-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AyOOUiZX2K/GI/tUNtBet7MHlqBp4BvAiOMNnObHuzAxo4YMIzjI0ycp7WAvcmwx xEWMa8AzMvv1WoSRe046TQ== 0000899733-97-000014.txt : 19970520 0000899733-97-000014.hdr.sgml : 19970520 ACCESSION NUMBER: 0000899733-97-000014 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-25391 FILM NUMBER: 97610551 BUSINESS ADDRESS: STREET 1: 555 17TH ST STE 1000 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032911400 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 S-1/A 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1997 REGISTRATION NO. 333-25391 - -------------------------------------------------------------------- - -------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 QWEST COMMUNICATIONS INTERNATIONAL INC. ---------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ---------------- DELAWARE 4813 84-1339282 (STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.) INCORPORATION OR CLASSIFICATION CODE ORGANIZATION) NO.) 555 SEVENTEENTH STREET, SUITE 1000 DENVER, COLORADO 80202 (303) 291-1400 (ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ---------------- ROBERT S. WOODRUFF EXECUTIVE VICE PRESIDENT--FINANCE QWEST COMMUNICATIONS INTERNATIONAL INC. 555 SEVENTEENTH STREET, SUITE 1000 DENVER, COLORADO 80202 (303) 291-1400 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE FOR THE REGISTRANT) COPIES TO: MARTHA D. REHM, ESQ. DAVID J. BEVERIDGE, ESQ. HOLME ROBERTS & OWEN LLP SHEARMAN & STERLING 1700 LINCOLN STREET, SUITE 4100 599 LEXINGTON AVENUE DENVER, COLORADO 80203 NEW YORK, NEW YORK (303) 861-7000 10022-6069 (212) 848-4000 ---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. As soon as practical after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] ---------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ----------------------------------------------------------------- - ----------------------------------------------------------------- ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) EXHIBITS:
EXHIBIT NO. DESCRIPTION ------- ----------- 1.1** --Form of Underwriting Agreement 3.1** --Form of Certificate of Incorporation of the Company, to be in effect as of the Effective Date 3.3* --By-laws of the Company 4.1** --Form of Certificate for the shares of Common Stock being offered 4.2* --Indenture dated as of March 31, 1997 with Bankers Trust Company (including form of the Company's 10 7/8% Senior Notes Due 2007 as an exhibit thereto) 4.3* --Registration Agreement dated March 31, 1997 with Salomon Brothers Inc relating to the Company's 10 7/8% Senior Notes Due 2007 5.1** --Opinion of Holme Roberts & Owen LLP as to the validity of the shares of Common Stock being offered 10.1* --Growth Share Plan, as amended, effective October 1, 1996 10.2 --Employment Agreement dated December 21, 1996 with Joseph P.Nacchio 10.3 --Employment Agreement dated July 1994 with Robert S. Woodruff 10.4 --Settlement Agreement, General Release and Covenant Not to Sue dated as of November 11, 1996 with Douglas H. Hanson 10.5*** --IRU Agreement dated as of October 18, 1996 with Frontier Communications International Inc., with Amendments 10.6*** --IRU Agreement dated as of February 26, 1996 with WorldCom Network Services, Inc. 10.7*** --IRU Agreement dated as of May 2, 1997 with GTE Intelligent Network Services Incorporated 11.1** --Statement re Computation of Per Share Earnings 21.1* --Subsidiaries of the Registrant 23.1* --Consent of KPMG Peat Marwick LLP 23.2** --Consent of Holme Roberts & Owen LLP (included in Exhibit 5.1) 24.1 --Powers of Attorney (see signature page on page II-4 of the original filing of Registration Statement) 27.1* --Financial Data Schedule
- - -------- * Filed with original filing of Form S-1 ** To be filed by amendment *** Portions have been omitted pursuant to a request for confidential treatment. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Company has duly caused this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado on May 13, 1997. Qwest Communications International Inc. /s/ By: _________________________________ Robert S. Woodruff Executive Vice President - Finance and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE(S) DATE - --------- -------- ---- /*/ Chairman of the Board May 13, 1997 _________________ Philip F. Anschutz /*/ Director, President and May 13, 1997 _________________ Chief Executive Officer Joseph P. Nacchio (Principal Executive Officer) /s/ Director and Executive May 13, 1997 __________________ Vice President-Finance Robert S. Woodruff and Chief Financial Officer and Treasurer (Principal Financial Officer) /*/ Vice President and May 13, 1997 ___________________ Controller(Principal) Richard L. Smith Accounting Officer /*/ Director May 13, 1997 __________________ Cannon Y. Harvey /*/ Director May 13, 1997 ____________________ Richard T. Liebhaber /*/ Director May 13, 1997 _________________ Douglas L. Polson /*/ Director May 13, 1997 ________________ Craig D. Slater
- --------------------- *By Power of Attorney /s/ _____________________ Robert S. Woodruff, Attorney in Fact EX-10.2 2 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 21st day of December, 1996 by and between Qwest Holding Corporation, a Colorado corporation, having its principal executive offices in Denver, Colorado (the "Company"), and Joseph P. Nacchio, residing at 1 Manor Hill Drive, Mendham, New Jersey 07945 (the "Executive"). WHEREAS, in order to achieve its corporate and business objectives, the Company desires to hire an experienced and knowledgeable President and Chief Executive Officer of the Company who will be principally responsible for the overall conduct of the Company's business; WHEREAS, the Executive has substantial experience and expertise in connection with the Company's business; and WHEREAS, the Company and the Executive mutually desire to agree upon the terms of the Executive's employment as the President and Chief Executive Officer of the Company and, in addition, to agree as to certain benefits of said employment. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth below, the Company and the Executive hereby agree as follows: 1. TERM OF EMPLOYMENT: Subject to the terms of this Agreement, the Company hereby employs the Executive, and the Executive hereby accepts such employment, for the period beginning on January 6, 1997 (or such earlier date on or after the date hereof as the Executive shall elect) and ending at the close of business on December 31, 2001, unless terminated earlier as provided herein (the "Term"). Portions of this Agreement that by their terms provide or imply that they survive the end of the Term shall survive the end of the Term. 2. POSITION AND DUTIES: a. During the Term, the Executive shall serve as President and Chief Executive Officer of the Company and shall have such duties, responsibilities, and authority as are customarily required of and given to a President and Chief Executive Officer and such other duties and responsibilities commensurate with such position as the Board of Directors of the Company (the "Board") shall determine from time to time. Such duties, responsibilities, and authority shall include, without limitation, responsibility for the management, operation, strategic direction, and overall conduct of the business of the Company. The Executive shall perform his duties and responsibilities at the Company's offices in New Jersey; provided, however, that the Executive may, at the direction of the Board, be required to perform such duties and responsibilities up to four (4) days per week at the headquarters offices of the Company in Denver, Colorado. The Executive shall travel as reasonably required to perform his duties and responsibilities, provided that any such travel days shall reduce the number of days per week that the Executive will be required to work at the headquarters office in Denver, Colorado. For purposes of this Agreement, the term "employment" shall include the Executive's service to the Company in any capacity during the Term; provided the foregoing shall not change the positions to be held by the Executive. b. During the Term, while the Executive is employed by the Company, the Company shall cause the Executive to be nominated for a director position on the Board and shall use its best efforts to have him elected as such. If an initial public offering of the common stock of the Company (an "IPO") occurs, the Company shall, during the term while the Executive is employed by the Company, use its best efforts to include the Executive in the Board's slate of nominees for election as directors at each annual meeting of the Company's shareholders and shall recommend to the shareholders that the Executive be elected as a director of the Company. c. During the Term, the Executive shall devote substantially his full business time, energy, and ability to the business of the Company. The Executive shall report directly to the Board and shall perform his duties subject to the overall policies and directions of the Board. During the Term, all other employees of the Company shall report to the Executive and not directly to the Board or the Chairman of the Board. d. The Executive may (i) with express authorization of the Board, serve as a director or trustee of other for profit corporations or businesses which are not in competition with the business of the Company or the telecommunications business of any of its subsidiaries, or, to his knowledge, any other affiliate of the Company, present or future, provided that, if a directorship is approved and the Board later determines that the directorship would be with a competitive entity, it shall notify the Executive in writing and the Executive shall have a reasonable period of time to resign such directorship, (ii) serve on civic or charitable boards or committees, (iii) deliver lectures, fulfill speaking engagements, or teach at educational institutions(and retain any fees therefrom), and (iv) manage personal investments; provided, however, that the Executive may not engage in any of the activities described in this Paragraph 2(d) to the extent such activities materially interfere with the performance of the Executive's duties and responsibilities to the Company. As used in this Agreement, the term "affiliate" of the Company means any company controlled by, controlling, or under common control with the Company, whether through stock ownership or otherwise. e. Without the prior express authorization of the Board, the Executive shall not, directly or indirectly, during the Term (i) render services of a business, professional, or commercial nature to any other person or firm, whether for compensation or otherwise, or (ii) engage in any activity competitive with the business of the Company or the telecommunications business of any of its subsidiaries, present or future, or, to his knowledge, of any other affiliate of the Company, present or future, whether alone, as a partner, or as an officer, director, employee, member or holder (directly or indirectly, such as by means of a trust or option arrangement). The Executive may be an investor, shareholder, joint venturer, or partner (hereinafter referred to as "Investor"); provided, however, that his status as an Investor shall not (i) pose a conflict of interest, (ii) require the Executive's active involvement in the management or operation of such Investment (recognizing that the Executive shall be permitted to monitor and oversee the Investment), or (iii) materially interfere with the performance of the Executive's duties and obligations hereunder. For the purposes of clause (i) of the proviso to the preceding sentence, the Executive shall not be deemed to be subject to a conflict of interest merely by reason of the ownership of less than three percent (3%) of (i) the outstanding stock of any entity whose stock is traded on an established stock exchange or on the National Association of Securities Dealers Automated Quotation System or (ii) the outstanding stock, partnership interests or other form of equity interest of any venture fund, investment pool or similar investment vehicle that shall solicit investments on a "blind pool" basis. f. The Executive represents and warrants that, to the best of his knowledge after the review of his personal files, he has the full right and authority to enter into this Agreement and to render the services as required under this Agreement, and that by signing this Agreement and rendering such services he is not breaching any contract or legal obligation he owes to any third party, including without limitation AT&T Corp. ("Former Employer"); provided that the Company shall not require the Executive to use any trade secrets of Former Employer. Neither the Executive nor the Company believe that any such trade secrets exist or, if they do, that they would be necessary for the Executive to perform his services to the Company hereunder. g. The Executive represents and warrants that (i) Schedule 1 hereto lists certain benefits provided by Former Employer, and the Executive's evaluation of the respective amounts thereof, that the Executive may lose or forfeit upon or in connection with the termination of his employment by Former Employer in connection with the commencement of his employment by the Company (the "Forfeit Benefits") and (ii) Schedule 2 lists the stock options granted by Former Employer and held by the Executive as of the date hereof that the Executive contemplates exercising concurrently with or promptly after his execution and delivery of this Agreement (the "Stock Options"). 