EXECUTION FORM
CONFIDENTIAL AND PROPRIETARY
IRU AGREEMENT
DATED AS OF MAY 2, 1997
BY AND BETWEEN
QWEST COMMUNICATIONS CORPORATION ("QWEST")
AND
GTE INTELLIGENT NETWORK SERVICES INCORPORATED ("GTE")
TABLE OF CONTENTS
Page
RECITALS
ARTICLE I. GRANT OF IRU IN QWEST SYSTEM
ARTICLE II. CONSIDERATION FOR GRANT
ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM
ARTICLE IV. ACCEPTANCE AND TESTING OF GTE FIBERS
ARTICLE V. DOCUMENTATION
ARTICLE VI. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES . . . . . . . . . . .
ARTICLE VIII. OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM . . . . . . . . . .
ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION. . . . . . . . . . . . .
ARTICLE XI. USE OF QWEST SYSTEM. . . . . . . . . . . . . . . . . . . . . .
ARTICLE XII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIII. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . .
ARTICLE XIV. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS . . . . . . . .
ARTICLE XVI. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XVII. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XVIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XX. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXI. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXII. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXIII.GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXIV. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . .
ARTICLE XXV. ASSIGNMENT AND TRANSFER RESTRICTIONS. . . . . . . . . . . . .
ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS. . . . . . .
ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . . . . . . . .
ARTICLE XXVIII. NO PERSONAL LIABILITY. . . . . . . . . . . . . . . . . . .
ARTICLE XXIX. RELATIONSHIP OF THE PARTIES. . . . . . . . . . . . . . . . .
ARTICLE XXX. LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXXI. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXXII. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XXXIII. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . .
EXHIBITS
Exhibit A: QWEST System Description
Exhibit A-1: QWEST System Description and Delivery Dates
Exhibit A-2: General Route Map
Exhibit A-3: Detailed Route Maps
Exhibit A-4: Designated Endpoint and Intermediate Point Cities
Exhibit B: IRU Fee Payment Schedule
Exhibit C: Construction Specifications
Exhibit D: Fiber Cable Splicing, Testing, and Acceptance Procedures
Exhibit E: Fiber Specifications
Exhibit E-1: Fiber Deployment Diagram
Exhibit F: Specifications for Regeneration Facilities
Exhibit G: Regeneration Facility Sites
Exhibit H: QWEST System Maintenance Specifications and Procedures
Exhibit I: Underlying Rights and Underlying Rights Requirements
IRU AGREEMENT
THIS IRU AGREEMENT (this "Agreement") is made and entered into as
of May 2, 1997, by and between QWEST COMMUNICATIONS CORPORATION, a
Delaware corporation ("QWEST"), and GTE INTELLIGENT NETWORK SERVICES
INCORPORATED, a Delaware corporation ("GTE").
RECITALS
A. QWEST is planning to construct a continuous fiberoptic
communication system, contiguous from end to end, as described in
Exhibit A hereto, and between each of the city pairs identified in
Exhibit A-1 hereto (the fiberoptic communication system between each
such city pair being referred to as a "Segment"), being referred to
herein collectively as the "QWEST System". The route that the QWEST
System shall follow as described in this paragraph is referred to
herein as the "System Route."
B. GTE desires to be granted the right to use certain optical
fibers in the QWEST System.
C. QWEST desires to grant GTE an exclusive, indefeasible right
to use certain fibers and associated property in the QWEST System, all
upon the terms and conditions set forth below.
Accordingly, in consideration of the mutual promises set forth
below, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree
as follows:
ARTICLE I.
GRANT OF IRU IN QWEST SYSTEM
1.1 (a) Effective as of the effective date described in
Section 6.1 below, for each particular Segment delivered by QWEST to
GTE hereunder and with respect to which an Acceptance Date (as defined
in Section 4.2 below) has occurred, QWEST hereby grants to GTE, and
GTE hereby purchases from QWEST, (i) an exclusive, Indefeasible Right
of Use (as defined in Section 33.1(f), for the purposes described
herein, in twenty-four (24) "Dark Fibers" (as defined in
Section 33.1(c)), to be specifically identified, in the QWEST System
in the Segments and more specifically described in the maps included
in Exhibit A-3 hereto and (ii) an associated and non-exclusive
Indefeasible Right of Use, for the purposes described herein, in the
tangible and intangible property needed for the use of such Dark
Fibers as Dark Fibers, including, but not limited to, the associated
conduit, QWEST's rights in all "Underlying Rights" (as defined in
Section 10.1), but in any event excluding any electronic or optronic
equipment (collectively, the "Associated Property"), for the Term (as
defined in Section 6.1) respecting such Segment, and all on the terms
and subject to the covenants and conditions set forth herein
(collectively, the "IRUs"). The Dark Fibers subject to the IRUs are
referred to collectively as the "GTE Fibers."
(b) The parties acknowledge and agree that the specific
route of any Segment that has not been finally designed or engineered,
or with respect to which a right-of-way agreement has not been
obtained as of the date hereof is subject to final determination by
QWEST, based on specific engineering, right-of-way, permitting,
authorization and other requirements; provided, however, that (i) any
such Segment route, as finally determined, must include all of the
endpoint and intermediate point cities identified in Exhibit A-4 and
all of the junction points identified in the System Route maps
included in Exhibit A; (ii) no deviation in the route of any Segment
as set forth in the maps included in Exhibit A-3 shall result in a
Material Deviation (as defined below) in the System Route as set forth
in Exhibit A, and (iii) once the final route of any Segment has been
so determined, QWEST shall deliver to GTE corresponding revisions to
the relevant maps included in Exhibit A hereto. As used herein, the
term "Material Deviation" shall mean a deviation in the general route
of a Segment (A) that modifies the System Route architecture in a
manner that breaks a ring, creates a spur or breaks the contiguous
nature of Segments; (B) that modifies the route of the System Route
through any city, identified in Exhibit A-3 as being the location of a
GTE POP site, from the detailed route map shown in Exhibit A-3 for
such city in a manner that materially changes the proximity of such
POP site to the System Route right-of-way (provided that, if any such
detailed city map shows that the POP site is in direct proximity to
the System Route right-of-way, any route modification which does not
provide such direct proximity shall be considered a material change in
proximity); (C) that modifies the route of the System Route through
any city, as set forth in the detailed route map for such city set
forth in Exhibit A-3, such that the location of the route at any point
would be moved more than 1,200 feet in any direction, without the
prior written approval of GTE (such approval not to be unreasonably
withheld or delayed); or (D) that modifies any parallel route shown
within any city that is the subject of a detailed map included in
Exhibit A-3 such that the distance between such parallel routes is
less than 1,200 feet outside metropolitan areas and less than two city
blocks within metropolitan areas.
(c) If any deviation(s) in the routes of Segments comprising
the System Route cause(s) the aggregate route miles as reflected in
Exhibit A estimated for the System Route to increase by more than
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%) of such estimate such mileage shall be solely at QWEST's cost
and expense and any route mileage in excess of the applicable
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%) increase as aforesaid shall not be included in the route
mileage for purposes of determining the IRU Fee as defined and
described in Section 2.1 below.
ARTICLE II.
CONSIDERATION FOR GRANT
2.1 In consideration of the grant of the IRUs hereunder by
QWEST to GTE, GTE agrees to pay to QWEST an IRU fee determined based
on the QWEST mileage (and allocated among the Segments based on
Segment Rate mileage as set forth in Exhibit B. (the "IRU Fee").
The IRU Fee shall be payable with respect to each Segment
according to the payment schedule set forth in Exhibit B.
2.2 QWEST will fax or send by overnight delivery each invoice
for payments to be made by GTE hereunder. GTE shall pay such invoiced
amounts, less any reasonably disputed amounts, for receipt by QWEST
within thirty (30) days after receipt of such invoice by GTE with
respect to payments of the IRU Fee and within thirty (30) days after
receipt of such invoice by GTE for any other amounts owed to QWEST
hereunder; provided that GTE shall provide written notice describing
in detail the basis for any disputed amounts; and provided further
that any disputed amounts that are resolved in favor of QWEST shall be
due for payment based on the original invoice date. All payments to
be made by GTE hereunder of the IRU Fee and of any other amounts in
excess of $100,000 shall be made by wire transfer of immediately
available funds to the account or accounts as QWEST shall notify GTE
in writing from time to time. Payments of all other amounts by GTE
hereunder may be made by check payable to QWEST. QWEST agrees to
provide GTE from time to time, upon request, with QWEST's estimate of
the next invoice date for a portion of the IRU Fee and the estimated
amount of such IRU Fee payment; provided that failure to provide any
such notice shall not in any way alter or impair GTE's payment
obligations hereunder.
2.3 QWEST and GTE acknowledge and agree that with respect to
Segment 23, notwithstanding the fact that Segment 23 has already been
constructed and installed, delivery of Segment 23 shall occur in two
installments of twelve (12) Dark Fibers each as indicated in
Exhibit A, and payment of the IRU Fee established pursuant to
Section 2.1 therefor (other than the initial
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% due upon execution of this Agreement), shall be deferred until
each such deferred installment delivery date as set forth in
Exhibit B.
ARTICLE III.
CONSTRUCTION OF THE QWEST SYSTEM
3.1 QWEST shall, at QWEST's sole cost and expense, be
responsible for and shall effect the design, engineering,
installation, and construction of those portions of the QWEST System
not already constructed as of the date hereof in accordance with the
System Route (as it may be modified pursuant to Section 1.1) and in
conformity with (i) the construction specifications set forth in
Exhibit C, (ii) industry standards and practices, and (iii) applicable
Underlying Rights Requirements (as defined in Section 11.1). Such
responsibilities shall include, without limitation, preparation of
construction drawings, bills of materials, materials specifications
and materials requisitions. Except for the existing fibers on
Segments 11A, 11B, 12A, 12B, 12C and 12D (which are Corning SMF-DS)
and any alternative fibers approved pursuant to the following
sentence, all fiber included in the GTE Fibers shall be Corning SMF-LS
non-zero dispersion-shifted or Lucent Technologies True Wave and shall
meet or exceed the applicable fiber specifications set forth in
Exhibit E. QWEST may use alternative types of fiber equivalent to
either of the aforementioned fibers; provided that (i) prior to any
such use, QWEST meets with GTE (and GTE hereby agrees to so meet) to,
cooperatively and in good faith, jointly evaluate the use of any such
fiber and (ii) thereafter, GTE approves the use of such fiber, which
approval shall not be unreasonably withheld or delayed. QWEST agrees
that, to the extent possible in light of the fiber already
incorporated in Segments that have been constructed, in whole or in
part, prior to the date hereof and the availability and cost of the
fiber of a particular type and manufacture hereafter, fiber utilized
with respect to the loops, rings and regions of the QWEST System shall
be of the same type and manufacture, as depicted in the fiber
deployment diagram set forth in Exhibit E-1 hereto, indicating the
type of fiber QWEST currently plans to use in each such Segment. Any
deviation from the planned fiber use set forth in the diagram must be
approved by GTE, which approval shall not be unreasonably withheld or
delayed.
3.2 Subject to extension for delays described in Article XX,
QWEST shall complete at QWEST's sole cost and expense, all
construction, installation, and satisfactory Fiber Acceptance Testing
(as defined in Section 4.1) of each of the Segments, including the
provision of such Regeneration Facilities on such Segment as may be
provided pursuant to Section 7.2(a), by the applicable "Estimated
Delivery Date" (as defined in Section 33.1(d)) respecting such
Segment.
3.3 Except as may be provided herein, QWEST shall, at QWEST's
sole cost and expense, procure all materials to be incorporated in and
to become a permanent part of the QWEST System, including, without
limitation, the Regeneration Facilities provided pursuant to
Section 7.2(a).
3.4 QWEST shall, at QWEST's sole cost and expense, obtain all
Underlying Rights and other rights, licenses, permits and
authorizations as required pursuant to Article X hereof.
3.5 QWEST shall perform, at QWEST's sole cost and expense,
substantially in accordance with industry standards and practices and
as deemed necessary or appropriate in QWEST's reasonable business
judgment, all supervisory and inspection services relating to the
construction of the QWEST System, including, without limitation,
performing construction inspections to assure that all construction
shall be in material compliance with the specifications, drawings,
Underlying Rights, provisions of this Agreement, and applicable
governmental codes. During the course of construction of each
Segment, QWEST shall prepare and provide to GTE construction schedule
and progress reports every two weeks. GTE shall have the right, but
not the obligation, to inspect the construction of each Segment,
including the installation, splicing and testing of the GTE Fiber
incorporated therein, during the course and at the time of the
relevant design, construction and installation period. No inspection
or failure to inspect by GTE shall impair or invalidate any rights and
remedies of GTE under this Agreement or modify, amend or otherwise
affect any of the representations, warranties, covenants or agreements
of QWEST under this Agreement.
3.6 Upon GTE's written request, QWEST shall make available for
inspection by GTE, at QWEST's offices, copies of all information,
documents, agreements, reports, permits, drawings and specifications
generated, obtained or acquired by QWEST in performing its duties
pursuant to this Article III that are material to grant of the IRUs to
GTE, including, without limitation, the Underlying Rights, subject
only to the conditions that (i) the terms of each such document or the
legal restrictions applicable to such information or document permits
disclosure; provided that QWEST will use its best efforts (without
requiring the expenditure of money) to obtain a waiver of any existing
confidentiality and/or non-disclosure restrictions, and to exempt GTE
from subsequent confidentiality and/or non-disclosure restrictions,
that would restrict QWEST's ability to make such documents and/or
information available to GTE for inspection; (ii) notwithstanding the
existence or non-existence of such restrictions and/or waivers, QWEST
may, in its sole discretion, redact portions of such documents it
deems proprietary business terms prior to GTE's inspection. No
inspection or failure to inspect by GTE shall impair or invalidate any
rights and remedies of GTE under this Agreement or modify, amend or
otherwise affect any of the representations, warranties, covenants or
agreements of QWEST under this Agreement.
ARTICLE IV.
