Portions of this exhibit have been omitted and filed separately with
the Securities and Exchange Commission. These portions are
designated "[ * * * ]."
Exhibit 10.3
FIBER OPTIC ACCESS AGREEMENT
BETWEEN
PATHNET TELECOMMUNICATIONS, INC.
AND
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY
This fiber optic access agreement ("Agreement") is entered into as
of this 30th day of March, 2000 between Pathnet Telecommunications, Inc., a
Delaware corporation ("Pathnet") and The Burlington Northern and Santa Fe
Railway Company, a Delaware corporation ("BNSF").
WHEREAS, BNSF has certain ownership interests in certain of its rail
corridors covering the western United States, BNSF's rail network consisting of
over 30,000 route miles in 28 states and two Canadian provinces;
WHEREAS, Pathnet desires to obtain from BNSF the right to lease from
BNSF, on specified terms and conditions, strips of land constituting
approximately [ * * * ] route miles, in the aggregate, within any rail corridor
in BNSF's existing rail corridor network (or within the Auburn-Yakima-Pasco,
Washington rail corridor, or the Ortonville, Minnesota-Xxxxx, Montana rail
corridor)(collectively, "Rail Corridors" and any one individually, "Rail
Corridor"), to the extent of BNSF's ownership rights, so that Pathnet can
construct, install, operate, maintain, replace, reconstruct, remove and/or
relocate (collectively, "Construct and Operate") a fiber optic
telecommunications transmission system and certain appurtenant equipment and
structures (collectively, "Fiber Optic Facilities");
WHEREAS, Pathnet intends to construct and operate a network of Fiber
Optic Facilities over many BNSF Rail Corridors, and to construct or acquire, and
then operate, a network of Fiber Optic Facilities over many corridors throughout
the eastern United States;
WHEREAS, Pathnet and BNSF have entered into a Contribution
Agreement, dated November 2, 1999, by which BNSF has agreed to contribute
certain property interests into Pathnet and to execute and deliver this
Agreement and, subject to the terms, conditions and obligations set forth in
this Agreement, perform the duties set forth herein; and
WHEREAS, BNSF is willing, on the terms and conditions set forth in
this Agreement, to enter into various specific leases with Pathnet, in the form
of the Lease attached hereto as Exhibit A, with respect to approximately [ * * *
] route miles of Rail Corridors of BNSF's existing Rail Corridor network, as
specified by Pathnet and as shown on Exhibits B and C attached hereto, each
Lease to grant to Pathnet the right to Construct and Operate Fiber Optic
Facilities on a specific BNSF Rail Corridor, to the extent of BNSF's ownership
rights therein;
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NOW, THEREFORE, Pathnet and BNSF agree as follows:
1. Condition Precedent to Commencement of Pathnet's Rights.
Pathnet and BNSF have closed the transaction described and
governed by the Contribution Agreement, on the terms set forth in the
Contribution Agreement.
2. Right to Lease.
For a period of 15 years following the date of this Agreement,
on each rail corridor within BNSF's existing Rail Corridor network, subject to
the limitations of BNSF's ownership interest in each Rail Corridor, as set forth
in Section 11 hereof, and to the restrictions set forth in Section 3 hereof
concerning BNSF's overriding rail operations, safety concerns and property
marketing rights, Pathnet shall have the right to enter into a fiber optic lease
with BNSF on the terms set forth in the form of Fiber Optic Lease attached
hereto as Exhibit A and made a part hereof (hereinafter, "Lease"). (Where, with
respect to a particular Rail Corridor BNSF is subject to a limitation on its
ability to grant a Lease, but has a right to grant a fiber optic easement
instead, BNSF shall grant to Pathnet such a fiber optic easement on terms
otherwise identical to the Lease, and any such easement also shall be included
in references hereinafter to the term "Lease.") Pathnet acknowledges that,
subject only to certain restrictions set forth in Section 4 hereof, BNSF will
continue to convey to other parties, or may abandon, various Rail Corridors, or
portions thereof, throughout the term of this Agreement, and that such actions
will affect the Rail Corridor network subject to leasing to Pathnet at any
particular time. Each Lease shall permit Pathnet to Construct and Operate Fiber
Optic Facilities on the specific Rail Corridor premises to which each Lease
applies, subject to the procedures and terms of each Lease. Each Lease shall be
for a term of 35 years unless the Lease is terminated earlier in accordance with
the terms of each Lease.
3. Procedure to Obtain a Lease.
Pathnet may request a Lease in the form of Exhibit A, to the
extent of BNSF's ownership interest in the Rail Corridor, by providing to BNSF
prior written notice of its desire to enter into a Lease, which notice shall
specify the end points of the particular BNSF Rail Corridor where Pathnet
desires a Lease. BNSF shall grant such request, and BNSF and Pathnet shall
execute a Lease in the form of Exhibit A, as soon as practicable but no later
than thirty (30) days after the date BNSF receives such notice from Pathnet,
unless BNSF cannot allow a Lease in the Rail Corridor because either: (i) the
Construction and Operation of Fiber Optic Facilities under the Lease in BNSF's
judgment would materially interfere with, or create a safety hazard to BNSF with
respect to, BNSF's existing or then reasonably foreseeable future rail
operations on a segment of the Rail Corridor, as determined by a BNSF operating
or engineering Vice President or Assistant Vice President; or (ii) the
Construction and Operation of Fiber Optic Facilities under the Lease in BNSF's
judgment would materially interfere with BNSF's existing or then reasonably
foreseeable future plans to market or develop a particular parcel of land for
the benefit of a rail customer or as a real estate development (but not as a
fiber optic venture) on a
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segment of the Rail Corridor, as reasonably determined by a BNSF property
management Vice President or Assistant Vice President. Where BNSF cannot allow a
Lease in the Rail Corridor for one of the reasons just set forth, BNSF shall
cooperate with Pathnet in good faith to seek a solution that will enable Pathnet
to install its Fiber Optic Facilities on the requested portion of the Rail
Corridor and, if BNSF is unable to do so, to allow Pathnet to Construct and
Operate its Fiber Optic Facilities over as much of the Rail Corridor as
possible, consistent with the terms of (i) and (ii) above, and, if Pathnet so
desires, BNSF shall execute a Lease with Pathnet over those portions of the Rail
Corridor where the Lease would not violate the terms of (i) or (ii) above.
4. Restrictions on BNSF's Right to Grant Future Fiber Optic
Rights Along Certain Corridors.
Pathnet acknowledges that the rights to Construct and Operate
Fiber Optic Facilities to be granted to Pathnet in the Lease are nonexclusive,
except to the extent set forth in this Section 4, and that other parties have
rights under their existing agreements with, and/or conveyances from, BNSF to
Construct and Operate Fiber Optic Facilities on various BNSF rail corridors.
Subject to the existing rights of other parties under existing fiber optic
agreements, BNSF agrees as follows:
(a) Immediate Exclusivity Rights: Commencing on the date of
this Agreement, and continuing until December 31, 2004, for all of the Rail
Corridors set forth on Exhibit B attached hereto and made a part hereof,
constituting an aggregate of no more than approximately 4,052 miles ("Exclusive
Corridors"), BNSF shall not grant any rights to any other party to Construct and
Operate any Fiber Optic Facilities on any Exclusive Corridor, except where: (i)
such Fiber Optic Facilities only cross the Exclusive Corridor, and (ii) the
construction and operation of such Fiber Optic Facilities does not materially
disrupt Pathnet's ability to utilize the Fiber Optic Facilities covered by a
Lease. This exclusivity period shall terminate earlier on all routes where
Commencement of Construction (as defined herein) has not occurred, on either:
(x) the dates specified in Section 7 hereof if on such date Pathnet has not met
the applicable fiber optic network development milestone specified in Section 7
with respect to such date; or (y) on one of the dates specified below if:
(I) As of April 30, 2001, Pathnet has not completed
construction, which in this Section 4(a) shall mean
installation of a conduit and at least [* * *] fiber optic
fibers in the conduit, of at least 800 miles of Fiber Optic
Facilities along the Exclusive Corridors;
(II) As of [* * *], a Liquidity Event (as hereinafter
defined) has not occurred;
(III) As of April 30, 2002, Pathnet has not completed
construction of at least 1,600 miles of Fiber Optic Facilities
along the Exclusive Corridors;
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(IV) As of April 30, 2003, Pathnet has not completed
construction of at least 2,400 miles of Fiber Optic Facilities
along the Exclusive Corridors;
(V) As of April 30, 2004, Pathnet has not completed
construction of at least 3,200 miles of Fiber Optic Facilities
along the Exclusive Corridors; or
(VI) As of April 30, 2005, Pathnet has not completed
construction of at least 4,000 miles of Fiber Optic Facilities
along the Exclusive Corridors.
Termination of Pathnet's exclusivity rights on all routes
where Commencement of Construction has not then occurred will be the sole
consequence of Pathnet's failure to reach any milestone set forth in this
Section 4(a). In this Agreement, a "Liquidity Event" shall mean the earliest of:
(aa) a Qualified IPO, as defined in the Stockholders' Agreement, dated on or
about the date hereof, among Pathnet, the current holders of Pathnet's Preferred
Stock, BNSF, CSX Railway Company and Colonial Pipeline Company; or (bb) the date
on which the common stock or any successor security of Pathnet either is listed
for trading on a national securities exchange registered under the Exchange Act
of 1934, as amended ("Exchange Act"), or is traded in an over-the- counter
market and quoted in an automated quotation system of the National Association
of Securities Dealers, Inc.; or (cc) there has been a transaction in which all
stockholders of Pathnet have received ownership interests which are listed for
trading on a national securities exchange registered under the Exchange Act, or
is traded in an over-the-counter market and quoted in an automated quotation
system of the National Association of Securities Dealers, Inc.
(b) Exclusive Right to Negotiate after Commencement of
Construction:
(1) Definitions. In this Agreement, the term "Commencement
of Construction" shall mean the date of award of the primary
construction contract for any segment of a Rail Corridor. In
this Agreement, the term "Restricted Corridors" shall mean
those Rail Corridors set forth on Exhibit C, which is made a
part hereof, the initial version of which is attached
hereto, which Exhibit C may be modified by Pathnet from time
to time by Pathnet delivering notice of such modification to
BNSF; provided that the aggregate route miles of the
Exclusive Corridors plus the Restricted Corridors during the
term of this Agreement shall not exceed approximately [ * *
*] route miles. In the event that Pathnet revises Exhibit C
to include all or any portion of the Auburn-Yakiman-Pasko,
Washington Rail Corridor or the Ortonville, Minnesota-Xxxxx,
Montana Rail Corridor, BNSF, within 30 days following its
receipt of notice of such revision, shall acquire from its
affiliate now owning certain property rights in each Rail
Corridor that affiliate's rights in the Rail Corridor land
(possibly exclusive of a rail service easement in the case
of the Auburn-Yakima-Xxxxx rail corridor).
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(2) Exclusive Right to Negotiate. Until Commencement of
Construction occurs on a Rail Corridor, Pathnet shall have
no exclusive right to negotiate and execute a fiber optic
agreement on such Rail Corridor with any third party.
Beginning on the date of Commencement of Construction, and
continuing for up to five years thereafter for each
Exclusive Corridor to the extent Pathnet no longer has
exclusive rights under 4(a) on such Rail Corridor, and for
up to three years thereafter for each Restricted Corridor,
but in no event beyond the termination of the Lease related
to such Exclusive Corridor or Restricted Corridor, Pathnet
shall have an exclusive right to negotiate and execute any
fiber optic agreement on such Rail Corridor, except for any
agreement related to Fiber Optic Facilities which only cross
the Restricted Corridor or Exclusive Corridor, where the
construction and operation of such Fiber Optic Facilities
does not materially disrupt Pathnet's ability to utilize the
Fiber Optic Facilities covered by a Lease; provided that
this exclusive right to negotiate and execute any fiber
optic agreement with respect to any particular party shall
continue for a period of [* * *] (and BNSF thereafter may
negotiate a fiber optic agreement with such party if by the
end of such [* * *] Pathnet does not have an executed fiber
optic agreement with such party). The periods for exclusive
rights to negotiate as specified in this Section 4(b) shall
terminate earlier, as to all Rail Corridors and Rail
Corridor segments on which Pathnet has not yet reached the
stage Commencement of Construction if Pathnet either: (i)
does not meet the applicable development milestone specified
in Section 7 hereof, (ii) as of [* * *], a Liquidity Event
has not occurred, or (iii) has not met the schedule for
constructing Fiber Optic Facilities along Exclusive
Corridors, as set forth in Section 4(a) hereof . In
addition, Pathnet's exclusive right to negotiate and execute
any fiber optic agreement shall terminate on any Rail
Corridor on the date that Pathnet's Lease on such Rail
Corridor is terminated pursuant to the terms of such Lease.
In addition, at any time prior to the end of the period in
which Pathnet has an exclusive right to negotiate and
execute any fiber optic agreement on any Restricted
Corridor, BNSF may not enter into any fiber optic agreement
with another party with respect to such Restricted Corridor
except where such agreement requires such other party to
reach Commencement of Construction on such Restricted
Corridor within one year following the effective date of
such agreement.
5. Limitation on Pathnet's Right to Lease.
If Pathnet enters into a Lease with BNSF, and such Lease
subsequently is terminated for any reason specified in such Lease, for a period
of three (3) years following the date of any such termination, Pathnet shall
have no right to enter into a Lease on any portion of the BNSF Rail Corridor
that was subject to such Lease.
-5-
6. Contribution to Pathnet.
This Agreement is being contributed by BNSF to Pathnet
pursuant to the terms of the Contribution Agreement.