3. COMPENSATION AND BENEFITS: During the Term, while the Executive is employed by the Company, the Company shall compensate the Executive for his services as set forth in this Paragraph 3. The Executive recognizes that during the Term of the Agreement, the Company reserves the right to change from time to time the terms and benefits of any welfare, pension, or fringe benefit plan of the Company, including the right to change any service provider, so long as such changes are also generally applicable to all executives of the Company; provided, however, that (i) the Growth Share Plan (as defined below) shall not be amended in any respect that applies to the Executive without the Executive's written consent and (ii) the Executive's minimum level of compensation and benefits as set forth in this Paragraph 3 will be preserved in the event of any such change. a. Salary: During the Term, the Company shall pay the Executive a base salary at an annual rate of Six Hundred Thousand Dollars and No Cents ($600,000.00). Such salary shall be earned and shall be payable in periodic installments in accordance with the Company's payroll practices. Amounts payable shall be reduced by standard withholding and other authorized deductions. The Board will review the Executive's salary at least annually and may increase (but not reduce) the Executive's annual base salary in its sole discretion. Once increased such base salary shall not be reduced. His base salary as so increased shall thereafter be treated as his base salary hereunder. b. Equalization Payment: The Company shall pay to the Executive an amount (the "Equalization Payment") to compensate the Executive for the loss or forfeiture of the Forfeit Benefits. The Equalization Payment shall be an aggregate amount equal to (i) $11,300,000 less (ii) the aggregate value of the benefits specified on Schedule 1 hereto that the Executive receives from Former Employer or is permitted by Former Employer to retain (other than the Stock Options, for which provision is made below), any other benefits received by the Executive from Former Employer in replacement of one or more of the benefits listed on Schedule 1 and any other severance benefits (other than accrued benefits of the sort identified by the Executive to the Company) received by the Executive from Former Employer. The value of the benefits referred to in clause (ii) of the preceding sentence shall be determined using the assumptions and methodology used by the Executive to evaluate the benefits listed on Schedule 1, in each case based upon the period during which the Executive shall be entitled to receive such benefit. The amount of the Equalization Payment shall be determined as of January 7, 1997 and shall be paid in three installments, subject to this Paragraph 3 and to Paragraphs 4 and 5 below, in the percentage amounts set forth below opposite the corresponding dates of payment:
Date Amount 01/07/97 64% 01/01/98 18% 01/01/99 18%
Each installment of the Equalization Payment shall be paid in cash. The installments paid after January 7, 1997 shall accrue interest at five percent (5%) per annum accruing from January 7, 1997 to the date of payment. The Equalization Payment shall be redetermined on March 21, 1997. The remaining installments of the Equalization Payment shall be reduced or increased (in each case in the order of payment) in an aggregate amount equal to the product obtained by multiplying (i) the number of Stock Options exercised by the Executive in accordance with paragraph 2(g) above times (ii) the amount by which the closing price per share of the common stock of Former Employer on March 21, 1997 is greater than or less than, respectively, $37 per share. After January 7, 1997, if the Executive shall receive from Former Employer any benefit specified on Schedule 1, or shall be permitted by Former Employer to retain any such benefit, or shall receive from Former Employer any other benefit in replacement of one or more of the benefits listed on Schedule 1, then the Equalization Payment shall be redetermined (or further redetermined) as of the date of such receipt or permitted retention and the remaining installments of the Equalization Payment shall be reduced (in the order of payment) in an aggregate amount equal to the value of each benefit so received or retained. If the value of any such benefit exceeds the unpaid portion of the Equalization Payment, the Executive shall repay to the Company in cash an amount equal to such excess value, together with any interest thereon paid by the Company to the Executive (assuming for the purpose of this paragraph that the amount of the Equalization Payment is so repaid in the reverse order as received by the Executive); provided that (x) the aggregate amount so repaid by the Executive to the Company shall not exceed the aggregate amount of the Equalization Payment then paid by the Company to the Executive, and (y) if the Executive uses reasonable efforts to make the repayment deductible for purposes of federal and state income tax, after consulting with the Company (but the Executive may in his good faith judgment determine whether a position should be taken in any tax return that would subject him to penalties and, if he elects to obtain an opinion of counsel with respect to any position as to which there is substantial doubt, the reasonable fees and expenses of such counsel shall be reduced from the amount to be refunded), the amount of each such repayment made by the Executive to the Company in cash will be reduced in the amount, if any, by which the reduction in federal and state income and payroll taxes that may be realized by the Executive as a result of such repayment (after giving effect to the deduction of all other amounts deductible by the Executive for federal and state income taxes) is less than the amount of federal and state income and payroll tax previously paid by the Executive on the amount so repaid. c. Annual Bonus: The Executive shall be eligible to receive an annual bonus. The Executive recognizes that whether or not he receives a bonus, and the amount of any such bonus, shall be determined at the sole discretion of the Board; provided that, subject to Paragraphs 4 and 5 below, for the 1997 calendar year the Executive will receive a bonus of Three Hundred Thousand Dollars and No Cents ($300,000.00), and for the 1998 calendar year, unless an IPO occurs at any time during 1998, the Executive will receive a bonus of Three Hundred Thousand Dollars and No Cents ($300,000.00). Any bonus awarded to the Executive shall be paid in the same form and manner and at or around the same time as such bonus payments are made to other senior executives of the Company. The foregoing shall not limit the Board in its sole discretion from giving Executive other bonuses. d. Growth Share Plan: The Executive shall be eligible to participate in the Qwest Holding Corporation Growth Share Plan (the "Growth Share Plan"). Upon execution of the Growth Share Plan Agreement attached hereto at Exhibit A, the Executive shall be allocated 300,000 Growth Shares in the Company. The Executive's continued eligibility to participate in the Growth Share Plan, and the vesting of the Growth Shares granted thereunder, shall be governed by the terms of the Growth Share Plan Agreement and the Growth Share Plan itself, as may be amended from time to time in accordance with the terms hereof and thereof. e. Savings and Retirement Plans: The Executive shall be entitled to participate in all savings and retirement plans applicable generally to other senior executives of the Company, in accordance with the terms of such plans, as may be amended from time to time. f. Welfare Benefit Plans: The Executive and/or his family (including Class 2 dependents), as the case may be, shall be eligible to participate in and shall receive all benefits under the Company's welfare benefit plans and programs applicable generally to other senior executives of the Company (collectively, as amended from time to time, the "Company Plans"), in accordance with the terms of the Company Plans. g. Vacation: Beginning with the 1997 calendar year, the Executive shall be entitled to paid vacation at a rate of twenty-five (25) days per calendar year during the Term in accordance with the plans, policies, and programs as in effect generally with respect to other senior executives of the Company, including the limitations, if any, on the carry-over of accrued but unused vacation time. h. Travel: The Executive shall be entitled to fly first-class or business class, or to use the Company's aircraft when available and appropriate, for business travel, including travel between the business offices of the Company. The Company shall also pay the airfare of the Executive's family members with respect to travel, at reasonable frequencies, between the headquarters office of the Company in Denver, Colorado and the Executive's residence in New Jersey and shall, to the extent this payment shall constitute income to the Executive, pay the Executive an amount such that the Executive shall have no after tax cost for the deemed income and this gross up payment; provided that family members shall utilize available advance ticketing programs to the extent feasible in making such travel arrangements. i. Business Club Memberships: The Company shall pay the initiation fees and membership dues for the Executive at business clubs in the vicinity of the business offices of the Company approved by the Board from time to time to the same extent that the Company pays such fees and dues with respect to comparable business club memberships of other senior executives of the Company. To the extent the Company is not required to treat such fees and dues as income to the Executive it shall not do so and, to the extent it must treat such amounts as income to the Executive, it shall pay the Executive an amount such that the Executive shall have no after tax cost for the deemed income and this gross up payment. j. Expenses: The Company shall reimburse the Executive for reasonable expenses for parking at the business offices of the Company, cellular telephone usage, entertainment, travel, meals, lodging, and similar items incurred in the conduct of the Company's business, including meals and lodging of the Executive when performing his duties and responsibilities at the headquarters office of the Company in Denver, Colorado when he is not resident in the vicinity of such business office. Such expenses shall be reimbursed in accordance with the Company's expense reimbursement policies and guidelines. The Company shall also reimburse the Executive for reasonable attorney's fees and charges incurred in connection with the preparation and execution of this Agreement. k. Relocation: If the Executive relocates to the vicinity of the headquarters office of the Company in Denver, Colorado at any time prior to the termination of the Term and prior to his receipt from the Company of written notice of termination or non-renewal pursuant to Paragraphs 4(a), 4(b), or 4(f), the Company and the Executive shall discuss the types and amounts of relocation expenses of the Executive that will be paid or reimbursed by the Company. l. Indemnification: To the fullest extent permitted by the indemnification provisions of the articles of incorporation and bylaws of the Company in effect as of the date of this Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the Company's incorporation in effect from time to time (collectively, the "Indemnification Provisions"), and in each case subject to the conditions thereof, the Company shall (i) indemnify the Executive, as a director and officer of the Company or a subsidiary of the Company or a trustee or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if the Executive shall be serving in such capacity at the Company's written request, as a director or officer of any other corporation (other than a subsidiary of the Company) or as a trustee or fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company, against all liabilities and reasonable expenses that may be incurred by the Executive in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because the Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan, and against which the Executive may be indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by the Executive in the defense of any proceeding to which the Executive is a party because the Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan. The rights of the Executive under the Indemnification Provisions shall survive the termination of the employment of the Executive by the Company. 