ACCEPTANCE AND TESTING OF GTE FIBERS
4.1 QWEST shall test all GTE Fibers in accordance with the
procedures specified in Exhibit D ("Fiber Acceptance Testing") to
verify that the GTE Fibers are installed and operating in accordance
with the specifications described in Exhibit D. Fiber Acceptance
Testing shall progress span by span along each Segment as cable
splicing progresses, so that test results may be reviewed in a timely
manner. QWEST shall provide GTE at least five (5) days advance notice
of the date and time of each Fiber Acceptance Testing such that GTE
shall have the right, but not the obligation, to have a person or
persons present to observe QWEST's Fiber Acceptance Testing. When
QWEST has determined that the results of the Fiber Acceptance Testing
with respect to a particular span show that the GTE Fibers so tested
are installed and operating in conformity with the applicable
specifications set forth in Exhibit D, QWEST shall promptly provide
GTE with a copy of such test results.
4.2 When QWEST reasonably determines in good faith that the GTE
Fibers with respect to an entire Segment are installed and operating
in conformity with the applicable specifications set forth in
Exhibit D, QWEST shall promptly provide written notice of same to GTE
(a "Completion Notice"). GTE shall, within thirty (30) days of
receipt of the Completion Notice, either reject the Completion Notice
specifying, in good faith, the defect or failure in such Fiber
Acceptance Testing or give QWEST written notice of acceptance of such
Fiber Acceptance Testing (the period from the date of GTE's receipt of
the Completion Notice to the date of QWEST's receipt of GTE's notice
of rejection or acceptance being referred to herein as the "GTE Review
Period"). In the event GTE rejects the Completion Notice, QWEST shall
promptly, and not later than seven days, and at no cost to GTE,
commence to remedy the defect or failure. Thereafter QWEST shall
again give GTE a Completion Notice with respect to such GTE Fibers.
The foregoing procedure shall apply again and successively thereafter
for a total of two attempts to remedy the defect or failure. If QWEST
fails to adequately remedy or complete the defect or failure after two
attempts, GTE shall have the right to proceed promptly and in an
economically efficient manner to cure such defects or failures at
QWEST's cost and expense, which shall be paid by QWEST to GTE upon
demand, or at the election of GTE, offset from any IRU Fee payable by
GTE to QWEST with respect to such Segment or any other Segment. No
acceptance of, or failure by GTE to reject, the Completion Notice
shall be deemed to be a waiver of any rights or remedies of GTE under
this Agreement; provided that, any failure by GTE to timely reject as
set forth above shall operate as a constructive acceptance for
purposes of this Agreement. The date when GTE accepts or is deemed to
have accepted a Completion Notice or cures such defects at QWEST's
cost and expense as provided above with respect to a Segment is herein
defined as the "Acceptance Date".
ARTICLE V.
DOCUMENTATION
5.1 Notwithstanding the conditions and limitations set forth in
Section 3.6, QWEST shall provide GTE with a copy of all Underlying
Right Requirements (as defined in Section 11.1) applicable to each
Segment promptly following the grant to QWEST of the Underlying Right
pursuant to which such Underlying Right Requirements are imposed and,
in any event, on or before the date of completion of conduit
installation in such Segment (as defined in Exhibit B,
paragraph 3(ii)).
5.2 Not later than ninety (90) days after the Acceptance Date
for each Segment, QWEST shall provide GTE with the following
documentation:
(a) As-built drawings for such Segment in accordance with the
requirements described in Exhibit C ("As-Builts").
(b) Technical specifications of the optical fiber cable and
associated splices and other equipment placed in that Segment.
5.3 As a condition to, and effective upon receipt of, each IRU
Fee payment installment that is due upon QWEST's achievement of a
construction, installation, testing or acceptance milestone as set
forth in Exhibit B, QWEST shall deliver to GTE a lien waiver with
respect to liens in favor of QWEST arising out of QWEST's services in
accomplishing such milestone. Promptly following QWEST's receipt of
each such payment, QWEST shall use reasonable efforts to obtain (and
in any event on or before the Acceptance Date with respect to the
relevant Segment shall obtain) from each subcontractor that provided
services in accomplishing such milestone a lien waiver with respect to
liens arising out of such services and, upon receipt, deliver a copy
of each such lien waiver to GTE.
ARTICLE VI.
TERM
6.1 The grant of the IRUs hereunder with respect to each
Segment shall become effective on the first day when both (i) the
Acceptance Date with respect to that Segment has occurred and
(ii) QWEST has received payment in full of the IRU Fee with respect to
such Segment in accordance with Exhibit B, and, subject to the
provisions of Article X, such grant shall terminate at the end of the
economically useful life of the GTE Fibers, as reasonably determined
by GTE pursuant to Section 6.2 below. The period of each such grant
respecting each such Segment and IRU is herein defined as the "Term".
6.2 In the event that GTE, at any time, reasonably determines that
the GTE Fibers comprising any Segment have reached the end of their
economically useful life and desires to not retain the IRU in such
Segment, GTE shall have the right to abandon the IRU with respect to
such Segment by written notice to QWEST. If, at any time during or
after the last year of the Minimum Period (as defined in
Section 10.2(ii) below), with respect to any Segment, GTE fails to use
any of the GTE Fibers comprising such Segment for any period of thirty
(30) consecutive days (except to the extent that such non-use is as a
result of any of the events described in Article XX or as a result of
QWEST System maintenance, restoration, relocation, or reconfiguration
or as a result of the failure of QWEST to observe and perform the
terms of this Agreement), QWEST shall have the right to request GTE to
acknowledge that the GTE Fibers comprising such Segment have reached
the end of their economic life and, accordingly, has abandoned the GTE
Fibers comprising such Segment (which acknowledgment shall not be
unreasonably withheld or delayed). Upon any such notice of
abandonment or acknowledgment, the Term shall expire with respect to
such Segment and all rights to the use of such Segment shall revert to
QWEST without reimbursement of any fees or other payments previously
made with respect thereto, and from and after such time GTE shall have
no further rights or obligations hereunder with respect to such
Segment (subject to the provisions of Article XIX).
6.3 It is understood and agreed as between the parties that the
grant of the IRUs hereunder shall be treated for accounting and
federal and all applicable state and local tax purposes as the sale
and purchase of the GTE Fibers and a corresponding interest in QWEST's
rights in the Associated Property subject thereto, and that on and
after the Acceptance Date with respect to each Segment, GTE shall be
treated as the owner of the GTE Fibers and an interest in QWEST's
rights in the Associated Property comprising such Segment for such
purposes. The parties agree to file their respective financial
reports, income tax returns, property tax returns, and other returns
and reports for their respective Impositions (as such term is defined
in Section 33.1(e)) on such basis and, except as otherwise required by
law, not to take any positions inconsistent therewith. QWEST shall
retain legal title to the entire QWEST System, including the GTE
Fibers and Associated Property subject to the IRUs hereunder. In the
event the grant is not treated as a sale and purchase for tax
purposes, the parties shall pay any taxes arising by reason of such
tax treatment on the same basis as if it had been treated as a sale
and purchase. Each party agrees to indemnify the other with respect
to any late filing penalties, interest or fees incurred as a result of
such party's failure to provide the other with such information solely
in such party's possession or control that may be necessary in order
to timely make any such filing.
6.4 This Agreement shall become effective on the date hereof and
shall terminate on the date when, after completion and delivery of all
Segments required to be delivered hereunder, all the Terms of all such
Segments shall have expired; provided that, those provisions of this
Agreement which, by their express terms, are intended to survive such
ter mination, shall survive.
ARTICLE VII.
NETWORK ACCESS; REGENERATION FACILITIES
7.1 (a) QWEST shall provide GTE with access to, and GTE shall
have the right to connect, at GTE's sole cost and expense, its
telecommunications system with, the GTE Fibers at various network
access points on the QWEST System right-of-way in each of the endpoint
cities and intermediate point cities along the route of each Segment
and at such additional locations along the QWEST System right-of-way
as may be requested by GTE (each such access point being referred to
as a "Connecting Point"). The specific locations of each such
Connecting Point shall be as mutually reasonably agreed upon by the
parties in good faith, subject to the Underlying Rights Requirements
and QWEST obtaining other required permits, authorizations and
approvals (which QWEST agrees to use its best efforts to obtain). Any
such connection will be performed by QWEST, at GTE's sole cost and
expense, in accordance with QWEST's applicable specifications and
operating procedures. GTE shall pay QWEST's Costs for each such
connection within thirty (30) days of the date of GTE's receipt of
QWEST's invoice therefor. In order to schedule a connection of this
type, GTE shall request and coordinate such work not less than ninety
(90) days in advance of the date the connection is requested to be
completed. Such work will be restricted to a Planned System Work
Period ("PSWP"), as defined in Section 33.1(i), unless otherwise
agreed to in writing for specific projects. Subject to all applicable
Underlying Rights Requirements, GTE shall also be provided reasonable
access by QWEST to any Connecting Point at all times. GTE shall have
no limitations on the types of electronics or technologies employed to
utilize the GTE Fibers, subject to mutually agreeable safety
procedures and so long as such electronics or technologies do not
interfere with the use of or present a risk of damage to any portion
of the QWEST System.
(b) QWEST may route the GTE Fibers through QWEST's separate
terminal, endlink, POP or Regeneration Facilities at its sole
discretion so long as such routing does not have a material adverse
effect on the security, the safety or GTE's use of the GTE Fibers or
Associated Property hereunder and QWEST is responsible for all costs
and expenses associated therewith.
7.2 (a) QWEST will provide GTE with regeneration site
facilities as identified on Exhibit F or as mutually agreed by the
parties to be located at approximately sixty (60) mile intervals along
the QWEST System right-of-way, in each case consisting of and
providing space of approximately
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square feet and amenities (except for the operating costs
associated therewith expressly required to be paid by GTE pursuant to
Section 8.2), as described in Exhibit F ("Regeneration Facilities") at
the rates set forth below. The parties acknowledge that (i) the
locations of such Regeneration Facilities shall be coincident with the
locations of QWEST's own Regeneration Facilities. In addition, QWEST
shall provide to GTE at GTE's Prorated Cost (as defined below in this
paragraph (a)) POP or terminal facilities of approximately
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square feet along the QWEST System right-of-way at such
locations as may be mutually determined by GTE and QWEST, subject to
space and power availability and Underlying Rights Requirements.
GTE's Occupancy of and access to all such Regeneration Facility Sites
(or POP or terminal facilities) shall include separate, secured, 24-hour-per-day
building access. Any Regeneration Facilities (or POP or
terminal facilities) provided by QWEST to GTE shall be at GTE's
Prorated Cost. For purposes of the foregoing two sentences, GTE's
Prorated Cost for Regeneration facilities means $
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per facility and for POP or terminal facilities means $
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per facility.
(b) Except as provided in Section 8.2 or as otherwise agreed
upon, in writing, by the parties, all amounts payable under this
Section 7.2 shall be due upon the date that the subject facility is
available for occupancy by GTE and shall be paid in the manner
specified in Section 2.2.
7.3 Notwithstanding any qualifications or limitations on
QWEST's obligations under this Article or elsewhere in this Agreement,
including but not limited to the qualification that any obligation of
QWEST is subject to the Underlying Rights Requirements, QWEST is
obligated to use its best efforts to obtain and provide any requisite
consents, approvals, permits, authorizations and rights as may be
necessary in order for GTE to be able to install necessary equipment
and/or facilities, to have access to and to maintain its equipment and
facilities, to fully utilize the GTE Fibers, Associated Property, and
the IRU granted or to be granted to GTE under the Agreement, and to
provide maintenance on the Qwest System should QWEST not provide the
maintenance services set out in Exhibit H. QWEST agrees that in the
event GTE's ability to utilize and maintain the GTE Fibers as herein
described is impeded in a material way as a result of the Underlying
Rights Requirements, QWEST agrees to use all commercially reasonable
efforts to amend the Underlying Rights or secure additional rights in
order to provide GTE with full access to the GTE Fibers.
ARTICLE VIII.
OPERATIONS
8.1 Each party shall have full and complete control and
responsibility for determining any network and service configuration
or designs, routing configurations, regrooming, rearrangement or
consolidation of channels or circuits and all related functions with
regard to the use of that party's Dark Fiber.
8.2 GTE shall reimburse QWEST for GTE's proportionate share of
all reasonable and necessary operating costs incurred by QWEST in
connection with the Regeneration Facilities (or alternatively
requested POP or terminal facilities) provided pursuant to
Section 7.2(a), including its proportionate share of any monthly lease
costs for any such facilities and/or underlying property that QWEST
leases (including, to the extent included in such lease costs, base
rent, maintenance, insurance, security and taxes), maintenance of such
facilities, and all power and utility fees and charges, excluding any
lease costs for underlying rights on the right-of-way. GTE's
proportionate share of such operating costs, including a proportionate
share of common area costs, shall be the ratio that the floor space
provided to GTE in any such facility (including a proportionate share
of the common area) bears to (i) in the case of lease costs, the total
space in such facility, and (ii) in the case of all other costs
(including common area costs), the total utilized space in such
facility. QWEST shall submit invoices to GTE on an annual basis for
GTE's pro rata share of such operating costs during the preceding
twelve months. GTE's reimbursement obligations for insurance and
taxes pursuant to this Section 8.2 shall in no event be duplicative of
GTE's payment obligations for insurance or taxes, respectively, as
provided in Article XIV and XV hereof, and in no event shall relieve
QWEST of its payment obligations for insurance costs or taxes,
respectively, as provided in Article XIV and XV hereof.
8.3 GTE acknowledges and agrees that, except to the extent
expressly provided pursuant to Section 7.2, QWEST is not supplying nor
is QWEST obligated to supply to GTE any optronics or electronics or
optical or electrical equipment or other facilities, including without
limitation, generators, batteries, air conditioners, fire protection
and monitoring and testing equipment, all of which are the sole
responsibility of GTE, nor is QWEST responsible for performing any
work other than as specified in this Agreement.
8.4 Upon not less than one hundred twenty (120) days' written
notice from QWEST to GTE, QWEST may, subject to GTE's prior written
approval (which approval shall not be unreasonably delayed or
withheld) substitute for the GTE Fibers on the QWEST System, or any
Segment or Segments comprising a portion of said QWEST System, an
equal number of alternative fibers along the same or an alternative
route; provided that in any such event, such substitution (i) shall be
in accordance with GTE's applicable specifications and operating
procedures, (ii) shall be effected at the sole cost of QWEST,
including, without limitation, all disconnect and reconnect costs,
fees and expenses, (iii) shall be constructed and tested in accordance
with the specifications and drawings set forth in Exhibits C and D and
Section 4.2, and incorporate fiber meeting the specifications set
forth in Exhibit E, and (iv) shall not interrupt or adversely affect
the use, operation or performance of GTE's network or business, or
change any Connecting Points or endpoints of any Segment or change the
location of any Regeneration Facilities (or POPs or terminal
facilities) used by GTE hereunder or any other GTE POP, node or switch
facilities, all as determined by GTE, in its sole discretion.