7. Fiber Optic Network Development Schedule.
Pathnet shall develop a Fiber Optic Facilities network
throughout the United States, utilizing BNSF's rail corridors and longitudinal
corridors of one or more other parties in the United States, in accordance with
the following schedule of fiber optic network development milestones:
(a) By June 30, 2001, Pathnet must have completed
construction of, or have acquired, Fiber Optic
Facilities over at least 3,000 Route Miles, in the
aggregate. As used in this Section, each "Route Mile"
shall consist of either one mile of at least [* * *], or
one mile of [* * *] plus [* * *]
(b) By June 30, 2002, Pathnet must have completed
construction of, or have acquired, Fiber Optic
Facilities over at least 6,000 Route Miles, in the
aggregate.
(c) By June 30, 2003, Pathnet must have completed
construction of, or have acquired, Fiber Optic
Facilities over at least 9,500 Route Miles, in the
aggregate.
(d) By June 30, 2004, Pathnet must have completed
construction of, or have acquired, Fiber Optic
Facilities over at least 12,000 Route Miles, in the
aggregate.
(e) By June 30, 2005, Pathnet must have completed
construction of, or have acquired, Fiber Optic
Facilities over at least 12,500 Route Miles, in the
aggregate.
Termination of Pathnet's exclusivity rights on all routes where Commencement of
Construction has not then occurred will be the sole consequence of Pathnet's
failure to reach any milestone set forth in this Section 7.
-6-
8. Reporting Relative to Fiber Optic Network Development
Schedule.
Forty days before each deadline specified in Section 7 hereof,
Pathnet shall deliver to BNSF a report reasonably satisfactory to BNSF showing
Pathnet's progress, as of the date of the report, toward meeting each
appropriate level of development specified in Section 7, and its plans to meet
or exceed each such level by the appropriate deadline. Seven (7) days after each
deadline specified in Section 7, Pathnet shall deliver to BNSF a certified
report showing whether Pathnet has met or exceeded each appropriate level of
development specified in that Section. BNSF shall have the right to audit
Pathnet's records in order to verify the contents of each report required by
this Section 8.
9. Time is of the Essence; Post-Termination Liability.
Time is of the essence in performing this Agreement. No
termination of this Agreement shall release Pathnet from any liability or
obligation of Pathnet under the terms of this Agreement, resulting from events
happening prior to the date of termination.
10. Compliance with Laws.
In exercising any and all of its right under this Agreement,
Pathnet shall comply with all applicable laws, regulations, ordinances, rules,
decisions and orders of any court or governmental body with jurisdiction, and
shall have the sole responsibility for all costs associated with such
compliance. Pathnet, at its sole cost, shall secure and maintain in effect all
federal, state and local permits licenses and/or zoning approvals required to
Construct and Operate the Fiber Optic Facilities, and shall satisfy any and all
conditions that must be met in order to obtain any required permit, license or
zoning approval.
11. Limitations on BNSF's Ownership Rights.
Pathnet acknowledges that one or more other parties,
including, but not limited to, various native American nations, may have, or may
claim to have, ownership rights in certain segments of certain of BNSF's rail
corridors, and may claim that Pathnet also must obtain rights from it (or them)
in order to occupy, or access, the Premises, as defined in each Lease, and that,
in some cases, such claims may be valid. Pathnet acknowledges that BNSF's
ownership interest in many of its Rail Corridors is a determinable fee, a
railroad right of way or a rail service easement, which shall terminate when
BNSF either: (i) ceases to use those Rail Corridors for railroad purposes; or
(ii) uses such Rail Corridors for purposes found to be inconsistent with use of
the corridors for railroad purposes, and that in such circumstances, Pathnet's
right to Lease any such Rail Corridor, or its rights under any Lease of any such
Rail Corridor, may be subject to termination as of the date the circumstances
set forth in either (i) or (ii), above, first arise (unless Pathnet improves the
quality of title to the Lease property by obtaining a patent or deed from the
federal government, if appropriate, or acquiring additional property interests
from third parties). Pathnet also acknowledges that BNSF's ownership rights may
terminate for other reasons, such
-7-
as termination of franchise rights, and that certain segments of BNSF's Rail
Corridors consist only of a trackage rights license to BNSF to enable BNSF to
provide rail service, or shared ownership with other railroads, and that BNSF
may not have rights to include those segments in any Lease to Pathnet. Pathnet
further acknowledges that Pathnet's rights to enter into a Lease on any BNSF
Rail Corridor, and its rights under any Lease of any BNSF Rail Corridor, are
subject and subordinate to all outstanding and/or future rights and encumbrances
on BNSF's Rail Corridors (including liens, security interests and mortgages),
and any and all easements, other leases, licenses, permits or agreements which
now or in the future relate to BNSF's Rail Corridors, except BNSF in the future
shall not place any encumbrance upon any BNSF Rail Corridor then subject to a
Lease to Pathnet, or enter into any easement, lease, license, permit or
agreement, which would materially disrupt Pathnet's ability to exercise its
rights under this Agreement or to utilize the Fiber Optic Facilities covered by
a Lease (and Pathnet acknowledges that its ability to exercise its rights under
this Agreement or to utilize such Fiber Optic Facilities would not be materially
disrupted if either: (x) Pathnet is relocated to another location within the
applicable BNSF Rail Corridor in accordance with the terms of Section 14 of the
applicable Lease, or could be located elsewhere in the Rail Corridor; or (y)
BNSF preserves fiber optic rights and makes those rights available to Pathnet at
no charge payable by Pathnet to the holder of the land interest where such
rights are located and changes following any conveyance by BNSF of its ownership
interest in such a parcel have not caused a significant physical limitation on
constructing Fiber Optic Facilities through such parcel (and Pathnet agrees that
any cost of enforcing such rights shall be the responsibility of Pathnet). BNSF
therefore conveys to Pathnet no more right, title or interest in any Rail
Corridor than BNSF holds in such Rail Corridor at the time of conveyance, and
Pathnet hereby releases BNSF from any and all liability, cost, loss, damage or
expense in connection with any claims that BNSF lacked sufficient legal title to
convey the rights described herein. Pathnet shall have the right, at its sole
cost and expense, to acquire or attempt to acquire from other parties such
rights in BNSF Rail Corridors that Pathnet deems necessary or appropriate.
12. Confidentiality.
The parties hereto shall keep confidential all terms of this
Agreement, except to the extent that disclosure thereof is required by law or
agreed by the parties in writing. In the event either party hereto is required
to disclose any terms of this agreement pursuant to applicable law, at least
three days prior to disclosing the same (or such shorter period permitted by
law), such party shall notify the other party hereto in writing and provide
copies of the terms that the party intends to disclose. The language of the
press release announcing this deal shall be mutually agreed upon between the
parties hereto.
13. No Assignment.
Neither this Agreement, nor any of the rights to lease that
are granted to Pathnet by the terms of this Agreement, shall be assigned by
Pathnet without BNSF's prior written consent, which may be granted or withheld
in BNSF's sole discretion. BNSF acknowledges that Pathnet, without consent of
BNSF may sublease to one or more parties the right to use other
-8-
Fiber Optic Facilities under a Lease, may sell to one or more other parties a
partial ownership in such Fiber Optic Facilities, may sublease or assign this
Agreement or any Lease to a subsidiary, affiliate or parent company controlled
by, under common control with, or controlling, either indirectly or directly,
Pathnet, but only where, and to the extent, that such transaction does not
violate the terms of the Contribution Agreement, or, for financing purposes
only, Pathnet may assign this Agreement to Lucent Technologies, Inc. and/or
Nortel Networks, Inc., or an affiliate of either company, or to some other third
party following the written concurrence of BNSF which shall not be unreasonably
withheld or delayed, or may assign any Lease to a third party, provided that in
any such case Pathnet shall remain fully responsible to BNSF for compliance with
all terms of this Agreement and the Lease. (In the foregoing sentence the terms
"control", "controlled", and "controlling" shall mean ownership of more than 50
percent of the equity interest in a company.) Nothing herein shall prohibit
Pathnet: (i) from involving contractors, or strategic or co-development
partners, in Construction and Operation of the Fiber Optic Facilities, on such
terms as Pathnet may determine in its sole discretion, provided that all such
activities are conducted in accordance with the terms of this Lease, and that
Pathnet remains fully liable for all obligations hereunder; and (ii) from
granting liens or other security interests in the Fiber Optic Facilities or
Pathnet's rights under this Lease in connection with financing or investments
made available to Pathnet, which agreements may permit Pathnet's lenders to take
possession, sell, assign or otherwise transfer the Fiber Optic Facilities,
including the right to operate, or permit a third-party to operate, the Fiber
Optic Facilities, provided that any party taking possession of the Fiber Optic
Facilities shall be subject to all terms of the Lease, and that continued
operation of the Fiber Optic Facilities shall be subject to all terms of the
Lease.
14. Limitation on Damages for Breach of this Agreement.
Damages that may be recovered for breach of this Agreement
shall not include any indirect, consequential, special or punitive damages, or
lost profits, or the cost of Pathnet building Fiber Optic Facilities on any
alternative route.
15. Taxes and Other Charges.
(a) Pathnet shall pay, and shall indemnify BNSF against
the liability for, any and all taxes, levies,
excises, charges and assessments (including any
penalties and interest related thereto)
(collectively, "Taxes") attributable to the
execution, delivery, recording or filing of this
Agreement, including without limitation any ad
valorem taxes assessed against the properties of BNSF
to the extent such ad valorem taxes are attributable
to Pathnet's rights hereunder, but only to the extent
that the ad valorem taxes attributable to the value
of Pathnet's rights have increased due to assessments
levied after the date hereof.
(b) In the case of amounts described in Section 15(a) to
be paid by Pathnet, BNSF shall determine the amount
of such Taxes to be paid by Pathnet by reference to
information provided by the relevant taxing authority
that demonstrates or establishes the increase in such
Taxes after the date hereof. If the information
provided by the relevant taxing authority
demonstrates or establishes that Taxes are
attributable to fiber optic development value, but
the information does not demonstrate or establish the
amount of the Taxes that are so
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(c)
attributable, such amount shall be determined by reference to
a formula that is consistently applied and that allocates any
such Taxes among all of BNSF's Rail Corridors (including
similar agreements) subject to such Taxes in a manner that
reasonably reflects both the basis upon which the Taxes are
imposed and the relative proportion of such Rail Corridors in
respect of which Pathnet has been granted rights hereunder.
The amount of Taxes attributable to fiber optic development
value shall be fairly allocated between Pathnet and BNSF based
upon the relative value of Pathnet's rights and the rights of
others to whom BNSF has granted, or in the future may grant,
fiber optic rights with respect to the same property. In all
cases, BNSF promptly shall provide to Pathnet information that
establishes the manner in which any such Taxes were allocated
and the basis for establishing that such amounts are
attributable to the execution of this Agreement. The parties
shall resolve any dispute regarding the liability for payment
of Taxes hereunder pursuant to the dispute resolution and
arbitration procedures set forth in Section 21 of the Lease.
(d) Notwithstanding the foregoing, Pathnet shall not be
responsible for any Taxes for which it would not be
responsible pursuant to the provisions of Section 24(d)
or (e) of the form of Lease attached hereto or for any
Taxes on Rail Corridors for periods in respect of which
Pathnet no longer has rights hereunder.
(e) BNSF agrees to reasonably cooperate with Pathnet in the
refund, rebate, reduction, abatement, mitigation and
contest of any Taxes for which Pathnet is obligated to
pay hereunder.
16. Notices.
Unless otherwise provided herein, all notices and other
communications required by or concerning this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person, or on the next
business day when sent by a nationally recognized overnight courier, or on the
second succeeding business day when sent by registered or certified United
States Mail (postage prepaid, return receipt requested), or, if postal claim
notice is given , on the date of its return marked "unclaimed" (provided,
however, that upon receipt of a returned notice marked "unclaimed", the sending
party hereto shall make reasonable effort to contact and notify the other party
hereto by telephone) and each respective party hereto at the following addresses
(or at such other address for a party hereto as shall be specified by like
notice):
(1) if to Pathnet:
Pathnet, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: General Counsel
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(2) if to BNSF:
Assistant Vice President, Telecommunications
The Burlington Northern and Santa Fe Railway Company
0000 Xxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxxxx 00000-0000
and to:
Vice President - Law
The Burlington Northern and Santa Fe Railway Company
0000 Xxx Xxxx Xxxxx, XXX-0
Xxxx Xxxxx, Xxxxx 00000-0000
18. Brokers and Agents.
BNSF and Pathnet represent and warrant to each other that
neither has employed any broker, agent or finder in connection with this
Agreement or the Purchase Agreement, and each indemnifies and agrees to hold
harmless the other from and against any commission or fee claimed by any broker,
agent or finder in connection with this transaction.
19. Force Majeure.
Except as may be elsewhere specifically provided in this
Agreement, any failure or delay in the performance by a party hereto of its
obligations hereunder shall not constitute a breach of this Agreement if such
failure or delay results from causes beyond that party's control, including but
not limited to acts of God, governmental action (whether in its sovereign or
contractual capacity), fire, flood, or other catastrophe, national emergency,
insurrection, riot, and war. The phrase "beyond that party's control" shall not
include any failure to reach agreement with a party with whom Pathnet is
negotiating pursuant to the exclusive right to negotiate provided in Section
4(b).
20. Severability.
If any provision of this Agreement or the application thereof,
shall be held invalid, illegal or unenforceable in whole or in part, the
remainder of this Agreement and the application thereof shall not be affected,
and shall be enforceable to the full extent permitted by law, and the portion
hereof found to be invalid shall be enforced to the fullest extent permitted by
law, and, if possible, shall be reformed to carry out as much as possible the
intent of the parties as expressed herein.