4. TERMINATION: The Executive's employment with the Company during the Term may be terminated by the Company or the Executive only under the circumstances described in this Paragraph 4, and subject to the provisions of Paragraph 5: a. Death or Disability: The Executive's employment hereunder shall terminate automatically upon the Executive's death. If the Disability of the Executive has occurred (pursuant to the definition of Disability set forth below), it may give to the Executive written notice of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 10th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 10-day period after such receipt, the Executive shall not have returned to full-time performance of the Executive's material duties. For purposes of this Agreement, "Disability" shall mean any physical or mental condition which prevents the Executive, for a period of 180 consecutive days, from performing and carrying out his material duties and responsibilities with the Company. b. Cause: The Company may immediately terminate this Agreement for "Cause" by giving written notice to the Executive. Any one or more of the following events shall constitute "Cause": (1) any material breach of the representations of the Executive set forth in Paragraph 2(f); (2) any wilful misconduct with respect to the Company which is materially detrimental to the Company and its subsidiaries in the aggregate, including but not limited to theft or dishonesty (other than good faith expense account disputes); (3) conviction of (or pleading nolo contendere to) a felony (other than (A) a traffic violation that is in most jurisdictions not classified as a felony and (B) a felony resulting from vicarious (rather than direct) liability arising out of his position as an officer or director of the Company); (4) failure or refusal to attempt to follow the written directions of the Board within a reasonable period after receiving written notice; or (5) gross continuous nonfeasance with regard to the Executive's duties, taken as a whole, which materially continue after a written notice thereof is given to the Executive. c. Other than Death or Disability or Cause: The Company may terminate the Executive's employment for any reason other than Death, Disability, or Cause, subject to the provisions of Paragraph 5(c). d. Termination by Executive for Good Reason: The Executive may terminate his employment for Good Reason upon written notice to the Company, and in such event, said employment termination shall be treated as termination by the Company for reason other than Death, Disability, or Cause under Paragraph 4(c). For purposes hereof, Good Reason shall mean: (1) a diminution of the Executive's titles, offices, positions or authority, excluding for this purpose an action not taken in bad faith and which is remedied within twenty (20) days after receipt of written notice thereof given by the Executive; (2) the assignment to the Executive of any duties inconsistent with the Executive's position (including status or reporting requirements), authority, or material responsibilities, or the removal of the Executive's authority or material responsibilities, excluding for this purpose an action not taken in bad faith and which is remedied by the Company within twenty (20) days after receipt of notice thereof given by the Executive; (3) the failure by the Company to timely make any payment due hereunder or to comply with any of the material provisions of this Agreement, other than a failure not occurring in bad faith and which is remedied by the Company within twenty (20) days after receipt of notice thereof given by the Executive; (4) occurrence of a Change of Control of the Company, which shall be deemed to have occurred upon (A) acquisition by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than Anschutz Company, The Anschutz Corporation, or any entity or organization controlled by Philip F. Anschutz (collectively, the Anschutz Entities"), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (i) the then- outstanding shares of common stock of the Company ("Outstanding Shares") or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors ("Voting Power") and (B) such beneficial ownership (as so defined) by such individual, entity or group of more than 20% of the Outstanding Shares or the Voting Power, as the case may be, shall then exceed the beneficial ownership (as so defined) by the Anschutz Entities of the Outstanding Shares or the Voting Power, respectively; (5) the failure of the Company to elect or re-elect the Executive as a director of the Company or the removal of the Executive as a director; (6) any person other than Philip F. Anschutz or the Executive serving in the position of Chairman of the Board; or (7) following an IPO, the failure of the Company to maintain Directors' and Officers' insurance ("D&O Insurance") of at least $15 million in the aggregate. e. Other Than Good Reason: The Executive may terminate his employment at any time after December 31, 1998 without breaching this Agreement, subject to Paragraph 5(d) below. f. Resignations: On and as of the date that the employment of the Executive by the Company shall terminate for any reason, the Executive shall resign from his position as a director and employee of the Company and from all other positions he holds as a director or employee of any subsidiary or affiliate of the Company. g. Non-Renewal of Term: Either party may elect not to renew this Agreement on the same or similar terms following the expiration of the Term. The parties agree to give the other party written notice of any such decision at least one-hundred-eighty (180) days prior to the expiration of the Term. 5. OBLIGATIONS OF THE COMPANY AND THE EXECUTIVE UPON TERMINATION: a. Death or Disability: If the Executive's employment is terminated by reason of the Executive's Death or Disability during the Term, the Term shall terminate without further obligations to the Executive or his legal representatives under this Agreement, other than for (A) payment of the sum of (i) any base salary and bonus owed to the Executive through the date of termination (provided that such bonus shall be paid only if the date of such termination shall occur in 1997 or 1998, or shall be a formula bonus and for this purpose the amount of such bonus shall be calculated based on the number of days in the year through the date of termination, as well as any earned bonus for any complete year that theretofore had not been paid) and (ii) any other compensation earned through the date of termination but not yet paid or delivered to the Executive ("Accrued Obligations"), and (B) payment of any amounts due pursuant to the terms of any applicable stock option (or other equity-based) plan of the Company or any welfare or pension benefit plan of the Company as of the date of termination or which by their specific terms extend beyond such date of termination, and (C) payment of any amount of the Equalization Payment not then paid and (D) payments due, if any, pursuant to the terms of the Growth Share Plan and (E) payments due, if any, and continuation of coverage (collectively, "Indemnification/Insurance Payments"), pursuant to the Indemnification Provisions and D&O Insurance. All such payments shall be paid to the Executive or his estate or beneficiary, as applicable. b. Termination for Cause: If the Executive's employment is terminated by the Company for Cause, the Term shall terminate without further obligations to the Executive or his legal representatives under this Agreement on the date of such termination and no further payments or benefits of any kind, including salary, bonuses and any unpaid amount of the Equalization Payment, shall be payable to the Executive, other than for (i) Accrued Obligations and (ii) the payments and benefits provided in Paragraph 5(f). If the termination is effected on or before December 31, 1999, and if the percentage of the Equalization Payment then paid by the Company to the Executive exceeds the percentage determined below with respect to the date of termination, then the Executive shall repay to the Company in cash an amount equal to such excess value, together with any interest thereon paid by the Company to the Executive (assuming for the purpose of this paragraph that the amount of the Equalization Payment is so repaid in the reverse order as received by the Executive); provided that (x) the aggregate amount so repaid by the Executive to the Company shall not exceed the aggregate amount of the Equalization Payment then paid or provided by the Company to the Executive, together with any interest thereon paid by the Company to the Executive, and (y) if the Executive uses his best efforts to make the repayment deductible for purposes of federal and state income tax, after consulting with the Company (but the Executive may in his good faith judgment determine whether a position should be taken in any tax return that would subject him to penalties and, if he elects to obtain an opinion of counsel with respect to any position as to which there is substantial doubt, the reasonable fees and expenses of such counsel shall be reduced from the amount to be refunded), the amount of each such repayment made by the Executive to the Company in cash will be reduced in the amount, if any, by which the reduction in federal and state income taxes that may be realized by the Executive as a result of such repayment (after giving effect to the deduction of all other amounts deductible by the Executive for federal and state income taxes) is less than the amount of federal and state income tax previously paid by the Executive on the amount so repaid.
Date of Termination Percentage on or before 12/31/97 25% 01/01/98 - 12/31/98 50% 01/01/99 - 12/31/99 75%
If the termination is effected after December 31, 1999, there shall be no repayment of the Equalization Payment. If it is subsequently determined that the Company did not have Cause for termination, then the Company's decision to terminate shall be deemed to have been made under Paragraph 4(c), and the Executive shall be entitled to receive the amounts payable under Paragraph 5(c) (and any Equalization Payment repayment made by the Executive shall promptly be refunded to the Executive with interest at five percent (5%) accruing from the date of the repayment to the date of refund. If the Executive serves notice challenging the determination of Cause made by the Company, repayment of a portion of the Equalization Payment shall be delayed until a determination of the arbitrator in accordance with Paragraph 9 hereof. To the extent the arbitrator upholds the Company's finding of Cause, the Executive shall promptly make the necessary Equalization Payment repayment with interest at five percent (5%) accruing from the date of termination to the date of repayment. c. Other than Death or Disability or Cause: If the Company terminates the Executive's employment during the Term for any reason other than Death or Disability, or Cause, or the Executive terminates for Good Reason, the Term shall terminate on the date of such termination without further obligation to the Executive other than (A) Accrued Obligations (B) payment of any amounts due pursuant to the terms of any applicable stock option (or other equity-based) plan of the Company or any welfare or pension benefit plan of the Company as of the date of termination or which by their specific terms extend beyond such date of termination, (C) payment to the Executive, within thirty (30) days of the date of termination, of a lump sum equal to the product of two (2) times the Executive's then current base salary, (D) subject to the terms of the applicable plans (or equivalent substitute(s) (on a fully grossed up after tax basis) if the plan(s) prohibit participation by ex-employees), continuation of the benefits provided in Paragraphs 3(d), 3(e), and 3(f) of this Agreement for two (2) years following the date of termination (or such shorter period as shall terminate on the date that the Executive shall commence his next employment), (E) payment of any amount of the Equalization Payment not then paid, together with interest thereon, if any, and (F) payment of Indemnification/Insurance Payments. The Company shall be obligated to make the foregoing payments and to provide the foregoing benefits upon the Executive and the Company signing a mutual release of all claims against the other, substantially in the form attached as Exhibit B; such release shall not affect the Executive's rights (x) under the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"), (y) any conversion rights under any applicable life insurance policies and (z) any rights with respect to Indemnification/Insurance Payments. d. Termination by Executive: If the Executive terminates his employment for any reason other than for Good Reason, as defined in Paragraph 4(d), the Term shall terminate without further obligation to the Executive on the date of such termination and no further payments or benefits of any kind, including salary, bonuses and any unpaid amount of the Equalization Payment, shall be payable to the Executive, other than for (A) Accrued Obligations and (B) the payments and benefits provided in Paragraph 5(f). If such termination occurs on or before December 31, 1999, and if the percentage of the Equalization Payment then paid by the Company to the Executive exceeds the percentage determined below with respect to the date of termination, then the Executive shall repay to the Company in cash an amount equal to such excess value, together with any interest thereon paid by the Company to the Executive (assuming for the purpose of this paragraph that the amount of the Equalization Payment is so repaid in the reverse order as received by the Executive); provided that (x) the aggregate amount so repaid by the Executive to the Company shall not exceed the aggregate amount of the Equalization Payment then paid by the Company to the Executive, together with any interest thereon paid by the Company to the Executive, and (y) if the Executive uses his best efforts to make the repayment deductible for purposes of federal and state income tax, after consulting with the Company (but the Executive may in his good faith judgment determine whether a position should be taken in any tax return that would subject him to penalties and, if he elects to obtain an opinion of counsel with respect to any position as to which there is substantial doubt, the reasonable fees and expenses of such counsel shall be reduced from the amount to be refunded), the amount of each such repayment made by the Executive to the Company in cash will be reduced in the amount, if any, by which the reduction in federal and state income taxes that may be realized by the Executive as a result of such repayment (after giving effect to the deduction of all other amounts deductible by the Executive for federal and state income taxes) is less than the amount of federal and state income tax previously paid by the Executive on the amount so repaid.
