FROM* TO* # miles COMMENTS*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
500 47
- ----------------------------------------------------------------------------------------------------------
230 30
- ----------------------------------------------------------------------------------------------------------
230 125
- ----------------------------------------------------------------------------------------------------------
115 34
- ----------------------------------------------------------------------------------------------------------
230 28
- ----------------------------------------------------------------------------------------------------------
230 60
- ----------------------------------------------------------------------------------------------------------
230 12
- ----------------------------------------------------------------------------------------------------------
60 9
- ----------------------------------------------------------------------------------------------------------
less than
60kV 3800'
- ----------------------------------------------------------------------------------------------------------
less than
60kV 1800'
- ----------------------------------------------------------------------------------------------------------
60 4
- ----------------------------------------------------------------------------------------------------------
230 18
- ----------------------------------------------------------------------------------------------------------
115 4
- ----------------------------------------------------------------------------------------------------------
115 4
- ----------------------------------------------------------------------------------------------------------
less than
60kV 1
- ----------------------------------------------------------------------------------------------------------
less than
60kV 2000'
- ----------------------------------------------------------------------------------------------------------
115 15
- ----------------------------------------------------------------------------------------------------------
115 16
- ----------------------------------------------------------------------------------------------------------
230 45
- ----------------------------------------------------------------------------------------------------------
230 103
- ----------------------------------------------------------------------------------------------------------
230 56
- ----------------------------------------------------------------------------------------------------------
230 61
- ----------------------------------------------------------------------------------------------------------
TOTAL MILES: 672
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Distribution ROW not included in the scope of this Agreement; for reference
purposes only
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
<PAGE>
EXHIBIT "B"
CABLE SPECIFICATIONS
--------------------
[to be completed]
<PAGE>
EXHIBIT "C"
DETAILED RESTORATION PLAN
-------------------------
[to be completed]
<PAGE>
EXHIBIT "D"
PG&E SAFETY RULES
-----------------
[to be completed]
<PAGE>
EXHIBIT 10.18.1
FIRST AMENDMENT TO OPTICAL FIBER INSTALLATION
---------------------------------------------
AND IRU AGREEMENT
-----------------
THIS FIRST AMENDMENT TO OPTICAL FIBER INSTALLATION AND IRU AGREEMENT
("Amendment") is made and entered into effective as of March 9, 1998, by and
between PACIFIC GAS AND ELECTRIC COMPANY, a California corporation ("PG&E"), and
ELECTRIC LIGHTWAVE, INC., a Delaware corporation ("ELI").
RECITALS:
--------
1. PG&E and ELI entered into an Optical Fiber Installation and IRU
Agreement, dated effective as of December 31, 1997 (the "Agreement"), for the
design and installation of an optical fiber communications system.
2. PG&E and ELI desire to amend the Agreement to reflect certain
adjustments to the route of the communications system.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Amendment, and for other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, PG&E and ELI agree to amend
the Agreement as follows:
1. Terms Previously Defined. Except as expressly modified by the
------------------------
terms of this Amendment, all terms defined in the Agreement shall have the same
defined meanings when used in this Amendment as given in the Agreement.
2. Replacement of Exhibit "A". Exhibit "A" to the Agreement, which
--------------------------
describes the Cable Route, is hereby deleted in its entirety and replaced by the
Exhibit "A" attached to and incorporated by reference in this Amendment.
3. Amendment to Section 5.1(a). Section 5.1(a) of the Agreement is
--------------------------
hereby deleted in its entirety and replaced by the following:
(1) The first Annual Fee shall be calculated on a base price of
TWO THOUSAND ONE HUNDRED FIFTY DOLLARS ($2,150.00) per Route Mile and shall
be in the amount of ONE MILLION FIVE HUNDRED FIFTY-FOUR THOUSAND FOUR
HUNDRED FIFTY DOLLARS ($1,554,450.00) (based on an estimated 723 Route
Miles), which shall be due and payable ninety (90) days after the Effective
Date.
4. Survival of All Other Provisions. Except as otherwise provided
--------------------------------
for in this Amendment, all terms, covenants and conditions of the Agreement
shall remain in full force and effect and shall apply to the terms, covenants
and conditions of this Amendment. In the event of any inconsistency between the
Agreement and this Amendment, this Amendment shall control.