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21. Amendment.
This Agreement may be amended only by a written instrument
executed by both parties hereto. No failure to exercise and no delay in
exercising, on the part of a party hereto, any right, power or privilege
hereunder shall operate as a waiver of any other provision of this Agreement, or
as a waiver of that right, power or privilege either before, or after, the
period of waiver.
22. Entire Agreement.
This Agreement and all Exhibits attached hereto, constitutes
the entire agreement of the parties hereto with respect to the subject matters
hereof, and supersede any and all prior negotiations, understandings and
agreements, whether oral or written, with respect hereto.
23. Applicable Law.
This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Texas. Venue for any legal action to interpret or
enforce this Agreement shall lie exclusively in the United States District Court
for the Northern District of Texas, or if jurisdiction cannot be obtained in
federal court, then venue shall be in a Texas state court in Tarrant County,
Texas.
24. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, authorized representatives of BNSF and Pathnet
have executed this Agreement as of the date first set forth herein.
THE BURLINGTON NORTHERN AND PATHNET TELECOMMUNICATIONS,
SANTA FE RAILWAY COMPANY INC.
By: /s/ illegible By: /s/ X.X. Xxxxxxxx V
------------------------------ --------------------------
Name: Name:
------------------------ --------------------
Title: Title:
--------------------------- --------------------------
-12-
EXHIBIT A
FORM OF LEASE
Portions of this exhibit have been omitted and filed separately with
the Securities and Exchange Commission. Those portions are
designated "[ * * * ]."
EXHIBIT B
FORM OF FIBER OPTIC LEASE
THIS FIBER OPTIC LEASE ("Lease") is made as of this ____ day of
______________, 200__ between Pathnet Telecommunications, Inc., a Delaware
corporation ("Pathnet") and The Burlington Northern and Santa Fe Railway
Company, a Delaware corporation ("BNSF"). This Lease is being entered into
pursuant to the terms of that certain fiber optic access agreement between BNSF
and Pathnet dated November __, 1999 ("Fiber Optic Access Agreement"), which sets
forth the terms upon which BNSF granted to Pathnet the right to enter into fiber
optic leases, on the terms of this Lease, on specified rail corridors in the
BNSF rail transportation network and subject to all limitations on the ownership
interest of BNSF, to Construct and Operate Fiber Optic Facilities (as defined
below).
WHEREAS, BNSF has certain ownership interests in a rail corridor
consisting of ___ route miles between ___________________ and
______________________ ("Rail Corridor");
WHEREAS, Pathnet desires to lease from BNSF, on the terms and
conditions set forth herein, a portion of the Rail Corridor, in order for
Pathnet to construct, install, operate, maintain, replace, reconstruct, remove
and/or relocate (collectively, "Construct and Operate") a fiber optic
telecommunications transmission system and certain appurtenant equipment and
structures (collectively, "Fiber Optic Facilities"); and
WHEREAS, BNSF is willing, on the terms and conditions set forth in
this Lease, to lease a portion of the Rail Corridor to Pathnet, for the sole
purpose of allowing Pathnet, subject to all limitations on the ownership
interest of BNSF, to Construct and Operate Fiber Optic Facilities on the Rail
Corridor.
NOW THEREFORE, Pathnet and BNSF agree as follows:
1. Lease Rights. Pursuant to the terms of this Lease and the Fiber
Optic Access Agreement, Pathnet shall have the right to enter upon a portion of
the Rail Corridor, which portion generally shall be a three foot wide strip of
land, or such larger portion required to Construct and Operate the Fiber Optic
Facilities, as specified in the Final Construction Plans (as defined later
herein) but at each repeater station or other required Fiber Optic Facilities
structure occupying more land, the portion shall extend one foot beyond the
perimeter of the structure or equipment, or, where a perimeter fence is built
around the structure or equipment, one foot beyond the perimeter fence, the
specific portion of the Rail Corridor leased ("Premises") being identified in
Exhibit A attached hereto and made a part hereof. All structures may be fenced
by Pathnet, at its sole cost and expense, and may be multiple stories to the
extent approved by BNSF, provided that the height and other dimensions of any
such structure do not interfere with railroad operations or clearance, or create
a safety hazard. Any such structures may exceed 3,500
1
square feet only: (i) subject to space availability; (ii) following prior
written approval of BNSF, not to be unreasonably withheld; and (iii) where such
structures are not buildings where people regularly report to work. Pathnet's
right to enter the Premises shall commence on the ___ day of ________________,
200__, and shall be for the sole purpose of allowing Pathnet, or any of its
permitted assignees, sublessees of capacity, agents, contractors, strategic or
co-development partners, customers or invitees, or any of their employees
(collectively, "Pathnet Parties") to Construct and Operate Fiber Optic
Facilities on the Premises, subject to BNSF's rights as set forth herein and all
contract and/or property rights of others in the Premises. Pathnet, and any of
the Pathnet Parties, also shall have the right to cross other property in which
BNSF has a sufficient ownership interest as required to access the Premises,
subject to BNSF's rights as set forth herein and all contract and/or property
rights of others in the Premises, so long as such access shall not cross any
active railroad track, or come within 25 feet of such track, without BNSF's
prior written consent, which will not be unreasonably withheld or delayed. Any
of the Pathnet Parties entering onto the Rail Corridor must first execute an
agreement with BNSF in the form of Exhibit "C-1" attached hereto and made a part
hereof, by which such party agrees to comply with BNSF's Contractor Requirements
set forth as Exhibit "C" attached hereto and made a part hereof (and Pathnet
acknowledges that any such Pathnet Party's execution of the Exhibit "C-1"
agreement shall not relieve Pathnet of its full responsibility hereunder for any
actions, omissions or the presence of such Pathnet Party on or near the Rail
Corridor). Pathnet may install as much fiber optic capacity (which term shall
include conduits, whether installed empty or with fiber) on the Premises as it
determines to be appropriate, and may add further fiber optic capacity during
the term of this Lease. Pathnet's rights under this Lease are granted without
covenant of title or quiet enjoyment and Pathnet acknowledges that one or more
other parties may have, or may claim to have, ownership rights in the Rail
Corridor, and may claim that Pathnet also must obtain rights from it (or them)
in order to occupy or access the Premises, and that, in some cases, such claims
may be valid. Pathnet acknowledges that segments of the Rail Corridor may
consist only of a trackage rights licensed to BNSF to enable BNSF to provide
rail service, or shared ownership with other railroads, and that BNSF may not
have rights to include these segments in any Lease to Pathnet. BNSF will use
reasonable efforts to make available to Pathnet all documents reasonably
requested by Pathnet that could be located in a reasonable search (and, at
BNSF's option, BNSF can require that Pathnet or Pathnet's agent conduct the
search, at Pathnet's cost), which documents concern BNSF's rights, and the
rights of others, which in BNSF's judgment affects the Premises and Pathnet's
rights under this Lease or which Pathnet may identify which reasonably relates
to its rights under this Lease. Pathnet acknowledges that BNSF shall not be
liable for any nondisclosure of any document other than nondisclosure resulting
from gross negligence or wilfull misconduct of BNSF. Pathnet shall keep
confidential all confidential and proprietary data contained in these documents
and shall not use it for any purposes other than as set forth herein. BNSF shall
have the right, without causing undue delay, to review documents prior to
permitting Pathnet or its agent to review those documents, and to redact
confidential and proprietary information contained therein. Where
confidentiality provisions apply to contracts requested by Pathnet under this
Section 1, BNSF shall describe for Pathnet the restrictions and interference
with Pathnet's rights that such contracts permit, and or the fiber optic
capacity that such contracts permit to be built in the Rail Corridor, to the
extent that BNSF determines that it can do so consistent with the terms of each
applicable confidentiality provision. If Pathnet determines that BNSF's
description in such
2
circumstances is insufficient, Pathnet shall so inform BNSF and BNSF shall use
good faith efforts to obtain promptly from the other party to the contract at
issue a waiver of the confidentiality provision. Pathnet's rights are subject
and subordinate to all outstanding rights and encumbrances on the Rail Corridor
(including, but not limited to, BNSF's mortgages) which BNSF has placed, or in
the future will place, on the Rail Corridor, and any and all easements, other
leases, licenses, permits or agreements which now or in the future relate to the
Rail Corridor, except that BNSF in the future shall not place any encumbrance
upon the Premises, or enter into any easement, lease, license, permit or
agreement covering any portion of the Premises, which would materially disrupt
Pathnet's ability to utilize the Fiber Optic Facilities under this Lease (and
Pathnet acknowledges that its ability to utilize such Fiber Optic Facilities
would not be materially disrupted if Pathnet is relocated to another location
within the Rail Corridor in accordance with the terms of Section 14 hereof, or
BNSF makes available to Pathnet the fiber optic rights that BNSF has reserved at
no charge payable by Pathnet to the holder of the land interest where such
rights are located (and Pathnet agrees that any cost of enforcing such rights
shall be the responsibility of Pathnet). Pathnet accepts the condition of the
Premises "AS IS, WHERE IS" and "WITH ALL FAULTS". BNSF DISCLAIMS ANY AND ALL
WARRANTIES, EXPRESS OR IMPLIED, THAT ARE NOT SPECIFICALLY SET FORTH HEREIN IN
SECTION 22 HEREOF.
2. Limitations on Lease Rights. Pathnet's rights under this Lease
also shall be subject and subordinate to the prior and continuing rights: (i) of
BNSF (and/or any other party with rights from BNSF) to use and maintain all or
any portion of its Rail Corridor in operating, maintaining, reconstructing or
relocating railroad tracks, signals, communications, electric lines or any other
improvements, equipment or facilities related to providing rail service
(collectively, "Rail Facilities"); (ii) of BNSF to use, and to allow others to
use, all and any portion of the Rail Corridor for any purpose (subject to the
terms of Section 4 of the Fiber Optic Access Agreement), which would not
materially disrupt Pathnet's ability to utilize the Fiber Optic Facilities under
this Lease; (iii) of BNSF to market and/or develop all or any portion of the
Rail Corridor or other BNSF property to rail transportation customers,
utilities, municipalities and other third parties except as restricted by
Section 4 of the Fiber Optic Access Agreement; and (iv) of BNSF to convey to any
party all or any portion of the Rail Corridor, any improvements owned by BNSF on
its Rail Corridor, and any air rights above, or subsurface rights below, the
surface of the Rail Corridor, except that any such conveyance by BNSF after the
date of this Lease shall be subject to this Lease, to the extent permitted by
applicable laws and agreements entered into prior to the date of this Lease. The
provisions of this paragraph shall be subject to the provisions of the Fiber
Optic Access Agreement.
3. Railroad Control. BNSF (and/or any other party with rights from
BNSF) shall have full control at all times over the operation of its railroad
and all Rail Facilities in the Rail Corridor. Pathnet's rights under this Lease
do not authorize Pathnet, or any of the Pathnet Parties, to interfere in any way
with any aspect of BNSF's (and/or such other party's) rail operations, or with
any Rail Facilities, on or near the Rail Corridor, or BNSF's (and/or such other
party) ability to maintain, reconstruct or relocate any Rail Facilities on or
near the Rail Corridor. Pathnet understands that various activities of BNSF, or
parties with rights through BNSF, could have the potential of interrupting
service provided by Pathnet's Fiber Optic Facilities. BNSF
3
understands that uninterrupted service via Pathnet's Fiber Optic Facilities is
of critical importance to Pathnet. Where BNSF knows about future activities
which, in BNSF's opinion, would have a reasonable potential of interrupting
service via Pathnet's Fiber Optic Facilities or otherwise materially interfering
with the Construction and Operation of the Fiber Optic Facilities, BNSF shall
provide notice thereof to Pathnet as far in advance as is practical under the
circumstances, and shall cooperate with Pathnet to attempt to avoid any such
service interruption. Any failure by BNSF to provide such notice or cooperation
shall not subject BNSF to any liability, costs, expenses, damages, losses or
claims to Pathnet or any of the Pathnet Parties, except where the failure is due
to the gross negligence or willful misconduct of BNSF.
4. Fiber Optics Rights are Nonexclusive. The fiber optics rights
granted to Pathnet are nonexclusive, except to the extent set forth in Section 4
of the Fiber Optic Access Agreement.