Date of Termination Percentage on or before 12/31/97 25% 01/01/98 - 12/31/98 50% 01/01/99 - 12/31/99 75%
e. Non-Renewal of Agreement: If the parties do not renew this Agreement following the expiration of the Term, the Company shall not have any further obligation to the Executive, other than for (A) Accrued Obligations, (B) severance at the same level given to other senior executives of the Company and (C) the payments and benefits provided in Paragraph 5(f). f. Exclusive Remedy: Except for the payments and benefits provided in this Paragraph 5, the Executive acknowledges and agrees that upon termination of the Term, he shall have no other claims against, and be entitled to no other payments or benefits from, the Company under this Agreement or pursuant to the Company's policies and plans, other than (A) the Growth Share Plan, (B) the Executive's rights under COBRA, (C) any conversion rights under any applicable life insurance policies, (D) payment of any amounts due pursuant to the terms of any stock option (or other equity-based) plan of the Company or any welfare or pension benefit plan of the Company as of the date of termination or which by their specific terms extend such date of termination and (E) rights with respect to Indemnification/Insurance Payments. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. 6. SPECIAL TAX PROVISION: a. Anything in this Agreement to the contrary notwithstanding, in the event that the Executive receives any amount or benefit (collectively, the "Covered Payments") (whether pursuant to the terms of this Agreement, the Growth Share Plan or any other plan, arrangement or agreement with the Company, any person whose actions result in a change of ownership or effective control covered by Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code") or any person affiliated with the Company or such person) that is or becomes subject to the excise tax imposed by or under Section 4999 of the Code (or any similar tax that may hereafter be imposed) and/or any interest or penalties with respect to such excise tax (such excise tax, together with such interest and penalties, is hereinafter collectively referred to as the "Excise Tax") by reason of the application of Section 280G(b)(2) of the Code, the Company shall pay to the Executive an additional amount (the "Tax Reimbursement Payment") such that after payment by the Executive of all taxes (including, without limitation, any interest or penalties and any Excise Tax imposed on or attributable to the Tax Reimbursement Payment itself), the Executive retains an amount of the Tax Reimbursement Payment equal to the sum of (i) the amount of the Excise Tax imposed upon the Covered Payments, and (ii) without duplication, an amount equal to the product of (A) any deductions disallowed for federal, state or local income tax purposes because of the inclusion of the Tax Reimbursement Payment in Executive's adjusted gross income, and (B) the highest applicable marginal rate of federal, state or local income taxation, respectively, for the calendar year in which the Tax Reimbursement Payment is made or is to be made. The intent of this Paragraph 6 is that after the Executive pays federal, state and local income taxes and any payroll taxes, the Executive will be in the same position as if the Executive were not subject to the Excise Tax under Section 4999 of the Code and did not receive the extra payments pursuant to this Paragraph 6, and this Paragraph 6 shall be interpreted accordingly. b. Except as otherwise provided in Paragraph 6(a), for purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Covered Payments will be treated as "parachute payments" (within the meaning of Section 280G(b)(2) of the Code) and such payments in excess of the Code Section 280G(b)(3) "base amount" shall be treated as subject to the Excise Tax, unless, and except to the extent that, the Company's independent certified public accountants or legal counsel (reasonably acceptable to the Executive) appointed by such public accountants (or, if the public accountants decline such appointment and decline appointing such legal counsel, such independent certified public accountants as promptly mutually agreed on in good faith by the Company and the Executive) (the "Accountant"), deliver a written opinion to the Executive, reasonably satisfactory to the Executive's legal counsel, that, in the event such reporting position is contested by the Internal Revenue Service, there will be a more likely than not chance of success with respect to a claim that the Covered Payments (in whole or in part) do not constitute "parachute payments," represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the "base amount" allocable to such reasonable compensation, or such "parachute payments" are otherwise not subject to such Excise Tax (with appropriate legal authority, detailed analysis and explanation provided therein by the Accountant); and the value of any Covered Payments which are non-cash benefits or deferred payments or benefits shall be determined by the Accountant in accordance with the principles of Section 280G of the Code. c. For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay federal, state and/or local income taxes at the highest applicable marginal rate of income taxation for the calendar year in which the Tax Reimbursement Payment is made or is to be made, and to have otherwise allowable deductions for federal, state and local income tax purposes at least equal to those disallowed due to the inclusion of the Tax Reimbursement Payment in the Executive's adjusted gross income. d. (i) (A) In the event that prior to the time the Executive has filed any of the Executive's tax returns for a calendar year in which Covered Payments are made, the Accountant determines, for any reason whatsoever, the correct amount of the Tax Reimbursement Payment to be less than the amount determined at the time the Tax Reimbursement Payment was made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Tax Reimbursement Payment is determined by the Accountant, the portion of the prior Tax Reimbursement Payment attributable to such reduction (including the portion of the Tax Reimbursement Payment attributable to the Excise Tax and federal, state and local income taxes imposed on the portion of the Tax Reimbursement Payment being repaid by the Executive, using the assumptions and methodology utilized to calculate the Tax Reimbursement Payment (unless manifestly erroneous)), plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. (B) In the event that the determination set forth in (A) above is made by the Accountant after the filing by the Executive of any of the Executive's tax returns for a calendar year in which Covered Payments are made, the Executive shall file at the request of the Company an amended tax return in accordance with the Accountant's determination, but no portion of the Tax Reimbursement Payment shall be required to be refunded to the Company until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed the interest received or credited to the Executive by such tax authority for the period it held such portion (less any tax the Executive must pay on such interest and which the Executive is unable to deduct as a result of payment of the refund). (C) In the event the Executive receives a refund pursuant to (B) above and repays such amount to the Company, the Executive shall thereafter file for any refunds or credits that may be due to Executive by reason of the repayments to the Company. The Executive and the Company shall mutually agree upon the course of action, if any, to be pursued (which shall be at the expense of the Company) if the Executive's claim for such refund or credit is denied. (ii) In the event that the Excise Tax is later determined by the Accountant or the Internal Revenue Service to exceed the amount taken into account hereunder at the time a Tax Reimbursement Payment was made (including by reason of any payment the existence or amount of which could not be determined at the time of the earlier Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalties payable with respect to such excess) once the amount of such excess is finally determined. (iii) In the event of any controversy with the Internal Revenue Service (or other taxing authority) under this Paragraph 6, subject to the second sentence of subparagraph (i)(C) above, Executive shall permit the Company to control issues related to this Paragraph 6 (at its expense), provided that such issues do not potentially materially adversely affect the Executive, but the Executive shall control any other issues. In the event the issues are interrelated, the Executive and the Company shall in good faith cooperate so as not to jeopardize resolution of either issue. In the event of any conference with any taxing authority as to the Excise Tax or associated income taxes, the Executive shall permit the representative of the Company to accompany the Executive, and the Executive and his representative shall cooperate with the Company and its representative. (iv) With regard to any initial filing for a refund or any other action required pursuant to this Paragraph 6 (other than by mutual agreement) or, if not required, agreed to by the Company and the Executive, the Executive shall cooperate fully with the Company, provided that the foregoing shall not apply to actions that are provided herein to be at the Executive's sole discretion. e. The Tax Reimbursement Payment, or any portion thereof, payable by the Company shall be paid not later than the fifth day following the determination by the Accountant, and any payment made after such fifth day shall bear interest at the rate provided in Code Section 1274(b)(2)(B) to the extent and for the period after such fifth day that Executive has an obligation to make payment or estimated payment of the Excise Tax. The Company shall use its best efforts to cause the Accountant to promptly deliver the initial determination required hereunder with respect to Covered Payments paid or payable in any calendar year; if the Accountant's determination is not delivered within ninety (90) days after Covered Payments are paid or distributed, the Company shall pay the Executive the Tax Reimbursement Payment set forth in an opinion from counsel recognized as knowledgeable in the relevant areas selected by Executive, and reasonably acceptable to the Company, within five (5) days after delivery of such opinion. The Company may withhold from the Tax Reimbursement Payment and deposit into applicable taxing authorities such amounts as they are required to withhold by applicable law. To the extent that the Executive is required to pay estimated or other taxes on amounts received by the Executive beyond any withheld amounts, the Executive shall promptly make such payments. The amount of such payment shall be subject to later adjustment in accordance with the determination of the Accountant as provided herein. f. The Company shall be responsible for (i) all charges of the Accountant, (ii) if subparagraph (e) is applicable, the reasonable charges for the opinion given by the Executive's legal counsel, and (iii) all reasonable charges in connection with the preparation and filing of any amended tax returns on behalf of the Executive requested by the Company, required hereunder, or required by applicable law. The Company shall gross-up for tax purposes any income to the Executive arising pursuant to this subparagraph (f) so that the economic effect to the Executive is the same as if the benefits were provided on a non-taxable basis. g. The Executive and the Company shall mutually agree on and promulgate further guidelines in accordance with this Paragraph 6 to the extent that, if any, necessary to effect the reversal of excessive or shortfall Tax Reimbursement Payments. The foregoing shall not in any way be inconsistent with Paragraph 6(d)(i)(C). 7. CONFIDENTIAL INFORMATION: During and after the Term, the Executive shall not use or disclose any secret, confidential, and/or proprietary information, knowledge, or data relating to the Company, any of its subsidiaries or any of the other affiliates of the Company, present and future, and their respective businesses, which shall have been obtained by the Executive during his employment by the Company, any of its subsidiaries or any of the other affiliates of the Company and which shall not be or become public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement) provided that the Executive may, (a) while employed by the Company, disclose such information, knowledge, or data as he in good faith deems appropriate and (b) otherwise comply with legal process, so long as Executive gives prompt notice to the Company of any required disclosure and reasonably cooperates (without being required to incur any expense or subject himself to sanction or penalty) with the Company if the Company determines to oppose, challenge, or quash the legal process. 8. NONSOLICITATION: The Executive agrees that during the Term of this Agreement and for a period of one (1) year following the termination of the Term, he will not, directly or indirectly, knowingly solicit on behalf of any such entity any employee of the Company, any of its subsidiaries or any of its other affiliates, present or future (while an affiliate), who is being compensated at a rate of Fifty Thousand Dollars ($50,000.00) or more per year as an employee of the Company, any of its subsidiaries, or any of its other affiliates, present or future, to work for any individual or firm then in competition with the business of the Company, any of its subsidiaries or any other affiliate of the Company, present or future. The Executive may give references with respect to such employees. 