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 JUNE 30, 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 June 30, 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
- --------------------------------------------------------------------------------
(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
August 4, 1998 were:
Common Stock Class A 8,546,063
Common Stock Class B 41,165,000
<PAGE>
ELECTRIC LIGHTWAVE, INC.
Index to Financial Statements
<TABLE>
<CAPTION>
Page No.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at June 30, 1998 (unaudited) and December 31, 1997 2
Statements of Operations for the Three Months Ended June 30, 1998 and 1997 (unaudited) 3
Statements of Operations for the Six Months Ended June 30, 1998 and 1997 (unaudited) 4
Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997 (unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9
Part II. Other Information 14
Signature 16
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ELECTRIC LIGHTWAVE, INC.
BALANCE SHEETS
(In thousands)
June 30, 1998 December 31, 1997
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash $ 12,638 $ 26,531
Trade receivables, net 10,207 12,569
Other receivables 652 7,688
Other current assets 893 844
-------------- -------------
Total current assets 24,390 47,632
-------------- -------------
Property, plant and equipment 396,080 328,664
Less accumulated depreciation and amortization (31,887) (25,791)
-------------- -------------
Property, plant and equipment, net 364,193 302,873
-------------- -------------
Other assets 6,420 9,457
-------------- -------------
Total assets $ 395,003 $ 359,962
============== =============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 28,101 $ 50,237
Taxes other than income taxes 5,078 3,136
Due to Citizens Utilities Company 4,863 944
Current portion of capital lease obligation 6,460 452
Other current liabilities 5,301 2,650
-------------- -------------
Total current liabilities 49,803 57,419
-------------- -------------
Deferred credits and other 1,740 1,800
Deferred income taxes payable 10,870 16,918
Capital lease obligation 12,656 10,511
Long-term debt 134,000 60,000
-------------- -------------
Total liabilities 209,069 146,648
-------------- -------------
Shareholders' Equity:
Common stock issued, $.01 par value
Class A 85 85
Class B 412 412
Additional paid-in-capital 318,881 316,731
Deficit (133,444) (103,914)
-------------- -------------
Total shareholders' equity 185,934 213,314
-------------- -------------
Total liabilities and shareholders' equity $ 395,003 $ 359,962
============== =============
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
2
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands, except per-share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Revenues $ 21,443 $ 14,246
------------ -----------
Operating expenses:
Network access 9,860 7,016
Sales and marketing 5,735 3,761
Depreciation and amortization 3,780 2,786
Other operating expenses 18,381 10,426
------------ -----------
Total operating expenses 37,756 23,989
------------ -----------
Loss from operations (16,313) (9,743)
Interest expense (net of capitalized interest of $2,050 for 1998 and $481 for 1997) 1,690 211
Interest income (223) -
------------ -----------
Net loss before income taxes (17,780) (9,954)
Income tax benefit (3,022) -
------------ -----------
Net loss $ (14,758) $ (9,954)
============ ===========
Net loss per common share:
Basic $ (.30) $ (.24)
Diluted $ (.30) $ (.24)
Weighted average shares outstanding 49,694 41,685
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
3
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands, except per-share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Revenues $ 41,500 $ 24,765
------------ -----------
Operating expenses:
Network access 19,072 11,946
Sales and marketing 10,675 6,667
Depreciation and amortization 7,664 5,603
Other operating expenses 34,062 20,363
------------ -----------
Total operating expenses 71,473 44,579
------------ -----------
Loss from operations (29,973) (19,814)
Interest expense (net of capitalized interest of $3,838 for 1998 and $826 for 1997) 2,601 302
Interest income (390) -
------------ -----------
Net loss before income taxes and cumulative effect of change in accounting (32,184) (20,116)
principle
Income tax benefit (5,471) -
------------ -----------
Net loss before cumulative effect of change in accounting principle (26,713) (20,116)
Cumulative effect of change in accounting principle (net of $577 income tax benefit) 2,817 -
------------ -----------
Net loss $ (29,530) $ (20,116)
============ ===========
Net loss before cumulative effect of change in accounting principle per common
share:
Basic $ (.54) $ (.48)
Diluted $ (.54) $ (.48)
Net loss per common share:
Basic $ (.59) $ (.48)
Diluted $ (.59) $ (.48)
Weighted average shares outstanding 49,690 41,685
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
4
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Net cash used for operating activities $ (13,022) $ (4,845)
--------------- ---------------
Cash flows used for investing activities:
Capital expenditures (74,971) (36,902)
--------------- ---------------
Cash flows from financing activities:
Debt borrowings 74,000 -
Citizens fundings - 42,392
Other, net 100 (147)
--------------- ---------------
Net cash provided by financing activities 74,100 42,245
--------------- ---------------
Net increase (decrease) in cash (13,893) 498
Cash at January 1, 26,531 611
--------------- ---------------
Cash at June 30, $ 12,638 $ 1,109
=============== ===============
Supplemental cash flow information:
Cash paid for interest, net of capitalized portion $ 1,836 $ -
Non-cash increase in capital lease asset and obligation 8,337 -
Other non-cash transactions with Citizens:
Deferred income taxes - 3,118
Capitalized interest $ - $ 826
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
5
<PAGE>
PART I. 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 three months ended and six months ended
June 30, 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 three months ended and
six months ended June 30, 1997 .
(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 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 adopted 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 statement of
operations for the six months ended June 30, 1998, net of income tax
benefit of $577,000.
6
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
(3) Commitments and Contingencies
Effective March 20, 1998, the Company amended two previous fifteen year
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
one 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.
In May 1998, the Company entered into a 20 year operating lease agreement
with a third party in order to develop a long-haul route from Oregon to
southern California. Rental payments are based on a percentage of the
Company's leased traffic and the route is expected to become operational
in the second quarter of 1999.
In June 1998, the Company entered into a private line services agreement
with a third party which allows the Company to utilize the third party's
national fiber optic network for a period of nine years. The Company has a
total minimum commitment of $122 million over the term of the agreement,
including $6.3 million over the twelve months subsequent to June 30, 1998.
A portion of the network was operational as of June 30, 1998, with
construction on the remainder of the network scheduled for completion in
the second quarter of 1999.
The current portion of capital lease obligation at June 30, 1998 includes
$6.1 million of an accrued obligation to reflect construction activity on
capital leases for long-haul routes under development.
(4) Related Party Transactions
A summary of the activity in the amount due to Citizens for the six months
ended June 30, 1998 is as follows:
($ in thousands)
Balance beginning of period $ 944
Guarantee fees 3,522
Administrative services and other items 4,897
Payment to Citizens (4,500)
----------
Balance end of period $ 4,863
==========
(5) Employee Stock Purchase Plan
In May 1998, the Company's stockholders approved the Employee Stock
Purchase Plan (ESPP). Under the ESPP, eligible employees of the Company
may subscribe to purchase shares of Class A Common Stock at the lesser of
85% of the mean between the high and low market prices on the first or
last day of the purchase period. An employee may elect to have up to 20%
of annual base pay withheld in equal installments throughout the
designated payroll-deduction period for the purchase of shares. The value
of an employee's subscription may not exceed $25,000 in any one calendar
year. An employee may not participate in the ESPP if the employee owns
stock possessing 5% or more of the total combined voting power or value of
all classes of capital stock of the Company. As of June 30, 1998, there
were 175,460 shares of Class A Common Stock reserved for issuance under
the ESPP, which will be adjusted for any future stock dividends or stock
splits. The ESPP will terminate when all 175,460 shares of Class A Common
Stock reserved have been subscribed for, unless terminated earlier by the
Board of Directors. The ESPP is administered by a committee of the Board
of Directors. As of June 30, 1998, the number of employees participating
in the ESPP was 362 and the total number of shares subscribed for under
the ESPP was 51,208. No stock-based compensation expense was recorded in
the financial statements pursuant to the ESPP in accordance with APB
opinion No. 25.
7
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
(6) Income Taxes
The income tax benefit of $3,022,000 and $6,048,000 for the three and six
months ended June 30, 1998, respectively, primarily represents the
recognition of operating losses. A full valuation allowance against the
benefit of the Company's losses was necessary in the three and six months
ended June 30, 1997 due to 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, November 24,
1997. For the post IPO period, which includes the three and six months
ended June 30, 1998, the tax benefit of the Company's operating losses are
being recognized to the extent of net deferred income tax liabilities,
since Citizens has agreed to reimburse the Company when losses can be
utilized by the Company on a stand alone basis. 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.
8
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This quarterly report on Form 10-Q contains 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.
Forward-looking statements are statements (including oral representations)
about future performance or results, including any statements using the
words "believe", "expect", "anticipate" or similar words. All
forward-looking statements 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 Regional Bell Operating
Companies (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 Company has no obligation to update or
revise forward-looking statements to reflect the occurrence of future
events or circumstances.
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 is a facilities-based integrated communications provider (ICP)
providing a broad range of communications services in six major market
clusters in the western United States including: Portland, Oregon; Seattle,
Washington; Salt Lake City, Utah; Sacramento, California; Boise, Idaho; and
Phoenix, Arizona and their respective surrounding areas. The Company also
provides data services in Los Angeles and San Francisco, California; and
Las Vegas, Nevada. 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 six months ended June 30, 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 million revolving bank credit facility.
Citizens has guaranteed all of the Company's obligations under this credit
facility. The Company drew $74 million on its line of credit during the
first six months of 1998, and as of June 30, 1998, $134 million was
outstanding under this facility.
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 $396 million at June 30, 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.
In June 1998, the Company entered into a private line services agreement
with a third party which allows the Company to utilize the third party's
national fiber optic network for a period of nine years. The Company is
obligated for a minimum commitment of $122 million in a take-or-pay
arrangement, including $6.3 million over the twelve months subsequent to
June 30, 1998.
9
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
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. The Company expects
that additional debt or equity financing may be required to consummate
significant acquisitions. The Company believes that it would be able to
attract such financing at reasonable terms; however, there can be no
assurance that the Company will be able to obtain such financing at
reasonable terms, which would have a material adverse effect on its
business, results of operations, and financial condition.
U.S. West union employees have authorized a strike effective August 15,
1998. The Company relies upon U.S. West, the RBOC operating in a majority
of the Company's markets, for provisioning new off-net customers. A U.S.
West strike, depending on its duration, may have an adverse impact upon the
Company's ability to generate new revenue through the provisioning of new
off-net customers.
(b) Results of Operations
REVENUES
Revenues for the three and six months ended June 30, 1998 increased $7.2
million, or 51%, and $16.7 million, or 68%, respectively, over the three
and six months ended June 30, 1997 due to the continued expansion of the
Company's network and customer base. In 1998, the Company added Boise,
Idaho as a new market cluster and began offering data services in a number
of other cities, including Los Angeles and San Francisco, California. From
June 30, 1997 to June 30, 1998, the Company added 339 customers and 34,077
access line equivalents (34% and 167% increases, respectively).
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
----------------------------------------- ----------------------------------------------
($ in thousands) ($ in thousands)
%
Increase/ %
1998 1997 (Decrease) 1998 1997 Increase
---------- ---------- ------------ ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dedicated services $ 8,371 $ 8,036 4% $ 17,478 $ 14,116 24%
Local dial tone services 7,769 1,997 289% 13,793 3,243 325%
Long distance services 1,899 1,942 (2)% 3,721 3,443 8%
Enhanced services 3,404 2,271 50% 6,508 3,963 64%
---------- ---------- ------------ ----------
Total $ 21,443 $ 14,246 51% $ 41,500 $ 24,765 68%
========== ========== ============ ==========
</TABLE>
Dedicated Services
Dedicated services revenues for the three months ended June 30, 1998
increased $.3 million, or 4%, over the three months ended June 30, 1997.
Revenues increased $1.2 million over 1997 due to an expansion of sales in
existing markets and a $.5 million increase from the Company's entrance
into new markets in 1998. This increase was offset by a $.9 million
decrease in revenue from a significant customer primarily related to the
expiration of a short-term contract in the first quarter 1998.
Dedicated services revenues for the six months ended June 30, 1998
increased $3.4 million, or 24%, over the six months ended June 30, 1997
primarily due to an expansion of sales in existing markets and a $1.0
million increase from the Company's entrance into new markets in 1998.
Local Dial Tone Services
Local dial tone services revenues for the three months ended June 30, 1998
increased $5.8 million, or 289%, over the three months ended June 30, 1997
primarily due to local access revenue of $2.8 million, net of $2.3 million
reserved for due to a dispute by a carrier. No local access revenue was
recognized in the three months ended June 30, 1997. Access line equivalents
increased 34,077, or 167%, from June 30, 1997 to June 30, 1998 also
contributing to the increase in local dial tone services. In addition, the
successful sales and marketing of the ISDN product also generated $1.6
million of increased revenue in the three months ended June 30, 1998 over
the three months ended June 30, 1997.
10
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
Local dial tone services revenues for the six months ended June 30, 1998
increased $10.6 million, or 325%, over the six months ended June 30, 1997
primarily due to local access revenue of $5.3 million, net of $2.4 million
reserved for due to a dispute by a carrier. Local access revenue for the
six months ended June 30, 1998 includes $1.1 million of revenue related to
the reversal of an allowance previously provided for access fees that had
been disputed by a carrier. No local access revenue was recognized in the
six months ended June 30, 1997. Access line equivalents increased 34,077,
or 167%, from June 30, 1997 to June 30, 1998 also contributing to the
increase in local dial tone services. In addition, the successful sales and
marketing of the ISDN product generated $2.9 million of increased revenue
in the six months ended June 30, 1998 over the six months ended June 30,
1997.
Long Distance Services
Long distance services revenues for the three months ended June 30, 1998
decreased by $43,000, or 2%, from the three months ended June 30, 1997
primarily due to lower wholesale long distance and prepaid services
revenues offset in part by a $.3 million increase in Advantage Long
Distance, the Company's retail long distance service. Long distance
services revenues for the six months ended June 30, 1998 increased $.3
million, or 8%, primarily due to a $1.0 million increase in Advantage Long
Distance offset in part by decreases of $.4 million and $.3 million in
wholesale long distance and prepaid services, respectively. The increase in
Advantage Long Distance is attributable to an overall expansion of the
Company's sales force and the Company's product bundling strategy.
Enhanced Services
Enhanced services revenues for the three and six months ended June 30, 1998
increased $1.1 million, or 50%, and $2.5 million, or 64%, respectively,
over the three and six months ended June 30, 1997 primarily due to
increased sales of the frame relay and Internet products in new and
existing markets as a result of strong customer demand for these services.
For the three and six months ended June 30, 1998 frame relay and Internet
product revenues of $.3 million and $.5 million, respectively, were
recognized in markets entered into subsequent to June 30, 1997, including
Los Angeles and San Francisco, California.
OPERATING EXPENSES
Operating expenses increased $13.8 million, or 57%, and $26.9 million, or
60%, respectively, over the three and six months ended June 30, 1997 due to
the Company's rapid network and customer growth as reflected in revenues,
offset in part by economies of scale from infrastructure and network
development.
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
---------------------------------------- ---------------------------------------------
($ in thousands) ($ in thousands)
% %
1998 1997 Increase 1998 1997 Increase
--------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Network access $ 9,860 $ 7,016 41% $ 19,072 $ 11,946 60%
Sales and marketing 5,735 3,761 52% 10,675 6,667 60%
Depreciation & amortization 3,780 2,786 36% 7,664 5,603 37%
Other operating expenses 18,381 10,426 76% 34,062 20,363 67%
--------- ---------- ----------- ------------
$ 37,756 $ 23,989 57% $ 71,473 $ 44,579 60%
========= ========== =========== ============
</TABLE>
Network Access
Network access expenses for the three and six months ended June 30, 1998
increased $2.8 million, or 41%, and $7.1 million, or 60%, over the three
and six months ended June 30, 1997, respectively, primarily due to the
Company's revenue growth, including expansion of its frame relay and
internet products, and its customer base. Network access expenses were
lower, as a percentage of revenues, in the three months and six months
ended June 30, 1998 than in the respective periods in 1997 as a result of
increased efficiencies from network development, allowing the Company to
carry more of its traffic on its own network.
11
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
Sales and Marketing
Sales and marketing expenses for the three and six months ended June 30,
1998 increased $2.0 million, or 52%, and $4.0 million, or 60%,
respectively, over the three and six months ended June 30, 1997 primarily
due to the Company's continued focus on expanding sales in its established
markets, 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; Las Vegas, Nevada; and Spokane, Washington. The
Company increased its sales force by 55 employees, a 95% increase, from
June 30, 1997 to June 30, 1998. In addition, the Company expanded
advertising, direct marketing, and public relations efforts in key markets
to increase name recognition and product information in the second quarter
of 1998.
Depreciation and Amortization
Depreciation and amortization expense for the three and six months ended
June 30, 1998 increased $1.0 million, or 36%, and $2.1 million, or 37%,
respectively, over the three and six months ended June 30, 1997, primarily
due to higher plant in service balances for newly completed communications
network facilities and electronics.
Other Operating Expenses
Other operating expenses for the three and six months ended June 30, 1998
increased $8.0 million, or 76%, and $13.7 million, or 67%, respectively,
over the three and six months ended June 30, 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. Employee head count increased 356, or 73%, over June 30, 1997
which also caused increased facilities rental costs of $.6 million and $1.1
million over the three and six months ended June 30, 1997, respectively, as
facility demands increased because of the new employees and the opening of
five new sales offices, including Los Angeles and San Francisco,
California. In addition, maintenance costs have risen $.5 million and $1.4
million over the three and six months ended June 30, 1997, respectively,
due to the expansion of the Company's network.
<TABLE>
<CAPTION>
EBITDA
For the three months For the six months
ended June 30, ended June 30,
---------------------------------------- ---------------------------------------------
($ in thousands) ($ in thousands)
% %
1998 1997 (Decrease) 1998 1997 (Decrease)
---------- --------- ------------ ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
EBITDA $ (12,533) $ (6,957) (80)% $ (22,309) $ (14,211) (57)%
EBITDA consists of earnings (loss) before interest, income taxes,
depreciation, amortization, and one-time and certain non-recurring charges
such as the cumulative effect of a change in accounting principle. EBITDA
is a measure commonly used in the telecommunications industry to measure
operating performance, asset value, and financial leverage, and is not
intended to present, or replace, cash flow or operating income as defined
by generally accepted accounting principles for the periods presented. See
the Financial Statements and accompanying Notes included elsewhere in this
report.
EBITDA for the three and six months ended June 30, 1998 decreased $5.6
million, or 80%, and $8.1 million, or 57%, respectively, over the three and
six months ended June 30, 1997, primarily due to employee expenses that
have grown faster than revenues as the Company builds an internal
infrastructure that is able to generate and accommodate revenue growth and
market expansion.
</TABLE>
12
<PAGE>
PART I. FINANCIAL INFORMATION (Continued)
ELECTRIC LIGHTWAVE, INC.
INTEREST EXPENSE / INTEREST INCOME
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
---------------------------------------- ---------------------------------------------
($ in thousands) ($ in thousands)
% %
1998 1997 Increase 1998 1997 Increase
---------- --------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Interest expense, net $ 1,690 $ 211 701% $ 2,601 $ 302 761%
Interest income 223 - n/a 390 - n/a
Interest expense for the three and six months ended June 30, 1998 increased
$1.5 million, or 701%, and $2.3 million, or 761%, respectively, over the
three and six months ended June 30, 1997, primarily due to interest and
guarantee fees associated with the Company's borrowings against its credit
facility and construction agency agreement. Interest expense is net of
capitalized interest of $2.1 million and $3.8 million for the three and six
months ended June 30, 1998, respectively, and $.5 million and $.8 million
for the three and six months ended June 30, 1997, respectively.
Interest income for the three and six months ended June 30, 1998 increased
$.2 million, and $.4 million, respectively, over the three and six months
ended June 30, 1997 primarily due to interest earned on cash maintained in
a money market fund.
</TABLE>
<TABLE>
<CAPTION>
INCOME TAX BENEFIT
For the three months For the six months
ended June 30, ended June 30,
---------------------------------------- ---------------------------------------------
($ in thousands) ($ in thousands)
% %
Increase/ Increase/
1998 1997 (Decrease) 1998 1997 (Decrease)
--------- ---------- ------------ ----------- ---------- --------------
<S> <C> <C> <C> <C>
Income tax benefit $ 3,022 $ - n/a $ 5,471 $ - n/a
Income tax benefit increased $3.0 million for the three and six months
ended June 30, 1998 and $6.0 million (including $.6 million netted against
cumulative effect of change in accounting principle), respectively, over
the three and six months ended June 30, 1997, primarily due to the
recognition of net operating losses.
</TABLE>
13
<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 these 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 2. Changes in Securities and Use of Proceeds
On November 21, 1997, the Company's Registration Statement on Form S-1, file
number 333-35227, registering $207,000,000 aggregate amount of the Company's
Class A Common Stock, par value $.01 per share, became effective under the
Securities Act of 1933. The Company used the $6,531,000 remaining proceeds from
this issuance in the first quarter of 1998 to fund operating and capital
expenditures. All of the offering proceeds from this issuance have been applied.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its 1998 Annual Meeting of the Stockholders on May 21, 1998 to
elect directors and consider proposals (i) to approve the 1997 Equity Incentive
Plan and (ii) to approve the Employee Stock Purchase Plan, as discussed in the
Company's proxy statement filed on April 28, 1998.
The following persons were elected directors to hold office until the next
annual meeting and until their successors have been elected and qualified:
<TABLE>
<CAPTION>
Votes
----------------------------------------
For (*) Abstained
------------------- ----------------
<S> <C> <C>
Daryl A. Ferguson 416,740,465 6,735
Stanley Harfenist 416,741,065 6,135
David B. Sharkey 416,741,065 6,135
Robert A. Stanger 416,740,965 6,235
Leonard Tow 416,741,065 6,135
Maggie Wilderotter 416,741,065 6,135
</TABLE>
The stockholders approved the 1997 Equity Incentive Plan by a vote of
413,257,018 (*) votes For to 1,421,510 votes Against; 7,830 votes Abstained and
there were 2,060,842 Broker Non-Votes.
The stockholders also approved the Employee Stock Purchase Plan by a vote of
414,681,109 (*) votes For to 181,430 votes Against; 7,230 votes Abstained and
there were 1,877,431 Broker Non-Votes.
* Includes votes from the 41,165,000 shares of Class B common stock. All
Class B Common Stock is owned by Citizens and each share is entitled to 10
votes on each matter to be voted upon by holders of the Common Stock.
14
<PAGE>
PART II. OTHER INFORMATION (continued)
ELECTRIC LIGHTWAVE, INC.
Item 6. Exhibits and Reports on Form 8-K
a) The exhibits below are filed as part of this report:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.2 Amended By-laws of the Company.
10.19* Initial Optical Fiber Design and Installation Agreement between the Company and FOCAS, Inc. dated as of May
7, 1998.
10.20* Post-Completion Agreement between the Company and FOCAS, Inc. dated as of May 7, 1998.
10.21* Private Line Services Agreement between the Company and Qwest Communications Corporation dated as of June
1, 1998.
10.22 Electric Lightwave, Inc. Employee Stock Purchase Plan.
27.1 Financial Data Schedule for the six months ended June 30, 1998.
27.2 Amended Financial Data Schedules for the three months ended March 31, 1998 and 1997, the six months ended
June 30, 1997, the nine months ended September 30, 1997, and the twelve months ended December 31, 1997.
Exhibit 10.22 is a management contract or compensatory plan or arrangement, and
is incorporated by reference to the Company's Proxy Statement on Schedule 14A
filed on April 28, 1998.
* 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 May 5, 1998, under Item 5, "Other Events" first quarter 1998 financial information.
</TABLE>
15
<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
August 13, 1998
16
EXHIBIT 3.2
BYLAWS
OF
ELECTRIC LIGHTWAVE, INC.
As amended October 16, 1997; May 21, 1998
<PAGE>
BYLAWS
OF
ELECTRIC LIGHTWAVE, INC.
TITLE
1. The title of this Corporation is ELECTRIC LIGHTWAVE, INC.
("Corporation").
LOCATION OF OFFICES
2. The principal office of the Corporation in Delaware shall be in
Wilmington and the resident agent in charge thereof shall be The Corporation
Trust Company, located in New Castle County at The Corporation Trust Center,
1209 Orange Street, Wilmington, DE 19801.
The Corporation may also have an office or offices at such other
places within or without the State of Delaware as the Board of Directors may
from time to time designate.
CORPORATE SEAL
3. The corporate seal shall be circular in form and have inscribed
thereon the name of the Corporation, the year of its incorporation (1990) and
the words "Incorporated Delaware".
MEETINGS OF STOCKHOLDERS
4. All meetings of stockholders shall be held at the offices of the
Corporation or such other place as shall be designated by the Board of Directors
of the Corporation.
Annual Meetings of stockholders shall be held on a date and at a
time designated by the Board of Directors of the Corporation. At each annual
meeting the stockholders shall elect a Board of Directors, such election to be
by majority of the stock present or represented by proxy, and entitled to vote
at the meeting.
Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, each stockholder shall, at every meeting of the
stockholders, be entitled to one vote for each share of stock held by him or
her, in person or by written proxy signed by him or her, but no proxy shall be
voted on after one year from its date. Such right to vote shall be subject to
the right of the Board of Directors to close the transfer books or to fix a
record date for voting stockholders as hereinafter provided.
Special meetings of the stockholders may be called by the Chief
Executive Officer and shall be called on the request in writing or by vote of a
majority of the Board of Directors or on demand in writing of stockholders of
record owning twenty-five percent (25%) in amount of the capital stock
outstanding and entitled to vote.
Notice of each meeting of stockholders, whether annual or special,
shall be mailed by the secretary to each stockholder of record, at his or her
post office address as shown by the stock books of the Corporation, at least ten
days and not more than sixty days prior to the date of the meeting. If the
transfer books are closed or a record date is fixed in connection with an annual
meeting, as permitted by Bylaw 19, the notice of the meeting shall be given to
the stockholders of record as of the time said books are closed or record date
is fixed, but if the transfer books are not closed or a record date is not
fixed, said notice shall be given to the stockholders of record at the time the
notice is mailed.
<PAGE>
The holders of a majority of the stock outstanding and entitled to
vote shall constitute a quorum, but the holders of a smaller amount may adjourn
any meeting from time to time without further notice until a quorum is secured.
At the annual meeting of stockholders, only such business shall be
conducted as shall have been brought before the meeting (a) pursuant to the
Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of the notice provided for below, who shall be
entitled to vote at such meeting and who complies with the procedures set forth
below; provided that any such business proposed by a stockholder is otherwise
proper for consideration under applicable law, the Corporation's certificate of
incorporation and these Bylaws.
For business to be brought before an annual meeting by a
stockholder, the stockholder must have given notice thereof in writing to the
Secretary of the Corporation, delivered to or mailed and received at the
principal office of the Corporation no earlier than the January 1 and no later
than the February 15 preceding the annual meeting. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the meeting (a) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(b) the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, and the name and address of the beneficial
owner, if any, on whose behalf the proposal is made, (c) the class and number of
shares of the Corporation which are owned beneficially and of record by such
stockholder of record and by the beneficial owner, if any, on whose behalf the
proposal is made, together with documentary support for any claim of beneficial
ownership, (d) any material interest of such stockholder of record and the
beneficial owner, if any, on whose behalf the proposal is made in such business
and (e) any information, in addition to that required above, which may be
required from time to time by Regulation 14A of the Securities Exchange Act of
1934 with respect to security holder proposals.
The Chairman of the meeting, in addition to making any other
determinations that may be appropriate to the conduct of the meeting, shall
determine whether such notice has been duly given and whether such business is
otherwise proper for consideration (using as a non-exclusive guideline the
provisions of Rule 14a-8(c) under the Securities Exchange Act of 1934), and
shall direct that any business not properly brought before the meeting shall not
be transacted.
-2-
<PAGE>
DIRECTORS
5. The property and business of the Corporation shall be managed and
controlled by its Board of Directors, which shall consist of not less than three
or more than seven members. The number of Directors shall be fixed from time to
time, within the limits prescribed, by resolution of the Board of Directors.
Vacancies in the Board of Directors (except vacancies resulting from the removal
of directors by stockholders), including vacancies in the Board of Directors
resulting from any increase in the number of Directors, may be filled by a
majority of the Directors then in office, though less than a quorum.
Directors shall otherwise be elected by the stockholders at
the annual meeting and shall hold office until the next annual election and
until their successors are elected and qualified. Except as otherwise provided
by law, the Certificate of Incorporation or these Bylaws, at all elections of
Directors of this Corporation each stockholder shall be entitled to one vote for
each share of stock owned by him or her, in person or by written proxy signed by
him or her, and election shall be by majority vote of the stock present or
represented by proxy and entitled to vote at the meeting. The stockholders of
this Corporation shall have no preemptive right to subscribe to any issue of
shares of stock of this Corporation now or hereafter made.
The Board of Directors shall have an Executive Committee. The
Executive Committee of the Board shall consist of (3 three) members, to be
appointed by and to serve at the pleasure of the Board. The Chairman of the
Board shall be the Chairman of the Executive Committee. During intervals between
meetings of the Board, the Committee shall have the power and authority of the
Board of Directors of the management of the business affairs and property of the
Corporation.
Nominations of persons for election to the Board of Directors of the
Corporation may be made by any stockholder of the Corporation who is a
stockholder of record at the time of giving of the notice provided for below,
who shall be entitled to vote for the election of Directors at the meeting and
who complies with the notice procedures set forth below.
Nominations by stockholders shall be made pursuant to notice in
writing to the Secretary of the Corporation, delivered to or mailed and received
at the principal office of the Corporation no earlier than the January 1 and no
later than the February 15 preceding the annual meeting. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election as a Director all information relating to such person that
is required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934 (including such person's written
consent to being named in the proxy statement as a nominee and to serve as a
Director if elected); (b) as to the stockholder giving the notice; (i) the name
and address, as they appear on the Corporation's books, of such stockholder and
(ii) the class and number of shares of the Corporation which are beneficially
owned by such stockholder and also which are owned of record by such stockholder
and (iii) documentary support for such claim of beneficial ownership; (c) as to
the beneficial owner, if any, on whose behalf the nomination is made, (i) the
name and address of such person, (ii) the class and number of shares of the
Corporation which are beneficially owned by such person and (iii) documentary
support for such claim of beneficial ownership; and (d), a description of all
arrangements or understandings between the stockholder giving notice, the
beneficial owner and each nominee and any other person or persons (naming such
person or persons) relating to the nomination to be made or resulting
directorship.
The Board of Directors or a Nominating Committee established by the
Board of Directors shall determine whether a stockholder nomination was made in
accordance with the procedures prescribed herein and whether the stockholder's
nominee should be recommended as a member of the slate of nominees to be
proposed at the annual meeting, and the Board of Directors or its Nominating
Committee may disregard any nomination not made in accordance with these Bylaws.
The Chairman of the meeting shall not nominate for election to the Board of
Directors any stockholder nominee who has been disregarded by the Board of
Directors or its Nominating Committee.
-3-
<PAGE>
POWERS OF DIRECTORS
6. The Board of Directors shall have all such powers as may be
exercised by the Corporation, subject to the provisions of the statutes, the
Certificate of Incorporation, and the Bylaws.
MEETINGS OF DIRECTORS
7. Meetings of the Board of Directors shall be held at such place
within or without the State of Delaware as may from time to time be fixed by
resolution of the Board of Directors, or as may be specified by the Chief
Executive Officer in the call of any meeting. Regular meetings of the Board of
Directors shall be held at such times as may from time to time be fixed by
resolution of the Board of Directors and special meetings may be held at any
time upon the call of two (2) Directors, the Chief Executive Officer or the
Chief Operating Officer, by oral, telegraphic or written notice duly served or
sent or mailed to each Director not less than five (5) days before such meeting.
A meeting of the Board may be held without notice immediately after the annual
meeting of stockholders at the same place at which such meeting is held. Notice
need not be given of regular meetings of the Board held at times fixed by
resolution of the Board. Meetings may be held at any time without notice if all
the Directors are present or if those not present waive notice of the meeting in
writing.
Members of the Board of Directors (or any committees thereof) may
participate in a meeting of the Board of Directors (or of such committees) by
means of conference telephone or other communications equipment via which all
persons participating can hear each other. Such participation in the substantive
discussion and determinations of a meeting shall constitute presence in person
at such meeting.
A majority of the Directors shall constitute a quorum, but a smaller
number may adjourn any meeting from time to time without further notice until a
quorum is secured.
OFFICERS OF THE CORPORATION
8. The officers of the Corporation shall be a Chairman of the Board of
Directors, a Vice Chairman of the Board of Directors, a President, one or more
vice presidents (with such duties and titles as may be assigned to them), a
secretary, a treasurer, one or more assistant vice presidents (with such duties
and titles as may be assigned to them), and such other officers as may from time
to time be chosen by the Board of Directors.
The officers of the Corporation shall hold office until their
successors are elected and qualified. If the office of any officer or officers
becomes vacant for any reason, the vacancy shall be filled by the affirmative
vote of a majority of the whole Board of Directors.
DUTIES OF THE CHAIRMAN
9. The Chairman presides at all meetings of the Board of Directors and
at all meetings of the shareholders. It shall be his or her prerogative to see
that all orders, resolutions, and policy determinations of the Board of
Directors are carried into effect. He or she acts in a general oversight and
advisory capacity with respect to the affairs of the Corporation. He or she
provides leadership to the Board in reviewing and deciding upon matters which
constitute major policies of the Corporation, what the Corporation does and the
manner in which the Corporation business is conducted. Any of such duties may be
delegated by the Chairman to the Vice-Chairman.
DUTIES OF THE CHIEF EXECUTIVE OFFICER
10. It shall be the duty of the Chief Executive Officer to carry into
effect all orders, resolutions, and policy determinations of the Board of
Directors; to execute all contracts and agreements; to keep the seal of the
Corporation; and to sign and to affix the seal of the Corporation to any
instrument requiring the same, which seal shall be attested by the signature of
the Secretary or Treasurer or Assistant Secretary or Assistant Treasurer. He or
she shall have the general supervision and direction of the other officers of
the Corporation.
-4-
<PAGE>
He shall submit a report of the operations of the Corporation for
the year to the Directors at their meeting next preceding the annual meeting of
the stockholders and to the stockholders at their annual meeting.
He shall have the general duties and powers of supervision and
management usually vested in the chief executive officer of a Corporation.
The Chief Executive may also hold another office with the
Corporation. Accordingly, the duties and responsibilities of the position may be
assigned by the Board of Directors to any Corporation officer.
-5-
<PAGE>
DUTIES OF THE PRESIDENT
11. Unless otherwise decided by the Board of Directors, the President
shall be the chief operating and administrative officer of the Corporation. It
shall be his or her duty to see that all orders and policy determination
conveyed by the Chairman are carried into effect. He or she shall have the
general supervision and direction of the operations and administration of the
affairs of the Corporation and general supervision and direction of the other
officers and employees of the Corporation and shall see that their duties are
properly performed.
VICE PRESIDENT
12. The vice president or vice presidents, in the order of their
seniority, shall be vested with all the powers and required to perform all the
duties of the President in his or her absence or disability and shall perform
such other duties as may be prescribed by the Board of Directors.
CHIEF EXECUTIVE PRO TEM
13. In the absence or disability of the Chairman, Vice-Chairman and
President, the Board may appoint a chief executive pro tem.
SECRETARY
14. The secretary shall attend all meetings of the Corporation and the
Board of Directors. He or she shall act as clerk thereof and shall record all of
the proceedings of such meetings in a book kept for that purpose. He or she
shall give proper notice of meetings of stockholders and Directors and shall
perform such other duties as shall be assigned to him or her by the Chairman,
Vice-Chairman, President or the Board of Directors.
TREASURER
15. The treasurer shall have custody of the funds and securities of the
Corporation and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board, or
Chairman, Vice-Chairman or President, taking proper vouchers for such
disbursements and shall render to the Chairman, Vice Chairman, President and
Directors, whenever they may require it, an account of all his or her
transactions as treasurer and of the financial condition of the Corporation.
He shall keep an account of stock and income notes registered and
transferred in such manner and subject to such regulations as the Board of
Directors may prescribe.
He shall give the Corporation a bond, if required by the Board of
Directors, in such sum and in form and with security satisfactory to the Board
of Directors for the faithful performance of the duties of his or her office and
the restoration to the Corporation, in case of his or her death, resignation, or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his or her possession, belonging to the Corporation. He or she
shall perform such other duties as the Board of Directors may from time to time
prescribe or require.
DUTIES OF OFFICERS MAY BE DELEGATED
16. In case of the absence or disability of any officer of the
Corporation or for any other reason deemed sufficient by a majority of the
Board, the Board of Directors may delegate his or her powers or duties to any
other officer or to any Director for the time being. The duties relating to the
execution of contracts and agreements and the signing of instruments and
affixing the seal of the Corporation and other matters may be delegated to any
officer, from time to time, as the Board shall see fit.
-6-
<PAGE>
CERTIFICATES OF STOCK
17. Certificates of stock shall be signed by the Chairman,
Vice-Chairman, President or a vice president and either the treasurer, assistant
treasurer, secretary or assistant secretary. If a certificate of stock be lost
or destroyed, another may be issued in its stead upon proof of such loss or
destruction and the giving of a satisfactory bond of indemnity, in an amount
sufficient to indemnify the Corporation against any claim.
TRANSFER OF STOCK
18. All transfers of stock of the Corporation shall be made upon its
books upon presentation of the certificate or certificates therefor, properly
endorsed by the holder of the shares in person or by his or her lawfully
constituted representative, and upon surrender of such certificate or
certificates of stock for cancellation.
CLOSING OF TRANSFER BOOKS
19. The Board of Directors shall have the power to close the stock
transfer books of the Corporation for a period not exceeding sixty days
preceding the date for any meeting of stockholders or for payment of any
dividend or for the allotment of rights or when any change or conversion or
exchange of capital stock shall go into effect, or for a period of not exceeding
sixty days in connection with obtaining the consent of stockholders for any
purpose. In lieu of so closing the books, the Board of Directors may fix in
advance a date, not exceeding sixty days preceding the said above mentioned
dates, as a record date for the determination of the stockholders entitled to
notice of or to vote at any such meeting, and any adjournment thereof, or
entitled to dividends or other rights hereinbefore mentioned, or to give such
consent.
STOCKHOLDERS OF RECORD
20. The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person whether or not it shall have express or
other notice thereof, save as expressly provided by the laws of Delaware.
FISCAL YEAR
21. The fiscal year of the Corporation shall begin on the first day in
January in each year.
DIVIDENDS
22. Dividends, to the extent not restricted by provisions of the
Corporation's Certificate of Incorporation or by subsisting agreements of the
Corporation, may be declared by the Board of Directors and paid in cash, in
property, or in shares of the capital stock of the Corporation to the extent
permitted by law, out of net assets in excess of its capital or out of its net
profits, provided there shall be no impairment of the capital of the Corporation
represented by its issued and outstanding stock of all classes having a
preference upon the distribution of assets.
BOOKS AND RECORDS
23. The books, accounts, and records of the Corporation may be kept
within or without the State of Delaware, at such place or places as may from
time to time be designated by the Bylaws or by resolution of the Directors.
-7-
<PAGE>
NOTICES
24. Notice required to be given under the provisions of these Bylaws to
any Director, officer or stockholder shall not be construed to mean personal
notice, but may be given in writing by depositing the same in a post office or
letter box, in a postpaid sealed or unsealed wrapper, addressed to such
stockholder, officer or Director at such address as appears on the books of the
Corporation, and such notice shall be deemed to be given at the time when the
same shall be thus mailed. In computing the number of days notice required for
any meeting, the day on which the notice shall be deposited in the mail or sent
by telegraph shall be excluded.
WAIVER OF NOTICE
25. Any stockholder, officer, or Director may waive in writing, or by
telegraph, any notice required to be given under these Bylaws, whether before or
after the time stated therein.
INDEMNIFICATION OF
DIRECTORS AND OFFICERS
26. (a) Right of Indemnification. The Corporation shall, to the fullest
extent permitted by applicable law as then in effect, indemnify any person (the
"indemnitee") who was or is involved in any manner (including, without
limitation, as a party or a witness) or was or is threatened to be made so
involved in any threatened, pending or completed investigation, claim, action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action or proceeding by or in the right of
the Corporation to procure a judgement in its favor) (a "Proceeding") by reason
of the fact that he or she is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director or officer
of another Corporation, or of a partnership, joint venture, trust or other
enterprise (including, without limitation, service with respect to any employee
benefit plan), whether the basis of any such Proceeding is alleged action in an
official capacity as director or officer or in any other capacity while serving
as a director or officer, against all expenses, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or
penalties, and amounts paid or to be paid in settlement) actually and reasonably
incurred by him or her in connection with such Proceeding. Such indemnification
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of his or her heirs, executors, administrators and
legal representatives. The right to indemnification conferred in this Bylaw
shall include the right to receive payment of any expenses incurred by the
indemnitee in connection with such Proceeding in advance of the final
disposition of the Proceeding, consistent with applicable law as then in effect.
All rights to indemnification conferred in this Bylaw, including rights to the
advancement of expenses and the evidentiary, procedural and other provisions of
this Bylaw, shall be contract rights with the same effect as if embodied in a
separate written agreement for each indemnitee, executed and delivered by the
Corporation and such indemnitee. The Corporation may, by action of its Board of
Directors, provide indemnification for employees, agents, attorneys and
representatives of the Corporation with the same, or with more or less, scope
and extent as herein provided for officers and directors. No amendment to the
Restated Certificate of Incorporation or amendment or repeal of this Bylaw
purporting to have the effect of modifying or repealing any of the provisions of
this Bylaw in a manner adverse to the indemnitee shall abridge or adversely
affect any right to indemnification or other similar rights and benefits with
respect to any acts or omissions occurring prior to such amendment or repeal.
This Bylaw shall be applicable to all Proceedings, whether arising from acts or
omissions occurring before or after the adoption of this Bylaw. The phrase "this
Bylaw" shall refer to Bylaws 26 and 27. For all purposes, except the corporate
procedure required for amendment of Bylaws 26 and 27, Bylaws 26 and 27 shall be
considered as one Bylaw.
(b) ByLaw Not Exclusive. The right of indemnification, including the
right to receive payment in advance of expenses, conferred in this Bylaw shall
not be exclusive of any other rights to which any person seeking indemnification
may otherwise be entitled under any provision of the Restated Certificate of
Incorporation, Bylaw, agreement, applicable corporate law and statute, vote of
disinterested directors or stockholders or otherwise. The indemnitee is free to
proceed under any or all of the rights or procedures available to him or her.
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<PAGE>
(c) Burden of Proof. In any determination, review of a determination,
action, arbitration, or other proceeding relating to the right to
indemnification conferred in this Bylaw, the Corporation shall have the burden
of proof that the indemnitee has not met any standard of conduct or belief which
may be required by applicable law to be applied in connection with a
determination that the indemnitee is not entitled to indemnity and also the
burden of proof on any of the issues which may be material to a determination
that the indemnitee is not entitled to indemnification. Neither a failure to
make such a determination of entitlement nor an adverse determination of
entitlement to indemnity shall be a defense of the Corporation in an action or
proceeding brought by the indemnitee or by or on behalf of the Corporation
relating to indemnification or create any presumption that the indemnitee has
not met any such standard of conduct or belief or is otherwise not entitled to
indemnity. If successful in whole or in part in such an action or proceeding,
the indemnitee shall be entitled to be further indemnified by the Corporation
for the expenses actually and reasonably incurred by him or her in connection
with such action or proceeding.
(d) Advancement of Expenses. All reasonable expenses incurred by or on
behalf of indemnitee in connection with any Proceeding shall be advanced from
time to time to the indemnitee by the Corporation promptly after the receipt by
the Corporation of a statement from the indemnitee requesting such advance,
whether prior to or after final disposition of such Proceeding.
(e) Insurance, Contracts and Funding. The Corporation may purchase and
maintain insurance to protect itself and any person who is, or may become an
officer, director, employee, agent, attorney, trustee or representative (any of
the foregoing being herein referred to as a "Representative") of the Corporation
or, at the request of the Corporation, a Representative of another corporation
or entity, against any expenses, liability or loss asserted against him or her
or incurred by him or her in connection with any Proceeding in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such expense,
liability or loss under the provisions of this Bylaw or otherwise. The
Corporation may enter into contracts with any Representative of the Corporation,
or any person serving as such at the request of the Corporation for another
corporation or entity, in furtherance of the provisions of this Bylaw. Such
contracts shall be deemed specifically approved and authorized by the
stockholders of the Corporation and not subject to invalidity by reason of any
interested directors. The Corporation may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification of any person entitled thereto.