5. Term of Lease. The term of this Lease shall be for 35 years years
from the date set forth in Section 1, except this Lease shall be terminated
earlier, if any of the following circumstances occur, on the specific date
related to those circumstances, as follows:
(a) If Pathnet fails to deliver Proposed Construction Plans
(as defined herein) within one hundred twenty (120) days
after the date of this Lease, or such longer period as
may be reasonably necessary to cure such failure,
provided that Pathnet already has begun to cure such
failure, and continues diligently to cure until
completion;
(b) If Pathnet fails to reach Commencement of Construction
(which is defined herein as the date of award of the
primary construction contract for the segment of the
Rail Corridor covered by the Proposed Construction
Plans), within either: (i) sixty (60) days from the date
that the Proposed Construction Plans become Final
Construction Plans for that segment of the Rail
Corridor, or such longer period as may be reasonably
necessary to cure such failure, provided that Pathnet
already has begun to cure such failure, and continues
diligently to cure until completion; or (ii) thirty (30)
days from a later date agreed to in writing by BNSF;
(c) Upon Pathnet's submission of the Proposed Construction
Plans, Pathnet also will submit to BNSF a construction
schedule ("Construction Schedule") for BNSF's approval,
such approval not to be unreasonably withheld. Pathnet
acknowledges that BNSF desires that construction be
completed as promptly as possible and will take this
into account in preparing the Construction Schedule. The
Construction Schedule shall contemplate completion of
construction of Fiber Optic Facilities on the segment of
the Rail Corridor covered by the Proposed Construction
Plans as promptly after BNSF's final approval of the
Proposed Construction Plans as is commercially feasible,
taking into account issues of weather and season, and
time to complete title due diligence or respond as
4
reasonably required to any title problems that likely
would materially affect Pathnet's ability to Construct
and Operate the Fiber Optic Facilities, and to acquire
any necessary construction and operating permits. Upon
approval of the Proposed Construction Plans and
Construction Schedule, Pathnet will construct the Fiber
Optic Facilities in accordance with the Construction
Schedule and otherwise with all promptness and due
diligence, it being understood that modifications in the
Construction Schedule may be required due to issues
arising during construction. If at any time BNSF
believes that Pathnet has failed to construct the Fiber
Optic Facilities as promptly as commercially feasibly,
subject to Pathnet's right to suspend construction as
provided in this Subsection, BNSF may provide Pathnet
with written notice of this fact. If Pathnet does not
cure such failure within thirty (30) days after
receiving such written notice, then upon written notice
to Pathnet, BNSF may terminate the Lease, effective
immediately. Notwithstanding the foregoing, Pathnet may
suspend construction for up to two (2) years, upon
receiving BNSF's written approval, not to be
unreasonably withheld, if market considerations or
financial issues warrant such a suspension. During any
such suspension, Pathnet's exclusive right to negotiate
fiber optic agreements with respect to the Rail
Corridor, as set forth in Section 4(b)(2) of the Fiber
Optic Access Agreement, also shall be suspended.
(d) If Pathnet fails to provide the capacity required by
Section 8 hereof, and such failure continues for a
period of thirty (30) days after Pathnet receives
written notice of such failure, or such longer time as
may be reasonably necessary, provided that Pathnet
commences a cure within thirty (30) days and continues
diligently to cure until such cure is completed.
(e) If BNSF has required that Pathnet suspend construction
activities on the Premises for Pathnet's failure to
comply with any BNSF safety requirements, or on account
of Pathnet's interference with BNSF's rail operations or
maintenance activities, and within twenty four (24)
hours after written notice requiring suspension, Pathnet
has not suspended such activities.
6. Effect of Termination of Lease. Immediately upon termination of
this Lease, or if Pathnet abandons any Fiber Optic Facilities under this Lease
for a period of three years (which term shall mean the failure either to have in
use or to dedicate commercially reasonable marketing efforts to sell conduit,
dark fibers or capacity on the Premises), Pathnet shall relinquish to BNSF
possession of the Premises, provided that, for one hundred eighty (180) days
following such date Pathnet shall have the obligation to, and may continue to
enter the Premises for, the sole purposes of: (i) removing all above ground
Fiber Optic Facilities, (ii) removing below ground fiber Optic Facilities as
desired by Pathnet or to the extent reasonably requested by BNSF, and (iii)
restoring the Premises substantially to their condition on the date of this
Lease, reasonable wear and tear and casualty excepted, or as approved by BNSF.
Failure by Pathnet to
5
comply with the foregoing sentence by one hundred eighty (180) days following
the date of termination shall entitle BNSF to treat all remaining Fiber Optic
Facilities as abandoned, and as the property of BNSF.
7. BNSF's Right to Suspend Pathnet Construction and Operating
Activities. In the event that Pathnet or a Pathnet Party fails to comply with
BNSF safety or operational regulations, or interferes or is reasonably likely to
interfere with BNSF rail operations, BNSF may require that Pathnet immediately
suspend all construction and/or operating activities on the Rail Corridor. In
such event, BNSF shall make a good faith effort to make available by
teleconference to discuss with Pathnet, within four (4) hours after suspension,
an individual with sufficient authority to resolve the issue, who shall be
prepared to discuss the reason(s) for such suspension and to attempt to resolve
the issue. If the parties are unable to resolve the issue in such discussion,
then BNSF and Pathnet will escalate the issue to the next higher level of
management, and shall attempt to meet, at a mutually agreeable location, or,
failing that, will have a telephonic meeting, within twenty four (24) hours of
the work suspension, with the goal of resolving the issue at that meeting. The
parties will negotiate in good faith to resolve the issue, and to prevent the
occurrence of similar situations in the future.
8. Fiber Optic Capacity for BNSF.
(a) BNSF has retained the right to use the Premises leased
hereunder to the extent of retaining the right to use fiber optic capacity as
described in this Section 8, either as located on the Rail Corridor or, at
BNSF's option, on an alternative portion of Pathnet's fiber optic network, to
the extent that BNSF's desired point of termination on Pathnet's network is
within [***] miles of BNSF's current rail network (which in this sentence shall
include the two rail corridors included as "Rail Corridors" in the Fiber Optic
Access Agreement and the rail corridors where rail service operating rights were
sold to shortline railroads by BNSF or one of its predecessors and BNSF retained
fiber optic rights in the shortline rail corridor, as such current rail network
is shown on the map identified on Exhibit B). A map generally depicting BNSF's
current rail network is attached as Exhibit B. Accordingly, Pathnet shall make
available to BNSF, on an annual basis each year during the term of this Lease,
at BNSF's request and at no charge to BNSF (except as set forth in Section 8(e)
or (g)), commencing on the later of: (i) the date of completion of the Initial
Construction, or (ii) the date when capacity becomes available at the desired
location, and continuing for the entire term of this Lease, the following fiber
optic capacity, either over the entire length of the Premises, or over any other
Fiber Optic Facilities that are part of Pathnet's fiber optic network within the
area described in this Section 8(a), as specified by BNSF, whether or not they
are located on any of BNSF's Rail Corridors:
(1) Each year during the first [***] years following
completion of Initial Construction (and each anniversary of the date of
completion of Initial Construction shall be referenced herein as "Anniversary
Date"), [***], or its equivalent, of digital transmission capacity for each
route mile of Pathnet's Fiber Optic Facilities constructed under this Lease;
(2) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***], or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease;
(3) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***], or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease;
(4) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***], or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease;
6
(5) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***], or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease;
(6) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***], or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease; and
(7) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***], or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease; and
(8) Each year, commencing on the [***] Anniversary Date,
until the [***] Anniversary Date, [***] miles, or its equivalent, of digital
transmission capacity for each route mile of Pathnet's Fiber Optic Facilities
constructed under this Lease.
(b) The fiber optic capacity described in this Section 8 may be
specified by BNSF in any format then being provided by Pathnet on the Fiber
Optic Facilities on which BNSF requests fiber optic capacity. BNSF shall not be
entitled to the increases in capacity as set forth in Section 8(a) until, and
only to the extent that, the fiber optic capacity increases are required for
BNSF's uses, either on the Premises or on some other route in Pathnet's fiber
optic network within the area described in the first sentence of this Section
8(a). In addition, the miles of digital transmission capacity to which BNSF is
entitled may be specified by BNSF in its equivalent capacity, so that, for
example, if BNSF were entitled to [***] over a 2,000 mile route, this could be
[***] over [***] miles [***] each over [***], [***] over [***], or any
combination of the above totaling the capacity to which BNSF is entitled,
provided that the maximum cross-section at any point shall not exceed the lesser
of [***] of the then-available capacity on the Fiber Optic Facilities at that
location; or (ii) (I) prior to the [***] Anniversary Date, the equivalent of
[***]; (II) after the [***] Anniversary Date, and prior to the [***] Anniversary
Date, the equivalent of [***]; (III) after the [***] Anniversary Date, and prior
to the [***] Anniversary Date, the equivalent of [***]; (IV) after the [***]
[***] Anniversary Date, and prior to the [***] Anniversary Date, the equivalent
[***], and after the [***] Anniversary Date, and prior to the [***] Anniversary
Date, the equivalent of [***]. Pathnet shall have no obligation to install or
upgrade any of its digital telecommunications transmission facilities to provide
to BNSF any fiber optic capacity which at that time is not available on
Pathnet's Fiber Optic Facilities network. Pathnet shall have no obligation to
provide capacity at any multiplexed level below [***]. Pathnet will be
responsible for all costs associated with the creating, maintaining and
transporting the fiber optic capacity to be provided, including all optical
amplification and regeneration, and terminating the capacity at the multiplexor
or other optronic equipment at which the capacity is to be terminated, including
the cost of such terminating equipment. BNSF shall be responsible for all costs
of transport of the fiber optic capacity from the point of termination in the
shelter used by Pathnet to BNSF's desired point of termination.
7
(c) The fiber optic capacity described in this Section 8 (including use of
the fibers addressed in Section 8(e)) may be utilized by BNSF and its Affiliates
(excluding any such Affiliate that competes in the telecommunications business)
for their respective internal communications only. The capacity made available
to BNSF by the terms of this Section 8 may not be sold, assigned, leased,
licensed, or otherwise made available to third-parties, or used in connection
with any telecommunications business. Notwithstanding the foregoing, BNSF is
discussing an agreement with a cellular telecommunications carrier that gathers
BNSF operational data, aggregates the BNSF operational data with its own
commercial cellular traffic, and delivers the BNSF operational data to BNSF
facilities. BNSF may allow the cellular telecommunications carrier or
partnership to use a portion of BNSF's retained fiber optic capacity as
described in this Section 8 in connection with the foregoing agreement. In
addition, BNSF may permit this one or other cellular telecommunications carriers
or partnerships to use any amount of additional fiber optic capacity as
described in this Section 8 for similar arrangements in the future. Any cellular
telecommunications carrier or partnership who utilizes BNSF's retained fiber
optic capacity in this way shall pay to Pathnet a charge equal to [***] of the
charge that Pathnet then is offering for sales of like capacity in like
markets."
(c) In the event that Pathnet permanently discontinues telecommunications
services or capacity of which BNSF is using a portion, Pathnet will provide
sixty (60) days prior written notice to BNSF to permit BNSF to try to obtain
replacement capacity.
(e)(1) Subject to the conditions set forth in this Section 8(e), BNSF may
require, in addition to the fiber optic capacity detailed in Section 8(b)
through 8(d), by notice in writing delivered to Pathnet no later than forty-five
(45) days after Pathnet's submission of Proposed Construction Plans respecting
any portion of the Fiber Optic Facilities, that Pathnet install [***] fibers in
those Fiber Optic Facilities, at Pathnet's sole cost, which [***] fibers shall
be an improvement to property of BNSF, from the Pathnet node site to a point
along the route of the Fiber Optic Facilities closest to BNSF's
telecommunications facility (hereinafter referenced as an "End Link"). These
[***] fibers shall be the same fiber type as that then being installed in those
Fiber Optic Facilities for Pathnet's own use, or to lease or sell capacity to
others, and, at Pathnet's sole discretion, may be contained within the same
cable sheath as Pathnet's fibers or within a separate cable sheath. Pathnet
shall be responsible for the maintenance of, and repair of these fibers for the
term of this Lease, so long as some fibers on the Premises, other than these
[***] fibers, are being maintained. Each End Link shall include a separate BNSF
handhole or manhole to be provided to BNSF, at Pathnet's sole cost, which shall
be an improvement to property of BNSF, to terminate and/or provide connection to
BNSF's telecommunications facility. Pathnet shall not be obligated to provide
fibers to BNSF in any End Link that is longer than [***] miles, nor shall
Pathnet be obligated to alter the planned route of the Fiber Optic Facilities,
except where BNSF has agreed in writing in advance to pay Pathnet's incremental
costs, including overhead, of extending any fibers more than [***] miles or
altering the planned route of
8
the Fiber Optic Facilities. If BNSF first required Pathnet to extend an End Link
after Commencement of Construction on the Rail Corridor segment where the End
Link is located, BNSF shall reimburse Pathnet for all such incremental costs,
including overhead. Pathnet shall perform such installation unless, in Pathnet's
reasonable judgment, performance thereof would materially adversely affect the
Fiber Optic Facilities or Pathnet's schedule for completion of Initial
Construction.
(e)(2) Where BNSF requests an End Link on any corridor in BNSF's current
rail network, as defined in Section 8(a), Pathnet shall provide two 23-inch
racks, and space therefore, and adequate supporting electrical service, in
equipment shelters at terminal and junction sites on any BNSF Rail Corridor.
Where BNSF requests fiber optic capacity off of a corridor in BNSF's current
rail network, as defined in Section 8(a), Pathnet will make the requested
capacity available to BNSF at no charge, and BNSF shall be responsible to pay
the local exchange company to obtain the space, equipment and connection service
that BNSF requires.
(f) In addition to the capacity to which BNSF is entitled under the terms
of this Section 8, BNSF shall have the right to purchase capacity on any portion
of Pathnet's network on terms no less favorable than Pathnet is then offering
for sales of like capacity and product over like distances in like markets.