9. SUCCESSORSHIP: This Agreement shall inure to the benefit of and be binding upon the Company and its successors and permitted assigns and any such successor or permitted assignee shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, "successor" and "assignee" shall be limited to any person, firm, corporation, or other business entity which at any time, whether by purchase, merger, or otherwise, directly or indirectly acquires the stock of the Company or to which the Company assigns this Agreement by operation of law or otherwise in connection with any sale of all or substantially all of the assets of the Company, provided that any successor or permitted assignee promptly assumes in a writing delivered to the Executive this Agreement and, in no event, shall any such succession or assignment release the Company from its obligations hereunder. 10. ARBITRATION: Any and all controversies, claims, or disputes arising out of or in any way relating to this Agreement or the termination thereof shall be resolved by final and binding arbitration in New York, New York before a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). The arbitration shall be commenced by filing a demand for arbitration with the AAA within eighteen (18) months after the occurrence of the facts giving rise to any such controversy, claim, or dispute. The arbitrator shall decide all issues relating to arbitrability. The costs of such arbitration, including the arbitrator's fees, shall be split evenly between the parties to the arbitration. Each party to the arbitration shall be responsible for the payment of its own attorneys' fees, provided that, if the Executive prevails as to any matter in any such arbitration, the Company shall pay the reasonable attorneys' fees incurred by the Executive in connection with those matters on which he prevails, in an amount to be determined by the arbitrator. 11. GOVERNING LAW: The provisions of this Agreement shall be construed in accordance with, and governed by, the laws of the State of New York without regard to principles of conflict of laws. 12. SAVINGS CLAUSE: If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable. 13. WAIVER OF BREACH: No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach. 14. MODIFICATION: No provision of this Agreement may be amended, modified, or waived except by written agreement signed by the parties hereto. 15. ASSIGNMENT OF AGREEMENT: The Executive acknowledges that his services are unique and personal. Accordingly, the Executive may not assign his rights or delegate his duties or obligations under this Agreement to any person or entity; provided, however, that payments may be made to the Executive's estate or beneficiaries as expressly set forth herein. 16. ENTIRE AGREEMENT: This Agreement is an integrated document and constitutes and contains the complete understanding and agreement of the parties with respect to the subject matter addressed herein, and supersedes and replaces all prior negotiations and agreements, whether written or oral, concerning the subject matter hereof. 17. CONSTRUCTION: Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter. The captions of this Agreement are not part of the provisions and shall have no force or effect. 18. NOTICES: Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the addresses set forth below (or at such other addresses as shall be specified by the parties by like notice). Such notices, demands, claims, and other communications shall be deemed given: a. in the case of delivery by overnight service with guaranteed next day delivery, such next day or the day designated for delivery; b. in the case of certified or registered United States mail, five days after deposit in the United States mail; or c. in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone, or otherwise; and d. in the case of personal delivery, when received. Communications that are to be delivered by the United States mail or by overnight service are to be delivered to the addresses set forth below: (1) To the Company: Qwest Holding Corporation 555 Seventeenth Street Denver, Colorado 80202 Attention: Chairman of the Board (2) To the Executive: Joseph P. Nacchio 1 Manor Hill Drive Mendham, New Jersey 07945 Each party, by written notice furnished to the other party, may modify the acceptable delivery address, except that notice of change of address shall be effective only upon receipt. In the event that the Company is aware that the Executive is not at the location when notice is being given, notice shall be deemed given when received by the Executive, whether at the aforementioned location or at another location. 19. TAX WITHHOLDING: The Company may withhold from any amounts payable under this Agreement such federal, state, or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. 20. REPRESENTATION: The Executive represents that he is knowledgeable and sophisticated as to business matters, including the subject matter of this Agreement, that he has read this Agreement and that he understands its terms. The Executive acknowledges that, prior to assenting to the terms of this Agreement, he has been given a reasonable time to review it, to consult with counsel of his choice, and to negotiate at arm's-length with the Company as to its contents. The Executive and the Company agree that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that they have entered into this Agreement freely and voluntarily and without pressure or coercion from anyone. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the Company and the Executive, intending to be legally bound, have executed this Agreement on the day and year first above written. QWEST HOLDING CORPORATION /s/ By:____________________________ Name: Title: JOSEPH P. NACCHIO /s/ _______________________________ SCHEDULE 1 Value 1. Unmatured Long-Term Awards $ 673,804 2. Non-Qualified Pension 2,514,721 3. Stock Options 2,783,913 4. "Earnings" on Deferred 4,211,419 Compensation Account 5. Restricted Shares 675,503 6. Ayco Fee 90,640 7. 1996 Short Term Award 350,000 (payable March 1997) $11,300,000 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT AMENDMENT NO. 1 (the "Amendment") to Employment Agreement dated as of December 21, 1996 (the "Agreement") is made and entered into as of the 3rd day of January, 1997 by and between Qwest Holding Corporation, a Colorado corporation, having its principal executive offices in Denver, Colorado (the "Company"), and Joseph P. Nacchio, residing at 1 Manor Hill Drive, Mendham, New Jersey 07945 (the "Executive"). Capitalized terms not otherwise defined in this Amendment have the respective meanings assigned in the Agreement. WHEREAS, Former Employer has agreed to extend to April 3, 1997 the date on which the vested stock options of the Executive will be cancelled by reason of the termination of his employment with Former Employer, the commencement of his employment with the Company or the performance of his duties to the Company. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth below, the Company and the Executive hereby agree as follows: 1. WAIVER OF PARAGRAPH 2(G)(ii): The Executive shall not be required by Paragraph 2(g)(ii) of the Agreement to exercise any or all of the vested stock options for shares of common stock of Former Employer promptly following the termination of the Executive's employment with AT&T Corp., or at any other time. 2. AMENDMENT TO PARAGRAPH 3(B): The second paragraph of Paragraph 3(b) of the Agreement is hereby amended and restated in its entirety as follows: The Equalization Payment shall be redetermined on March 21, 1997. The remaining installments of the Equalization Payment shall be reduced or increased (in each case in the order of payment) in an aggregate amount equal to the product obtained by multiplying (i) the sum of (a) the number of shares of common stock of Former Employer issued to the Executive upon the exercise of vested stock options during the period from January 6, 1997 through March 21, 1997 at exercise prices equal to or less than the closing prices per share of Former Employer on the trading days immediately preceding the respective dates of exercise plus (b) the number of shares of common stock of Former Employer issuable upon the exercise by the Executive of vested stock options held by the Executive at the close of business on March 21, 1997 and having exercise prices equal to or less than the closing price per share of the common stock of Former Employer on March 20, 1997 times (ii) the amount by which the closing price per share of the common stock of Former Employer on March 21, 1997 is greater than or less than, respectively, an amount per share equal to the weighted average exercise price of the stock options referred to in the preceding clause (i). 3. GOVERNING LAW: The provisions of this Amendment shall be construed in accordance with, and governed by, the laws of the State of New York without regard to principles of conflicts of laws. 4. CONTINUING EFFECT: Except as expressly provided in this Amendment, the terms and provisions of the Agreement shall continue in full force and effect. Hereafter, the term "Agreement" shall refer to the Agreement, as amended by this Amendment. 5. ENTIRE AGREEMENT: This Amendment is an integrated document and constitutes and contains the complete understanding and agreement of the parties with respect to the subject matter addressed herein, and supersedes and replaces all prior negotiations and agreements, whether written or oral, concerning the subject matter hereof. 6. CONSTRUCTION: Each party has cooperated in the drafting and preparation of this Amendment. Hence, in any construction to be made of this Amendment, the same shall not be construed against any party on the basis that the party was the drafter. The captions of this Amendment are not part of the provisions and shall have no force or effect. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the Company and the Executive, intending to be legally bound, have executed this Amendment on the day and year first above written. QWEST HOLDING CORPORATION By: /s/________________________ Name: Philip F. Anschutz Title: Chairman JOSEPH P. NACCHIO /s/____________________________ Exhibit A QWEST HOLDING CORPORATION GROWTH SHARE PLAN AGREEMENT THIS AGREEMENT is made and entered into as of January 1, 1997, by and between Qwest Holding Corporation (the "Company") and Joseph P. Nacchio (the "Participant"). WHEREAS, the Company has adopted the Qwest Holding Corporation Growth Share Plan, as amended effective October 1, 1996 (the "Plan"), and WHEREAS, the Plan requires that an Agreement be entered into between the Company and the Participant setting out certain terms and benefits of the Plan as they apply to the Participant; NOW, THEREFORE, the Company and the Participant hereby agree as follows: 1. The Plan is hereby incorporated into and made a part of this Agreement as though set forth in full herein. Capitalized terms that are used herein shall have the meanings assigned to such terms by the Plan, unless another definition is specified in this Agreement. The parties shall be bound by, and have the benefit of, each and every provision of the Plan, including but not limited to the provisions relating to amendment and termination of the Plan which are set forth in the Plan. Certain provisions contained in the Plan are modified by the terms and provisions of this Agreement. In the event of any conflict between the terms of this Agreement and the Plan, the provisions of this Agreement shall prevail. The Plan and this Agreement are intended to provide to the Participant the benefits of a stock appreciation right with respect to the Growth Shares granted hereunder. 2. The beginning of the Performance Cycle for Growth Shares granted under this Agreement will be January 1, 1997. 3. The end of the Performance Cycle for Growth Shares granted under this Agreement will be December 31, 2001. 4. The Participant is hereby granted 300,000 Growth Shares under this Agreement. The total number of Growth Shares available for issuance shall at no time exceed 10,000,000 Growth Shares. 5. The Beginning Company Value for the purpose of determining the value of the grant, determined as of January 1, 1997, is $1,000,000,000 (one billion dollars) The parties agree that neither party has made any representations or warranties to the other party with respect to the amount of the Beginning Company Value or the Ending Company Value, respectively. The parties also acknowledge that the actual value of the Company, or that the value of the assets of the Company less its liabilities, in each case as of January 1, 1997, may be more or less than the Beginning Company Value stated above. 6. (a) Except as set forth below in subparagraphs (b) and (c) below, Growth Shares granted under this Agreement will vest according to the following schedule:
Period of Time (Years) Since January 1, 1997 Annual Vesting Cumulative Vesting 1 20% 20% 2 20% 40% 3 20% 60% 4 20% 80% 5 20% 100%