(f) Severability; Statutory Alternative. If any provision or provisions
of this Bylaw shall be held to be invalid, illegal or unenforceable for any
reason whatsoever (i) the validity, legality and enforceability of all of the
remaining provisions of this Bylaw shall not in any way be affected or impaired
thereby; and (ii) to the fullest extent possible, the remaining provisions of
this Bylaw shall be construed so as to give effect to the intent manifested by
the provision held invalid, illegal or unenforceable. In the event that the
indemnitee elects, as an alternative to the procedures specified in this Bylaw,
to follow one of the procedures authorized by applicable corporate law or
statute to enforce his or her right to indemnification and notifies the
Corporation of his or her election, the Corporation agrees to follow the
procedure so elected by the indemnitee. If, in accordance with the preceding
sentence the procedure therefor contemplated herein or the procedure elected by
the indemnitee in any specific circumstances (or such election by the
indemnitee) shall be invalid or ineffective in bringing about a valid and
binding determination of the entitlement of the indemnitee to indemnification,
the most nearly comparable procedure authorized by applicable corporate law or
statute shall be followed by the Corporation and the indemnitee.
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<PAGE>
INDEMNIFICATION PROCEDURES;
PRESUMPTIONS AND REMEDIES
27. In furtherance, but not in limitation, of the foregoing provisions
of this Bylaw, the following procedures, presumptions and remedies shall apply
with respect to advancement of expenses and the right to indemnification under
this Bylaw:
(a) Advancement of Expenses. The advancement or reimbursement of
expenses to an indemnitee provided in paragraph (d) of Bylaw 26 shall be made
within 20 days after the receipt by the Corporation of a request therefor from
the indemnitee. Such request shall reasonably evidence the expenses incurred or
about to be incurred by the indemnitee and, if required by law at the time of
such advance, shall include or be accompanied by an undertaking by or on behalf
of the indemnitee to repay the amounts advanced if it should ultimately be
determined that the indemnitee is not entitled to be indemnified against such
expenses.
(b) Procedure for Determination of Entitlement to Indemnification.
(i) To obtain indemnification (except with respect to the
advancement of expenses), an indemnitee shall submit to the Chief
Executive Officer or Secretary of the Corporation a written
request, including such documentation and information as is
reasonably available to the indemnitee and reasonably necessary
to determine whether and to what extent the indemnitee is
entitled to indemnification (the "Supporting Documentation"). The
Secretary of the Corporation shall promptly advise the Board of
Directors in writing that the indemnitee has requested
indemnification. The determination of the indemnitee's
entitlement to indemnification shall be made not later than 60
days after receipt by the Corporation of the written request and
Supporting Documentation.
(ii) The indemnitee's entitlement to indemnification shall be
determined in one of the following ways: (A) by a majority vote
of the Disinterested Directors (as hereinafter defined) (which
term shall mean the Disinterested Director, if there is only
one); (B) by a written opinion of the Independent Counsel (as
hereinafter defined) if (x) a majority of the Disinterested
Directors so directs; (y) there is no Disinterested Director, or
(z) a Change of Control (as hereinafter defined) shall have
occurred and the indemnitee so requests in which case the
Disinterested Directors shall be deemed to have so directed; (C)
by the stockholders of the Corporation (but only if a majority of
the Disinterested Directors determines that the issue of
entitlement to indemnification should be submitted to the
stockholders for their determination); or (D) as provided in
paragraph (c) of Bylaw 27.
(iii) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
clause (ii) of paragraph (b) of Bylaw 27, a majority of the
Disinterested Directors shall select the Independent Counsel, but
only an Independent Counsel to which the indemnitee does not
reasonably object; provided, however, that if a Change of Control
shall have occurred, the indemnitee shall select such Independent
Counsel, but only an Independent Counsel to which the Board of
Directors does not reasonably object.
(c) Presumptions and Effect of Certain Proceedings. Except as
otherwise expressly provided in this Bylaw, the indemnitee shall be presumed to
be entitled to indemnification upon submission of a request for indemnification
together with the Supporting Documentation, and thereafter in any determination
or review of any determination, and in any arbitration, proceeding or
adjudication the Corporation shall have the burden of proof to overcome that
presumption in reaching a contrary determination. In any event, if the person or
persons empowered under clause (ii) of paragraph (b) of Bylaw 27 to determine
entitlement to indemnification shall not have been appointed or shall not have
made a determination within 60 days after receipt by the Corporation of the
request therefor together with the Supporting Documentation, the indemnitee
shall be deemed to be entitled to indemnification. In either case, the
indemnitee shall be entitled to such indemnification, unless (i) the indemnitee
misrepresented or failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (ii) such indemnification
is prohibited by law, as finally determined by adjudication. The termination of
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<PAGE>
any Proceeding, or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendre or its equivalent,
shall not, of itself, adversely affect the right of the indemnitee to
indemnification or create any presumption with respect to any standard of
conduct or belief or any other matter which might form a basis for a
determination that the indemnitee is not entitled to indemnification. With
regard to the right to indemnification for expenses, (i) if and to the extent
that the indemnitee has been successful on the merits or otherwise in any
Proceeding, or (ii) if a Proceeding was terminated without a determination of
liability on the part of the indemnitee with respect to any claim, issue or
matter therein or without any payments in settlement or compromise being made by
the indemnitee with respect to a claim, issue or matter therein, or (iii) if and
to the extent that the indemnitee was not a party to the Proceeding, the
indemnitee shall be deemed to be entitled to indemnification, which entitlement
shall not be defeated or diminished by any determination which may be made
pursuant to clauses (A), (B) or (C) of clause (ii) of paragraph (b) of Bylaw 27.
The indemnitee shall be presumptively entitled to indemnification in all
respects for any act, omission or conduct taken or occurring which (whether by
condition or otherwise) is required, authorized or approved by any order issued
or other action by any commission or governmental body pursuant to any federal
statute or state statute regulating the Corporation or any of its subsidiaries
by reason of its status as a public utility or public utility holding
Corporation or by reason of its activities as such. To the extent permitted by
law, the presumption shall be conclusive on all parties with respect to acts,
omissions or conduct of the indemnitee if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation or its subsidiary. No presumption adverse to an
indemnitee shall be drawn with respect to any act, omission or conduct of the
indemnitee if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation or its
subsidiary taken or occurring in the absence of, or inconsistent with, any order
issued or action by any commission or governmental body.
(d) Remedies of Indemnitee.
(i) In the event that a determination is made pursuant to
paragraph (b) of Bylaw 27 that the indemnitee is not entitled to
indemnification under this Bylaw, (A) the indemnitee shall be
entitled to seek an adjudication of his or her entitlement to such
indemnification in an appropriate court of the State of Delaware
or any other court of competent jurisdiction; (B) any such
judicial proceeding shall be de novo and the indemnitee shall not
be prejudiced by reason of such adverse determination; and (C) in
any such judicial proceeding the Corporation shall have the burden
of proof that the indemnitee is not entitled to indemnification
under this Bylaw.
(ii) If a determination shall have been made or deemed to have
been made, pursuant to paragraphs (b) or (c) of Bylaw 27, that the
indemnitee is entitled to indemnification, the Corporation shall
be obligated to pay the amounts constituting such indemnification
within five days after such determination has been made or deemed
to have been made and shall be conclusively bound by such
determination, unless (A) the indemnitee misrepresented or failed
to disclose a material fact in making the request for
indemnification or in the Supporting Documentation or (B) such
indemnification is prohibited by law, in either case as finally
determined by adjudication. In the event that (x) advancement of
expenses is not timely made by the Corporation pursuant to this
Bylaw or (y) payment of indemnification is not made within five
days after a determination of entitlement to indemnification has
been made or deemed to have been made pursuant to paragraphs (b)
or (c) of Bylaw 27, the indemnitee shall be entitled to seek
judicial enforcement of the Corporation's obligations to pay to
the indemnitee such advancement of expense of indemnification.
Notwithstanding the foregoing, the Corporation may bring an
action, in an appropriate court in the State of Delaware or any
other court of competent jurisdiction, contesting the right of the
indemnitee to receive indemnification hereunder due to the
occurrence of a circumstance described in subclause (A) of this
clause (ii) of paragraph (d) of Bylaw 27 or a prohibition of law
(both of which are herein referred to as a "Disqualifying
Circumstance. In any such enforcement action or other proceeding
whether brought by the indemnitee or the Corporation, indemnitee
shall be entitled to indemnification unless the Corporation can
satisfy the burden or proof that indemnification is prohibited by
reason of a Disqualifying Circumstance.
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<PAGE>
(iii) The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to this paragraph (d) that
the procedures and presumptions of this Bylaw are not valid,
binding and enforceable and shall stipulate in any such court or
before any such arbitrator or arbitrators that the Corporation is
bound by all the provisions of this Bylaw.
(iv) In the event that the indemnitee, pursuant to this Bylaw,
seeks a judicial adjudication of his or her rights under, or to
recover damages for breach of, this Bylaw, or is otherwise involved
in any adjudication with respect to his or her right to
indemnification, the indemnitee shall be entitled to recover from
the Corporation, and shall be indemnified by the Corporation
against, any expenses actually and reasonably incurred by him or
her if the indemnitee prevails in such judicial adjudication. If it
shall be determined in such judicial adjudication that the
indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses
incurred by the indemnitee in connection with such judicial
adjudication shall be prorated accordingly.
(e) Definitions. For purposes of indemnification under this Bylaw
or otherwise:
(i) "Change in Control" means a change in control of the
Corporation of a nature that would be required to be reported in
response to Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 (the "Act"), whether or not the
Corporation is then subject to such reporting requirement; provided
that, without limitation, such a change in control shall be deemed to
have occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Act) other than Citizens Utilities Corporation
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Corporation
representing 20 percent or more of the combined voting power of the
Corporation's then outstanding securities without the prior approval of
at least two-thirds of the members of the Board of Directors in office
immediately prior to such acquisition; (B) the Corporation is a party
to a merger, consolidation, sale of assets or other reorganization, or
a proxy contest, as a consequence of which, members of the Board of
Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter;
or (C) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors
(including for this purpose any new Director whose election or
nomination for election by the Corporation's stockholders was approved
by a vote of at least two-thirds of the Directors then still in office
who were Directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board of Directors.
(ii) "Disinterested Director" means a Director of the
Corporation who is not or was not a material party to the Proceeding in
respect of which indemnification is sought by the indemnitee.
(iii) "Independent Counsel" means a law firm or a member of a
law firm that neither presently is, nor in the past five years has
been, retained to represent (A) the Corporation or the indemnitee in
any manner or (B) any other party to the Proceeding giving rise to a
claim for indemnification under this Bylaw. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person
who, under the applicable standards of professional conduct then
prevailing under the law of the State of Delaware, would have a
conflict of interest in representing either the Corporation or the
indemnitee in an action to determine the indemnitee's rights under this
Bylaw.
(f) Acts of Disinterested Directors. Disinterested Directors
considering or acting on any indemnification matter under this Bylaw or under
governing corporate law or otherwise may consider or take action as the Board of
Directors or may consider or take action as a committee or individually or
otherwise. In the event that Disinterested Directors consider or take action as
the Board of Directors, one-third of the total number of Directors in office
shall constitute a quorum.
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<PAGE>
AMENDMENTS OF BYLAWS
28. These Bylaws may be amended or altered by the vote of a majority of
the whole Board of Directors at any meeting provided that notice of such
proposed amendment shall have been given in the notice given to the Directors of
such meeting. Such authority in the Board of Directors is subject to the power
of the stockholders to change or repeal any Bylaws by a majority vote of the
stockholders present and represented at any annual meeting or at any special
meeting called for such purpose, and Bylaws adopted by the stockholders (other
than Bylaw 27) shall not be repeated, altered or amended by the Board of
Directors.
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EXHIBIT 10.19
INITIAL
OPTICAL FIBER DESIGN AND
INSTALLATION AGREEMENT
BETWEEN
FOCAS, INC.
AND
ELECTRIC LIGHTWAVE, INC.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................................................1
ARTICLE II DESCRIPTION OF TRANSACTION..................................................................8
2.1 Utility Agreements.................................................................8
2.2 Delegation of Certain ELI Duties to FOCAS..........................................9
2.3 ELI Duties.........................................................................9
2.4 Licenses Revocable.................................................................9
2.5 Regulatory Approval................................................................9
2.6 Conversion from Revocable License to Irrevocable License..........................10
2.7 Nonexclusive Use of Right of Way..................................................10
2.8 Reservation of Certain Utility Company Rights.....................................10
2.9 Utility Operations................................................................10
2.10 No Property or Possessory Interest................................................11
2.11 Right of Entry....................................................................11
2.12 Entry Conditions..................................................................12
2.13 Cooperation.......................................................................12
2.14 Disclaimer........................................................................12
2.15 Operation of System...............................................................12
2.16 Cable Route.......................................................................13
ARTICLE III TERM.......................................................................................13
3.1 Term..............................................................................13
3.2 Termination of Agreement by ELI...................................................13
ARTICLE IV PAYMENTS...................................................................................14
4.1 Quarterly Payments................................................................14
4.2 Quarterly Payment Due Dates.......................................................14
4.3 Supporting Documentation..........................................................14
4.4 Reimbursement of Costs............................................................14
4.5 Payment Procedure.................................................................15
4.6 Late Payment......................................................................15
4.7 Performance Criteria..............................................................15
4.8 Security Interest.................................................................17
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ARTICLE V SYSTEM DESIGN..............................................................................18
5.1 FOCAS Design Responsibility.......................................................18
5.2 ELI Design Responsibilities.......................................................19
5.3 Utility Company Information.......................................................19
5.4 Notice of Adverse Claims..........................................................20
5.5 Working Drawings..................................................................20
5.6 Scheduling........................................................................20
5.7 Warranty of Work..................................................................21
5.8 Design Performance Completion.....................................................21
ARTICLE VI CONSTRUCTION...............................................................................21
6.1 Scope of Work.....................................................................21
6.2 Regeneration Facilities...........................................................22
6.3 Work Standards....................................................................22
6.4 Time..............................................................................22
6.5 Permits and Approvals.............................................................22
6.6 System Materials..................................................................23
6.7 Interface Between FOCAS and ELI...................................................23
6.8 Title and Risk of Loss............................................................23
6.9 System Warranties.................................................................23
6.10 Use of Contractors................................................................24
6.11 Inspection of Construction........................................................24
6.12 As-Built Drawings.................................................................25
6.13 Completion of System Construction.................................................26
6.14 Warranty of Work..................................................................26
6.15 Construction Performance Completion...............................................26
ARTICLE VII PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE...............................................27
7.1 Avoidance of Encumbrances.........................................................27
7.2 Payment of Ad Valorem Taxes.......................................................27
7.3 Sales or Use Taxes................................................................27
7.4 Liens.............................................................................27
7.5 Discontinuance or Relocation......................................................28
7.6 Relocation of Cable...............................................................28
7.7 Design and Installation of Relocated Facilities...................................29
7.8 Utility Company Maintenance Responsibilities......................................29
7.9 Maintenance of Regeneration Facilities and System Electronics.....................29
7.10 Restoration Plans.................................................................29
7.11 Performance Completion............................................................29
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<PAGE>
ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS..................................................29
8.1 Representations, Warranties and Covenants of ELI..................................29
8.2 Representations, Warranties and Covenants of FOCAS................................31
8.3 Confidentiality...................................................................33
8.4 Cooperation.......................................................................35
8.5 Regulatory Compliance.............................................................35
8.6 Certificates......................................................................35
8.7 Independent Status................................................................36
8.8 Transactions with Affiliates......................................................36
8.9 Further Assurances................................................................36
8.10 Audit Rights......................................................................36
8.11 Interference......................................................................36
8.12 Independent System Operator.......................................................36
8.13 Performance in Stead..............................................................37
8.14 Utility Agreements................................................................37
ARTICLE IX INSURANCE..................................................................................37
9.1 Required Insurance Coverage.......................................................37
9.2 General Conditions................................................................38
9.3 Evidence of Insurance.............................................................38
9.4 Blanket Policies..................................................................39
9.5 Self-Insurance....................................................................39
ARTICLE X ASSIGNMENT AND OTHER TRANSFERS.............................................................39
10.1 Transfers.........................................................................39
10.2 Financing.........................................................................39
10.3 Recognition of Transferees........................................................40
10.4 No Assumption or Release..........................................................40
10.5 Mergers and Acquisitions..........................................................40
ARTICLE XI CONDEMNATION...............................................................................40
11.1 Taking............................................................................40
11.2 Notice of Taking..................................................................40
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<PAGE>
ARTICLE XII ENVIRONMENTAL HAZARD LIABILITY.............................................................41
12.1 Responsibilities of FOCAS.........................................................41
12.2 Responsibilities of ELI...........................................................41
12.3 Warning...........................................................................41
ARTICLE XIII LIABILITY AND INDEMNITY....................................................................41
13.1 FOCAS Indemnity...................................................................41
13.2 ELI Indemnity.....................................................................42
13.3 No Consequential Damages..........................................................42
13.4 Defense of Claims.................................................................42
13.5 Third-Party Claims................................................................43
13.6 Survival..........................................................................43
13.7 Applicability of Liability Limitations............................................43
13.8 Claims Against Third-Parties......................................................43
13.9 Anti-Indemnity Statute............................................................43
ARTICLE XIV FORCE MAJEURE..............................................................................44
14.1 Excuse of Performance.............................................................44
14.2 Definition........................................................................44
14.3 Continuance after Force Majeure Event.............................................45
ARTICLE XV DEFAULT AND TERMINATION....................................................................45
15.1 Termination Events................................................................45
15.2 Actions Following Occurrence of Termination Event.................................47
15.3 No Release........................................................................47
ARTICLE XVI DISPUTE RESOLUTION.........................................................................48
16.1 Dispute Resolution................................................................48
16.2 Negotiation and Mediation.........................................................48
16.3 Confidentiality...................................................................48
16.4 Injunctive Relief.................................................................48
16.5 Continuing Obligation.............................................................48
16.6 Failure of Mediation..............................................................48
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<PAGE>
ARTICLE XVII MISCELLANEOUS..............................................................................49
17.1 Amendments........................................................................49
17.2 Binding Effect....................................................................49
17.3 Waivers...........................................................................49
17.4 Notices...........................................................................49
17.5 Severability......................................................................50
17.6 Interpretation....................................................................50
17.7 Governing Law and Choice of Forum.................................................50
17.8 Commissions.......................................................................50
17.9 Counterparts......................................................................51
17.10 Attorney Fees.....................................................................51
17.11 Costs.............................................................................51
17.12 No Third-Party Beneficiaries......................................................51
17.13 Entire Agreement..................................................................51
17.14 Survival..........................................................................51
17.15 Exhibits..........................................................................51
EXHIBITS
Exhibit "A" Acceptance Testing Standards
Exhibit "B" Cable Route
Exhibit "C" Cable Specifications
Exhibit "D" Performance Criteria
Exhibit "E" Revenue Sharing Route
Exhibit "F" Utility Company Agreements
Exhibit "G" Utility Company Safety Rules
Exhibit "H" Cable Warranty
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</TABLE>
<PAGE>
INITIAL
OPTICAL FIBER DESIGN
AND INSTALLATION AGREEMENT
THIS INITIAL OPTICAL FIBER DESIGN AND INSTALLATION AGREEMENT
("Agreement") is made and entered into effective as of the 7th day of May, 1998,
by and between FOCAS, INC., a Delaware corporation ("FOCAS"), and ELECTRIC
LIGHTWAVE, INC., a Delaware corporation ("ELI").
R E C I T A L S :
1. ELI has secured or is in the process of securing licenses to use
certain rights of way in the State of California upon which ELI desires to
construct and install or have constructed and installed an optical fiber
telecommunications transmission system over the entire Revenue Sharing Route (as
defined herein) estimated to cover approximately 1300 route miles.
2. FOCAS, at its expense, upon the terms, covenants and conditions set
forth in this Agreement, is willing to design, engineer, and supply the optical
fiber cable and other related facilities and equipment necessary for the
construction and installation of the optical fiber, and to participate in the
construction and installation of the optical fiber over a portion of the Revenue
Sharing Route which portion is estimated to cover approximately 920 route miles.
3. ELI, at its expense, upon the terms, covenants and conditions
contained in this Agreement, desires that FOCAS perform such design,
engineering, construction and installation services for ELI to the point that
the above-mentioned portion of the entire Revenue Sharing Route is completed.
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, FOCAS 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 ELI to FOCAS, pursuant to Section 6.11, that specified work has been
inspected by ELI and found to have been performed substantially in accordance
with the requirements of this Agreement.
"Acceptance Testing Standards" means ELI's Acceptance Testing
Standards set forth on Exhibit "A" attached to and incorporated in this
Agreement by reference.
<PAGE>
"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 FOCAS 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.
"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 any portion 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, the
Connecting Points and, as applicable, the Regeneration Facilities, the System
Electronics and other facilities and equipment associated with the Approved
System Segment.
"Cable" means one or more optical fiber telecommunications
cables containing single mode, nondispersion shifted 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 "B" attached to and incorporated in this Agreement by reference.
"Cable Specifications" means the drawings and specifications
regarding the Cable, the Cable Accessories, and related hardware and materials
to be employed in the installation and splicing of the Cable. A copy of the
Cable Specifications is attached to and incorporated by reference in this
Agreement as Exhibit "C."
"Cable Use License" means the exclusive right to use the
Commercial Fibers contained in the Cable that follows the portion of the Cable
Route contained in a particular Utility Company's service territory granted by
the Utility Company to ELI in a Utility Agreement. A Cable Use License does not
grant to ELI any right to enter upon or to access the Towers, the Substation
Sites or the Right of Way of the Utility Company.
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"Chief Engineer" means with respect to FOCAS 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.
"Commercial Fibers" means the single mode, nondispersion
shifted optical fibers along the entirety of the Revenue Sharing Route in which
ELI holds an exclusive license, lease or IRU.
"Connecting Point" means any point where the network or
facilities of ELI or any Utility Company connect to the System. The connecting
point may be: (1) a splice point in the Cable created during the installation of
the Cable for a Utility Company to access its Dark Fibers; or (2) a splice point
in a connection box located adjacent to a Regeneration Facility created during
the installation of the Cable for ELI's access to the Commercial Fibers.
"CPUC" means the California Public Utilities Commission.
"Dark Fiber Lease Services" means the leasing of dark
Commercial Fibers or capacity in dark Commercial Fibers by ELI to other
telecommunications carriers or commercial users. Dark Fiber Lease Services do
not include the Dark Fibers leased by ELI to the Utility Companies.
"Dark Fibers" means the single mode, nondispersion shifted
optical fibers in the Cable along the entirety of each Developed System Segment
leased to or reserved by the Utility Companies for the purposes and on the terms
described in the Utility Agreements.
"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 FOCAS and ELI.
"Force Majeure Event" shall have the meaning given in Section
14.2.
"Gross Revenues" means for any accounting period:
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(1) The sum of: (a) all revenues billed by
ELI for Transport Services and Dark Fiber Lease Services using
the Commercial Fibers over all or any portion of the entire
Revenue Sharing Route; (b) any other proceeds or value
received or receivable by ELI from any condemnation, eminent
domain or other Taking, or from the exploitation or
commercialization of the System or any interest therein,
including, but not limited to, any business interruption
insurance proceeds; and (c) any recoveries obtained by ELI
from the Utility Companies or others in respect of the System.
(2) Less the sum of: (a) any billed revenues
from the Revenue Sharing Route actually written off (as
determined consistent with ELI's business practices) net of
any cash receipts in respect of previously written off billed
revenue; (b) relocation costs allocable to and paid by ELI as
provided under the terms of any Utility Agreement resulting
from a relocation required by a party other than ELI, FOCAS or
the applicable Utility Company (as described in Section 7.6);
(c) Maintenance cost reimbursement payments made by ELI to the
Utility Companies under the terms of the Utility Agreements to
the extent provided in Section 7.8; (d) the premiums paid for
business interruption insurance relating to the Revenue
Sharing Route, if any; and (e) the cost of recovering any sum
of money from any of the Utility Companies or any other party
if the recovered amount is included in Gross Revenues (as
defined above).
"Hazardous Substances" means any waste, pollutant (as that
term is defined in 42 U.S.C. ss. 9601(33) or in 33 U.S.C. ss. 1362(13) or any
successor statutes thereto), hazardous substance (as that term is defined in 42
U.S.C. ss. 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.
ss. 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 any entity or agency to
which any Utility Company has ceded operational control of its electric
transmission system. An Independent System Operator, among other powers, has
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 a Cable Use License or a Right of
Way License that has been approved by the CPUC as described in Sections 2.5 and
2.6.
"IRU" means the exclusive indefeasible right to use the Cable
and the optical fibers contained therein reserved by ELI under the terms of a
Utility Agreement that grants to ELI a Right of Way License.
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"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.
"Maps" means any drawings or maps that FOCAS, a Utility
Company or ELI is required to prepare, update or submit to any state or federal
regulatory agency as required by applicable statute, rule or regulation.
"Payment Completion Date" means the date described in Section
4.1 of this Agreement.
"Payment Factor" means the percentage factor identified in
Section 4.1(b) which when multiplied against the Gross Revenues for a particular
accounting period produces the Quarterly Payment.
"Performance Completion Date" means the date described in
Section 5.8 of this Agreement.
"Performance Criteria" means those minimum annual Gross
Revenues described in Section 4.7 and set forth on Exhibit "D" attached to and
incorporated in this Agreement by reference.
"Qualified Contractor" means a party with whom ELI or FOCAS
contracts to perform any portion of the work for the System over which ELI or
FOCAS, as applicable, pursuant to the terms of this Agreement, has
responsibility. Each such Qualified Contractor must meet the qualification
standards imposed by ELI, FOCAS and the Utility Companies for the type of work
to be undertaken by such Qualified Contractor.
"Quarterly Payments" means the quarterly payments ELI shall
make to FOCAS under the terms of this Agreement as described in Section 4.1.
"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 design, engineer and construct the Regeneration Facilities. In
addition, ELI shall own or lease the physical structure comprising a
Regeneration Facility, and shall own and install all System Electronics used in
connection with each Regeneration Facility.
"Revenue Sharing Route" means the cable path for the
Commercial Fibers over an estimated 1300 Route Miles. An approximate location of
the Revenue Sharing Route is described on Exhibit "E" attached to and
incorporated in this Agreement by reference.
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"Revocable Licenses" means a Cable Use License or a Right of
Way License regarding which the CPUC has not granted approval to the applicable
Utility Company to convert such license to an Irrevocable License as described
in Sections 2.5 and 2.6.
"Right of Way" means the Utility Companies' real property and
rights related thereto created pursuant to a grant, easement, lease, license or
other agreement which are used for the Cable Route.
"Right of Way License" means the nonexclusive right to use the
Towers, Substation Sites and Right of Way of a particular Utility Company to
install and operate the System granted by the Utility Company to ELI under the
terms of a Utility Agreement. The Right of Way License includes the exclusive
right to use the Commercial Fibers on such Utility Company's portion of the
Cable Route.
"Route Miles" means the actual miles traversed by the
Commercial Fibers (including spurs) based on the "as-built" drawings described
in Section 6.12.
"Scheduled Completion Date" means January 31, 1999.
"Service Ready Date" means the date when the Commercial Fibers
for any particular System Segment are fully installed and meet the Acceptance
Testing Standards, as evidenced by the issuance of an Acceptance of Construction
for that System Segment.
"Substation Sites" means those areas on or near the Right of
Way where a Utility Company owns or leases the land and maintains electric
transmission or distribution equipment and on which ELI, pursuant to the terms
of the Utility Agreements, may locate Regeneration Facilities.
"System" means all of the Cable, the Cable Accessories, the
Connecting Points, 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 over the Cable
Route.
"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.
"System Integrity" means the operation of a Utility Company's
electric system in a manner that is deemed to minimize the risk of injury to
persons and property and enable the Utility Company to provide adequate and
reliable electric service to its customers, as determined by the Utility
Company.
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"System Materials" means all Cable, Cable Accessories, System
Electronics, and other equipment and materials obtained by FOCAS 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, or any other entity having the same or
similar authority to divest title to real or personal property from a person.
"Term" means the period of time beginning on the Effective
Date and terminating on that date which is thirty (30) days after the twentieth
(20th) year anniversary of the date the entire Revenue Sharing Route is
completed.
"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 or distribution 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
FOCAS or ELI, pursuant to Article X, transfers or assigns any interest in this
Agreement.
"Transport Services" means individual circuits used or sold as
bulk transport by ELI to other telecommunications carriers or to commercial
users for long-haul traffic on the Commercial Fibers.
"Utility Agreements" means the written agreements entered into
by ELI with the Utility Companies, or by ELI and FOCAS with any Utility Company,
which provide, among other things, for the design, engineering, construction and
installation of the System. Copies of the Utility Agreements are attached to and
incorporated by reference in this Agreement as Exhibit "F."
"Utility Companies" means Pacific Gas and Electric Company,
PacifiCorp, Southern California Edison, and any other electric power
transmission company with which ELI enters into a written agreement for use of
Right of Way to construct and install a portion of the System.
"Utility Operations" means the procurement, generation,
transmission, distribution, management or monitoring by a Utility Company of its
services, or any combination thereof, including, without limitation, consulting
and advising with respect to the use thereof and providing all related equipment
and services.
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"Working Drawings" means the construction plans for the
installation of the System along the Cable Route.
ARTICLE II
DESCRIPTION OF TRANSACTION
--------------------------
2.1 Utility Agreements. Under the terms of the Utility
Agreements, the Utility Companies and ELI have or will agree to design, engineer
and install the System along the Cable Route. ELI has entered into, or is about
to enter into a separate Utility Agreement with each of the Utility Companies
relating to that portion of the Right of Way owned or controlled by each such
Utility Company. The duties and responsibilities of the Utility Companies and
ELI under the terms of the Utility Agreements are summarized below:
(a) Utility Companies. Under the terms of the Utility
Agreements, each Utility Company agrees to grant to ELI a Right of Way
License, or a Cable Use License.
(1) Under a Utility Agreement which grants a
Right of Way License to ELI, the applicable Utility Company:
(A) grants to ELI a license to enter upon the Right of Way
controlled by such Utility Company for the purposes of
designing, engineering, constructing and installing the
System; (B) authorizes ELI and ELI's employees, agents and
contractors to enter on such Utility Company's Right of Way,
Towers and Substation Sites to exercise ELI's rights under the
terms of its Utility Agreement with ELI; (3) allows ELI to
reserve for ELI's exclusive use an IRU in and to the Cable to
be installed on such Utility Company's Right of Way; and (4)
upon completion of the construction and installation of the
System, leases from ELI Dark Fibers in the Cable installed on
such Utility Company's Right of Way.
(2) Under a Utility Agreement which grants a
Cable Use License to ELI, the applicable Utility Company
agrees to: (A) design and install an optical fiber
communications system using the Utility Company's Right of Way
along its portion of the Cable Route; (B) upon completion of
the installation of the Cable along its portion of the Cable
Route, grant to ELI an exclusive license to use the Commercial
Fibers in the Cable installed by the Utility Company on such
Utility Company's Right of Way; and (C) reserve for the
Utility Company's own use the Dark Fibers to be installed on
such Utility Company's Right of Way.
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(b) ELI. Under the terms of the Utility Agreements,
ELI makes the following undertakings:
(1) With respect to a Utility Agreement
that grants to ELI a Right of Way License, ELI agrees to: (A)
design, engineer, construct and install the System; (B) upon
completion of the construction and installation of the System
on such Utility Company's portion of the Cable Route, and
subject to ELI's reservation of an exclusive IRU to the
Commercial Fibers along such portion of the Cable Route,
transfer legal title to the Cable and the Cable Accessories
installed on the Utility Company's Right of Way to that
Utility Company; and (C) upon completion of the construction
and installation of the System on such Utility Company's
portion of the Cable Route, lease to such Utility Company the
Dark Fibers in the Cable installed on such Utility Company's
Right of Way.
(2) With respect to a Utility Agreement that
grants to ELI a Cable Use License, ELI agrees to: (A) supply
the Cable for use in the installation of the System on the
Utility Company's portion of the Cable Route; and (B) upon
completion of the construction and installation of the System
along such portion of the Cable Route, transfer legal title to
the Cable and the Cable Accessories installed on the Utility
Company's Right of Way to that Utility Company.
2.2 Delegation of Certain ELI Duties to FOCAS. Under the terms
of this Agreement, ELI delegates to FOCAS (as contemplated by the terms of the
Utility Agreements) certain of the duties and responsibilities assumed by ELI
under the terms of the Utility Agreements. In consideration of the Quarterly
Payments made by ELI to FOCAS under the terms of this Agreement with respect to
the portion of the Cable Route for which FOCAS has responsibility: (a) FOCAS, at
its expense, shall manufacture or acquire and deliver the Cable for the System
for all of the Cable Route; and (b) with respect only to those Utility
Agreements that grant a Right of Way License, FOCAS, at its expense, either
directly or indirectly through one or more approved Qualified Contractors and in
accordance with the requirements of Article V, shall perform or cause to be
performed the design, engineering and installation work for the Cable, the Cable
Accessories and the Connecting Points.
2.3 ELI Duties. As provided in and subject to the provisions
of this Agreement, ELI, at its expense, shall design, engineer and construct the
Regeneration Facilities, and shall acquire and install all System Electronics.
2.4 Licenses Revocable. Under the terms of the Utility
Agreements, the Right of Way Licenses and the Cable Use Licenses are revocable,
until such time as each license is approved by the CPUC (as described in Section
2.5). Consequently, until approval is obtained from the CPUC, the rights of ELI
and, hence FOCAS, under the terms of the Right of Way Licenses and the Cable Use
Licenses shall consist only of a revocable right to use and shall be subject to
all terms, covenants and conditions applicable to such licenses as contained in
the Utility Agreements.
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2.5 Regulatory Approval. Each Utility Company and ELI shall
jointly apply to the CPUC under Section 851 of the California Public Utilities
Code for an Approval authorizing the Utility Company to enter into an
irrevocable Right of Way License or Cable Use License, as applicable, with ELI.
FOCAS shall cooperate fully in the application process by providing, at FOCAS's
sole cost and expense, any information, personnel or other resources a Utility
Company or ELI may reasonably request from time to time. FOCAS's cooperation
shall include assisting in the preparation of applications, discovery and
testimony and making available to the Utility Companies, ELI, the CPUC and other
relevant authorities all necessary and appropriate FOCAS information and
personnel. ELI shall provide FOCAS with a copy of all such applications made to
the CPUC under the terms of the Utility Agreements. ELI makes no representation
or warranty concerning the likelihood that any such Approval can be secured, or
with respect to 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.
2.6 Conversion from Revocable License to Irrevocable License.
If and when a Utility Company secures a final non-reviewable Approval from the
CPUC to enter into an irrevocable Right of Way License or Cable Use License, as
applicable, with ELI for the purposes and on the terms set forth in the
applicable Utility Agreement, the revocable nature of the license described in
the applicable Utility Agreement shall automatically convert into an Irrevocable
License. Except as specifically described in the Utility Agreements, each such
Irrevocable License shall be on the same terms, covenants and conditions as the
Revocable License it replaces. ELI shall provide written notice to FOCAS of the
conversion of each Revocable License to an Irrevocable License, which notice
shall specify the effective date thereof. Thereafter, use, as applicable, of the
Cable, the Towers, the Substation Sites and the Right of Way by ELI and FOCAS
for such portion of the Cable Route shall be in accordance with the terms of the
Irrevocable License contemplated by the applicable Utility Agreement.
2.7 Nonexclusive Use of Right of Way. Under the terms of the
Utility Agreements, any use of a Utility Company's Towers, Substation Sites and
Right of Way granted to ELI is expressly made nonexclusive. In addition, each
Utility Company expressly reserves the right to negotiate with any third-party
with respect to the use by such third-party of such Utility Company's Towers,
Substation Sites and Right of Way, subject to the rights specifically granted to
ELI under the applicable Utility Agreement.
2.8 Reservation of Certain Utility Company Rights. FOCAS
understands and acknowledges that under the terms of the Utility Agreements,
each Utility Company reserves for itself, its successors and assigns, the right
to use such Utility Company's Towers, Substation Sites and Right of Way, or any
portion thereof, for any purpose such Utility Company finds necessary, together
with the right to enter upon or into such Towers, Substation Sites and Right of
Way, or any portion thereof, at all times, and for any and all purposes.
Further, each Utility Company may exercise such rights without any notice to or
consent from ELI or FOCAS and without payment of any compensation to ELI or
FOCAS.
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2.9 Utility Operations. FOCAS also understands and
acknowledges that under the terms of the Utility Agreements, if a Utility
Company determines that modifications to the Towers, the Substation Sites, or
the Right of Way owned or controlled by such Utility Company over, upon or
through which the System is installed, or any portion thereof, are necessary to
conduct Utility Operations in a manner that adversely affects the use of the
System, the Utility Company must provide ELI with twelve (12) months' prior
written notice of its intention to make such modifications. The notice must 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. However, the
foregoing right is not available after a Revocable License converts to an
Irrevocable License as described in Section 2.6.
2.10 No Property or Possessory Interest. Neither the Revocable
Licenses, the Irrevocable Licenses, ELI's exercise of its rights under any
Utility Agreement, or FOCAS's exercise of its rights under this Agreement, shall
confer upon FOCAS any property interest in any of the Towers, the Substation
Sites, or the Right of Way, whether or not owned in fee simple by a Utility
Company or a third-party. Notwithstanding the generality of the foregoing
sentence, FOCAS, subject to the terms of this Agreement and the Utility
Agreements that grant a Right of Way License, shall have the right to enter upon
the Towers, the Substation Sites and the Right of Way to install the Cable and
the Cable Accessories, and to construct the Connecting Points. FOCAS shall have
no such right of entry with respect to a Utility Company's Towers, Substation
Sites and Right of Way that are subject to a Cable Use License only.
2.11 Right of Entry. FOCAS shall notify ELI's Project Manager
and, if requested by ELI, the applicable Utility Company whenever FOCAS intends
to enter upon the Towers, the Substation Sites and the Right of Way of a Utility
Company that has granted a Right of Way License to ELI in connection with
FOCAS's performance under this Agreement in accordance with the following notice
requirements:
(a) FOCAS shall give not less than seventy-two (72)
hours prior notice by telephone to ELI at (360) 816-4032 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 FOCAS to complete the Working Drawings, including,
without limitation, engineering, design and installation plans and
costs estimates for the work contemplated by this Agreement.
(b) FOCAS shall give not less than one week's prior
telephone notice to ELI at (360) 816-4032 before entering any Right of
Way for the performance of any construction to be performed by FOCAS or
by others consistent with and under the terms of Section 6.10.
(c) FOCAS shall give not less than forty-eight (48)
hours prior telephone notice to ELI at (360) 816-4032 before entering
any Right of Way for the purpose of inspection, testing, Maintenance,
repair or exercise of any other right of FOCAS under this Agreement
with respect to any portion of the System not attached to the Towers.
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(d) In cases of emergency with respect to any portion
of the installed Cable, FOCAS shall provide as much prior telephone
notice as possible to ELI at (360) 816-4032.
2.12 Entry Conditions. ELI, from time to time by written
notice to FOCAS, may specify additional entry conditions or requirements
relating to a Right of Way License arising out of the relationship of a Utility
Company with a particular land owner, including, without limitation, prior
telephone notice to the land owner, no entry unless accompanied by the
applicable Utility Company's personnel, and entry only through a specific route.
FOCAS's right of entry to the Towers, the Substation Sites and the Right of Way
subject to a Right of Way License is further subject to the conditions that: (a)
FOCAS shall comply with each Utility Company's established safety rules, copies
of which are attached to and incorporated by reference in this Agreement as
Exhibit "G," when working around the Towers, cables or other elements of the
Utility Companies' electric power transmission system; and (b) FOCAS shall
indemnify ELI with respect to such entry as further provided in Section 13.1 of
this Agreement. If entry by FOCAS 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 2.11 shall be given.
2.13 Cooperation. FOCAS shall cooperate with ELI and each
Utility Company in designing, engineering, constructing and installing the
System. FOCAS shall follow and comply with the applicable Cable Specifications
and safety rules of each Utility Company in fulfilling FOCAS's obligations under
this Agreement.
2.14 Disclaimer. ELI 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 FOCAS. FOCAS
acknowledges that neither ELI nor any of ELI's officers, employees or agents has
made, nor is FOCAS entering into this Agreement in reliance upon, any such
representation or warranty.
2.15 Operation of System. Following the Service Ready Date for
each Developed System Segment, unless expressly provided otherwise in this
Agreement, FOCAS's rights under this Agreement to such Developed System Segment
shall be limited to the receipt of Quarterly Payments derived from the Revenue
Sharing Route as described in Section 4.1 and FOCAS's other rights under Article
IV. ELI shall have full authority and responsibility with respect to the
operation of the System and the marketing, pricing and sale of Transport Service
and Dark Fiber Lease Services over the Revenue Sharing Route. ELI shall keep
FOCAS generally informed regarding ELI's marketing efforts with respect to the
Revenue Sharing Route and, without obligation, shall accept input from FOCAS
regarding the marketing of services over the Revenue Sharing Route.
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2.16 Cable Route. FOCAS and ELI estimate that the portion of
the Revenue Sharing Route for which FOCAS has responsibility under this
Agreement will extend a distance of 920 Route Miles when the System is
completed. In the event Working Drawings for the Cable Route project the total
distance of the Cable Route will exceed such estimate by more than 10 Route
Miles, or fall short of such estimate by more than 10 Route Miles, FOCAS and ELI
shall meet expeditiously to discuss and negotiate in good faith the effect of
such overage or shortfall. Among other things, FOCAS and ELI may agree to modify
the projected Cable Route, adjust the Payment Factor identified in Section 4.1,
or modify other financial considerations between them as described in this
Agreement.
ARTICLE III
TERM
----
3.1 Term. The Term of this Agreement shall commence on the
Effective Date and shall continue, unless sooner terminated pursuant to the
terms of this Agreement, until midnight Pacific time on that date which is
thirty (30) days after the twentieth (20th) year anniversary of the date the
entire Revenue Sharing Route is completed. ELI shall exercise its rights to
renew or extend the term of any Utility Agreement to the extent necessary to
avoid the expiration of the term of such Utility Agreement prior to the
expiration of the Term of this Agreement.
3.2 Termination of Agreement by ELI. With ten (10) days' prior
written notice to FOCAS, ELI may terminate this Agreement if by the sixtieth
(60th) day following the Effective Date:
(a) ELI and FOCAS, in their reasonable discretion,
determine that the operating requirements, protocols, rules or policies
of any Independent System Operator, and the transfer of operational
control of electric transmission systems to such Independent System
Operator make it economically infeasible for: (1) ELI and FOCAS to
design or construct the System; or (2) for ELI to use the System for
the purposes contemplated by this Agreement and the Utility Agreements;
or
(b) The Detailed Restoration Plans (as defined in the
Utility Agreements) in form and content reasonably acceptable to the
Utility Companies and ELI have not been completed.
Upon either such termination, ELI shall reimburse FOCAS for any actual and
direct costs, incurred by FOCAS under the terms of this Agreement through the
date of the notice of termination. ELI shall make such reimbursement payment to
FOCAS within thirty (30) days after receipt from FOCAS of an invoice detailing
FOCAS's reimbursable costs as provided in this Section 3.2. ELI shall have the
audit rights described in Section 8.10 in reviewing FOCAS's reimbursable costs
under this Section 3.2.
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ARTICLE IV
PAYMENTS
--------
4.1 Quarterly Payments. In consideration of the performance by
FOCAS of its obligations specified in this Agreement, ELI shall pay the
Quarterly Payments to FOCAS according to the following specifications:
(a) The Quarterly Payment shall be calculated by
multiplying the Gross Revenues for the applicable three month period by
the Payment Factor.
(b) Until the cumulative amount of ELI's Quarterly
Payments to FOCAS under this Agreement equals * DOLLARS (*), per actual
Route Mile of the Cable Route (the date as of which such cumulative
amount is paid is referred to as the "Payment Completion Date"), the
Payment Factor shall be * percent (*%).
(c) After the Payment Completion Date, ELI shall have
no further Quarterly Payment obligations pursuant to this Agreement.
4.2 Quarterly Payment Due Dates. Throughout the Term, the
Quarterly Payments shall be due and payable within thirty (30) days after each
three month period following the Effective Date, beginning with the three month
period immediately following the month during which ELI first receives any Gross
Revenues.
4.3 Supporting Documentation. Each Quarterly Payment shall be
accompanied by a quarterly report detailing the Gross Revenues, identified into
categories of revenues, including Dark Fiber Lease Services and Transport
Services. ELI and FOCAS shall agree on a reporting format to be used prior to
the due date of ELI's first Quarterly Payment.