ARTICLE IX.
MAINTENANCE AND REPAIR OF THE QWEST SYSTEM
9.1 From and after the Acceptance Date with respect to each
Segment, the maintenance of the QWEST System comprising such Segment
shall be provided in accordance with the maintenance requirements and
procedures set forth in Exhibit H hereto.
ARTICLE X.
PERMITS; UNDERLYING RIGHTS; RELOCATION
10.1 QWEST covenants and agrees that it shall obtain, during the
course of construction of, and in any event on or before the
completion of conduit installation with respect to, each Segment of
conduit to be delivered hereunder all Underlying Rights (as defined
below) and such other rights, licenses, permits, authorizations,
consents and approvals (including, without limitation, any necessary
local, state, federal or tribal authorizations and environmental
permits) that are necessary in order to permit QWEST to construct,
install and maintain the conduit and the GTE Fibers to be encompassed
in such Segment in accordance with the terms and conditions hereof.
QWEST further covenants and agrees that it shall obtain, during the
course of construction of and in any event on or before the Acceptance
Date with respect to each Segment to be delivered hereunder, any and
all rights-of way, easements, licenses and other agreements relating
to the grant of rights and interests in and/or access to the real
property underlying the QWEST System (collectively, the "Underlying
Rights") and such other rights, licenses, permits, authorizations,
consents and approvals (including without limitation, any necessary
local, state, federal or tribal authorizations and environmental
permits) that are necessary in order to permit QWEST to grant the
IRUs, and otherwise to perform its obligations hereunder, in
accordance with the terms and conditions hereof, and to (and all of
which Underlying Rights shall) permit GTE to use the GTE Fibers and
Associated Property as provided and permitted hereunder and in
accordance with the terms and conditions hereof. QWEST shall use its
best efforts to cause the terms of each such Underlying Right to
provide GTE with notice of any default on the part of QWEST and to
permit GTE to cure, on behalf of QWEST, any such default by QWEST and,
thereafter, to continue the use of such Underlying Right in accordance
with QWEST's rights and interests thereunder and, if GTE at any time
cures such default by QWEST, QWEST shall reimburse GTE for any and all
amounts reasonably paid by GTE promptly upon demand.
10.2 QWEST further covenants and agrees that, with respect to
each Underlying Right that is necessary in order to continue and
maintain the IRUs granted hereunder, and to permit GTE to exercise its
rights to use the GTE Fibers and Associated Property, in each case in
accordance with the terms and conditions hereof:
(i) QWEST shall, for a period of
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years from the date hereof (or until the earlier to occur of
(A) the expiration of the economically useful life of the GTE Fibers,
as determined pursuant to Section 6.2, or (B) the expiration or
termination of the term of a particular Underlying Right, so long as
any such termination is not effected as a result of any failure of
QWEST (not caused as a result of GTE's failure to observe and perform
its obligations hereunder) to observe and perform its duties,
obligations and responsibilities under such Underlying Right or under
this Agreement, including under this Article X), observe and perform
each and every of its obligations under each document, agreement or
instrument granting or conveying to QWEST such an Underlying Right if
the failure to observe and perform any such obligation or obligations
would permit the grantor of such Underlying Right to terminate such
Underlying Right prior to its stated expiration date, or would
otherwise materially, adversely impair or affect GTE's ability to use
the GTE Fibers and Associated Property, or exercise its rights with
respect thereto, as provided and permitted hereunder; and
(ii) QWEST shall either require that the initial stated
term of each such Underlying Right be for a period that does not
expire, in accordance with its ordinary terms, prior to the last day
of the Minimum Period (as hereinafter defined with respect to each
Segment) or, if the initial stated term of any such Underlying Right
expires, in accordance with its ordinary terms, on a date earlier than
the last day of the Minimum Period, QWEST shall at its cost exercise
any renewal rights thereunder, or otherwise acquire such extensions,
additions and/or replacements as may be necessary, in order to cause
the stated term thereof to be continued until a date that is not
earlier than the last day of the Minimum Period. The "Minimum Period"
shall be, with respect to each Segment, the period from the date on
which construction of such Segment commences until the
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CONFIDENTIAL TREATMENT##
anniversary of such date; and
(iii) From and after the last day of the Minimum Period,
QWEST at its sole cost shall use its best efforts (without being
required to expend commercially unreasonably amounts therefor) to
obtain such extensions and/or renewals as may be necessary in order to
cause the stated term of each such Underlying Right to be continued
for an additional period or periods of, in the aggregate,
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CONFIDENTIAL TREATMENT##
years following the Minimum Period or until the earlier
expiration of the economically useful life of the GTE Fibers, as
determined pursuant to Section 6.2; provided that QWEST shall not be
required to expend, as consideration for any such renewal or
extension, more than the fair market rate payable at such time for
similar rights and terms except to the extent that GTE agrees at its
option to pay directly or reimburse QWEST for any amounts required to
be paid in excess of such fair market rate to renew or extend such an
Underlying Right; and
(iv) Throughout the term of each such Underlying Right, QWEST
shall at its reasonable cost and expense defend and protect QWEST's
rights in and interests under the Underlying Rights and GTE's right to
use the GTE Fibers and Associated Property as provided and permitted
hereunder against interfering or infringing rights, interests or
claims of third parties.
10.3 Upon the expiration or termination of any Underlying Right
that is necessary in order to grant, continue or maintain an IRU
granted hereunder in accordance with the terms and conditions hereof,
so long as QWEST shall have fully observed and performed its
obligations under this Article X with respect thereto, the Term of the
IRUs hereunder with respect to any Segment or Segments affected
thereby shall automatically expire upon such expiration or
termination.
10.4 If, after the Acceptance Date with respect to a Segment,
QWEST is required by a third party with legal authority to so require
(including, without limitation, the grantor of an Underlying Right,
but only to the extent that such relocation is not required as a
result of a failure by QWEST to observe and perform its obligations
under such Underlying Right or this Agreement), or if GTE agrees, to
relocate any portion of such Segment including any of the facilities
used or required in providing the IRUs in such Segment hereunder,
QWEST shall proceed with such relocation, including, but not limited
to, the right, in good faith, to reasonably determine the extent of,
the timing of, and methods to be used for such relocation; provided
that (i) the route of any such relocation shall be subject to the good
faith agreement of the parties with a bona fide interest therein,
(ii) GTE shall be kept fully informed of all other determinations made
by QWEST in connection with such relocation, and (iii) any such
relocation shall be constructed and tested in accordance with the
specifications and drawings set forth in Exhibits C and D, and
incorporate fiber meeting the specifications set forth in Exhibit E.
GTE shall reimburse QWEST for its proportionate share of the Costs of
such relocation of the portion of the Segment so relocated, reduced by
such amount, if any, of the portion of such Costs as are reimbursed to
QWEST by the party requiring such relocation, as follows: (i) if the
affected portion of the Segment includes any conduit other than the
conduit housing the GTE Fibers for which QWEST is responsible for
relocation costs, the total Costs of relocation of the conduits (i.e.,
relocation of the conduits only without regard to whether the conduits
contain fibers) shall be allocated based on the overall number of
conduits relocated; (ii) such Costs allocated to the conduit carrying
the GTE Fibers plus the Costs specifically associated with the
relocation of the fiber (i.e., relocation of the fiber only without
regard to relocation of conduit) shall be further allocated to GTE
based on GTE's proportionate share of (A) all Costs of fiber
acquisitions, splicing and testing, prorated based on the total fiber
count in the affected Cable, as so relocated, and (B) all other Costs
associated with the relocation of the conduit housing the affected
Cable, prorated based on the total number of owners (including QWEST)
and holders of IRUs or equivalent interests (including long-term
lessees) (each, an "Interest Holder") in the affected Cable, as so
relocated. GTE shall have the right to review and audit all Costs
incurred in connection with such relocation. QWEST shall deliver to
GTE updated As-Builts with respect to the relocated Segment not later
than sixty (60) days following the completion of such relocation. Any
condemnation or taking under the power of eminent domain of all or any
portion of a Segment shall be deemed a relocation required by a third
party with legal authority to so require, and such affected Segment,
or portion thereof, shall be relocated in accordance with this
Section 10.4 and any condemnation proceeds received by QWEST shall be
applied to such relocation as provided above.
ARTICLE XI.
USE OF QWEST SYSTEM
11.1 The requirements, restrictions, and/or limitations upon
GTE's right to use the GTE Fibers and Associated Property as provided
and permitted under this Agreement imposed under, and associated
safety, operational and other rules and regulations imposed in
connection with, the Underlying Rights are referred to collectively as
the "Underlying Rights Requirements." QWEST represents and warrants
that, it has made available to GTE for its review and inspection a
copy of certain documents, agreements, or instruments pursuant to
which QWEST has been granted an Underlying Right as of the date hereof
(the "Existing Underlying Rights"), and certain associated safety,
operational and other rules and regulations imposed in connection with
the exercise of its rights thereunder (all of which are identified on
Exhibit I hereto). GTE hereby accepts the Existing Underlying Rights
and the Underlying Rights Requirements associated therewith. QWEST
represents that it is not in default under any of the Existing
Underlying Rights that would permit the grantor of such Underlying
Right to terminate such Underlying Right prior to its stated
expiration date, or would otherwise materially, adversely impair or
affect GTE's ability to use the GTE Fibers and Associated Property, or
exercise its rights with respect thereto, as provided and permitted
hereunder, and, to the best of its knowledge, none of the grantors are
in default under the Existing Underlying Rights. With respect to each
Underlying Right (other than the Existing Underlying Rights) obtained
after the date hereof by QWEST (or an Underlying Right existing on the
date hereof under any document, agreement or instrument delivered
after the date hereof) in carrying out its obligations hereunder from
the same type of grantor as a grantor of any Existing Underlying
Right, QWEST represents and warrants that the terms and conditions
thereof, and rules and regulations imposed in connection therewith,
shall not impose materially more onerous limitations and restrictions
on the rights of GTE to use the GTE Fibers and Associated Property as
permitted and provided hereunder than those imposed by such type of
grantor under and in connection with the Existing Underlying Rights
and Underlying Rights Requirements associated therewith. To the
extent that any such Underlying Right documents, agreements or
instruments were or hereafter are provided in a redacted format to
protect confidential and proprietary business terms, QWEST represents
and warrants that no language or information so redacted constitutes
an Underlying Rights Requirement nor otherwise imposes material
requirements, restrictions and/or limitations upon GTE's right to use
the GTE Fibers and Associated Property as provided and permitted
hereunder. QWEST represents to GTE that the map heretofore provided
to GTE delineating the general location of rights of way, easements
and other rights held by QWEST under the principal agreements
evidencing the Existing Underlying Rights is a true and complete
depiction, in all material respects, with respect to the general
location of such Existing Underlying Rights that relate to the GTE
Fibers to be installed along the QWEST System as contemplated by this
Agreement.
11.2 GTE represents, warrants and covenants that it will use the
GTE Fibers and Associated Property in compliance with (i) all
applicable government codes, ordinances, laws, rules, regulations
and/or restrictions, and (ii) subject to QWEST's obligations under
Section 11.1, the Underlying Rights Requirements.
11.3 In addition to the other rights provided hereunder, but
subject to the provisions of Article VII, the IRUs granted hereunder
shall include the right at GTE's cost to install additional equipment,
or replace existing equipment, in the facility space provided to GTE
pursuant to Article VII, subject to the Underlying Rights
Requirements.
11.4 QWEST agrees and acknowledges that it has no right to use
the GTE Fibers during the Term hereof, and that, from and after the
effective date of the grant of each IRU hereunder, QWEST shall keep
the GTE Fibers, the Associated Property and the IRUs granted hereunder
free from (i) any liens of any third party attributable to QWEST, and
(ii) any rights or claims of any third party attributable to QWEST, as
and to the extent required pursuant to Article X hereof. In addition,
QWEST agrees that, from and after the execution of this Agreement and
until the effective date of the grant of each IRU hereunder with
respect to any Segment, it shall obtain from any entity in favor of
which QWEST in its discretion shall have granted a security interest
or lien on all or part of such Segment a written nondisturbance
agreement substantially to the effect that such lienholder
acknowledges GTE's rights and interests in and to the GTE Fibers, the
Associated Property and the IRU's hereunder and agrees that the same
shall not be diminished, disturbed, impaired or interfered with by
such lienholder.
11.5 Subject to the provisions of Article XXV and this
Article XI, GTE may use the GTE Fibers, the Associated Property and
the IRUs for any lawful telecommunications purpose. For purposes of
this Section 11.5 "telecommunications" shall have the meaning as used
and interpreted in 47 U.S.C. Sec.153(2)(43). GTE agrees and
acknowledges that it has no right to use any of the fibers, other than
the GTE Fibers, included in the Cable or otherwise incorporated in the
QWEST System, and that GTE shall keep any and all of the QWEST System,
other than the IRU in the GTE Fibers or in the Associated Property,
free from any liens, rights or claims of any third party attributable
to GTE.
11.6 GTE and QWEST shall promptly notify each other of any
matters pertaining to, or the occurrence (or impending occurrence) of,
any event which could give rise to any damage or impending damage to
or loss of the QWEST System that are known to such party. Without
limiting the generality of the foregoing, QWEST shall promptly forward
to GTE a copy of any notice of default received by QWEST with respect
to its obligations under any Underlying Right if such default is not
promptly cured by QWEST.
11.7 GTE shall not use the GTE Fibers or any related facilities
or equipment in a way which physically interferes in any way with or
adversely affects the use of the fibers or cable of any other person
using the QWEST System, it being expressly acknowledged that the QWEST
System includes or will include other participants, including QWEST
and other owners and holders of Dark Fiber IRUs and telecommunication
system operations. QWEST shall not use any other fibers in the QWEST
System in a way which physically interferes with or adversely affects
the use of the GTE Fibers, and shall obtain a similar agreement from
any person that acquires the right to use fibers in the QWEST System
after the date hereof.