9. Construction and Operation of Fiber Optic Facilities.
(a) (1) BNSF shall make available for inspection and
copying by Pathnet, at Pathnet's sole cost: (i) maps of BNSF's
Rail Corridor, and lists and/or center diagrams indicating the
approximate location and nature of all bridges and
9
locations of all tunnels, overpasses and other significant
railroad structures located on the Rail Corridor; (ii)
available engineering documents in BNSF's possession
(including profiles, lengths, internal diameter, etc.), that
relate to bridges, overpasses or tunnels on the Rail Corridor,
which Pathnet reasonably requests in connection with its
activities to Construct and Operate the Fiber Optic
Facilities; and (iii) maps, agreements (redacted to remove
confidential business terms) or other documents showing the
identity, location, rights and nature of other known users or
owners of portions of the Rail Corridor whose use, rights or
ownership Pathnet and BNSF reasonably determine would cause
title, possession or operational problems or cost to Pathnet
(including, without limitation, reversion rights of underlying
fee owners and, exclusivity rights of third parties); and (iv)
other such documentation or information reasonably requested
by Pathnet to assist Pathnet in its activities to Construct
and Operate the Fiber Optic Facilities and which, in the
opinion of BNSF, relates to or impacts upon the development of
Fiber Optic Facilities; all to the extent that (i) through
(iv) are readily and available from the records of BNSF or its
outside contractors charged with retaining such records, can
be located by BNSF in a reasonable search, and are not
confidential and proprietary to BNSF or third parties, and if
they are made available to Pathnet without determining what is
confidential or proprietary to BNSF, Pathnet shall keep such
information confidential and proprietary and shall not use it
for any purpose other than as set forth herein. The
availability of all such maps or documents shall not be
considered a guarantee or warranty that such maps or documents
are accurate or complete. The absence of markers, monuments or
maps indicating the present of subterranean facilities,
whether belonging to BNSF or otherwise, shall not constitute a
warranty or representation by BNSF that none exist. Pathnet
accepts this Lease with full cognizance of the potential
presence of the various claims, restrictions and physical
conditions described herein, acknowledging that Pathnet's
costs to Construct and Operate the Fiber Optic Facilities may
increase by reason thereof. Any failure by BNSF to provide
such documents shall not subject BNSF to any liability, costs,
expenses, damages, losses, or claims to Pathnet or any of the
Pathnet Parties, except to the extent of failures due to gross
negligence or willful misconduct.
(2) Pathnet recognizes that any BNSF documents supplied by
BNSF were not prepared for use as real estate title maps. BNSF
does not represent or suggest that the property lines and Rail
Corridor boundary lines shown on such documents are accurate
or that any other information contained on such documents is
correct.
(b) Prior to commencing construction of the Fiber Optic
Facilities, Pathnet, at its sole cost and risk, shall submit
to BNSF four sets of prints showing in detail the proposed
initial construction of all Fiber Optic Facilities on the
Premises, including every proposed element, item of equipment
and improvement included therein that Pathnet plans to locate
on the Premises, which prints shall be referenced herein as
"Proposed Construction Plans". Where Fiber Optic Facilities
10
extend over a route longer than 150 miles, Pathnet shall
submit Proposed Construction Plans to BNSF for each 150 mile
segment, as and when they are ready, and shall use its best
efforts to avoid any single submission of such Proposed
Construction Plans for a segment longer than 150 miles.
(c) (1) BNSF shall review the Proposed Construction Plans,
and may disapprove them, or propose changes, but any
disapproval or proposed change must be made in writing and
delivered to Pathnet within thirty (30) days of the date BNSF
receives such plans. Pathnet acknowledges that if BNSF does
not disapprove the Proposed Construction Plans, or propose any
changes to them, this does not constitute a determination by
BNSF that there are no design defects in such plans or that
Fiber Optic Facilities built in accordance with such plans
could be built or operated safely. If BNSF disapproves the
Proposed Construction Plans because it determines that
construction and/or maintenance of the Fiber Optic Facilities
likely would interfere with BNSF's rail operations or create a
safety hazard and that the Fiber Optic Facilities cannot be
located within BNSF's Rail Corridor for a specified distance,
and Pathnet then determines that the cost of locating its
Fiber Optic Facilities off of BNSF's Rail Corridors would be
significantly higher for Pathnet and so notifies BNSF, then
BNSF shall make reasonable efforts to work with Pathnet to
determine if there is a way to locate the Fiber Optic
Facilities somewhere on BNSF's Rail Corridor without
interfering with BNSF's rail operations or creating a safety
hazard. If BNSF disapproves all or any part of the Proposed
Construction Plans, BNSF, at the time of such disapproval,
shall provide to Pathnet a written explanation of the reasons
for disapproval and suggested cures, if any. Pathnet then
shall submit revised Proposed Construction Plans, which shall
be subject to the same review procedures just described. Once
the thirty (30) day period described above has expired and
BNSF has not disapproved the Proposed Plans (or the revised
Proposed Plans, if applicable), the same shall be the "Final
Construction Plans" which term shall also include any
subsequent modifications to the Plans as provided herein.
Pathnet shall not commence construction of the Fiber Optic
Facilities along any portion of the Rail Corridor in each
instance until it has received written notice from BNSF that
BNSF does not disapprove the Final Construction Plans.
(2) If at any time Pathnet desires to amend the Proposed
Construction Plans or the Final Construction Plans, Pathnet
must submit four sets of prints showing such amendment to BNSF
in the same manner described for submission of the Proposed
Construction Plans. If such amendment is not modified or
disapproved by BNSF in the manner specified for modification
or disapproval of Proposed Construction Plans, the Final
Construction Plans will be deemed as of such time to
incorporate such amendment
(d) In constructing the Fiber Optic Facilities, and with
respect to all entries onto the Rail Corridor by Pathnet and
the Pathnet Parties to Construct and
11
Operate the Fiber Optic Facilities, or for any other purpose,
Pathnet shall coordinate with BNSF, with the understanding
that BNSF's presence and activities on the Rail Corridor for
any purpose, except as limited by the Fiber Optic Access
Agreement, shall have priority over Pathnet's activities under
this Lease.
(e) The Construction Schedule shall be used by Pathnet
and BNSF to coordinate personnel, activities and train
movements. Pathnet shall amend the Construction Schedule, as
required, to reflect any and all schedule changes and shall
furnish promptly to BNSF any amended Construction Schedule.
BNSF may rely on the Construction Schedule to schedule flagmen
and other BNSF personnel whose duties require them to
accompany personnel constructing the Fiber Optic Facilities.
(f) If, at any time it appears to BNSF that BNSF's
tracks may be "Fouled" (defined in this Lease to mean the
presence of equipment and/or personnel of Pathnet or any of
the Pathnet Parties on a railroad track or within twenty-five
(25) feet of the centerline of any railroad track) in
connection with the exercise of Pathnet's rights under this
Lease, BNSF personnel may be provided, at BNSF's option, to
accompany Pathnet and/or any of the Pathnet Parties who may
Foul BNSF's tracks. Pathnet shall bear the entire cost
associated with such BNSF personnel, regardless of whether
such personnel are actually utilized in a particular case, and
Pathnet agrees promptly to pay all invoices for such personnel
that are submitted to it by BNSF. The failure of BNSF to
furnish such personnel shall not relieve Pathnet, or any of
the Pathnet Parties, of any obligations or liabilities it or
they otherwise have assumed hereunder.
(g) Pathnet, and all Pathnet Parties, who are or will be
involved in any activities or presence permitted under this
Lease on or near the Rail Corridor, shall comply with all
applicable BNSF safety rules and regulations, as set forth in
Exhibits "C" and "C-1" attached hereto. BNSF shall pay for any
such materials or safety training personnel (but Pathnet shall
pay any BNSF safety contractor's cost, including the cost of
any instructors); Pathnet shall pay salaries, any travel
expenses or other costs for Pathnet, and any and all such
Pathnet Parties, to receive such safety training.
(h) As promptly as possible, but in no event later than
six months after each segment of the Fiber Optic Facilities is
installed, Pathnet shall furnish to BNSF "As Built" Fiber
Optic Facilities drawings.
(i) During and in furtherance of completion of Initial
Construction, Pathnet and the Pathnet Parties, subject to
BNSF's prior written approval, may use, as required, and at no
additional charge, available portions of the Rail Corridor, as
identified by local BNSF personnel, for the purpose of
allowing Pathnet, or any of the Pathnet Parties, to erect, at
its sole cost and risk, temporary
12
structures and fences to protect Pathnet's material or
equipment necessary for the construction of the Fiber Optic
Facilities, including staging of construction activities and
storage of materials, provided that such structures and
fences: (i) shall not interfere with, or disrupt in any way,
other than in a manner approved in advance by BNSF, any
operations conducted by BNSF, or any activities of third
parties, on the Rail Corridor; and (ii) to the extent
reasonably feasible, shall be as shown and described in the
Final Construction Plans. Pathnet shall restore any land used
for such structures and fences substantially to its previous
condition before Initial Construction is complete, reasonable
wear and tear and casualty excepted, and shall remove all such
structures, fences, equipment and material placed thereon by
Pathnet, or any of the Pathnet Parties, before Initial
Construction is complete. In the event Pathnet does not comply
with the foregoing sentence, BNSF, following reasonable
advance notice to Pathnet, may take the actions specified in
that sentence, and Pathnet shall reimburse to BNSF all cost
incurred by BNSF in taking such actions.
(j) Subject to BNSF's approval and execution by the
applicable utility company of a BNSF standard form right of
entry permit, Pathnet may bring electrical power and other
utilities to the Fiber Optic Facilities. Pathnet shall make
its own arrangements, at its sole cost and risk, to obtain all
electrical power and other utilities or services necessary to
Construct and Operate the Fiber Optic Facilities, and Pathnet
shall indemnify, defend and hold BNSF harmless against any
liability to any utility or service company arising out of
utilities or services ordered or used by or on behalf of
Pathnet, except to the extent caused by the gross negligence
or willful misconduct of BNSF or its agents or contractors, or
any of their employees. Utilities and services needed by
Pathnet at each junction or repeater site shall be as shown
and described in the Final Construction Plans and shall be
part of Fiber Optic Facilities for purposes of this Lease. If
the location of such utilities or services serving the Fiber
Optic Facilities must be changed because of its interference
to BNSF railroad purposes or industrial development related to
railroad purposes, BNSF shall notify Pathnet and Pathnet
promptly shall relocate the affected Fiber Optic Facilities,
at Pathnet's sole cost, in a manner satisfactory to BNSF.
Power sources installed by Pathnet shall be part of the
Initial Construction.
(k) Pathnet, at its sole cost and risk, shall furnish
all materials, supervision, labor, parts, components,
equipment and structures necessary to Construct and Operate
the Fiber Optic Facilities, or any part thereof, in accordance
with this Lease. Any and all work by Pathnet and/or a Pathnet
Party under the authority of this Lease shall be done in a
good and workmanlike manner, in conformity with the Final
Construction Plans, and shall comply with all applicable
engineering, safety, and other statutes, laws, ordinance,
regulations, rules, codes, orders or specifications of any
public body or authority having jurisdiction over the Fiber
Optic Facilities or BNSF's rail operations, including,
13
but not limited to, the Federal Communications Commission and
the Federal Railroad Administration.
(l) All installations by Pathnet and/or a Pathnet Party
under the authority of this Lease must meet or exceed
applicable specifications of the public authority of the state
in which the installation is located and must be in compliance
with all existing federal, state or local laws, ordinances,
and regulations. In no case shall any part of the Fiber Optic
Facilities be located in a manner that will interfere with the
presence or activities of BNSF, or any third parties acting
within their rights on the Rail Corridor as they exist on the
date of this Lease. The manner of, and the equipment and
devices to be used for, any installation, relocation or
removal of the Fiber Optic Facilities, shall be reviewed in
advance by BNSF, as set forth herein.
(m) Fiber Optic Facilities may be installed by Pathnet,
at its sole cost and risk, on bridges or other water crossings
on the Rail Corridor by attachment to BNSF's fixed or movable
bridges or crossing structures, as available, as agreed by
BNSF and Pathnet, as shown in the Final Construction Plans.
(n) Installation of Fiber Optic Facilities under public
roadways shall be at Pathnet's sole cost and risk, at a
location and depth as agreed to by BNSF, as shown on the Final
Construction Plans.
(o) Installation of Fiber Optic Facilities crossing over
or under other existing facilities in the Rail Corridor shall
be located and installed, at Pathnet's sole cost and risk, in
accordance with conditions set forth in this Section 9, and
applicable requirements of the owner of each such facility.
If, in the course of any activity that Pathnet is authorized
to undertake under the terms of this Lease, any changes in any
pipelines, sewers, conduits, fences, power, signal or
communication lines or other utility, facility or Railroad
Facilities is necessary (either temporary or permanent), such
change shall require prior review by BNSF, and a letter from
BNSF indicating that it does not disapprove such change, and
all other necessary approvals from third parties. Pathnet
shall indemnify, defend and hold BNSF harmless against all
claims from any third party relating to any such activity.
(p) All cranes, lifts, drilling equipment, or other
machinery that is to be operated in the vicinity of any Rail
Facilities, electric transmission lines or other facilities in
connection with Initial Construction or any other activity
that Pathnet is authorized to undertake under the terms of
this Lease, shall be electrically grounded in a manner
reviewed by, and not disapproved by, BNSF. Pathnet
acknowledges that if BNSF does not disapprove such plans this
does not constitute a determination by BNSF that such plans or
activities are safe. All personnel of Pathnet and any of the
Pathnet Parties that are operating such cranes, lifts,
drilling equipment, or other machinery shall have appropriate
and sufficient
14
experience in operating of the machinery being used, and
Pathnet shall be prepared to certify the extent of this
experience upon request by BNSF.
(q) If Pathnet, or any of the Pathnet Parties, acting
under the authority granted by this Lease, discovers any
scientific or historic artifacts, Pathnet immediately shall
notify BNSF of such discovery and shall protect such artifacts
until they are identified and removed by the appropriate
authorities.
(r) BNSF shall have the right to verify by inspection,
at the sole cost of Pathnet, that the location of the work and
the materials constituting the Initial Construction, or used
operation of the Fiber Optic Facilities, are in compliance
with the Final Construction Plans. BNSF shall give Pathnet
reasonable notice of such inspections, and Pathnet, at its
option, may designate a representative to accompany BNSF's
representative on such inspections. If, following an
inspection, BNSF reasonably determines that Pathnet is
conducting activities that do not comply with the approved
Final Construction Plans, the parties hereto shall meet
promptly to discuss the situation and determine a remedy
satisfactory to BNSF. If BNSF is not satisfied with the remedy
selected at such meeting, and its subsequent implementation,
Pathnet's rights to Construct and Operate Fiber Optic
Facilities shall be suspended entirely until the parties have
settled on a remedy that is satisfactory to BNSF. The
provisions of Section 7 shall apply to any suspension of work
pursuant to this Section.