4.4 Reimbursement of Costs. On or before the twentieth (20th)
working day of each calendar month following the Effective Date, ELI and FOCAS
shall prepare and submit to each other, if applicable, an invoice for all
identified reimbursable costs pursuant to Articles III, V, VI and VII and XIII
incurred by or for the account of the invoicing party during the immediately
preceding calendar month, together with all other identified reimbursable costs
previously incurred by the invoicing party and not previously invoiced. For
purposes of this Section 4.4, "incurred" means the actual and reasonable
payments made by the invoicing party to contractors, vendors, suppliers and
other third-parties, as well as reasonable expenses booked or recorded by the
invoicing party 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 1.3 times base compensation). The full amount of each
such invoice shall be due and payable by the invoiced party within thirty (30)
days following receipt thereof. If the invoiced party disputes any amount
invoiced under this Section 4.4, the amount not in dispute shall be promptly
paid and any disputed amount that is ultimately determined to have been payable
shall be paid promptly following resolution of the dispute. Any dispute that is
not resolved by mutual agreement of the parties shall be resolved in accordance
with Article XVI.
* Confidential information 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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4.5 Payment Procedure. Any fees payable to FOCAS or ELI under
this Agreement shall be made by check payable to FOCAS or ELI, as applicable,
and sent to the following addresses:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Treasurer
If to ELI, to: 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 place of payment described above.
4.6 Late Payment. If any payment under the terms of this
Agreement is not received by the party entitled to payment within fifteen (15)
days after the date it becomes due, the payor shall pay to the payee, in
addition to the amount due, a late fee charge in an amount equal to five percent
(5%) of the amount due. The late payment charge shall not apply to amounts not
paid because of a good faith dispute between the parties.
4.7 Performance Criteria.
(a) Annual Requirement. ELI shall achieve Gross
Revenues from the Revenue Sharing Route in an amount equal to or
greater than the applicable Performance Criteria set forth on Exhibit
"D" attached to this Agreement. The Gross Revenues requirement shall be
measured annually beginning with the twelve (12) month period which
begins thirty (30) days after the entire Revenue Sharing Route is
completed. Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, in the event ELI cannot provide
telecommunications services along any material portion of the Revenue
Sharing Route for more than a continuous period of twelve (12) hours
due to a failure of the cable, an event of casualty or a Force Majeure
Event which is not adequately covered by business interruption
insurance, the Performance Criteria for the applicable year (as shown
of Exhibit "D") shall be reduced proportionately based on a fraction,
the numerator of which is the number of days (rounded up to the nearest
one-half day) the Revenue Sharing Route is non-operational, and the
denominator of which is three hundred sixty-five (365).
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(b) Performance Audits. FOCAS shall have the right to
make a performance audit within sixty (60) days of the conclusion of
each annual period. If FOCAS determines that ELI has failed to meet the
annual Performance Criteria, FOCAS shall give ELI written notice of
such failure. ELI shall have thirty (30) working days after receipt of
written notice from FOCAS in which to: (1) review the results of
FOCAS's audit; (2) provide any new information or data that might alter
FOCAS's audit conclusions; and (3) consider a resolution of any
differences of opinion concerning the results of the performance audit,
or both.
(c) Rights of FOCAS and ELI. If at the end of such
thirty (30) working day period, FOCAS and ELI have not reached an
agreement to resolve any differences of opinion concerning the results
of a performance audit, FOCAS and ELI shall have the rights described
below:
(1) ELI, at its option, may cure the
Performance Criteria shortfall by paying FOCAS the Quarterly
Payments that, in the aggregate, would be required if ELI had
met the Performance Criteria for the annual period in
question.
(2) If ELI elects not to cure the
Performance Criteria shortfall, or in the event of a default
by ELI as described in Section 15.1(b)(5), this Agreement
shall continue and FOCAS, at its option and without prejudice
to its rights to Quarterly Payments (as provided in this
Article IV), may succeed to ELI's interest in the unused
Commercial Fibers over the entire Revenue Sharing Route,
subject to the terms, covenants and conditions of the Utility
Agreements. If FOCAS elects to succeed to ELI's interest in
the unused Commercial Fibers, ELI shall have the right,
subject to the terms of this Agreement, to continue its use of
the Commercial Fibers then being used by ELI to provide
Transport Services and Dark Fiber Lease Services. In addition,
during the balance of the Term, ELI shall have the right to
lease unused dark fiber capacity in the System from FOCAS on
the same terms offered by FOCAS to other carriers for similar
services using comparable capacity and for a comparable term.
Such right to lease unused dark fiber capacity is not a right
of first refusal in favor of ELI, and FOCAS may lease unused
dark fiber capacity to other telecommunications carriers or
users. During any period when ELI continues to use any portion
of the Commercial Fibers (as provided in this Section
4.7(c)(2)), ELI shall continue to make the Quarterly Payments
required in this Article IV.
(3) In the event FOCAS exercises its right
to succeed to ELI's interest in the unused Commercial Fibers
as provided above, ELI shall cooperate with FOCAS to allow
co-location of other users of the Commercial Fibers in ELI's
Regeneration Facilities, based on the availability of space.
FOCAS or such other users shall pay ELI then existing market
rates for co-location services.
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(4) If at the time of FOCAS's election to
succeed to ELI's interest in the unused Commercial Fibers (as
provided above) the applicable Payment Factor under the terms
of this Agreement is the percentage described in Section
4.1(b), all revenues obtained by FOCAS from the use of such
unused Commercial Fibers shall be applied towards the
cumulative amount of Quarterly Payments described in Section
4.1(b). Thereafter, when the cumulative amount of ELI's
Quarterly Payments and FOCAS's revenues obtained from the use
of the Commercial Fibers available to FOCAS (as provided
above) exceeds the cumulative amount described in Section
4.1(b), ELI's obligation to make Quarterly Payments under this
Agreement shall cease and the Payment Completion Date shall be
deemed to have occurred. ELI shall have the right, on an
annual basis until the Payment Completion Date, to audit
FOCAS's books and records relating to FOCAS's use of the
Commercial Fibers.
(5) Notwithstanding any other provision of
this Agreement, the rights and obligations of FOCAS and ELI
described in this Section 4.7(c) shall constitute the sole
remedy of FOCAS for a failure by ELI to satisfy the
Performance Criteria. No such failure in and of itself shall
constitute a breach of this Agreement or entitle FOCAS to
damages for breach of contract.
(d) Dispute Resolution. Nothing in this Section 4.7
shall prevent either FOCAS or ELI from seeking a resolution of any
dispute hereunder pursuant to the provisions of Article XVI of this
Agreement.
(e) Early Service Gross Revenues. Gross Revenues
generated by ELI using the Commercial Fibers before the Service Ready
Date for the entire System, and paid to FOCAS pursuant to Section 4.2
of this Agreement, shall be aggregated for purposes of this subsection
as a credit against the Performance Criteria in year one as identified
on Exhibit "D" attached to this Agreement.
4.8 Security Interest.
(a) Consents. ELI shall promptly determine whether
any consent of a lender or other party is required for ELI to grant to
FOCAS the security interest described in Section 4.8(b). If consent is
required, ELI shall use reasonable efforts to obtain such consent.
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(b) Grant of Security Interest. Subject to the
determination that consent is not required and, if consent is required,
subject to ELI obtaining all such required consents, ELI hereby grants
to FOCAS a security interest in the Gross Revenues and all accounts
arising thereunder, now or hereafter existing, and all proceeds of the
foregoing to the extent of FOCAS's interest in the Gross Revenues (as
described in this Agreement). Such security interest shall become
effective upon ELI's determination that: (1) consent, as provided above
in this Section 4.8 is not required; or (2) all required consents have
been obtained.
(c) Financing Statements. Following the effective
date of the grant of the security interest described in Section 4.8(b),
ELI shall execute and deliver to FOCAS any Uniform Commercial Code
Financing Statements or Continuation Statements necessary to perfect or
continue the perfection of FOCAS's security interest in the Gross
Revenues.
(d) Enforcement of Security Interest. FOCAS may
exercise its remedies with respect to the security interest granted in
Section 4.8(b) only upon the occurrence and continuance of a default by
ELI under Section 15.1(b)(5) of this Agreement.
ARTICLE V
SYSTEM DESIGN
-------------
5.1 FOCAS Design Responsibility. Subject to the terms of the
applicable Utility Agreement, FOCAS, at FOCAS's cost and expense, shall design
and engineer the Cable and the Cable Accessories to follow the portion of the
Cable Route for which FOCAS has responsibility under this Agreement and any
modifications to the Towers, the Substation Sites or the Right of Way necessary
to accommodate the Cable, the Cable Accessories and the Connecting Points. The
design shall include only those modifications to the Towers needed to
accommodate installation of the Cable and the Cable Accessories and shall not
include any upgrade by any Utility Company, unless requested by the Utility
Company and paid for separately by the Utility Company to FOCAS. Any such
additional upgrade work shall not materially interfere with or delay the design
or construction of any System Segment. In addition, the design shall include
optical fiber drop-offs at each Regeneration Facility site including the
Connecting Points adjacent to the Regeneration Facilities. FOCAS shall furnish
ELI with copies of any computer models, analyses, and design specifications
developed for modifications to the Towers. In fulfilling its responsibilities
under this Section 5.1, FOCAS shall follow: (a) the Cable Specifications; (b)
the Utility Companies' established procedures for working in and around the
Towers and their electric transmission facilities, including the applicable
safety rules set forth on Exhibit "G" attached to this Agreement; (c) the
Utility Companies' design specifications relating to the Dark Fibers and
associated Connecting Points; (d) the Utility Companies' engineering standards
and specifications for the Towers; (e) ELI's design specifications relating to
the Connecting Points for optical fiber drop-offs adjacent to the Regeneration
Facilities; and (f) FOCAS's customary design and engineering standards and
specifications. FOCAS shall reimburse ELI for any design, engineering, drawing
review, or analysis that ELI performs for the System in the place of FOCAS under
the terms of this Agreement as provided in Section 4.4.
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5.2 ELI Design Responsibilities. ELI, at ELI's cost and
expense, shall design and engineer the Regeneration Facilities and all System
Electronics. The design shall include the extension of fiber optic cable from
the Regeneration Facilities out to the Connecting Points adjacent to the
Regeneration Facilities. ELI shall reimburse FOCAS for any design, engineering,
drawing review, or analysis that FOCAS performs for the System in the place of
ELI under the terms of this Agreement as provided in Section 4.4.
5.3 Utility Company Information. To facilitate FOCAS's design
and engineering responsibilities under this Agreement, ELI shall furnish to
FOCAS, to the extent available from the Utility Companies, with reasonable
promptness after request from FOCAS, and upon the condition that FOCAS shall
reimburse ELI for ELI's reasonable cost of obtaining and delivering the same:
(a) Copies of all Utility Company established
procedures for working in and around the Towers and copies of all
Utility Company transmission facilities and design specifications
relating to the Dark Fibers and associated Connecting 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 the Utility Companies 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;
(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
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(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.
5.4 Notice of Adverse Claims. ELI shall promptly notify FOCAS
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.
5.5 Working Drawings. When FOCAS has completed the design for
any System Segment, FOCAS shall either prepare, or cause any applicable
contractor to prepare, and submit to ELI Working Drawings for the construction
of that System Segment. The Working Drawings shall include plans and
specifications for the Cable, the Cable Accessories and the Connecting Points
(including Connecting Points for the Dark Fibers at locations designated by the
applicable Utility Company). Within thirty (30) working days of submission of
the Working Drawings, ELI 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 ELI fails to respond within such thirty (30) working day period,
ELI shall be deemed to have approved the Working Drawings. Upon receipt of any
objections to the Working Drawings, FOCAS shall use its reasonable efforts to:
(i) correct, or cause the applicable 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 ELI 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 FOCAS and ELI (without thereby waiving
any rights with respect to the matter in controversy). Approval by ELI of
Working Drawings submitted by FOCAS shall constitute ELI's approval solely with
respect to ELI's telecommunications system and shall in no way be deemed to
constitute an opinion of ELI with respect to the effect of the
telecommunications system on any Utility Company's electric transmission system.
5.6 Scheduling. ELI and FOCAS shall jointly develop an
implementation plan for the design and construction of the System. The
implementation plan shall include a master schedule for all phases of System
design, engineering, placement of Regeneration Facilities, bidding, permitting,
clearances, construction, testing and required Approvals. The implementation
plan shall also sequence the work along the Cable Route in an orderly and
efficient manner that complies with the terms and requirements of the Utility
Agreements. ELI shall have primary responsibility for planning and scheduling
work associated with the Regeneration Facilities, SONET procurement, System
Electronics procurement and installation, and System turn-up. Subject to the
terms of the applicable Utility Agreement, FOCAS shall have primary planning and
scheduling responsibilities for Cable installation and splicing. The master
schedule shall be managed by ELI's Project Management Group. ELI and FOCAS shall
each designate a project management representative to coordinate efforts under
this Section 5.6. ELI shall make capital investments to provision the Commercial
Fibers with electronics, optronics, buildings, other infrastructure, and fiber
connectivity with local exchange carrier networks and interexchange carrier
networks, at a level sufficient to meet the revenue projections set forth on
Exhibit "D."
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5.7 Warranty of Work. FOCAS and its Qualified Contractors, and
their subcontractors and agents who perform work to design or engineer the
System shall warrant their work in accordance with industry standards and
practices and the terms of this Agreement (including, without limitation, the
Cable Specifications). FOCAS shall, at its own cost and expense, enforce the
provisions of such warranties following completion of the work. The warranty for
the Cable shall be FOCAS's standard manufacturer's warranty which shall be a
minimum of three (3) years of operation. In addition, FOCAS shall warrant that
all design and engineering work performed by or for FOCAS (as provided in this
Article V) is consistent with industry standards and shall conform to reasonable
standards of care, skill and diligence. Such warranty shall extend for a period
of one (1) year following the Service Ready Date for the entire System. FOCAS is
not hereby warranting any design or engineering work for the System performed or
to be performed by a Utility Company. ELI's sole and exclusive remedy for a
breach of the warranty described in this Section 5.7 shall be the repair and
replacement of the warranted item or items or the correction of the warranted
work. FOCAS shall be given a reasonable time, not to exceed thirty (30) days, to
remedy the item or work in need of repair, replacement or correction. In the
event FOCAS fails to complete the repair, replacement or other correction within
such thirty (30) day period, ELI may complete the repair, replacement or other
corrective work and invoice FOCAS for the cost incurred by ELI in performing
such work as provided in Section 4.4.
5.8 Design Performance Completion. Upon the Service Ready Date
for the entire Cable Route evidencing completion of all System Segments (both
Cable and System Electronics) for the Cable Route (the "Performance Completion
Date"), except as provided in Section 5.7, neither FOCAS nor ELI shall have any
further performance obligations under this Article V.
ARTICLE VI
CONSTRUCTION
------------
6.1 Scope of Work. Subject to the terms of the applicable
Utility Agreement, FOCAS shall be responsible to provide and to install the
Cable, the Cable Accessories, the Connecting Points, the construction of any
modifications to the Towers, the Substation Sites or the Right of Way necessary
to accommodate the Cable, the Cable Accessories and the Connecting Points over
the portion of the Cable Route for which FOCAS has responsibility under this
Agreement. The installation work undertaken by FOCAS shall be performed by FOCAS
or one or more Qualified Contractors. ELI shall have the right to approve the
appointment and qualifications of each Qualified Contractor, which consent shall
not be unreasonably withheld or delayed. In order to permit FOCAS to perform its
construction responsibilities under this Agreement, FOCAS and the Qualified
Contractors shall have access to the Right of Way, the Towers, the Tower Sites
and the Substation Sites, subject to the notice requirements of Sections 2.11
and 2.12. Modification to the Towers shall be limited to those needed to
accommodate installation of the Cable and the Cable Accessories, and shall not
include any upgrade sought by the Utility Companies for other purposes.
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6.2 Regeneration Facilities. ELI shall be responsible for the
construction of all Regeneration Facilities and the installation of all System
Electronics. The construction and installation work shall be performed by ELI or
one or more Qualified Contractors. FOCAS shall have the right to approve the
appointment and qualifications of each Qualified Contractor, which consent shall
not be unreasonably withheld or delayed.
6.3 Work Standards. All work to be performed hereunder by ELI,
FOCAS and all Qualified Contractors shall be performed in a good, workmanlike
manner and in compliance with the requirements of this Agreement and applicable
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 the applicable Utility Company's
established safety rules set forth on Exhibit "G" attached to this Agreement.
6.4 Time. Installation of the Cable, the Cable Accessories and
the Connecting Points by FOCAS under the terms of this Agreement, to the extent
practicable and within the reasonable control of FOCAS, shall be carried out by
FOCAS in accordance with the implementation plan and master schedule prepared
pursuant to Section 5.6. The implementation plan and master schedule shall be
updated and revised at regular intervals by FOCAS with the approval of ELI,
which approval shall not be unreasonably withheld or delayed. Such updating and
revision shall include, without limitation, adjustment for delays caused by a
Force Majeure Event. Unless otherwise agreed, extensions of time under such
updates and revisions shall not operate to extend the Scheduled Completion Date
or to amend the terms and requirements regarding the completion of the System
described in Section 6.13.
6.5 Permits and Approvals. FOCAS shall use its reasonable
efforts to secure on a timely basis, at FOCAS's expense, all necessary Approvals
from government authorities having jurisdiction or approval rights with respect
to FOCAS's installation of the Cable, the Cable Accessories and the Connecting
Points. The foregoing provision does not impose any requirement on FOCAS to
obtain the CPUC Approval described in Section 2.5. FOCAS shall indemnify and
save ELI harmless from any and all claims, including the expense reasonably
incurred by ELI to defend itself against such claims, resulting from or arising
out of FOCAS's failure to obtain such Approvals. ELI 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
construction of the Regeneration Facilities and the installation of the System
Electronics. ELI shall indemnify and save FOCAS harmless from any and all
claims, including the expense reasonably incurred by FOCAS to defend itself
against such claims, resulting from or arising out of ELI's failure to obtain
such Approvals. FOCAS and ELI shall cooperate with each other and shall
coordinate efforts with the Utility Companies to cause their respective
personnel and contractors to render all reasonable assistance in the procurement
of the Approvals.
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6.6 System Materials. Subject to the terms of the applicable
Utility Agreements, FOCAS, at its expense, shall provide all System Materials
necessary to install the Cable, including the Cable Accessories and the Cable
and other System Materials required to complete the System, up to and including
the Connecting Points. ELI, at its expense, shall provide all System Materials
necessary to construct and install the Regeneration Facilities and the System
Electronics, and other System Materials required to complete the System up to
the Connecting Points. All System Materials shall comply with the Cable
Specifications and shall meet the specifications described in the Working
Drawings.
6.7 Interface Between FOCAS and ELI. FOCAS 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 and installation responsibilities, and the
portion of the System for which FOCAS has construction and installation
responsibilities.
6.8 Title and Risk of Loss.
(a) Cable and Cable Accessories. At all times during
the course of construction, up until the time of the issuance of an
Acceptance of Construction with respect to any System Segment, FOCAS
shall retain title to and shall bear the risk of loss or damage with
respect to the Cable and all associated System Materials used by FOCAS
to install the Cable. Upon the issuance of an Acceptance of
Construction with respect to any System Segment, legal title to the
Cable and the Cable Accessories shall pass to the applicable Utility
Company. Notwithstanding such transfer of title to the Utility Company,
after issuance of an Acceptance of Construction, 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 both before and after the issuance of an
Acceptance of Construction.
6.9 System Warranties. In procuring and obtaining System
Materials pursuant to Section 6.6, each of FOCAS and ELI shall use reasonable
efforts to obtain from the vendors and suppliers thereof, for the benefit of
FOCAS, the applicable Utility Company 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. FOCAS shall
administer for the benefit of FOCAS, the Utility Companies and ELI the
manufacturer's and other warranties for the Cable and its associated hardware.
If requested by ELI, FOCAS shall assign all such warranties for the Cable and
its associated hardware to ELI or the applicable Utility Company. ELI shall
administer the manufacturer's and other warranties with respect to the System
Electronics both before and after the issuance of an Acceptance of Construction
associated with such System Segment.
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6.10 Use of Contractors. FOCAS shall have the right, at its
cost and expense, to have any of the design, engineering, construction and
installation work to be provided by FOCAS under the terms of this Agreement
performed by one or more Qualified Contractors; provided that each such
Qualified Contractor retained by FOCAS to install the Cable shall be subject to
the prior approval of ELI and the applicable Utility Company. No such contract
or subcontract shall create a contractual relationship between ELI or the
Utility Companies and the Qualified Contractor, and FOCAS shall be solely
responsible for the engagement and management of the Qualified Contractors.
6.11 Inspection of Construction.
(a) Inspections During Construction. ELI may perform
routine inspections of any construction over which FOCAS has
responsibility while construction is in progress. A representative of
the applicable Utility Company may be on-site during all construction
work to perform functions such as safety watch, protection of its
electric transmission system, and to obtain clearances.
(b) Cable Testing. FOCAS shall test the Cable
installed by FOCAS in accordance with the Acceptance Testing Standards
to verify that the Cable is operating in accordance with the
specifications set forth in Exhibit "A." Testing shall progress segment
by segment along the Cable Route as Cable splicing progresses so that
test results may be reviewed in a timely manner. ELI and each
applicable Utility Company shall have the right, but not the obligation
to have a representative present to observe the testing, and FOCAS
shall provide ELI prior notice of FOCAS's testing schedule. Within five
(5) working days of the conclusion of any such testing, FOCAS shall
provide ELI with a copy of the test results. ELI shall have the right,
but not the obligation, at its sole expense, to conduct its own tests
on the Cable to verify that it is operating in accordance with the
Acceptance Testing Standards set forth on Exhibit "A," and for
conformance with the applicable Working Drawings and other construction
requirements of this Agreement. ELI shall have thirty (30) working days
following receipt of FOCAS's test results to conduct its own Cable
inspections and tests.
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(c) Acceptance of Construction. After such thirty
(30) working day period, ELI shall furnish FOCAS with either: (i) an
Acceptance of Construction with respect to the installation of the
Cable, the Cable Accessories and the Connecting Points along such
Approved System Segment; or (ii) a statement setting forth in
reasonable detail any objections to or defects in such installation.
ELI's failure to furnish a written notification within such fifteen
(15) day working period, shall be deemed to constitute an Acceptance of
Construction for purposes of this Agreement.
(d) Statement of Objections. Upon receipt of any such
statement of objections, FOCAS shall either: (1) correct, or cause the
applicable Qualified Contractor to correct, the objections or defects,
whereupon ELI shall re-inspect the same within fifteen (15) working
days following receipt from FOCAS that the work has been corrected, and
if found corrected, issue an Acceptance of Construction as stated
above; or (2) dispute such statement of objections or defects by
referring the disputed issues for determination to the Chief Engineers
of FOCAS and ELI (without thereby waiving any rights with respect to
the issues in controversy). Notwithstanding the foregoing, acceptance
of the construction and installation work associated with the Cable and
the Cable Accessories for any System Segment by ELI shall constitute
ELI's approval solely with respect to ELI's telecommunications system
and shall in no way be deemed to constitute an opinion of ELI with
respect to the effect of the telecommunications system on any Utility
Company's electric transmission system.
6.12 As-Built Drawings. Within fifteen (15) working days
following the issuance of an Acceptance of Construction for any System Segment,
constructed by FOCAS, FOCAS, at FOCAS's cost, shall submit, or cause the
applicable Qualified Contractor to submit, to ELI "as-built" drawings of the
Cable, the Cable Accessories and the Connecting Points in paper and electronic
file formats (AutoCadd Version 13). FOCAS shall also provide to ELI, at no cost
to ELI, Cable splicing and splice data records for ELI's fiber database records.
Within fifteen (15) working days following the delivery of the "as-built"
drawings, ELI shall inspect the Cable, the Cable Accessories and the Connecting
Points along such Developed System Segment for conformance with the "as-built"
drawings. Within fifteen (15) working days following such inspection, ELI shall
furnish FOCAS with either: (a) an acceptance of the drawings with respect to the
Cable, the Cable Accessories and the Connecting Points; or (b) a statement
setting forth in reasonable detail any reasonable objections to or defects in
the drawings thereof. Failure of ELI to issue written notification to FOCAS
within such fifteen (15) working day period shall be deemed to constitute
acceptance of such drawings by ELI for purposes of this Agreement. Upon receipt
of any such statement of reasonable objections or defects, FOCAS shall either:
(i) promptly amend, or cause the applicable Qualified Contractor to amend, the
"as-built" drawings, if so requested by ELI; (ii) correct the defects, or cause
the applicable Qualified Contractor to correct the defects, whereupon ELI shall
re-inspect the same within fifteen (15) working days following notice from FOCAS
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 FOCAS and ELI. Notwithstanding the foregoing, ELI'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 ELI's telecommunications
system along such Developed System Segment only and shall in no way be deemed to
represent an opinion of ELI with respect to the effect of the telecommunications
system on any Utility Company's electric transmission system.
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6.13 Completion of System Construction. FOCAS shall diligently
seek to complete the installation of all Cable, Cable Accessories and Connecting
Points over which FOCAS has construction responsibility under the terms of this
Agreement by the Scheduled Completion Date. If the Service Ready Date has not
occurred by the ninetieth (90th) day following the Scheduled Completion Date and
Section 14.1 does not apply, ELI, at its option, may notify FOCAS in writing
that ELI or ELI's designee will assume all or part of the project construction
administration, and FOCAS shall work with ELI to transfer to ELI that part of
the construction project administration as may be requested by ELI. If ELI
participates in such construction, FOCAS shall promptly reimburse ELI the direct
and actual costs incurred by ELI in such participation as described in Section
4.4. ELI shall provide reasonable supporting documentation for its costs.
6.14 Warranty of Work. Each of FOCAS and ELI shall cause their
respective contractors, subcontractors and agents who perform work to install
the System (including, without limitation each Qualified Contractor) to warrant
their work in accordance with industry standards and practices and the terms of
this Agreement (including, without limitation, the Cable Specifications). FOCAS
or ELI, as applicable, shall, at its own cost and expense, enforce the
provisions of such warranties following completion of the work. A copy of
FOCAS's manufacturer's warranty for the Cable is attached to and incorporated by
reference in this Agreement as Exhibit "H." In addition, FOCAS shall warrant
that all installation work (as provided in this Article VI) is consistent with
industry standards and shall conform to reasonable standards of care, skill and
diligence. Such warranty shall extend for a period of one (1) year following the
Service Ready Date for the entire System. ELI's sole and exclusive remedy for a
breach of the warranty described in this Section 6.14 shall be the repair and
replacement of the warranted item or items or the correction of the warranted
work. FOCAS is not hereby warranting any installation work for the System
performed or to be performed by a Utility Company. FOCAS shall be given a
reasonable time, not to exceed thirty (30) days, to remedy the item or work in
need of repair, replacement or correction. In the event FOCAS fails to complete
the repair, replacement or other correction within such thirty (30) day period,
ELI may complete the repair, replacement or other corrective work and invoice
FOCAS for the cost incurred by ELI in performing such work as provided in
Section 4.4.
6.15 Construction Performance Completion. Effective upon the
Performance Completion Date, except as provided in Section 6.14, neither FOCAS
nor ELI shall have any further performance obligations under this Article VI.
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ARTICLE VII
PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE
--------------------------------------------
7.1 Avoidance of Encumbrances. FOCAS shall not create or
permit any lien or other encumbrance against the Right of Way, the Towers, the
Substation Sites, the Cable, the Cable Accessories, the Connecting Points, the
Regeneration Facilities, the System Electronics, the Commercial Fibers, any IRU
(or comparable lease or other right), or the Gross Revenues. ELI shall not
create or permit any lien or other encumbrance against the Right of Way, the
Towers, the Substation Sites, or create or permit any lien or other encumbrance
not existing as of the Effective Date affecting ELI's right, title or interest
in and to the Cable, the Cable Accessories, the Connecting Points, the
Regeneration Facilities, the System Electronics, the Commercial Fibers, any IRU
(or comparable lease or other right), or the Gross Revenues. Such covenant by
ELI shall not affect ELI's right to market over the System, or to sell, lease,
assign or swap rights in and to the Commercial Fibers as provided in Section
10.1(b). The foregoing covenant shall not be breached by the creation of
mechanic's, materialman's, or similar liens in the ordinary course of
construction or installation, provided that such liens are satisfied, bonded, or
otherwise provided for in due course by the party hereto which is responsible
for the creation or imposition of such liens.
7.2 Payment of Ad Valorem Taxes. ELI or the applicable Utility
Company shall pay any Ad Valorem Taxes assessed against the System during the
Term. FOCAS shall not be required to pay any such Ad Valorem Taxes.
7.3 Sales or Use Taxes.
(a) FOCAS. FOCAS shall pay or cause to be paid all
sales and use taxes associated with or attributable to FOCAS's
provision and installation of the Cable, the Cable Accessories and the
Connecting Points. FOCAS shall indemnify and hold ELI harmless from and
against all sales and use taxes associated with or attributable to the
provision and installation of the Cable, the Cable Accessories and the
Connecting Points.
(b) ELI. ELI shall pay or cause to be paid all sales
and use taxes associated with or attributable to ELI's provision and
installation of the Regeneration Facilities and the System Electronics.
ELI shall indemnify and hold FOCAS harmless from and against all sales
and use taxes associated with or attributable to the provision and
installation of the Regeneration Facilities and the System Electronics.
7.4 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:
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(1) If such a lien is chargeable to or
through FOCAS, FOCAS 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 or the
applicable Utility Company. FOCAS shall 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 FOCAS, then ELI may
pay or secure the release or discharge thereof at the expense
of FOCAS.
(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 FOCAS. ELI
shall indemnify FOCAS 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 FOCAS to ELI, then FOCAS may pay or secure
the release or discharge thereof at the expense of ELI.
(b) Contest of Liens. Nothing in this Agreement shall
preclude FOCAS or ELI from contesting any lien described in Section
7.4(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 FOCAS nor ELI
shall create or permit a pledge or encumbrance of any of its interests
in the System which in any manner impairs or could impair the use and
operation of the System for internal or commercial telecommunications
purposes.
7.5 Discontinuance or Relocation. Each Utility Company 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, as provided in the Utility
Agreements, a Utility Company may not take any action to release or relinquish
voluntarily its underlying property interests along the Right of Way, whether by
a Taking or otherwise, without first notifying ELI. In the event of any such
discontinuance or relocation, during or after construction of any System
Segment, ELI shall give written notice to FOCAS as soon as reasonably
practicable. The notice of discontinuance or relocation shall be accompanied by
a plan of any alternative route, if available.
7.6 Relocation of Cable. In the event the Cable or the Cable
Route requires relocation or replacement, the cost of such relocation or
replacement shall be allocated as provided in the Utility Agreements; provided,
however, if FOCAS requests the relocation, FOCAS shall pay all of ELI's and the
applicable Utility Company's relocation costs. If the relocation is required
other than by ELI, FOCAS or a Utility Company, the relocation costs allocable to
and paid by ELI as provided under the terms of the applicable Utility Agreement
shall be deducted from Gross Revenues for the applicable accounting period when
calculating the Quarterly Payment.
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7.7 Design and Installation of Relocated Facilities. In the
event of the relocation of any portion of the System after the Service Ready
Date for the Affected Portion, FOCAS shall have the same design and installation
responsibilities for the relocated Cable, Cable Accessories and Connecting
Points as described in Articles V and VI. In the event of any such relocation,
FOCAS shall be compensated for such materials and for such design and
installation services in accordance with the cost allocations described in
Section 7.6 in a reasonable amount which is consistent with then prevailing
market rates, terms and conditions.
7.8 Utility Company Maintenance Responsibilities. Under the
terms of the Utility Agreements, each Utility Company is responsible for the
Maintenance of the Cable, the Cable Accessories, the Connecting Points, the
Towers, the Substation Sites and the Right of Way along its portion of the Cable
Route. ELI is required, under the terms of the Utility Agreements, to reimburse
the Utility Companies for such Maintenance costs. All such Maintenance costs
allocable to and paid by ELI under the terms of the Utility Agreements, net of
casualty insurance and other recoveries by ELI, shall be a deduction from the
Gross Revenues obtained by ELI from the use of the System for the purpose of
calculating the Quarterly Payments.
7.9 Maintenance of Regeneration Facilities and System
Electronics. ELI, at ELI's sole cost, shall be responsible for the Maintenance
of the Regeneration Facilities and the System Electronics.
7.10 Restoration Plans. ELI shall not agree to the terms of
the detailed restoration plan contemplated by each Utility Agreement, without
the prior written consent of FOCAS, which consent shall not be unreasonably
withheld or delayed.
7.11 Performance Completion. Except to the extent of
obligations incurred or undertaken by FOCAS or ELI which are outstanding as of
the Performance Completion Date, effective upon the Performance Completion Date,
neither FOCAS nor ELI shall have any further performance obligations under this
Article VII.
ARTICLE VIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
8.1 Representations, Warranties and Covenants of ELI. ELI
represents and warrants to FOCAS, and covenants with FOCAS, 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.
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(b) Restrictions. The execution and performance 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
to the best of ELI's knowledge, 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 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 FOCAS of any material adverse
claims, actual or threatened, affecting any part of the System or ELI's
telecommunications 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. ELI shall use reasonable efforts, consistent with reasonable
commercial practices, to maximize Gross Revenues generated from the
Revenue Sharing Route.
(g) Compliance with Government Requirements. 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.
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(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.
(j) Relationship with Contractors. ELI shall timely
perform all of its duties and obligations to ELI's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete ELI's design, engineering, construction
and installation obligations under this Agreement.
(k) Enforcement of Utility Agreements. ELI covenants
that it shall use its best efforts to enforce the provisions of the
Utility Agreements including but not limited to the provisions of
Sections 2.6, 9.9 and 9.10(a)(2) of the Utility Agreement with Pacific
Gas and Electric Company dated effective as of December 31, 1997 to the
end that the Utility Company shall pay to ELI, and ELI in turn shall
pay to FOCAS from the funds paid by the Utility Company to ELI net of
ELI's cost of enforcement, FOCAS's costs (based on a rate of $* per
Route Mile) arising from any revocation, relocation, or discontinuance
to the fullest extent of the provisions of such Utility Agreements.
(l) Consents of Utility Companies. ELI shall use its
best efforts to obtain the consent of each Utility Company to the
succession by FOCAS to ELI's interest in the unused Commercial Fibers
subject to the Utility Agreement with such Utility Company (on the
terms described in Section 4.7 of this Agreement) either: (1) in the
provisions of the Utility Agreement; or (2) by a separate
acknowledgment from the Utility Company promptly following the
effective date of such Utility Agreement.
8.2 Representations, Warranties and Covenants of FOCAS. FOCAS
represents and warrants to ELI, and covenants with ELI, as follows:
(a) Authority. FOCAS is 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. The execution and performance 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
to the best of FOCAS's knowledge, any statute, ordinance, law, order,
ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which FOCAS is subject.
* Confidential information 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) Binding Obligation. This Agreement, when duly
executed by FOCAS, shall constitute a valid, legal and binding
obligation of FOCAS, 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. FOCAS has or will use
reasonable efforts to procure all necessary government approvals to
enter into and to perform its obligations under this Agreement.
(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 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 FOCAS's knowledge, threatened which
might adversely affect this Agreement, the transactions contemplated by
this Agreement, or FOCAS's rights under, or ability to perform pursuant
to the terms of, this Agreement. FOCAS shall promptly notify ELI of any
material adverse claims, actual or threatened, affecting any portion of
the System.
(f) Conduct of Business. In performing its
obligations under this Agreement, FOCAS 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, FOCAS has not violated any rule, order or regulation issued
by any government authority with respect to FOCAS, its business or
operations which may materially and adversely affect FOCAS'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 FOCAS.
(i) Resources and Capacity. FOCAS possesses
sufficient financial, managerial, and technical capacity and resources
to perform its obligations under the terms of this Agreement.
(j) Relationship with Contractors. FOCAS shall timely
perform all of its duties and obligations to FOCAS's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete FOCAS's design, engineering, construction
and installation obligations under this Agreement.
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8.3 Confidentiality. For purposes of this Section 8.3, the
term "Information" shall mean all information furnished by FOCAS 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
FOCAS 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 FOCAS or ELI, as
the case may be, shall mean any and all directors, officers, employees, agents
or representatives, including, without limitation, contractors, subcontractors,
attorneys, accountants, consultants and financial advisors of FOCAS or ELI, as
the case may be. In consideration of being furnished with the Information, FOCAS
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, FOCAS 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 17.4. 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 8.3
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 FOCAS
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 FOCAS and ELI notwithstanding the terms of this
Agreement. To the extent reasonably practical, FOCAS 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 8.3 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 the applicable Utility Company and both FOCAS and ELI,
which approval by FOCAS or ELI shall not be unreasonably withheld or
delayed. Excluded from the foregoing are disclosures required by
securities laws and rules or regulations of securities exchanges
applicable to the parties or their publicly-held Affiliates.
(h) Equitable Relief. FOCAS and ELI 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 FOCAS, ELI or
their respective representatives, but shall be in addition to all other
remedies available by law or equity. A breach of the provisions of this
Section 8.3 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 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.
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8.4 Cooperation. FOCAS 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
FOCAS 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;
(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; and
(d) Coordination and Cooperation with Utility
Companies. Coordinate efforts under this Agreement with ELI's
obligations under the Utility Agreements, and to cooperate with the
Utility Companies to design, engineer, construct and install the System
in accordance with the requirements of and pursuant to the terms of the
Utility Agreements, including, without limitation, the Cable
Specifications and each Utility Company's safety rules.
8.5 Regulatory Compliance. FOCAS and ELI shall each be
responsible to comply with the regulatory requirements relating to its own
business practices and operations.
8.6 Certificates. Upon request of either FOCAS 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 FOCAS or by FOCAS 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 X, 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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8.7 Independent Status. FOCAS 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
FOCAS 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
FOCAS and ELI.
8.8 Transactions with Affiliates. All transactions with an
Affiliate involving the System entered into by either FOCAS or ELI shall be at
arm's-length, for market prices and shall comply with any applicable regulatory
requirements.
8.9 Further Assurances. FOCAS 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.
8.10 Audit Rights. FOCAS shall have the right to audit ELI's
books and records relating solely to the Quarterly Payments and the satisfaction
of the Performance Criteria, including, without limitation, the Gross Revenues
derived from the operation of the Revenue Sharing Route, and ELI's costs for
which ELI, under the terms of Section 4.4 of this Agreement, seeks reimbursement
or contribution from FOCAS. Any such audit shall be conducted: (a) by a
reputable public accountant or, as applicable, a member of the internal auditing
staff of FOCAS 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.
8.11 Interference. Whenever a Utility Company notifies FOCAS
or ELI that the System or any portion thereof materially interferes with the
operation of such Utility Company's equipment or with existing equipment of
current licensees, or constitutes a hazard to the service rendered by the
Utility Company or other licensee, or fails to comply with the codes or
regulations herein before referred to, FOCAS and ELI shall cooperate with each
other and use reasonable efforts to cooperate with and assist the Utility
Company to remedy the interference or hazard. Under no circumstances shall
either ELI, FOCAS, or their respective employees or Qualified Contractors
disturb, tamper with or contact any Utility Company equipment, without the
Utility Company's consent. ELI and FOCAS shall each avoid contact with Utility
Company's lines, wires and transformers, whether or not they appear to be
energized.
8.12 Independent System Operator. ELI shall provide FOCAS with
a copy of the organizational documents, protocols and operating policies of the
Independent System Operator relevant to FOCAS's obligations under this Agreement
and not protected by confidentiality covenants when available to ELI.
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8.13 Performance in Stead. Should either party (the
"Non-performing Party") fail to make any payment or to do any act as provided in
this Agreement, then the other party (the "Other Party"), at the Other Party's
option, without any obligation to do so, and without releasing the
Non-performing Party from any obligation under this Agreement may: (a) make or
do the same in such manner and to such extent the Other Party may deem necessary
to protect the Other Party's rights under this Agreement or any of the Utility
Agreements; (b) commence, appear in and defend any action or proceeding
purporting to affect the Other Party's rights or interests under this Agreement
or to the System; (c) pay, purchase, contest or compromise any encumbrance,
charge or lien which, in the sole judgment of the Other Party, affects or may
affect the Other Party's rights or interests under this Agreement or to the
System; and (d) in exercising any such powers, incur any liability, expend such
reasonable amounts as the Other Party, in its sole discretion, may deem
necessary.
8.14 Utility Agreements. No amendments shall be made to any of
the Utility Agreements which affect FOCAS without FOCAS's prior written consent,
which consent shall not be unreasonably withheld or delayed.
ARTICLE IX
INSURANCE
---------
9.1 Required Insurance Coverage. Without limiting any of the
liabilities or other obligations of FOCAS or ELI, both parties shall procure and
cause their respective contractors, including, without limitation, Qualified
Contractors, to procure and maintain in force at their own cost and expense the
following insurance coverages during any period of construction and throughout
the Term, as applicable:
(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.
9.2 General Conditions. The following general conditions apply
to the extent FOCAS or ELI do not self-insure:
(a) FOCAS Policies. The policies required to be
maintained by FOCAS and its contractors pursuant to Sections 9.1(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 9.1(b), (c)
and (d) shall: (1) include FOCAS as an additional insured; (2) provide
that FOCAS 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 FOCAS.
9.3 Evidence of Insurance. Prior to commencing work under the
terms of this Agreement, FOCAS, ELI and their respective contractors shall
furnish a certificate of insurance as evidence attesting that the insurance
required under this Article IX 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 FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may inspect original policies or require complete certified copies
at any time. Upon request, each of FOCAS and ELI shall furnish the other with
the same evidence of insurance for its contractors and subcontractors as
required by this Article IX.
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9.4 Blanket Policies. Nothing in this Article IX shall be
construed to prevent either FOCAS 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 IX.
9.5 Self-Insurance. Notwithstanding any provision in this
Article IX to the contrary, FOCAS 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 X
ASSIGNMENT AND OTHER TRANSFERS
------------------------------
10.1 Transfers. This Agreement and the rights granted under
this Agreement are being granted in reliance on the financial standing and
technical experience of FOCAS and ELI and are thus granted personally to ELI by
FOCAS and to FOCAS by ELI. Neither FOCAS 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 or delayed.
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
an Affiliate, provided that such assignment shall not relieve the
assigning party of any of its obligations under this Agreement; and
(b) ELI, without prior notice to or the prior consent
of FOCAS, shall have the right to sell, lease, assign or swap rights in
and to the Commercial Fibers to commercial users of telecommunications
services and to other telecommunications services providers in the
ordinary course of business. 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.
10.2 Financing. In the event that ELI or FOCAS, after
obtaining the consent of the other party pursuant to Section 10.1, assigns its
interest under this Agreement pursuant to a sale-leaseback or other financing
transaction, the non-transferring 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 non-transferring party will simultaneously give to such
agent any notices required to be given to the transferring party under this
Agreement. The non-transferring party shall accept payment or performance by the
Transferee's agent of any obligation of the transferring 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 the transferring party within the applicable cure periods allowed by
this Agreement. Subject to the terms of Section 10.1 and this Section 10.2, 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 the non-transferring party, which consent shall not be
unreasonably withheld or delayed.
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10.3 Recognition of Transferees. ELI and FOCAS shall recognize
each other's authorized Transferees as provided this Article X, so long as all
of the obligations of the transferring party under this Agreement are being
performed and such Transferee agrees to be bound by and to observe and perform
the obligations of the transferring party under this Agreement.
10.4 No Assumption or Release. Except as set forth in Section
10.3, no assignment under this Article X shall be deemed to be an assumption by
the Transferee of the obligations of the transferring party under this
Agreement. The transferring party 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 non-transferring party.
10.5 Mergers and Acquisitions. Notwithstanding any provision
of this Agreement to the contrary, neither FOCAS 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 FOCAS 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.
ARTICLE XI
CONDEMNATION
------------
11.1 Taking. Should any portion of the Towers, the Substation
Sites or the Right of Way owned or controlled by a Utility Company be the
subject of a Taking, the Revocable License or the Irrevocable License, as then
applicable, granted to ELI under the terms of the applicable Utility Agreement,
to the extent appropriated by such Taking, shall terminate. In the event of a
Taking, the Cable Route shall be relocated as provided in Sections 7.5, 7.6 and
7.7.
11.2 Notice of Taking. ELI shall promptly notify FOCAS of any
Taking threatened or filed against any portion of the Towers, the Substation
Sites or the Right of Way. Under the terms of the Utility Agreements, the
applicable Utility Company, to the extent reasonably available, is required to
procure alternate Right of Way within which the System may be relocated
following such Taking. FOCAS shall cooperate with ELI and the applicable Utility
Company to relocate any portion of the System affected by a taking, whether
before or after the completion of the installation of the Cable.
