CONFIDENTIAL AND PROPRIETARY EXECUTION FORM
------------------------------ ------------
- -----------------------------------------------------------------------------
IRU AGREEMENT
DATED AS OF OCTOBER 18, 1996
BY AND BETWEEN
QWEST COMMUNICATIONS CORPORATION ("QWEST")
AND
FRONTIER COMMUNICATIONS INTERNATIONAL INC. ("FRONTIER")
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
RECITALS........................................................ 1
ARTICLE I. GRANT OF IRU IN QWEST SYSTEM........................ 1
ARTICLE II. CONSIDERATION FOR GRANT............................ 7
ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM.................. 11
ARTICLE IV. ACCEPTANCE AND TESTING OF FRONTIER FIBERS.......... 13
ARTICLE V. DOCUMENTATION....................................... 14
ARTICLE VI. TERM............................................... 14
ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES........... 16
ARTICLE VIII. OPERATIONS....................................... 19
ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM......... 20
ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION.............. 20
ARTICLE XI. USE OF QWEST SYSTEM................................ 23
ARTICLE XII. INDEMNIFICATION................................... 26
ARTICLE XIII. LIMITATION OF LIABILITY.......................... 28
ARTICLE XIV. INSURANCE......................................... 28
ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS..... 30
ARTICLE XVI. NOTICE............................................ 34
ARTICLE XVII. CONFIDENTIALITY.................................. 36
ARTICLE XVIII. DEFAULT......................................... 37
ARTICLE XIX. TERMINATION....................................... 42
ARTICLE XX. FORCE MAJEURE...................................... 42
ARTICLE XXI. DISPUTE RESOLUTION................................ 43
ARTICLE XXII. WAIVER........................................... 45
ARTICLE XXIII. GOVERNING LAW................................... 45
ARTICLE XXIV. RULES OF CONSTRUCTION............................ 46
ARTICLE XXV. ASSIGNMENT AND DARK FIBER TRANSFERS............... 46
ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS.. 50
ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT..................... 52
ARTICLE XXVIII. NO PERSONAL LIABILITY.......................... 52
ARTICLE XXIX. RELATIONSHIP OF THE PARTIES...................... 53
ARTICLE XXX. LATE PAYMENTS..................................... 53
ARTICLE XXXI. SEVERABILITY..................................... 53
ARTICLE XXXII. COUNTERPARTS.................................... 53
ARTICLE XXXIII. CERTAIN DEFINITIONS............................ 54
EXHIBITS
Exhibit A: QWEST System Description
Exhibit A-1: QWEST System Description and Delivery Dates
Exhibit A-2: General Route Map
Exhibit A-3: Basic and Optional 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 G-1: Temporary Space within Certain QWEST Facilities
Exhibit H: QWEST System Maintenance Specifications and Procedures
Exhibit I: Form of Surety Bond
Exhibit J: Underlying Rights and Underlying Rights Requirements
Exhibit K: Form of Frontier Corporation Guaranty
Exhibit L: Form of Anschutz Guaranty
IRU AGREEMENT
THIS IRU AGREEMENT (this "Agreement") is made and entered into as of
October 18, 1996, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware
corporation ("QWEST"), and FRONTIER COMMUNICATIONS INTERNATIONAL INC. a Delaware
corporation ("FRONTIER").
RECITALS
--------
A. QWEST is planning to construct a continuous fiberoptic communication
system, contiguous from end to end, as described in Exhibit A hereto as the
"Basic Route," and between each of the city pairs identified in Exhibit A-1
hereto under the caption "Basic Route" (the fiberoptic communication system
between each such city pair being referred to as a "Basic Segment"), and may
elect to construct a continuation of such fiberoptic communication system along
the routes described in Exhibit A hereto as the "Option 1 Route," "Option 1A
Route" and the "Option 2 Route" (collectively, the "Optional Routes"), and
between each of the city pairs identified in Exhibit A-1 hereto under the
captions "Option 1 Route," "Option 1A Route" and "Option 2 Route" (the
fiberoptic communication system between each such city pair being referred to as
an "Optional Segment") (the Basic Segments, together with such of the Optional
Segments, if any, that QWEST elects to construct hereunder, being referred to
herein collectively as the "QWEST System").
B. FRONTIER desires to be granted the right to use (or, if and to the
extent provided in Section 1.5 hereof, to own) certain optical fibers in the
QWEST System.
C. QWEST desires to grant FRONTIER an exclusive, indefeasible right to use
(or, if and to the extent provided in Section 1.5 hereof, to convey title to)
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 (as defined below in this Section 1.1)
delivered by QWEST to FRONTIER hereunder and with respect to which an Acceptance
Date (as defined in Section 4.2 below) has occurred, QWEST hereby grants to
FRONTIER, and FRONTIER hereby purchases from QWEST, (i) an exclusive,
Indefeasible Right of Use (as defined in Section 33.1(f)) (or, if and to the
extent provided in Section 1.5 hereof, ownership) in, for the purposes described
herein, twenty-four (24) (or, if and to the extent that FRONTIER timely
exercises the options described in Section below, forty-eight (48))
"Dark Fibers" (as defined in Section 33.1(c)) to be
specifically identified, in the QWEST System (A) in the Basic Segments and along
the Basic Route more specifically described in the maps included in Exhibit A-3
hereto; and (B) if, pursuant to Section 1.3, QWEST elects, in its discretion, to
construct either of Option Route 1 or Option Route 1A, and/or Option Route 2, or
FRONTIER elects, in its discretion, to require QWEST to construct Option Route
1, in any case as identified in Exhibit A (and along the Option 1, Option 1A and
Option 2 Routes more specifically described in the maps included in Exhibit A-3
hereto), in the Optional Segments included in any such Optional Routes so
elected to be constructed, 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) and, to the extent provided in Article VII
herein, associated Regeneration Facilities (as defined in Section 7.2), 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
Basic Segment or Optional 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 "FRONTIER
Fibers." The Basic Segments, together with such of the Optional Segments, if
any, that QWEST elects or is required to construct pursuant to Section 1.3 are
referred to herein collectively as the "Segments." The Basic Route, together
with such of the Optional Routes, if any, that QWEST elects or is required to
construct pursuant to Section 1.3 are referred to herein collectively as the
"System Route."