(b) If the Participant's employment with the Company is terminated by the Company for any reason other than "Cause" (as defined in the Employment Agreement between the Company and the Participant dated as of December 21, 1996 (the "Employment Agreement")), or if the Participant terminates his employment for "Good Reason" (as defined in the Employment Agreement), the Participant shall Vest in one-twelfth of the 20% of the Growth Shares subject to annual vesting for the calendar year of termination for each full month of employment by the Company during such calendar year. The definition of "Cause" contained in the Plan shall be replaced by the definition of "Cause" contained in Paragraph 4(b) of the Employment Agreement. (c) If the Participant's employment with the Company terminates because of the Participant's death, "Disability" (as defined in the Employment Agreement) or Retirement, the Participant shall be 100% Vested with respect to his Growth Shares. The definition of "Permanent Disability" in the Plan shall be replaced by the foregoing definition of "Disability". (d) Sections 7.3 and 7.4 and the third sentence of Section 8.2 of the Plan shall not apply to the Participant with respect to his Growth Shares. The Growth Shares of the Participant shall not be subject to forfeiture pursuant to such provisions. (e) Notwithstanding the provisions of Section 7.2 of the Plan, the Participant shall not become 100% Vested in his Growth Shares upon the occurrence of a Change of Control unless, following the Change of Control, the Participant's employment with the Company is terminated by the Company without "Cause" or the Participant terminates his employment for "Good Reason" (as defined in the Employment Agreement, provided that the occurrence of a "Change of Control" shall not constitute "Good Reason" for purposes of this subparagraph 6(e)). Upon the occurrence of a Change of Control, the Growth Shares of the Participant will remain subject to the Vesting provisions of Section 7 of the Plan, as amended or modified by this Paragraph 6. 7. If the Participant's employment with the Company is terminated for "Cause," the Participant shall forfeit the Growth Shares that are not vested in accordance with the provisions of paragraph 6 above and shall become entitled to payment with respect to his Vested Growth Shares based upon the Ending Company Value determined as of the end of the immediately preceding calendar year. Ending Company Value shall be determined in accordance with Section 8.1 of the Plan and payment shall be made in accordance with the remaining provisions of Section 8, as modified by this Agreement. Ending Company Value shall be determined as soon as practicable following the date of the Participant's termination of employment, but in no event later than 90 days after the date of termination. 8. The definition of "Change of Control" contained in the Plan shall be replaced by the definition of Change of Control contained in Paragraph 4(d)(4) of the Employment Agreement. 9. The provisions of clauses (ii) and (iii) of Section 2.1(x) of the Plan, whereby a termination of the Plan or a Change of Control constitutes a Triggering Event, shall not apply with respect to the Participant's Growth Shares. 10. In addition to the events set forth in Section 2.1(x) of the Plan, the following shall also constitute a "Triggering Event": The payment of dividends or other distributions with respect to the outstanding stock of the Company (other than such dividends or distributions with respect to the outstanding stock of the Company that are not, in the aggregate, in excess of the amount of equity contributions to the capital of the Company, whether in the form of capital contributions, purchases of stock, or otherwise, made by Anschutz Company, its affiliates or another equity investor in the Company subsequent to the Effective Date) subsequent to the date as of which Beginning Company Value is determined for a grant of Growth Shares that exceed, in the aggregate, the greater of (a) $200,000,000 or (b) 50% or more of the sum of (i) the greater of the Beginning Company Value with respect to that grant of Growth Shares or the Appraised Value of the Company pursuant to subsection 2.1(c), if any, subsequent to the grant of such Growth Shares, plus (ii) the increase in the Company's retained earnings since the date of grant of the Growth Shares or the date as of which Appraised Value was calculated if Appraised Value is the greater amount under (i) above. The Board may cause a determination of Appraised Value to be made for purposes of this provision at any time. 11. In the case of a Triggering Event described above in Paragraph 10 of this Agreement, the Ending Company Value will be the Appraised Value of the Company as of the last day of the month immediately prior to or coincident with the date on which such dividend is paid, provided, however, that if all classes of the Company's outstanding common equity securities are traded on an established securities market as of the time Ending Company Value is to be determined and the Company is subject to the reporting and disclosure requirements of the Exchange Act, the Ending Company Value will be determined by multiplying the per share Market Value of such outstanding equity securities on the date of the Triggering Event by the total number of such securities outstanding at the time of the Triggering Event. 12. The following provision shall be added to Section 6 of the Plan and shall apply to the Participant's Growth Shares: 6.4 Adjustment of Number of Growth Shares. Upon changes in the outstanding common stock of the Company by reason of a merger, consolidation (whether or not the Company is the surviving corporation), a combination or exchange of shares, separation, reorganization or liquidation, the aggregate number of Growth Shares available under the Plan for awards and the outstanding Growth Share grants shall, in each case, be correspondingly adjusted by the Board in order to equitably reflect any such changes. 13. The following provisions shall be added to Section 7.2 of the Plan and shall apply to the Participant's Growth Shares: Upon the occurrence of a Triggering Event described above in Paragraph 10 of this Agreement, the Participant shall become 100% Vested in a percentage of his Growth Shares equal to the percentage of Ending Company Value distributed to the shareholders of the Company in the form of dividends, as described in Paragraph 10 of this Agreement. The remaining Growth Shares of the Participant, in such an event, shall remain subject to the other Vesting provisions of the Plan, as modified by this Agreement. 14. The next to the last sentence of Section 8.1 of the Plan shall be replaced by the following sentence with respect to the Participant's Growth Shares: For purposes of clause (C) above, a merger or other reorganization where the shareholders of the Company immediately prior to the transaction own more than 50% of the surviving entity in approximately the same proportions as they owned of the Company immediately prior to the transaction shall be treated as the acquisition of assets for Company stock. 15. Notwithstanding the other provisions of Section 8 of the Plan, in the case of a Triggering Event described above in Paragraph 10 of this Agreement, the amount payable initially with respect to Vested Growth Shares shall be a percentage of the value determined in accordance with Section 8.1 of the Plan, with such percentage being equal to the percentage of the Ending Company Value distributed to the shareholders of the Company in the form of dividends or otherwise that serves as the Triggering Event. In such a case, the Participant's Growth Shares shall remain subject to the provisions of the Plan and this Agreement and any further payment with respect to such Growth Shares, if any, shall be made in accordance with the applicable provisions of the Plan and this Agreement. 16. Notwithstanding the provisions of Section 8.3 of the Plan, payment to the Participant with respect to his Growth Shares shall be made in cash (unless the Participant agrees otherwise) unless, at the time of the Triggering Event, the shares of the Company's common stock satisfy the requirements of Section 8.4(b) of the Plan, in which case the provisions of Section 8.4(b) of the Plan shall apply with respect to the payment for the Participant's Growth Shares. Payment to the Participant, in cash or in shares of the Company's Common Stock, as applicable, shall be made no later than thirty (30) days after the final determination of the value of the Participant's Growth Shares. 17. The provisions of Section 13 of the Plan shall be replaced in their entirety by the following: The Board may at any time terminate, and from time to time may amend or modify the Plan. Upon termination of the Plan, no further Growth Shares shall be issued, but the provisions of the Plan shall remain applicable to all Growth Shares then outstanding at the time of Plan termination. No amendment, modification or termination of the Plan shall in any manner adversely affect any Growth Shares theretofore granted under the Plan, without the consent of the Participant holding such Growth Shares. 18. Notwithstanding the provisions of Section 3 of the Plan, if any dispute arises between the Participant and the Company with respect to the meaning or interpretation of the Plan or this Agreement, such dispute shall be resolved on a de novo basis pursuant to the arbitration provisions contained in Section 9 of the Employment Agreement. 19. If the shares of the Company's common stock are actively traded on an established securities market and the Company is subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934, as amended, as provided in Section 8.4(b) of the Plan, the Participant may elect to receive payment for up to 20% of his Vested Growth Shares in shares of the Company's common stock in accordance with the provisions of this Paragraph. The Participant may exercise his election to receive payment for up to 20% of his Vested Growth Shares (taking into account any prior payments made pursuant to this Paragraph) by delivering written notice of such election to the Board during the period beginning on the third business day following the date of release of the Company's quarterly financial data and ending on the twelfth business day following such date (the "Window Period"). The election shall specify the number of Growth Shares with respect to which the Participant has elected to receive payment. The amount of payment to be received by the Participant with respect to such Growth Shares shall be based upon the provisions of Section 8.1 of the Plan, with the Ending Company Value determined by taking the average of the mean between the bid and the asked prices of the Company's common stock, or the closing price, as applicable, on the principal stock exchange on which such common stock is traded, over the trading days included within the Window Period. The Company shall cause a certificate covering the nearest whole number of shares of the Company's common stock with a value so determined to be issued and delivered to the Participant as soon as reasonably practicable following the determination of the value of the Participant's Growth Shares in accordance with the provisions of this Paragraph. The Vested Growth Shares for which the Participant receives payment under this Paragraph shall be canceled and the Participant shall be entitled to no further payments under the Plan with respect to such canceled Growth Shares. 20. The provisions of Section 11 of the Plan shall not apply with respect to the Participant's Growth Shares. 21. This Agreement shall inure to the benefit of, and be binding upon, the Company, its successors and assigns, and the Participant and his Beneficiaries. 22. This Agreement may be modified or amended only by means of a written instrument executed by the parties hereto. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. QWEST HOLDING CORPORATION By:_________________________________ PARTICIPANT ____________________________________ Joseph P. Nacchio DESIGNATION OF BENEFICIARY FOR PAYMENTS DUE UNDER QWEST HOLDING CORPORATION GROWTH SHARE PLAN The undersigned is a Participant in the Qwest Holding Corporation Growth Share Plan, as amended effective October 1, 1996 (the "Plan") established by Qwest Holding Corporation (the "Company"). Pursuant to Section 10 of the Plan, the undersigned hereby designates the following persons or entities as primary and secondary beneficiaries and primary and secondary appointees as my legal representative of any amount due to me under the Plan with respect to the grant of Growth Shares effective as of January 1, 1997 and payable by reason of my death or disability, respectively: DEATH Primary Beneficiary: Name: Address: Relationship: _______________ ________________________ _________________ ________________________ Secondary (Contingent) Beneficiary: Name: Address: Relationship: _______________ ________________________ _________________ ________________________ DISABILITY Primary Appointee: Name: Address: Relationship: _______________ ________________________ _________________ ________________________ Secondary (Contingent) Appointee: Name: Address: Relationship: _______________ ________________________ _________________ ________________________ THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY OR APPOINTEE DESIGNATION IS HEREBY RESERVED. ALL PRIOR DESIGNATIONS (IF ANY) OF BENEFICIARIES AND APPOINTEES, OF ANY KIND, ARE HEREBY REVOKED. The Company shall pay all sums payable under the Plan by reason of my death to the Primary Beneficiary, if he or she survives me, and if no Primary Beneficiary shall survive me, then to the Secondary Beneficiary, and if no named beneficiary survives me, then the Company shall pay all amounts in accordance with Section 10 of the Plan. In the event that a named beneficiary survives me and dies prior to receiving the entire amount payable under the Plan, then and in that event, the remaining unpaid amount, payable according to the terms of the Plan, shall be payable to the personal representative of the estate of said deceased beneficiary, who survives me, but dies prior to receiving the total amount due under the Plan. This same payment scheme shall apply to Primary and Secondary Appointees except that no amount payable under the Plan shall be paid to the estate of a Primary or Secondary Appointee. Should the Secondary Appointee not survive me and not receive the full amount payable under the Plan, then such remaining amount shall be payable to my guardian or conservator as appointed by a court of competent jurisdiction. IN WITNESS WHEREOF, the undersigned has executed this document on the day and year hereinafter indicated, in the presence of the witnesses indicated below who each signed as witnesses in the presence of the undersigned and each other. ________________________________ Name ________________________________ Signature ________________________________ Date WITNESSES: ______________________________ Name ______________________________ Signature ______________________________ Name ______________________________ Signature NOTE: In preparing this Designation of Beneficiary, you should consult with your attorney to determine the appropriate method of designation consistent with your personal estate plan. EXHIBIT B SEPARATION AND GENERAL RELEASE AGREEMENT THIS SEPARATION AND GENERAL RELEASE AGREEMENT (the "Agreement") is made as of this ____ day of ______________, ____ by and between [ABC], an individual residing at ______________ ("Mr. ABC"), and Qwest Holding Corporation, a Colorado corporation, having its principal executive offices in Denver, Colorado ("Qwest"). In consideration of the mutual agreements set forth below, Mr. ABC and Qwest hereby agree as follows: 1. SEPARATION AS AN OFFICER, DIRECTOR, AND EMPLOYEE: Mr. ABC hereby acknowledges that, effective at the close of business on ______________, he no longer holds the positions of President and Chief Executive Officer of Qwest, nor will he hold as of such date any other positions as an employee or officer of Qwest or any of its subsidiaries or affiliated companies. In addition, effective at the close of business on ______________, Mr. ABC shall resign from his position as a Director of Qwest, and from any other positions he holds as a director of Qwest's subsidiaries or affiliated companies. 