11.8 GTE and QWEST each agree to cooperate with and support the
other in complying with any requirements applicable to their
respective rights and obligations hereunder by any governmental or
regulatory agency or authority.
11.9 QWEST agrees, so long as any such action would not violate
the terms of any Underlying Right, upon request of GTE, to execute,
file and/or record such documents or instruments as GTE shall deem
reasonably necessary or appropriate to evidence or safeguard the IRUs
granted to GTE hereunder. GTE agrees to reimburse QWEST for all
reasonable costs and out-of-pocket expenses (including, without
limitation, reasonable fees and expenses of legal counsel) incurred by
QWEST in fulfilling its obligations under this Section 11.9.
ARTICLE XII.
INDEMNIFICATION
12.1 Subject to the provisions of Articles XIII and XVIII, QWEST
hereby releases and agrees to indemnify, defend, protect and hold
harmless GTE and its employees, officers and directors, from and
against, and assumes liability for:
(a) Any injury, loss or damage to any person (including GTE),
tangible property or facilities of any person or entity (including
reasonable attorneys' fees and costs) to the extent arising out of or
resulting from the acts or omissions, negligent or otherwise, of
QWEST, its officers, employees, servants, affiliates, agents,
contractors, licensees, invitees or vendors arising out of or in
connection with a default (other than a default caused by a failure of
GTE to perform or comply with its obligations hereunder) by QWEST in
the performance of its obligations or breach of its representations
under this Agreement (including, without limitation, any default by
QWEST in the performance of its obligations under Article X with
respect to the Underlying Rights and under Article XI with respect to
its use of the QWEST System); and
(b) Any claims, liabilities or damages, including reasonable
attorneys' fees and costs, arising out of any violation by QWEST of
any regulation, rule, statute or court order of any local, state or
federal governmental agency, court or body in connection with the
performance of its obligations under this Agreement.
12.2 Subject to the provisions of Articles XIII and XVIII, GTE
hereby releases and agrees to indemnify, defend, protect and hold
harmless QWEST, and its employees, officers and directors, from and
against, and assumes liability for:
(a) Any injury, loss or damage to any person (including QWEST),
tangible property or facilities of any person or entity (including
reasonable attorneys' fees and costs) to the extent arising out of or
resulting from the acts or omissions, negligent or otherwise, of GTE,
its officers, employees, servants, affiliates, agents, contractors,
licensees, invitees or vendors arising out of or in connection with a
default (other than a default caused by a failure of QWEST to perform
or comply with its obligations hereunder) by GTE in the performance of
its obligations or breach of its representations under this Agreement
(including, without limitation, any default by GTE in the performance
of its obligations under Article XI with respect to its use of the
QWEST System); and
(b) Any claims, liabilities or damages, including reasonable
attorneys' fees and costs, arising out of any violation by GTE of any
regulation, rule, statute or court order of any local, state or
federal governmental agency, court or body in connection with its use
of the IRUs and/or the GTE Fibers and Associated Property hereunder.
12.3 The parties agree to promptly provide each other with
notice of any lawsuit, judicial, administrative or other dispute
resolution action or proceeding, or claim of which it becomes aware
and which it believes may result in an indemnification obligation
hereunder (each, an "Action"); provided that the failure to provide
any such notice shall not affect the indemnifying party's
indemnification obligation unless the indemnifying party is actually
prejudiced by the failure to receive such notice. After receipt of
any such notice, if the indemnifying party shall acknowledge in
writing to the indemnified party that the indemnifying party shall be
obligated under the terms of this indemnity hereunder in connection
with such Action, then the indemnifying party shall be entitled, if it
so elects (i) to take control of the defense and investigation of such
Action, (ii) to employ and engage attorneys of its own choice to
handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include
both the indemnifying party and the indemnified party and the
indemnified party has been advised in writing by counsel that there
may be one or more legal defenses available to such indemnified party
that are different from or additional to those available to the
indemnifying party, in which case the indemnified party shall also
have the right to employ its own counsel in any such case with the
reasonable fees and expenses of such counsel being borne by the
indemnifying party, and (iii) to compromise or settle such Action,
which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably
withheld. Notwithstanding anything in this Section 12.3 to the
contrary, (i) if there is a reasonable probability that an
indemnifiable claim may materially adversely affect the indemnified
party, other than as a result of money damages or other money
payments, the indemnified party shall have the right to participate in
such defense, compromise or settlement and the indemnifying party
shall not, without the indemnified party's written consent (which
consent shall not be unreasonably withheld), settle or compromise any
indemnifiable claim or consent to entry of any judgment in respect
thereof unless such settlement, compromise or consent includes as an
unconditional term thereof the giving by the claimant or the plaintiff
to the indemnified party a release from all liability in respect of
such indemnifiable claim.
12.4 The parties hereby expressly recognize and agree that each
party's said obligation to indemnify, defend, protect and save the
other harmless is not a material obligation to the continuing
performance of the parties' other obligations, if any, hereunder. In
the event that a party shall fail for any reason to so indemnify,
defend, protect and save the other harmless, the injured party hereby
expressly recognizes that its sole remedy in such event shall be the
right to bring legal proceedings against the other party for its
damages as a result of the other party's said failure to indemnify,
defend, protect and save harmless. The obligations of the parties
under this Article XII shall survive the expiration or termination of
this Agreement.
12.5 Nothing contained herein shall operate as a limitation on
the right of either party hereto to bring an action for damages
against any third party, including 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
GTE Fibers or the QWEST System; provided, however, that each party
hereto shall assign such rights or claims, execute such documents and
do whatever else may be reasonably necessary to enable the other party
to pursue any such action against such third party.
ARTICLE XIII.
LIMITATION OF LIABILITY
13.1 Notwithstanding any provision of this Agreement to the
contrary, except to the extent caused by its own willful misconduct,
neither party shall be liable to the other party for any special,
incidental, indirect, punitive or consequential damages, whether
foreseeable or not, arising out of, or in connection with such party's
failure to perform its respective obligations or breach of its
respective representations hereunder, including, but not limited to,
loss of profits or revenue (whether arising out of transmission
interruptions or problems, any interruption or degradation of service
or otherwise), cost of capital, or claims of customers, in each case
whether occasioned by any construction, reconstruction, relocation,
repair or maintenance performed by, or failed to be performed by, the
other party or any other cause whatsoever, including breach of
contract, breach of warranty, negligence, or strict liability, all
claims with respect to which such special, incidental, indirect,
punitive or consequential damages are hereby specifically waived.
Nothing contained herein shall be construed to prohibit or reduce the
payment by QWEST of the amounts described in Section 18.2 and which
the parties acknowledge are the sole rights and remedies of GTE to the
extent provided in Section 18.2(e).
ARTICLE XIV.
INSURANCE
14.1 During the construction period with respect to any Segment,
and until the Acceptance Date with respect thereto, QWEST shall
procure and maintain in force the following insurance coverage from
companies lawfully approved to do business in the state where the
construction will be performed:
(a) not less than $5,000,000 combined single-limit liability
insurance, on an occurrence basis, for personal injury and property
damage, including, without limitation, injury or damage arising from
the operation of vehicles or equipment and liability for completed
operations;
(b) workers' compensation insurance in amounts required by
applicable law and employers' liability insurance with a limit of at
least $1,000,000 per occurrence;
(c) automobile liability insurance covering death or injury to
any person or persons, or damage to property arising from the
operation of vehicles or equipment, with limits of not less than
$2,000,000 per occurrence; and
(d) any other insurance coverages required pursuant to QWEST's
right-of-way agreements with railroads or other third parties.
QWEST shall require its subcontractors who are engaged in
connection with the construction of the QWEST System to maintain
insurance in the types and amounts as would be obtained by a prudent
person to provide adequate protection against loss. In all
circumstances, QWEST shall require its subcontractors to carry a
minimum of $1,000,000 in commercial general liability; and
(e) GTE shall be listed as an additional insured on all
policies set forth above, except workers' compensation. QWEST shall
provide to GTE a certificate of insurance evidencing such insurance
coverage. Evidence of insurance furnished shall contain a clause
stating GTE "shall be notified in writing at least thirty (30) days
prior to any cancellation of, or any material change or new exclusions
in the policy."
14.2 Following the Acceptance Date with respect to each Segment,
and throughout the remaining term of the IRU with respect to such
Segment, each party shall procure and maintain in force, at its own
expense:
(a) not less than $5,000,000 combined single limit liability
insurance, on an occurrence basis, for personal injury and property
damage, including, without limitation, injury or damage arising from
the operation of vehicles or equipment and liability for completed
operations;
(b) workers' compensation insurance in amounts required by
applicable law and employers' liability insurance with a limit of at
least $1,000,000 per occurrence;
(c) automobile liability insurance covering death or injury to
any person or persons, or damage to property arising from the
operation of vehicles or equipment, with limits of not less than
$2,000,000 per occurrence; and
(d) any other insurance coverages specifically required of such
party pursuant to QWEST's right-of-way agreements with railroads or
other third parties.
14.3 Both parties expressly acknowledge that a party shall be
deemed to be in compliance with the provisions of this Article if it
maintains an approved self insurance program providing for a retention
of up to $1,000,000. If either party provides any of the foregoing
coverages on a claims-made basis, such policy or policies shall be for
at least a three-year extended reporting or discovery period. Unless
otherwise agreed, GTE's and QWEST's insurance policies shall be
obtained and maintained with companies rated "A" or better by Best's
Key Rating Guide and each party shall provide the other with an
insurance certificate confirming compliance with this requirement for
each policy providing such required coverage.
14.4 In the event either party fails to obtain the required
insurance or to obtain the required certificates from any contractor
and a claim is made or suffered, such party shall indemnify and hold
harmless the other party from any and all claims for which the
required insurance would have provided coverage. Further, in the
event of any such failure which continues after seven (7) days'
written notice thereof by the other party, such other party may, but
shall not be obligated to, obtain such insurance and will have the
right to be reimbursed for the cost of such insurance by the party
failing to obtain such insurance.
14.5 In the event coverage is denied or reimbursement of a
properly presented claim is disputed by the carrier for insurance
provided above, the party carrying such coverage shall make good-faith
efforts to pursue such claim with its carrier.
14.6 GTE and QWEST shall each obtain from the insurance
companies providing the coverages required by this Agreement the
permission of such insurers to allow such party to waive all rights of
subrogation and such party does hereby waive all rights of said
insurance companies to subrogation against the other party, its parent
corporation, affiliates, subsidiaries, assignees, officers, directors,
and employees or any other party entitled to indemnity under this
Agreement.
ARTICLE XV.
TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS
15.1 The parties acknowledge and agree that it is their mutual
objective and intent to (i) minimize, to the extent feasible, the
aggregate Impositions (as defined in Section 33.1(e)) payable with
respect to the QWEST System and (ii) share such Impositions according
to their respective interests in the QWEST System , and that they will
cooperate with each other and coordinate their mutual efforts to
achieve such objectives in accordance with the provisions of this
Article XV.
15.2 (a) QWEST shall be responsible for and shall timely pay
any and all Impositions with respect to the construction or operation
of the QWEST System which Impositions are (i) imposed or assessed
prior to the Acceptance Date, (ii) imposed or assessed with respect to
events which occurred or property rights or obligations of QWEST which
existed prior to the acceptance date; or (iii) imposed or assessed
(regardless of the time) with respect to the QWEST System in exchange
for the approval of construction in the original agreement which
resulted in the granting of an Underlying Right. Notwithstanding the
foregoing obligations, QWEST shall have the right to challenge any
such Impositions so long as the challenge of such Impositions does not
materially, adversely affect the title, rights or property to be
delivered to GTE pursuant hereto.
(b) Real and/or personal property or ad valorem taxes
shall be prorated between QWEST and GTE based on the period the
Property was owned by each respective party during the fiscal period
for which such taxes were imposed by the taxing jurisdiction (as such
fiscal period is reflected on the bill rendered by such taxing
jurisdiction). If the fiscal period is not identified on the tax
bill, proration between QWEST and GTE shall be calculated based on the
privilege period of the taxing jurisdiction. QWEST and GTE shall pay
or be reimbursed for real and/or personal property taxes (including
instances in which such property taxes have been paid before the
Acceptance Date) prorated on this basis.
15.3 Except as to Impositions described in paragraphs (ii) and
(iii) of Section 15.2, which are clearly for QWEST's account following
the Acceptance Date, QWEST shall timely pay any and all Impositions
imposed upon or with respect to the QWEST System to the extent such
Impositions may not feasibly be separately assessed or imposed upon or
against the respective ownership interests of QWEST and GTE in the
QWEST System; provided that, upon receipt of a notice of any such
Imposition, QWEST shall promptly notify GTE of such Imposition and
following payment of such Imposition by QWEST, GTE shall promptly
reimburse QWEST for its proportionate share of such Imposition, which
share shall be determined (i) to the extent possible, based upon the
manner and methodology used by the particular authority imposing such
Impositions (e.g., on the cost of the relative property interests,
historic or projected revenue derived therefrom, or any combination
thereof) and, if based upon projected revenue or gross receipts, then
based on the relative number of GTE Fibers in the affected portion of
the QWEST System compared to the total number of fibers in the
affected portion of the QWEST System during the relevant tax period
which are subject to an indefeasible right of use or are otherwise in
use; or (ii) if the same cannot be so determined, then based upon
GTE's proportionate share of the total fiber count in the affected
portion of the QWEST System. If QWEST's assessed value, for property
tax purposes, is based on its entire operation in any state
(i.e., central assessment), QWEST and GTE shall work together in good
faith to allocate a proper portion n of said assessment to the QWEST
System and GTE's ownership interest in the QWEST System. If GTE's
assessed value, for property tax purposes, is based on a duplicate
assessment of the same property as QWEST, QWEST and GTE shall work
together in good faith to allocate a portion of this duplicate
assessment to each party. QWEST and GTE shall work together in good
faith to aggressively defend against such duplicate assessment in any
state which attempts to impose a duplicate assessment. QWEST shall
provide GTE with reasonable supporting documentation for Impositions
for which QWEST seeks reimbursement. Any reimbursement made under this
Section 15.3 shall be in an amount that, after deductions of all
Impositions required to be paid by QWEST in respect of the receipt or
accrual of such reimbursement and after consideration of any deduction
to which QWEST may be entitled with respect to the payment or accrual
of the Impositions which have been reimbursed shall be equal to the
amount otherwise required to be paid by QWEST hereunder. Hereafter,
such additional amount or amounts shall be referred to as the "Gross-up Amount."