(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 FRONTIER
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 FRONTIER 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 FRONTIER (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 (i) comprising the Basic
Route and Option Route 1 cause(s) the aggregate route miles as reflected in
Exhibit A estimated for the Basic Route and Option Route 1 taken together to
increase by more than
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
%) of such aggregate estimate or (ii)
comprising Option Route 1A and/or Option Route 2 cause(s) the route miles as
reflected in Exhibit A estimated for Option 1A and/or Option Route 2 taken
separately to increase by more than
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
%) of such estimate, then in
each case under the foregoing clause (i) and clause (ii) such mileage shall be
solely at QWEST's cost and expense and any route mileage in excess of the
applicable
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
%) increase as aforesaid shall not be included in the
route mileage for purposes of determining or redetermining the IRU Fee as
defined and described in Section 2.1 below.
1.2 With respect to Segments 12A, 12B, 12C, 12D and 16, the parties
acknowledge that (i) QWEST has represented that the conduit and Cable comprising
such Segments have been constructed and installed as of the date hereof, and
that only the regeneration and other technical facilities required to be
provided with respect to each such Segment pursuant to Article VII remains to be
constructed and installed, (ii) FRONTIER desires to use the FRONTIER Fibers in
the Cable comprising each such Segment pending delivery of such facilities, and
(iii) the Cable comprising such Segments currently is routed through such
facilities of QWEST. Accordingly, with respect to Segments 12A, 12B, 12C, 12D
and 16, the parties agree that notwithstanding any provisions of this Agreement
to the contrary:
(a) Promptly following execution of this Agreement, the Fiber Acceptance
Testing procedures set forth in Article IV shall take place with respect to each
such Segment, as the FRONTIER Fibers currently are routed through the QWEST
facilities and, upon satisfactory completion thereof with respect to each such
Segment in accordance with Article IV, the Acceptance Date with respect to such
Segment shall occur. Upon such Acceptance Date, payment of an additional
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% of
the IRU Fee with respect to such Segment shall be due and payable by FRONTIER.
(b) Upon receipt of such payment, the IRUs with respect to the relevant
Segment, other than the IRU in the Associated Property required to be delivered
pursuant to Section 7.2, shall become effective. Thereupon, FRONTIER may
temporarily install in the space within certain QWEST facilities described in
Exhibit G-1 hereto, such electronic, optronic and other
equipment as shall be necessary to operate the FRONTIER Fibers in such Segment;
provided that such installation is done consistent with QWEST's co-location
-------------
policies and procedures substantially as set forth in the form of co-location
agreement, a copy of which has been provided to and accepted by FRONTIER.
(c) The Associated Property required to be delivered pursuant to Section
7.2 shall be delivered in accordance with the requirements of Section 3.2 with
respect to each such Segment. The parties agree to cause their respective
appropriate technical personnel to discuss and agree, in good faith, upon the
procedures by which, upon such delivery, (i) the FRONTIER Fibers comprising such
Segments shall be rerouted, at QWEST's cost and expense, in the Regeneration
Facilities (or POPs or terminal facilities) required to be provided pursuant to
Article VII, and (ii) tested, at QWEST's cost and expense, to confirm that, as
rerouted, the FRONTIER Fibers continue to operate in conformity with the Fiber
Acceptance Testing specifications set forth in Exhibit D and the procedures set
forth in Article IV.
(d) Upon the delivery of such Associated Property, the rerouting of the
FRONTIER Fibers therein, and the confirmed testing described in Section
1.3(c)(ii), the remaining
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
%) of the IRU Fee with respect to each
such Segment shall be due and payable by FRONTIER. Upon receipt of such
payment, the IRU with respect to such Associated Property for such Segment shall
become effective.
1.3 (a) Until 5:00 p.m. Eastern Standard (or Daylight, as applicable)
Time on the date that is one hundred eighty (180) days after the date hereof
(the "Option Period") (i) QWEST shall have the right to elect to construct and
(ii) FRONTIER shall have the right to elect to require QWEST to construct,
Option Route 1.
Either party desiring to exercise such right shall notify the other in writing
by such time and date whether or not it will construct or require the
construction of Option Route 1. Failure of QWEST to notify FRONTIER of QWEST's
election as to Option Route 1 as provided herein shall be deemed an election by
QWEST not to undertake to construct Option Route 1, and failure of FRONTIER to
notify QWEST of FRONTIER's election as to Option Route 1 as provided herein
shall be deemed an election by FRONTIER not to require that QWEST construct
Option Route 1. If neither QWEST nor FRONTIER timely exercises its right to
construct or require the construction of Option Route 1 as provided herein,
then, until 5:00 p.m. Eastern Standard (or Daylight, as applicable) Time on the
day that is five (5) days following the last day of the Option Period, QWEST
shall have the right to elect to construct Option Route 1A. QWEST shall notify
FRONTIER in writing by such time and date whether or not it will construct
Option Route 1A. Failure of QWEST to notify FRONTIER of QWEST's election as to
Option Route 1A as provided herein shall be deemed an election by QWEST not to
construct Option Route 1A.
(b) QWEST shall have until 5:00 p.m. Eastern Standard (or Daylight, as
applicable) Time on the last day of the Option Period to elect whether or not it
will construct Option Route 2 as provided herein. QWEST shall notify FRONTIER
in writing by such time and date whether
or not it will construct Option Route 2 as provided herein. Failure of QWEST to
timely notify FRONTIER of QWEST's election as to Option Route 2 as provided
herein shall be deemed an election by QWEST not to undertake to construct Option
Route 2 as provided herein.
(c) The election or deemed election by QWEST not to construct any of the
Optional Routes as provided herein shall not affect its obligations or rights
with respect to the other Optional Routes or any of the Basic Segments and, from
and after any such election or deemed election, neither party shall have any
further rights or obligations with respect to such Optional Route hereunder.
(d) From the date hereof until the expiration of the parties' rights under
this Section 1.3, FRONTIER shall not enter into any agreement (oral or written)
or initiate discussions or negotiations with any third party with respect to its
acquisition of an alternative Dark Fiber system along the same or similar routes
as any of the Optional Routes, and FRONTIER shall not engage in discussions with
any third party who may initiate the same without prior notice to QWEST of the
identity of such third party given promptly after such initiation by such third
party and prior to FRONTIER's engaging in such discussions with such third
party, and if FRONTIER engages in such discussions as aforesaid then FRONTIER
shall keep QWEST informed generally of the material proposed terms and material
changes to such terms with respect to such discussions relating to an
acquisition by such third party of an alternative Dark Fiber system along the
same or similar routes as any of the Optional Routes. If QWEST timely exercises
its option hereunder to construct any of the Optional Routes or if FRONTIER
timely exercises its right to require the construction of Option Route 1, in any
such case as provided herein, then FRONTIER and QWEST shall be obligated to
observe and perform their respective obligations hereunder with respect to such
Optional Route, all on the terms and subject to the conditions set forth herein.