2. RELEASE OF CLAIMS AGAINST QWEST: For good and valuable consideration, including the payments and benefits set forth in either Paragraphs 4 or 5 (as applicable) of the Employment Agreement between Mr. ABC and Qwest effective ______________, 199__ (the "Employment Agreement"), which includes special enhancements to which Mr. ABC would not otherwise be entitled under current company policies, plans, and guidelines, Mr. ABC hereby knowingly, voluntarily, and willingly releases, discharges, and covenants not to sue Qwest and its direct and indirect parents, subsidiaries, affiliates, and related companies, past and present, as well as each of its and their former directors, officers, employees, Board of Directors and agents thereof, representatives, attorneys, trustees, insurers, assigns, successors, and agents, past and present (collectively hereinafter referred to as the "Releases"), from and with respect to any and all actions, claims, or lawsuits, whether known or unknown, suspected or unsuspected, in law or in equity, which against the Releases, Mr. ABC, and his heirs, executors, administrators, successors, assigns, dependents, descendants, and attorneys ever had, now have, or hereafter can, shall or may have arising out of or in any way relating to Mr. ABC's employment by Qwest, his separation from that employment, his separation from Qwest, or his participation on the Board of Directors of Qwest, including without limitation the following: a. any and all claims arising out of or in any way relating to breach of oral or written employment contracts (whether such contracts were express or implied), or any and all tort claims; b. any and all claims arising out of or in any way relating to age, race, sex, religion, national origin, disability, or other form of employment discrimination, including without limitation any claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, as amended, the New Jersey Law Against Discrimination, the Colorado Anti-Discrimination Act, or any other federal, state or local law, ordinance, or administrative regulation; or c. any and all claims for salary, bonus, severance pay, pension, vacation pay, life insurance, health or medical insurance, or any other fringe benefits, including payments or benefits under the Qwest Holding Corporation Growth Share Plan other than the payments and benefits provided for in or in accordance with the Employment Agreement and the Growth Share Plan referred to therein. provided that such release shall not affect Mr. ABC's rights (x) under the Consolidated Omnibus Budget Reconciliation Act of 1986, (y) any conversion rights under any applicable life insurance policies and (z) any rights with respect to Indemnification Payments (as defined in the Employment Agreement). 3. ADEA WAIVER OF CLAIMS: Mr. ABC expressly acknowledges and agrees that his release and waiver of rights and claims is knowing and voluntary, that by this Agreement he will receive compensation beyond that which he was already entitled to receive before entering into this Agreement, that he has been given a period of twenty-one (21) days within which to consider this Agreement, and that he elects to execute this Agreement on this date. Mr. ABC shall have seven (7) days following the execution of this Agreement within which he may revoke this Agreement, and this Agreement shall not become effective or enforceable until such seven-day revocation period has expired. To be effective, such revocation must be in writing and delivered to counsel for Qwest on or before the last day of the seven-day revocation period. Mr. ABC certifies that he understands and agrees to all of the terms of this Agreement, and has had an opportunity to discuss these terms with an attorney of his own choosing. Mr. ABC further acknowledges that he has been advised previously by Qwest, and by this writing is again advised by Qwest, to consult with an attorney prior to executing this Agreement and regarding his release of claims herein, including without limitation the release of claims under the Age Discrimination in Employment Act of 1967, as amended. 4. RELEASE OF CLAIMS AGAINST MR. ABC: For good and valuable consideration, including without limitation the release described in this Agreement, Qwest (for itself and behalf of the other Releasees) hereby releases, discharges, and covenants not to sue Mr. ABC, as well as his heirs, executors, administrators, successors and assigns, from and with respect to any and all actions, claims, or lawsuits, whether known or unknown, suspected or unsuspected in law or in equity, which against Mr. ABC, Qwest had, now has, or hereafter can, shall, or may have arising out of or in any way relating to Mr. ABC's employment by Qwest, his separation from that employment, his separation from Qwest, or his participation on the board of directors of Qwest. 5. EXTENT OF RELEASES: It is the express intention of Mr. ABC and Qwest that this Agreement constitutes a full and comprehensive release of all claims and potential claims, to the fullest extent permitted by law. Mr. ABC and Qwest acknowledge that they may hereafter discover claims or facts in addition to or different from those which they now know or believe to exist with respect to the subject matter of this Agreement and which if known or suspected at the time of executing this Agreement, may have materially affected this Agreement or their decision to enter into it. Nevertheless, Mr. ABC and Qwest hereby waive any right, claim, or cause of action that might arise as a result of such different or additional claims or facts. 6. CONTINUING OBLIGATIONS OF MR. ABC: This Agreement shall not supersede any continuing obligations Mr. ABC has under the terms of the Employment Agreement, or any other agreement between Mr. ABC and Qwest, including without limitation the confidentiality provisions of Paragraph 7 of the Employment Agreement. 7. CHOICE OF LAW. This Agreement and the rights and obligations of the parties hereunder shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to principles of conflict of laws. IN WITNESS WHEREOF, Qwest and Mr. ABC, intending to be legally bound, have executed this Agreement on the day and year first above written. QWEST HOLDING CORPORATION By: ___________________________ MR. ABC By: ___________________________ EX-10.3 3 [SP Telecom Letterhead] July 15, 1994 Mr. Robert S. Woodruff 542 Adams Street Denver, CO 80206 Re: Executive Vice President Finance & Chief Financial Officer Dear Bob: This letter formalizes the agreement under which you will join SP Telecom as its Executive Vice President Finance and Chief Financial Officer. It is a complete statement of our agreement and it supersedes all prior documents and discussion between us: 1. DUTIES. You will report to me and your duties will change at my election from time to time, but they generally shall include monitoring the financial viability of the company and keeping me informed of any changes thereto. In addition, you will prepare and maintain all financial reports of the company, including performing the duties of the treasurer. You will be responsible for all banking relationships. In the event external funding is required, you will be responsible for finding the sources for those funds. You will be a member of the senior executive team and you will be expected to provide financial advice and guidance on the strategies and business transactions contemplated by the company. You will perform your duties in accordance with the obligations of a common law employee and officer of the company within applicable ethical standards. 2. TERM; COMPENSATION. The term of your employment shall commence when you report to work. Your report date will be as soon as possible, consistent with your obligations to your current employer, but in no event shall it be later than August 8, 1994, without my approval. Your annual base salary will be $165,000 paid monthly prorated daily in the first month. You will be eligible to participate in the company's bonus plan with a bonus payout potential of up to 30% of base salary paid in 1994, in accordance with the terms of the plan. Your future compensation will be subject to increases at the company's discretion. 3. GROWTH SHARE PLAN. The company plans to adopt a growth share plan which will provide a very real monetary stake in the future economic success of the company. Your participation will be based on parent company performance and you will participate in the plan at your peer group level. 4. VACATION. You will receive 10 vacation days in accordance with company policy, a copy of which you have reviewed. 5. SEVERANCE PAY. In the event your employment is terminated for reasons other than willful misconduct during the first twenty-four months of employment, you shall receive either a lump sum payment equal to six (6) month's pay at your then current rate or payment in accordance with the company's severance policy, at your election. Thereafter, severance pay shall be in accordance with the company's then existing policy. 6. BENEFITS. You will be entitled to participate in the company's other benefit plans such as Medical/Dental, Life Insurance, Accidental Death and Dismemberment, Short-term and Long-term Disability, Sick Leave and 401(k) in accordance with their terms and conditions. 7. MISCELLANEOUS. This Agreement shall be construed and enforced in accordance with the laws of the State of Colorado without giving effect to its principles with respect to choice of law. As used throughout this Agreement, the term "company" shall be deemed to refer to SP Telecom Company. If you agree this letter sets forth our entire understanding and agreement regarding your future employment with the company, please execute two duplicate originals and return one fully executed copy to me. Bob, we look forward to the commencement of your employment with SP Telecom and are genuinely and sincerely excited about our future. Sincerely, /s/ Douglas H. Hanson President ACCEPTED AND AGREED: DATE: __/s/ Robert S. Woodruff_ __7-15-94________________ PROMISSORY NOTE November 20, 1996 $100,000.00 FOR VALUE RECEIVED, Robert S. Woodruff ("Maker") promises to pay to Qwest Communications Corporation, a Delaware corporation ("Payee"), the principal sum of One Hundred Thousand Dollars ($100,000.00), without interest. The amount due hereunder shall be repayable to Payee as follows: 1. Subject to provisions of Paragraph 2 below, the outstanding principal balance shall be automatically reduced by $2,083.33 on December 1, 1996, and further reduced in $2,083.33 increments thereafter on the 1st day of each successive month until and including November 1, 2000, upon which date no principal balance shall remain. 2. Payee shall have the right to declare all the unforgiven outstanding principal balance under this Note due and payable within forty-five (45) days upon, and only upon, either of the following occurrences: a. Maker voluntarily terminates his employment with Payee; or b. Payee lawfully terminates Maker's employment due to Maker's willful misconduct. 