QWEST shall, upon request, provide GTE with documentation
in support of any Gross-up Amount so as to ensure that both parties
are made whole in a manner that is consistent with the mutual
objectives set forth in section 15.1 of the Agreement. If such Gross-up Amount
exceeds $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
, GTE may elect to engage the services of an independent
consultant, at GTE's sole cost and expense, to review QWEST's
computation of such Gross-up Amount. Any independent consultant
selected by GTE shall be subject to approval by QWEST, which such
approval shall not be unreasonably withheld, and such independent
consultant shall be subject to confidentiality restrictions as may be
determined in QWEST's sole discretion. Further, if, after review of
such documentation or otherwise, in the event the parties are unable
to agree upon the amount of the Gross-up Amount, such dispute shall be
resolved pursuant to Article XXI of the Agreement.
15.4 Upon notice of the assertion or proposed assertion of any
Imposition described in Section 15.3 (including Impositions that
trigger a Gross-up Amount) QWEST shall promptly and in good faith
consult with GTE concerning the underlying facts and whether to
contest or continue to contest such assertion or proposed assertion.
Notwithstanding any provision herein to the contrary, QWEST shall have
the right to contest any Imposition described in Section 15.3, above,
(including Impositions which trigger a Gross-up Amount), provided that
such contest does not materially adversely affect GTE. Such contest
may be pursued by any lawful means including by non-payment of such
Imposition provided such non-payment contest does not materially,
adversely affect the title, rights or property to be delivered to GTE
pursuant hereto. The out-of-pocket costs and expenses (including
reasonable attorneys' fees) incurred by QWEST in any such contest
shall be shared by QWEST and GTE in the same proportion as to which
the parties shared in any such Imposition, as it was originally
assessed. Any refunds or credits resulting from a contest brought
pursuant to this Section 15.4 shall be divided between QWEST and GTE
in the same proportion as to which such refunded or credited
Impositions were borne by QWEST and GTE. In any such event, QWEST
shall provide timely notice of such challenge to GTE. If QWEST
chooses to proceed with such challenge after receipt of a written
objection to the challenge from GTE, QWEST shall conduct such
challenge at its own costs and expense, provided that GTE shall not
receive the benefit of any refund or credit, if any, obtained as a
result of a successful challenge. Further, where QWEST does not
contest an Imposition, GTE shall have the right, after notice to
QWEST, to contest such Imposition as long as such contest does not
materially, adversely affect the title property or rights of QWEST.
The out-of-pocket costs and expenses (including reasonable attorneys'
fees) incurred by GTE in any such contest shall be shared by GTE and
QWEST in the same proportion as to which the parties shared in such
Imposition, as it was originally assessed. Any refunds or credits
resulting from a contest shall be divided between GTE and QWEST in the
same proportion as to which such refunded or credited Imposition was
borne by GTE and QWEST. If GTE chooses to proceed with such contest
after receipt of written objection to the challenge from QWEST, GTE
shall conduct such challenge at its own costs and expense, provided
that QWEST shall not receive the benefit of any refund or credit, if
any, obtained as a result of a successful challenge. Provided,
however, that notwithstanding anything to the contrary in this
Article XV, QWEST shall have complete authority over and discretion to
control (including the authority to dismiss or not pursue) any
contests relating to Impositions based upon the computation of QWEST's
taxable income under the Federal Internal Revenue Code or state income
or franchise tax laws (hereinafter "Net Income Based Impositions").
GTE shall, however, be consulted on the conduct and status of such
contest. QWEST shall have no obligation to disclose to GTE its income
or franchise tax returns and records except as to the discrete portion
of such return or record that directly relates to the computation and
payment of such Net Income Based Impositions. Provided further,
however, that in the event QWEST shall determine in its own discretion
not to pursue a contest of any Net Income Based Imposition as to which
GTE has requested a contest pursuant to the provisions described above
in this Section 15.4, then GTE shall have no obligation to provide any
reimbursement for such amount if GTE shall have obtained and provided
to QWEST an opinion of nationally recognized legal counsel confirming
that a meritorious defense exists to such Net Income Based Imposition.
15.5 Except as to Impositions described in paragraph (iii) of
Section 15.2, following the Acceptance Date QWEST and GTE,
respectively, shall be separately responsible for any and all
Impositions (i) expressly or implicitly imposed upon, based upon, or
otherwise measured by the gross receipts, gross income, net receipts
or net income received by or accrued to such party due to its
respective ownership or use of the QWEST System and/or the GTE Fibers,
or (ii) which have been separately assessed or imposed upon the
respective ownership interest of such party in the QWEST System and/or
the GTE Fibers. If the GTE Fibers are the only fibers located in the
Cable from the point where the Cable leaves the QWEST System right-of-way to a
GTE POP, GTE shall be solely responsible for any and all
Impositions imposed on or with respect to such portion of the QWEST
System.
15.6 Notwithstanding any provision herein to the contrary, GTE
shall have the right to protest by appropriate proceedings any
Imposition described in Section 15.5, above. In such event, GTE shall
indemnify and hold QWEST harmless from any expense, legal action or
cost, including reasonable attorneys' fees, resulting from GTE's
exercise of its rights hereunder. In the event of any refund, rebate,
reduction or abatement to GTE of any such Imposition imposed upon
and/or paid by GTE, GTE shall be entitled to receive the entire
benefit of such refund, rebate, reduction or abatement attributable to
GTE's use of the QWEST System. In the event GTE has exhausted all its
rights of appeal in protesting any Imposition and has failed to obtain
the relief sought in such proceedings or appeals ("Finally Determined
Taxes and Fees"), GTE and QWEST may jointly agree (with the consent
and participation of the other Interest Holders in the affected
portion of the QWEST System) to relocate a portion of the QWEST System
so as to bypass the jurisdiction which had imposed or assessed such
Finally Determined Taxes and Fees with the total Costs thereof to be
shared proportionately as follows: (i) if the affected portion of the
QWEST System includes any conduit other than the conduit in which the
GTE Fibers are located, the total Costs of relocation of the conduits
(i.e., relocation of the conduits only without regard to whether the
conduits contain fibers) shall be allocated based on the overall
number of conduits in the QWEST System which are relocated; and
(ii) such Costs allocated to the conduit carrying the GTE Fibers plus
the Costs specifically associated with the relocation of the fiber
(i.e., relocation of the fiber only without regard to relocation of
conduit) to be further allocated to GTE based upon GTE's proportionate
share of (A) all Costs of fiber acquisitions, splicing and testing,
prorated based on the total fiber count in the Cable, as so relocated;
and (B) all other Costs associated with the relocation of the conduit
housing the affected Cable, prorated based upon the total number of
Interest Holders in the affected Cable, as so relocated. QWEST shall
deliver to GTE updated As-Builts with respect to the relocated QWEST
System not later than sixty (60) days following the completion of such
relocation. If GTE and QWEST do not determine to relocate the
affected portion of the QWEST System, GTE shall have the right to
terminate its use of the GTE Fibers in the affected portion of the
QWEST System. Such termination shall be effective on the date
specified by GTE in a notice of termination, which date shall be at
least ninety (90) days after the notice. Upon such termination, the
IRU in the affected portion of the QWEST System shall immediately
terminate, and the GTE Fibers in the affected portion of the QWEST
System shall thereupon revert to QWEST without reimbursement of any of
the IRU Fee or other payments previously made with respect thereto.
15.7 Notwithstanding the provisions of Section 15.6, with
respect to any Impositions relating to the QWEST System which are
imposed upon both QWEST and GTE (or both of their respective interests
therein), QWEST, at its option and at its own expense, shall have the
right to direct and manage in good faith any such contest; subject,
however, to reasonable and appropriate consultation with GTE which
hereby agrees to reasonably cooperate with QWEST in any such contest.
The right of QWEST to contest any Imposition pursuant to this
Section 15.7 shall be contingent upon reasonable and appropriate
assurances that any such contest will not adversely affect the title,
property or rights of GTE hereunder.
15.8 QWEST and GTE agree to cooperate fully in the preparation
of any returns or reports relating to the Impositions. QWEST and GTE
further acknowledge and agree that the provisions of this Article XV
are intended to allocate the Impositions expected to be assessed
against or imposed upon the parties with respect to the QWEST System
based upon the procedures and methods of computation by which
Impositions generally have been assessed and imposed to date, and that
material changes in the procedures and methods of computation by which
such assessments are assessed and imposed could significantly alter
the fundamental economic assumptions underlying the transactions
hereunder to the parties. Accordingly, the parties agree that, if in
the future the procedures or methods of computation by which
Impositions are assessed or imposed against the parties change
materially from the procedures or methods of computation by which they
are imposed as of the date hereof, the parties will negotiate in good
faith an amendment to the provisions of this Article XV in order to
preserve, to the extent reasonably possible, the economic intent and
effect of this Article XV as of the date hereof.
ARTICLE XVI.
NOTICE
16.1 Unless otherwise provided herein, all notices and
communications concerning this Agreement shall be addressed to the
other party as follows:
If to QWEST: QWEST Communications Corporation
ATTENTION: President
555 Seventeenth Street
Denver, Colorado 80202
Telephone No.: (303) 291-1400
Facsimile No.: (303) 291-1724
with a copy to: QWEST Communications Corporation
ATTENTION: General Counsel
555 Seventeenth Street
Denver, Colorado 80202
Telephone No.: (303) 291-1400
Facsimile No.: (303) 291-1724
If to GTE: GTE Intelligent Network Services
Incorporated
ATTENTION: President
600 Hidden Ridge
P.O. Box 152092
Irving, Texas 75038
Telephone No.:
Facsimile No:
with a copy to:
or at such other address as either party may designated from time to
time in writing to the other party.
16.2 Unless otherwise provided herein, notices shall be
hand delivered, sent by registered or certified U.S. mail, postage
prepaid, or by commercial overnight delivery service, or transmitted
by facsimile, and shall be deemed served or delivered to the addressee
or its office when received at the address for notice specified above
when hand delivered, upon confirmation of sending when sent by fax, on
the day after being sent when sent by overnight delivery service, or
three (3) days after deposit in the mail when sent by U.S. mail.
16.3 All invoices concerning payment obligations due to
QWEST pursuant to this Agreement shall be addressed to GTE as follows:
GTE Intelligent Network Services Incorporated
600 Hidden Ridge
P.O. Box 152092
Irving, Texas 75038
ATTENTION: Accounts Payable
with a copy to:
ARTICLE XVII.
CONFIDENTIALITY
17.1 QWEST and GTE hereby agree that if either party
provides (or, prior to the execution hereof, has provided)
confidential or proprietary information to the other party
("Proprietary Information"), such Proprietary Information shall be
held in confidence, and the receiving party shall afford such
Proprietary Information the same care and protection as it affords
generally to its own confidential and proprietary information (which
in any case shall be not less than reasonable care) in order to avoid
disclosure to or unauthorized use by any third party. The parties
acknowledge and agree that this Agreement, including all of the terms,
conditions and provisions hereof, and all drafts hereof, constitutes
Proprietary Information. In addition, all information disclosed by
either party to the other in connection with or pursuant to this
Agreement, including prior to the date hereof, shall be deemed to be
Proprietary Information. All Proprietary Information, unless
otherwise specified in writing, shall remain the property of the
disclosing party, shall be used by the receiving party only for the
intended purpose, and such written Proprietary Information, including
all copies thereof, shall be returned to the disclosing party or
destroyed after the receiving party's need for it has expired or upon
the request of the disclosing party. Proprietary Information shall
not be reproduced except to the extent necessary to accomplish the
purpose and intent of this Agreement, or as otherwise may be permitted
in writing by the disclosing party.
17.2 The foregoing provisions of Section 17.1 shall not
apply to any Proprietary Information which (i) becomes publicly
available other than through the recipient; (ii) is required to be
disclosed by a governmental or judicial law, order, rule or
regulation; (iii) is independently developed by the disclosing party;
(iv) becomes available to the disclosing party without restriction
from a third party; or (v) becomes relevant to the settlement of any
dispute or enforcement of either party's rights under this Agreement
in accordance with the provisions of this Agreement, in which case
appropriate protective measures shall be taken to preserve the
confidentiality of such Proprietary Information as fully as possible
within the confines of such settlement or enforcement process. If any
Proprietary Information is required to be disclosed pursuant to the
foregoing clause (ii), the party required to make such disclosure
shall promptly inform the other party of the requirements of such
disclosure.
17.3 Notwithstanding Sections 17.1 and 17.2 of this
Article, either party may disclose Proprietary Information to its
employees, agents, and legal, financial, and accounting advisors and
providers (including its lenders and other financiers) to the extent
necessary or appropriate in connection with the negotiation and/or
performance of this Agreement or its obtaining of financing, provided
that each such party is notified of the confidential and proprietary
nature of such Proprietary Information and is subject to or agrees to
be bound by similar restrictions on its use and disclosure.
17.4 Notwithstanding the foregoing sections of this Article
17, the parties may provide public statements concerning their
participation in this Agreement that do not disclose Proprietary
Information of the other party. Any news release, public
announcement, advertising or any form of publicity pertaining to this
Agreement, provision of services pursuant to it, or association of the
parties with respect to the subject of this Agreement shall be subject
to prior written approval of both parties which approval shall not be
unreasonably withheld.
17.5 The provisions of this Article XVII shall survive
expiration or termination of this Agreement.
ARTICLE XVIII.