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ARTICLE XII
ENVIRONMENTAL HAZARD LIABILITY
12.1 Responsibilities of FOCAS. If any Hazardous Substance is
unlawfully introduced or released by FOCAS or any of its contractors or
subcontractors which affects any portion of the System, FOCAS shall defend,
indemnify and hold ELI and the applicable Utility Company 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, including,
without limitation, attorney fees and costs. In addition, FOCAS shall also bear
all costs of removing, neutralizing, containing or otherwise remediating any
such Hazardous Substance.
12.2 Responsibilities of ELI. If any Hazardous Substance is
unlawfully introduced or released by ELI or any of its contractors or
subcontractors which affects any portion of the System, ELI shall defend,
indemnify and hold FOCAS and the applicable Utility Company 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, including,
without limitation, attorney fees and costs. In addition, ELI shall also bear
all costs of removing, neutralizing, containing or otherwise remediating any
such Hazardous Substance.
12.3 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." The Utility Companies use or
may use chemicals on the Governor's list at many of their facilities and
locations. Accordingly, in exercising its rights and performing the work or
services contemplated by this Agreement, FOCAS and its contractors and
subcontractors and their respective employees and agents may be exposed to
chemicals on the Governor's list. FOCAS shall be responsible for notifying all
such persons that work performed hereunder may result in exposures to chemicals
on the Governor's list.
ARTICLE XIII
LIABILITY AND INDEMNITY
-----------------------
13.1 FOCAS Indemnity. FOCAS shall indemnify, defend and hold
harmless ELI, its parent corporation, officers, agents and employees (the "ELI
Indemnitees") 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 FOCAS
or ELI, and damage or destruction of property, including, but not limited to,
property of FOCAS, any Utility Company or ELI, or other loss or damage incurred
by ELI, arising out of: (a) negligent acts or omissions or willful misconduct of
FOCAS, its agents, officers, directors, employees or contractors; or (b) the
breach by FOCAS of any of its obligations under this Agreement. The obligation
to indemnify shall extend to and encompass all costs incurred by ELI and any ELI
Indemnitee 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. FOCAS's obligations pursuant to this Section 13.1
shall not extend to claims, demands, lawsuits or actions for liability to the
extent attributable to the negligence or willful misconduct of ELI, the ELI
Indemnitees, or their respective contractors, successors or assigns, or to the
acts of third-parties. FOCAS shall pay any cost that may be incurred by ELI or
the ELI Indemnitees in enforcing this indemnity, including reasonable attorney
fees.
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13.2 ELI Indemnity. ELI shall indemnify, defend and hold
harmless FOCAS, its officers, agents and employees (the "FOCAS Indemnitees") 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 FOCAS or ELI, and
damage or destruction of property, including, but not limited to, property of
either FOCAS or ELI, or other loss or damage incurred by FOCAS, 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 FOCAS and any FOCAS Indemnitee 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 13.2 shall not extend to
claims, demands, lawsuits or actions for liability to the extent attributable to
the negligence or willful misconduct of FOCAS, the FOCAS Indemnitees, or their
respective contractors, successors or assigns, or the acts of third-parties. ELI
shall pay any cost that may be incurred by FOCAS or the FOCAS Indemnitees in
enforcing this indemnity, including reasonable attorney fees.
13.3 No Consequential Damages. NOTWITHSTANDING ANY PROVISION
IN THIS AGREEMENT TO THE CONTRARY, NEITHER FOCAS NOR ELI SHALL BE LIABLE TO THE
OTHER FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES,
INCLUDING WITHOUT LIMITATION, LOSS OF USE, LOSS OF PROFITS, 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. The foregoing provision shall not
prohibit FOCAS or ELI from seeking and obtaining general contract damages for a
breach of this Agreement, including, without limitation, the payment or
application of any monetary obligation described in Article IV.
13.4 Defense of Claims. Either FOCAS or ELI as the
indemnifying party hereunder shall have the right to defend the other by counsel
of the indemnifying party's selection reasonably satisfactory to the indemnified
party, with respect to any claims within the indemnification obligations of this
Article XIII. FOCAS 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.
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13.5 Third-Party Claims. Except as set forth in Sections 10.2,
13.1 and 13.2, 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. FOCAS and
ELI by entering into this Agreement do not hold themselves out as furnishing
like or similar services to any other person or entity.
13.6 Survival. The obligations of the respective parties under
this Article XIII shall survive the expiration or earlier termination of this
Agreement.
13.7 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: (a) 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 (b) extend to the Affiliates, parent
corporations, directors, officers, employees and agents of both FOCAS and ELI.
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 parent corporation, officer, director, employee, agent or other
individual representative of either FOCAS or ELI shall be personally responsible
for any liability arising under this Agreement.
13.8 Claims Against Third-Parties. Nothing contained herein
shall operate as a limitation on the right of either FOCAS 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
Commercial Fibers, the Dark Fibers or the System. FOCAS 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. Each of FOCAS and ELI shall
assign such rights of claims, execute such documents and to whatever else may be
reasonably necessary to enable the other to pursue any such action against such
third-party. The provisions of this Section 13.8, however, shall not permit
either FOCAS or ELI to bring an action for damages against a third-party for
indirect, special or consequential damages if such third-party, directly or
through one or more intermediate parties, pursuant to this Agreement, has a
right of indemnification, impleader, cross claim, contribution, or other right
of recovery against FOCAS or ELI.
13.9 Anti-Indemnity Statute. FOCAS and ELI are aware of the
provisions of Section 2782 of the California Civil Code. FOCAS and ELI have
negotiated and agreed to the provisions of this Agreement that address the
apportionment of risk, such as the warranty, insurance and liability provisions
of this Agreement. For adequate consideration both FOCAS and ELI have concluded
this Agreement with the intent that the apportionment of risk in this Agreement
be valid and binding under such code section and the laws of California in
general.
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ARTICLE XIV
FORCE MAJEURE
-------------
14.1 Excuse of Performance. Notwithstanding anything in this
Agreement to the contrary, neither FOCAS nor ELI shall be liable or responsible
for a delay or failure in performing or carrying out any of its obligations
(other than its obligations to make payments under Article IV) under this
Agreement caused by a Force Majeure Event (as defined below).
14.2 Definition. The term "Force Majeure Event" as used in
this Agreement shall mean any cause beyond the reasonable control of FOCAS 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, 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 government body
materially and adversely affecting use of the Revenue Sharing Route;
(d) Government or Regulatory Agencies. Orders or
judgments of any government or regulatory agency materially and
adversely affecting use of the Revenue Sharing Route.
(e) Independent System Operator. Actions of any
Independent System Operator having operational control over any Utility
Company's electric transmission system which materially and adversely
affects the use of the System;
(f) 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 which make performance hereunder unlawful,
impossible, or economically infeasible or which frustrates the purpose
and intent of this Agreement; or
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(g) 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
negligent act or failure to act of the party claiming the occurrence of
a Force Majeure Event.
14.3 Continuance after Force Majeure Event. If either FOCAS or
ELI cannot fulfill any of its obligations under this Agreement by reason of a
Force Majeure Event, such party 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 14.3 shall be construed as
requiring FOCAS 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.
ARTICLE XV
DEFAULT AND TERMINATION
-----------------------
15.1 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 XV:
(a) Change of Conditions. A change of conditions
under which FOCAS, ELI or any portion of the Revenue Sharing Route
operates which is beyond the control of the parties such that the
Revenue Sharing Route, or any material portion thereof, cannot continue
to operate as contemplated by the terms of this Agreement, including,
without limitation:
(1) A change in the financial condition of
FOCAS or ELI that materially and adversely affects the ability
of FOCAS 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 ten percent (10%)
or more of the Revenue Sharing Route;
(3) Changes in law or in the regulatory
environment that materially and adversely affect the use of
any portion of the Revenue Sharing Route;
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(4) Actions by an Independent System
Operator that materially and adversely affect the use of any
portion of the Revenue Sharing Route;
(5) The occurrence of a Force Majeure Event
that renders FOCAS or ELI unable to perform its material
obligations under this Agreement for a continuous period of
six (6) months;
(6) The inability of a Utility Company or
ELI to obtain any required material Approvals for the use and
occupation of the Right of Way and the Towers by the System;
(7) The inability of a Utility Company or
FOCAS to obtain any required material Approvals for the
installation of the Cable, the Cable Accessories and the
Connecting Points; or
(8) The termination of any Utility Agreement
other than due to a default by ELI thereunder.
(b) Default. A material default under the terms,
covenants or conditions of this Agreement by either FOCAS or ELI,
including, without limitation:
(1) The failure of either FOCAS or ELI to
make any payment required under the terms of this Agreement
when due;
(2) Either FOCAS 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;
(3) The willful failure by either FOCAS or
ELI to perform its obligations under the terms of this
Agreement;
(4) Either FOCAS or ELI, by willful acts or
omissions, places either itself or the Revenue Sharing Route
or any portion thereof in a position or condition which
violates the terms, covenants and conditions of this Agreement
or effectively terminates this Agreement, including, without
limitation, a willful failure to cure a default after having
received written notice thereof from the other party; or
(5) Either FOCAS or ELI becomes insolvent,
is dissolved or liquidated, files or has filed against it a
petition in bankruptcy, reorganization, dissolution or
liquidation or similar action (which in the case of an
involuntary filing against a party is not stayed or dismissed
within ninety (90) days after the filing thereof), or is
adjudicated a bankrupt, or has a receiver appointed for its
assets.
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15.2 Actions Following Occurrence of Termination Event. Should
any termination event described in Section 15.1 occur, FOCAS 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 15.1(a), FOCAS 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, FOCAS and ELI may terminate this Agreement, or modify this
Agreement to address and account for the changed condition in a
mutually acceptable manner. If FOCAS 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; provided that
nothing herein shall abrogate, reduce, alter, or adversely affect the
right of either FOCAS or ELI to receive, or their respective
obligations to make, the payments required by Article IV.
(b) Default. If the termination event is a default
described in Section 15.1(b), 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 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.
(c) Remedies. In the event of an uncured breach or
default described in Section 15.1(b), the nondefaulting party shall
have available to it all legal remedies available at law or in equity
for breach of contract, including, without limitation, general contract
damages.
15.3 No Release. No termination or expiration of this
Agreement or the rights granted hereunder shall release either FOCAS or ELI, as
applicable, from any liability or obligation (whether for the Quarterly Payment
or other payments described in Article IV, payments of 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.
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ARTICLE XVI
DISPUTE RESOLUTION
------------------
16.1 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 XVI.
16.2 Negotiation and Mediation. FOCAS 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 FOCAS or his or her
designated representative and an executive of similar authority of ELI. Either
FOCAS 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 FOCAS 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
FOCAS and ELI agree to extend the mediation process beyond such deadline. Upon
agreeing on a mediator, FOCAS 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.
16.3 Confidentiality. All negotiations and any mediation
conducted pursuant to Section 16.2 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.
16.4 Injunctive Relief. Notwithstanding the foregoing
provisions, either FOCAS or ELI may seek a preliminary injunction, other
provisional judicial remedy, or other equitable remedies if in its judgment such
action is necessary to avoid irreparable damage or to preserve the status quo.
16.5 Continuing Obligation. FOCAS 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.
16.6 Failure of Mediation. If FOCAS and ELI, after good faith
efforts to mediate a dispute under the terms of this Agreement (as provided in
Section 16.2), 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 17.7.
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ARTICLE XVII
MISCELLANEOUS
-------------
17.1 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 FOCAS and ELI.
17.2 Binding Effect. This Agreement shall be binding upon
FOCAS, ELI and their respective successors and assigns. This Agreement shall
inure to the benefit of FOCAS, ELI and, to the extent provided in Article X,
their respective successors and assigns.
17.3 Waivers. The failure by FOCAS 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 FOCAS or ELI under this Agreement to demand strict
compliance and performance therewith. None of the undertakings, agreements or
covenants of FOCAS 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.
17.4 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 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 FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
Telephone: (770) 664-4949
Facsimile: (770) 664-4379
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With copy to: Cookson America, Inc.
1 Cookson Place
Providence, Rhode Island 02903
Attn: James V. Rosati
Telephone: (401) 521-1000
Facsimile: (401) 521-5273
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: 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.
17.5 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.
17.6 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 FOCAS or ELI, as applicable, and
references to "parties" shall be to both FOCAS and ELI.
17.7 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.
17.8 Commissions. FOCAS 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.
FOCAS and ELI shall each pay any fees or compensation due to their respective
consultants as advisors, if any, with respect to this transaction.
-50-
<PAGE>
17.9 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.
17.10 Attorney Fees. FOCAS 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.
17.11 Costs. Except as otherwise set forth in this Agreement,
FOCAS and ELI shall each be responsible for its own costs, including legal fees,
incurred in negotiating and finalizing this Agreement.
17.12 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.
17.13 Entire Agreement. This Agreement expresses the entire
understanding of FOCAS 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.
17.14 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 5.7 (Warranty of Work), Section 6.14 (Warranty of
Work), Section 7.11 (Performance Completion), Section 8.3 (Confidentiality),
Article XIII (Liability and Indemnity), Section 15.2 (Actions Following
Occurrence of Termination Event), and Section 15.3 (No Release).
17.15 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 FOCAS 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.
-51-
<PAGE>
DATED effective as of the date first above written.
FOCAS:
FOCAS, INC., a Delaware corporation
By: /s/ James V. Rosati
Title: Chairman
ELI:
ELECTRIC LIGHTWAVE, INC., a Delaware corporation
By: /s/Daryl A. Ferguson
Title: Chief Executive Officer
G:\5093\194\INIT0504.AGR
-52-
<PAGE>
EXHIBIT "A"
ACCEPTANCE TESTING STANDARDS
----------------------------
FOCAS shall meet or exceed the Acceptance Testing Standards set forth below.
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. FOCAS will endeavor to keep the number of splices in a span to a
minimum.
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 levels of 0.40 dB per Km @ 1310nm and 0.30 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.
o Maximum total span loss must not exceed 35.0 dB at 1550nm for a
100 Km span.
o Maximum dB/Km loss must not exceed 0.30 dB/Km at 1550nm excluding
splices
o In no case shall a fiber show a point discontinuity greater than
0.1dB. Discontinuities (known as steps, 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.
o Span loss will be the sum of cable loss in dB/Km plus System
splice loss in dB. The test results will be submitted to ELI in a
format approved by ELI.
<PAGE>
o Maximum span dispersion = 2250 ps/mn/Km for a 100 Km span. o
Performance levels at the time of acceptance must be maintained
at all times. o 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 Fibers.
In the event the measured span measured values exceeds the calculated values,
FOCAS will perform corrective maintenance as required to restore the Commercial
Fibers to the calculated values.
4.0 Splice Loss:
The splice loss will average 0.10dB @ 1550 nm. All splicing will be performed by
FOCAS. Further, no individual splice will exceed 0.30dB. Splices shall be
measured using bi-directional methods to average absolute splice loss. All fiber
splicing must be fusion type. The test results will be submitted to ELI in a
format approved by ELI.
5.0 Compliance:
ELI, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of the Commercial Fibers. Test data including OTDR
hard copies or electronic data must be submitted to ELI for review. Traces will
be taken on each fiber after all work is completed, bi-directionally, at 1310 nm
and 1550 nm, and submitted on 3 1/2 inch floppy disks. Filenames will be
approved by the Project Engineer prior to traces being submitted. ELI has the
option to waive any specifications and/or requirements listed in the technical
specification criteria.
6.0 Waivers:
FOCAS must provide Cable with attenuation of not greater than 0.30 dB/Km @
1550nm and will not be required to perform corrective maintenance under 0.30dB
to reduce span attenuation.
7.0 Key Optical Performance Characteristics Required for Single-Mode Optical
Cables:
A2
<PAGE>
7.1 Attenuation Single Mode Non-Shifted:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement. o 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:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement.
7.3 Attenuation versus Wavelength Single-Mode and Dispersion Shifted:
o 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):
o For conventional single mode fibers, the zero dispersion
wavelength must be 1300 to 1322.5nm. The maximum dispersion slope
(SoMAX) must be no greater than 0.092ps/(km-nm squared). 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:
o The cutoff wavelength of cabled fiber must be less than 1260 nm.
7.6 Core Diameter:
o The core diameter must be typically 8.30 plus or minus 0.13.
7.7 Temperature:
o Cable operating temperature range -40(degree) C to +85(degree) C.
FOCAS will insure that the Cable and related appurtenances meet all of the above
optical performance characteristics operating systems power level.
A3
<PAGE>
EXHIBIT "B"
CABLE ROUTE
-----------
An approximate description of the Cable Route is set out below:
Utility Company Route Description
PacifiCorp *
PG&E *
Southern California *
Edison
* 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"
CABLE 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 (mu)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. The Vapor
Axiel Deposition (VAD) process may also be used.
GENERAL FEATURES AND BENEFITS
o Versatility in 1310 nm and 1550 nm applications.
o Geometrical properties that allow for low splice loss and high splice
yields.
o OVD and VAD manufacturing reliability and product consistency.
o Optimized for use in ribbon, loose tube and other common cable designs.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
OPTICAL SPECIFICATIONS
Attenuation
- ------------------------------------------------
Uncabled Fiber Attenuation Cells Point Discontinuity
- ------------------------------------------------
- ------------------------- ----------------------
Attenuation Cells No point of discontinuity greater than 0.10 dB at either 1310 nm
(dB/km) or 1550 nm.
- ------------------------- ----------------------
- ------------------------- ----------------------
Wavelength (nm) Standard
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1310 0.40 Attenuation at the Water Peak
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1550 0.30 The attenuation at 1383 plus or minus 3 nm shall not exceed 2.1 dB/km.
- ------------------------- ----------------------
- --------------------------------------------------------------
Attenuation vs. Wavelength
- --------------------------------------------------------------
- --------------------- ------------------- --------------------
Range Ref. lambda Max Increase The attenuation in a given wavelength range does
(nm) (nm) alpha (dB/km) not exceed the attenuation of the reference
wavelength (lambda) by more than the value alpha.
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1285-1330 1310 0.1
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1525-1575 1550 0.05
- --------------------- ------------------- --------------------
- -----------------------------------------------------------------------------
Attenuation With Bending
- -----------------------------------------------------------------------------
- -------------------- ----------------- ----------------- --------------------
Mandrel Number of Wavelength Induced The induced attenuation due to
Diameter Turns (nm) Attenuation fiber wrapped around a mandrel
(nm) (dB) of a specified diameter.
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
32 1 1550 0.50
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1310 0.05
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1550 0.10
- -------------------- ----------------- ----------------- --------------------
o Cable Cutoff Wavelength (lambda ccf) o Mode-Field Diameter
(lambda ccf) less than 1260 nm 9.30 plus or minus 0.50 mu m at 1310 nm
10.50 plus or minus 1.00 mu m at 1550 nm
o Dispersion
Zero Dispersion Wavelength (lambda o): 1300 nm Less than or equal to (lambda o) Less than or equal to 1322 nm
Zero Dispersion Slope (So): Less than or equal to 0.092 ps/(nm squared times km)
Fiber Polarization Mode Dispersion Coefficient (PMD): Less than or equal to 0.5 psec divided by square root km
C2
<PAGE>
- --------------------------------------------------------------------------------------------------------------------
Dispersion Calculation
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
The agreement sets forth a detailed calculation of dispersion.
- --------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SPECIFICATIONS
- ------------------------------------------ --------------------------------
Environmental Test Induced Operating Temperature Range
Condition Attenuation -60(degree)C to +85(degree)C
(dB/km)
- ------------------------------------------ --------------------------------
- ------------------------------------------ -------------- -----------------
1310 nm 1550 nm
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature Dependence 0.05 0.05
- -60(degree)to +85(degree)C
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature-Humidity Cycling 0.05 0.05
- -10(degree)C to +85(degree)C, up to 98% RH
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Water Immersion, 23(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Heat Aging, 85(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
DIMENSIONAL SPECIFICATIONS
Standard Length (km/reel): 2.2 - 25.0
Glass Geometry Coating Geometry
Fiber Curl: greater than equal to 2.0 m radius of curvature Coating Diameter: 245 plus or minus 10 mu m
Cladding Diameter: 125.0 + 1.0 mu m Coating-Cladding Concentricity: less than 12 mu m
Core-Clad Concentricity: less than or equal to 0.8 mu m
Cladding Non-Circularity: less than 1.0%
Defined as: 1- (Min. Cladding Diameter divided by Max. Cladding Diameter) x 100
C3
<PAGE>
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 squared)
Cable Selection:
The Cable jacket shall comply with applicable National Electrical Safety Code
(NESC) standards for storm loading.
PERFORMANCE CHARACTERIZATIONS Characterized parameters must be typical values.
Core Diameter: Refractive Index Difference:
8.3 mu m 0.36%
Numerical Aperture: Effective Group Index of Refraction (Neff):
0.13 1.4675 or 1.466 at 1310 nm
NA measured at the one percent power angle of a 1.4681 or 1.467 at 1550 nm
one-dimensional far-field scan at 1310 nm.
Zero Dispersion Wavelength (lambda omicron): Fatigue Resistance Parameter (nd):
1312 nm greater than or equal to 20
Zero Dispersion Slope (S omicron): Coating Strip Force:
0.092 ps divided by (nm2 times km) Dry: greater than 0.3 lbf and less than 2.0 lbf
Wet: 14 days room temperature: 0.7 lbs. (3.2 N)
C4
<PAGE>
EXHIBIT "D"
PERFORMANCE CRITERIA
- --------------------------------------------------------------------------------------------------------------------
($ in thousands)
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Year (Measured from Revenue Forecast Performance Criteria
Completion Date for entire
Revenue Sharing Route)
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 1 (months 1-12) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 2 (months 13-24) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 3 (months 25-36) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 4 (months 37-48) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 5 (months 49-62) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 6 (months 63-72) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 7 (months 73-84) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 8 (months 85-96) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 9 (months 97-108) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 10 (months 109-120) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 11 (months 121-132) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 12 (months 133-144) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 13 (months 145-156) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 14 (months 157-168) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 15 (months 169-180) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 16 (months 181-192) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 17 (months 193-204) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 18 (months 205-216) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 19 (months 217-228) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 20 (months 229-240) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
* 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 "E"
REVENUE SHARING ROUTE
The revenue sharing route originates in the Portland, Oregon area and terminates
in Los Angeles, California, passing through Sacramento and San Francisco,
California.
</TABLE>
<PAGE>
EXHIBIT "F"
UTILITY COMPANY AGREEMENTS
[to be completed]
<PAGE>
EXHIBIT "G"
UTILITY COMPANY SAFETY RULES
[to be completed]
<PAGE>
EXHIBIT "H"
CABLE WARRANTY
FOCAS MANUFACTURER'S
LIMITED WARRANTY
FOCAS warrants that the Cable to be delivered under the foregoing
agreement will be of the kind and quality described in the order or agreement
and will be free of defects in workmanship or material for a period of three
years from the date its installation is completed and accepted by ELI. Should
any failure to conform to this warranty appear within such three year period,
FOCAS will, upon notification thereof and substantiation that the products have
been stored, installed and maintained in accordance with FOCAS's recommendations
and standard industry practice, correct such defects by suitable repair to or
replacement of the product. THIS WARRANTY IS EXCLUSIVE AND IT IS IN LIEU OF ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER
WARRANTY OF QUALITY, WHETHER EXPRESS OR IMPLIED, EXCEPT THE WARRANTY OF TITLE
AND AGAINST PATENT INFRINGEMENT. FOCAS SHALL NOT BE LIABLE UNDER ANY
CIRCUMSTANCES FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES TO ANY PARTY WHATSOEVER.
FOCAS shall have no obligation or liability of any kind and it is further agreed
and understood that the consideration stated for those products described in the
foregoing agreement is consideration for the limitation of FOCAS's liability
hereunder.
EXHIBIT 10.20
POST-COMPLETION AGREEMENT
BETWEEN
FOCAS, INC.
AND
ELECTRIC LIGHTWAVE, INC.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................................................1
-----------
ARTICLE II DESCRIPTION OF TRANSACTION..................................................................8
--------------------------
2.1 UTILITY AGREEMENTS.................................................................8
------------------
2.2 DELEGATION OF CERTAIN ELI DUTIES TO FOCAS..........................................9
-----------------------------------------
2.3 ELI DUTIES.........................................................................9
----------
2.4 LICENSES REVOCABLE.................................................................9
------------------
2.5 REGULATORY APPROVAL................................................................9
-------------------
2.6 CONVERSION FROM REVOCABLE LICENSE TO IRREVOCABLE LICENSE..........................10
--------------------------------------------------------
2.7 NONEXCLUSIVE USE OF RIGHT OF WAY..................................................10
--------------------------------
2.8 RESERVATION OF CERTAIN UTILITY COMPANY RIGHTS.....................................10
---------------------------------------------
2.9 UTILITY OPERATIONS................................................................10
------------------
2.10 NO PROPERTY OR POSSESSORY INTEREST................................................11
----------------------------------
2.11 RIGHT OF ENTRY....................................................................11
--------------
2.12 ENTRY CONDITIONS..................................................................12
----------------
2.13 COOPERATION.......................................................................12
-----------
2.14 DISCLAIMER........................................................................12
----------
2.15 OPERATION OF SYSTEM...............................................................12
-------------------
2.16 CABLE ROUTE.......................................................................13
-----------
ARTICLE III TERM.......................................................................................13
----
3.1 TERM..............................................................................13
----
3.2 TERMINATION OF AGREEMENT BY ELI...................................................13
-------------------------------
ARTICLE IV PAYMENTS...................................................................................14
--------
4.1 QUARTERLY PAYMENTS................................................................14
------------------
4.2 QUARTERLY PAYMENT DUE DATES.......................................................14
---------------------------
4.3 SUPPORTING DOCUMENTATION..........................................................14
------------------------
4.4 REIMBURSEMENT OF COSTS............................................................14
----------------------
4.5 PAYMENT PROCEDURE.................................................................15
-----------------
4.6 LATE PAYMENT......................................................................15
------------
4.7 PERFORMANCE CRITERIA..............................................................15
--------------------
4.8 SECURITY INTEREST.................................................................17
-----------------
- i -
<PAGE>
ARTICLE V SYSTEM DESIGN..............................................................................17
-------------
5.1 FOCAS DESIGN RESPONSIBILITY.......................................................17
---------------------------
5.2 ELI DESIGN RESPONSIBILITIES.......................................................18
---------------------------
5.3 UTILITY COMPANY INFORMATION.......................................................18
---------------------------
5.4 NOTICE OF ADVERSE CLAIMS..........................................................19
------------------------
5.5 WORKING DRAWINGS..................................................................19
----------------
5.6 SCHEDULING........................................................................20
----------
5.7 WARRANTY OF WORK..................................................................20
----------------
5.8 DESIGN PERFORMANCE COMMENCEMENT...................................................21
-------------------------------
ARTICLE VI CONSTRUCTION...............................................................................21
------------
6.1 SCOPE OF WORK.....................................................................21
-------------
6.2 REGENERATION FACILITIES...........................................................21
-----------------------
6.3 WORK STANDARDS....................................................................21
--------------
6.4 TIME..............................................................................22
----
6.5 PERMITS AND APPROVALS.............................................................22
---------------------
6.6 SYSTEM MATERIALS..................................................................22
----------------
6.7 INTERFACE BETWEEN FOCAS AND ELI...................................................22
-------------------------------
6.8 TITLE AND RISK OF LOSS............................................................23
----------------------
6.9 SYSTEM WARRANTIES.................................................................23
-----------------
6.10 USE OF CONTRACTORS................................................................23
------------------
6.11 INSPECTION OF CONSTRUCTION........................................................24
--------------------------
6.12 AS-BUILT DRAWINGS.................................................................25
-----------------
6.13 COMPLETION OF SYSTEM CONSTRUCTION.................................................25
---------------------------------
6.14 WARRANTY OF WORK..................................................................26
----------------
6.15 CONSTRUCTION PERFORMANCE COMMENCEMENT.............................................26
-------------------------------------
ARTICLE VII PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE...............................................26
--------------------------------------------
7.1 AVOIDANCE OF ENCUMBRANCES.........................................................26
-------------------------
7.2 PAYMENT OF AD VALOREM TAXES.......................................................27
---------------------------
7.3 SALES OR USE TAXES................................................................27
------------------
7.4 LIENS.............................................................................27
-----
7.5 DISCONTINUANCE OR RELOCATION......................................................28
----------------------------
7.6 RELOCATION OF CABLE...............................................................28
-------------------
7.7 DESIGN AND INSTALLATION OF RELOCATED FACILITIES...................................28
-----------------------------------------------
7.8 UTILITY COMPANY MAINTENANCE RESPONSIBILITIES......................................28
--------------------------------------------
7.9 MAINTENANCE OF REGENERATION FACILITIES AND SYSTEM ELECTRONICS.....................29
-------------------------------------------------------------
- ii -
<PAGE>
7.10 RESTORATION PLANS.................................................................29
-----------------
7.11 PERFORMANCE COMMENCEMENT..........................................................29
------------------------
ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS..................................................29
-----------------------------------------
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ELI..................................29
------------------------------------------------
8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF FOCAS................................31
--------------------------------------------------
8.3 CONFIDENTIALITY...................................................................32
---------------
8.4 COOPERATION.......................................................................34
-----------
8.5 REGULATORY COMPLIANCE.............................................................35
---------------------
8.6 CERTIFICATES......................................................................35
------------
8.7 INDEPENDENT STATUS................................................................35
------------------
8.8 TRANSACTIONS WITH AFFILIATES......................................................35
----------------------------
8.9 FURTHER ASSURANCES................................................................35
------------------
8.10 AUDIT RIGHTS......................................................................35
------------
8.11 INTERFERENCE......................................................................36
------------
8.12 INDEPENDENT SYSTEM OPERATOR.......................................................36
---------------------------
8.13 PERFORMANCE IN STEAD..............................................................36
--------------------
8.14 UTILITY AGREEMENTS................................................................36
------------------
ARTICLE IX INSURANCE..................................................................................36
---------
9.1 REQUIRED INSURANCE COVERAGE.......................................................36
---------------------------
9.2 GENERAL CONDITIONS................................................................37
------------------
9.3 EVIDENCE OF INSURANCE.............................................................37
---------------------
9.4 BLANKET POLICIES..................................................................38
----------------
9.5 SELF-INSURANCE....................................................................38
--------------
ARTICLE X ASSIGNMENT AND OTHER TRANSFERS.............................................................38
------------------------------
10.1 TRANSFERS.........................................................................38
---------
10.2 FINANCING.........................................................................39
---------
10.3 RECOGNITION OF TRANSFEREES........................................................39
--------------------------
10.4 NO ASSUMPTION OR RELEASE..........................................................39
------------------------
10.5 MERGERS AND ACQUISITIONS..........................................................39
------------------------
ARTICLE XI CONDEMNATION...............................................................................39
------------
11.1 TAKING............................................................................39
------
11.2 NOTICE OF TAKING..................................................................40
----------------
- iii -
<PAGE>
ARTICLE XII ENVIRONMENTAL HAZARD LIABILITY.............................................................40
------------------------------
12.1 RESPONSIBILITIES OF FOCAS.........................................................40
-------------------------
12.2 RESPONSIBILITIES OF ELI...........................................................40
-----------------------
12.3 WARNING...........................................................................40
-------
ARTICLE XIII LIABILITY AND INDEMNITY....................................................................41
-----------------------
13.1 FOCAS INDEMNITY...................................................................41
---------------
13.2 ELI INDEMNITY.....................................................................41
-------------
13.3 NO CONSEQUENTIAL DAMAGES..........................................................41
------------------------
13.4 WAIVER OF SUBROGATION.............................................................42
---------------------
13.5 DEFENSE OF CLAIMS.................................................................42
-----------------
13.6 THIRD-PARTY CLAIMS................................................................42
------------------
13.7 SURVIVAL..........................................................................42
--------
13.8 APPLICABILITY OF LIABILITY LIMITATIONS............................................42
--------------------------------------
13.9 CLAIMS AGAINST THIRD-PARTIES......................................................43
----------------------------
13.10 ANTI-INDEMNITY STATUTE............................................................43
----------------------
ARTICLE XIV FORCE MAJEURE..............................................................................43
-------------
14.1 EXCUSE OF PERFORMANCE.............................................................43
---------------------
14.2 DEFINITION........................................................................43
----------
14.3 CONTINUANCE AFTER FORCE MAJEURE EVENT.............................................44
-------------------------------------
ARTICLE XV DEFAULT AND TERMINATION....................................................................45
-----------------------
15.1 TERMINATION EVENTS................................................................45
------------------
15.2 ACTIONS FOLLOWING OCCURRENCE OF TERMINATION EVENT.................................46
-------------------------------------------------
15.3 NO RELEASE........................................................................47
----------
ARTICLE XVI DISPUTE RESOLUTION.........................................................................47
------------------
16.1 DISPUTE RESOLUTION................................................................47
------------------
16.2 NEGOTIATION AND MEDIATION.........................................................47
-------------------------
16.3 CONFIDENTIALITY...................................................................48
---------------
16.4 INJUNCTIVE RELIEF.................................................................48
-----------------
16.5 CONTINUING OBLIGATION.............................................................48
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16.6 FAILURE OF MEDIATION..............................................................48
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<PAGE>
ARTICLE XVII MISCELLANEOUS..............................................................................48
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17.1 AMENDMENTS........................................................................48
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17.2 BINDING EFFECT....................................................................48
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17.3 WAIVERS...........................................................................48
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17.4 NOTICES...........................................................................49
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17.5 SEVERABILITY......................................................................49
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17.6 INTERPRETATION....................................................................49
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17.7 GOVERNING LAW AND CHOICE OF FORUM.................................................50
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17.8 COMMISSIONS.......................................................................50
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17.9 COUNTERPARTS......................................................................50
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17.10 ATTORNEY FEES.....................................................................50
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17.11 COSTS.............................................................................50
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17.12 NO THIRD-PARTY BENEFICIARIES......................................................50
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17.13 ENTIRE AGREEMENT..................................................................50
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17.14 SURVIVAL..........................................................................51
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17.15 EXHIBITS..........................................................................51
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EXHIBITS
Exhibit "A" Acceptance Testing Standards
Exhibit "B" Cable Route
Exhibit "C" Cable Specifications
Exhibit "D" Performance Criteria
Exhibit "E" Revenue Sharing Route
Exhibit "F" Utility Company Agreements
Exhibit "G" Utility Company Safety Rules
Exhibit "H" Cable Warranty
</TABLE>
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<PAGE>
POST-COMPLETION AGREEMENT
THIS POST-COMPLETION AGREEMENT ("Agreement") is made and
entered into effective as of the 7th day of May, 1998, by and between FOCAS,
INC., a Delaware corporation ("FOCAS"), and ELECTRIC LIGHTWAVE, INC., a Delaware
corporation ("ELI").
R E C I T A L S :
A. ELI and FOCAS have entered into that certain Initial Optical Fiber
Design and Installation Agreement of even date herewith (the "Initial
Agreement") concerning the initial design and installation of a portion of the
System (as defined herein).
B. ELI desires that FOCAS hold itself available to perform, and to
perform as necessary, certain post-completion service with respect to the
System.
C. FOCAS, upon the terms, covenants and conditions contained in this
Agreement, is willing to hold itself available to perform, and to perform, such
post-closing services.
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, FOCAS 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 ELI to
FOCAS, pursuant to Section 6.11, that specified work has been inspected by ELI
and found to have been performed substantially in accordance with the
requirements of this Agreement.
"Acceptance Testing Standards" means ELI's Acceptance Testing Standards
set forth on Exhibit "A" attached to and incorporated in this Agreement by
reference.
"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 FOCAS 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.
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<PAGE>
"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 any portion 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, the Connecting Points and,
as applicable, the Regeneration Facilities, the System Electronics and other
facilities and equipment associated with the Approved System Segment.
"Cable" means one or more optical fiber telecommunications cables
containing single mode, nondispersion shifted 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
"B" attached to and incorporated in this Agreement by reference.
"Cable Specifications" means the drawings and specifications regarding
the Cable, the Cable Accessories, and related hardware and materials to be
employed in the installation and splicing of the Cable. A copy of the Cable
Specifications is attached to and incorporated by reference in this Agreement as
Exhibit "C."
"Cable Use License" means the exclusive right to use the Commercial
Fibers contained in the Cable that follows the portion of the Cable Route
contained in a particular Utility Company's service territory granted by the
Utility Company to ELI in a Utility Agreement. A Cable Use License does not
grant to ELI any right to enter upon or to access the Towers, the Substation
Sites or the Right of Way of the Utility Company.
"Chief Engineer" means with respect to FOCAS 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.
"Commercial Fibers" means the single mode, nondispersion shifted
optical fibers along the entirety of the Revenue Sharing Route in which ELI
holds an exclusive license, lease or IRU.
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<PAGE>
"Connecting Point" means any point where the network or facilities of
ELI or any Utility Company connect to the System. The connecting point may be:
(1) a splice point in the Cable created during the installation of the Cable for
a Utility Company to access its Dark Fibers; or (2) a splice point in a
connection box located adjacent to a Regeneration Facility created during the
installation of the Cable for ELI's access to the Commercial Fibers.
"CPUC" means the California Public Utilities Commission.
"Dark Fiber Lease Services" means the leasing of dark Commercial Fibers
or capacity in dark Commercial Fibers by ELI to other telecommunications
carriers or commercial users. Dark Fiber Lease Services do not include the Dark
Fibers leased by ELI to the Utility Companies.
"Dark Fibers" means the single mode, nondispersion shifted optical
fibers in the Cable along the entirety of each Developed System Segment leased
to or reserved by the Utility Companies for the purposes and on the terms
described in the Utility Agreements.
"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 FOCAS
and ELI.
"Force Majeure Event" shall have the meaning given in Section 14.2.
"Gross Revenues" means for any accounting period:
(1) The sum of: (a) all revenues billed by ELI for Transport
Services and Dark Fiber Lease Services using the Commercial Fibers over
all or any portion of the entire Revenue Sharing Route; (b) any other
proceeds or value received or receivable by ELI from any condemnation,
eminent domain or other Taking, or from the exploitation or
commercialization of the System or any interest therein, including, but
not limited to, any business interruption insurance proceeds; and (c)
any recoveries obtained by ELI from the Utility Companies or others in
respect of the System. (2) Less the sum of: (a) any billed revenues
from the Revenue Sharing Route actually written off (as determined
consistent with ELI's business practices) net of any cash receipts in
respect of previously written off billed revenue; (b) relocation costs
allocable to and paid by ELI as provided under the terms of any Utility
Agreement resulting from a relocation required by a party other than
ELI, FOCAS or the applicable Utility Company (as described in Section
7.6);
- 3 -
<PAGE>
(c) Maintenance cost reimbursement payments made by ELI to the Utility
Companies under the terms of the Utility Agreements to the extent
provided in Section 7.8; (d) the premiums paid for business
interruption insurance relating to the Revenue Sharing Route, if any;
and (e) the cost of recovering any sum of money from any of the Utility
Companies or any other party if the recovered amount is included in
Gross Revenues (as defined above).
"Hazardous Substances" means any waste, pollutant (as that term is
defined in 42 U.S.C. ss. 9601(33) or in 33 U.S.C. ss. 1362(13) or any successor
statutes thereto), hazardous substance (as that term is defined in 42 U.S.C. ss.
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. ss. 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 any entity or agency to which any
Utility Company has ceded operational control of its electric transmission
system. An Independent System Operator, among other powers, has 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.
"Initial Agreement" means the agreement described in Recital A of this
Agreement, the terms, covenants and conditions of which are incorporated in this
Agreement by reference.
"Irrevocable License" means a Cable Use License or a Right of Way
License that has been approved by the CPUC as described in Sections 2.5 and 2.6.
"IRU" means the exclusive indefeasible right to use the Cable and the
optical fibers contained therein reserved by ELI under the terms of a Utility
Agreement that grants to ELI a Right of Way License.
"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.
"Maps" means any drawings or maps that FOCAS, a Utility Company or ELI
is required to prepare, update or submit to any state or federal regulatory
agency as required by applicable statute, rule or regulation.
"Payment Commencement Date" means the day following the Payment
Completion Date as defined in the Initial Agreement.
- 4 -
<PAGE>
"Payment Completion Date" shall have the meaning given in the Initial
Agreement.
"Payment Factor" means the percentage factor identified in Section
4.1(b) which when multiplied against the Gross Revenues for a particular
accounting period produces the Quarterly Payment.
"Performance Commencement Date" means the day following the Performance
Completion Date as defined in the Initial Agreement.
"Performance Criteria" means those minimum annual Gross Revenues
described in Section 4.7 and set forth on Exhibit "D" attached to and
incorporated in this Agreement by reference.
"Qualified Contractor" means a party with whom ELI or FOCAS contracts
to perform any portion of the work for the System over which ELI or FOCAS, as
applicable, pursuant to the terms of this Agreement, has responsibility. Each
such Qualified Contractor must meet the qualification standards imposed by ELI,
FOCAS and the Utility Companies for the type of work to be undertaken by such
Qualified Contractor.
"Quarterly Payments" means the quarterly payments ELI shall make to
FOCAS under the terms of this Agreement as described in Section 4.1.
"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
design, engineer and construct the Regeneration Facilities. In addition, ELI
shall own or lease the physical structure comprising a Regeneration Facility,
and shall own and install all System Electronics used in connection with each
Regeneration Facility.
"Revenue Sharing Route" means the cable path for the Commercial Fibers
over an estimated 1300 Route Miles. An approximate location of the Revenue
Sharing Route is described on Exhibit "E" attached to and incorporated in this
Agreement by reference.
"Revocable Licenses" means a Cable Use License or a Right of Way
License regarding which the CPUC has not granted approval to the applicable
Utility Company to convert such license to an Irrevocable License as described
in Sections 2.5 and 2.6.
"Right of Way" means the Utility Companies' real property and rights
related thereto created pursuant to a grant, easement, lease, license or other
agreement which are used for the Cable Route.
- 5 -
<PAGE>
"Right of Way License" means the nonexclusive right to use the Towers,
Substation Sites and Right of Way of a particular Utility Company to install and
operate the System granted by the Utility Company to ELI under the terms of a
Utility Agreement. The Right of Way License includes the exclusive right to use
the Commercial Fibers on such Utility Company's portion of the Cable Route.
"Route Miles" means the actual miles traversed by the Commercial Fibers
(including spurs) based on the "as-built" drawings described in Section 6.12.
"Scheduled Completion Date" means the date agreed upon by FOCAS and ELI
under the provisions of Section 5.6 by which construction of an Approved System
Segment under the terms of this Agreement should be completed.
"Service Ready Date" means the date when the Commercial Fibers for any
particular System Segment are fully installed and meet the Acceptance Testing
Standards, as evidenced by the issuance of an Acceptance of Construction for
that System Segment.
"Substation Sites" means those areas on or near the Right of Way where
a Utility Company owns or leases the land and maintains electric transmission or
distribution equipment and on which ELI, pursuant to the terms of the Utility
Agreements, may locate Regeneration Facilities.
"System" means all of the Cable, the Cable Accessories, the Connecting
Points, 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 over the Cable
Route.
"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.
"System Integrity" means the operation of a Utility Company's electric
system in a manner that is deemed to minimize the risk of injury to persons and
property and enable the Utility Company to provide adequate and reliable
electric service to its customers, as determined by the Utility Company.
"System Materials" means all Cable, Cable Accessories, System
Electronics, and other equipment and materials obtained by FOCAS 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.
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<PAGE>
"Taking" means the exercise of the power of eminent domain by any
public or quasi-public authority, or any other entity having the same or similar
authority to divest title to real or personal property from a person.
"Term" means the period of time beginning on the Effective Date and
terminating on that date which is thirty (30) days after the twentieth (20th)
year anniversary of the date the entire Revenue Sharing Route is completed.
"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
or distribution 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 FOCAS or
ELI, pursuant to Article X, transfers or assigns any interest in this Agreement.
"Transport Services" means individual circuits used or sold as bulk
transport by ELI to other telecommunications carriers or to commercial users for
long-haul traffic on the Commercial Fibers.
"Utility Agreements" means the written agreements entered into by ELI
with the Utility Companies, or by ELI and FOCAS with any Utility Company, which
provide, among other things, for the design, engineering, construction and
installation of the System. Copies of the Utility Agreements are attached to and
incorporated by reference in this Agreement as Exhibit "F."
"Utility Companies" means Pacific Gas and Electric Company, PacifiCorp,
Southern California Edison, and any other electric power transmission company
with which ELI enters into a written agreement for use of Right of Way to
construct and install a portion of the System.
"Utility Operations" means the procurement, generation, transmission,
distribution, management or monitoring by a Utility Company of its services, or
any combination thereof, including, without limitation, consulting and advising
with respect to the use thereof and providing all related equipment and
services.
"Working Drawings" means the construction plans for the installation of
the System along the Cable Route.