(s) BNSF's expenses for any work performed for or at the
expense of Pathnet pursuant to the terms of this Lease shall
be paid by Pathnet promptly upon Pathnet's receipt of each
itemized xxxx therefor. Expenses so billed by BNSF shall be
only those attributable to the work performed and shall
include, without limitation, cost of labor (whether performed
by BNSF or a contractor of BNSF) and supervision, necessary
travel or transportation expenses, lodging, meals, equipment
rental, materials, and any freight and handling charges on
materials used, plus standard additives A list of standard
additives then in effect will be provided to Pathnet with any
billing containing such activities.
(t) Pathnet, at its sole cost and risk: (i) shall secure
and maintain in effect all federal, state, and local permits,
licenses, platting, subdivisions, and/or zoning approvals or
any other land use requirement that is required to Construct
and Operate the Fiber Optic Facilities, including, without
limitation, crossing, zoning, building, health, environmental,
and communication permits and licenses, and Pathnet, at its
sole cost and risk, shall satisfy any and all conditions
required to obtain, maintain and comply with any required
permit, license or zoning approval or any other land use
requirement; and (ii) shall indemnify, defend and hold
harmless BNSF from and against payment of the cost therefor,
and against any fines or penalties that may be levied for
failure to procure, maintain or to comply with any such
permits, licenses and/or zoning, or any other land use
requirement as well as any remedial costs incurred by BNSF in
curing any such
15
failure. BNSF shall cooperate with Pathnet in securing and
maintaining any such permits or licenses, and Pathnet shall
reimburse any reasonable out-of-pocket costs of BNSF in
providing such cooperation..
(u) Any environmental impact statements required by any
governmental agency in connection with any activity of Pathnet
to Construct and Operate the Fiber Optic Facilities shall be
prepared by Pathnet at Pathnet's sole cost and risk, and
Pathnet, at its sole cost and risk, shall comply with any
conditions required by any applicable government authority in
connection with, or following from, any environmental impact
statement.
(v) BNSF shall cooperate with Pathnet, as requested by
Pathnet, at no out-of-pocket cost to BNSF, in Pathnet's
efforts to obtain and maintain any permits, licenses or
approvals of government agencies or authorities, or any
approvals of any necessary third parties, for the use of any
structures or facilities (including streets, roads or utility
poles) along portions of the Rail Corridor. The provisions of
this paragraph will not be deemed to require BNSF to expend
significant internal resources.
10. Entry Notice.
(a) During progress of the Initial Construction, Pathnet
shall give BNSF at least five days' written notice before
initial entry by Pathnet, or any of the Pathnet Parties, upon
any portion of the Rail Corridor.
(b) After completion of Initial Construction, any entry
by Pathnet or any Pathnet Party onto the Rail Corridor that
does not constitute Routine Maintenance and Operation (defined
later herein) of the Fiber Optic Facilities, or is not related
to an Emergency (defined later herein) shall require: (i)
advance written notice from Pathnet to BNSF not less than ten
days prior to such planned entry, such notice to specify the
purpose of the entry; (ii) if entry involves any new
construction, reconstruction, or removal of Fiber Optic
Facilities, four (4) sets of prints showing in detail such
proposed new construction, reconstruction, or removal; and
(iii) approval by BNSF, which approval shall not be
unreasonably withheld or delayed, taking in account the nature
of the proposed entry. As used herein, "Routine Maintenance
and Operation" shall mean maintenance and operation by Pathnet
and/or a Pathnet Party of the Fiber Optic Facilities that does
not require any: (i) excavation of soil that could alter or
disturb, or threaten the support of, or ability to use, any
Rail Facility; (ii) use of heavy machinery within 50 feet of
any railroad track; or (iii) an activity or presence which
results in a Fouled railroad track. As used herein,
"Emergency" shall mean that service on the Fiber Optic
Facilities has been interrupted or significantly disrupted or
such interruption is reasonably likely, or that there is a
material adverse threat to the integrity of Pathnet's fiber
optic network, in circumstances that make it
16
impractical for Pathnet or any Pathnet Party to give BNSF
normal advance written notice of entry onto BNSF's Rail
Corridor.
(c) During Routine Maintenance and Operation, Pathnet
and/or any Pathnet Party may enter the Rail Corridor without
notice to BNSF, for the sole purpose of Routine Maintenance
and Operation; provided, however, that: (i) if any entry for
such purpose is likely to result in a Fouled railroad track,
Pathnet shall give BNSF written notice of the places where and
the manner in which entry is required not less than two (2)
days, and not more than seven (7) days, prior to such entry;
and (ii) without BNSF's prior consent, which shall not be
unreasonably withheld, neither Pathnet nor any Pathnet Party
shall enter the Rail Corridor at any place where BNSF
previously has disapproved entry.
(d) In the event of an Emergency, Pathnet and/or any
Pathnet Party may enter the Rail Corridor without notice to
BNSF, for the sole purpose of dealing with the Emergency;
provided, however, that: (i) if any entry for such purpose is
likely to result in a Fouled railroad track, Pathnet shall
obtain verbal or written approval from BNSF prior to such
entry, promptly followed by written confirmation of such
approval, which may be provided within 24 hours after Pathnet
has addressed the Emergency; (ii) if any entry for such
purpose is likely to require the excavation of soil that could
alter or disturb, or threaten the support of or ability to
use, any Rail Facility, or would involve the use of heavy
machinery within 50 feet of any railroad track, Pathnet shall
give BNSF verbal or telephonic notice of the places where, and
the manner in which, entry is required prior to such entry,
promptly followed by written confirmation which shall be
obtained within 24 hours after Pathnet has addressed the
Emergency. and (iii) without BNSF's prior consent, which shall
not be unreasonably withheld, neither Pathnet nor any Pathnet
Party shall enter the Rail Corridor at any place where BNSF
previously has disapproved entry. Both parties acknowledge
that an Emergency involving a derailment or other similar
situation could cause significant damage to both parties, and
that both parties will need to respond promptly and
effectively to the situation. Subject to (i), (ii) and (iii)
above, in the event of an Emergency involving a derailment or
other similar situation, BNSF agrees that it will not prohibit
Pathnet from responding to the situation as appropriate to
repair or protect the Fiber Optic Facilities, provided that
Pathnet does not interfere with BNSF's rail operations or
related activities. The parties will cooperate with one
another to enable each party to take appropriate response
action as promptly and effectively as possible.
11. Maintenance of Premises and Fiber Optic Facilities. BNSF shall
not be responsible for maintenance of any Fiber Optic Facilities, or for
clearing or removal of trees, shrubs, plants, ice, snow or debris from the
Premises. Pathnet shall be responsible to remove from the Rail Corridor any
debris resulting from any of the activities of Pathnet or any of the Pathnet
Parties acting under the authority of this Lease.
17
12. Track Support: Materials Storage.
(a) During any work by Pathnet or any of the Pathnet Parties
pursuant to this Lease, Pathnet shall ensure that all tracks,
supporting structures and roadbed of BNSF is supported in such
manner as is necessary for the safe operation of BNSF without any
slower speed or other train operating restrictions and, upon
completion of such work, Pathnet shall ensure that all such tracks,
supporting structures, and the roadbed are returned to their
pre-existing condition, all at Pathnet's sole cost.
(b) Except as expressly set forth in the Final Construction
Plans, Pathnet shall not store or temporarily place any goods,
materials, or equipment on the Rail Corridor: (i) near a highway or
private grade crossing in such a manner as to interfere with the
sight distance of anyone approaching such crossing; (ii) within
fifteen feet of the end of any tie in any railroad track; or (iii)
within such greater distance as required by an applicable government
authority. Notwithstanding any other provision in this Lease,
Pathnet shall not store or temporarily place fuel or any Hazardous
Substance (as defined later herein) on the Rail Corridor, other than
as may be approved in writing in advance by BNSF. If Pathnet
knowingly discovers any Hazardous Substances on the Premises,
Pathnet will promptly notify BNSF, suspend or relocate activities
that would disturb the Hazardous Substance, and permit BNSF to take
appropriate actions. BNSF will respond promptly to any such
situation.
13. Facility Location Signs. Pathnet, at its sole cost and risk,
shall furnish, erect, and thereafter maintain signs showing the location of all
underground Fiber Optic Facilities. The size, form, color, text, location, and
spacing of such signs shall be subject to advance review by BNSF, and such signs
shall be in conformance with standard industry practices and shall be considered
part of the Fiber Optic Facilities.
14. Relocations.
(a) If BNSF determines that the location of any of the Fiber
Optic Facilities must be changed due to either: (i) relocation or
placement of any Rail Facilities; (ii) rail operating improvements
for BNSF (or for any other party offering rail service in the Rail
Corridor via rights granted or conveyed by BNSF); (iii) locating or
modifying a rail customer's facilities, buildings or other
improvements along BNSF's rail route, or locating or modifying any
facilities, buildings or other improvements for railroad purposes or
industrial development related to railroad purposes; or (iv) any
reason beyond the control of BNSF, BNSF shall notify Pathnet of such
plans and shall use reasonable efforts to secure an alternative
location for the Fiber Optic Facilities within the Rail Corridor, in
light of BNSF's business assets, plans and activities and the rights
of third parties in the Rail Corridor, or to provide Pathnet with an
opportunity to protect its Fiber Optic Facilities if Pathnet may do
so without interference with the situation requiring relocation;
provided however, BNSF shall not be obligated to spend any money, or
incur any
18
liabilities, to secure such an alternative location. If such
alternative location is found on the Rail Corridor, Pathnet shall
move the affected Fiber Optic Facilities to such alternative
location, at Pathnet's sole cost and risk, as soon as practicable.
If a location for Fiber Optic Facilities cannot be found on the Rail
Corridor, Pathnet shall move the affected Fiber Optic Facilities off
of the Rail Corridor as soon as practicable, at Pathnet's sole cost
and risk.
(b) In the event BNSF desires that Pathnet also move certain
Rail Facilities (excluding tracks and track structures)
simultaneously with moving its Fiber Optic Facilities, BNSF shall so
notify Pathnet in writing, and Pathnet shall move such Rail
Facilities and shall invoice BNSF for the reasonable, actual
incremental costs, including reasonable overhead costs, that are
incurred by Pathnet in moving such Rail Facilities.
(c) If BNSF desires to relocate any of the Fiber Optic
Facilities in order to accommodate a third party (other than as set
forth in Section 14(a)), BNSF shall so notify Pathnet, and Pathnet
promptly thereafter shall submit to BNSF a reasonable, detailed,
itemized estimate, including reasonable contingencies ("Estimate")
of its anticipated reasonable actual costs to relocate such Fiber
Optic Facilities (including reasonable overhead costs not to exceed
ten percent (10%) of actual costs). Upon receiving from BNSF fifty
percent of the amount of the Estimate, Pathnet shall proceed, as
expeditiously as feasible under the circumstances, to relocate those
Fiber Optic Facilities at a cost not to exceed one hundred ten
percent (110%) of the Estimate. Upon completion of such relocation,
and submission to BNSF of invoices documenting all costs thereof,
BNSF promptly shall pay the balance of such costs to Pathnet.
(d) Pathnet acknowledges that BNSF's ownership rights in all
or certain portions of the Rail Corridor may terminate, or revert,
if BNSF ceases to use the Rail Corridor for rail transportation
purposes, or, in some cases if BNSF uses the Rail Corridor for a
purpose inconsistent with rail transportation purposes, or for other
reasons, such as termination of franchise rights, and that if this
occurs, Pathnet might be required either to relocate its Fiber Optic
Facilities or acquire from the appropriate party the right to
continue to use the Fiber Optic Facilities. BNSF shall have no
obligation not to abandon rail service over all or any portion of
the Rail Corridor, no obligation not to use the Rail Corridor for a
purpose inconsistent with rail transportation purposes, and no
obligation to extend the term of BNSF's franchise rights or
ownership rights in the Rail Corridor.
15. Condemnation. In the event that any portion of the Premises
becomes the subject of condemnation proceedings, BNSF shall make reasonable
efforts to notify Pathnet promptly. Pathnet's interest in the personal property,
improvements, and facilities comprising the Fiber Optic Facilities shall be
valued separately from BNSF's ownership interest in the Fiber Optic Facilities
and the Premises, and BNSF and Pathnet shall seek to have any condemnation
award, or sale in lieu of condemnation, apportioned between Pathnet and BNSF
based on the relative value of their specific ownership interests in the Fiber
Optic Facilities and the Premises.
19
16. Conveyance of Rail Corridor. In the event BNSF conveys all or
any portion of the Rail Corridor, in circumstances not covered by Section 14 or
Section 15 of this Lease, such conveyance shall be subject to any existing
rights of Pathnet under this Lease and the Fiber Optic Access Agreement, to the
extent permitted by applicable laws and agreements entered into prior to the
date of this Lease.
17. Compliance with Laws. Pathnet, in exercising any and all rights
under this Lease, shall comply with all applicable laws, regulations, ordinance,
rules, decisions and orders ("Laws") applicable to Pathnet and/or the Fiber
Optic Facilities, or resulting from the exercise of Pathnet's rights, and shall
have the sole responsibility for all costs and risks associated with such
compliance. Pathnet shall indemnify, defend and hold harmless BNSF against any
claims, damages, costs, fines or penalties arising in any way from Pathnet's
breach of this Section 17.