DEFAULT
18.1 With respect to all payments required to be made by
GTE hereunder, including, without limitation, payment of the IRU Fee
and all other amounts payable by GTE hereunder, in the event GTE shall
fail to make a payment by the date due and payable hereunder, from and
after such date, (i) such unpaid amount shall bear interest until paid
at a rate equal to the rate set forth in Article XXX and (ii) if such
payment is due with respect to a Segment on or prior to the Acceptance
Date of such Segment, the Estimated Delivery Date for such Segment
shall be extended by a number of days equal to the number of days that
elapse from the date such payment is due until paid. In the event any
amount or amounts due and payable hereunder remain unpaid for a period
of eighty (80) days after written notice from QWEST to GTE, and the
amount thereof is not in bona fide dispute, then QWEST may, in its
sole and absolute discretion and in addition to its other rights and
remedies hereunder, after ten (10) days prior written notice to GTE
and the failure of GTE to pay such amount within such ten-day period,
terminate any and all of its obligations hereunder with respect to any
Segment or Segments as to which the Acceptance Date has not yet
occurred or the grant of the IRU with respect to which has not yet
become effective, and to apply any and all amounts previously paid by
GTE hereunder with respect to such Segment or Segments toward the
payment of any other amounts then or thereafter payable by GTE
hereunder. With respect to all of its other obligations hereunder, in
the event GTE shall fail to perform a non-payment obligation and such
failure shall continue for a period of thirty (30) days after QWEST
shall have given GTE written notice of such failure, GTE shall be in
default hereunder unless GTE shall have cured such failure or such
failure is otherwise waived in writing by QWEST within such thirty
(30) days; provided, however, that where such failure cannot
reasonably be cured within such 30-day period, if GTE shall proceed
promptly to cure the same and prosecute such cure with due diligence,
the time for curing such failure shall be extended for such period of
time as may be necessary to complete such cure; and provided further
that if GTE certifies in good faith to QWEST in writing that a non-payment
failure has been cured, such failure shall be deemed to be
cured unless QWEST otherwise notifies GTE in writing within fifteen
(15) days of receipt of such notice from GTE. GTE shall be in default
hereunder (i) automatically upon the making by GTE of a general
assignment for the benefit of its creditors, the filing by GTE of a
voluntary petition in bankruptcy or the filing by GTE of any petition
or answer seeking, consenting to, or acquiescing in reorganization,
arrangement, adjustment, composition, liquidation, dissolution, or
similar relief; (ii) one hundred twenty (120) days after the filing of
an involuntary petition in bankruptcy or other insolvency protection
against GTE which is not dismissed within such one hundred twenty
(120) days, or (iii) upon any default by GTE under the Guaranty, which
default is not cured within the relevant cure period, if any, provided
with respect thereto under the Guaranty. Except as otherwise provided
in this Section 18.1, upon any default by GTE, after written notice
thereof from QWEST, QWEST may (i) take such action as it determines,
in its sole discretion, to be necessary to correct the default and,
subject to Section 13.1, recover from GTE its reasonable costs
incurred in correcting such default, and (ii) pursue any legal
remedies it may have under applicable law or principles of equity
relating to such default, including specific performance.
Notwithstanding any other provision of this Agreement, QWEST
acknowledges and agrees that QWEST shall have no right to terminate
the IRU or any of the rights and interests of GTE hereunder with
respect to any Segment for which the IRU Fee relating thereto has been
fully paid.
18.2 (a) With respect to its obligation to complete the
construction, installation, and satisfactory Fiber Acceptance Testing
of the GTE Fibers comprising a particular Segment by the Estimated
Delivery Date with respect to such Segment pursuant to Section 3.2,
the parties acknowledge and agree that it is in their mutual best
interest to work together in a cooperative effort to determine whether
and to what extent any event or occurrence that is reasonably likely
to cause a delay in the delivery of a Segment hereunder, as a result
of any force majeure event or other occurrence described in Article XX
or otherwise, can be terminated, resolved or avoided, and to cause the
construction, installation and delivery of the Segment to be completed
in the most expeditious and practical manner feasible under the
circumstances. Accordingly, within three (3) months following its
discovery of an event or occurrence that QWEST reasonably believes is
likely to cause (i) an extension of the Estimated Delivery Date of one
hundred twenty (120) days or more pursuant to Article XX or (ii) a
Delivery Default (as defined pursuant to Section 18.2(d) below), QWEST
shall give written notice to GTE of such event or occurrence.
Thereupon, each of QWEST and GTE (i) will designate a senior executive
officer with decision-making authority and familiarity with this
Agreement and the relevant issue hereunder, and (ii) may designate one
technical representative and one financial representative, to
participate in the following resolution efforts. Each of such
designees shall participate in such meetings, promptly scheduled at
mutually agreed upon times and places, as may be necessary or
appropriate to discuss in good faith the status of construction of the
affected Segment, the reason or reasons for the anticipated Estimated
Delivery Date extension or Delivery Default, various possible and
practical means by which the event(s) or occurrence(s) causing such
anticipated Estimated Delivery Date extension or Delivery Default
might be terminated, avoided or resolved, including, without
limitation, possible modifications to the route, selection of right-of-way, or
manner of construction of the affected Segment, and
(iii) use their best efforts to settle upon and implement a procedure
by which such event(s) or occurrence(s) may be terminated, avoided or
resolved and the construction, installation and delivery of the
affected Segment completed in an expeditious and economically
practical and feasible manner under the circumstances. The parties
acknowledge and agree that, because the QWEST System includes or will
include other participants, including owners and holders of Dark Fiber
IRUs and telecommunication system operations, such meetings may, and
likely will, involve designees and representatives of such other
participants, and the resolution of any matters so acted upon will
require the cooperative efforts of, and have to be structured, to the
extent feasible, in an effort to meet the needs of all such
participants. The parties hereto further acknowledge and agree that
no failure of the parties hereto to resolve, or to agree upon a manner
in which they might resolve, any issue addressed hereunder shall
impair, adversely affect or invalidate any of their respective rights,
claims or remedies under this Agreement.
(b) If, notwithstanding the efforts of the parties pursuant to
Section 18.2(a):
(i) (A) a force majeure event or occurrence described in
Article XX causing an anticipated Estimated Delivery Date extension
has not been terminated, avoided or resolved by the date that is
twelve (12) months following QWEST's discovery of such event or
occurrence, and
(B) there is no "Reasonably Apparent Probability" (either
as mutually determined by QWEST and GTE or, if QWEST and GTE are
unable to make such a mutual determination, as determined by an
independent third party mutually selected by QWEST and GTE and
familiar with large-scale fiberoptic system constructions projects or,
if QWEST and GTE are unable to make such a mutual selection, each of
QWEST and GTE shall designate such an independent third party, the two
of which shall designate such an independent third party to make such
determination) that the Acceptance Date with respect to any such
affected Segment will occur within (1) twelve (12) months following
the Estimated Delivery Date (without extension for any delay pursuant
to Article XX) with respect to any Segment designated as a "priority"
Segment on Exhibit A-1, or (2) eighteen (18) months following the
Estimated Delivery Date (without extension for any delay pursuant to
Article XX) with respect to any other Segment (such date with respect
to each Segment being referred to as the "Outside Force Majeure
Date"); or
(ii) notwithstanding a determination pursuant to the foregoing
clause (i) that there was a Reasonably Apparent Probability that the
Acceptance Date with respect to the affected Segment would occur by
the applicable Outside Force Majeure Date, nonetheless the event or
occurrence described in Article XX causing such delay is continuing on
such applicable Outside Force Majeure Date; or
(iii) notwithstanding such a determination that there was a
Reasonably Apparent Probability that the Acceptance Date with respect
to the affected Segment would occur by the applicable Outside Force
Majeure Date, nonetheless, on the applicable Outside Force Majeure
Date, although the event or occurrence described in Article XX has
been terminated, avoided or resolved and QWEST has resumed its
construction, installation, splicing, and/or testing efforts, QWEST is
unable to demonstrate to GTE's reasonable satisfaction that the
Acceptance Date for such Segment will occur, in all reasonable
probability, by the date that is six (6) months following such Outside
Force Majeure Date, then, in any such event described in foregoing
clauses (i), (ii), and (iii), GTE may elect, in its sole discretion,
by written notice to QWEST, to delete such Segment from the System
Route otherwise to be delivered pursuant to this Agreement, and
recover from QWEST (1) the amount of the IRU Fee previously paid by
GTE hereunder with respect to such Segment, plus (2) interest at the
prime rate interest published by The Wall Street Journal as the base
rate on corporate loans posted by a substantial percentage of the
nation's largest banks on such date, plus (3) an amount equal to
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of the IRU Fee for such Segment, as determined pursuant to
Section 2.1 (with such aggregate amount payable to GTE promptly
following QWEST's receipt of such election notice or, at the election
of GTE, offset against the unpaid amount of the IRU Fee payable
hereunder with respect to any other Segment or Segments). Upon any
such election and payment (or offset), neither party shall have any
further rights or obligations with respect to such Segment hereunder.
(c) If, notwithstanding the efforts of the parties pursuant to
Section 18.2(a):
(i) (A) an event or occurrence causing an anticipated
Delivery Default (as defined in Section 18.2(d) below) has not been
terminated, avoided, resolved or waived by the date that is twelve
(12) months following QWEST's discovery of such event or occurrence;
and
(B) there is no Reasonably Apparent Probability that
the Acceptance Date with respect to any such affected Segment will
occur within (x) twelve (12) months following the Estimated Delivery
Date with respect to each Segment designated as a "Priority" Segment
on Exhibit A-1, or (y) eighteen (18) months following the Estimated
Delivery Date with respect to any other Segment (such dates being
referred to collectively as the "Outside Delivery Default Date"); or
(ii) notwithstanding a determination pursuant to the foregoing
clause (i) that there was a Reasonably Apparent Probability that the
Acceptance Date with respect to the affected Segment would occur by
the applicable Outside Delivery Default Date, nonetheless, on the
applicable Outside Delivery Default Date, the Acceptance Date for such
Segment has not occurred; then, in any such event described in the
foregoing clauses (i) and (ii), GTE may elect, in its sole discretion,
by written notice to QWEST, to delete such Segment from the System
Route otherwise to be delivered pursuant to this Agreement, and
recover from QWEST (1) the amount of the IRU Fee previously paid by
GTE hereunder with respect to such Segment, plus (2) interest thereon
at the rate of interest applicable to late payments set forth in
Article XXX, plus (3) an amount equal to
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of the IRU Fee for such Segment, as determined pursuant to
Section 2.1, but without reduction of such IRU fee under
Section 18.2(d) (with such aggregate amount payable to GTE promptly
following QWEST's receipt of such election notice or, at the election
of GTE, offset against the unpaid amount of the IRU Fee payable
hereunder with respect to any other Segment or Segments). Upon any
such election and payment (or offset), neither party shall have any
further rights or obligations with respect to such Segment hereunder.
(d) In addition to the specific rights and remedies provided
pursuant to the foregoing paragraphs (b) and (c) in connection with
delays and anticipated delays in the delivery of Segments hereunder,
QWEST shall be in default under this Agreement if the Acceptance Date
with respect to any Segment has not occurred within one hundred twenty
(120) days after the Estimated Delivery Date (a "Delivery Default").
From the date of any such Delivery Default, and until the Acceptance
Date with respect to such Segment occurs, the IRU Fee with respect to
such Segment, as determined or redetermined pursuant to Section 2.1
hereof, shall be reduced by an amount equal to
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% of such IRU Fee for each thirty (30) days (or a pro rata
percentage of
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% for any period of less than thirty (30) days) that elapse
between such date of Delivery Default and the Acceptance Date.
(e) The rights and remedies set forth in the foregoing
Sections 18.2(c) and 18.2(d) shall be the sole remedies available to
GTE with respect to any failure by QWEST to construct, install, and
conduct satisfactory Fiber Acceptance Testing with respect to the GTE
Fibers comprising any Segment by the relevant Estimated Delivery Date
(it being expressly acknowledged and agreed that the rights provided
to GTE pursuant to Section 18.2(b) are provided only as an
accommodation in the event of lengthy force majeure delays pursuant to
Article XX, and that the events described in Section 18.2(b) do not
constitute defaults hereunder). With respect to all of QWEST's other
obligations hereunder, in the event that QWEST shall fail to perform
an obligation and such failure shall continue for a period of thirty
(30) days after GTE shall have given QWEST written notice of such
failure, QWEST shall be in default hereunder unless QWEST shall have
cured such failure or such failure is otherwise waived in writing by
GTE within such thirty (30) days; provided however, that where such
failure cannot reasonably be cured within such 30-day period, if QWEST
shall proceed promptly to cure the same and prosecute such cure with
due diligence, the time for curing such failure shall be extended for
such period of time as may be necessary to complete such cure; and
provided further, that if QWEST certifies in good faith to GTE in
writing that failure has been cured, such failure shall be deemed to
be cured unless GTE otherwise notifies QWEST in writing within fifteen
(15) days of receipt of such notice from QWEST. QWEST shall be in
default hereunder automatically upon the making by QWEST of a general
assignment for the benefit of its creditors, the filing by QWEST of a
voluntary petition in bankruptcy or the filing by QWEST of any
petition or answer seeking, consenting to, or acquiescing in
reorganization, arrangement, adjustment, composition, liquidation,
dissolution, or similar relief, or (ii) one hundred twenty (120) days
after the involuntary filing of a petition in bankruptcy or other
insolvency protection against QWEST which is not dismissed within such
120-day period. Except as otherwise provided in this Section 18.2,
upon any default by QWEST, after notice thereof from GTE, GTE may
(i) take such action as it determines, in its sole discretion, to be
necessary to correct the default, and, subject to Section 13.1,
recover from QWEST its reasonable costs in correcting such default,
and (ii) pursue any legal remedies it may have under applicable law or
principles of equity relating to such default including specific
performance.
ARTICLE XIX.
TERMINATION
19.1 This Agreement automatically shall terminate with respect
to a Segment upon the expiration or termination of the Term of the IRU
respecting such Segment pursuant to Article VI or Section 18.2 hereof.
19.2 Upon the expiration or termination of this Agreement with
respect to a Segment, the IRU in such Segment shall immediately
terminate and all rights of GTE to use the QWEST System, the GTE
Fibers, the Associated Property or any part thereof relating to such
Segment, shall cease and QWEST shall owe GTE no additional duties or
consideration with respect to such Segment. Promptly thereupon, GTE
shall remove all of GTE's electronics, equipment, separate
Regeneration Facilities (as provided pursuant to Section 7.2) and
other associated GTE property from such Segment and any related QWEST
facilities at its sole cost under QWEST's supervision (which
supervision shall be without cost to GTE).
19.3 Notwithstanding the foregoing, no termination or expiration
of this Agreement shall affect the rights or obligations of any party
hereto (i) with respect to any then existing defaults or the
obligation to make any payment hereunder for services rendered prior
to the date of termination or expiration or (ii) pursuant to
Article XII, Article XIII, Article XV or Article XVII herein, which
shall survive the expiration or termination hereof.