1.4 (a) FRONTIER shall have an option (the "System Fiber
Option"), exercisable until 5:00 p.m. Eastern Standard (or Daylight,
as applicable) Time on the date that is one hundred eighty-six (186)
days after the date hereof (the "System Option Exercise Date"), to
elect to increase the number of Dark Fibers subject to the IRU in the
entire QWEST System to be delivered hereunder (including the Optional
Segments, if and to the extent QWEST elects to construct the Optional
Routes or is required to construct Option Route 1 pursuant to
Section 1.3 hereof) from twenty-four (24) to forty-eighty (48) Dark
Fibers (such additional twenty-four (24) Dark Fibers being referred to
as the "Optional System Dark Fibers"), by delivering written notice of
such election to QWEST by such time and date. If FRONTIER timely
exercises the System Fiber Option, the IRU Fee with respect to all
Segments shall be redetermined as described in Section 2.1(b) below.
(ii) If, prior to the System Option Exercise Date, QWEST
enters into an agreement with the party (or the successor in interest
of such party or a subsidiary of such party) with whom QWEST and
FRONTIER previously have engaged in extensive discussions concerning
the provision by QWEST of a forty-eight (48) Dark Fiber system along
the QWEST System (the "Third Party"), pursuant to which QWEST grants
to the Third Party an IRU in twenty-four (24) Dark Fibers along some
or all of the QWEST System, QWEST shall promptly notify FRONTIER
thereof. In such event, FRONTIER may, at its election and at its sole
discretion, at any time on or before the Option Exercise Date (A) if
the Third Party acquires Dark Fibers along the entire QWEST System,
elect to cancel the System Fiber Option in its entirety, in
consideration for which the IRU Fee for all Segments shall be
redetermined as described in Section 2.1(c) below, (B) if the Third
Party acquires Dark Fibers in Segments comprising less than all of the
QWEST System, elect to exercise the System Fiber Option only with
respect to the Segments not so acquired by the Third Party and to
cancel the System Fiber Option with respect to the Segments acquired
by the Third Party, in consideration for which the IRU Fee with
respect to all Segments shall be redetermined as described in
Section 2.1(d) below, or (C) in any event, elect to exercise the
System Fiber Option in its entirety pursuant to Section 1.4(a)(i),
unaffected by QWEST's transaction with the Third Party.
(iii) Failure of FRONTIER to timely notify QWEST of
FRONTIER's election to exercise the System Fiber Option in whole or,
as permitted, in part, as provided herein, shall be deemed an election
by FRONTIER not to exercise the System Fiber Option. The election or
deemed election of FRONTIER not to exercise the System Fiber Option
shall not affect either party's rights or obligations with respect to
the twenty-four (24) Dark Fiber QWEST System to be provided hereunder
and, from and after any such election or deemed election, neither
party shall have any further rights or obligations with respect to the
Optional System Dark Fibers hereunder.
(b) FRONTIER shall have an option (the "Sacramento/Seattle Fiber
Option"), exercisable until 5:00 p.m. Eastern Standard (or Daylight,
as applicable) Time on the date that is thirty (30) days after the
date hereof, to elect to increase the number of Dark Fibers subject to
the IRU in the Segments between the cities of Sacramento, California
and Seattle, Washington identified in Exhibit A (the
"Sacramento/Seattle Segments") from twenty-four (24) to forty-eight
(48) Dark Fibers (such additional twenty-four (24) Dark Fibers being
referred to as the "Optional Sacramento/Seattle Dark Fibers"), by
delivering written notice of such election to QWEST by such time and
date. If FRONTIER timely exercises the Sacramento/Seattle Fiber
Option, the IRU Fee with respect to the Sacramento/Seattle Segments
shall be redetermined as described in Section 2.1(e) below.
Notwithstanding the foregoing, FRONTIER acknowledges that the
Sacramento/Seattle Fiber Option is not to be redundant of the System
Fiber Option and, accordingly, (i) the Sacramento/Seattle Fiber Option
automatically shall be canceled if FRONTIER exercises the System Fiber
Option or cancels the System Fiber Option pursuant to Section
1.4(a)(ii), and (ii) the maximum number of Dark Fibers deliverable by
QWEST to FRONTIER with respect to either or both of the
Sacramento/Seattle Fiber Option and the System Fiber Option shall not
exceed forty-eight (48) Dark Fibers along the applicable route.
Failure of FRONTIER to timely notify QWEST of FRONTIER's election to
exercise the Sacramento/Seattle Fiber Option as provided herein shall
be deemed an election by FRONTIER not to exercise the
Sacramento/Seattle Fiber Option. The election or deemed election of
FRONTIER not to exercise the Sacramento/Seattle Fiber Option shall not
affect either party's rights or obligations with respect to the
twenty-four (24) Dark Fibers in the Sacramento/Seattle Segments to be
provided hereunder and, from and after any such election or deemed
election, neither party shall have any further rights or obligations
with respect to the Optional Sacramento/Seattle Dark Fibers hereunder.
1.5 Notwithstanding anything contained herein to the contrary: (a) if and
to the extent allowed by the Underlying Right(s) for a particular Segment, and
(b) if the Underlying Right(s) with respect to such Segment do not and will not
impose upon QWEST any additional fees, costs or charges as a result thereof
(unless FRONTIER shall pay the same or make arrangements satisfactory to QWEST
to assure such payment), QWEST shall, upon the request of FRONTIER and on a
Segment-by-Segment basis on or before the Acceptance Date with respect to such
Segment: (i) grant a non-exclusive sub-easement, sub-right of way, or sub-
underlying right (collectively a "Sub-Easement") to FRONTIER providing rights
(but, subject to the foregoing clause (b) of this Section 1.5 above, at no
additional cost to or monetary obligations of FRONTIER) to FRONTIER similar to
the rights held by QWEST under the relevant Underlying Right(s), and (ii)
transfer title to the Frontier Fibers to FRONTIER free and clear of all liens as
provided in Section 11.4 hereof, and (iii) continue the grant of the IRU in the
Associated Property. Nothing in this Section 1.5 shall relieve QWEST or
FRONTIER of its (nor, except and only to the extent of the change in the nature
of the property interest of FRONTIER in the FRONTIER Fibers or a Sub-Easement,
or the case may be, diminish, enlarge or otherwise affect its) rights, duties
and obligations set forth in this Agreement and if any Sub-Easement shall
terminate or FRONTIER shall be otherwise prohibited from owning title to the
Frontier Fibers, QWEST shall retain, maintain or replace the relevant Underlying
Right in accordance with and pursuant to Article X, title to such Frontier
Fibers shall revert and be reconveyed to QWEST and FRONTIER shall have and
retain the IRU in such Frontier Fibers under and subject to the terms and
conditions of this Agreement. If a Sub-Easement is granted or title to the
FRONTIER Fibers transferred to FRONTIER in accordance with the foregoing
provisions of this Section 1.5, then such Sub-Easement shall terminate and such
title shall revert and be reconveyed to QWEST at the expiration or termination
of the Term respecting the applicable Segment as provided in and pursuant to
Article VI hereof.