18. Liability: Indemnification. PATHNET HEREBY RELEASES BNSF FROM,
AND AGREES TO INDEMNIFY, DEFEND, PROTECT, AND HOLD BNSF HARMLESS AGAINST, ANY
AND ALL CLAIMS, SUITS, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING, BUT NOT
LIMITED TO, REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RELATED TO:
(1) ANY LOSS OF AND/OR DAMAGE TO THE REAL OR PERSONAL PROPERTY OF
BNSF, PATHNET OR THIRD PARTIES AND ANY LOSS AND/OR DAMAGE ON ACCOUNT OF INJURY
TO, OR DEATH OF, ANYONE, CAUSED BY OR GROWING OUT OF PATHNET'S, OR ANY PATHNET
PARTY'S PRESENCE OR ACTIVITIES ON OR NEAR THE RAIL CORRIDOR, REGARDLESS OF ANY
NEGLIGENCE OF BNSF OR ANY PARTY THEN PERFORMING AS A CONTRACTOR OR AGENT OF
BNSF, EXCEPT TO THE EXTENT (AND ONLY TO THE EXTENT) THAT SUCH LOSS OR DAMAGE IS
PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BNSF OR SUCH
CONTRACTOR OR AGENT OF BNSF;
(2) (i) EXCEPT IN CONNECTION WITH THE FIBERS AND CAPACITY TO BE
PROVIDED TO BNSF, SERVICE INTERRUPTION, CESSATION, OR UNRELIABILITY OF THE FIBER
OPTIC FACILITIES CAUSED BY ANY PERSON, REGARDLESS OF ANY NEGLIGENCE OF BNSF OR
ANY PARTY THEN PERFORMING AS A CONTRACTOR OR AGENT OF BNSF, EXCEPT TO THE EXTENT
(AND ONLY TO THE EXTENT) THAT SUCH SERVICE INTERRUPTION, CESSATION OR
UNRELIABILITY WAS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BNSF
OR SUCH CONTRACTOR OR AGENT OF BNSF, OR (ii) EXCEPT IN CONNECTION WITH THE
FIBERS AND CAPACITY TO BE PROVIDED TO BNSF, LIBEL, SLANDER, INFRINGEMENT OR
COPYRIGHT, OR UNAUTHORIZED USE OF ANY TRADEMARK, TRADE NAME, OR SERVICE XXXX,
ARISING OUT OF THE MATERIAL, DATA, INFORMATION OR OTHER CONTENT TRANSMITTED OR
RECEIVED OVER THE FIBER OPTIC FACILITIES, IN EACH CASE REGARDLESS OF WHETHER
SUCH CLAIMS, SUITS, JUDGMENTS, OR LIABILITIES ARISE FROM NEGLIGENCE, ACTIONS, OR
INACTION OF BNSF, OR ANY PARTY USING THE RAIL CORRIDOR WITH PERMISSION OF BNSF;
AND
20
(3) ANY BREACH OF THE TERMS OF THIS LEASE BY PATHNET OR ANY OF THE
PATHNET PARTIES.
WITHOUT LIMITATION OF ANY OF THE FOREGOING, PATHNET HEREBY AGREES TO
INDEMNIFY, DEFEND, PROTECT AND HOLD BNSF HARMLESS FROM AND AGAINST ANY AND ALL
LOSS, DAMAGE, COST AND EXPENSE SUSTAINED, SUFFERED, OR INCURRED BY BNSF AS A
RESULT OF THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE WITHIN THE RAIL CORRIDOR TO
THE EXTENT CAUSED BY, CONTRIBUTED TO, EXPOSED BY OR AGGRAVATED BY PATHNET OR ANY
PATHNET PARTY. HAZARDOUS SUBSTANCE AS USED HEREIN SHALL MEAN MATERIAL OR
CONTAMINATION IN VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAW, ORDER, DECISION
OR REGULATION.
19. Insurance.
(a) Pathnet, prior to entering onto the Rail Corridor shall
procure the following insurance, covering all of the work and
services to be performed hereunder by Pathnet, which shall remain in
effect for so long as such party has any personnel, property or
facilities on, or having a right to be on, the Rail Corridor, at
their sole cost:
(1) Workers' Compensation and Employers Liability
Insurance in an amount of at least $1,000,000, covering the
entire liability of Pathnet, as determined by the compensation
laws of the State in which the work is performed, but if
optional under State law the insurance must cover all
employees anyway, or the federal workmen's compensation laws
as applicable. THE CERTIFICATE MUST CONTAIN A SPECIFIC WAIVER
OF THE INSURANCE COMPANY'S SUBROGATION RIGHTS AGAINST THE
BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY.
(2) Commercial General Liability insurance and umbrella
liability insurance covering liability, including but not
limited to Public Liability, Personal Injury, Property Damage,
and Contractual Liability with combined coverage of at least
$21,000,000 per occurrence and a general aggregate of at least
$21,000,000. Where explosion, collapse, or underground hazards
are involved, the X, C and U exclusions must be removed from
the policy;
(3) Automobile Liability insurance, including bodily
injury and property damage, with coverage of at least
$1,000,000 combined single limit or the equivalent covering
any and all vehicles owned, used or hired by Pathnet;
(4) All Risk Property Damage insurance covering all of the
property of Pathnet on a replacement cost basis including
property in their care, custody or control and first party
pollution clean up. The first party pollution clean up shall
include, at a minimum, debris removal and cost of clean up on
a named perils
21
basis. Such insurance shall contain a waiver of subrogation in
favor The Burlington Northern and Santa Fe Railway Company.
(5) Pollution Liability coverage in an amount of not less
than $2,000,000 per occurrence and in the aggregate and shall
include coverage for: (a) bodily injury, sickness, disease,
mental anguish or shock sustained by any person, including
death; (b) property damage including physical injury to or
destruction of tangible property including the resulting loss
of use thereof, clean up costs, and the loss of use of
tangible property that has not been physically injured or
destroyed; and (c) defense including loss adjustment costs,
charges and expenses incurred in the investigation adjustment
or defense of claims for such compensatory damages.
(6) If Pathnet requires disposal of any hazardous or
non-hazardous materials off of their property, Pathnet shall
utilize only a fully licensed and qualified disposal company.
(7) Railroad Protective Liability insurance naming The
Burlington Northern and Santa Fe Railway Company as the Named
Insured with coverage of at least $5,000,000 per occurrence
and $10,000,000 in the aggregate. Coverage shall be issued on
a standard ISO for CG 00 35 01 96 and endorsed to include ISO
for CG 28 31 10 93 and the Limited Seepage and Pollution
Endorsement.
All insurance shall be placed with insurance companies licensed to
do business in the States in which the work is to be performed, and
with a Best's Insurance Guide Rating of A- and Class VII, or better.
If any work is to be performed within 50 feet of railroad property,
then the insurance must provide for coverage of incidents occurring
within fifty (50) feet of railroad property, and any provision to
the contrary (including any limitation regarding the definition of
an insured contract) in the insurance policy must be specifically
deleted.
To the extent obtainable, with respect to any incident on or along
the Rail Corridor, in all cases except for Workers' Compensation,
the certificate must specifically state that "THE BURLINGTON
NORTHERN AND SANTA FE RAILWAY COMPANY IS AN ADDITIONAL INSURED." The
Additional Insured endorsement shall, at a minimum, include coverage
for the general supervision performed by BNSF.
Any coverage afforded BNSF, the Certificate Holder, as an Additional
Insured shall apply as primary and not excess to any insurance
issued in the name of BNSF.
(b) Before commencing any work hereunder, Pathnet shall
furnish to BNSF, Certificate of Insurance on the form prescribed by
BNSF, evidencing the issuance to Pathnet of the policies of
insurance providing the types of insurance and limits of liability
prescribed above, and amending the cancellation clause to certify
that BNSF shall be
22
given not less than 30 days' written notice prior to any material
change, substitution or cancellation prior to normal expiration
dates. Cancellation or expiration of any of said policies of
insurance shall not preclude BNSF from recovery thereunder for any
liability arising under this Agreement.
If any coverage is purchased on a "claims made" basis, Pathnet
hereby agrees to maintain coverage in force for a minimum of three
years after expiration, cancellation or termination of this
contract. Pathnet shall provide evidence annually of such coverage
as required hereunder.
(c) Pathnet Parties shall procure and maintain insurance as
outlined in Exhibit C-1.
(d) It is mutually understood and agreed that the purchase of
insurance as herein provided shall not in any way limit the
liability of the Pathnet or Pathnet Parties to BNSF, as herein set
forth.
20. Liens.
(a) In the event that any BNSF property becomes subject to any
mechanics' or materialmen's lien, or other construction or
supplier's lien or encumbrance chargeable to or through Pathnet or
any of the Pathnet Parties as a result of a failure to pay. Pathnet
promptly, and in any event within ten days, shall cause such lien or
encumbrance to be discharged or released of record (by payment,
posting of bond, court deposit or other means), without cost to
BNSF, and shall indemnify and hold harmless BNSF against all costs
(including reasonable attorneys' fees) incurred in connection with
such lien or encumbrance. If any such lien or encumbrance is not so
discharged and released, BNSF may pay or secure the release or
discharge thereof, at the expense of Pathnet, after first giving
five days' advance notice of its intention to do so. Pathnet
acknowledges that: (i) all or portions of the Rail Corridor are
subject to the liens of one or more of BNSF's various mortgages;(ii)
BNSF from time to time may place other liens or mortgages on the
Rail Corridor and (iii) the discharge or release of record of the
current or future liens and mortgages from the Rail Corridor is not
required by this Section, provided however, that any such future
liens or mortgages shall be subject to Pathnet's rights under this
Lease.
(b) Nothing herein shall preclude either Pathnet or BNSF from
contesting of any lien or other encumbrance.
21. Liaison, Dispute Resolution and Arbitration.
(a) Not later than thirty days after the date of this Lease,
BNSF and Pathnet each shall send a letter to the other, pursuant to
Section 28 hereof, designating individuals as points of contact at
the following levels: corporate officer for overall decision-making,
corporate officer for dispute resolution; contact person for
day-to-day corporate contact and liaison; contact person for
engineering and project management; contact person for
23
field construction; contact person for daily operations and
maintenance; and contact person for disaster operations on a
twenty-four (24) hour basis. The same individual may be designated
for one or more of the foregoing positions, and either BNSF or
Pathnet may change the name of any designated officer or contact
person at any time by so informing the other in writing.
(b) It is the intent of the parties hereto that any dispute
which may arise between them be resolved as quickly and as
informally as possible. When quick and informal resolution of any
dispute is not possible, the issues in dispute shall be referred to
the two corporate officers designated for dispute resolution
pursuant to this Section 21, who shall make a reasonable attempt to
settle the dispute.
(c) The parties hereto agree to waive any rights that either
may have to a remedy in a court of law or in a court of equity
arising out of this Lease, and to submit any dispute arising under
the Lease, and not settled pursuant to Section 21(b) hereof, to
binding arbitration in accordance with this Section 21.
Notwithstanding the foregoing, either party shall have the right to
pursue preliminary equitable relief in connection with this Lease,
or to pursue appropriate legal or equitable remedies in support of a
decision rendered in arbitration.
(d) The parties hereto agree that one of the remedies
available to the arbitrator(s) for any substantial breach of this
Agreement shall be specific performance, and that an award of
specific performance by an arbitrator or arbitrators may be enforced
in a court of law or equity.
(e) Any arbitration under this Agreement shall be conducted in
accordance with the Commercial Rules of the American Arbitration
Association and shall be conducted by an arbitrator, and said
arbitration shall be conducted by a panel of three (3) arbitrators,
one to be selected by BNSF, one to be selected by Pathnet, and one
to be selected by the two designated arbitrators. Discovery shall be
conducted in accordance with the Federal Rules of Civil Procedure
(f) All costs, fees and expense charged by the arbitrator(s)
and other neutral third parties retained by mutual agreement of
Pathnet and BNSF in any arbitration conducted pursuant to this
Section 21 shall be shared equally by Pathnet and BNSF, unless
apportioned otherwise by the arbitrators.
22. Representations and Warranties.
(a) By executing this Lease, BNSF represents and warrants the
following facts:
(1) BNSF has the full right and authority to enter into
and perform this Lease, and by entering into and performing
this Lease, BNSF is not in violation of its charter or
by-laws, or any Laws or agreement by which it is bound or to
which it is subject; it being understood, however, that this
warranty does not
24
constitute a warranty, express or implied, that BNSF has
sufficient rights in the Rail Corridor to permit Pathnet to
Construct and Operate the Fiber Optic Facilities; and
(2) The execution, delivery and performance of this
Lease by BNSF has been duly authorized by all requisite
corporate action, that the signatory for BNSF hereto is
authorized to sign this Lease and bind BNSF to its terms.
(b) By executing this Lease, Pathnet represents and
warrants:
(1) Pathnet has the full right and authority to enter
into and perform this Lease and by entering into and
performing this Lease, Pathnet is not in violation of its
charter or by-laws, or any Laws or agreement by which it is
bound or to which it is bound or to which it is subject;
(2) The execution, delivery and performance of this
Lease by Pathnet has been duly authorized by all requisite
corporate action, that the signatory for Pathnet hereto is
authorized to sign this Lease and bind Pathnet to its terms;
and
(3) Pathnet has the financial capability to fulfill
all of its obligations under this Lease.
23. Limitation on Damages for Breach of this Lease. Damages that may
be recovered for breach of this Lease shall not include any indirect,
consequential, special or punitive damages, or lost profits, or the cost of
Pathnet building Fiber Optic Facilities at a different location than it
originally planned.