<PAGE>
5. Successors and Assigns. This Amendment shall be binding upon and
----------------------
shall inure to the benefit of PG&E, ELI and their respective successors and
assigns.
6. Governing Law. This Amendment shall be construed according to the
-------------
laws of the State of California.
7. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
PG&E:
PACIFIC GAS AND ELECTRIC COMPANY, a
California corporation
By: /s/ Stephan J. Metague
----------------------------------------------
Title: Manager, Grid Customer Service
ELI:
ELECTRIC LIGHTWAVE, INC., a Delaware
corporation
By: /s/ David B. Sharkey
--------------------------------------------
Title: President and Chief Operating Officer
-2-
<PAGE>
EXHIBIT "A"
CABLE ROUTE
-----------
<PAGE>
PG&E Proprietary Information
PG&E transmission routes
02/12/98
<TABLE>
<CAPTION>
LINE NAME* KV FROM* TO* # miles COMMENTS*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
500 47
- ----------------------------------------------------------------------------------------------------------
230 30
- ----------------------------------------------------------------------------------------------------------
230 125
- ----------------------------------------------------------------------------------------------------------
115 34
- ----------------------------------------------------------------------------------------------------------
230 27
- ----------------------------------------------------------------------------------------------------------
115 25
- ----------------------------------------------------------------------------------------------------------
60 13
- ----------------------------------------------------------------------------------------------------------
60 4
- ----------------------------------------------------------------------------------------------------------
230 29
- ----------------------------------------------------------------------------------------------------------
230 1
- ----------------------------------------------------------------------------------------------------------
115 15
- ----------------------------------------------------------------------------------------------------------
230 6
- ----------------------------------------------------------------------------------------------------------
230 20
- ----------------------------------------------------------------------------------------------------------
230 45
- ----------------------------------------------------------------------------------------------------------
230 12
- ----------------------------------------------------------------------------------------------------------
60 9
- ----------------------------------------------------------------------------------------------------------
less than
60kV 3800'
- ----------------------------------------------------------------------------------------------------------
less than
60kV 1800'
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
60 4
- ----------------------------------------------------------------------------------------------------------
230 18
- ----------------------------------------------------------------------------------------------------------
115 4
- ----------------------------------------------------------------------------------------------------------
115 4
- ----------------------------------------------------------------------------------------------------------
less than
60kV 5280'
- ----------------------------------------------------------------------------------------------------------
less than
60kV 2000'
---------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
115 15
- ----------------------------------------------------------------------------------------------------------
115 16
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
230 103
- ----------------------------------------------------------------------------------------------------------
230 56
- ----------------------------------------------------------------------------------------------------------
230 61
- ----------------------------------------------------------------------------------------------------------
TOTAL MILES: 723
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Distribution ROW not included in the scope of this Agreement; for reference
purposes only
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Electric Lightwave, Inc.'s Consolidated Financial Statements for the
periods ended March 31, 1998 and March 31, 1997 is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> Dec-31-1998 Dec-31-1997
<PERIOD-START> Jan-1-1998 Jan-1-1997
<PERIOD-END> Mar-31-1998 Mar-31-1997
<EXCHANGE-RATE> 1 1
<CASH> 21,849 1,213
<SECURITIES> 0 0
<RECEIVABLES> 23,129 8,045
<ALLOWANCES> 3,163 1,653
<INVENTORY> 0 0
<CURRENT-ASSETS> 43,434 8,231
<PP&E> 352,062 190,818
<DEPRECIATION> (28,247) (19,680)
<TOTAL-ASSETS> 373,374 188,795
<CURRENT-LIABILITIES> 45,417 19,785
<BONDS> 0 0
0 0
0 0
<COMMON> 497 497
<OTHER-SE> 199,116 (1,373)
<TOTAL-LIABILITY-AND-EQUITY> 373,374 188,795
<SALES> 20,057 10,519
<TOTAL-REVENUES> 20,057 10,519
<CGS> 9,212 4,930
<TOTAL-COSTS> 33,717 20,590
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 911 91
<INCOME-PRETAX> (14,404) (10,162)
<INCOME-TAX> (2,449) 0
<INCOME-CONTINUING> (11,955) (10,162)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 2,817 0
<NET-INCOME> (14,772) (10,162)
<EPS-PRIMARY> (.30) (.24)
<EPS-DILUTED> (.30) (.24)
</TABLE>