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<PAGE>
ARTICLE II
DESCRIPTION OF TRANSACTION
2.1 UTILITY AGREEMENTS. Under the terms of the Utility Agreements, the
Utility Companies and ELI have or will agree to design, engineer and install the
System along the Cable Route. ELI has entered into, or is about to enter into a
separate Utility Agreement with each of the Utility Companies relating to that
portion of the Right of Way owned or controlled by each such Utility Company.
The duties and responsibilities of the Utility Companies and ELI under the terms
of the Utility Agreements are summarized below:
(a) UTILITY COMPANIES. Under the terms of the Utility
Agreements, each Utility Company agrees to grant to ELI a Right of Way
License, or a Cable Use License.
(1) Under a Utility Agreement which grants a Right of
Way License to ELI, the applicable Utility Company: (A) grants
to ELI a license to enter upon the Right of Way controlled by
such Utility Company for the purposes of designing,
engineering, constructing and installing the System; (B)
authorizes ELI and ELI's employees, agents and contractors to
enter on such Utility Company's Right of Way, Towers and
Substation Sites to exercise ELI's rights under the terms of
its Utility Agreement with ELI; (3) allows ELI to reserve for
ELI's exclusive use an IRU in and to the Cable to be installed
on such Utility Company's Right of Way; and (4) upon
completion of the construction and installation of the System,
leases from ELI Dark Fibers in the Cable installed on such
Utility Company's Right of Way.
(2) Under a Utility Agreement which grants a Cable
Use License to ELI, the applicable Utility Company agrees to:
(A) design and install an optical fiber communications system
using the Utility Company's Right of Way along its portion of
the Cable Route; (B) upon completion of the installation of
the Cable along its portion of the Cable Route, grant to ELI
an exclusive license to use the Commercial Fibers in the Cable
installed by the Utility Company on such Utility Company's
Right of Way; and (C) reserve for the Utility Company's own
use the Dark Fibers to be installed on such Utility Company's
Right of Way.
(b) ELI. Under the terms of the Utility Agreements, ELI
makes the following undertakings:
(1) With respect to a Utility Agreement that grants
to ELI a Right of Way License, ELI agrees to: (A) design,
engineer, construct and install the System; (B) upon
completion of the construction and installation of the System
on such Utility Company's portion of the Cable Route, and
subject to ELI's reservation of an exclusive IRU to the
Commercial Fibers along such portion of the Cable Route,
transfer legal title to the Cable and the Cable Accessories
installed on the Utility Company's Right of Way to that
Utility Company; and (C) upon completion of the construction
and installation of the System on such Utility Company's
portion of the Cable Route, lease to such Utility Company the
Dark Fibers in the Cable installed on such Utility Company's
Right of Way.
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<PAGE>
(2) With respect to a Utility Agreement that grants
to ELI a Cable Use License, ELI agrees to: (A) supply the
Cable for use in the installation of the System on the Utility
Company's portion of the Cable Route; and (B) upon completion
of the construction and installation of the System along such
portion of the Cable Route, transfer legal title to the Cable
and the Cable Accessories installed on the Utility Company's
Right of Way to that Utility Company.
2.2 DELEGATION OF CERTAIN ELI DUTIES TO FOCAS. Under the terms of the
Initial Agreement, ELI delegates to FOCAS (as contemplated by the terms of the
Utility Agreements) certain of the duties and responsibilities assumed by ELI
under the terms of the Utility Agreements. In consideration of the Quarterly
Payments made by ELI to FOCAS under the terms of the Initial Agreement with
respect to the portion of the Cable Route for which FOCAS has responsibility:
(a) FOCAS, at its expense, shall manufacture or acquire and deliver the Cable
for the System for all of the Cable Route; and (b) with respect only to those
Utility Agreements that grant a Right of Way License, FOCAS, at its expense,
either directly or indirectly through one or more approved Qualified Contractors
and in accordance with the requirements of Article V, shall perform or cause to
be performed the design, engineering and installation work for the Cable, the
Cable Accessories and the Connecting Points.
2.3 ELI DUTIES. As provided in and subject to the provisions of the
Initial Agreement, ELI, at its expense, shall design, engineer and construct the
Regeneration Facilities, and shall acquire and install all System Electronics.
2.4 LICENSES REVOCABLE. Under the terms of the Utility Agreements, the
Right of Way Licenses and the Cable Use Licenses are revocable, until such time
as each license is approved by the CPUC (as described in Section 2.5).
Consequently, until approval is obtained from the CPUC, the rights of ELI and,
hence FOCAS, under the terms of the Right of Way Licenses and the Cable Use
Licenses shall consist only of a revocable right to use and shall be subject to
all terms, covenants and conditions applicable to such licenses as contained in
the Utility Agreements.
2.5 REGULATORY APPROVAL. Each Utility Company and ELI shall jointly
apply to the CPUC under Section 851 of the California Public Utilities Code for
an Approval authorizing the Utility Company to enter into an irrevocable Right
of Way License or Cable Use License, as applicable, with ELI. FOCAS shall
cooperate fully in the application process by providing, at FOCAS's sole cost
and expense, any information, personnel or other resources a Utility Company or
ELI may reasonably request from time to time. FOCAS's cooperation shall include
assisting in the preparation of applications, discovery and testimony and making
available to the Utility Companies, ELI, the CPUC and other relevant authorities
all necessary and appropriate FOCAS information and personnel. ELI shall provide
FOCAS with a copy of all such applications made to the CPUC under the terms of
the Utility Agreements. ELI makes no representation or warranty concerning the
likelihood that any such Approval can be secured, or with respect to 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.
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<PAGE>
2.6 CONVERSION FROM REVOCABLE LICENSE TO IRREVOCABLE LICENSE. If and
when a Utility Company secures a final non-reviewable Approval from the CPUC to
enter into an irrevocable Right of Way License or Cable Use License, as
applicable, with ELI for the purposes and on the terms set forth in the
applicable Utility Agreement, the revocable nature of the license described in
the applicable Utility Agreement shall automatically convert into an Irrevocable
License. Except as specifically described in the Utility Agreements, each such
Irrevocable License shall be on the same terms, covenants and conditions as the
Revocable License it replaces. ELI shall provide written notice to FOCAS of the
conversion of each Revocable License to an Irrevocable License, which notice
shall specify the effective date thereof. Thereafter, use, as applicable, of the
Cable, the Towers, the Substation Sites and the Right of Way by ELI and FOCAS
for such portion of the Cable Route shall be in accordance with the terms of the
Irrevocable License contemplated by the applicable Utility Agreement.
2.7 NONEXCLUSIVE USE OF RIGHT OF WAY. Under the terms of the Utility
Agreements, any use of a Utility Company's Towers, Substation Sites and Right of
Way granted to ELI is expressly made nonexclusive. In addition, each Utility
Company expressly reserves the right to negotiate with any third-party with
respect to the use by such third-party of such Utility Company's Towers,
Substation Sites and Right of Way, subject to the rights specifically granted to
ELI under the applicable Utility Agreement.
2.8 RESERVATION OF CERTAIN UTILITY COMPANY RIGHTS. FOCAS understands
and acknowledges that under the terms of the Utility Agreements, each Utility
Company reserves for itself, its successors and assigns, the right to use such
Utility Company's Towers, Substation Sites and Right of Way, or any portion
thereof, for any purpose such Utility Company finds necessary, together with the
right to enter upon or into such Towers, Substation Sites and Right of Way, or
any portion thereof, at all times, and for any and all purposes. Further, each
Utility Company may exercise such rights without any notice to or consent from
ELI or FOCAS and without payment of any compensation to ELI or FOCAS.
2.9 UTILITY OPERATIONS. FOCAS also understands and acknowledges that
under the terms of the Utility Agreements, if a Utility Company determines that
modifications to the Towers, the Substation Sites, or the Right of Way owned or
controlled by such Utility Company over, upon or through which the System is
installed, or any portion thereof, are necessary to conduct Utility Operations
in a manner that adversely affects the use of the System, the Utility Company
must provide ELI with twelve (12) months' prior written notice of its intention
to make such modifications. The notice must 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. However, the foregoing right is not
available after a Revocable License converts to an Irrevocable License as
described in Section 2.6.
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<PAGE>
2.10 NO PROPERTY OR POSSESSORY INTEREST. Neither the Revocable
Licenses, the Irrevocable Licenses, ELI's exercise of its rights under any
Utility Agreement, or FOCAS's exercise of its rights under this Agreement, shall
confer upon FOCAS any property interest in any of the Towers, the Substation
Sites, or the Right of Way, whether or not owned in fee simple by a Utility
Company or a third-party. Notwithstanding the generality of the foregoing
sentence, FOCAS, subject to the terms of the Initial Agreement, this Agreement
and the Utility Agreements that grant a Right of Way License, shall have the
right to enter upon the Towers, the Substation Sites and the Right of Way to
install the Cable and the Cable Accessories, and to construct the Connecting
Points. FOCAS shall have no such right of entry with respect to a Utility
Company's Towers, Substation Sites and Right of Way that are subject to a Cable
Use License only.
2.11 RIGHT OF ENTRY. FOCAS shall notify ELI's Project Manager and, if
requested by ELI, the applicable Utility Company whenever FOCAS intends to enter
upon the Towers, the Substation Sites and the Right of Way of a Utility Company
that has granted a Right of Way License to ELI in connection with FOCAS's
performance under this Agreement in accordance with the following notice
requirements:
(a) FOCAS shall give not less than seventy-two (72) hours
prior notice by telephone to ELI at (360) 816-4032 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 FOCAS
to complete the Working Drawings, including, without limitation,
engineering, design and installation plans and costs estimates for the
work contemplated by this Agreement.
(b) FOCAS shall give not less than one week's prior
telephone notice to ELI at (360) 816-4032 before entering any Right of
Way for the performance of any construction to be performed by FOCAS or
by others consistent with and under the terms of Section 6.10.
(c) FOCAS shall give not less than forty-eight (48) hours
prior telephone notice to ELI at (360) 816-4032 before entering any
Right of Way for the purpose of inspection, testing, Maintenance,
repair or exercise of any other right of FOCAS under this Agreement
with respect to any portion of the System not attached to the Towers.
- 11 -
<PAGE>
(d) In cases of emergency with respect to any portion of
the installed Cable, FOCAS shall provide as much prior telephone notice
as possible to ELI at (360) 816-4032.
2.12 ENTRY CONDITIONS. ELI, from time to time by written notice to
FOCAS, may specify additional entry conditions or requirements relating to a
Right of Way License arising out of the relationship of a Utility Company with a
particular land owner, including, without limitation, prior telephone notice to
the land owner, no entry unless accompanied by the applicable Utility Company's
personnel, and entry only through a specific route. FOCAS's right of entry to
the Towers, the Substation Sites and the Right of Way subject to a Right of Way
License is further subject to the conditions that: (a) FOCAS shall comply with
each Utility Company's established safety rules, copies of which are attached to
and incorporated by reference in this Agreement as Exhibit "G," when working
around the Towers, cables or other elements of the Utility Companies' electric
power transmission system; and (b) FOCAS shall indemnify ELI with respect to
such entry as further provided in Section 13.1 of this Agreement. If entry by
FOCAS 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 2.11 shall be given.
2.13 COOPERATION. FOCAS shall cooperate with ELI and each Utility
Company in designing, engineering, constructing and installing the System. FOCAS
shall follow and comply with the applicable Cable Specifications and safety
rules of each Utility Company in fulfilling FOCAS's obligations under this
Agreement.
2.14 DISCLAIMER. ELI 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 FOCAS. FOCAS
acknowledges that neither ELI nor any of ELI's officers, employees or agents has
made, nor is FOCAS entering into the Initial Agreement or this Agreement in
reliance upon, any such representation or warranty.
2.15 OPERATION OF SYSTEM. Following the Service Ready Date for each
Developed System Segment, unless expressly provided otherwise in this Agreement,
FOCAS's rights under this Agreement to such Developed System Segment shall be
limited to the receipt of Quarterly Payments derived from the Revenue Sharing
Route as described in Section 4.1 and FOCAS's other rights under Article IV. ELI
shall have full authority and responsibility with respect to the operation of
the System and the marketing, pricing and sale of Transport Service and Dark
Fiber Lease Services over the Revenue Sharing Route. ELI shall keep FOCAS
generally informed regarding ELI's marketing efforts with respect to the Revenue
Sharing Route and, without obligation, shall accept input from FOCAS regarding
the marketing of services over the Revenue Sharing Route.
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2.16 CABLE ROUTE. FOCAS and ELI estimate that the portion of the
Revenue Sharing Route for which FOCAS has responsibility under this Agreement
will extend a distance of 920 Route Miles when the System is completed. In the
event Working Drawings for the Cable Route project the total distance of the
Cable Route will exceed such estimate by more than 10 Route Miles, or fall short
of such estimate by more than 10 Route Miles, FOCAS and ELI shall meet
expeditiously to discuss and negotiate in good faith the effect of such overage
or shortfall. Among other things, FOCAS and ELI may agree to modify the
projected Cable Route, adjust the Payment Factor identified in Section 4.1, or
modify other financial considerations between them as described in this
Agreement.
ARTICLE III
TERM
3.1 TERM. The Term of this Agreement shall commence on the Effective
Date and shall continue, unless sooner terminated pursuant to the terms of this
Agreement, until midnight Pacific time on that date which is thirty (30) days
after the twentieth (20th) year anniversary of the date the entire Revenue
Sharing Route is completed. ELI shall exercise its rights to renew or extend the
term of any Utility Agreement to the extent necessary to avoid the expiration of
the term of such Utility Agreement prior to the expiration of the Term of this
Agreement. Notwithstanding the commencement of the Term on the Effective Date,
ELI's payment obligations under Section 4.1 shall not commence until the Payment
Commencement Date, and obligations of FOCAS and ELI under Articles V, VI and VII
shall not commence until the Performance Commencement Date.
3.2 TERMINATION OF AGREEMENT BY ELI. With ten (10) days' prior written
notice to FOCAS, ELI may terminate this Agreement if by the sixtieth (60th) day
following the Effective Date:
(a) ELI and FOCAS, in their reasonable discretion,
determine that the operating requirements, protocols, rules or policies
of any Independent System Operator, and the transfer of operational
control of electric transmission systems to such Independent System
Operator make it economically infeasible for: (1) ELI and FOCAS to
design or construct the System; or (2) for ELI to use the System for
the purposes contemplated by this Agreement and the Utility Agreements;
or
(b) The Detailed Restoration Plans (as defined in the
Utility Agreements) in form and content reasonably acceptable to the
Utility Companies and ELI have not been completed.
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ARTICLE IV
PAYMENTS
4.1 QUARTERLY PAYMENTS. In consideration of the interest of FOCAS and
the performance by FOCAS of its obligations specified in this Agreement, ELI
shall pay the Quarterly Payments to FOCAS according to the following
specifications:
(a) The Quarterly Payment shall be calculated by
multiplying the Gross Revenues for the applicable three month period by
the Payment Factor.
(b) The Payment Factor shall be * percent (*).
4.2 QUARTERLY PAYMENT DUE DATES. Throughout the period commencing as of
the Payment Commencement Date and throughout the balance of the Term, the
Quarterly Payments shall be due and payable within thirty (30) days after each
three month period following the Payment Commencement Date. It is understood
that the Payment Commencement Date may occur during (rather than at the end of)
a three-month period under the Initial Agreement. In such case, the Payment
Factor shall apply with respect to Gross Revenues after such date
notwithstanding that the period applicable to the first payment may be less than
three (3) full months.
4.3 SUPPORTING DOCUMENTATION. Each Quarterly Payment shall be
accompanied by a quarterly report detailing the Gross Revenues, identified into
categories of revenues, including Dark Fiber Lease Services and Transport
Services. ELI and FOCAS shall agree on a reporting format to be used prior to
the due date of ELI's first Quarterly Payment.
4.4 REIMBURSEMENT OF COSTS. On or before the twentieth (20th) working
day of each calendar month following the Performance Commencement Date, ELI and
FOCAS shall prepare and submit to each other, if applicable, an invoice for all
identified reimbursable costs pursuant to Articles III, V, VI and VII and XIII
incurred by or for the account of the invoicing party during the immediately
preceding calendar month, together with all other identified reimbursable costs
previously incurred by the invoicing party and not previously invoiced. For
purposes of this Section 4.4, "incurred" means the actual and reasonable
payments made by the invoicing party to contractors, vendors, suppliers and
other third-parties, as well as reasonable expenses booked or recorded by the
invoicing party 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 1.3 times base compensation). The full amount of each
such invoice shall be due and payable by the invoiced party within thirty (30)
days following receipt thereof. If the invoiced party disputes any amount
invoiced under this Section 4.4, the amount not in dispute shall be promptly
paid and any disputed amount that is ultimately determined to have been payable
shall be paid promptly following resolution of the dispute. Any dispute that is
not resolved by mutual agreement of the parties shall be resolved in accordance
with Article XVI.
* Confidential information 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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4.5 PAYMENT PROCEDURE. Any fees payable to FOCAS or ELI under
this Agreement shall be made by check payable to FOCAS or ELI, as applicable,
and sent to the following addresses:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Treasurer
If to ELI, to: 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 place of payment described above.
4.6 LATE PAYMENT. If any payment under the terms of this Agreement is
not received by the party entitled to payment within fifteen (15) days after the
date it becomes due, the payor shall pay to the payee, in addition to the amount
due, a late fee charge in an amount equal to five percent (5%) of the amount
due. The late payment charge shall not apply to amounts not paid because of a
good faith dispute between the parties.
4.7 PERFORMANCE CRITERIA.
(a) ANNUAL REQUIREMENT. ELI shall achieve Gross Revenues
(including Gross Revenues under the Initial Agreement in the year in
which the Payment Commencement Date occurs) from the Revenue Sharing
Route in an amount equal to or greater than the applicable Performance
Criteria set forth on Exhibit "D" attached to this Agreement. The Gross
Revenues requirement shall be measured annually beginning with the
twelve (12) month period which begins thirty (30) days after the entire
Revenue Sharing Route is completed. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, in the event ELI
cannot provide telecommunications services along any material portion
of the Revenue Sharing Route for more than a continuous period of
twelve (12) hours due to a failure of the cable, an event of casualty
or a Force Majeure Event which is not adequately covered by business
interruption insurance, the Performance Criteria for the applicable
year (as shown of Exhibit "D") shall be reduced proportionately based
on a fraction, the numerator of which is the number of days (rounded up
to the nearest one-half day) the Revenue Sharing Route is
non-operational, and the denominator of which is three hundred
sixty-five (365).
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(b) PERFORMANCE AUDITS. FOCAS shall have the right to make
a performance audit within sixty (60) days of the conclusion of each
annual period. If FOCAS determines that ELI has failed to meet the
annual Performance Criteria, FOCAS shall give ELI written notice of
such failure. ELI shall have thirty (30) working days after receipt of
written notice from FOCAS in which to: (1) review the results of
FOCAS's audit; (2) provide any new information or data that might alter
FOCAS's audit conclusions; and (3) consider a resolution of any
differences of opinion concerning the results of the performance audit,
or both.
(c) RIGHTS OF FOCAS AND ELI. If at the end of such thirty
(30) working day period, FOCAS and ELI have not reached an agreement to
resolve any differences of opinion concerning the results of a
performance audit, FOCAS and ELI shall have the rights described below:
(1) ELI, at its option, may cure the Performance
Criteria shortfall by paying FOCAS the Quarterly Payments
that, in the aggregate, would be required if ELI had met the
Performance Criteria for the annual period in question.
(2) If ELI elects not to cure the Performance
Criteria shortfall, or in the event of a default by ELI as
described in Section 15.1(b)(5), this Agreement shall continue
and FOCAS, at its option and without prejudice to its rights
to Quarterly Payments (as provided in this Article IV), may
succeed to ELI's interest in the unused Commercial Fibers over
the entire Revenue Sharing Route, subject to the terms,
covenants and conditions of the Utility Agreements. If FOCAS
elects to succeed to ELI's interest in the unused Commercial
Fibers, ELI shall have the right, subject to the terms of this
Agreement, to continue its use of the Commercial Fibers then
being used by ELI to provide Transport Services and Dark Fiber
Lease Services. In addition, during the balance of the Term,
ELI shall have the right to lease unused dark fiber capacity
in the System from FOCAS on the same terms offered by FOCAS to
other carriers for similar services using comparable capacity
and for a comparable term. Such right to lease unused dark
fiber capacity is not a right of first refusal in favor of
ELI, and FOCAS may lease unused dark fiber capacity to other
telecommunications carriers or users. During any period when
ELI continues to use any portion of the Commercial Fibers (as
provided in this Section 4.7(c)(2)), ELI shall continue to
make the Quarterly Payments required in this Article IV.
(3) In the event FOCAS exercises its right to succeed
to ELI's interest in the unused Commercial Fibers as provided
above, ELI shall cooperate with FOCAS to allow co-location of
other users of the Commercial Fibers in ELI's Regeneration
Facilities, based on the availability of space. FOCAS or such
other users shall pay ELI then existing market rates for
co-location services.
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(4) Notwithstanding any other provision of this
Agreement, the rights and obligations of FOCAS and ELI
described in this Section 4.7(c) shall constitute the sole
remedy of FOCAS for a failure by ELI to satisfy the
Performance Criteria. No such failure in and of itself shall
constitute a breach of this Agreement or entitle FOCAS to
damages for breach of contract.
(d) DISPUTE RESOLUTION. Nothing in this Section 4.7 shall
prevent either FOCAS or ELI from seeking a resolution of any dispute
hereunder pursuant to the provisions of Article XVI of this Agreement.
4.8 SECURITY INTEREST.
(a) CONSENTS. ELI shall promptly determine whether any
consent of a lender or other party is required for ELI to grant to
FOCAS the security interest described in Section 4.8(b). If consent is
required, ELI shall use reasonable efforts to obtain such consent.
(b) GRANT OF SECURITY INTEREST. Subject to the
determination that consent is not required and, if consent is required,
subject to ELI obtaining all such required consents, ELI hereby grants
to FOCAS a security interest in the Gross Revenues and all accounts
arising thereunder, now or hereafter existing, and all proceeds of the
foregoing to the extent of FOCAS's interest in the Gross Revenues (as
described in this Agreement). Such security interest shall become
effective upon ELI's determination that: (1) consent, as provided above
in this Section 4.8 is not required; or (2) all required consents have
been obtained.
(c) FINANCING STATEMENTS. Following the effective date of
the grant of the security interest described in Section 4.8(b), ELI
shall execute and deliver to FOCAS any Uniform Commercial Code
Financing Statements or Continuation Statements necessary to perfect or
continue the perfection of FOCAS's security interest in the Gross
Revenues.
(d) ENFORCEMENT OF SECURITY INTEREST. FOCAS may exercise
its remedies with respect to the security interest granted in Section
4.8(b) only upon the occurrence and continuance of a default by ELI
under Section 15.1(b)(5) of this Agreement.
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ARTICLE V
SYSTEM DESIGN
5.1 FOCAS DESIGN RESPONSIBILITY. Subject to the terms of the applicable
Utility Agreement, in the event of any replacement or relocation of any material
portion of the System following the Performance Commencement Date, FOCAS, at
FOCAS's cost and expense, shall design and engineer the Cable and the Cable
Accessories to follow the portion of the Cable Route for which FOCAS has
responsibility under this Agreement and any modifications to the Towers, the
Substation Sites or the Right of Way necessary to accommodate the Cable, the
Cable Accessories and the Connecting Points. The design shall include only those
modifications to the Towers needed to accommodate installation of the Cable and
the Cable Accessories and shall not include any upgrade by any Utility Company,
unless requested by the Utility Company and paid for separately by the Utility
Company to FOCAS. Any such additional upgrade work shall not materially
interfere with or delay the design or construction of any System Segment. In
addition, the design shall include optical fiber drop-offs at each Regeneration
Facility site including the Connecting Points adjacent to the Regeneration
Facilities. FOCAS shall furnish ELI with copies of any computer models,
analyses, and design specifications developed for modifications to the Towers.
In fulfilling its responsibilities under this Section 5.1, FOCAS shall follow:
(a) the Cable Specifications; (b) the Utility Companies' established procedures
for working in and around the Towers and their electric transmission facilities,
including the applicable safety rules set forth on Exhibit "G" attached to this
Agreement; (c) the Utility Companies' design specifications relating to the Dark
Fibers and associated Connecting Points; (d) the Utility Companies' engineering
standards and specifications for the Towers; (e) ELI's design specifications
relating to the Connecting Points for optical fiber drop-offs adjacent to the
Regeneration Facilities; and (f) FOCAS's customary design and engineering
standards and specifications. FOCAS shall reimburse ELI for any design,
engineering, drawing review, or analysis that ELI performs for the System in the
place of FOCAS under the terms of this Agreement as provided in Section 4.4.
5.2 ELI DESIGN RESPONSIBILITIES. In the event of any replacement or
relocation of the System following the Performance Completion Date, ELI, at
ELI's cost and expense, shall design and engineer the Regeneration Facilities
and all System Electronics. The design shall include the extension of fiber
optic cable from the Regeneration Facilities out to the Connecting Points
adjacent to the Regeneration Facilities. ELI shall reimburse FOCAS for any
design, engineering, drawing review, or analysis that FOCAS performs for the
System in the place of ELI under the terms of this Agreement as provided in
Section 4.4.
5.3 UTILITY COMPANY INFORMATION. To facilitate FOCAS's design and
engineering responsibilities under this Agreement, ELI shall furnish to FOCAS,
to the extent available from the Utility Companies, with reasonable promptness
after request from FOCAS, and upon the condition that FOCAS shall reimburse ELI
for ELI's reasonable cost of obtaining and delivering the same:
(a) Copies of all Utility Company established procedures
for working in and around the Towers and copies of all Utility Company
transmission facilities and design specifications relating to the Dark
Fibers and associated Connecting 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;
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(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 the Utility Companies 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;
(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.
5.4 NOTICE OF ADVERSE CLAIMS. ELI shall promptly notify FOCAS 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.
5.5 WORKING DRAWINGS. When under the terms of this Agreement FOCAS has
completed the design for any System Segment, FOCAS shall either prepare, or
cause any applicable contractor to prepare, and submit to ELI Working Drawings
for the construction of that System Segment. The Working Drawings shall include
plans and specifications for the Cable, the Cable Accessories and the Connecting
Points (including Connecting Points for the Dark Fibers at locations designated
by the applicable Utility Company). Within thirty (30) working days of
submission of the Working Drawings, ELI 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 ELI fails to respond within such thirty (30)
working day period, ELI shall be deemed to have approved the Working Drawings.
Upon receipt of any objections to the Working Drawings, FOCAS shall use its
reasonable efforts to: (i) correct, or cause the applicable 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 ELI 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
FOCAS and ELI (without thereby waiving any rights with respect to the matter in
controversy). Approval by ELI of Working Drawings submitted by FOCAS shall
constitute ELI's approval solely with respect to ELI's telecommunications system
and shall in no way be deemed to constitute an opinion of ELI with respect to
the effect of the telecommunications system on any Utility Company's electric
transmission system.
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5.6 SCHEDULING. ELI and FOCAS shall jointly develop an implementation
plan for the design and construction of any System Segments under the terms of
this Agreement. The implementation plan shall include a master schedule for all
phases of System design, engineering, placement of Regeneration Facilities,
bidding, permitting, clearances, construction, testing and required Approvals.
The implementation plan shall also sequence the work along the Cable Route in an
orderly and efficient manner that complies with the terms and requirements of
the Utility Agreements and set a Scheduled Completion Date for the System
Segment. ELI shall have primary responsibility for planning and scheduling work
associated with the Regeneration Facilities, SONET procurement, System
Electronics procurement and installation, and System turn-up. Subject to the
terms of the applicable Utility Agreement, FOCAS shall have primary planning and
scheduling responsibilities for Cable installation and splicing. The master
schedule shall be managed by ELI's Project Management Group. ELI and FOCAS shall
each designate a project management representative to coordinate efforts under
this Section 5.6. ELI shall make capital investments to provision the Commercial
Fibers with electronics, optronics, buildings, other infrastructure, and fiber
connectivity with local exchange carrier networks and interexchange carrier
networks, at a level sufficient to meet the revenue projections set forth on
Exhibit "D."
5.7 WARRANTY OF WORK. FOCAS and its Qualified Contractors, and their
subcontractors and agents who perform work to design or engineer the System
shall warrant their work in accordance with industry standards and practices and
the terms of this Agreement (including, without limitation, the Cable
Specifications). FOCAS shall, at its own cost and expense, enforce the
provisions of such warranties following completion of the work. The warranty for
the Cable shall be FOCAS's standard manufacturer's warranty which shall be a
minimum of three (3) years of operation. In addition, FOCAS shall warrant that
all design and engineering work performed by or for FOCAS (as provided in this
Article V) is consistent with industry standards and shall conform to reasonable
standards of care, skill and diligence. Such warranty shall extend for a period
of one (1) year following the Service Ready Date for the entire System. FOCAS is
not hereby warranting any design or engineering work for the System performed or
to be performed by a Utility Company. ELI's sole and exclusive remedy for a
breach of the warranty described in this Section 5.7 shall be the repair and
replacement of the warranted item or items or the correction of the warranted
work. FOCAS shall be given a reasonable time, not to exceed thirty (30) days, to
remedy the item or work in need of repair, replacement or correction. In the
event FOCAS fails to complete the repair, replacement or other correction within
such thirty (30) day period, ELI may complete the repair, replacement or other
corrective work and invoice FOCAS for the cost incurred by ELI in performing
such work as provided in Section 4.4.
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5.8 DESIGN PERFORMANCE COMMENCEMENT. The performance obligations of
FOCAS and ELI under this Article V shall commence on the Performance
Commencement Date.
ARTICLE VI
CONSTRUCTION
6.1 SCOPE OF WORK. Subject to the terms of the applicable Utility
Agreement, in the event of any replacement or relocation of any material portion
of the System following the Performance Commencement Date, FOCAS shall be
responsible to provide and to install the Cable, the Cable Accessories, the
Connecting Points, the construction of any modifications to the Towers, the
Substation Sites or the Right of Way necessary to accommodate the Cable, the
Cable Accessories and the Connecting Points over the portion of the Cable Route
for which FOCAS has responsibility under this Agreement. The installation work
undertaken by FOCAS shall be performed by FOCAS or one or more Qualified
Contractors. ELI shall have the right to approve the appointment and
qualifications of each Qualified Contractor, which consent shall not be
unreasonably withheld or delayed. In order to permit FOCAS to perform its
construction responsibilities under this Agreement, FOCAS and the Qualified
Contractors shall have access to the Right of Way, the Towers, the Tower Sites
and the Substation Sites, subject to the notice requirements of Sections 2.11
and 2.12. Modification to the Towers shall be limited to those needed to
accommodate installation of the Cable and the Cable Accessories, and shall not
include any upgrade sought by the Utility Companies for other purposes.
6.2 REGENERATION FACILITIES. In the event of any replacement or
relocation of any material portion of the System following the Performance
Commencement Date, ELI shall be responsible for the construction of all
Regeneration Facilities and the installation of all System Electronics. The
construction and installation work shall be performed by ELI or one or more
Qualified Contractors. FOCAS shall have the right to approve the appointment and
qualifications of each Qualified Contractor, which consent shall not be
unreasonably withheld or delayed.
6.3 WORK STANDARDS. All work to be performed under this Agreement by
ELI, FOCAS and all Qualified Contractors shall be performed in a good,
workmanlike manner and in compliance with the requirements of this Agreement and
applicable 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 the applicable Utility
Company's established safety rules set forth on Exhibit "G" attached to this
Agreement.
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6.4 TIME. Installation of the Cable, the Cable Accessories and the
Connecting Points by FOCAS under the terms of this Agreement, to the extent
practicable and within the reasonable control of FOCAS, shall be carried out by
FOCAS in accordance with the implementation plan and master schedule prepared
pursuant to Section 5.6. The implementation plan and master schedule shall be
updated and revised at regular intervals by FOCAS with the approval of ELI,
which approval shall not be unreasonably withheld or delayed. Such updating and
revision shall include, without limitation, adjustment for delays caused by a
Force Majeure Event. Unless otherwise agreed, extensions of time under such
updates and revisions shall not operate to extend the Scheduled Completion Date
or to amend the terms and requirements regarding the completion of the System
described in Section 6.13.
6.5 PERMITS AND APPROVALS. FOCAS shall use its reasonable efforts to
secure on a timely basis, at FOCAS's expense, all necessary Approvals from
government authorities having jurisdiction or approval rights with respect to
FOCAS's installation of Cable, Cable Accessories and Connecting Points under the
terms of this Agreement. The foregoing provision does not impose any requirement
on FOCAS to obtain the CPUC Approval described in Section 2.5. FOCAS shall
indemnify and save ELI harmless from any and all claims, including the expense
reasonably incurred by ELI to defend itself against such claims, resulting from
or arising out of FOCAS's failure to obtain such Approvals. ELI 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 construction of Regeneration Facilities and the installation of System
Electronics under the terms of this Agreement. ELI shall indemnify and save
FOCAS harmless from any and all claims, including the expense reasonably
incurred by FOCAS to defend itself against such claims, resulting from or
arising out of ELI's failure to obtain such Approvals. FOCAS and ELI shall
cooperate with each other and shall coordinate efforts with the Utility
Companies to cause their respective personnel and contractors to render all
reasonable assistance in the procurement of the Approvals.
6.6 SYSTEM MATERIALS. Subject to the terms of the applicable Utility
Agreements, FOCAS, at its expense, shall provide all System Materials necessary
to install the Cable, including the Cable Accessories and the Cable and other
System Materials required under the terms of this Agreement, up to and including
the Connecting Points. ELI, at its expense, shall provide all System Materials
necessary to construct and install the Regeneration Facilities and the System
Electronics, and other System Materials required under the terms of this
Agreement, up to the Connecting Points. All System Materials shall comply with
the Cable Specifications and shall meet the specifications described in the
Working Drawings.
6.7 INTERFACE BETWEEN FOCAS AND ELI. FOCAS 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 and installation responsibilities, and the portion of the
System for which FOCAS has construction and installation responsibilities.
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6.8 TITLE AND RISK OF LOSS.
(a) CABLE AND CABLE ACCESSORIES. At all times during the
course of construction, up until the time of the issuance of an
Acceptance of Construction with respect to any System Segment, FOCAS
shall retain title to and shall bear the risk of loss or damage with
respect to the Cable and all associated System Materials used by FOCAS
to install the Cable. Upon the issuance of an Acceptance of
Construction with respect to any System Segment, legal title to the
Cable and the Cable Accessories shall pass to the applicable Utility
Company. Notwithstanding such transfer of title to the Utility Company,
after issuance of an Acceptance of Construction, 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 both before and after the issuance of an Acceptance of
Construction.
6.9 SYSTEM WARRANTIES. In procuring and obtaining System Materials
pursuant to Section 6.6, each of FOCAS and ELI shall use reasonable efforts to
obtain from the vendors and suppliers thereof, for the benefit of FOCAS, the
applicable Utility Company 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. FOCAS shall administer for the
benefit of FOCAS, the Utility Companies and ELI the manufacturer's and other
warranties for the Cable and its associated hardware. If requested by ELI, FOCAS
shall assign all such warranties for the Cable and its associated hardware to
ELI or the applicable Utility Company. ELI shall administer the manufacturer's
and other warranties with respect to the System Electronics both before and
after the issuance of an Acceptance of Construction associated with such System
Segment.
6.10 USE OF CONTRACTORS. FOCAS shall have the right, at its cost and
expense, to have any of the design, engineering, construction and installation
work to be provided by FOCAS under the terms of this Agreement performed by one
or more Qualified Contractors; provided that each such Qualified Contractor
retained by FOCAS to install the Cable shall be subject to the prior approval of
ELI and the applicable Utility Company. No such contract or subcontract shall
create a contractual relationship between ELI or the Utility Companies and the
Qualified Contractor, and FOCAS shall be solely responsible for the engagement
and management of the Qualified Contractors.
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6.11 INSPECTION OF CONSTRUCTION.
(a) INSPECTIONS DURING CONSTRUCTION. ELI may perform
routine inspections of any construction over which FOCAS has
responsibility while construction is in progress. A representative of
the applicable Utility Company may be on-site during all construction
work to perform functions such as safety watch, protection of its
electric transmission system, and to obtain clearances.
(b) CABLE TESTING. FOCAS shall test the Cable installed by
FOCAS in accordance with the Acceptance Testing Standards to verify
that the Cable is operating in accordance with the specifications set
forth in Exhibit "A." Testing shall progress segment by segment along
the Cable Route as Cable splicing progresses so that test results may
be reviewed in a timely manner. ELI and each applicable Utility Company
shall have the right, but not the obligation to have a representative
present to observe the testing, and FOCAS shall provide ELI prior
notice of FOCAS's testing schedule. Within five (5) working days of the
conclusion of any such testing, FOCAS shall provide ELI with a copy of
the test results. ELI shall have the right, but not the obligation, at
its sole expense, to conduct its own tests on the Cable to verify that
it is operating in accordance with the Acceptance Testing Standards set
forth on Exhibit "A," and for conformance with the applicable Working
Drawings and other construction requirements of this Agreement. ELI
shall have thirty (30) working days following receipt of FOCAS's test
results to conduct its own Cable inspections and tests.
(c) ACCEPTANCE OF CONSTRUCTION. After such thirty (30)
working day period, ELI shall furnish FOCAS with either: (i) an
Acceptance of Construction with respect to the installation of the
Cable, the Cable Accessories and the Connecting Points along such
Approved System Segment; or (ii) a statement setting forth in
reasonable detail any objections to or defects in such installation.
ELI's failure to furnish a written notification within such fifteen
(15) day working period, shall be deemed to constitute an Acceptance of
Construction for purposes of this Agreement.
(d) STATEMENT OF OBJECTIONS. Upon receipt of any such
statement of objections, FOCAS shall either: (1) correct, or cause the
applicable Qualified Contractor to correct, the objections or defects,
whereupon ELI shall re-inspect the same within fifteen (15) working
days following receipt from FOCAS that the work has been corrected, and
if found corrected, issue an Acceptance of Construction as stated
above; or (2) dispute such statement of objections or defects by
referring the disputed issues for determination to the Chief Engineers
of FOCAS and ELI (without thereby waiving any rights with respect to
the issues in controversy). Notwithstanding the foregoing, acceptance
of the construction and installation work associated with the Cable and
the Cable Accessories for any System Segment by ELI shall constitute
ELI's approval solely with respect to ELI's telecommunications system
and shall in no way be deemed to constitute an opinion of ELI with
respect to the effect of the telecommunications system on any Utility
Company's electric transmission system.
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6.12 AS-BUILT DRAWINGS. Within fifteen (15) working days following the
issuance of an Acceptance of Construction for any System Segment, constructed by
FOCAS, FOCAS, at FOCAS's cost, shall submit, or cause the applicable Qualified
Contractor to submit, to ELI "as-built" drawings of the Cable, the Cable
Accessories and the Connecting Points in paper and electronic file formats
(AutoCadd Version 13). FOCAS shall also provide to ELI, at no cost to ELI, Cable
splicing and splice data records for ELI's fiber database records. Within
fifteen (15) working days following the delivery of the "as-built" drawings, ELI
shall inspect the Cable, the Cable Accessories and the Connecting Points along
such Developed System Segment for conformance with the "as-built" drawings.
Within fifteen (15) working days following such inspection, ELI shall furnish
FOCAS with either: (a) an acceptance of the drawings with respect to the Cable,
the Cable Accessories and the Connecting Points; or (b) a statement setting
forth in reasonable detail any reasonable objections to or defects in the
drawings thereof. Failure of ELI to issue written notification to FOCAS within
such fifteen (15) working day period shall be deemed to constitute acceptance of
such drawings by ELI for purposes of this Agreement. Upon receipt of any such
statement of reasonable objections or defects, FOCAS shall either: (i) promptly
amend, or cause the applicable Qualified Contractor to amend, the "as-built"
drawings, if so requested by ELI; (ii) correct the defects, or cause the
applicable Qualified Contractor to correct the defects, whereupon ELI shall
re-inspect the same within fifteen (15) working days following notice from FOCAS
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 FOCAS and ELI. Notwithstanding the foregoing, ELI'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 ELI's telecommunications
system along such Developed System Segment only and shall in no way be deemed to
represent an opinion of ELI with respect to the effect of the telecommunications
system on any Utility Company's electric transmission system.
6.13 COMPLETION OF SYSTEM CONSTRUCTION. FOCAS shall diligently seek to
complete the installation of all Cable, Cable Accessories and Connecting Points
over which FOCAS has construction responsibility under the terms of this
Agreement by the Scheduled Completion Date. If the Service Ready Date has not
occurred by the ninetieth (90th) day following the Scheduled Completion Date and
Section 14.1 does not apply, ELI, at its option, may notify FOCAS in writing
that ELI or ELI's designee will assume all or part of the project construction
administration, and FOCAS shall work with ELI to transfer to ELI that part of
the construction project administration as may be requested by ELI. If ELI
participates in such construction, FOCAS shall promptly reimburse ELI the direct
and actual costs incurred by ELI in such participation as described in Section
4.4. ELI shall provide reasonable supporting documentation for its costs.
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6.14 WARRANTY OF WORK. Each of FOCAS and ELI shall cause their
respective contractors, subcontractors and agents who perform work to install
the System under the terms of this Agreement (including, without limitation each
Qualified Contractor) to warrant their work in accordance with industry
standards and practices and the terms of this Agreement (including, without
limitation, the Cable Specifications). FOCAS or ELI, as applicable, shall, at
its own cost and expense, enforce the provisions of such warranties following
completion of the work. A copy of FOCAS's manufacturer's warranty for the Cable
is attached to and incorporated by reference in this Agreement as Exhibit "H."
In addition, FOCAS shall warrant that all installation work (as provided in this
Article VI) is consistent with industry standards and shall conform to
reasonable standards of care, skill and diligence. Such warranty shall extend
for a period of one (1) year following the Service Ready Date for the entire
System. ELI's sole and exclusive remedy for a breach of the warranty described
in this Section 6.14 shall be the repair and replacement of the warranted item
or items or the correction of the warranted work. FOCAS is not hereby warranting
any installation work for the System performed or to be performed by a Utility
Company. FOCAS shall be given a reasonable time, not to exceed thirty (30) days,
to remedy the item or work in need of repair, replacement or correction. In the
event FOCAS fails to complete the repair, replacement or other correction within
such thirty (30) day period, ELI may complete the repair, replacement or other
corrective work and invoice FOCAS for the cost incurred by ELI in performing
such work as provided in Section 4.4.
6.15 CONSTRUCTION PERFORMANCE COMMENCEMENT. The performance obligations
of FOCAS and ELI under this Article VI shall commence on the Performance
Commencement Date.
ARTICLE VII
PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE
7.1 AVOIDANCE OF ENCUMBRANCES. FOCAS shall not create or permit any
lien or other encumbrance against the Right of Way, the Towers, the Substation
Sites, the Cable, the Cable Accessories, the Connecting Points, the Regeneration
Facilities, the System Electronics, the Commercial Fibers, any IRU (or
comparable lease or other right), or the Gross Revenues. ELI shall not create or
permit any lien or other encumbrance against the Right of Way, the Towers, the
Substation Sites, or create or permit any lien or other encumbrance not existing
as of the Effective Date affecting ELI's right, title or interest in and to the
Cable, the Cable Accessories, the Connecting Points, the Regeneration
Facilities, the System Electronics, the Commercial Fibers, any IRU (or
comparable lease or other right) or the Gross Revenues. Such covenant by ELI
shall not affect ELI's right to market over the System, or to sell, lease,
assign or swap rights in and to the Commercial Fibers as provided in Section
10.1(b). The foregoing covenant shall not be breached by the creation of
mechanic's, materialman's, or similar liens in the ordinary course of
construction or installation, provided that such liens are satisfied, bonded, or
otherwise provided for in due course by the party hereto which is responsible
for the creation or imposition of such liens.
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7.2 PAYMENT OF AD VALOREM TAXES. ELI or the applicable Utility Company
shall pay any Ad Valorem Taxes assessed against the System during the Term.
FOCAS shall not be required to pay any such Ad Valorem Taxes.
7.3 SALES OR USE TAXES.
(a) FOCAS. FOCAS shall pay or cause to be paid all sales
and use taxes associated with or attributable to FOCAS's provision and
installation of the Cable, the Cable Accessories and the Connecting
Points. FOCAS shall indemnify and hold ELI harmless from and against
all sales and use taxes associated with or attributable to the
provision and installation of the Cable, the Cable Accessories and the
Connecting Points.
(b) ELI. ELI shall pay or cause to be paid all sales and
use taxes associated with or attributable to ELI's provision and
installation of the Regeneration Facilities and the System Electronics.