ARTICLE II.
CONSIDERATION FOR GRANT
-----------------------
2.1 In consideration of the grant of the IRUs hereunder by QWEST to
FRONTIER, FRONTIER agrees to pay to QWEST an IRU fee determined based on the
QWEST System route
mileage (and allocated among the Segments based on Segment route mileage) as
follows (the "IRU Fee"):
(a) Initially, the IRU Fee shall be determined based on the following per-
route-mile pricing:
(i) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for all Segments other than those (A) between
the cities of Cleveland and Boston, as identified in Exhibit A, (B) between the
City of Albany, New York and the location at 60 Hudson Street in New York City,
as identified in Exhibit A, and (C) between the cities of Philadelphia and New
York City, as identified in Exhibit A; and
(ii) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for all Segments identified in clause
(a)(i)(A) above conditioned upon FRONTIER making available to QWEST at least
twenty-four (24) non-zero dispersion shifted Dark Fibers between Boston and 60
Hudson Street at a price not to exceed $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
(failing which condition the IRU
Fee shall be $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for such Segments identified in clause (a)(i)(A))
and clause (a)(i)(B) above; and
(iii) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile (unless the parties mutually agree on a
lesser amount) for all Segments identified in clause (a)(i)(C) above.
(b) If FRONTIER timely elects to exercise the System Fiber
Option in its entirety as provided pursuant to Section 1.4(a)(i), the
IRU Fee shall be redetermined based on the price of
(i) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for all Segments identified in
the clauses (a)(i) and (a)(ii) above; and
(ii) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile (unless the parties mutually
agree on a lesser amount) for all Segments identified in
clause (a)(iii) above.
(c) If FRONTIER timely elects to cancel the System Fiber Option
in its entirety as permitted pursuant to Section 1.4(a)(ii)(A), the
IRU Fee shall be redetermined based on the price of
(i) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for all Segments identified in
the clauses (a)(i) and (a)(ii) above; and
(ii) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile (unless the parties mutually
agree on a lesser amount) for all Segments identified in
clauses (a)(iii) above.
(d) If FRONTIER timely elects to exercise the System Fiber
Option in part, as permitted pursuant to Section 1.4(a)(ii)(B), the
IRU Fee shall be redetermined with respect to all Segments as follows:
(i) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for all Segments identified in
clauses (a)(i) and (a)(ii) above as to which the System Fiber Option
is exercised;
(ii) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile for all Segments identified in
clauses (a)(i) and (a)(ii) above as to which the System Fiber Option
is canceled;
(iii) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
for route mile (unless the parties
mutually agree on a lesser amount) for all Segments identified in
clause (a)(iii) above as to which the System Fiber Option is
exercised; and
(iv) $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile (unless the parties mutually
agree on a lesser amount) for all Segments identified in
clause (a)(iii) above as to which the System Fiber Option is
cancelled.
(e) If FRONTIER timely elects to exercise the Sacramento/Seattle Dark Fiber
Option as permitted pursuant to Section 1.4(b), the IRU Fee with respect to the
Sacramento/Seattle Segments (and only such Segments) shall be redetermined based
on a price of $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per route mile.
(f) The IRU Fee shall (except as provided in Sections 1.2, 2.4 and 2.5) be
payable with respect to each Segment according to the payment schedule set forth
in Exhibit B.
2.2 (a) In addition to the IRU Fee payable under Section 2.1, if and to
the extent that the actual cost to QWEST (including freight and taxes) of the
fiberoptic cable that includes the FRONTIER Fibers to be incorporated in any
Segment is more than $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
/fiber foot, FRONTIER shall reimburse QWEST for the total
amount of such cost difference attributable to the FRONTIER Fibers incorporated
in such Segment (including slack); provided that QWEST shall give FRONTIER at
-------------
least ten (10) days prior written notice before executing and submitting to a
vendor a firm commitment for any such fiberoptic cable. If and to the extent
that the actual cost to QWEST (including freight and taxes) of the fiberoptic
cable that includes the FRONTIER Fibers to be incorporated in an Segment is less
than $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
/fiber foot, FRONTIER shall receive a credit against amounts subsequently
payable by FRONTIER hereunder equal to the total amount of such cost difference
attributable to the FRONTIER Fibers incorporated in such Segment (including
slack).
(b) In the event that FRONTIER receives a bona fide quote from a fiberoptic
cable vendor to provide the same fiberoptic cable that QWEST would acquire to
install in a Segment hereunder in accordance with the QWEST System design and
the fiber deployment plan and fiber specification requirements provided herein,
at a price (including the business terms, handling charges and similar
incidental charges) lower than
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
the best price available to QWEST for
such fiberoptic cable, FRONTIER shall notify QWEST in writing thereof,
identifying the vendor, the quoted price, and the type and quantity of
fiberoptic cable subject to such quote (each, a "Fiber Quote Notice"), such that
QWEST may attempt to acquire such fiberoptic cable at such price from such
vendor. If QWEST is able to acquire fiberoptic cable from the vendor and at the
price set forth in a Fiber Quote Notice for inclusion in a Segment or Segments
delivered hereunder, FRONTIER shall receive a credit against amounts
subsequently payable by FRONTIER hereunder equal to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
%) of the
difference between the best price available to QWEST for such fiberoptic cable
and the price obtained from such vendor pursuant to the Fiber Quote Notice (the
"Fiber Savings Credit") for the entire fiberoptic cable so acquired by QWEST for
inclusion in such Segment or Segments. If QWEST is unable, for any reason, to
acquire fiberoptic cable from the vendor identified in the Fiber Quote Notice or
any other vendor at the price set forth in the Fiber Quote Notice then the
foregoing provisions of this paragraph (b) shall have no further force and
effect and QWEST shall acquire fiberoptic cable through its own sources, subject
to paragraph (a) of this Section 2.2.
(c) Notwithstanding the foregoing provisions of paragraphs (a) and (b) of
this Section 2.2, no such reimbursement or credit shall be required with respect
to any fiberoptic cable including FRONTIER Fibers that, as of the date hereof,
has already been installed or
delivered to QWEST for installation in the QWEST System or is subject to a
binding purchase order for delivery to QWEST for installation in the QWEST
System. The amount of any such reimbursement or credit shall be invoiced or
credited, as appropriate, to FRONTIER at the time the fiberoptic cable
incorporating such FRONTIER Fibers is invoiced to QWEST. FRONTIER and QWEST
agree to reasonably consult and cooperate with each other in order to obtain the
lowest possible price for fiberoptic cable to be included in a Segment.