ARTICLE XX.
FORCE MAJEURE
20.1 Neither party shall be in default under this Agreement if
and to the extent that any failure or delay in such party's
performance of one or more of its obligations hereunder is caused by
any of the following conditions, and such party's performance of such
obligation or obligations shall be excused and extended for and during
the period of any such delay: act of God; fire; flood; fiber, Cable,
or other material failures, shortages or unavailability or other delay
in delivery not resulting from the responsible party's failure to
timely place orders therefor (it being expressly acknowledged that the
Cable that is being acquired for and installed in the QWEST System and
that will include the GTE Fibers must include higher fiber counts than
that necessary solely for the GTE Fibers in order to permit completion
of the entire QWEST System); lack of or delay in transportation;
government codes, ordinances, laws, rules, regulations or restrictions
(collectively, "Regulations"); war or civil disorder; strikes or other
labor disputes; failure of a third party to grant or recognize an
Underlying Right, or any other cause beyond the reasonable control of
such party; provided that any delay caused by the failure of a third
party to grant an Underlying Right shall constitute a force majeure
delay hereunder only to the extent that such delay does not extend
beyond a period of six months (such that the Estimated Delivery Date
with respect to any Segment affected by such delay shall be extended
only up to a period of six months of any such delay, and shall not be
further extended if such delay extends beyond a period of six months).
The party claiming relief under this Article shall notify the other in
writing of the existence of the event relied on and the cessation or
termination of said event.
ARTICLE XXI
DISPUTE RESOLUTION
21.1 Except as provided in Sections 18.1 and 18.2, if the
parties are unable to resolve any disagreement or dispute arising
under or related to this Agreement, including without limitation, the
failure to agree upon any item requiring a mutual agreement of the
parties hereunder, they shall resolve the disagreement or dispute as
follows:
(a) Officers. Either party may refer the matter to the
Chief Executive Officers or the Chief Operating Officers (the
"Officers") of the parties by giving the other party written notice (a
"Notice"). Within fifteen (15) days after delivery of a Notice, the
Officers of both parties shall meet at a mutually acceptable time and
place to exchange relevant information and to attempt to resolve the
dispute.
(b) Negotiation. If the matter has not been resolved
within thirty (30) days after delivery of such Notice, or if the
Officers fail to meet within fifteen (15) days after delivery of such
Notice, either party may initiate mediation and, if applicable,
arbitration in accordance with the procedure set forth in subsections
(c) and (d) below. All negotiations conducted by the Officers
pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of the Federal
Rules of Evidence and State Rules of Evidence.
(c) Mediation. In the event a dispute exists between the
parties and the respective Officers are unable to resolve the dispute,
the parties agree to participate in a non-binding mediation procedure
as follows:
(i) A mediator will be selected by having counsel for
each party agree on a single person to act as mediator. The
parties' counsel as well as the Officers of each party and not
more than two other participants from each party will appear
before the mediator at a time and place determined by the
mediator, but not more than sixty (60) days after delivery of a
Notice. The fees of the mediator and other costs of mediation
will be shared equally by the parties.
(ii) Each party's counsel will have forty-five (45)
minutes to present a review of the issue and argument before the
mediator. After each counsel's presentation, the other counsel
may present specific counter-arguments not to exceed ten (10)
minutes. The 45-minute and 10-minute periods will be exclusive
of the time required to answer questions from the mediator or
attendees.
(iii) After both presentations, the Officers may
ask questions of the other side. At the conclusion of both
presentations and the question periods, the Officers and their
counsels will meet together to attempt to resolve the dispute.
The length of the meeting will be as agreed between the parties.
Either party may abandon the procedure at the end of the
presentations and question periods if they feel it is not
productive to go further. The mediation procedure is not
binding on either party.
(iv) The duties of the mediator are to be sure that
the above set-out time periods are adhered to and to ask
questions so as to clarify the issues and understandings of the
parties. The mediator may also offer possible resolutions of
the issues but has no duty to do so.
(d) Arbitration. If the matter is not resolved after
applying the mediation procedures set forth above, or if either party
refuses to take part in the mediation process, the parties hereby
agree to submit all controversies, claims and matters of difference
that are unresolved to arbitration in Denver, Colorado, according to
the commercial rules and practices of the American Arbitration
Association ("AAA") from time to time in force, and in accordance with
the following provisions of this subsection (d), and unless otherwise
agreed by the parties and subject to the rights of the parties as
provided in Section 18.1 and Section 18.2 hereof (including the right
not to continue to perform under this Agreement), they shall continue
to perform under this Agreement during arbitration.
(i) Arbitration discovery shall be conducted in
accordance with the Federal Rules of Civil Procedure, with any
disputes over the scope of discovery to be determined by the
arbitrators, it being intended that the arbitrators shall allow
limited, reasonable discovery prior to any hearing on the
merits.
(ii) Arbitration hereunder shall be by three
independent and impartial arbitrators. Each of the parties
shall appoint one arbitrator within thirty (30) days after
initiation of arbitration and the two arbitrators so appointed
shall select a third arbitrator within forty-five (45) days
after initiation of arbitration. In the event that the parties
or the arbitrators fail to select arbitrators as required above,
the AAA shall select such arbitrators.
(iii) The AAA shall have the authority to
disqualify any arbitrator who it determines not to be
independent and impartial. The arbitrators shall be entitled to
a fee commensurate with their fees for professional services
requiring similar time and effort.
(iv) The arbitrators shall conduct a hearing no later
than sixty (60) days after initiation of the matter to
arbitration, and a decision shall be rendered by the arbitrators
within thirty (30) days of the hearing. At the hearing, the
parties shall present such evidence and witnesses as they may
choose, with or without counsel. Adherence to formal rules of
evidence shall not be required but the arbitration panel shall
consider any evidence and testimony that it determines to be
relevant, in accordance with procedures that it determines to be
appropriate. The arbitration determination shall be in writing
and shall specify the factual and legal bases for the
determination. The arbitrators may award legal or equitable
relief, including but not limited to specific performance.
(v) The parties agree that this submission and
agreement to arbitrate shall be governed by and specifically
enforceable in accordance with the laws of the State of
Colorado. Arbitration may proceed in the absence of any party
if prior written notice of the proceedings has been given to
such party. The parties agree to abide by all decisions and
determinations rendered in such proceedings. Such decisions and
determinations shall be final and binding on all parties. All
decisions and determinations may be filed with the clerk of one
or more courts, state, federal or foreign having jurisdiction
over the party against whom it is rendered or its property, as a
basis of judgment.
(vi) The arbitrators' fees and other costs of the
arbitration shall be borne by the party against whom the award
is rendered, except as the arbitration panel may otherwise
provide in its written opinion.
ARTICLE XXII.
WAIVER
22.1 The failure of either party hereto to enforce any of the
provisions of this Agreement, or the waiver thereof in any instance,
shall not be construed as a general waiver or relinquishment on its
part of any such provision, but the same shall nevertheless be and
remain in full force and effect.
ARTICLE XXIII.
GOVERNING LAW
23.1 This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado, without
reference to its choice of law principles. Any litigation based
hereon, or arising out of or in connection with a default by either
party in the performance of its obligations hereunder, shall be
brought and maintained exclusively in the courts of the State of
Colorado or in the United States District Court for the District of
Colorado, and each party hereby irrevocable submits to the
jurisdiction of such courts for the purpose of any such litigation and
irrevocably agrees to be bound by any judgment rendered thereby in
connection with such litigation.
ARTICLE XXIV.
RULES OF CONSTRUCTION
24.1 The captions or headings in this Agreement are strictly for
convenience and shall not be considered in interpreting this Agreement
or as amplifying or limiting any of its content. Words in this
Agreement which import the singular connotation shall be interpreted
as plural, and words which import the plural connotation shall be
interpreted as singular, as the identity of the parties or objects
referred to may require.
24.2 Unless expressly defined herein, words having well known
technical or trade meanings shall be so construed. All listing of
items shall not be taken to be exclusive, but shall include other
items, whether similar or dissimilar to those listed, as the context
reasonably requires.
24.3 Except as set forth to the contrary herein, any right or
remedy of GTE or QWEST shall be cumulative and without prejudice to
any other right or remedy, whether contained herein or not.
24.4 Except as expressly provided in Section 28.1, nothing in
this Agreement is intended to provide any legal rights to anyone not
an executing party of this Agreement.
24.5 This Agreement has been fully negotiated between and
jointly drafted by the parties.
24.6 All actions, activities, consents, approvals and other
undertakings of the parties in this Agreement shall be performed in a
reasonable and timely manner, it being expressly acknowledged and
understood that time is of the essence in the performance of
obligations required to be performed by a date expressly specified
herein. Except as specifically set forth herein, for the purpose of
this Agreement the standards and practices of performance within the
telecommunications industry in the relevant market shall be the
measure of a party's performance.
ARTICLE XXV.
ASSIGNMENT AND TRANSFER RESTRICTIONS
25.1 Except as provided below, QWEST shall not assign, encumber
or otherwise transfer this Agreement or all or any portion of its
rights or obligations hereunder to any other party without the prior
written consent of GTE, which consent will not be unreasonably
withheld or delayed. Notwithstanding the foregoing, QWEST shall have
the right, without GTE's consent, to (i) subcontract any of its
construction or maintenance obligations hereunder, or (ii) assign or
otherwise transfer this Agreement in whole or in part (A) as
collateral to any institutional lender to QWEST (or institutional
lender to any permitted transferee or assignee of QWEST) subject to
the prior rights and obligations of the parties hereunder, (B) to any
parent, subsidiary or affiliate of QWEST, (C) to any person, firm or
corporation which shall control, be under the control of or be under
common control with QWEST, or (D) any corporation or other entity into
which QWEST may be merged or consolidated or which purchases all or
substantially all of the stock or assets of QWEST, or (E) any
partnership, joint venture or other business entity of which QWEST or
any wholly owned subsidiary of QWEST HOLDING CORPORATION owns at least
50 percent of the equity interests thereof and which cannot make major
decisions without the consent of QWEST (or subsidiary of QWEST HOLDING
CORPORATION); provided that the assignee or transferee in any such
circumstance shall continue to be subject to all of the provisions of
this Agreement, including without limitation, this Section 25.1
(except that any lender referred to in clause (A) above shall not
incur any obligations under this Agreement nor shall it be restricted
from exercising any right of enforcement or foreclosure with respect
to any related security interest or lien, so long as the purchaser in
foreclosure is subject to the provisions of this Agreement, including,
without limitation, this Section 25.1); and provided further that
promptly following any such assignment or transfer, QWEST shall give
GTE written notice identifying the assignee or transferee. In the
event of any permitted partial assignment of any rights hereunder,
QWEST shall remain the sole point of contact with GTE. No permitted
partial or complete assignment shall release or discharge QWEST from
its duties and obligations hereunder.
25.2 Except as provided in this Section 25.2 and the following
Section 25.3, GTE shall not assign, encumber or otherwise transfer
this Agreement or all or any of portion of its rights or obligations
hereunder to any other party without the prior written consent of
QWEST, which consent will not be unreasonably withheld or delayed.
Subject to the provisions of Section 25.3 (which provision shall be
binding upon any permitted assignee or transferee hereunder), GTE
shall have the right, without QWEST's consent, to assign or otherwise
transfer this Agreement in whole or in part (i) as collateral to any
institutional lender to GTE (or institutional lender to any permitted
transferee or assignee of GTE) subject to the prior rights and
obligations of the parties hereunder, (ii) to any parent, subsidiary
or affiliate of GTE, (iii) to any person, firm or corporation which
shall control, be under the control of or be under common control with
GTE, or (iv) any other entity into which GTE may be merged or
consolidated or which purchases all or substantially all of the stock
or assets of GTE or (v) any partnership, joint venture or other
business entity of which GTE or any wholly owned subsidiary of GTE
owns at least 50 percent of the equity interests thereof and which
cannot make major decisions without the consent of GTE (or subsidiary
of GTE); provided that no assignment or other transfer under this
clause (v) shall be permitted hereunder if its purpose or effect would
constitute, directly or indirectly, a Restricted Transaction (as
defined in Section 25.3) or otherwise violate the provisions of
Section 25.3; provided that the assignee or transferee in any such
circumstance shall continue to be subject to all of the provisions of
this Agreement, including without limitation this Section 25.2 and the
following Section 25.3 (except that any lender referred to in
clause (i) above shall not incur any obligations under this Agreement,
nor shall it be restricted from exercising any right of enforcement or
foreclosure with respect to any related security interest or lien, so
long as the purchaser in foreclosure is subject to the provisions of
this Agreement, including, without limitation, this Section 25.2 and
the following Section 25.3); and provided further that in any of
circumstances described in clauses (ii), (iii) or (iv) all of the
payment obligations of GTE hereunder for the remainder of the Term
shall be fully guaranteed by GTE or shall be paid in full as a
condition to such transfer or assignment; and provided further that
promptly following any such assignment or transfer, GTE shall give
QWEST written notice identifying the assignee or transferee. In the
event of any permitted partial assignment of any rights hereunder, GTE
shall remain the sole party and point of contact with QWEST hereunder.
No permitted partial or complete assignment shall release or discharge
GTE from its duties and obligations hereunder.
25.3 Notwithstanding the provisions of Article XI, except as expressly
permitted in Section 25.2(i)-(v), inclusive, without the prior written
consent of QWEST, which consent may be withheld in QWEST's sole
discretion, for a period of
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following the date that the
last Segment of the QWEST System is accepted by GTE:
(a) GTE shall not sell, assign, lease, grant an IRU
with respect to, exchange, encumber, or otherwise in any manner
transfer or make available in any manner to any third party the
ownership, right to use, use of, or access in any manner to, any of
GTE's rights in the whole or discrete GTE Fibers which at the time of
such transaction are Dark Fibers, or engage in substantive discussions
or negotiations with respect thereto, or otherwise engage in a similar
transaction with respect to any GTE Fibers in a manner designed or
intended to circumvent the foregoing limitations.