ELI shall indemnify and hold FOCAS harmless from and against all sales
and use taxes associated with or attributable to the provision and
installation of the Regeneration Facilities and the System Electronics.
7.4 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 FOCAS,
FOCAS 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 or the applicable Utility
Company. FOCAS shall 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 FOCAS, then ELI may pay or
secure the release or discharge thereof at the expense of
FOCAS.
(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 FOCAS. ELI shall indemnify
FOCAS 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 FOCAS
to ELI, then FOCAS may pay or secure the release or discharge
thereof at the expense of ELI.
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(b) CONTEST OF LIENS. Nothing in this Agreement shall
preclude FOCAS or ELI from contesting any lien described in Section
7.4(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 FOCAS nor ELI shall
create or permit a pledge or encumbrance of any of its interests in the
System which in any manner impairs or could impair the use and
operation of the System for internal or commercial telecommunications
purposes.
7.5 DISCONTINUANCE OR RELOCATION. Each Utility Company 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, as provided in the Utility
Agreements, a Utility Company may not take any action to release or relinquish
voluntarily its underlying property interests along the Right of Way, whether by
a Taking or otherwise, without first notifying ELI. In the event of any such
discontinuance or relocation, during or after construction of any System
Segment, ELI shall give written notice to FOCAS as soon as reasonably
practicable. The notice of discontinuance or relocation shall be accompanied by
a plan of any alternative route, if available.
7.6 RELOCATION OF CABLE. In the event the Cable or the Cable Route
requires relocation or replacement, the cost of such relocation or replacement
shall be allocated as provided in the Utility Agreements; provided, however, if
FOCAS requests the relocation, FOCAS shall pay all of ELI's and the applicable
Utility Company's relocation costs. If the relocation is required other than by
ELI, FOCAS or a Utility Company, the relocation costs allocable to and paid by
ELI as provided under the terms of the applicable Utility Agreement shall be
deducted from Gross Revenues for the applicable accounting period when
calculating the Quarterly Payment.
7.7 DESIGN AND INSTALLATION OF RELOCATED FACILITIES. In the event of
the relocation of any portion of the System after the Service Ready Date for the
Affected Portion, FOCAS shall have the same design and installation
responsibilities for the relocated Cable, Cable Accessories and Connecting
Points as described in Articles V and VI. In the event of any such relocation,
FOCAS shall be compensated for such materials and for such design and
installation services in accordance with the cost allocations described in
Section 7.6 in a reasonable amount which is consistent with then prevailing
market rates, terms and conditions.
7.8 UTILITY COMPANY MAINTENANCE RESPONSIBILITIES. Under the terms of
the Utility Agreements, each Utility Company is responsible for the Maintenance
of the Cable, the Cable Accessories, the Connecting Points, the Towers, the
Substation Sites and the Right of Way along its portion of the Cable Route. ELI
is required, under the terms of the Utility Agreements, to reimburse the Utility
Companies for such Maintenance costs. All such Maintenance costs allocable to
and paid by ELI under the terms of the Utility Agreements, net of casualty
insurance and other recoveries by ELI, shall be a deduction from the Gross
Revenues obtained by ELI from the use of the System for the purpose of
calculating the Quarterly Payments.
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7.9 MAINTENANCE OF REGENERATION FACILITIES AND SYSTEM ELECTRONICS. ELI,
at ELI's sole cost, shall be responsible for the Maintenance of the Regeneration
Facilities and the System Electronics.
7.10 RESTORATION PLANS. ELI shall not agree to the terms of the
detailed restoration plan contemplated by each Utility Agreement, without the
prior written consent of FOCAS, which consent shall not be unreasonably withheld
or delayed.
7.11 PERFORMANCE COMMENCEMENT. The performance obligations of FOCAS and
ELI under this Article VII shall commence on the Performance Commencement Date.
ARTICLE VIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ELI. ELI represents
and warrants to FOCAS, and covenants with FOCAS, 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. The execution and performance 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
to the best of ELI's knowledge, 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 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.
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<PAGE>
(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 FOCAS of any material adverse
claims, actual or threatened, affecting any part of the System or ELI's
telecommunications 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. ELI
shall use reasonable efforts, consistent with reasonable commercial
practices, to maximize Gross Revenues generated from the Revenue
Sharing Route.
(g) COMPLIANCE WITH GOVERNMENT REQUIREMENTS. 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.
(j) RELATIONSHIP WITH CONTRACTORS. ELI shall timely
perform all of its duties and obligations to ELI's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete ELI's design, engineering, construction
and installation obligations under this Agreement.
(k) ENFORCEMENT OF UTILITY AGREEMENTS. ELI covenants that
it shall use its best efforts to enforce the provisions of the Utility
Agreements including but not limited to the provisions of Sections 2.6,
9.9 and 9.10(a)(2) of the Utility Agreement with Pacific Gas and
Electric Company dated effective as of December 31, 1997 to the end
that the Utility Company shall pay to ELI, and ELI in turn shall pay to
FOCAS from the funds paid by the Utility Company to ELI net of ELI's
cost of enforcement, FOCAS's costs (based on a rate of $* per
Route Mile) arising from any revocation, relocation, or discontinuance
to the fullest extent of the provisions of such Utility Agreements.
* Confidential information 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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(l) CONSENTS OF UTILITY COMPANIES. ELI shall use its best
efforts to obtain the consent of each Utility Company to the succession
by FOCAS to ELI's interest in the unused Commercial Fibers subject to
the Utility Agreement with such Utility Company (on the terms described
in Section 4.7 of this Agreement) either: (1) in the provisions of the
Utility Agreement; or (2) by a separate acknowledgment from the Utility
Company promptly following the effective date of such Utility
Agreement.
8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF FOCAS. FOCAS
represents and warrants to ELI, and covenants with ELI, as follows:
(a) AUTHORITY. FOCAS is 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. The execution and performance 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
to the best of FOCAS's knowledge, any statute, ordinance, law, order,
ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which FOCAS is subject.
(c) BINDING OBLIGATION. This Agreement, when duly executed
by FOCAS, shall constitute a valid, legal and binding obligation of
FOCAS, 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. FOCAS has or will use reasonable
efforts to procure all necessary government approvals to enter into and
to perform its obligations under this Agreement.
(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 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 FOCAS's knowledge, threatened which
might adversely affect this Agreement, the transactions contemplated by
this Agreement, or FOCAS's rights under, or ability to perform pursuant
to the terms of, this Agreement. FOCAS shall promptly notify ELI of any
material adverse claims, actual or threatened, affecting any portion of
the System.
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(f) CONDUCT OF BUSINESS. In performing its obligations
under this Agreement, FOCAS 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, FOCAS has not violated any rule, order or regulation issued
by any government authority with respect to FOCAS, its business or
operations which may materially and adversely affect FOCAS'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 FOCAS.
(i) RESOURCES AND CAPACITY. FOCAS possesses sufficient
financial, managerial, and technical capacity and resources to perform
its obligations under the terms of this Agreement.
(j) RELATIONSHIP WITH CONTRACTORS. FOCAS shall timely
perform all of its duties and obligations to FOCAS's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete FOCAS's design, engineering, construction
and installation obligations under this Agreement.
8.3 CONFIDENTIALITY. For purposes of this Section 8.3, the term
"Information" shall mean all information furnished by FOCAS 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
FOCAS 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 FOCAS or ELI, as
the case may be, shall mean any and all directors, officers, employees, agents
or representatives, including, without limitation, contractors, subcontractors,
attorneys, accountants, consultants and financial advisors of FOCAS or ELI, as
the case may be. In consideration of being furnished with the Information, FOCAS
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, FOCAS 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.
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(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 17.4. 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 8.3 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.
(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 FOCAS 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 FOCAS and ELI notwithstanding the terms of this Agreement. To the
extent reasonably practical, FOCAS 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.
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(f) NON-WAIVER. The failure or delay by a party in
exercising any rights, power or privilege under this Section 8.3 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
the applicable Utility Company and both FOCAS and ELI, which approval
by FOCAS or ELI shall not be unreasonably withheld or delayed. Excluded
from the foregoing are disclosures required by securities laws and
rules or regulations of securities exchanges applicable to the parties
or their publicly-held Affiliates.
(h) EQUITABLE RELIEF. FOCAS and ELI 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 FOCAS, ELI or their
respective representatives, but shall be in addition to all other
remedies available by law or equity. A breach of the provisions of this
Section 8.3 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 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.
8.4 COOPERATION. FOCAS 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
FOCAS 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;
(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; and
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(d) COORDINATION AND COOPERATION WITH UTILITY COMPANIES.
Coordinate efforts under this Agreement with ELI's obligations under
the Utility Agreements, and to cooperate with the Utility Companies to
design, engineer, construct and install the System in accordance with
the requirements of and pursuant to the terms of the Utility
Agreements, including, without limitation, the Cable Specifications and
each Utility Company's safety rules.
8.5 REGULATORY COMPLIANCE. FOCAS and ELI shall each be responsible to
comply with the regulatory requirements relating to its own business practices
and operations.
8.6 CERTIFICATES. Upon request of either FOCAS 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 FOCAS or by FOCAS 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 X, following its receipt of notice of
the transfer; and (e) as to other matters as the party requesting such
certificate may reasonably request.
8.7 INDEPENDENT STATUS. FOCAS 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 FOCAS 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
FOCAS and ELI.
8.8 TRANSACTIONS WITH AFFILIATES. All transactions with an Affiliate
involving the System entered into by either FOCAS or ELI shall be at
arm's-length, for market prices and shall comply with any applicable regulatory
requirements.
8.9 FURTHER ASSURANCES. FOCAS 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.
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8.10 AUDIT RIGHTS. FOCAS shall have the right to audit ELI's books and
records relating solely to the Quarterly Payments and the satisfaction of the
Performance Criteria, including, without limitation, the Gross Revenues derived
from the operation of the Revenue Sharing Route, and ELI's costs for which ELI,
under the terms of Section 4.4 of this Agreement, seeks reimbursement or
contribution from FOCAS. Any such audit shall be conducted: (a) by a reputable
public accountant or, as applicable, a member of the internal auditing staff of
FOCAS 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.
8.11 INTERFERENCE. Whenever a Utility Company notifies FOCAS or ELI
that the System or any portion thereof materially interferes with the operation
of such Utility Company's equipment or with existing equipment of current
licensees, or constitutes a hazard to the service rendered by the Utility
Company or other licensee, or fails to comply with the codes or regulations
herein before referred to, FOCAS and ELI shall cooperate with each other and use
reasonable efforts to cooperate with and assist the Utility Company to remedy
the interference or hazard. Under no circumstances shall either ELI, FOCAS, or
their respective employees or Qualified Contractors disturb, tamper with or
contact any Utility Company equipment, without the Utility Company's consent.
ELI and FOCAS shall each avoid contact with Utility Company's lines, wires and
transformers, whether or not they appear to be energized.
8.12 INDEPENDENT SYSTEM OPERATOR. ELI shall provide FOCAS with a copy
of the organizational documents, protocols and operating policies of the
Independent System Operator relevant to FOCAS's obligations under this Agreement
and not protected by confidentiality covenants when available to ELI.
8.13 PERFORMANCE IN STEAD. Should either party (the "Non-performing
Party") fail to make any payment or to do any act as provided in this Agreement,
then the other party (the "Other Party"), at the Other Party's option, without
any obligation to do so, and without releasing the Non-performing Party from any
obligation under this Agreement may: (a) make or do the same in such manner and
to such extent the Other Party may deem necessary to protect the Other Party's
rights under this Agreement or any of the Utility Agreements; (b) commence,
appear in and defend any action or proceeding purporting to affect the Other
Party's rights or interests under this Agreement or to the System; (c) pay,
purchase, contest or compromise any encumbrance, charge or lien which, in the
sole judgment of the Other Party, affects or may affect the Other Party's rights
or interests under this Agreement or to the System; and (d) in exercising any
such powers, incur any liability, expend such reasonable amounts as the Other
Party, in its sole discretion, may deem necessary.
8.14 UTILITY AGREEMENTS. No amendments shall be made to any of the
Utility Agreements which affect FOCAS without FOCAS's prior written consent,
which consent shall not be unreasonably withheld or delayed.
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ARTICLE IX
INSURANCE
9.1 REQUIRED INSURANCE COVERAGE. Without limiting any of the
liabilities or other obligations of FOCAS or ELI, both parties shall procure and
cause their respective contractors, including, without limitation, Qualified
Contractors, to procure and maintain in force at their own cost and expense the
following insurance coverages during any period of construction and throughout
the Term, as applicable:
(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.
(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.
9.2 GENERAL CONDITIONS. The following general conditions apply to the
extent FOCAS or ELI do not self-insure:
(a) FOCAS POLICIES. The policies required to be maintained
by FOCAS and its contractors pursuant to Sections 9.1(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 9.1(b), (c) and (d)
shall: (1) include FOCAS as an additional insured; (2) provide that
FOCAS 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 FOCAS.
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9.3 EVIDENCE OF INSURANCE. Prior to commencing work under the terms of
this Agreement, FOCAS, ELI and their respective contractors shall furnish a
certificate of insurance as evidence attesting that the insurance required under
this Article IX 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 FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may inspect original policies or require complete certified copies
at any time. Upon request, each of FOCAS and ELI shall furnish the other with
the same evidence of insurance for its contractors and subcontractors as
required by this Article IX.
9.4 BLANKET POLICIES. Nothing in this Article IX shall be construed to
prevent either FOCAS 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 IX.
9.5 SELF-INSURANCE. Notwithstanding any provision in this Article IX to
the contrary, FOCAS 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 X
ASSIGNMENT AND OTHER TRANSFERS
10.1 TRANSFERS. This Agreement and the rights granted under this
Agreement are being granted in reliance on the financial standing and technical
experience of FOCAS and ELI and are thus granted personally to ELI by FOCAS and
to FOCAS by ELI. Neither FOCAS 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 or delayed.
Notwithstanding the generality of the foregoing:
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(a) Either party may assign its rights in this Agreement
in whole or in part without the consent of the other party to an
Affiliate, provided that such assignment shall not relieve the
assigning party of any of its obligations under this Agreement; and
(b) ELI, without prior notice to or the prior consent of
FOCAS, shall have the right to sell, lease, assign or swap rights in
and to the Commercial Fibers to commercial users of telecommunications
services and to other telecommunications services providers in the
ordinary course of business. 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.
10.2 FINANCING. In the event that ELI or FOCAS, after obtaining the
consent of the other party pursuant to Section 10.1, assigns its interest under
this Agreement pursuant to a sale-leaseback or other financing transaction, the
non-transferring 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 non-transferring party will simultaneously give to such agent
any notices required to be given to the transferring party under this Agreement.
The non-transferring party shall accept payment or performance by the
Transferee's agent of any obligation of the transferring 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 the transferring party within the applicable cure periods allowed by
this Agreement. Subject to the terms of Section 10.1 and this Section 10.2, 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 the non-transferring party, which consent shall not be
unreasonably withheld or delayed.
10.3 RECOGNITION OF TRANSFEREES. ELI and FOCAS shall recognize each
other's authorized Transferees as provided this Article X, so long as all of the
obligations of the transferring party under this Agreement are being performed
and such Transferee agrees to be bound by and to observe and perform the
obligations of the transferring party under this Agreement.
10.4 NO ASSUMPTION OR RELEASE. Except as set forth in Section 10.3, no
assignment under this Article X shall be deemed to be an assumption by the
Transferee of the obligations of the transferring party under this Agreement.
The transferring party 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 non-transferring party.
10.5 MERGERS AND ACQUISITIONS. Notwithstanding any provision of this
Agreement to the contrary, neither FOCAS 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 FOCAS 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 XI
CONDEMNATION
11.1 TAKING. Should any portion of the Towers, the Substation Sites or
the Right of Way owned or controlled by a Utility Company be the subject of a
Taking, the Revocable License or the Irrevocable License, as then applicable,
granted to ELI under the terms of the applicable Utility Agreement, to the
extent appropriated by such Taking, shall terminate. In the event of a Taking,
the Cable Route shall be relocated as provided in Sections 7.5, 7.6 and 7.7.
11.2 NOTICE OF TAKING. ELI shall promptly notify FOCAS of any Taking
threatened or filed against any portion of the Towers, the Substation Sites or
the Right of Way. Under the terms of the Utility Agreements, the applicable
Utility Company, to the extent reasonably available, is required to procure
alternate Right of Way within which the System may be relocated following such
Taking. FOCAS shall cooperate with ELI and the applicable Utility Company to
relocate any portion of the System affected by a taking, whether before or after
the completion of the installation of the Cable.
ARTICLE XII
ENVIRONMENTAL HAZARD LIABILITY
12.1 RESPONSIBILITIES OF FOCAS. If any Hazardous Substance is
unlawfully introduced or released by FOCAS or any of its contractors or
subcontractors which affects any portion of the System, FOCAS shall defend,
indemnify and hold ELI and the applicable Utility Company 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, including,
without limitation, attorney fees and costs. In addition, FOCAS shall also bear
all costs of removing, neutralizing, containing or otherwise remediating any
such Hazardous Substance.
12.2 RESPONSIBILITIES OF ELI. If any Hazardous Substance is unlawfully
introduced or released by ELI or any of its contractors or subcontractors which
affects any portion of the System, ELI shall defend, indemnify and hold FOCAS
and the applicable Utility Company 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, including, without limitation,
attorney fees and costs. In addition, ELI shall also bear all costs of removing,
neutralizing, containing or otherwise remediating any such Hazardous Substance.
12.3 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." The Utility Companies use or may
use chemicals on the Governor's list at many of their facilities and locations.
Accordingly, in exercising its rights and performing the work or services
contemplated by this Agreement, FOCAS and its contractors and subcontractors and
their respective employees and agents may be exposed to chemicals on the
Governor's list. FOCAS shall be responsible for notifying all such persons that
work performed hereunder may result in exposures to chemicals on the Governor's
list.
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ARTICLE XIII
LIABILITY AND INDEMNITY
13.1 FOCAS INDEMNITY. FOCAS shall indemnify, defend and hold harmless
ELI, its parent corporation, officers, agents and employees (the "ELI
Indemnitees") 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 FOCAS
or ELI, and damage or destruction of property, including, but not limited to,
property of FOCAS, any Utility Company or ELI, or other loss or damage incurred
by ELI, arising out of: (a) negligent acts or omissions or willful misconduct of
FOCAS, its agents, officers, directors, employees or contractors; or (b) the
breach by FOCAS of any of its obligations under this Agreement. The obligation
to indemnify shall extend to and encompass all costs incurred by ELI and any ELI
Indemnitee 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. FOCAS's obligations pursuant to this Section 13.1
shall not extend to claims, demands, lawsuits or actions for liability to the
extent attributable to the negligence or willful misconduct of ELI, the ELI
Indemnitees, or their respective contractors, successors or assigns, or to the
acts of third-parties. FOCAS shall pay any cost that may be incurred by ELI or
the ELI Indemnitees in enforcing this indemnity, including reasonable attorney
fees.
13.2 ELI INDEMNITY. ELI shall indemnify, defend and hold harmless
FOCAS, its officers, agents and employees (the "FOCAS Indemnitees") 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 FOCAS or ELI, and damage or
destruction of property, including, but not limited to, property of either FOCAS
or ELI, or other loss or damage incurred by FOCAS, 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 FOCAS and any FOCAS Indemnitee 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 13.2 shall not extend to claims, demands,
lawsuits or actions for liability to the extent attributable to the negligence
or willful misconduct of FOCAS, the FOCAS Indemnitees, or their respective
contractors, successors or assigns, or the acts of third-parties. ELI shall pay
any cost that may be incurred by FOCAS or the FOCAS Indemnitees in enforcing
this indemnity, including reasonable attorney fees.
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13.3 NO CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANY PROVISION IN THIS
AGREEMENT TO THE CONTRARY, NEITHER FOCAS NOR ELI SHALL BE LIABLE TO THE OTHER
FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES, INCLUDING
WITHOUT LIMITATION, LOSS OF USE, LOSS OF PROFITS, 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. The foregoing provision shall not prohibit
FOCAS or ELI from seeking and obtaining general contract damages for a breach of
this Agreement, including, without limitation, the payment or application of any
monetary obligation described in Article IV.
13.4 DEFENSE OF CLAIMS. Either FOCAS or ELI as the indemnifying party
hereunder shall have the right to defend the other by counsel of the
indemnifying party's selection reasonably satisfactory to the indemnified party,
with respect to any claims within the indemnification obligations of this
Article XIII. FOCAS 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.
13.5 THIRD-PARTY CLAIMS. Except as set forth in Sections 10.2, 13.1 and
13.2, 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. FOCAS and ELI
by entering into this Agreement do not hold themselves out as furnishing like or
similar services to any other person or entity.
13.6 SURVIVAL. The obligations of the respective parties under this
Article XIII shall survive the expiration or earlier termination of this
Agreement.
13.7 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: (a) 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 (b) extend to the Affiliates, parent
corporations, directors, officers, employees and agents of both FOCAS and ELI.
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 parent corporation, officer, director, employee, agent or other
individual representative of either FOCAS or ELI shall be personally responsible
for any liability arising under this Agreement.
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13.8 CLAIMS AGAINST THIRD-PARTIES. Nothing contained herein shall
operate as a limitation on the right of either FOCAS 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
Commercial Fibers, the Dark Fibers or the System. FOCAS 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. Each of FOCAS and ELI shall
assign such rights of claims, execute such documents and to whatever else may be
reasonably necessary to enable the other to pursue any such action against such
third-party. The provisions of this Section 13.8, however, shall not permit
either FOCAS or ELI to bring an action for damages against a third-party for
indirect, special or consequential damages if such third-party, directly or
through one or more intermediate parties, pursuant to this Agreement, has a
right of indemnification, impleader, cross claim, contribution, or other right
of recovery against FOCAS or ELI.
13.9 ANTI-INDEMNITY STATUTE. FOCAS and ELI are aware of the provisions
of Section 2782 of the California Civil Code. FOCAS and ELI have negotiated and
agreed to the provisions of this Agreement that address the apportionment of
risk, such as the warranty, insurance and liability provisions of this
Agreement. For adequate consideration both FOCAS and ELI have concluded this
Agreement with the intent that the apportionment of risk in this Agreement be
valid and binding under such code section and the laws of California in general.
ARTICLE XIV
FORCE MAJEURE
14.1 EXCUSE OF PERFORMANCE. Notwithstanding anything in this Agreement
to the contrary, neither FOCAS nor ELI shall be liable or responsible for a
delay or failure in performing or carrying out any of its obligations (other
than its obligations to make payments under Article IV) under this Agreement
caused by a Force Majeure Event (as defined below).
14.2 DEFINITION. The term "Force Majeure Event" as used in this
Agreement shall mean any cause beyond the reasonable control of FOCAS 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, wars, blockades,
embargoes, insurrections, riots or civil disturbances;
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(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 government body
materially and adversely affecting use of the Revenue Sharing Route;
(d) GOVERNMENT OR REGULATORY AGENCIES. Orders or judgments
of any government or regulatory agency materially and adversely
affecting use of the Revenue Sharing Route.
(e) INDEPENDENT SYSTEM OPERATOR. Actions of any
Independent System Operator having operational control over any Utility
Company's electric transmission system which materially and adversely
affects the use of the System;
(f) 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 which make performance hereunder unlawful,
impossible, or economically infeasible or which frustrates the purpose
and intent of this Agreement; or
(g) 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 negligent act or
failure to act of the party claiming the occurrence of a Force Majeure
Event.
14.3 CONTINUANCE AFTER FORCE MAJEURE EVENT. If either FOCAS or ELI
cannot fulfill any of its obligations under this Agreement by reason of a Force
Majeure Event, such party 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 14.3 shall be construed as requiring FOCAS 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.
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ARTICLE XV
DEFAULT AND TERMINATION
15.1 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 XV:
(a) CHANGE OF CONDITIONS. A change of conditions under
which FOCAS, ELI or any portion of the Revenue Sharing Route operates
which is beyond the control of the parties such that the Revenue
Sharing Route, or any material portion thereof, cannot continue to
operate as contemplated by the terms of this Agreement, including,
without limitation:
(1) A change in the financial condition of FOCAS or
ELI that materially and adversely affects the ability of FOCAS
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 ten percent (10%) or
more of the Revenue Sharing Route;
(3) Changes in law or in the regulatory environment
that materially and adversely affect the use of any portion of
the Revenue Sharing Route;
(4) Actions by an Independent System Operator that
materially and adversely affect the use of any portion of the
Revenue Sharing Route;
(5) The occurrence of a Force Majeure Event that
renders FOCAS or ELI unable to perform its material
obligations under this Agreement for a continuous period of
six (6) months;
(6) The inability of a Utility Company or ELI to
obtain any required material Approvals for the use and
occupation of the Right of Way and the Towers by the System;
(7) The inability of a Utility Company or FOCAS to
obtain any required material Approvals for the installation of
the Cable, the Cable Accessories and the Connecting Points; or
(8) The termination of any Utility Agreement other
than due to a default by ELI thereunder.
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(b) DEFAULT. A material default under the terms, covenants
or conditions of the Initial Agreement by FOCAS or ELI, or a material
default under the terms, covenants or conditions of this Agreement by
either FOCAS or ELI, including, without limitation:
(1) The failure of either FOCAS or ELI to make any
payment required under the terms of this Agreement when due;
(2) Either FOCAS 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;
(3) The willful failure by either FOCAS or ELI to
perform its obligations under the terms of this Agreement;
(4) Either FOCAS or ELI, by willful acts or
omissions, places either itself or the Revenue Sharing Route
or any portion thereof in a position or condition which
violates the terms, covenants and conditions of this Agreement
or effectively terminates this Agreement, including, without
limitation, a willful failure to cure a default after having
received written notice thereof from the other party; or
(5) Either FOCAS or ELI becomes insolvent, is
dissolved or liquidated, files or has filed against it a
petition in bankruptcy, reorganization, dissolution or
liquidation or similar action (which in the case of an
involuntary filing against a party is not stayed or dismissed
within ninety (90) days after the filing thereof), or is
adjudicated a bankrupt, or has a receiver appointed for its
assets.
15.2 ACTIONS FOLLOWING OCCURRENCE OF TERMINATION EVENT. Should any
termination event described in Section 15.1 occur, FOCAS 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 15.1(a), FOCAS 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, FOCAS
and ELI may terminate this Agreement, or modify this Agreement to
address and account for the changed condition in a mutually acceptable
manner. If FOCAS 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; provided that nothing herein
shall abrogate, reduce, alter, or adversely affect the right of either
FOCAS or ELI to receive, or their respective obligations to make, the
payments required by Article IV.
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(b) DEFAULT. If the termination event is a default
described in Section 15.1(b), 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 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.
(c) REMEDIES. In the event of an uncured breach or default
described in Section 15.1(b), the nondefaulting party shall have
available to it all legal remedies available at law or in equity for
breach of contract, including, without limitation, general contract
damages.
15.3 NO RELEASE. No termination or expiration of this Agreement or the
rights granted hereunder shall release either FOCAS or ELI, as applicable, from
any liability or obligation (whether for the Quarterly Payment or other payments
described in Article IV, payments of 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 XVI
DISPUTE RESOLUTION
16.1 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 XVI.
16.2 NEGOTIATION AND MEDIATION. FOCAS 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 FOCAS or his or her
designated representative and an executive of similar authority of ELI. Either
FOCAS 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 FOCAS 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
FOCAS and ELI agree to extend the mediation process beyond such deadline. Upon
agreeing on a mediator, FOCAS 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.
- 47 -
<PAGE>
16.3 CONFIDENTIALITY. All negotiations and any mediation conducted
pursuant to Section 16.2 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.
16.4 INJUNCTIVE RELIEF. Notwithstanding the foregoing provisions,
either FOCAS or ELI may seek a preliminary injunction, other provisional
judicial remedy, or other equitable remedies if in its judgment such action is
necessary to avoid irreparable damage or to preserve the status quo.
16.5 CONTINUING OBLIGATION. FOCAS 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.
16.6 FAILURE OF MEDIATION. If FOCAS and ELI, after good faith efforts
to mediate a dispute under the terms of this Agreement (as provided in Section
16.2), 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
17.7.
ARTICLE XVII
MISCELLANEOUS
17.1 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 FOCAS and ELI.
17.2 BINDING EFFECT. This Agreement shall be binding upon FOCAS, ELI
and their respective successors and assigns. This Agreement shall inure to the
benefit of FOCAS, ELI and, to the extent provided in Article X, their respective
successors and assigns.
17.3 WAIVERS. The failure by FOCAS 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 FOCAS or ELI under this Agreement to demand strict
compliance and performance therewith. None of the undertakings, agreements or
covenants of FOCAS 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.
- 48 -
<PAGE>
17.4 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 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 FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
Telephone: (770) 664-4949
Facsimile: (770) 664-4379
With copy to: Cookson America, Inc.
1 Cookson Place
Providence, Rhode Island 02903
Attn: James V. Rosati
Telephone: (401) 521-1000
Facsimile: (401) 521-5273
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: 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.
17.5 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.
17.6 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 FOCAS or ELI, as applicable, and
references to "parties" shall be to both FOCAS and ELI.
- 49 -
<PAGE>
17.7 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.
17.8 COMMISSIONS. FOCAS 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. FOCAS and ELI
shall each pay any fees or compensation due to their respective consultants as
advisors, if any, with respect to this transaction.
17.9 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.
17.10 ATTORNEY FEES. FOCAS 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.
17.11 COSTS. Except as otherwise set forth in this Agreement, FOCAS and
ELI shall each be responsible for its own costs, including legal fees, incurred
in negotiating and finalizing this Agreement.
17.12 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.
17.13 ENTIRE AGREEMENT. This Agreement expresses the entire
understanding of FOCAS 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.
- 50 -
<PAGE>
17.14 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 5.7 (Warranty of Work), Section 6.14 (Warranty of Work), Section
8.3 (Confidentiality), Article XIII (Liability and Indemnity), Section 15.2
(Actions Following Occurrence of Termination Event), and Section 15.3 (No
Release).
17.15 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 FOCAS 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.
FOCAS:
FOCAS, INC., a Delaware corporation
By: /s/ James Rosati
Title: Chairman
ELI:
ELECTRIC LIGHTWAVE, INC., a Delaware corporation
By: /s/ Daryl A. Ferguson
Title: Chief Executive Officer
G:\5093\194\POST0505.AGR
- 51 -
<PAGE>
EXHIBIT "A"
ACCEPTANCE TESTING STANDARDS
----------------------------
FOCAS shall meet or exceed the Acceptance Testing Standards set forth below.
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. FOCAS will endeavor to keep the number of splices in a span to a
minimum.
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 levels of 0.40 dB per Km @ 1310nm and 0.30 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.
o Maximum total span loss must not exceed 35.0 dB at 1550nm for a
100 Km span.
o Maximum dB/Km loss must not exceed 0.30 dB/Km at 1550nm excluding
splices
o In no case shall a fiber show a point discontinuity greater than
0.1dB. Discontinuities (known as steps, 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.
o Span loss will be the sum of cable loss in dB/Km plus System
splice loss in dB. The test results will be submitted to ELI in a
format approved by ELI.
<PAGE>
o Maximum span dispersion = 2250 ps/mn/Km for a 100 Km span. o
Performance levels at the time of acceptance must be maintained
at all times. o 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 Fibers.
In the event the measured span measured values exceeds the calculated values,
FOCAS will perform corrective maintenance as required to restore the Commercial
Fibers to the calculated values.
4.0 Splice Loss:
The splice loss will average 0.10dB @ 1550 nm. All splicing will be performed by
FOCAS. Further, no individual splice will exceed 0.30dB. Splices shall be
measured using bi-directional methods to average absolute splice loss. All fiber
splicing must be fusion type. The test results will be submitted to ELI in a
format approved by ELI.
5.0 Compliance:
ELI, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of the Commercial Fibers. Test data including OTDR
hard copies or electronic data must be submitted to ELI for review. Traces will
be taken on each fiber after all work is completed, bi-directionally, at 1310 nm
and 1550 nm, and submitted on 3 1/2 inch floppy disks. Filenames will be
approved by the Project Engineer prior to traces being submitted. ELI has the
option to waive any specifications and/or requirements listed in the technical
specification criteria.
6.0 Waivers:
FOCAS must provide Cable with attenuation of not greater than 0.30 dB/Km @
1550nm and will not be required to perform corrective maintenance under 0.30dB
to reduce span attenuation.
7.0 Key Optical Performance Characteristics Required for Single-Mode Optical
Cables:
A2
<PAGE>
7.1 Attenuation Single Mode Non-Shifted:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement. o 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:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement.
7.3 Attenuation versus Wavelength Single-Mode and Dispersion Shifted:
o 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):
o For conventional single mode fibers, the zero dispersion
wavelength must be 1300 to 1322.5nm. The maximum dispersion slope
(SoMAX) must be no greater than 0.092ps/(km-nm squared). 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:
o The cutoff wavelength of cabled fiber must be less than 1260 nm.
7.6 Core Diameter:
o The core diameter must be typically 8.30 plus or minus 0.13.
7.7 Temperature:
o Cable operating temperature range -40(degree) C to +85(degree) C.
FOCAS will insure that the Cable and related appurtenances meet all of the above
optical performance characteristics operating systems power level.
A3
<PAGE>
EXHIBIT "B"
CABLE ROUTE
-----------
An approximate description of the Cable Route is set out below:
Utility Company Route Description
PacifiCorp *
PG&E *
Southern California *
* 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"
CABLE 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 (mu)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. The Vapor
Axiel Deposition (VAD) process may also be used.
GENERAL FEATURES AND BENEFITS
o Versatility in 1310 nm and 1550 nm applications.
o Geometrical properties that allow for low splice loss and high splice
yields.
o OVD and VAD manufacturing reliability and product consistency.
o Optimized for use in ribbon, loose tube and other common cable designs.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
OPTICAL SPECIFICATIONS
Attenuation
- ------------------------------------------------
Uncabled Fiber Attenuation Cells Point Discontinuity
- ------------------------------------------------
- ------------------------- ----------------------
Attenuation Cells No point of discontinuity greater than 0.10 dB at either 1310 nm
(dB/km) or 1550 nm.
- ------------------------- ----------------------
- ------------------------- ----------------------
Wavelength (nm) Standard
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1310 0.40 Attenuation at the Water Peak
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1550 0.30 The attenuation at 1383 plus or minus 3 nm shall not exceed 2.1 dB/km.
- ------------------------- ----------------------
- --------------------------------------------------------------
Attenuation vs. Wavelength
- --------------------------------------------------------------
- --------------------- ------------------- --------------------
Range Ref. lambda Max Increase The attenuation in a given wavelength range does
(nm) (nm) alpha (dB/km) not exceed the attenuation of the reference
wavelength (lambda) by more than the value alpha.
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1285-1330 1310 0.1
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1525-1575 1550 0.05
- --------------------- ------------------- --------------------
- -----------------------------------------------------------------------------
Attenuation With Bending
- -----------------------------------------------------------------------------
- -------------------- ----------------- ----------------- --------------------
Mandrel Number of Wavelength Induced The induced attenuation due to
Diameter Turns (nm) Attenuation fiber wrapped around a mandrel
(nm) (dB) of a specified diameter.
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
32 1 1550 0.50
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1310 0.05
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1550 0.10
- -------------------- ----------------- ----------------- --------------------
o Cable Cutoff Wavelength (lambda ccf) o Mode-Field Diameter
(lambda ccf) less than 1260 nm 9.30 plus or minus 0.50 mu m at 1310 nm
10.50 plus or minus 1.00 mu m at 1550 nm
o Dispersion
Zero Dispersion Wavelength (lambda o): 1300 nm Less than or equal to (lambda o) Less than or equal to 1322 nm
Zero Dispersion Slope (So): Less than or equal to 0.092 ps/(nm squared times km)
Fiber Polarization Mode Dispersion Coefficient (PMD): Less than or equal to 0.5 psec divided by square root km
C2
<PAGE>
- --------------------------------------------------------------------------------------------------------------------
Dispersion Calculation
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
The agreement sets forth a detailed calculation of dispersion.
- --------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SPECIFICATIONS
- ------------------------------------------ --------------------------------
Environmental Test Induced Operating Temperature Range
Condition Attenuation -60(degree)C to +85(degree)C
(dB/km)
- ------------------------------------------ --------------------------------
- ------------------------------------------ -------------- -----------------
1310 nm 1550 nm
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature Dependence 0.05 0.05
- -60(degree)to +85(degree)C
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature-Humidity Cycling 0.05 0.05
- -10(degree)C to +85(degree)C, up to 98% RH
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Water Immersion, 23(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Heat Aging, 85(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
DIMENSIONAL SPECIFICATIONS
Standard Length (km/reel): 2.2 - 25.0
Glass Geometry Coating Geometry
Fiber Curl: greater than equal to 2.0 m radius of curvature Coating Diameter: 245 plus or minus 10 mu m
Cladding Diameter: 125.0 + 1.0 mu m Coating-Cladding Concentricity: less than 12 mu m
Core-Clad Concentricity: less than or equal to 0.8 mu m
Cladding Non-Circularity: less than 1.0%
Defined as: 1- (Min. Cladding Diameter divided by Max. Cladding Diameter) x 100
C3
<PAGE>
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 squared)
Cable Selection:
The Cable jacket shall comply with applicable National Electrical Safety Code
(NESC) standards for storm loading.
PERFORMANCE CHARACTERIZATIONS Characterized parameters must be typical values.
Core Diameter: Refractive Index Difference:
8.3 mu m 0.36%
Numerical Aperture: Effective Group Index of Refraction (Neff):
0.13 1.4675 or 1.466 at 1310 nm
NA measured at the one percent power angle of a 1.4681 or 1.467 at 1550 nm
one-dimensional far-field scan at 1310 nm.
Zero Dispersion Wavelength (lambda omicron): Fatigue Resistance Parameter (nd):
1312 nm greater than or equal to 20
Zero Dispersion Slope (S omicron): Coating Strip Force:
0.092 ps divided by (nm2 times km) Dry: greater than 0.3 lbf and less than 2.0 lbf
Wet: 14 days room temperature: 0.7 lbs. (3.2 N)
C4
<PAGE>
EXHIBIT "D"
PERFORMANCE CRITERIA
- --------------------------------------------------------------------------------------------------------------------
($ in thousands)
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Year (Measured from Revenue Forecast Performance Criteria
Completion Date for entire
Revenue Sharing Route)
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 1 (months 1-12) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 2 (months 13-24) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 3 (months 25-36) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 4 (months 37-48) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 5 (months 49-62) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 6 (months 63-72) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 7 (months 73-84) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 8 (months 85-96) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 9 (months 97-108) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 10 (months 109-120) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 11 (months 121-132) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 12 (months 133-144) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 13 (months 145-156) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 14 (months 157-168) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 15 (months 169-180) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 16 (months 181-192) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 17 (months 193-204) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 18 (months 205-216) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 19 (months 217-228) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 20 (months 229-240) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
* 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 "E"
REVENUE SHARING ROUTE
The revenue sharing route originates in the Portland, Oregon area and terminates
in Los Angeles, California, passing through Sacramento and San Francisco,
California.
</TABLE>
<PAGE>
EXHIBIT "F"
UTILITY COMPANY AGREEMENTS
[to be completed]
<PAGE>
EXHIBIT "G"
UTILITY COMPANY SAFETY RULES
[to be completed]
<PAGE>
EXHIBIT "H"
CABLE WARRANTY
FOCAS MANUFACTURER'S
LIMITED WARRANTY
FOCAS warrants that the Cable to be delivered under the foregoing
agreement will be of the kind and quality described in the order or agreement
and will be free of defects in workmanship or material for a period of three
years from the date its installation is completed and accepted by ELI. Should
any failure to conform to this warranty appear within such three year period,
FOCAS will, upon notification thereof and substantiation that the products have
been stored, installed and maintained in accordance with FOCAS's recommendations
and standard industry practice, correct such defects by suitable repair to or
replacement of the product. THIS WARRANTY IS EXCLUSIVE AND IT IS IN LIEU OF ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER
WARRANTY OF QUALITY, WHETHER EXPRESS OR IMPLIED, EXCEPT THE WARRANTY OF TITLE
AND AGAINST PATENT INFRINGEMENT. FOCAS SHALL NOT BE LIABLE UNDER ANY
CIRCUMSTANCES FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES TO ANY PARTY WHATSOEVER.
FOCAS shall have no obligation or liability of any kind and it is further agreed
and understood that the consideration stated for those products described in the
foregoing agreement is consideration for the limitation of FOCAS's liability
hereunder.
EXHIBIT 10.21
QWEST COMMUNICATIONS CORPORATION
PRIVATE LINE SERVICES AGREEMENT
This Private Line Services Agreement, having Agreement No.
PL-0000337-9806-01-01 is entered into as of June 1, 1998 (the
"EFFECTIVE DATE"), by and between Qwest Communications Corporation, a
Delaware corporation ("QWEST"), and Electric Lightwave, Inc., a
Delaware corporation ("ELI" or "CUSTOMER").
1. INCORPORATION OF DOCUMENTS AND CONTROLLING PROVISIONS:
1.1 This Agreement, together with (A) Service Orders (as defined in Section
2.1 of this Agreement) accepted by Qwest pursuant to the terms hereof,
and (B) schedules and exhibits incorporated herein by reference
("EXHIBITS"), shall be referred to collectively herein as this
"AGREEMENT." In the event of any conflict between the provisions of
this Agreement and the terms of any Service Order, the terms of this
Agreement shall control.
1.2 If any provision of this Agreement conflicts with any statute, rule or
order of any governmental unit or regulatory body, or tariff filed by
Qwest, then, if required by law, this Agreement shall remain in effect
but shall be automatically modified by such conflicting law, statute,
rule, order or tariff, subject to the termination rights granted
herein.
2. OBLIGATIONS OF QWEST:
2.1 Qwest shall provide to ELI telecommunications capacity, and related
ancillary services and alternative services as defined in Exhibit A
("SERVICES") available from Qwest as identified in the Service and
Pricing Exhibit attached hereto as "EXHIBIT A", which is incorporated
by this reference (the "SERVICE AND PRICING EXHIBIT"). Services
requested by ELI shall be requested on Qwest's service order forms in
effect from time to time (hereafter, any such order is a "SERVICE
ORDER(S)"). Each Service Order shall reference this Agreement by
Agreement Number and shall become a part of this Agreement when
executed by a duly authorized representative of each party. Qwest
reserves the right to reject any Service Order submitted by ELI that
(i) is incomplete; (ii) does not conform to the terms of this
Agreement; (iii) requests services at an OC-48 level or above; and (iv)
is not within the Qwest Network Build Plan, as such plan may be amended
from time to time and, to the extent applicable, the Interval
Guidelines set forth in Schedule A-2 to EXHIBIT A.
2.2 Upon acceptance by Qwest of a duly executed Service Order during the
Term (as defined in Section 4.3 of this Agreement) of this Agreement,
Qwest shall provide to ELI those Services identified in the Service
Order.
Qwest Communications Corporation
Confidential and Proprietary
1
ELI Initials: /s/ DBS
<PAGE>
3. OBLIGATIONS OF ELI:
3.1 ELI shall perform those duties outlined in the Service and Pricing
Exhibit in addition to those described herein and in any Service
Order(s).
3.2 ELI shall have sole responsibility for installation, testing and
operation of ELI Interconnection Services (as defined in Section 1.4 of
the Service and Pricing Exhibit), and any services and equipment other
than those Services specifically provided by Qwest under this
Agreement. Notwithstanding the foregoing, Qwest shall cooperate with
ELI in joint testing of the Interconnection Services to the extent
necessary to verify an effective interface with the Services provided
by Qwest.
3.3 ELI shall provide to Qwest, on a quarterly basis of June 15, September
15, December 15 and March 15, a rolling, written forecast, which may
change from time to time, listing in detail the Services, including
volumes, that ELI intends to order on a monthly basis for delivery and
installation during the following twelve (12) months of the Initial
Term.
4. TERM:
4.1 This Agreement shall be effective between the parties as of the date
first written hereon. Unless either party terminates this Agreement
earlier pursuant to the terms of this Agreement, the initial term (the
"INITIAL TERM") of this Agreement shall expire on the later of: (A)
nine (9) years and seven (7) months from the Effective Date hereof, or
(B) the expiration of the Minimum Service Term, as defined in Section
5.2 of the Service and Pricing Exhibit.
4.2 Upon the expiration of the Initial Term, if ELI is not then in Default
hereunder, the term of this Agreement shall be renewed automatically on
a month-to-month basis (hereafter, the "RENEWAL TERM") unless and until
an Amendment is executed by both parties extending the Renewal Term, or
either party terminates this Agreement in the manner provided herein.
4.3 The Initial Term and Renewal Term are sometimes referred to together
herein as the "TERM."