FRONTIER also shall pay directly or reimburse QWEST for all other costs, fees
and expenses which are expressly provided to be paid, in whole or in part, by
FRONTIER under this Agreement. FRONTIER shall have the right to review and
audit, at its cost, all such costs, fees and expenses.
2.3 QWEST will fax or send by overnight delivery each invoice for payments
to be made by FRONTIER hereunder. FRONTIER shall pay such invoiced amounts,
less any reasonably disputed amounts, for receipt by QWEST within fifteen (15)
days after receipt of such invoice by FRONTIER with respect to payments of the
IRU Fee and within thirty (30) days after receipt of such invoice by FRONTIER
for any other amounts owed to QWEST hereunder; provided that FRONTIER 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 FRONTIER 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 FRONTIER in writing from time
to time. Payments of all other amounts by FRONTIER hereunder may be made by
check payable to QWEST. QWEST agrees to provide FRONTIER 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
FRONTIER's payment obligations hereunder.
2.4 QWEST and FRONTIER 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 therefor
(other than the initial
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% due upon execution of this Agreement), shall be
deferred until each such deferred installment delivery date as set forth in
Exhibit B. QWEST and FRONTIER further acknowledge and agree that with respect
to Segments 24A, 24B, 24C, 24D, 24E and 25, once constructed and installed,
delivery of each such Segment likewise shall occur in two installments of twelve
(12) Dark Fibers each as indicated in Exhibit A, and payment of the IRU Fee
therefor shall be made as set forth in Exhibit B.
2.5 QWEST and FRONTIER acknowledge and agree that with respect to Segments
5, 6, 9A, 9B, 10A and 10B, notwithstanding the payment schedule set forth in
Exhibit B and the fact that the conduit in such Segments has already been
constructed and
installed, FRONTIER shall be required to pay with respect to each of those
Segments: (a)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% of the IRU Fee upon execution of this Agreement, (b)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
% of the
IRU Fee when (i) QWEST has commenced the placement of the Cable in the Segment,
and (ii) all such Cable and other materials necessary to complete such placement
within a reasonable time are on hand or scheduled for timely delivery in
connection with such placement, and (c) the balance of the IRU Fee in accordance
with the provisions of Exhibit B.
2.6 All of FRONTIER's payment obligations under this Agreement shall be
guaranteed by Frontier Corporation pursuant to a Guaranty in the form of Exhibit
K hereto, to be executed and delivered by Frontier Corporation as a condition to
the effectiveness hereof and the performance by QWEST of its obligations
hereunder.
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 FRONTIER 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 FRONTIER (and
FRONTIER hereby agrees to so meet) to, cooperatively and in good faith,
jointly evaluate the use of any such fiber and (ii) thereafter, FRONTIER
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 FRONTIER, 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 are required to 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 required to be 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 In support of QWEST's obligation to construct the QWEST System
hereunder, QWEST will provide, as a condition to FRONTIER's obligations
hereunder, either (i) so long as the Surety Bond has not been delivered as
provided in clause (ii) below, a guaranty up to a maximum aggregate amount of
$175 millionby Anschutz Company in favor of FRONTIER of the payment
obligations of QWEST under this Agreement pursuant to a Guaranty in the form
of Exhibit L or (ii) six (6) surety bonds in favor of FRONTIER, each
substantially in the form of and by the surety companies identified on
Exhibit I hereto or such other companies rated "A" or better by Best's Key
Rating Guide, which, in the aggregate, shall provide a total aggregate payment
value of not less than $175 million (collectively, the "Surety Bond"), in
each case clause (i) and (ii) over the entire construction period for all
Segments to be delivered hereunder.
3.6 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 FRONTIER construction schedule and progress reports every two
weeks. FRONTIER shall have the right, but not the obligation, to inspect the
construction of each Segment, including the installation, splicing and testing
of the FRONTIER 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 FRONTIER shall impair or invalidate any rights and
remedies of FRONTIER under this Agreement or modify, amend or otherwise affect
any of the representations, warranties, covenants or agreements of QWEST under
this Agreement.
3.7 Upon FRONTIER's written request, QWEST shall make available for
inspection by FRONTIER, 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 FRONTIER, 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
FRONTIER from subsequent confidentiality and/or non-disclosure restrictions,
that would restrict QWEST's ability to make such documents and/or information
available to FRONTIER 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 FRONTIER's inspection. No inspection or failure to inspect by
FRONTIER shall impair or invalidate any rights and remedies of FRONTIER under
this Agreement or modify, amend or otherwise affect any of the representations,
warranties, covenants or agreements of QWEST under this Agreement.
3.8 QWEST shall use reasonable efforts to construct all of Segment 13C of
the Basic Route within the territorial confines of the United States, using its
reasonable efforts and reasonably cooperating with FRONTIER to determine a
construction method, including a powerline build or other alternative, in each
case that would be reasonably cost effective within the overall QWEST System
design. If, notwithstanding such efforts and cooperation, no such alternative
construction method is mutually agreed upon, then QWEST may construct the
portion of such Segment as shown in Exhibit A-2 in Mexico.
ARTICLE IV.
ACCEPTANCE AND TESTING OF FRONTIER FIBERS
-----------------------------------------
4.1 QWEST shall test all FRONTIER Fibers in accordance with the procedures
specified in Exhibit D ("Fiber Acceptance Testing") to verify that the FRONTIER
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 FRONTIER at least five (5)
days advance notice of the date and time of each Fiber Acceptance Testing such
that FRONTIER 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 FRONTIER Fibers so tested are installed and
operating in conformity with the applicable specifications set forth in Exhibit
D, QWEST shall promptly provide FRONTIER with a copy of such test results.
4.2 When QWEST reasonably determines in good faith that the FRONTIER 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 FRONTIER (a "Completion Notice"). FRONTIER
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 FRONTIER's receipt of the
Completion Notice to the date of QWEST's receipt of FRONTIER's notice of
rejection or acceptance being referred to herein as the "FRONTIER Review
Period"). In the event FRONTIER rejects the Completion Notice, QWEST shall
promptly, and not later than seven days, and at no cost to FRONTIER, commence to
remedy the defect or failure. Thereafter QWEST shall again give FRONTIER a
Completion Notice with respect to such FRONTIER 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, FRONTIER 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 FRONTIER
upon demand, or at the election of FRONTIER, offset from any IRU Fee payable by
FRONTIER to QWEST with respect to such Segment or any other Segment. No
acceptance of, or failure by FRONTIER to reject, the Completion Notice shall be
deemed to be a waiver of any rights or remedies of FRONTIER under this
Agreement; provided that, any failure by FRONTIER to timely reject as set forth
-------------
above shall operate as a constructive acceptance for purposes of this Agreement.