24. Recordings, Taxes and Other Charges.
(a) Except as provided in this Section 24, Pathnet shall pay:
(i) all transfer taxes, documentary stamps, recording costs or fees,
or any similar expense in connection with this Lease and/or the
recording or filing of a Memorandum of Lease for this Lease (which
memorandum shall be in a form mutually agreeable between the parties
and the recording of a Memorandum of Lease shall occur only by
mutual agreement by the parties); and (ii) any and all taxes
(including but not limited to transfer, sales, use, and property
taxes), levies, excises, assessments and charges (collectively,
"Taxes"), including any penalties and/or interest thereon, levied or
assessed with respect to the Fiber Optic Facilities or Pathnet's
leasehold interest. Pathnet shall indemnify, defend and hold BNSF
harmless against the payment of any Taxes referenced in this Section
24(a).
(b) BNSF may pay any Taxes, plus any penalty and/or interest
thereon, imposed upon BNSF for which Pathnet is obligated pursuant
to this Lease, if Pathnet
25
does not pay such Taxes when due, and Pathnet shall promptly
reimburse BNSF for any such payment it makes.
(c) In the case of amounts described in Section 24(a)(ii),
where Taxes with respect to Fiber Optic Facilities or Pathnet's
leasehold interest are not separately assessed, BNSF shall determine
the amount of Taxes attributable to the Fiber Optic Facilities and
Pathnet's leasehold interest by reference to information provided by
the relevant taxing authority that demonstrates or establishes that
such Taxes are attributable to the Fiber Optic Facilities or
Pathnet's leasehold interest. If the information provided by the
relevant taxing authority demonstrates or establishes that Taxes are
attributable to the fiber optic value of a Rail Corridor in respect
of which Pathnet has been granted rights hereunder, but does not
demonstrate or establish the value attributable to the Fiber Optic
Facilities or Pathnet's leasehold interest, the amount so
attributable shall be determined by reference to a formula. Such
formula shall be consistently applied, shall reasonably allocate any
Taxes among all of BNSF's rail corridors and fiber optic values with
a further allocation of the Taxes attributable to the fiber optic
value between the Fiber Optic Facilities, Pathnet's leasehold
interest and fiber optic value attributable to fiber optic rights
granted by BNSF to others. In all cases, BNSF promptly shall provide
to Pathnet information that establishes the manner in which any such
Taxes were allocated and the basis for establishing that such
amounts are attributable to the Fiber Optic Facilities or Pathnet's
leasehold interest. The parties shall resolve any dispute regarding
the liability of Taxes hereunder pursuant to the dispute resolution
and arbitration procedures set forth in Section 21 of this Lease.
(d) Notwithstanding anything to the contrary contained in this
Lease, BNSF shall pay (i) any Taxes attributable to rights in the
Fiber Optic Facilities and other assets and services provided to
BNSF pursuant to Section 8 of this Lease; and (ii) property,
franchise or similar taxes that are attributable to a Rail Corridor
that are not attributable to the existence or use of the Fiber Optic
Facilities or Pathnet's leasehold interest. BNSF shall indemnify,
defend and hold Pathnet harmless against the payment of any Taxes
referenced in this Section 24(d). Pathnet may pay any Taxes imposed
on Pathnet for which BNSF is obligated to indemnify Pathnet pursuant
to this Section 24(d), if BNSF does not pay such amounts when due
and BNSF shall promptly reimburse Pathnet for any such payment it
makes. The provision of Section 24(c) shall apply to amounts claimed
by Pathnet, mutatis mutandis.
(e) Neither BNSF nor Pathnet will be responsible for the
income or corporate franchise tax of the other.
(f) Both BNSF and Pathnet agree to reasonably cooperate with
each other in the refund, rebate, reduction, abatement, mitigation
or contest of any Taxes for which either is obligated to pay
hereunder.
25. Independent Contractor Status; No Joint Venture. BNSF reserves
no control whatsoever over the employment, discharge or compensation of
Pathnet's employees or contractors. It is the intention of the parties hereto
that Pathnet shall be and remain an independent contractor, and nothing in this
Lease shall be construed as inconsistent with
26
Pathnet's independent contractor status or creating or implying any partnership
or joint venture between Pathnet and BNSF.
26. Confidentiality.
(a) The terms of this Lease shall be confidential.
Either party hereto may designate as confidential certain materials,
maps, documents and other information exchanged in fulfilling the
terms and intent of this Lease. In addition, in connection with the
provision of material and/or services to BNSF by Pathnet, or to
BNSF, BNSF and/or Pathnet may discover or otherwise come into
contact with specifications, drawings, computer programs, and/or
technical or business information which BNSF or Pathnet has clearly
identified as confidential. All construction plans, drawings and
specifications, including, without limitation, all proposed
Construction Drawings, Final Construction drawings and as-built
plans and all information about the location of the Fiber Optic
Facilities, will constitute confidential information.
(b) Unless confidential information was previously known
free of any obligation to keep it confidential, or has been or is
subsequently made public, it shall be handled in confidence by BNSF
and Pathnet and shall be disclosed only upon a need to know basis,
such terms and conditions as may be mutually agreed upon in writing
by the parties hereto, or as required by law. BNSF and Pathnet shall
advise those employees, agents, and contractors who may have contact
with such information, of the obligation to keep such information
confidential, and will use their best efforts to avoid unauthorized
disclosure of such information. Notwithstanding the foregoing,
either party may disclose confidential information to the extent
required by applicable law or regulations, provided that the
disclosing party has notified the other party of the disclosing
party's obligation to disclose, and provided that the non-disclosing
party has had an opportunity to contest such disclosure.
(c) In the event of an actual or threatened disclosure
of such information by either party hereto which might cause
irreparable harm to the other party hereto, it is agreed that
monetary remedies available at law may be inadequate and, therefore,
the aggrieved or threatened party hereto shall be entitled to
receive injunctive relief as an equitable remedy.
(d) Notwithstanding anything else herein, the
obligations of the parties hereto under this Section 26 shall
survive termination of this Lease for a period of three years.
27. Assignment.
(a) This Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted
successors or assignees. Pathnet shall not assign any of the rights
granted to Pathnet under this Lease, without the prior written
consent of BNSF, which may be withheld or conditioned in BNSF's sole
27
discretion. Any assignment made in violation of this Section 27
shall be null and void, shall confer no rights upon any party as
against BNSF, and shall give BNSF the right to terminate this Lease
effective immediately, or take any other lesser action with respect
thereto. The above requirement for consent shall not apply to (i)
any disposition of all or substantially all of Pathnet's stock or
assets; (ii) any corporate merger, consolidation or reorganization,
whether voluntary or involuntary, involving Pathnet; or (iii) a
sublease or assignment of the Lease (in whole or in part) by Pathnet
to a subsidiary, affiliate, or parent company, controlled, under
common control with, or controlling, either indirectly or directly,
Pathnet, but only where, and to the extent, such transaction does
not violate the terms of the Contribution Agreement; provided that
no assignment not consented to by BNSF shall relieve Pathnet of any
of its obligations or liabilities under this Lease. Nothing herein
shall prohibit Pathnet (i) from involving contractors, or strategic
or co-development partners in Construction and Operation of the
Fiber Optic Facilities, on such terms as Pathnet may determine in
its sole discretion, provided all such activities are conducted in
accordance with the terms of this Lease, and that Pathnet remains
fully liable for all obligations hereunder; and (ii) from granting
liens or other security interests in the Fiber Optic Facilities or
Pathnet's rights under this Lease in connection with financing or
investments made available to Pathnet.
(b) Upon request by Pathnet, BNSF shall execute
reasonable documentation to be provided by Pathnet acknowledging the
rights of Pathnet's lender(s) ("Lender") to obtain ownership of the
Fiber Optic Facilities if this Lease is still in effect and Pathnet
is in material default under the terms of Pathnet's loan to Lender,
provided, however, that in such case Lender shall become an assignee
to this Lease and shall become subject to all rights and obligations
of Pathnet under the terms of this Lease (and Pathnet also shall
remain subject to all obligations of Pathnet under this Lease). In
order to obtain the rights specified in this Lease, Lender must
execute an amendment to this Lease agreeing to be bound by the
terms, conditions and obligations contained in this Lease. The
execution of such an amendment by Lender shall not relieve Pathnet
from any obligations or liabilities contained in this Lease.
Further, before Lender or any other assignee or transferee of
Pathnet's interest in this Agreement may obtain any of Pathnet's
rights hereunder, such Lender, assignee, or transferee must cure any
and all outstanding defaults by Pathnet hereunder. In addition to
the rights granted to Pathnet hereunder, Pathnet's Lender shall have
the additional right to take possession, sell, assign or otherwise
transfer the Fiber Optic Facilities, including the right to operate,
or permit a third-party to operate, the Fiber Optic Facilities,
provided such operation shall be subject to all terms and conditions
of this Lease.
28. Notices. Unless otherwise provided herein, all notices and other
communications required by or concerning this Lease shall be in writing and
shall be deemed to have been duly given when delivered in person or on the next
business day when sent by a nationally recognized overnight courier, or on the
second succeeding business day when sent by registered or certified
00
Xxxxxx Xxxxxx Mail (postage prepaid, return receipt requested), or, if postal
claim notice is given, on the date of its return marked "unclaimed" (provided,
however, that upon receipt of a returned notice marked "unclaimed", the sending
party hereto shall make reasonable effort to contact and notify the other party
hereto by telephone) and each respective party hereto at the following addresses
(or at such other address for a party hereto as shall be specified by like
notice):
(1) if to Pathnet:
Pathnet, Inc.
0000 00xx Xx., X.X.
Xxxxxxxxxx, XX 00000
Attn: General Counsel
and to:
Pathnet, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Senior Vice President, Engineering
(2) if to BNSF:
Assistant Vice President, Telecommunications
The Burlington Northern and Santa Fe Railway Company
0000 Xxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxxxx 00000
and to:
Vice President -Law
The Burlington Northern and Santa Fe Railway Company
0000 Xxx Xxxx Xxxxx, XXX-0
Xxxx Xxxxx, Xxxxx 00000-0000
29. Brokers and Agents. BNSF and Pathnet represent and warrant to
each other than neither has employed any broker, agent or finder in connection
with this Lease, and each indemnifies and agrees to hold harmless the other from
and against any commission or fee claimed by any broker, agent or finder in
connection with this transaction.
30. Force Majeure. Except as may be elsewhere specifically provided
in this Lease, any failure or delay in the performance by a party hereto of its
obligations hereunder, including, without limitation, Pathnet's obligations
pursuant to Section 5 hereof, shall not be a breach of this Lease if such
failure or delay results from causes beyond that party's control, including but
not limited to acts of God, governmental action or inaction (whether in its
sovereign or contractual capacity), fire, flood, or other catastrophe, national
emergency, insurrection, riot, and
29
war. The phrase "beyond that party's control" shall not include any failure to
reach agreement with a party with whom Pathnet is negotiating pursuant to the
exclusive right to negotiate provided in Section 4(b) of the Fiber Optic Access
Agreement.
31. Costs. Except as specifically provided in this Lease, each
party hereto shall be responsible for its own costs (including legal fees)
incurred in connection with the preparation, execution and performance of this
Lease.
32. Severability. If any provision of this Lease or the application
thereof, shall be held invalid, illegal or unenforceable in whole or in part,
the remainder of this Lease and the application thereof shall not be affected,
and shall be enforceable to the fullest extent permitted by law, and the portion
hereof found to be invalid shall be enforced to the fullest extend permitted by
law, and, if possible, shall be reformed to carry out as much as possible the
intent of the parties as expressed herein.
33. Amendment, Waiver. This Lease may be amended only by a written
instrument executed by both parties hereto. No failure to exercise and no delay
in exercising, on the part of a party hereto, any right, power or privilege
hereunder shall operate as a waiver of any other provision of this Lease, or as
a waiver of that right, power or privilege either before, or after, the period
of waiver.
34. Entire Agreement. This Lease and all Exhibits attached hereto,
together with the Fiber Optic Access Agreement and the Contribution Agreement
between the parties hereto dated as of __________ __, 1999, constitute the
entire agreement of the parties hereto with respect to the subject matters
hereof, and supersede any and all prior negotiations, understandings and
agreements, whether oral or written, with respect hereto.
35. Interpretation; Construction.
(a) Section headings contained in this Lease are solely for
purpose of reference and shall not be construed with the substance
of the Section they caption or in any way affect the meaning or
interpretation of this Lease.
(b) Wherever used in this Lease: (i) any pronoun or pronouns
shall be deemed to include both the plural and the singular and to
cover all genders, and (ii) "or" is used in the inclusive sense, in
all cases where such meanings would be appropriate.
36. Legal Forum. This Lease shall be interpreted, construed and
enforced in accordance with the laws of the State of Texas.
37. Counterparts. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
30
IN WITNESS WHEREOF, authorized representatives of BNSF and Pathnet have executed
this Lease as of the date first set forth herein.
PATHNET TELECOMMUNICATIONS, INC. THE BURLINGTON NORTHERN AND
SANTA FE RAILWAY COMPANY
By: By:
----------------------------- ---------------------------
Name: Name:
----------------------------- ---------------------------
Title: Title:
----------------------------- ---------------------------
31
EXHIBIT A
[to be agreed to by the parties]
EXHIBIT B
Map of BNSF Railway Network
[to be agreed to by the parties]
EXHIBIT C
Additional Construction Specifications
--------------------------------------
[to be agreed to by the parties]
-13-
EXHIBIT B
EXCLUSIVE CORRIDORS
Approx.
Corridor Route
Description Miles
[* * *] [* * *]
Total: 4,052
-00-
XXXXXXX X
XXXXXXXXXX XXXXXXXXX
Approx.
Corridor Route
Description Miles
[* * *]
Total: [* * *]
------ -----
-16-