4.4 Notwithstanding anything to the contrary in this Section 4, if the
Facility Minimum Service Term (as set forth in Section 4.3 of the
Service and Pricing Exhibit) for the applicable Services extends beyond
the expiration of the Term of this Agreement, then this Agreement shall
continue in effect until the expiration or termination of the
applicable Facility Minimum Service Term, but only as to the Services
so affected, and subject to the termination rights of Qwest and ELI
under Section 8 of this Agreement.
Qwest Communications Corporation
Confidential and Proprietary
2
ELI Initials: /s/ DBS
<PAGE>
5. CHARGES AND PAYMENT:
5.1 Charges for the Services shall be determined according to the Service
and Pricing Exhibit except as is otherwise specifically provided in
this Agreement.
5.2 Qwest shall invoice recurring charges on a monthly basis in advance and
non-recurring charges shall be invoiced in arrears. If the Start of
Service Date (as defined in Section 2.1 of the Service and Pricing
Exhibit) for any Facility falls on other than the first day of any
month, the first invoice to ELI shall consist of: (1) the pro-rata
portion of the applicable monthly charge covering the period from the
Start of Service Date to the first day of the subsequent month, and (2)
the monthly charge for the following month.
5.3 ELI shall make all payments due hereunder within thirty (30) days after
the date of Qwest's invoice. If any amount due under this Agreement is
not received by the due date, in addition to its other remedies
available hereunder, Qwest may impose a late payment charge of the
lower of 1.5% per month or the highest rate legally permissible (such
late charge shall be payable upon demand by Qwest.
5.4 All disputes or requests for billing adjustments must be submitted in
writing and submitted with payment of undisputed amounts due. Any
amounts which are determined to be in error or not in compliance with
this Agreement shall be adjusted on the next month's invoice. Any
disputed amounts which are determined to be correct as billed and in
compliance with this Agreement, shall be due and payable by ELI, upon
notification and demand by Qwest, along with any late payment charges
which Qwest may impose pursuant to Section 5.3 above. Disputes shall
not be cause for ELI to delay payment of the undisputed balance to
Qwest according to the terms outlined in Section 5.3 above.
5.5 Invoices submitted to ELI by Qwest shall conform to a mutually agreed
upon standard billing format and content, as may be modified by the
parties from time to time.
5.6 Except for taxes arising out of Qwest's income, any applicable federal,
state, or local taxes, and all use, sales, commercial, gross receipts,
privilege or other similar taxes, whether charged to or against Qwest
or ELI, with respect to the Services provided by Qwest, as well as any
other imposition by any governmental authority which has the effect of
increasing Qwest's cost of providing the Services, shall be payable by
ELI in addition to the other charges set forth in this Agreement.
6. EVENTS OF DEFAULT:
A "DEFAULT" shall occur if: (A) ELI fails to make any payment required
to be made by it under this Agreement and any such failure remains
uncorrected for fifteen (15) business days after the date such payment
was due; (B) except as expressly set forth in this Agreement, either
party fails to perform or observe any material term or obligation
(other than making payment) contained in this Agreement, and any such
failure remains uncorrected for thirty (30) calendar days after written
notice from the non-defaulting party informing the defaulting party of
such failure.
Qwest Communications Corporation
Confidential and Proprietary
3
ELI Initials: /s/ DBS
<PAGE>
7. REMEDIES FOLLOWING DEFAULT:
7.1 If ELI is in Default, Qwest may, in addition to any other remedies it
has under this Agreement or under the law: (A) suspend its performance
under this Agreement without the requirement of any further notice to
ELI, until ELI has remedied all breaches of this Agreement and paid in
full all charges then due, including any late fees specified herein
plus, at Qwest's option, the prepayment of up to two (2) months
recurring charges, as is specified in Section 5.3 of this Agreement;
(B) condition provision of Services or acceptance of a Service Order on
ELI's assurance of payment and compliance with this Agreement, which
may be in the form of a deposit or such other means as is required by
Qwest to establish assurance of payment and compliance; or (C)
terminate this Agreement by providing written notice to ELI in the
manner provided in Section 8.2 of this Agreement.
7.2 If Qwest is in Default, ELI may, in addition to any other remedies it
has under this Agreement or under the law, terminate this Agreement in
the manner provided for in, and subject to, Section 8.1 of this
Agreement.
8. TERMINATION:
8.1 (A) ELI may terminate this Agreement: (A) effective upon written notice
to Qwest, if Qwest is in Default (as provided in Section 6 and 7.2 of
this Agreement); (B) effective upon thirty (30) calendar days prior
written notice, if any material rate or term contained herein and
relevant to the affected Services is materially changed by order of the
highest court of competent jurisdiction to which the matter is
appealed, the Federal Communications Commission, or other local, state
or federal government authority; or (C) effective upon thirty (30)
calendar days prior written notice, with or without cause, following
the expiration of the Initial Term; or (D) if more than two percent
(2%) of the total installed DS-0 equivalent Services chronically fail
to comply with the Specifications ("chronic" as used herein shall mean
a particular Service that experiences five (5) or more related failures
or more than thirty-six (36) hours of Outages over any thirty (30)
consecutive day period.
Qwest Communications Corporation
Confidential and Proprietary
4
ELI Initials: /s/ DBS
<PAGE>
(B) Subject to the terms of Schedule A-2, Qwest shall meet the
intervals identified in Schedule A-2 attached hereto and in accordance
with the percentage standards as set forth below in this Section
8.1(B). A failure by Qwest to meet such standards shall constitute a
Default pursuant to Section 6 of this Agreement. Notwithstanding
anything set forth herein to the contrary, ELI shall provide notice of
said Default to Qwest and Qwest shall have 14 days from the date of
said notice to provide ELI with a written plan for corrective action
and an additional 45 days to completely cure said Default. In the event
that Qwest fails to cure said Default within the timeframes set forth
in this paragraph; ELI may terminate this Agreement, without penalty,
and pursue all available remedies at law or in equity.
Qwest shall be in Default if it fails to meet any of the of the
following:
100% of the total standard intervals for all orders
submitted in any 2 month period, in calendar days; or
110% of the total standard intervals for all orders
submitted in any 1 month period, in calendar days.
The following are examples meeting or failing to meet the
above referenced performance standard intervals:
Example 1:
Below the actual interval is 81% of the standard, which
results in Qwest meeting the performance criteria and NOT
constituting Default.
<TABLE>
<CAPTION>
<S> <C>
Days Days
----------------------------------------------------------------------------------
Order Type Standard Interval Actual Interval Actual to Standard
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS3 POP to POP 15 9 60%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS3 POP to POP 15 17 113%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS1 LEC to LEC 20 18 90%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS3 Cross Connect 8 4 50%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
OC3 POP to POP 28 22 79%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
86 70 81%
----------------------------------------------------------------------------------
Example 2:
Below the actual interval is 115% of the standard, which
results in Qwest not meeting the performance criteria and
constituting Default.
Qwest Communications Corporation
Confidential and Proprietary
5
ELI Initials: /s/ DBS
<PAGE>
Days Days
----------------------------------------------------------------------------------
Order Type Standard Interval Actual Interval Actual to Standard
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS3 POP to POP 15 17 113%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS3 POP to POP 15 17 113%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS1 LEC to LEC 20 28 140%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
DS3 Cross Connect 8 12 150%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
OC3 POP to POP 28 25 89%
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
86 99 115%
----------------------------------------------------------------------------------
</TABLE>
8.2 Qwest may terminate this Agreement: (A) effective upon written notice
to ELI, if ELI is in Default (as provided in Section 7.1 of this
Agreement); (B) effective upon thirty (30) days prior written notice,
with or without cause, following the expiration of the Initial Term; or
(C) effective immediately and without any advance written notice, if
Qwest does not maintain or loses any required regulatory or other
governmental authorizations to provide the Services, as described in
Section 9.1 of this Agreement; following a Default by ELI under Section
9.2 of this Agreement; or if ELI makes an unauthorized Transfer under
Section 12.1 of this Agreement.
8.3 ELI may terminate the affected portion or portions of a Service Order
or Service Orders: (A) upon ten (10) calendar days prior written notice
following failure of performance, in the manner and subject to Section
10.2 of this Agreement or Section 1.2 of the Service and Pricing
Exhibit; or (B) following thirty (30) calendar days prior written
notice, following an increase in prices by Qwest as to a particular
Service or Services, in the manner and subject to Section 3.2 of the
Service and Pricing Exhibit. Any termination of a Service Order of
Service Orders shall not affect any remaining Service Orders, and shall
not constitute a termination of this Agreement.
9. GOVERNMENTAL AUTHORITY:
9.1 ELI acknowledges that the obligation of Qwest to provide the Services
to ELI is subject to the receipt by Qwest of any required regulatory or
other governmental authorizations. In the event that Qwest files a
tariff with the appropriate regulatory agency that is in any manner
inconsistent with the terms of this Agreement, the terms of this
Agreement shall control. If Qwest chooses to apply tariff terms which
are inconsistent with the terms set forth herein, ELI may terminate
this Agreement without any liability to Qwest, apart from liability for
Services rendered by Qwest in accordance with this Agreement to the
date of termination. Qwest acknowledges that any tariff provision,
which alters ELI's right to terminate this Agreement, is materially
inconsistent with this Agreement.
Qwest Communications Corporation
Confidential and Proprietary
6
ELI Initials: /s/ DBS
<PAGE>
9.2 Each party represents and warrants to the other that: (A) it has
received all necessary permits, licenses, approvals, grants, and
charters of whatsoever kind necessary to carry out the business in
which it is engaged; and (B) it has complied and does comply with all
laws, regulations, orders, and statutes which may be applicable to it,
whether local, State or Federal. From the date of this Agreement until
the termination hereof, the parties agree to operate in accordance with
and to maintain current all such certifications, permits, licenses,
approvals, grants, charters, and to comply with all applicable laws,
regulations, orders and statutes, whether local, State or Federal. A
breach by either party of any of the representations, warranties or
covenants of this Section 9.2 shall be deemed a Default hereunder, and
shall allow the non-breaching party to terminate this Agreement in the
manner described in Section 8.2 of this Agreement.
10. FORCE MAJEURE:
10.1 Except as is provided in Section 10.2 below, Qwest shall not be liable
for any failure of performance hereunder due to causes beyond its
reasonable control, including, but not limited to: acts of God, fire,
explosion, vandalism, storm, extreme temperatures or other similar
catastrophes; or any action of any civil or military authority;
national emergencies, insurrections, riots, wars, or strikes,
lock-outs, work stoppages or other labor difficulties; or any other
conditions or circumstances beyond the reasonable control of Qwest.
10.2 If any failure of performance on the part of Qwest described in Section
10.1 of this Agreement shall be: (A) for thirty (30) calendar days or
less, then this Agreement shall remain in effect, but ELI shall be
relieved of its obligation to pay for that portion of the Services
affected for the period of such failure of performance; or (B) for more
than thirty (30) days within any calendar year, then ELI may terminate
only that portion of any Service Order or Service Orders related to the
Services so affected, by written notice to Qwest, in accordance with
Section 8.3 of this Agreement.
10.3 If the Services are unavailable to ELI as a result of any events
described in Section 10.1, ELI shall be entitled to an Outage Credit
under Section 5 of the Service and Pricing Exhibit.
11. INDEMNIFICATION:
11.1 ELI shall indemnify and hold harmless Qwest (and Qwest's affiliates,
officers, directors and employees; hereafter, "QWEST'S AFFILIATES")
from and against, and shall reimburse Qwest and/or Qwest's Affiliates
for, any and all losses, liabilities, deficiencies, claims and expenses
(including, but not limited to, costs of defense and reasonable
attorneys' fees) incurred by Qwest and/or Qwest's Affiliates and
arising from or in connection with: (A) any breach of any covenant or
agreement of ELI contained in this Agreement; (B) any misrepresentation
or breach of any of the representations and warranties of ELI contained
in this Agreement; or (C) any claims which may be asserted by parties
other than ELI who have use of or access to the Services through ELI.
Qwest Communications Corporation
Confidential and Proprietary
7
ELI Initials: /s/ DBS
<PAGE>
11.2 Qwest shall indemnify and hold harmless ELI (and ELI's affiliates,
officers, directors and employees; hereafter, "ELI'S AFFILIATES"), from
and against, and shall reimburse ELI and/or ELI's Affiliates for, any
and all losses, liabilities, deficiencies, claims and expenses
(including, but not limited to, costs of defense and reasonable
attorneys' fees) incurred by ELI and/or ELI's Affiliates and arising
from or in connection with: (A) any breach of any covenant or agreement
of Qwest contained in this Agreement; (b) any misrepresentation or
breach of any of the representations and warranties of Qwest contained
in this Agreement; or (C) any claims which may be asserted by parties
other than Qwest who have use of or access to the Services through
Qwest.
12. ASSIGNMENT:
Neither party may assign or transfer this Agreement or any rights or
obligations hereunder without the prior written consent of the other
party, which shall not be unreasonably withheld. Notwithstanding the
foregoing, either party may assign or transfer this Agreement without
obtaining the consent of the other and upon prior written notice to any
of its affiliates, parents or subsidiaries, provided, however, that in
the case of ELI such assignee has the financial capacity to pay for the
Services and in the case of Qwest, such assignee has the technical,
financial and management capacity to perform Qwest's obligations which
are at least equal to those of Qwest. An assignment shall be deemed to
include the transfer of voting or management control.
13. TITLE:
Either party expressly disclaims any right, title, perpetual right of
use or any other interest in or to any equipment or property used or
supplied by the other under this Agreement.
14. WARRANTIES AND LIMITATION OF LIABILITY:
14.1 Qwest warrants to ELI that the Services shall be provided to ELI and
shall operate in accordance with the specifications attached as EXHIBIT
A-3 and incorporated herein by reference and with the prevailing
telecommunications industry standards (hereinafter the "TECHNICAL
STANDARDS"). If the Services are not in conformance with Technical
Standards (hereinafter, a "DEFECT" or "DEFECTS"), Qwest shall promptly
conform the Services to the Technical Standards.
Qwest Communications Corporation
Confidential and Proprietary
8
ELI Initials: /s/ DBS
<PAGE>
14.2 THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF
ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING
WITHOUT LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE. QWEST HEREBY SPECIFICALLY DISCLAIMS ANY LIABILITY
TO ELI FOR INTERRUPTIONS AFFECTING THE SERVICES FURNISHED HEREUNDER TO
THE EXTENT THAT THEY ARE ATTRIBUTABLE TO ELI'S INTERCONNECTION SERVICES
(AS DEFINED IN SECTION 1.4 OF THE SERVICE AND PRICING EXHIBIT) OR TO
ELI'S EQUIPMENT FAILURES, OR TO ELI'S BREACH OF THIS AGREEMENT.
14.3 IN NO EVENT SHALL THE CUMULATIVE LIABILITY OF QWEST UNDER THIS
AGREEMENT, INCLUDING ANY OUTAGE CREDITS, EXCEED THE TOTAL PAYMENTS PAID
BY ELI TO QWEST HEREUNDER.
14.4 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOSS OR
USE, INCOME OR PROFITS, OR ANY OTHER SPECIAL OR CONSEQUENTIAL LOSSES.
14.5 Qwest shall use commercially reasonable efforts to ensure and certify
that all vendor software and/or hardware used in connection with the
Services provided hereunder are fully Year 2000 compliant.
15. NON-DISCLOSURE AND PUBLICITY:
Except as required by law, neither party shall disclose to any third
party the terms and conditions of this Agreement without the prior
written consent of the other party. Neither party shall use the other
party's name in publicity or press releases without obtaining the other
party's prior written approval, which shall not be unreasonably
withheld. Confidentiality terms and conditions between the parties are
as per the Confidentiality Agreement, dated June 1, 1998, attached to
this Agreement as Exhibit B.
16. USE OF FACILITIES:
Qwest's obligation to provide the Services specified herein is
conditioned upon ELI not allowing the Services to be used for any
unlawful purpose; or in violation of any governmental regulations or
authorizations as outlined in Section 8 of this Agreement.
17. RESELLER CO-BRANDING EFFORT
Qwest Communications Corporation
Confidential and Proprietary
9
ELI Initials: /s/ DBS
<PAGE>
The parties agree to use reasonable efforts to develop a non-exclusive
co-branding marketing program for products and services. The
co-branding marketing program may include linkage of brands in
marketing communications, product development and leverage of ELI
relationships, as the parties may agree in writing. Subject to the
terms of such co-branding marketing program, Qwest will grant ELI the
right to incorporate the "QwestLinkedTM" logo and brand name into any
sales initiative that may become a part of any such co-branding
marketing programs. The parties agree to contribute marketing funds up
to $150,000 per company to support these activities.
18. MISCELLANEOUS:
18.1 Both parties shall execute such other documents, provide such
information and cooperate with each other, all as may be reasonably
required in connection with providing the Services and Services
hereunder.
18.2 Neither this Agreement, nor the provision of Services hereunder, shall
create a partnership or joint venture between the parties or result in
a joint communications service offering to any third parties.
18.3 The failure of either party to give notice of default or to enforce or
insist upon compliance with any of the terms or conditions of this
Agreement shall not constitute a waiver of any term or condition of
this Agreement.
18.4 In the event suit is brought or an attorney is retained by either party
to enforce the terms of this Agreement or to collect any moneys due
hereunder or to collect money damages for breach hereof, the prevailing
party shall be entitled to recover, in addition to any other remedy,
reimbursement for reasonable attorneys' fees, court costs, costs of
investigation and other related expenses incurred in connection
therewith.
18.5 This Agreement shall be construed under the laws of the State of
Delaware without regard to choice of law principles.
18.6 No subsequent agreement concerning the Services or Services or
modification to this Agreement shall be binding upon the parties unless
it is made in writing by an authorized representative of ELI and an
authorized Representative of Qwest Communications at its headquarters
in Denver, Colorado.
18.7 The parties agree to use reasonable efforts to develop and implement
mutually acceptable operating and support procedures in connection with
the Services provided hereunder.
Qwest Communications Corporation
Confidential and Proprietary
10
ELI Initials: /s/ DBS
<PAGE>
18.8 If any part of any provision of this Agreement shall be invalid or
unenforceable under applicable law, said part shall be ineffective to
the extent of such invalidity only, without in any way affecting the
remaining parts of said provision or the remaining provisions of this
Agreement, and the ELI and Qwest agrees to negotiate with respect to
any such invalid or unenforceable part to the extent necessary to
render such part valid and enforceable.
18.9 The terms and provisions contained in this Agreement that by their
sense and context are intended to survive the performance thereof by
the parties hereto shall survive the completion of performance and
termination of this Agreement, including, without limitation, the
making of any and all payments due hereunder.
18.10 Words having well-known technical or trade meanings shall be so
construed.
18.11 All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be given by: (A) hand
delivery; (B) first-class registered or certified mail with postage
prepaid; (C) overnight receipted courier service; or (D) telephonically
confirmed facsimile transmission, which notice is addressed to the
party at the address set forth below, or such other address as may
hereafter be designated in writing by the party. Notices given in
accordance with this Section shall be effective upon receipt or when
receipt is refused.
All notices to Qwest shall be addressed to:
Qwest Communications Corporation
555 17th Street, Suite 1000
Denver, Colorado 80202
Facsimile: (303) 291-1724Phone: (303) 291-1400
Attn.: Carrier Contracts Admin.
All notices to ELI shall be addressed to:
Electric Lightwave, Inc.
4400 NE 77th Avenue
Vancouver, WA 98662
Facsimile: (360) 816-3822 Phone: (360) 816-3226
Attn.: James Berthot
CC: Legal Department
The addresses set forth may be changed by appropriate notice to the
other party.
Qwest Communications Corporation
Confidential and Proprietary
11
ELI Initials: /s/ DBS
<PAGE>
18.12 This Agreement comprises the complete and exclusive statement of the
agreement of the parties concerning the subject matter hereof, and
supersedes all previous statements, representations, and agreements
concerning the subject matter hereof, including without limitation the
Qwest Private Line Services Agreement No. PL-0000337-9705-01-01, dated
May 21, 1997.
18.13 This instrument may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
DATED as of the first date above written.
ELECTRIC LIGHTWAVE, INC.
By:/s/ David B. Sharkey
Name:David B. Sharkey
Title:President & Chief Operating Officer
Date:6/17/98
QWEST COMMUNICATIONS CORPORATION:
By:/s/ Gregory M. Casey
Name: Gregory M. Casey
Title: Sr. Vice President, Carrier Markets
Date:7/1/98
APPROVED AS TO LEGAL FORM
JUN 18, 1998
/s/ M. Wal
LAW DEPT.
Qwest Communications Corporation
Confidential and Proprietary
12
ELI Initials: /s/ DBS
<PAGE>
EXHIBITS
Exhibit A: Service and Pricing Exhibit to Qwest Private Line Services
Agreement, consisting of seven (7) pages, dated June 1, 1998
as well as the following Schedules attached thereto:
SCHEDULES TO EXHIBIT A:
"A-1" Service POP Ready Report
"A-2" Interval Guidelines
"A-3" Technical Specifications
Exhibit B: Confidentiality Agreement
Exhibit C: Network Map
Qwest Communications Corporation
Confidential and Proprietary
1
ELI Initials: /s/ DBS
<PAGE>
EXHIBIT A
TO
QWEST COMMUNICATIONS
PRIVATE LINE SERVICES AGREEMENT
SERVICE AND PRICING EXHIBIT
This Service and Pricing Exhibit (this "SERVICE AND PRICING EXHIBIT")
is made as of June 1, 1998 with respect to Agreement No.
PL-0000337-9806-01-01 (the "AGREEMENT") by and between Qwest
Communications Corporation, a Delaware corporation ("QWEST"), and
Electric Lightwave, Inc., a Delaware corporation ("ELI").
1. QWEST SERVICES:
1.1 During the Term of the Agreement, Qwest will provide to ELI the
Services requested by ELI in a Service Order accepted by Qwest in
accordance with this Agreement.
1.2 A) Upon acceptance of a Service Order, Qwest shall notify ELI
of its target date for the delivery of each Facility (the
"ESTIMATED AVAILABILITY DATE"). Any Estimated Availability
Date given by Qwest to ELI shall be subject to Qwest's
standard and expedited interval guidelines, as amended by
Qwest from time to time (the "INTERVAL GUIDELINES"). A copy of
Qwest's current Interval Guidelines are attached hereto as
EXHIBIT A-2.
B) Time is of the essence with regard to Qwest making Services
available by each Estimated Availability Date and to the
performance of Qwest's other obligations under this Agreement.
Accordingly, Qwest will make reasonable efforts to fill every
Service Order submitted by ELI to Qwest for Services which, at
the time that the order is placed, are on fully completed
segments of the Qwest owned fiber optic network that offer
full access for ILEC and CLEC connectivity at each end POP on
the requested route. If Qwest fails to deliver any DS-1 or
DS-3 Services within thirty (30) calendar days of receipt and
acceptance (as evidenced by the signature of a duly authorized
representative of Qwest thereon) of such a Service Order, or
if Qwest fails to deliver any OC-n Services within ninety (90)
calendar days of receipt and acceptance (as evidenced by the
signature of a duly authorized representative of Qwest
thereon) of such a Service Order, then ELI may, at its option,
either (1) require Qwest to obtain, on ELI's behalf,
facilities from a third party substantially equivalent to the
Services ordered for the term of the Service Order; or (2)
obtain on its own such substantially equivalent facilities
("ALTERNATIVE SERVICES"), provided, however, that Qwest shall
pay to ELI the difference between the cost of the Alternative
Services and the charges which would have been payable for the
Services ordered under this Agreement. If Qwest provisions
Qwest Communications Corporation
Confidential and Proprietary
1
ELI Initials: /s/ DBS
<PAGE>
Alternative Services, Qwest shall ensure that the Alternative
Services are discontinued at Qwest's expense and replaced with
Services provided by Qwest under this Agreement at such time
as Qwest is able to provide such Services. If Qwest fails to
obtain the Alternative Services, Qwest shall immediately
advise ELI of the period by which Qwest believes that it will
be in a position to provide the Services ("FUTURE AVAILABILITY
DATE"), following which ELI may obtain Alternative Services.
Qwest shall pay to ELI the difference between the costs of the
Alternative Services and the charges which ELI paid or would
have paid had Qwest provided the Services in accordance with
this Agreement, provided that ELI agrees to use reasonable
best efforts to minimize such costs and, to the extent
commercially practicable, to negotiate terms for the provision
of the Alternative Services that will permit Qwest, at Qwest's
expense, to replace the Alternative Services as at the Future
Availability Date with equivalent Services to be delivered by
Qwest.
1.3 At each end of the city pairs (the "CITY PAIRS") on which ELI orders
Services, Qwest shall provide appropriate equipment in its terminal
locations necessary to connect the Services to ELI's Interconnection
Services (as defined in Section 1.4 of this Service and Pricing
Exhibit). If ELI desires to install its own equipment in one or more of
Qwest's terminals, and Qwest, in its sole discretion, agrees to such
installation, the parties shall execute the Collocation Agreement and
such amounts paid by ELI to Qwest shall be a credit against the
Quarterly Commitment and Revenue Commitment.
1.4 ELI agrees that ELI's Interconnection Services shall connect to the
Services provided by Qwest hereunder at the network interface points
located in the Qwest terminals and defined in the Specifications (as
defined in Section 2.1 of this Service and Pricing Exhibit). As used
herein, the term "ELI INTERCONNECTION SERVICES" shall mean transmission
capacity provided by ELI or its third party supplier to extend the
Services provided by Qwest from a Qwest terminal to any other location
(e.g., a local access telephone service provided by a local telephone
company).
1.5 At ELI's option, for DS-3 Services and below, Qwest shall order
Interconnection Services on behalf of ELI from ELI's designated
supplier, provided that ELI furnishes Qwest with an acceptable letter
of agency. ELI shall be billed directly by the supplier of such
Interconnection Services, and ELI may, at its election, order its own
Interconnection Services. If orders such Interconnection Services, then
unavailability, incompatibility, delay in installation, or other
impairment of Interconnection Services shall not excuse ELI's
obligation to pay Qwest all Rates or charges applicable to the
Services, whether or not such Services are useable by ELI. Qwest will
not order Interconnection Services on behalf of ELI for OC-n Services.
Qwest Communications Corporation
Confidential and Proprietary
2
ELI Initials: /s/ DBS
<PAGE>
2. START OF SERVICES:
2.1 Start of service for each Facility (the "START OF SERVICE DATE") shall
begin on the date on which ELI accepts delivery of such Facility. If
ELI fails to give written notice that the Facility is in material
non-compliance with the applicable industry standard and Qwest network
specifications, as modified from time to time (the "SPECIFICATIONS")
within thirty (30) business days after notification to ELI by Qwest
that the Facility is available, ELI shall be deemed to have accepted
such Facility, and the Start of Service Date shall commence as of the
20th day following such notification by Qwest. Following notice by ELI
of material non-compliance as set forth above, Qwest shall promptly
take such action as is necessary to correct any such non-compliance in
the Facility and shall, upon correction, notify ELI of a new Start of
Service Date.
2.2 Notwithstanding anything in Section 2.1 of this Service and Pricing
Exhibit to the contrary, ELI may delay the Start of Service Date for
any Facility for up to thirty (30) days from Qwest's Estimated
Availability Date by written notice to Qwest at least three business
days prior to any applicable Estimated Availability Date.
3. RATES:
Qwest shall provide the Services at the rates (the "RATES") set forth
in this Section 3 (exclusive of all sales, use, commercial or other
taxes). The Rates for each Service shall also include certain Monthly
Recurring and Non-Recurring charges, all as defined in this Section 3.
The Rates and charges are as follows:
(a) DS-1 SERVICES RATES FOR INTER-EXCHANGE CARRIER ("IXC") MILEAGE:
(i) BASE IXC RATES:
$* per DS-0 V&H Mile
(ii) DS-1 NON-RECURRING CHARGES: $* installation
charge per DS-1.
(b) DS-3 SERVICES RATES FOR IXC:
(i) BASE IXC RATES:
$* per DS-0 V&H Mile
(ii) DS-3 NON-RECURRING CHARGES:
$* installation charge per DS-3 for all
services and equipment.
(c) OC SERVICES RATES FOR IXC:
(i) BASE IXC RATES:
Qwest Communications Corporation
Confidential and Proprietary
3
ELI Initials: /s/ DBS
* 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>
$* per DS-0 V&H Mile
(ii) OC NON-RECURRING CHARGES:
Installation charge per OC for all services and
equipment:
SERVICE MINIMUM NRC
OC-3 $*
OC-12 $*
OC-48 $*
(d) OTHER CHARGES:
In addition to the foregoing Services Rates for DS-1, DS-3 and
OC Services for IXC, ELI shall pay to Qwest the following
additional charges, as applicable, including any and all
recurring charges imposed on Qwest for the handling of calls
under this agreement :
<TABLE>
<CAPTION>
<S> <C>
(i) OTHER MONTHLY RECURRING CHARGES:
~ Channel Bank: each $* per month
~ DS-1 cross-connect charges: each $* per month plus
any pass-through charges.
~ DS-3 cross-connect charges: each $* per month
~ Cross-connect charges: to another CAPS provider
$* each per month.
~ LTR charges: monthly charges incurred by
LECs will be passed through
to ELI to be paid by ELI.
(ii) OTHER NON-RECURRING CHARGES:
~ Expedited Order Charges: Waived
~ DACs rearrangements: each $* per DS-1
~ Channel Bank: each $* per installation
~ DS-1 cross-connect charges: each $* per installation
plus any pass-through charges.
~ Change of order cross-connect charges: $* per DS-3, $*
per DS-1
~ Pre-engineering cancellation cross-connect: $* per DS-3, $*
per DS-1
~ Post-engineering cancellation of cross-connect: $* per DS-3, $*
per DS-1
</TABLE>
Qwest Communications Corporation
Confidential and Proprietary
4
ELI Initials: /s/ DBS
* 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>
<TABLE>
<S> <C> <C> <C>
TABLE A-1
TAKE-OR-PAY COMMITMENT
- --------------------------------------------------------------------------------------------------------------
EFFECTIVE DATE QUARTERLY COMMITMENT NUMBER OF QUARTERS TOTAL
06/01/98 to 09/30/98 1,000,000.00 (4 months) 1,000,000.00
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
10/01/98 to 12/31/98 750,000.00 1 750,000.00
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
01/01/99 to 03/31/99 1,800,000.00 1 1,800,000.00
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
04/01/99 to 06/30/99 3,000,000.00 1 3,000,000.00
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
07/01/99 to 12/31/07 3,395,588.24 34 115,450,000.16
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
37 quarters, 3 122,000,000.16
months
- --------------------------------------------------------------------------------------------------------------
</TABLE>
4. REVENUE COMMITMENT:
4.1 The total cumulative ELI revenue commitment over the Term of this
Agreement shall be $122,000,000.16 on a take or pay basis ("Revenue
Commitment"). Further ELI and Qwest have agreed that ELI shall commit
to an average quarterly billing in those cumulative amounts as set
forth above in Table A-1 ("Quarterly Revenue Commitment"). ELI's
cumulative quarterly bill is subject to review by Qwest commencing with
the four month period beginning on June 1, 1998. In any such quarterly
period during the Term that ELI does not maintain a cumulative
Quarterly Commitment amount then ELI will pay to Qwest the difference
between ELI's Quarterly Commitment and the actual cumulative amounts
billed ("Quarterly Deficiency Charge"). The Quarterly Deficiency
Charge, if any, will be assessed and due at the same time payment is
due for Services and Services provided to ELI in the next billing
month. For purposes of calculating Quarterly Revenue Commitments and
the Revenue Commitment, those Rates billed shall constitute revenues as
of the invoice date. Furthermore, a Deficiency Charge does not apply to
ELI in the event that Qwest does not bill in accordance with the terms
set forth herein. Those revenues which are billed and are in excess of
any Quarterly Revenue Commitment shall constitute a credit to the
extent of such excess for any quarter which is designated by ELI for
purposes of calculating the Quarterly Revenue Commitment.
4.2 For purposes of calculating the Revenue Commitment and the Quarterly
Commitment, Qwest and ELI agree that the following billed amounts
constitute a contribution to said commitments:
(a) Services and Services billed hereunder;
Qwest Communications Corporation
Confidential and Proprietary
5
ELI Initials: /s/ DBS
<PAGE>
(b) Alternative Services obtained by either ELI or Qwest;
(c) Services and Services ordered by ELI and not delivered by
Qwest in accordance with the Specifications and terms and
conditions herein;
(d) Services ordered by ELI and provided by Qwest but said
Services fail to comply with the Specifications herein during
the Term;
(e) Deficiency Charges paid by ELI hereunder;
(f) other services and facilities under contract prior to the
execution of this Agreement; and
(g) other services and facilities which are provided under
separate contract executed during the Term.
4.3 All Services and Services under contract with Qwest and ELI prior to
the execution of this Agreement will be re-priced according to the
Rates specified herein beginning on June 1, 1998.
4.4 Notwithstanding the foregoing, if ELI meets or exceeds the Revenue
Commitment on or before the end of the Initial Term, the Quarterly
Commitment will no longer apply and Qwest will have no rights to assess
ELI any Deficiencies Charges.
4.5 Upon receipt of written notice of such election, ELI may terminate the
portion of the Service Order or Service Orders which pertain to such
Facility or Services by delivering written notice of termination to
Qwest within twenty (20) days of the date of the written notice of
increase. If written notice of termination from ELI is not received
within such twenty (20) day period, ELI will be deemed to have
consented to the increase.
4.6 Qwest represents and warrants that the rates and charges as set forth
in this Exhibit A are as favorable or better than the rates and charges
between Qwest and a Similarly Situated Customer. For purposes of this
section, a "SIMILARLY SITUATED CUSTOMER" is any customer of Qwest which
has executed a contract for Services in comparable volumes and with a
Term at least equal to that contained in this Agreement and a Revenue
Commitment and/or Quarterly Commitment that is comparable to that
contained in this Agreement. If Qwest provides services to any
Similarly Situated Customer at rates and charges less than the rates
and charges applicable to ELI as set forth in this Agreement, Qwest
shall notify ELI promptly of the reduced pricing and shall immediately
offer to ELI the reduced rate as of the date and in the amount offered
to a Similarly Situated Customer.
FACILITY MINIMUM SERVICE TERM:
5.1 ELI acknowledges that the Rates and charges described in Section 3 of
this Service and Pricing Exhibit are based on the commitment of ELI to
utilize the Services for a specified minimum period of time. Therefore,
notwithstanding anything in this Agreement to the contrary, ELI shall
be liable for and shall pay to Qwest all Rates, fees and charges which
accrue under this Agreement for each Facility for the entire Facility
Minimum Service Term (as defined in Section 4.2 of this Service and
Pricing Exhibit) applicable to each such Facility, regardless of
whether or not ELI utilizes all or any part of such Facility during all
or any part of the Facility Minimum Service Term applicable to such
Facility, except as is set forth in Section 4.3 of this Service and
Pricing Exhibit.
Qwest Communications Corporation
Confidential and Proprietary
6
ELI Initials: /s/ DBS
<PAGE>
5.2 The "FACILITY MINIMUM SERVICE TERM" for each Facility, is defined as
follows:
(a) Twelve (12) months from Start of Service Date for DS-1 Services.
(b) Twelve (12) months from Start of Service Date for DS-3 Services.
(c) Twelve (12) months from Start of Service Date for OC-3 and OC-12
Services.
(d) Twenty-four (24) months from Start of Service Date for OC-48 and
Services.
5.3 Notwithstanding anything in this Agreement to the contrary, ELI's
obligation to pay all Rates, fees and charges which accrue under this
Agreement for each Facility for the entire Facility Minimum Service
Term applicable to each such Facility shall terminate, as each such
Facility, if this Agreement is terminated during the Minimum Service
Term which pertains to each such Facility: (A) by ELI, pursuant to
Sections 8.1(a) or (b) of the Agreement, following a Default by Qwest
or an increase in prices; or (B) by Qwest, pursuant to Section 8.2(b)
of the Agreement, if termination by Qwest during the Minimum Service
Term as to the Facility occurs other than because of a Default by ELI,
or 8.2(c) of the Agreement, if Qwest terminates this Agreement because
Qwest loses any required permits. UPON TERMINATION OF THIS AGREEMENT
FOR ANY OTHER REASON, THE TOTAL OF ALL CHARGES REFERRED TO IN THIS
SECTION 4 SHALL BE AT ONCE DUE AND PAYABLE, REGARDLESS OF WHETHER OR
NOT ALL OF THE SERVICES MINIMUM SERVICE TERMS HAVE EXPIRED, AND MAY BE
COLLECTED BY QWEST FROM ELI AS A SINGLE AMOUNT.
5.4 Qwest shall provide SONET ring back-up protection for any City-Pair on
the Network Map attached as EXHIBIT C for which there is more than one
route connecting the two (2) cities in that City-Pair. Qwest shall
provide such back-up protection for each ring by the last City
Availability Date for the cities in that ring. Using this back-up
protection, in the event of an Outage on a Facility, Qwest shall, at no
additional cost and without interruption, continue to provide service
between the end points for that Facility by using an alternate route
between the same end points.
Qwest Communications Corporation
Confidential and Proprietary
7
ELI Initials: /s/ DBS
<PAGE>
6. OUTAGE CREDITS:
6.1 ELI acknowledges the possibility of an unscheduled, continuous and/or
interrupted period of time when a Facility or Services are
"UNAVAILABLE" (as defined in the Specifications) (hereafter an
"OUTAGE"). In the event of an Outage, ELI shall be entitled to a credit
(the "OUTAGE CREDIT") determined according to the following formula:
OUTAGE CREDIT = HOURS OF OUTAGE DIVIDED BY 720 HOURS TIMES TOTAL
MONTHLY CHARGE OF AFFECTED FACILITY 720 HOURS
6.2 The Outage Credit shall apply to the charges for the total mileage
between end terminals of any Facility affected by an Outage; provided,
however, that if any portion of the affected Facility remains
beneficially used or useable by ELI between any intermediate terminals
(where ELI has installed drop and insert capability) or end terminals,
the Outage Credit shall not apply to that pro-rata portion of the
mileage. The length of each Outage shall be calculated in hours and
shall include fractional portions thereof. An Outage shall be deemed to
have commenced upon verifiable notification thereof by ELI to Qwest,
or, when indicated by network control information actually known to
Qwest network personnel, whichever is earlier. Each Outage shall be
deemed to terminate upon restoration of the affected Facility as
evidenced by appropriate network tests by Qwest. Qwest shall give
notice to ELI of any scheduled outage as early as is practicable, and a
scheduled outage shall under no circumstance be viewed as an Outage
hereunder.
6.3 Outage Credits shall not be granted if the malfunction of any
end-to-end circuit is due to an Outage or other Defect occurring in
ELI's Interconnection Services.
6.4 All Outage Credits shall be credited on the next monthly invoice for
the affected Facility after receipt of ELI's request for credit. The
total of all Outage Credits applicable to or accruing in any given
month shall not exceed the amount payable by ELI to Qwest for that same
month for such Facility.
Qwest Communications Corporation
Confidential and Proprietary
8
ELI Initials: /s/ DBS
<PAGE>
DATED AS OF the first date above-written.
ELECTRIC LIGHTWAVE, INC.:
By:/s/ David B. Sharkey
Name:David B. Sharkey
Title:President & Chief Operating Officer
Date:6/17/98
QWEST COMMUNICATIONS CORPORATION:
By:/s/ Gregory M. Casey
Name: Gregory M. Casey
Title: Sr. Vice President, Carrier Markets
Date:7/1/98
APPROVED AS TO LEGAL FORM
JUN 18 1998
s/s M. WAL
LAW DEPT.