The date when FRONTIER 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 QWEST shall provide FRONTIER 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 6(ii)).
5.2 Not later than ninety (90) days after the Acceptance Date for each
Segment, QWEST shall provide FRONTIER 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 FRONTIER 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 FRONTIER.
ARTICLE VI.
TERM
----
6.1 Except to the extent expressly modified by Section 1.2 with respect to
the Segments identified therein, 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 FRONTIER
Fibers, as reasonably determined by FRONTIER 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 FRONTIER, at any time, reasonably determines that
the FRONTIER Fibers comprising any Segment have reached the end of their
economically useful life and desires to not retain the IRU in such Segment,
FRONTIER 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, FRONTIER fails to use any of the FRONTIER 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 FRONTIER to
acknowledge that the FRONTIER Fibers comprising such Segment have reached the
end of their economic life and, accordingly, has abandoned the FRONTIER 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
FRONTIER 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 FRONTIER
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, FRONTIER shall be treated as the owner of the FRONTIER 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 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 (except if and to the extent provided in Section 1.5), including the
FRONTIER Fibers and Associated Property subject to the IRUs hereunder. 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 termination, shall survive.
ARTICLE VII.
NETWORK ACCESS; REGENERATION FACILITIES
---------------------------------------
7.1 (a) QWEST shall provide FRONTIER with access to, and FRONTIER shall
have the right to connect, at FRONTIER's sole cost and expense, its
telecommunications system with, the FRONTIER 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 FRONTIER
(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 FRONTIER's sole cost and expense, in
accordance with QWEST's applicable specifications and operating procedures.
FRONTIER shall pay QWEST's Costs for each such connection within thirty (30)
days of the date of FRONTIER's receipt of QWEST's invoice therefor. In order to
schedule a connection of this type, FRONTIER 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, FRONTIER shall also be provided reasonable access by QWEST to any
Connecting Point at all times. FRONTIER shall have no limitations on the
types of electronics or technologies employed to utilize the FRONTIER 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 FRONTIER 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
FRONTIER's use of the FRONTIER Fibers or Associated Property hereunder and QWEST
is responsible for all costs and expenses associated therewith.
7.2 (a) The IRU Fee includes QWEST's provision to FRONTIER for its use as
permitted hereunder of
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
regeneration site facilities along the Basic
Route, and
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
regeneration site facilities along the Optional Routes (consisting of
up to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
for Option Route 1, up to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
for Option Route 1A and up to
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
for
Option Route 2, depending upon which of the Optional Routes are elected or
required to be constructed pursuant to Section 1.3 hereof)
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
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
square feet and amenities (except for the operating costs associated
therewith expressly required to be paid by FRONTIER pursuant to Section 8.2), as
described in Exhibit F ("Regeneration Facilities"). The parties acknowledge
that (i) the locations of such Regeneration Facilities shall be coincident with
the locations of QWEST's own Regeneration Facilities (and located at
approximately 60-mile intervals), the locations of which QWEST shall notify
FRONTIER with sufficient time (no less than ten working days) for FRONTIER to
request a different location for any given facility, in which case the parties
shall mutually agree on a mutually acceptable location for such facility, and
(ii) Exhibit G sets forth the estimated number of such Regeneration Facilities
by Segment, with the locations of such Regeneration Facilities being subject to
final determination of the route of the applicable Segment, space and power
availability and all applicable Underlying Rights Requirements. In addition,
QWEST shall provide to FRONTIER at FRONTIER's Prorated Cost (as defined below in
this paragraph (a)) POP or terminal facilities of approximately
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
square
feet along the QWEST System right-of-way at such locations as may be mutually
determined by FRONTIER and QWEST, subject to space and power availability and
Underlying Rights Requirements
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
subject to space and power
availability and underlying Rights Requirements. FRONTIER'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
FRONTIER
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
with respect to any of the Basic Route and the applicable
Optional Routes shall be at FRONTIER's Prorated Cost. For purposes of the
foregoing two sentences, FRONTIER's Prorated Cost for Regeneration Facilities
means $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per facility and for POP or terminal facilities means $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per
facility, subject to any adjustment (lower or higher) pursuant to Section 7.2(b)
below.
(b) QWEST heretofore has requested (or promptly after execution of this
Agreement will request) vendors to submit bids (collectively, the "Initial
Bids") that cover all or
substantially all of the proposed Basic Segments of the QWEST System (plus the
Optional Routes as and when included in any bid requests by QWEST) for the
building items listed below (collectively, the "Building Items"). QWEST has
delivered (or promptly after receipt thereof will deliver) to FRONTIER copies of
such Initial Bids. If the aggregate cost of the Building Items taking the
lowest quoted cost per Building Item (subject to the last sentence of this
paragraph) under any of the Initial Bids (the "Initial Bid Aggregate Cost") is
equal to or less than the aggregate estimated cost for the Building Items set
forth in the table below (the "Estimated Aggregate Cost"), then for 10 business
days thereafter, or if the Initial Bid Aggregate Cost is more than the Estimated
Aggregate Cost, then for 20 business days thereafter, FRONTIER may solicit from
the same or other vendors bids that cover all or substantially all of the Basic
Segments of the QWEST System (plus the Optional Routes as and when included in
any bid requests by QWEST) covering any of the Building Items (the "FRONTIER
Solicited Bids"). Without regard to what Building Items QWEST actually purchases
in connection with construction of the QWEST System, the lowest quoted cost per
Building Item obtained under any of the Initial Bids and the Frontier Solicited
Bids (subject to the last sentence of this paragraph) shall then be used in
place of the cost set forth in the table below for the respective Building Item,
and the allocated percentage of the total cost (which excludes freight and
taxes) attributable to FRONTIER as set forth in the table below shall be applied
accordingly to the recalculated cost. The aggregate FRONTIER allocation set
forth in the table below shall be recalculated, and the Prorated Cost for
Regeneration Facilities of $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per facility and the Prorated Cost of POPs (and
terminal facilities) of $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
per facility shall be increased or decreased, as
appropriate, by the difference between such recalculated aggregate FRONTIER
allocation and $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
. In determining whether a quote represents the "lowest
quoted cost" for any particular Building Item, (i) such quote must meet all of
QWEST's terms and specifications with respect to the applicable Building Item
and (ii) QWEST shall take into account whether and to what extent such quote is
contingent upon any other quote for one or more other Building Items.