(b) GTE shall not sell, assign, lease, grant an IRU
with respect to, exchange, encumber, or otherwise in any manner
transfer or make available in any manner to a Capacity Reseller (as
defined below) any of GTE's rights in the whole or discrete GTE Fibers
at a capacity in excess of OC-12, or engage in substantive discussions
or negotiations with respect thereto, or otherwise engage in a similar
transaction with respect to any GTE Fibers in a manner designed or
intended to circumvent the foregoing limitations. As used in this
subparagraph, a Capacity Reseller is any person or entity which, in
whole or in part, seeks to obtain such capacity for the purpose of
reselling or otherwise providing access thereto to third parties for
profit, whether or not such person or entity actually realizes a
profit as a result of such transaction.
(c) Each transaction prohibited in subparagraphs (a) or (b)
of this Section 25.3 shall constitute a "Restricted Transaction."
Except as provided in subparagraph (b) of this Section 25.3, nothing
contained herein shall restrict or prohibit GTE from creating
telecommunications capacity along or through the GTE Fibers by the
addition of GTE's electronic and optronic equipment and selling or
otherwise permitting third parties to use such telecommunications
capacity.
25.4 QWEST and GTE recognize that QWEST may desire to obtain
tax-deferred exchange treatment pursuant to Section 1031 of the
Internal Revenue Code, as amended, with respect to certain of the Dark
Fibers and Associated Property in which the IRUs are to be granted
hereunder and which are used or held for use by QWEST in its business
as of the date hereof (the "Existing Properties"), and GTE agrees to
reasonably cooperate as provided herein in obtaining such treatment
(at no cost or expense to GTE). Accordingly, notwithstanding any
provision contained in this Agreement to the contrary, QWEST may, at
its sole option, on or prior to the Acceptance Date for any relevant
Segment, appoint a third party (the "Intermediary") as agent for QWEST
with respect to the transfer of the Existing Properties to GTE, and
assign its rights under this Agreement (insofar as they relate to the
Existing Properties) to such Intermediary. If QWEST so elects to
appoint an Intermediary, QWEST shall notify GTE, in writing, on or
prior to the Acceptance Date with respect to the relevant Segment, and
shall provide GTE with copies of all agreements between QWEST and the
Intermediary. If QWEST appoints an Intermediary, QWEST shall transfer
the Existing Properties or such portion thereof as designated by QWEST
to the Intermediary, and GTE shall pay the IRU Fee with respect to the
Existing Properties (as designated by QWEST) to the Intermediary;
provided that QWEST agrees that such transfer shall be expressly
subject to this Agreement, and that QWEST shall remain liable for
performance under this Agreement to the same extent as if it had not
appointed an Intermediary; provided that in such event QWEST shall
indemnify and hold harmless GTE from and against any and all loss,
damage, cost or expense suffered, sustained or incurred by GTE in
connection with any such cooperation and/or payment of such IRU Fee to
such Intermediary.
25.5 This Agreement and each of the parties' respective rights
and obligations under this Agreement, shall be binding upon and shall
inure to the benefit of the parties hereto and each of their
respective permitted successors and assigns.
ARTICLE XXVI.
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS
26.1 Each party represents and warrants that:
(a) it has the full right and authority to enter into, execute,
deliver and perform its obligations under this Agreement;
(b) this Agreement constitutes a legal, valid and binding
obligation enforceable against such party in accordance with its
terms, subject to bankruptcy, insolvency, creditors' rights and
general equitable principles; and
(c) its execution of and performance under this Agreement shall
not violate any applicable existing regulations, rules, statutes or
court orders of any local, state or federal government agency, court
or body.
26.2 QWEST represents and warrants that the Segments of the
QWEST System that it has heretofore constructed or will construct
pursuant hereto have been or shall be designed, engineered, installed,
and constructed in compliance with the terms and provisions of this
Agreement and in material compliance with any and all applicable
building, construction and safety codes for such construction and
installation, as well as any and all other applicable governmental
laws, codes, ordinances, statutes and regulations.
26.3 With respect to each of the Segments that has been
constructed prior to the date hereof, QWEST represents and warrants
that such Segment, when constructed, generally was constructed
substantially in accordance with the specifications set forth in
Exhibit C hereto, and QWEST has no actual knowledge on the date hereof
of any material deviation in the construction of such Segment from
such specifications. If, within twelve (12) months from the
respective Acceptance Date for each of the Segments referred to in
this Section 26.3 , there is an event or occurrence that is caused by
a material deviation in the construction or installation of any of
such Segments from such specifications, and which has a material
adverse affect on the operation or performance of the GTE Fibers in
such Segment, then, promptly following receipt of written notice
thereof from GTE, QWEST, at its sole cost and expense, shall undertake
to repair the affected portion of such Segment to the relevant
specifications.
26.4 QWEST represents and warrants that the Segments of the
QWEST System that it constructs pursuant hereto shall be constructed
in all material respects in accordance with the specifications set
forth in Exhibit C hereto; provided that GTE's sole rights and
remedies with respect to any failure to so construct shall be (i) to
inspect the construction, installation and splicing, and participate
in the acceptance testing, of the GTE Fibers incorporated in each such
Segment, during the course and at the time of the relevant
construction, installation and testing periods for each Segment, as
provided in Articles III and IV, (ii) if, during the course of such
construction, installation and testing any material deviation from the
specifications set forth in Exhibit C is discovered, the construction
or installation of the affected portion of the Segment shall be
repaired to such specification by QWEST at QWEST's sole cost and
expense, and (iii) if, at any time prior to the date that is twelve
(12) months after the Acceptance Date, GTE shall notify QWEST in
writing of its discovery of a material deviation from the
specifications set forth in Exhibit C with respect to any such Segment
(which notice shall be given within thirty (30) days of such
discovery) the construction or installation of the affected portion of
such Segment shall be repaired to such specification by QWEST at
QWEST's sole cost and expense. For purposes hereof, "material
deviation" means a deviation which is reasonably likely to have a
material adverse affect on the operation or performance of the GTE
Fibers affected thereby.
26.5 EXCEPT AS SET FORTH IN THE FOREGOING PARAGRAPHS 26.2, 26.3
AND 26.4, AND EXCEPT AS MAY BE SET FORTH SPECIFICALLY AND EXPRESSLY
ELSEWHERE IN THIS AGREEMENT, QWEST MAKES NO WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE GTE FIBERS OR THE SEGMENTS DELIVERABLE
HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED.
26.7 The parties acknowledge and agree that on and after the
relevant Acceptance Date GTE's sole rights and remedies with respect
to any defect in or failure of the GTE Fibers to perform in accordance
with the applicable vendor's or manufacturer's specifications with
respect to the GTE Fibers shall be limited to the particular vendor's
or manufacturer's warranty with respect thereto, which warranty, to
the extent permitted by the terms thereof, shall be assigned to GTE
upon its request. In the event any maintenance or repairs to the
QWEST System are required as a result of a breach of any warranty made
by any manufacturers, contractors or vendors, unless GTE shall elect
to pursue such remedies itself, QWEST shall pursue all remedies
against such manufacturers, contractors or vendors on behalf of GTE,
and QWEST shall reimburse GTE's costs for any maintenance GTE has
incurred as a result of any such breach of warranty to the extent the
manufacturer, contractor or vendor has paid such costs.
26.8 QWEST and GTE acknowledge and agree:
(a) that each grant of the IRU in the GTE Fibers and Associated
Property for a Segment hereunder (each herein called a "Grant") will
be treated by each of them, vis-a-vis the other, as of and after the
relevant effective date thereof as described in Section 6.1, an
executed grant to GTE of an interest in real property with respect to
such Segment; and
(b) that, from and after the effective date of a Grant with
respect to a Segment, no material obligation of either QWEST or GTE
will remain to be performed with respect to such Grant or Segment; and
(c) that, with respect to each such Grant, this Agreement is
not intended as an executory contract or unexpired lease subject to
assumption, rejection, or assignment by the trustee in bankruptcy of
any party to this Agreement, including, without limitation,
assumption, rejection, or assignment under Bankruptcy Code
Section 365.
ARTICLE XXVII.
ENTIRE AGREEMENT; AMENDMENT
27.1 This Agreement, together with any Confidentiality Agreement
entered into in connection herewith constitutes the entire and final
agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements relating to
the subject matter hereof, which are of no further force or effect.
The Exhibits referred to herein are integral parts hereof and are
hereby made a part of this Agreement. To the extent that any of the
provisions of any Exhibit hereto are inconsistent with the express
terms of this Agreement, the terms of this Agreement shall prevail.
This Agreement may only be modified or supplemented by an instrument
in writing executed by a duly authorized representative of each party
and delivered to the party relying on the writing.
ARTICLE XXVIII.
NO PERSONAL LIABILITY
28.1 Each action or claim against any party arising under or
relating to this Agreement shall be made only against such party as a
corporation, and any liability relating thereto shall be enforceable
only against the corporate assets of such party. No party shall seek
to pierce the corporate veil or otherwise seek to impose any liability
relating to, or arising from, this Agreement against any shareholder,
employee, officer or director of the other party. Each of such
persons is an intended beneficiary of the mutual promises set forth in
this Article and shall be entitled to enforce the obligations of this
Article.
ARTICLE XXIX.
RELATIONSHIP OF THE PARTIES
29.1 The relationship between GTE and QWEST shall not be that of
partners, agents, or joint venturers for one another, and nothing
contained in this Agreement shall be deemed to constitute a
partnership or agency agreement between them for any purposes,
including, but not limited to federal income tax purposes. GTE and
QWEST, in performing any of their obligations hereunder, shall be
independent contractors or independent parties and shall discharge
their contractual obligations at their own risk subject, however, to
the terms and conditions hereof.
ARTICLE XXX.
LATE PAYMENTS
30.1 In the event a party shall fail to make any payment under
this Agreement when due, such amounts shall accrue interest, from the
date such payment is due until paid, including accrued interest
compounded monthly, at an annual rate equal to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
of the prime rate of interest published by The Wall Street
Journal as the base rate on corporate loans posted by a substantial
percentage of the nation's largest banks on the date any such payment
is due or, if lower, the highest percentage allowed by law.
ARTICLE XXXI.
SEVERABILITY
31.1 If any term, covenant or condition contained herein shall,
to any extent, be invalid or unenforceable in any respect under the
laws governing this Agreement, the remainder of this Agreement shall
not be affected thereby, and each term, covenant or condition of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
ARTICLE XXXII.
COUNTERPARTS
32.1 This Agreement may be executed in one or more counterparts, all
of which taken together shall constitute one and the same instrument.
ARTICLE XXXIII.
CERTAIN DEFINITIONS
33.1 The following terms shall have the stated definitions in
this Agreement.
(a) "Cable" means the fiberoptic cable and the fibers contained
therein, and associated splicing connections, splice boxes, and vaults
to be installed by QWEST as part of the QWEST System.
(b) "Costs" means actual, direct costs paid or payable in
accordance with the established accounting procedures generally used
by QWEST and which it utilizes in billing third parties for
reimbursable projects which costs shall include, without limitation,
the following: (i) internal labor costs, including wages and
salaries, and benefits and overhead allocable to such labor costs
(with the overhead allocation percentage equal to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
), and (ii) other direct costs and out-of-pocket expenses on a
pass-through basis (e.g., equipment, materials, supplies, contract
services, etc.).
(c) "Dark Fiber" means fiber provided without electronics or
optronics, and which is not "lit" or activated; provided that such
fiber may be used in any manner and for any purpose permitted under
Article XI.
(d) "Estimated Delivery Date" means, with respect to each
Segment of the QWEST System to be delivered hereunder, the date set
forth in Exhibit A hereto with respect to such Segment, as any such
date may be extended for and during (A) the period of any delay
described in Article XX and/or (B) the period of any payment default
pursuant to Section 18.1 with respect to any Segment and/or (C) the
aggregate number of days of the GTE Review Period or Periods (in the
event of multiple remedy attempts) under Section 4.2 with respect to
such Segment.
(e) "Impositions" means all taxes, fees, levies, imposts,
duties, charges or withholdings of any nature (including, without
limitation, gross receipts taxes and franchise, license and permit
fees), together with any penalties, fines or interest thereon (except
for penalties or interest imposed as a direct result of acts or
failures to act on the part of QWEST) arising out of the transactions
contemplated by this Agreement and/or imposed upon the QWEST System by
any federal, state or local government or other public taxing
authority.
(f) "Indefeasible Right of Use" or "IRU" means (i) an
exclusive, indefeasible right of use, for the purposes described
herein, in the GTE Fibers, as granted in Article II, and (ii) an
associated non-exclusive, indefeasible right of use, for the purposes
described herein, in the Associated Property; provided that the IRUs
granted hereunder do not provide GTE with any ownership interest in or
other rights to physical access to, control of, modification of,
encumbrance in any manner of, or other use of the QWEST System except
as expressly set forth herein.
(g) This item left blank intentionally.
(h) "POP" means the GTE point of presence at locations along
the QWEST System route.
(i) "PSWP" means Planned System Work Period, which is a
prearranged period of time reserved for performing certain work on the
QWEST System that may potentially impact traffic. Generally, this
will be restricted to weekends, avoiding the first and last weekend of
each month and high-traffic weekends. The PSWP shall be agreed upon
pursuant to Exhibit H.
(j) "QWEST System" shall have the meaning ascribed thereto in
Recital A.
(k) When used herein in connection with a covenant of a party
to this Agreement "best efforts" shall not obligate such party, unless
otherwise specifically required by the operative covenant, to make
unreimbursed expenditures (other than costs or expenditures that would
have been required of such party in the absence of the requirements of
such covenant) that are material in amount, in light of the
circumstances to which the requirement to use best efforts applies.
In confirmation of their consent and agreement to the terms and
conditions contained in this IRU Agreement and intending to be legally
bound hereby, the parties have executed this IRU Agreement as of the
date first above written.
"QWEST":
QWEST COMMUNICATIONS CORPORATION, a
Delaware corporation
By:/s/___________________________________________________
Name:
Title:
"GTE":
GTE INTELLIGENT NETWORK SERVICES INCORPORATED, a
Delaware corporation
By:___/s/_________________________________________________
Name:
Title:
EXHIBIT A
QWEST System Description
EXHIBIT A-1: QWEST System Description and Delivery Dates
GTE - Exhibit A-1
System Description and Delivery Dates
Indefeasible Right to Use Agreement - Qwest Communications Corp. and GTE Intelligent Network Services Inc.
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