Qwest Communications Corporation
Confidential and Proprietary
9
ELI Initials: /s/ DBS
<PAGE>
SCHEDULE A-1 TO EXHIBIT A
QWEST COMMUNICATIONS
SERVICE READY POP REPORT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT ON: 6/4/98
-----------------------------------------------------------------------------------------------------------------------------
SEG# POP CITY POP ADDRESS LATA ROUTE CONST. QWEST 1ST ACCESS FULL
QWEST AVAIL. FOR SERVICE FOR
MILES DELIVERY SEGMENT LIT POP TYPE QWEST QWEST
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
01A CHICAGO - DETROIT 6/30/98 8/21/98
305
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chicago IL 20 North Wacker, Ste. 656 358 TI-JCT 7/22/98 7/22/98
&614, Chicago, IL
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
South Bend IN 430 S. Arnold St., South 332 ROW 8/24/98 9/24/98
Bend, IN 46619
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Battle Creek MI 133 Angell Street, Battle 348 ROW 9/24/98 9/24/98
Creek, MI 49017
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Detroit MI 5664 Commercial St., 340 ROW 9/24/98 10/24/98
Detroit, MI 48209
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
01B DETROIT - CLEVELAND 7/22/98 8/21/98
165
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Detroit MI 5664 Commercial St., 340 ROW 9/24/98 10/24/98
Detroit, MI 48209
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Toledo OH 735 Emerald Ave., Toledo, 326 ROW 9/2/98 9/16/98
OH 43609
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Cleveland OH 1501 Euclid Ave., Suite 320 TI-JCT Complete 8/15/98
400, Cleveland, OH 44115
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
01C CLEVELAND - PITTSBURGH 7/15/98 8/21/98
162
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Cleveland OH 1501 Euclid Ave., Suite 320 TI-JCT Complete 8/15/98
400, Cleveland, OH 44115
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Akron OH 844 East Wood Ave., 325 ROW 8/26/98 9/9/98
Akron, OH
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Youngstown OH 633 Wilson, Ave., 322 ROW 8/26/98 8/26/98
Youngstown, OH 44503
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Pittsburgh PA 733 Gross St., Pittsburg, 234 ROW 8/26/98 9/9/98
PA
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
01D PITTSBURGH - PHILADELPHIA 7/20/98 8/21/98
356
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Pittsburgh PA 733 Gross St., Pittsburg, 234 ROW 8/26/98 9/9/98
PA
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Altoona PA Intersection of Union ROW 8/26/98 9/9/98
Ave. & 24th
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Harrisburg PA 1979 N. Seventh St., 226 ROW 8/26/98 9/9/98
Harrisburg, PA 17103
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Philadelphia PA 38th & Wyalusing 228 ROW-JCT 7/29/98 8/15/98
Streets,
Philadelphia, PA 19104
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
01E PHILADELPHIA - WASHINGTON DC 6/30/98 7/24/98
138
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Philadelphia PA 38th & Wyalusing 228 ROW-JCT 7/29/98 8/15/98
Streets,
Philadelphia, PA 19104
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Wilmington DE Governor Printz Blvd., 228 ROW 7/29/98 7/29/98
and Edgemoor Rd.,
Wilmington, DE 19802
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Baltimore MD Lanvale and St. Paul 238 ROW 7/29/98 7/29/98
Streets, Balitimore,
MD 21201
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Washington DC 60 Massachusetts Ave., 236 ROW 7/29/98 7/29/98
NE, Washington, DC
20002
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
02A CLEVELAND - COLUMBUS COMPLETE COMPLETE
133
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Cleveland OH 1501 Euclid Ave., Suite 320 TI-JCT Complete 8/15/98
400, Cleveland, OH 44115
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Columbus OH 376 W. Broad St., 324 ROW 8/8/98 9/8/98
Columbus, OH 43215
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
02B COLUMBUS - CINCINNATI COMPLETE COMPLETE
125
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Columbus OH 376 W. Broad St., 324 ROW 8/8/98 9/8/98
Columbus, OH 43215
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Dayton OH 512 Miami Blvd East, 328 ROW Complete 6/20/98
Dayton, OH 45402
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Cincinnati OH 607 Evans St., 922 ROW-JCT Complete 8/15/98
Cincinnati, OH 45203
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
3 INDIANAPOLIS - LOUISVILLE 6/15/98 8/22/98
110
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Indianapolis IN 550 Kentucky Ave., Ste 2, 336 TI-JCT Complete Complete
Indianapolis, IN 46225
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Louisville KY 462 ROW 12/1/98 12/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
4 INDIANAPOLIS - CHICAGO 6/30/98 7/22/98
215
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Indianapolis IN 550 Kentucky Ave., Ste 2, 336 TI-JCT Complete Complete
Indianapolis, IN 46225
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chicago IL 20 North Wacker, Ste. 656 358 TI-JCT 7/22/98 7/22/98
&614, Chicago, IL
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
5 INDIANAPOLIS - ST. LOUIS COMPLETE COMPLETE
248
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Indianapolis IN 550 Kentucky Ave., Ste 2, 336 TI-JCT Complete Complete
Indianapolis, IN 46225
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
St. Louis MO 20 Ferry St., St. Louis, 520 ROW Complete 6/15/98
MO 63147
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
6 ST. LOUIS - KANSAS COMPLETE COMPLETE
CITY 297
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
St. Louis MO 20 Ferry St., St. Louis, 520 ROW Complete 6/15/98
MO 63147
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Kansas City MO 1301 W. 25th St. Kansas 524 ROW-JCT Complete Complete
City, MO 64108
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
7 KANSAS CITY - TOPEKA COMPLETE COMPLETE
75
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Kansas City MO 1301 W. 25th St. Kansas 524 ROW-JCT Complete Complete
City, MO 64108
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Topeka KS 301 Northwest Tyler 534 ROW Complete Complete
Ave,Topeka, KS 66603
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
8 DENVER - TOPEKA COMPLETE COMPLETE
565
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Denver CO 910 15th St., Suite 200, 656 TI-JCT Complete Complete
Denver, CO 80202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Topeka KS 301 Northwest Tyler 534 ROW Complete Complete
Ave,Topeka, KS 66603
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
09A DENVER - GRAND JUNCTION COMPLETE COMPLETE
271
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Denver CO 910 15th St., Suite 200, 656 TI-JCT Complete Complete
Denver, CO 80202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Grand Junction CO 2805 HWY 6 - 24/ Unit B, 656 ROW Complete Complete
Grand Junction, CO 81501
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
09B GRAND JUNCTION - SALT LAKE CITY COMPLETE COMPLETE
295
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Grand Junction CO 2805 HWY 6 - 24/ Unit B, 656 ROW Complete Complete
Grand Junction, CO 81501
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Provo UT 978 West 400 South, 660 ROW Complete Complete
Provo, UT 84601
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Salt Lake City UT 136 East South Temple, 660 TI-POP Complete Complete
Ste 1560, SLC, UT nozip
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
10A SALT LAKE CITY - RENO COMPLETE COMPLETE
575
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Salt Lake City UT 136 East South Temple, 660 TI-POP Complete Complete
Ste 1560, SLC, UT nozip
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Reno NV 200 South Virginia, Ste. 720 TI-POP Complete Complete
630 Reno, NV 89505
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
10B RENO - ROSEVILLE/SACRAMENTO COMPLETE COMPLETE
136
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Reno NV 200 South Virginia, Ste. 720 TI-POP Complete Complete
630 Reno, NV 89505
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Roseville CA MP 106.81 726 ROW-JCT Complete Complete
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Sacramento CA One City Centre, 770 L 726 TI-JCT Complete Complete
St. #600, Sacramento, CA
95814
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
11A ROSEVILLE/SACRAMENTO - OAKLAND COMPLETE COMPLETE
111
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Roseville CA MP 106.81 726 ROW-JCT Complete Complete
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Sacramento CA One City Centre, 770 L 726 TI-JCT Complete Complete
St. #600, Sacramento, CA
95814
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Oakland CA 260 - 5th Avenue, 722 ROW Complete Complete
Oakland, CA 94601
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
11B OAKLAND - SAN JOSE COMPLETE COMPLETE
43
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Oakland CA 260 - 5th Avenue, 722 ROW Complete Complete
Oakland, CA 94601
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Jose CA 55 Almaden Blvd., 3rd 722 TI-POP Complete Complete
Floor, San Jose, CA 95113
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
12A SAN JOSE - SALINAS COMPLETE COMPLETE
71
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Jose CA 55 Almaden Blvd., 3rd 722 TI-POP Complete Complete
Floor, San Jose, CA 95113
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Salinas-915C&D CA 915-C&D Harkins Rd. 736 TI-POP Complete Complete
Salinas, CA 93901
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
12B SALINAS - SAN LUIS OBISPO COMPLETE COMPLETE
132
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Salinas-915C&D CA 915-C&D Harkins Rd. 736 TI-POP Complete Complete
Salinas, CA 93901
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Luis Obispo CA 2482 Victoria Avenue, San 740 ROW Complete Complete
Luis Obispo, CA
93401(QCC) ; 999 Lawrence
Drive (Frontier & GTE)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
12C SAN LUIS OBISPO - SANTA BARBARA COMPLETE COMPLETE
119
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Luis Obispo CA 2482 Victoria Avenue, San 740 ROW Complete Complete
Luis Obispo, CA
93401(QCC) ; 999 Lawrence
Drive (Frontier & GTE)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Santa-Barbara CA Lyon Building, 27 E. Cota 740 TI-POP Complete Complete
St., 2nd Floor, Santa
Barbara, CA 93101
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
12D SANTA-BARBARA - LOS ANGELES COMPLETE COMPLETE
107
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Santa-Barbara CA Lyon Building, 27 E. Cota 740 TI-POP Complete Complete
St., 2nd Floor, Santa
Barbara, CA 93101
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Los Angeles-17 CA One Wilshire Bldg. 624 S. 730 TI-POP Complete Complete
Grand #1700, Los Angeles,
CA 90017
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
13A LOS ANGELES - ANAHEIM COMPLETE COMPLETE
32
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Los Angeles-17 CA One Wilshire Bldg. 624 S. 730 TI-POP Complete Complete
Grand #1700, Los Angeles,
CA 90017
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Anaheim CA 704 N. Valley St. Stes. 730 TI-POP Complete 6/15/98
Y&Z, Bldg. B, Anaheim, CA
92801
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
13B ANAHEIM - SAN DIEGO COMPLETE COMPLETE
132
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Anaheim CA 704 N. Valley St. Stes. 730 TI-POP Complete 6/15/98
Y&Z, Bldg. B, Anaheim, CA
92801
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Diego CA 4216 University Avenue, 732 TI-POP Complete 7/1/98
Suites 2&3, San Diego, CA
92105
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
13C SAN DIEGO - YUMA COMPLETE COMPLETE
235
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Diego CA 4216 University Avenue, 732 TI-POP Complete 7/1/98
Suites 2&3, San Diego, CA
92105
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Yuma AZ 900 E. 20th Street, Yuma, 666 ROW 8/1/98 8/1/98
AZ 85364
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
13D YUMA - PHOENIX COMPLETE COMPLETE
187
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Yuma AZ 900 E. 20th Street, Yuma, 666 ROW 8/1/98 8/1/98
AZ 85364
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Phoenix AZ 429 S. 6th Drive, 666 ROW 8/1/98 8/15/98
Phoenix, AZ 85003
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
14A PHOENIX - TUCSON COMPLETE COMPLETE
123
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Phoenix AZ 429 S. 6th Drive, 666 ROW 8/1/98 8/15/98
Phoenix, AZ 85003
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tucson AZ 210 West Elm St., Tucson, 668 TI-POP 8/1/98 8/15/98
AZ 85705
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
14B TUCSON - EL PASO COMPLETE COMPLETE
310
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tucson AZ 210 West Elm St., Tucson, 668 TI-POP 8/1/98 8/15/98
AZ 85705
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
El Paso TX Texas Comm. Bank Bldg., 540 TI-JCT Complete Complete
201 E. Main St., #1410,
El Paso, TX 79901
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
15A EL PASO - SAN ANTONIO COMPLETE COMPLETE
586
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
El Paso TX Texas Comm. Bank Bldg., 540 TI-JCT Complete Complete
201 E. Main St., #1410,
El Paso, TX 79901
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Antonio TX 231 Rotary Avenue, San 566 TI-POP Complete 7/1/98
Antonio, TX 98202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
15B SAN ANTONIO - AUSTIN COMPLETE COMPLETE
85
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Antonio TX 231 Rotary Avenue, San 566 TI-POP Complete 7/1/98
Antonio, TX 98202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Austin TX 4118 1/2 Bluestein Blvd., 558 ROW Complete 6/30/98
Austin, TX 78721
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
15C AUSTIN - HOUSTON COMPLETE COMPLETE
221
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Austin TX 4118 1/2 Bluestein Blvd., 558 ROW Complete 6/30/98
Austin, TX 78721
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Houston TX 777 Walker St. C-170 560 TI-POP Complete Complete
Houston, TX 77002
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
16 HOUSTON - DALLAS COMPLETE COMPLETE
269
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Houston TX 777 Walker St. C-170 560 TI-POP Complete Complete
Houston, TX 77002
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Bryan TX 124 E. 26th Street, 570 TI-POP Complete Complete
Bryan, Texas 77803
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Dallas-2323 TX 2323 Bryan St., Dallas, 552 TI-POP Complete Complete
TX 75201 & 4316 Bryan
St., Dallas, TX
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
16F HOUSTON - DALLAS OVERBUILD COMPLETE COMPLETE
269
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Houston TX 777 Walker St. C-170 560 TI-POP Complete Complete
Houston, TX 77002
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Bryan TX 124 E. 26th Street, 570 TI-POP Complete Complete
Bryan, Texas 77803
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Dallas-2323 TX 2323 Bryan St., Dallas, 552 TI-POP Complete Complete
TX 75201 & 4316 Bryan
St., Dallas, TX
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
17A DALLAS - OKLAHOMA CITY COMPLETE COMPLETE
264
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Dallas-2323 TX 2323 Bryan St., Dallas, 552 TI-POP Complete Complete
TX 75201 & 4316 Bryan
St., Dallas, TX
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Fort Worth TX 1119 Northeast 23rd., Ft. 552 ROW Complete 7/1/98
Worth, TX 76102
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Oklahoma City OK 620 S. Santa Fe, Oklahoma 536 ROW 6/15/98 7/15/98
City,OK 73219
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
17B OKLAHOMA CITY - TULSA COMPLETE COMPLETE
119
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Oklahoma City OK 620 S. Santa Fe, Oklahoma 536 ROW 6/15/98 7/15/98
City,OK 73219
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tulsa OK 419 E. 1st St., Tulsa, 538 ROW Complete 6/30/98
OK 74120
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
17C TULSA - KANSAS CITY COMPLETE COMPLETE
256
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tulsa OK 419 E. 1st St., Tulsa, 538 ROW Complete 6/30/98
OK 74120
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Kansas City MO 1301 W. 25th St. Kansas 524 ROW-JCT Complete Complete
City, MO 64108
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
18 CINCINNATI - INDIANAPOLIS COMPLETE COMPLETE
117
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Cincinnati OH 607 Evans St., 922 ROW-JCT Complete 8/15/98
Cincinnati, OH 45203
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Indianapolis IN 550 Kentucky Ave., Ste 2, 336 TI-JCT Complete Complete
Indianapolis, IN 46225
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
19A LOUISVILLE - NASHVILLE 7/15/98 8/26/98
189
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Louisville KY 462 ROW 12/1/98 12/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Bowling Green KY 24 East 10th Ave., 464 ROW 9/1/98 9/14/98
Bowling Green, KY 42102
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Nashville TN 1217 Litton Ave. , 470 ROW 9/1/98 9/14/98
Nashville, TN 37216
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
19B NASHVILLE - CHATTANOOGA 10/31/98 11/22/98
147
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Nashville TN 1217 Litton Ave. , 470 ROW 9/1/98 9/14/98
Nashville, TN 37216
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chattanooga TN 17th & Slayton 472 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
19C CHATTANOOGA - ATLANTA 8/31/98 9/22/98
137
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chattanooga TN 17th & Slayton 472 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Atlanta GA 55 Marietta Street, Suite 438 TI-POP 11/14/98 11/28/98
1450, Atlanta, GA 30303
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
20A ATLANTA - CHARLOTTE 9/30/98 11/12/98
261
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Atlanta GA 55 Marietta Street, Suite 438 TI-POP 11/14/98 11/28/98
1450, Atlanta, GA 30303
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Greenville SC 430 ROW 12/1/98 12/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Charlotte NC 701 E. Trade Street, 422 TI-JCT 11/14/98 11/28/98
Suite D Charlotte, NC
28202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
20B CHARLOTTE - RALEIGH 9/30/98 11/12/98
174
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Charlotte NC 701 E. Trade Street, 422 TI-JCT 11/14/98 11/28/98
Suite D Charlotte, NC
28202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Greensboro NC 424 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Raleigh NC 426 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
20C RALEIGH - RICHMOND 9/30/98 11/12/98
301
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Raleigh NC 426 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Rocky Mount NC 100 W. Goldleaf Street, 951 ROW 11/14/98 11/14/98
Rocky Mount, NC 27804
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Portsmouth VA 252 ROW 11/14/98 11/14/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Richmond VA 248 ROW 11/14/98 11/14/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
20D RICHMOND - WASHINGTON DC 9/30/98 11/12/98
110
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Richmond VA 727 Hospital 248 ROW 11/14/98 11/14/98
Street Richmond,
VA, 23219
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Fredericksburg VA 901 Gunnery Road, 246 ROW 11/14/98 11/14/98
Fredricksburg, VA22401
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Washington DC 60 Massachusetts Ave., 236 ROW 7/29/98 7/29/98
NE, Washington, DC
20002
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
21A CHICAGO - MILWAUKEE 11/2/98 11/30/98
84
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chicago IL 20 North Wacker, Ste. 656 358 TI-JCT 7/22/98 7/22/98
&614, Chicago, IL
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Milwaukee WI 356 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
21B MILWAUKEE - GREEN BAY 11/2/98 11/30/98
118
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Milwaukee WI 356 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Green Bay WI 350 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
21C GREEN BAY - MINNEAPOLIS 11/2/98 11/30/98
295
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Green Bay WI 350 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Eau Claire WI 352 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Minneapolis MN 628 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
21D MINNEAPOLIS - DES MOINES 11/2/98 11/30/98
281
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Minneapolis MN 628 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Owatonna MN 620 ROW 12/1/98 12/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Des Moines IA 101 16th Street, Des 632 ROW 12/1/98 12/15/98
Moines, IA 50309
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
22C DES MOINES - OMAHA 7/30/98 11/30/98
140
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Des Moines IA 101 16th Street, Des 632 ROW 12/1/98 12/15/98
Moines, IA 50309
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Omaha NE 644 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
22D OMAHA - TOPEKA 7/30/98 11/30/98
224
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Omaha NE 644 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Lincoln NE 540 South 2nd Street, 958 ROW 12/1/98 12/15/98
Lincoln, NE 68508
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Topeka KS 301 Northwest Tyler 534 ROW Complete Complete
Ave,Topeka, KS 66603
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
23 DENVER - EL PASO COMPLETE COMPLETE
746
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Denver CO 910 15th St., Suite 200, 656 TI-JCT Complete Complete
Denver, CO 80202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Colorado Springs CO 335 S. Conejos St., 658 ROW 7/20/98 8/3/98
Colorado Springs, CO
80903
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Pueblo CO 211 Plum St, Pueblo, CO 658 ROW 8/1/98 8/1/98
81003
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Santa Fe NM 664 ROW 8/15/98 8/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Albuquerque NM 104 Gold St. , 664 ROW 8/1/98 8/15/98
Albuquerque, NM 87110
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
El Paso TX Texas Comm. Bank Bldg., 540 TI-JCT Complete Complete
201 E. Main St., #1410,
El Paso, TX 79901
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
23F DENVER - EL PASO OVERBUILD COMPLETE COMPLETE
746
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Denver CO 910 15th St., Suite 200, 656 TI-JCT Complete Complete
Denver, CO 80202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Colorado Springs CO 335 S. Conejos St., 658 ROW 7/20/98 8/3/98
Colorado Springs, CO
80903
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Pueblo CO 211 Plum St, Pueblo, CO 658 ROW 8/1/98 8/1/98
81003
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Santa Fe NM 664 ROW 8/15/98 8/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Albuquerque NM 104 Gold Ave., SE , 664 ROW 8/1/98 8/15/98
Albuquerque, NM 87110
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
El Paso TX Texas Comm. Bank Bldg., 540 TI-JCT Complete Complete
201 E. Main St., #1410,
El Paso, TX 79901
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
24A SACRAMENTO - CHICO COMPLETE COMPLETE
98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Sacramento CA One City Centre, 770 L 726 TI-JCT Complete Complete
St. #600, Sacramento, CA
95814
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chico CA 901 Dayton Circle, Chico, 724 ROW Complete Complete
CA 95928
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
24B CHICO - REDDING COMPLETE COMPLETE
75
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Chico CA 901 Dayton Circle, Chico, 724 ROW Complete Complete
CA 95928
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Redding CA 2836 Railroad Ave., 724 ROW 6/15/98 6/15/98
Redding, CA 96001
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
24C REDDING - MEDFORD COMPLETE COMPLETE
177
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Redding CA 2836 Railroad Ave., 724 ROW 6/15/98 6/15/98
Redding, CA 96001
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Medford OR 1 East Clark Street, 670 ROW 8/1/98 8/1/98
Medford, OR 97501
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
24D MEDFORD - EUGENE COMPLETE COMPLETE
206
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Medford OR 1 East Clark Street, 670 ROW 8/1/98 8/1/98
Medford, OR 97501
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Eugene OR 1460 Railroad Ave., 670 ROW 9/15/98 9/30/98
Eugene, OR 97402
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
24E EUGENE - PORTLAND COMPLETE COMPLETE
123
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Eugene OR 1460 Railroad Ave., 670 ROW 9/15/98 9/30/98
Eugene, OR 97402
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Salem OR 2080 Hyacynth, Salem, OR 672 ROW 8/1/98 8/15/98
97303
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Portland OR 707 Southwest Washington, 672 TI-POP Complete Complete
Suite 400, Portland, OR
97205
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
25 PORTLAND - COMPLETE COMPLETE
SEATTLE 182
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Portland OR 707 Southwest Washington, 672 TI-POP Complete Complete
Suite 400, Portland, OR
97205
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Seattle WA 2001 6th Ave., Suite 674 TI-POP 6/7/98 6/7/98
2802, Seattle, WA 98121
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
26A SACRAMENTO - STOCKTON COMPLETE COMPLETE
50
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Sacramento CA One City Centre, 770 L 726 TI-JCT Complete Complete
St. #600, Sacramento, CA
95814
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Stockton CA 952 E. Lindsay St. 738 ROW Complete 7/15/98
Stockton, CA 95202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
26B STOCKTON - BAKERSFIELD 9/30/98 1/22/99
230
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Stockton CA 952 E. Lindsay St. 738 ROW Complete 7/15/98
Stockton, CA 95202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Fresno CA 1458 H Street, Fresno, 728 ROW 2/1/99 2/1/99
CA 93721
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Bakersfield CA 900 Sumner St. 734 ROW 2/1/99 2/1/99
Bakersfield, CA 93305
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
26C BAKERSFIELD - LOS ANGELES 12/31/98 1/22/99
133
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Bakersfield CA 900 Sumner St. 734 ROW 2/1/99 2/1/99
Bakersfield, CA 93305
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Los Angeles-17 CA One Wilshire Bldg. 624 S. 730 TI-POP Complete Complete
Grand #1700, Los Angeles,
CA 90017
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
27 SAN JOSE - SAN FRANCISCO COMPLETE COMPLETE
56
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Jose CA 55 Almaden Blvd., 3rd 722 TI-POP Complete Complete
Floor, San Jose, CA 95113
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Francisco-60 CA 60 Federal St., San 722 TI-POP Complete Complete
Francisco, CA 94107
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
28A BOSTON - ALBANY 8/15/98 9/11/98
208
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Boston MA 230 Congress, Suite 800, 128 TI-POP 9/15/98 9/30/98
Boston, MA
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Worcester MA 128 ROW 9/15/98 9/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Westfield MA 8 Williams Riding Way, 126 ROW 9/15/98 9/15/98
Westfield, MA 81085
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Albany NY 11 N. Pearl, Suite 301, 134 TI-JCT 6/30/98 6/30/98
Albany, NY 12207
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
28B ALBANY - BUFFALO COMPLETE COMPLETE
298
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Albany NY 11 N. Pearl, Suite 301, 134 TI-JCT 6/30/98 6/30/98
Albany, NY 12207
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Utica NY Utica Toll Station, Exit 136 ROW 7/31/98 7/31/98
31, M.P. 232.85, Utica,
NY 13501
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Syracuse NY Mattydale Toll Station, 136 ROW 7/31/98 7/31/98
Exit 36, M.P. 282.93,
Syracuse, NY 13211
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Rochester NY Scottsville Travel Plaza, 974 ROW 7/31/98 7/31/98
PO Box 8, Farrell Rd.,
Scottsville, NY 14546
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Buffalo NY 1080 Harlem Rd., City 140 ROW 7/31/98 7/31/98
Line Toll Barriers,
Station 71, M.P. N O,53,
Buffalo, NY 14206
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
28C BUFFALO - CLEVELAND COMPLETE COMPLETE
197
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Buffalo NY 1080 Harlem Rd., City 140 ROW 7/31/98 7/31/98
Line Toll Barriers,
Station 71, M.P. N O,53,
Buffalo, NY 14206
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Cleveland OH 1501 Euclid Ave., Suite 320 TI-JCT Complete 8/15/98
400, Cleveland, OH 44115
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
29 ALBANY - NEW YORK CITY COMPLETE COMPLETE
157
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Albany NY 11 N. Pearl, Suite 301, 134 TI-JCT 6/30/98 6/30/98
Albany, NY 12207
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Poughkeepsie NY New Paltz Toll Station, 133 ROW 7/31/98 7/31/98
Exit 18, New Paltz, NY
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
White Plains NY Ardsley Travel Plaza, 132 ROW 7/31/98 7/31/98
Exit 8, Ardsley, NY
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New York NY 60 Hudson St. Ste 118, 132 TI-POP Complete Complete
New York, NY 10013
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
30 NEW YORK CITY - PHILADELPHIA 5/31/98 7/24/98
95
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New York NY 60 Hudson St. Ste 118, 132 TI-POP Complete Complete
New York, NY 10013
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Newark NJ Raymond Plaza West, 224 ROW 7/29/98 8/15/98
Newark, NJ 07102
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Trenton NJ 260 Monmouth Street, 222 ROW 7/29/98 8/15/98
Trenton, NJ 08609
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Philadelphia PA 38th & Wyalusing 228 ROW-JCT 7/29/98 8/15/98
Streets,
Philadelphia, PA 19104
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
40 HOUSTON - NEW ORLEANS 2/28/99 3/22/99
374
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Houston TX 777 Walker St. C-170 560 TI-POP Complete Complete
Houston, TX 77002
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Beaumont TX 562 ROW 4/1/99 4/1/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Lake Charles LA 129 West Railroad, Lake 488 ROW 4/1/99 4/15/99
Charles, LA 70601
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Lafayette LA 375 South Chestnut, 488 ROW 4/1/99 4/15/99
Lafayette, LA 70501
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New Orleans LA 2465 N. Peters, New 490 TI-POP 4/1/99 4/15/99
Orleans, LA 70117
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
41A NEW ORLEANS - MOBILE 6/30/99 7/22/99
142
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New Orleans LA 2465 N. Peters, New 490 TI-POP 4/1/99 4/15/99
Orleans, LA 70117
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Mobile AL 801 Water Street, Mobile, 480 ROW 8/1/99 8/15/99
AL 36633
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
41B MOBILE - PENSACOLA 6/30/99 7/22/99
60
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Mobile AL 801 Water Street, Mobile, 480 ROW 8/1/99 8/15/99
AL 36633
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Pensacola FL 90 East Maxwell St., 448 ROW 8/1/99 8/15/99
Pensacola, FL
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
42A PENSACOLA - TALLAHASSEE 3/31/99 7/22/99
207
-----------------------------------------------------------------------------------------------------------------------------
----------------------- ---------------------------------------------------------------------------
Pensacola FL 90 East Maxwell St., 448 ROW 8/1/99 8/15/99
Pensacola, FL
----------------------- ---------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tallahassee FL 953 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
42B TALLAHASSEE - LAKE CITY 9/30/98 11/7/98
164
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tallahassee FL 953 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Lake City FL 452 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
42C LAKE CITY - JACKSONVILLE SEE 9/30/98 11/7/98
42B
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Lake City FL 452 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Jacksonville FL 452 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
43 ATLANTA - TALLAHASSEE 9/30/98 11/7/98
325
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Atlanta GA 55 Marietta Street, Suite TI-POP 11/14/98 11/28/98
1450, Atlanta, GA 30303 438
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Macon GA ROW 12/1/98 12/1/98
446
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Albany(GA) GA TI-JCT 12/1/98 12/1/98
444
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tallahassee FL ROW 12/1/98 12/15/98
953
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
44 LAKE CITY - TAMPA 10/15/98 11/7/98
257
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Lake City FL 452 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Orlando FL 458 TI-POP 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tampa FL 952 TI-ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
45 TAMPA - MIAMI 1/15/99 2/7/99
282
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Tampa FL 952 TI-ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Naples FL 939 ROW 2/15/99 2/15/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Miami FL 460 TI-POP 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
46 MIAMI - JACKSONVILLE 9/30/98 10/27/98
349
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Miami FL 460 TI-POP 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Ft. Lauderdale FL 460 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
West Palm Beach FL 460 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Melbourne FL 458 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Daytona Beach FL 456 ROW 10/30/98 11/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Jacksonville FL 452 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
47A JACKSONVILLE - AUGUSTA 3/1/99 3/22/99
276
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Jacksonville FL 452 ROW 12/1/98 12/15/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Savannah GA 440 ROW 4/1/99 4/15/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Augusta GA 442 ROW 3/1/99 3/15/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
48 AUGUSTA - CHARLOTTE 2/1/99 2/22/99
192
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Augusta GA 442 ROW 3/1/99 3/15/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Columbia SC 434 ROW 3/1/99 3/15/99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Charlotte NC 200 S. College Street, 422 TI-JCT 11/14/98 11/28/98
22nd Fl., Charlotte, NC
28202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
49 PROVIDENCE - STAMFORD (BOS-NYC) 9/30/98 10/23/98
288
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New York NY 60 Hudson St. Ste 118, 132 TI-POP Complete Complete
New York, NY 10013
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Providence RI 130 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Greenhill RI 130 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New London CT 920 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
New Haven CT 920 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Bridgeport CT 920 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Stamford CT 920 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Framingham MA 128 11/1/98 11/1/98
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Boston MA 230 Congress, Suite 800, 128 9/15/98 9/30/98
Boston, MA 21100
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
White Plains NY Ardsley Travel Plaza, 132 ROW 7/31/98 7/31/98
Exit 8, Ardsley, NY
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
61 SAN ANTONIO - LAREDO
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
San Antonio TX 231 Rotary Avenue, San 566 TI-POP Complete 7/1/98
Antonio, TX 98202
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Laredo TX ROW
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
NEW POPS
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Boise ID TBD TBD TBD TBD
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Las Vegas NV TBD TBD TBD TBD
-----------------------------------------------------------------------------------------------------------------------------
.
3 5 6 7 17 17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE A-2 TO EXHIBIT A
- -------------------------------------------------------------------------------------------------------------------
STANDARD & EXPEDITE INTERVAL GUIDELINES
- -------------------------------------------------------------------------------------------------------------------
These are the standard order intervals for domestic services on Qwest Owned
Fiber Optic Network ("On -Net" services). If you have any questions regarding
the interval process, please contact your Sales Director.
TOTAL SERVICE INTERVAL IN
CALENDAR DAYS
SERVICE TYPE STANDARD EXPEDITE
OPTICAL:
POP TO POP (OC-3) 28 ICB
POP TO POP (ALL OTHERS) ICB ICB
LOA PROVIDER ICB ICB
LEC TO LEC ICB ICB
CAP TO CAP ICB ICB
CAP TO LEC ICB ICB
CROSS CONNECTS ICB ICB
DS-3:
POP TO POP 15 ICB
LOA PROVIDED 15 ICB
LEC TO LEC 22 ICB
CAP TO CAP 22 ICB
CAP TO LEC 22 ICB
CROSS CONNECTS 8 ICB
DS-1:
POP TO POP 12 ICB
LOA PROVIDED 12 ICB
LEC TO LEC 20 ICB
CAP TO CAP 20 ICB
CAP TO LEC 20 ICB
CROSS CONNECTS 8 ICB
ALL INTERVALS ARE SUBJECT TO ELI PROVIDING TO QWEST THE QUARTERLY FORECAST
PURSUANT TO SECTION 3.3, VOLUMES WITHIN SUCH FORECASTS, NETWORK CAPACITY, AND
LEC FACILITY AVAILABILITY. SHOULD OFF-NET CAPACITY BE REQUIRED, INTERVALS WILL
BE DETERMINED ON AN ICB BASIS.
QWEST DOES NOT GUARANTEE OFF-NET CAPACITY AND PERFORMANCE.
"ICB" means "Individual Case Basis"
"POP TO POP" means Qwest controls CFA.
CAP's: Local loop optical connectivity available on an ICB.
Equipment Plug-ins: Add 2 days.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Qwest Communicatons Corporation
Confidential and Proprietary
2
ELI Initials: /s/ DBS
<PAGE>
SCHEDULE A-3 TO EXHIBIT A
TO
QWEST COMMUNICATIONS PRIVATE LINE AGREEMENT
TECHNICAL SPECIFICATIONS
1. INTERCONNECT SPECIFICATIONS:
1.1 The ELI interconnection point of DS-1 & DS-3 signals at the Qwest (SPT)
location will be at an industry standard (DSX-1) & (DSX-3) digital
cross-connect panels and will be referred to as Qwest Network Interface
in this document.
1.2 The ELI interconnection point for optical carrier signals at the Qwest
location will conform with industry standard network interfaces.
1.2 The DS-1 & DS-3 signals terminating at the Qwest digital cross-connect
panels will meet the electrical specifications as defined in AT&T
Compatibility Bulletin (CB) No. 119, Issue 3, October, 1979.
1.3 The Qwest Digital Network will be compatible with the Bell System
hierarchical clock synchronization methods and stratum levels as
described in Bellcore Technical Advisory (GR436-Core).
1.4 ELI equipment must also meet the interconnect specifications listed
above and shall comply with jitter requirements of AT&T Technical
Reference PUB 63411.
2. PERFORMANCE OBJECTIVES:
2.1 DS1, DS3, OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c circuit
performance will be measured using two parameters: Availability and
Error-Free Seconds.
The following assumptions apply to the derived data:
~ The circuits originate and terminate on the SONET OC-48 backbone
~ High speed protection switching: 1 for N, where N=2
~ MTTR for SONET equipment: 2 hours
~ MTTR for fiber optic cable: 12 hours (Bellcore Standard )
~ Cable cut rate: 4.39 /year/1,000 sheath miles (Bellcore Standard)
The system includes three (3) DCS in Los Angeles, Sacramento, and
San Jose (although not all circuits are routed through the DCS,
they are included in all the calculations)
2.2 Availability is a measure of the relative amount of time during which
the circuit is available for use. According to CCITT and ANSI
definitions, unavailability begins when the Bit Error Ratio (BER) in
each second is worse than 1.0 E-3 for a period of 10 consecutive
seconds.
Qwest Communicatons Corporation
Confidential and Proprietary
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ELI Initials: /s/ DBS
<PAGE>
INTER OFFICE CHANNEL (IOC) : An Inter Office Channel refers to the
Qwest Communications network between the points of presence (POP).
OPTICAL CARRIER LEVEL 1 (OC-1) : The optical signal that results from
an optical conversion of an electrical STS-1 signal (51.840 Mb/s). This
signal forms the basis of the interface.
OC-3: Optical Carrier level 3 signal operating at 155.520 Mb/s.
OC-12: Optical Carrier level 12 signal transmitting at 622.080 Mb/s.
OC-48: Optical Carrier level 48 signal transmitting at 2488.32 Mb/s.
POINT OF PRESENCE (POP) : A physical location where a long distance
carrier terminates lines before connecting to the local exchange
carrier, another carrier, or directly to a ELI.
2.3 The availability objective for all circuits between Qwest Network
Interface points specified above is to provide performance levels over
a 12 month period as follows:
---------------------------- ------------------------------------
V&H MILES DS1, DS3, OC-3, OC-12, OC-48,
OC-3C, OC-12C, AND OC-48C
---------------------------- ------------------------------------
---------------------------- ------------------------------------
0-2500 99.999%
---------------------------- ------------------------------------
---------------------------- ------------------------------------
2501-4000 99.998%
---------------------------- ------------------------------------
This excludes any ELI provided access links to the Qwest digital
network.
2.4 Outages attributable to incidental damage to or severage of outside
fiber optic cable plant, or scheduled maintenance is excluded from the
performance objective stated above.
2.5 Error-Free Seconds (EFS) and Error Seconds (ES) are the primary measure
of error performance. An Error-Free Second is defined as any second in
which no bit errors are received. Conversely, an Error Second is any
second in which one or more bit errors are received.
3. SONET : Synchronous Optical Network is a family of optical transmission
rates and interface standards allowing internetworking of products from
different vendors. Base optical rate is 51.840 Mb/s. Higher rates are
direct multiples.
SONET TRANSPORT : Services associated with carrying OC-1 or higher
level signals.
Qwest Communicatons Corporation
Confidential and Proprietary
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<PAGE>
SYNCHRONOUS TRANSPORT SIGNAL LEVEL 1 (STS-1) : The basic logical
building block electrical signal with a rate of 51.840 Mb/s.
SYNCHRONOUS TRANSPORT SIGNAL LEVEL N (STS-N) : This electrical signal
is obtained by byte interleaving N STS-1 signals together. The rate of
the STS-N is N times 51.840 Mb/s.
TERMINATING MULTIPLEX (TM) : Provides the multiplex functions for
multiplexing and demultiplexing between the DS1 or higher signal level
and the SONET OC-N level.
4. ACCEPTANCE CRITERIA. The acceptance criteria for DS1, DS3, OC-3, OC-12,
OC-48, OC-3c, OC-12c, and OC-48c circuits between Qwest Network
Interface points is to provide the performance levels shown below
during a 60 minute test period. If no errors are observed during the
first 15 minutes of the test, the facility may be considered
acceptable. Access connections to ELI location will be tested in
accordance with Bell Publication 62508.
~ The tables below are based on QCC owned fiber optic network only
and on the Bellcore Specifications of the SONET delivery of DS1,
DS3, OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c directly off
the SONET Backbone.
~ If the DS1, DS3, OC-3, OC-12, OC-48, OC-3c, OC-12c, and OC-48c
service is delivered at the STS1 level then the general
performance objectives fall into the industry standard.
DS1, DS3
The table below defines the general performance objectives for DS1
service operating at 1.544 Mb/s, and the general performance objectives
for DS3 service operating at 45 Mb/s.
----------------------------------------------------------------------------
V&H MILES EFS BER
----------------------------------------------------------------------------
----------------------------------------------------------------------------
0 - 250 99.988 % 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
251 - 500 99.983 % 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
501 - 1000 99.971% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
1001 - 1500 99.959% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
1501 - 2000 99.948% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2001 - 2500 99.936% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2501 - 3000 99.925% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
3001 - 3500 99.913% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
3501 - 4000 99.902% 10 to 15th power
-----------------------------------------------------------------------------
Qwest Communicatons Corporation
Confidential and Proprietary
5
ELI Initials: /s/ DBS
<PAGE>
OC-3, 12, 48; OC3C, 12C, 48C
The table below defines the general performance objectives for OC-3,
OC-12, OC-48, OC-3c, OC-12c, and OC-48c.
-----------------------------------------------------------------------------
V&H MILES EFS BER
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
0 - 250 99.989% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
251 - 500 99.984% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
501 - 1000 99.974% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
1001 - 1500 99.964% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
1501 - 2000 99.954% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2001 - 2500 99.944% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2501 - 3000 99.933% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
3000 - 3500 99.923% 10 to 15th power
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
3501 - 4000 99.913% 10 to 15th power
-----------------------------------------------------------------------------
Qwest Communicatons Corporation
Confidential and Proprietary
6
ELI Initials: /s/ DBS
<PAGE>
EXHIBIT B
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement ("AGREEMENT") is effective as of June 1,
1998 and shall become a part of that certain Qwest Communications Corporation
and Electric Lightwave, Inc. Private Line Services Agreement, dated June 1, 1998
("Private Line Agreement"). This Agreement is by and between Qwest
Communications Corporation, a Delaware corporation, having its principal place
of business at 555 Seventeenth Street, Suite 1000, Denver, Colorado 80202
("QWEST"), and Electric Lightwave, Inc., a Delaware corporation, having its
principal place of business at 8100 NE Parkway Drive, Suite 150, Vancouver,
Washington 98662 ("COMPANY").
1. This Agreement is made in order for each party to obtain from the
other certain technical and business information under terms that will protect
the confidential and proprietary nature of such information for the purpose of
discussing and possibly entering into a business relationship.
2. As used herein, "CONFIDENTIAL INFORMATION" shall mean any and all
technical or business information furnished, in whatever form or medium, or
disclosed by one party to the other including, but not limited to, product or
service specifications, prototypes, computer programs, models, drawings,
marketing plans, financial data, and personnel statistics, which are marked as
confidential or proprietary by the disclosing party, or, for information which
is orally disclosed, the disclosing party indicates to the other at the time of
disclosure the confidential or proprietary nature of the information and
confirms in writing to the receiving party within 30 days after such disclosure
that such Confidential Information is confidential. For purposes herein, any
technical or business information of a third person furnished or disclosed by
one party to the other shall be deemed "Confidential Information" of the
disclosing party and subject to the terms of this Agreement.
3. Each party agrees to hold such Confidential Information in
confidence for a period of one (1) year from the termination of the Private Line
Agreement unless otherwise agreed to in writing by the disclosing party. Each
party further agrees that it shall not make disclosure of any such Confidential
Information to anyone except employees and consultants of such receiving party
to whom disclosure is necessary for the purposes of this Agreement, and who have
agreed to be bound by the obligations of confidentiality hereunder nor shall
either party use any such Confidential Information other than as necessary for
its performance hereunder. Each party shall cause its employees and consultants
to whom it makes disclosure to observe the obligations of confidentiality in
accordance with this Agreement. Each party also agrees that it will make
requests for Confidential Information of the other only if necessary to
accomplish the purposes set forth herein. The obligations set forth herein shall
be satisfied by each party through the exercise of the same degree of care used
to restrict disclosure and use of its own information of like importance, but in
no event less than reasonable care.
Qwest Communicatons Corporation
Confidential and Proprietary
7
ELI Initials: /s/ DBS
<PAGE>
4. Nothing herein shall be construed as granting any right or license
under any copyrights, inventions, or patents now or hereafter owned or
controlled by the disclosing party.
5. Upon termination of this Agreement for any reason or upon request of
the disclosing party, all Confidential Information, together with any copies of
same, shall be returned to the disclosing party. The requirements of
confidentiality shall survive return of such Confidential Information as set
forth herein.
6. The obligations imposed in this Agreement shall not apply to any
information that: (1) is independently developed by the receiving party; or (2)
is or becomes publicly available through no fault of the receiving party; or (3)
is obtained by the receiving party from a third person who is under no
obligation of confidence to the party who's information is disclosed; (4) is
disclosed without restriction by the disclosing party; or (5) is required to be
discussed due to law, regulation or judicial process.
7. Except for the obligations of confidentiality imposed herein, no
obligation of any kind is assumed or implied against either party by virtue of
the disclosure of Confidential Information contemplated by this Agreement, or by
the meetings and conversations between the parties with respect to the subject
matter stated above or with respect to whatever Confidential Information is
exchanged. The duty of confidentiality set forth in this Agreement shall not be
construed to limit either party's use of any information obtained from the other
party.
8. Each party acknowledges that this Agreement and any meetings and
communications of the parties shall not constitute an offer, request, or
contract with the other to engage in any research, development, or other work;
nor constitute an offer, request, or contract involving a buyer-seller
relationship or venture, teaming or partnership relationship between the
parties; nor shall this Agreement be construed to impair or restrict either
party's right to make, procure, or market jointly or individually, products or
services, now or in the future, which may be competitive with those offered by
the other, or which are the subject matter of this Agreement, or enter into any
partnership, teaming agreement or joint venture with another party regarding the
subject matter of this Agreement. The parties expressly agree that any money,
expenses or losses expended or incurred by each party in preparation for, or as
a result of this Agreement or the meetings and communications between the
parties, are at each party's sole cost and expense; provided, however, that
notwithstanding anything to the contrary in this Agreement, neither party's
rights shall be limited in law or equity to enforce the confidentiality
obligations imposed hereunder.
9. Neither party shall, without first obtaining written consent of the
other, use any trademark or trade name of the other or refer to the subject
matter of this Agreement or to the other party in any promotional activity or
otherwise, nor disclose to others any specific information about the subject
matter of this Agreement.
10. Neither this Agreement nor any rights hereunder are assignable or
otherwise transferable by either party, in whole or in part; provided, that
either party may assign or transfer this Agreement and rights hereunder to any
current or future affiliates or successor company if such assignee agrees in
writing to the terms and conditions herein.
Qwest Communicatons Corporation
Confidential and Proprietary
8
ELI Initials: /s/ DBS
<PAGE>
11. The foregoing shall apply to any subsequent meetings or any
communications between the parties relating to the same subject matter unless
this Agreement is modified in writing and such writing is signed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to sign this Agreement as of the date first stated above.
Electric Lightwave, Inc. Qwest Communications Corporation
By: /s/ David B. Sharkey By: /s/ Gregory M. Casey
Title: President and Chief Operating Title: Sr. V.P., Broadband
Officer Capacity
Date: 6/17/98 Date: 7/1/98
APPROVED AS TO LEGAL FORM
JUN 18 1998
/s/ M. Wal
LAW DEPT.
i:\rusan\forms\conf\2way.doc
Qwest Communications Corporation
Confidential and Proprietary
9
LI Initials: /s/ DBS
THIS PAGE CONTAINS A MAP OF THE QWEST NATIONWIDE NETWORK THAT ENCOMPASSES 18,449
MILES, WITH CONNECTIONS TO MEXICO, EUROPE, AND THE U.K.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Electric
Lightwave, Inc.'s Consolidated Financial Statements for the periods ended
June 30, 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<EXCHANGE-RATE> 1
<CASH> 12,638
<SECURITIES> 0
<RECEIVABLES> 10,859
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,390
<PP&E> 396,080
<DEPRECIATION> 31,887
<TOTAL-ASSETS> 395,003
<CURRENT-LIABILITIES> 49,803
<BONDS> 146,656
0
0
<COMMON> 497
<OTHER-SE> 185,437
<TOTAL-LIABILITY-AND-EQUITY> 395,003
<SALES> 0
<TOTAL-REVENUES> 41,500
<CGS> 0
<TOTAL-COSTS> 19,072
<OTHER-EXPENSES> 34,062
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,601
<INCOME-PRETAX> (32,184)
<INCOME-TAX> (5,471)
<INCOME-CONTINUING> (26,713)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 2,817
<NET-INCOME> (29,530)
<EPS-PRIMARY> (.59)
<EPS-DILUTED> (.59)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Electric
Lightwave, Inc.'s Consolidated Financial Statements for the three months ended
March 31, 1998 and 1997, the six months ended June 30, 1997, the nine months
ended September 30, 1997, and the twelve months ended December 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS 3-MOS
<FISCAL-YEAR-END> Dec-31-1997 Dec-31-1997 Dec-31-1997 Dec-31-1997 Dec-31-1998
<PERIOD-START> Jan-01-1997 Jan-01-1997 Jan-01-1997 Jan-01-1997 Jan-01-1998
<PERIOD-END> Mar-31-1997 Jun-30-1997 Sep-30-1997 Dec-31-1997 Mar-31-1998
<EXCHANGE-RATE> 1 1 1 1 1
<CASH> 1,213 1,109 1,147 26,531 21,849
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 6,392 7,531 10,272 23,826 19,966
<ALLOWANCES> 0 0 0 3,569 0
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 8,231 9,044 11,725 47,632 43,434
<PP&E> 190,818 235,953 249,499 316,109 352,062
<DEPRECIATION> 19,680 20,703 23,144 25,791 28,247
<TOTAL-ASSETS> 188,795 233,835 248,570 359,962 373,374
<CURRENT-LIABILITIES> 19,785 28,900 19,459 57,419 45,417
<BONDS> 10,843 10,664 10,374 70,511 112,732
0 0 0 0 0
0 0 0 0 0
<COMMON> 412 412 412 497 497
<OTHER-SE> (1,288) (11,242) (17,161) 212,817 199,116
<TOTAL-LIABILITY-AND-EQUITY> 188,795 233,835 248,570 359,962 373,374
<SALES> 0 0 0 0 0
<TOTAL-REVENUES> 10,519 24,765 41,843 61,084 20,057
<CGS> 0 0 0 0 0
<TOTAL-COSTS> 4,930 11,946 19,287 29,546 9,212
<OTHER-EXPENSES> 9,937 20,363 31,076 40,561 15,681
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 91 302 513 1,166 911
<INCOME-PRETAX> (10,162) (20,116) (26,035) (35,261) (14,404)
<INCOME-TAX> 0 0 0 (1,316) (2,449)
<INCOME-CONTINUING> (10,162) (20,116) (26,035) (33,945) (11,955)
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 2,817
<NET-INCOME> (10,162) (20,116) (26,035) (33,945) (14,772)
<EPS-PRIMARY> (.24) (.48) (.62) (.80) (.30)
<EPS-DILUTED> (.24) (.48) (.62) (.80) (.30)
</TABLE>