For purposes of this Section 7.2(b), the building items in Regeneration
Facilities and/or POPs or terminal facilities, their respective total cost, the
Estimated Aggregate Cost of them and the allocated FRONTIER percentage with
respect to them are as follows:
<TABLE>
<CAPTION>
Allocation Frontier
Building Items Total Cost of Item Percentage Allocation
--------------- ------------------ ---------- ----------
<S> <C> <C> <C>
Equipment building, $
12' x 30'0.0
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
80 kW skid-mounted diesel generator
(Regeneration Facility)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
100 kW skid-mounted diesel generator
(POP)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
Two 5 ton wall mounted HVAC units
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
Battery Plant, 1,200 Amp @ 48 VDC
each for 400A of rectifiers
a. Power distribution
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
b. Rectifiers
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
c. Batteries (4 hr. reserve,
dual 875 AH strings)
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
Estimated Aggregate Cost $
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
</TABLE>
(c) Payment by FRONTIER of its Prorated Cost, adjusted to give effect to
any adjustments (lower or higher) pursuant to Section 7.2(b), for any POP or
terminal facilities shall be paid to QWEST upon commencement of the construction
of the Segment of which they are a part. Payment by FRONTIER of its Prorated
Cost adjusted to give effect to any adjustments (lower or higher) pursuant to
Section 7.2(b), for Regeneration Facilities
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
shall be paid to QWEST upon
commencement of the construction of the Segment of which they are a part
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
.
The foregoing amounts paid by FRONTIER shall be finally trued up, with QWEST
reimbursing FRONTIER for any excess and FRONTIER paying QWEST for any
deficiency, on (or as soon as thereafter as practicable) the last Acceptance
Date with respect to the Basic Segments, the last Acceptance Date with respect
to Segments in Option Route 1 or 1-A, and the last Acceptance Date with respect
to Segments in Option Route 2, in each case (i) based on the actual number of
Regeneration Facilities actually provided by QWEST
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
or POPs (or terminal
facilities) with respect to the Basic Route and the applicable Optional Route
and (ii) adjusted to give effect to any adjustments (lower or higher) in the
FRONTIER's Prorated Cost to which FRONTIER may be entitled under Section 7.2(b)
above.
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 FRONTIER shall reimburse QWEST for FRONTIER's proportionate share
of all 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. FRONTIER'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 FRONTIER 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 FRONTIER on an annual basis for FRONTIER's pro rata
share of such operating costs during the preceding twelve months. FRONTIER's
reimbursement obligations for insurance and taxes pursuant to this Section 8.2
shall in no event be duplicative of FRONTIER'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 FRONTIER acknowledges and agrees that, except to the extent
expressly provided pursuant to Sections 1.2 and 7.2, QWEST is not supplying nor
is QWEST obligated to supply to FRONTIER 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 FRONTIER, 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 FRONTIER, QWEST may, subject to FRONTIER's prior written approval
(which approval shall not be unreasonably delayed or withheld) substitute for
the FRONTIER 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 FRONTIER'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
FRONTIER'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 FRONTIER hereunder or any other FRONTIER POP, node
or switch facilities, all as determined by FRONTIER, in its sole discretion; and
provided further that QWEST shall give FRONTIER written notice prior to QWEST's
placing any order for fiber for such alternative route segment or
segments if the number of fibers to be placed in such alternative route segment
or segments exceeds the number of fibers in the Segment or Segments to be so
relocated, and FRONTIER shall have a period of thirty (30) days from receipt of
such notice to commit, by written notice to QWEST, to acquire an IRU in an
additional number of Dark Fibers (i.e., in excess of the number of FRONTIER
Fibers to be so substituted) (subject to the availability of adequate conduit
capacity) for a per-fiber IRU fee
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
.
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, 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 FRONTIER 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, 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 FRONTIER to use the FRONTIER 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 FRONTIER with notice of any
default on the part of QWEST and to permit FRONTIER 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 FRONTIER at any time cures such default by QWEST, QWEST shall reimburse
FRONTIER for any and all amounts reasonably paid by
FRONTIER 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 FRONTIER to exercise its rights to use the
FRONTIER Fibers and Associated Property, in each case in accordance with the
terms and conditions hereof:
(i) QWEST shall, for a period of
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
years from the date hereof (or until
the earlier to occur of (A) the expiration of the economically useful life of
the FRONTIER 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 FRONTIER'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 FRONTIER's ability to use the FRONTIER
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
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
anniversary of such date; and
(iii) From and after the last day of the Minimum Period, QWEST
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,
##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR
CONFIDENTIAL TREATMENT##
years following the Minimum Period or until the earlier expiration of the
economically useful life of the FRONTIER 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 FRONTIER 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 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
FRONTIER 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) FRONTIER 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. FRONTIER 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 FRONTIER 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 FRONTIER 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 FRONTIER based on FRONTIER'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. FRONTIER shall
have the right to review and audit all Costs incurred in connection with such
relocation. QWEST shall deliver to FRONTIER 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.
10.5 QWEST acknowledges that FRONTIER has previously committed to
acquire a certain number of miles of right-of-way from ConRail (the "ConRail
ROW"). If determined practical by QWEST in its reasonable business judgment,
and provided that the cost and other terms and conditions of acquiring and
utilizing part or all of the ConRail ROW are not greater or more restrictive and
do not provide lesser rights than any other Underlying Right which QWEST may be
hereafter required to acquire in constructing the QWEST System, QWEST shall
cooperate with FRONTIER and acquire and utilize the ConRail ROW, or applicable
portions thereof, in satisfaction of the FRONTIER commitment to ConRail. In
such event, the IRU Fee payable hereunder with respect to any Segment on the
ConRail ROW shall be adjusted as agreed by the parties.
ARTICLE XI.
USE OF QWEST SYSTEM
-------------------
11.1 The requirements, restrictions, and/or limitations upon
FRONTIER's right to use the FRONTIER 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
FRONTIER 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 J
hereto). FRONTIER 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 FRONTIER's ability to use the FRONTIER 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 FRONTIER to use the FRONTIER 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 FRONTIER's right to use the
FRONTIER Fibers and Associated Property as provided and permitted hereunder.
QWEST represents to FRONTIER that the map heretofore provided to FRONTIER
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
FRONTIER Fibers to be installed along the QWEST System as contemplated by this
Agreement.
11.2 FRONTIER represents, warrants and covenants that it will use the
FRONTIER 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 FRONTIER's cost to install additional equipment, or replace existing
equipment, in the facility space provided to FRONTIER pursuant to Article VII,
subject to the Underlying Rights Requirements.
11.4 QWEST agrees and acknowledges that it has no right to use the
FRONTIER Fibers during the Term hereof, and that, from and after the effective
date of the grant of each IRU hereunder, QWEST shall keep the FRONTIER Fibers,
the Associated Property and the IRUs granted hereunder (other than any
Associated Property (excluding any Associated Property that may be covered by
the Pre-Existing Cal-Fiber Lien as to which QWEST agrees to use its best efforts
to provide a nondisturbance agreement substantially to the effect described in
the next sentence) as to which QWEST shall have provided to FRONTIER a
nondisturbance agreement substantially to the effect as described in the next
sentence) 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 (excluding the Pre-Existing Cal-Fiber Lien) a written nondisturbance
agreement substantially to the effect that such lienholder acknowledges
FRONTIER's rights and interests in and to the FRONTIER 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,
FRONTIER may use the FRONTIER 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.
' 153(2)(43). FRONTIER agrees and acknowledges that it has no right to use any
of the fibers, other than the FRONTIER Fibers, included in the Cable or
otherwise incorporated in the QWEST System, and that FRONTIER shall keep any and
all of the QWEST System, other than the IRU in the FRONTIER Fibers or in the
Associated Property, free from any liens, rights or claims of any third party
attributable to FRONTIER.
11.6 FRONTIER 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 FRONTIER 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 FRONTIER shall not use the FRONTIER Fibers 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 FRONTIER 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 FRONTIER 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 FRONTIER, to execute, file and/or
record such documents or instruments as FRONTIER shall deem reasonably necessary
or appropriate to evidence or safeguard the IRUs granted to FRONTIER hereunder.
FRONTIER 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
FRONTIER and its employees, officers and directors, from and against, and
assumes liability for:
(a) Any injury, loss or damage to any person (including FRONTIER), 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
FRONTIER 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, FRONTIER
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 FRONTIER, 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
FRONTIER in the performance of its obligations or breach of its representations
under this Agreement (including, without limitation, any default by FRONTIER 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 FRONTIER 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 FRONTIER 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 FRONTIER 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 FRONTIER 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) FRONTIER shall be listed as an additional insured on all policies set
forth above, except workers' compensation. QWEST shall provide to FRONTIER a
certificate of insurance evidencing such insurance coverage. Evidence of
insurance furnished shall contain a clause stating FRONTIER "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, FRONTIER'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 FRONTIER 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 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 FRONTIER pursuant hereto.
15.3 Except as to Impositions described in paragraphs (ii) and (iii)
of Section 15.2, 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 FRONTIER in the QWEST System; provided that, upon receipt
of a notice of any such Imposition, QWEST shall promptly notify FRONTIER of such
Imposition and following payment of such Imposition by QWEST, FRONTIER 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 FRONTIER 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 FRONTIER's
proportionate share of the total fiber count in the affected portion of the
QWEST System. QWEST shall provide FRONTIER with reasonable supporting
documentation for Impositions for which QWEST seeks reimbursement. If QWEST's
assessed value, for property tax purposes, is based on its entire operation in
any state (i.e., central assessment), QWEST and FRONTIER shall work together in
good faith to allocate a proper portion of said assessment to the QWEST System
and FRONTIER's ownership interest in the QWEST System. Any reimbursement made
under this Section 15.3 shall be in an amount equal to the Impositions required
to be paid by QWEST in respect of the receipt or accrual of such reimbursement
less the net present value (computed at a 10% discount rate) of the tax benefit
(e.g. from the deduction, depreciation or amortization of such payment or
accrual of the Imposition) to which QWEST may be entitled with respect to the
payment or accrual of the Impositions which have been reimbursed. Hereafter,
such additional amount or amounts shall be referred to as the "Gross-up Amount."
Such Gross-up Amount shall not include any tax on the amount of the Gross-up
Amount itself. QWEST shall, upon request, provide FRONTIER 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 $50,000,
FRONTIER may elect to engage the services of an independent consultant, at
FRONTIER's sole cost and expense, to review QWEST's computation of such Gross-up
Amount. Any independent consultant selected by FRONTIER 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 FRONTIER
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).
Such contest may be pursued by any lawful means including by non-payment of such
Imposition provided such non-payment
does not materially, adversely affect the title, rights or property to be
delivered to FRONTIER 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 FRONTIER 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 FRONTIER in the same proportion as to
which such refunded or credited Impositions were borne by QWEST and FRONTIER.
In any such event, QWEST shall provide timely notice of such challenge to
FRONTIER. If QWEST chooses to proceed with such challenge after receipt of a
written objection to the challenge from FRONTIER, QWEST shall conduct such
challenge at its own costs and expense, provided that FRONTIER 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,
FRONTIER 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
attorney's fees) incurred by FRONTIER in any such contest shall be shared by
FRONTIER 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 FRONTIER and QWEST in the same
proportion as to which such refunded or credited Imposition was borne by
FRONTIER and QWEST. If FRONTIER chooses to proceed with such contest after
receipt of written objection to the challenge from QWEST, FRONTIER 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 15, 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"). FRONTIER shall, however, be
consulted on the conduct and status of such contest. QWEST shall have no
obligation to disclose to FRONTIER 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 FRONTIER has requested a contest pursuant to the provisions described
above in this Section 15.4, then FRONTIER shall have no obligation to provide
any reimbursement for such amount if FRONTIER 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 FRONTIER, 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
FRONTIER 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
FRONTIER Fibers. If the FRONTIER Fibers are the only fibers located in the
Cable from the point where the Cable leaves the QWEST System right-of-way to a
FRONTIER POP, FRONTIER 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, FRONTIER
shall have the right to protest by appropriate proceedings any Imposition
described in Section 15.5, above. In such event, FRONTIER shall indemnify and
hold QWEST harmless from any expense, legal action or cost, including reasonable
attorneys' fees, resulting from FRONTIER's exercise of its rights hereunder. In
the event of any refund, rebate, reduction or abatement to FRONTIER of any such
Imposition imposed upon and/or paid by FRONTIER, FRONTIER shall be entitled to
receive the entire benefit of such refund, rebate, reduction or abatement
attributable to FRONTIER's use of the QWEST System. In the event FRONTIER 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"), FRONTIER 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 FRONTIER 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 FRONTIER 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 FRONTIER
based upon FRONTIER'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 FRONTIER updated As-Builts with respect to the relocated QWEST
System not later than sixty (60) days following the completion of such
relocation. If FRONTIER and QWEST do not determine to relocate the affected
portion of the QWEST System, FRONTIER shall have the right to terminate its use
of the FRONTIER Fibers in the affected portion of the QWEST System. Such
termination shall be effective on the date specified by FRONTIER 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 FRONTIER 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 No