3. In the event Maker's employment with Payee is terminated for any reason not listed in Paragraph 2, above, including, without limitation, death or disability, the then outstanding balance shall be automatically forgiven. In any and all events, unless sooner forgiven or called for payment as provided herein, the entire principal balance shall be forgiven and deemed paid on November 1, 2000. All payments shall be made to Payee, in lawful money of the United States, at 555 17th Street, Suite 1000, Denver, Colorado 80202, or such address as may be specified in writing by Payee. No delay or failure by the holder hereof in exercising any right, power, privilege or remedy hereunder shall affect such right, power, privilege or remedy or be deemed to be a waiver of the same. Nor shall any single or partial exercise thereof or any failure to exercise the same in any instance preclude any further or future exercise thereof or any other right, power, privilege or remedy. The rights and privileges provided for hereunder are cumulative and not exclusive. Maker, for himself, his endorsers, sureties and any guarantors, hereby waives demand, presentment, protest, notice of dishonor or nonpayment, notice of protest, and any and all delays or lack of diligence in collection hereof and assents to each and any extension or postponement of the time of payment at or after maturity, or other indulgence, and to any substitution, addition, exchange or release of any collateral securing this Note or the release of any party directly or indirectly liable for payment hereof. This Note may not be assigned by either party. This Note shall be governed by the laws of the State of Colorado. IN WITNESS WHEREOF, Maker has caused this Note to be duly executed on the date first above written. ________/s/______________________ Robert S. Woodruff Qwest Communications R.S. Woodruff Executive Vice President - Finance and Chief Financial Officer Telephone: (303) 291-1440 Fax: (303) 291-1724 MEMORANDUM To: P.F. Anschutz Date:: November 19, 1996 From: Bob Woodruff Subject: Severance Agreement As follow-up to our previous discussions, I would like to document our understanding with regard to severance pay that will be available to me in the event my employment with Qwest Communications Corporation should terminate other than under certain circumstances. My understanding of our agreement is that if my employment with Qwest Communications Corporation is terminated for reasons other than willful misconduct, I shall receive either a lump sum payment equal to one years compensation at my then current rate or payment in accordance with the Company's severance policy in place at that time, at my election. Please sign below indicating your concurrence that this is the severance benefit your are making available to me. Thank you. RSW/pj Concur:_______/s/________________ P.F. Anschutz Date:________12-1-96_____________ EX-10.4 4 SETTLEMENT AGREEMENT, GENERAL RELEASE AND COVENANT NOT TO SUE THIS SETTLEMENT AGREEMENT dated as of November 11, 1996, (the "Agreement") is between Douglas H. Hanson ("Hanson"), Qwest Communications Corporation, a Delaware corporation (Qwest), The Anschutz Corporation and Anschutz Company (collectively "the Parties"). RECITALS A. As of November 11, 1996, Qwest employed Hanson as President and Chief Executive Officer. B. Qwest and Hanson have mutually agreed that it would be in both of their interests to terminate the employment relationship between them. C. In connection with the termination of the employment relationship, Qwest, The Anschutz Corporation, Anschutz Company and Hanson desire to release each other from any and all obligations or legal right either may owe to the other, except for the specific rights identified in this Agreement. D. The entering into this Agreement is not an admission on either party's part of any wrongdoing or actual liability owed to the other. E. It is intended that this Agreement be construed in the broadest possible manner, in accordance with the parties' express intention that all disputes between them arising out of or in any way connected to Hanson's employment with Qwest be forever resolved. This includes all potential and actual claims under both federal and state law and under the company benefit plans including the Qwest Growth Share Plan. Hanson shall retain no rights with respect to his employment except for any rights he may have under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and any rights specifically granted by this Agreement. THEREFORE, in consideration of the mutual promises, covenants and other considerations set forth below, Hanson and Qwest agree as follows: AGREEMENT 1. Consideration. In consideration for Hanson's resignation of employment, the confidentiality provisions, the non- compete provisions, the releases and other agreements set forth in this Agreement, Qwest agrees to pay Hanson or to his heirs, assigns, beneficiaries, trustees or other person designated by him in writing the following: (a) The sum of $9,000,000, payable in three equal installments as follows: (i) On January 2, 1997, Qwest shall pay to Hanson the sum of $3,000,000, less normal and customary deductions for income, employment and other tax withholding, as determined by Qwest; (ii) The balance of 6,000,000 shall be payable in two equal installments of $3,000,000 plus accrued interest at the annual rate of 6% on January 2, 1998 and January 2, 1999. Qwest, in its sole discretion, may elect upon 90 days notice in writing to prepay any outstanding balance owing at any time. All amounts payable under this paragraph shall be subject to normal income, employment and other tax withholding, as determined by Qwest. (iii) The payments set forth in subparagraphs (i) and (ii) above shall be unconditionally guaranteed by Anschutz Company in the form attached hereto as Exhibit A. (b) Qwest shall continue to provide Hanson with the health, disability and life insurance coverage currently applicable to him, or comparable coverage, for a period of one year, to and including November 10, 1997. If, however, Hanson receives any health, disability or life insurance coverage from any other source prior to November 10, 1997, Qwest's obligation to continue these benefits to November 1, 1997, shall terminate. (c) Hanson shall be entitled to purchase the Jeep Cherokee automobile currently leased by Qwest for his use at the buyout price set forth in the lease agreement. Hanson shall be responsible for all maintenance and insurance on the vehicle beginning November 11, 1996. (d) Qwest shall transfer ownership of Hanson's home office computer, facsimile machine and copying machine to him, provided that Qwest shall first remove from the computer memory and hard drive all confidential or proprietary information and all licensed software as determined necessary by Qwest. 2. Resignation. Hanson hereby resigns his employment with Qwest effective as of November 11, 1996. 3. Employment Benefits. Upon execution of this Agreement, Qwest shall pay Hanson the sum of $119,420 for his accrued but unused vacation time as of November 8, 1996, less normal and customary deductions for income, employment and other tax withholding. Hanson shall retain any rights he may have under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). 4. Non-competition. Hanson agrees that for a period of 36 months from the date of this Agreement, Hanson shall not directly or indirectly own, manage, operate, control, be employed by, participate in, consult for, advise others with respect to or be connected in any manner with the ownership of any business that has services, products or research activities directly competitive with Qwest in the construction and sale of fiber optic cable systems. Hanson further agrees that in furtherance of his obligations of this paragraph he shall not solicit or contact in any manner, with respect to the business of constructing and selling fiber optic cable systems, customers of Qwest or any persons or entities that have been identified as potential customers of Qwest during the twelve months prior the date of this Agreement. This paragraph shall not preclude Hanson from holding a stock interest not to exceed five percent of the total outstanding shares of the class or classes of stock owned by Hanson in any corporation which is a direct competitor of Qwest in the construction and sale of fiber optic cable systems. For purposes of this paragraph only, stock nominally or beneficially owned by Hanson's wife, children or parents shall be deemed to be owned by Hanson. In the event that a court should find this paragraph to be overly broad and therefore unenforceable, the court shall modify this paragraph to reflect the maximum restraint allowable, and shall then enforce the paragraph, as so modified. Hanson represents that as of the date of this Agreement he is not currently engaged in any activity or ownership of any stock that would violate the provisions of this paragraph. 5. Promissory Note. The undersigned Parties agree that all amounts due and owing or to become due and owing under the promissory note executed by Hanson in favor of The Anschutz Corporation be and are hereby forgiven and extinguished and the mortgage and deed of trust securing the promissory note is fully and finally released by The Anschutz Corporation. 6. Confidential Information and Trade Secrets. Hanson acknowledges that during his employment with Qwest he has gained knowledge of and access to substantial nonpublic proprietary and confidential information relating to Qwest's methods of doing business, technology, clients, training methods and other matters, all of which have substantial value to Qwest and would be valuable to any competitor of Qwest's. For purpose of this paragraph, "Confidential Information" means all information that was disclosed to Hanson or that he acquired in whole or in part as a result of his employment with Qwest, unless such information has clearly come into the public domain. Hanson agrees that for 36 months following the date of this Agreement he shall not disclose to anyone outside of Qwest, or use directly or indirectly, any Confidential Information in connection with the construction and sale of fiber optic cable systems, and that for six months following the date of this Agreement he shall not disclose to anyone outside of Qwest, or use directly or indirectly, any other Confidential Information that would adversely affect Qwest or its business, except in either case with Qwest's prior written permission, which Qwest may withhold in its sole discretion. Hanson represents that, as of the effective date of this Agreement, he has surrendered to Qwest all written material, including electronic or computer compilations and data, and duplicates thereof in his possession or control containing, reflecting or alluding to Confidential Information. 7. Specific Release of Claims under Growth Share Plan. Hanson specifically and knowingly waives and releases any and all rights he has or may have under the Qwest Holding Corporation Growth Share Plan, as amended effective May 1,1996, and formerly know as the Southern Pacific Telecommunications Company Growth Share Plan (the "Growth Share Plan") and the Southern Pacific Telecommunications Company Growth Share Plan Agreement dated December 22, 1994, between Hanson and Southern Pacific Telecommunications Company. Hanson and Qwest recognize that the value of any rights Hanson may have under the Growth Share Plan may materially increase or decrease at any time after the execution of this Agreement. By executing this Agreement, Hanson acknowledges that he is releasing all rights to any such increased or decreased value and the rights he may otherwise have under the Growth Share Plan, including the rights under Section 8.8 of the Growth Share Plan. The inclusion of the specific release in this Paragraph 7 is not intended to limit, and shall not be deemed to have limited, the general release of Paragraph 8 below. 8. Mutual General Release. Except as specifically provided herein to the contrary, Hanson, for himself, his heirs, his personal representatives, assigns, and attorneys, and Qwest, for itself, its present and future affiliates and subsidiaries, including but not limited to Anschutz Company and The Anschutz Corporation, and each of their past, present, and future officers, directors, employees, shareholders, independent contractors, insurers, agents, representatives, assigns and attorneys, mutually release and discharge the other, the other's heirs, personal representatives, assigns, present and future affiliates and subsidiaries, past, present, and future officers, directors, employees, shareholders, independent contractors, attorneys, insurers, and any and all other persons or entities that are now or may become liable to the other due to the acts or omissions of either Hanson or Qwest, of and from any and all actions, causes of actions, claims, demands, costs and expenses, including attorneys' fees, of every kind and nature whatsoever, in law or in equity, whether now known or unknown, that either of them, or any person acting under any of them, may now have, or claim at any future time to have, based in whole or in part upon any act or omission occurring prior to the effective date of this Agreement without regard to present actual knowledge of such acts or omissions, including specifically, but not by way of limitation, matters which may arise at common law, such as breach of contract, expressed or implied, promissory estoppel, wrongful discharge, tortious interference with contractual rights, infliction of emotional distress, defamation, or under Federal, State or Local Laws, such as, but not necessarily limited to the Fair Labor Standards Act, the Employee Retirement Income Security Act, the National Labor Relations Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination and Employment Act, the Rehabilitation Act of 1973, the Equal Pay Act, the Americans With Disabilities Act, and the Colorado Civil Rights Act. 9. Covenant Not to Sue. Hanson, Qwest, Anschutz Company, The Anschutz Corporation, and any affiliate each covenant with the other never to institute or participate in any administrative proceeding, suit or action, at law or in equity, against each other by reason of any claim released in this Agreement. 10. Denial of Liability. Hanson and Qwest each understand and agree that this Agreement shall not be construed as an admission of liability on the part of any person, firm, corporation, or other entity released, liability being expressly denied. 11. References. Hanson expressly assumes all risk associated with listing any past or present Qwest employee, or Qwest, The Anschutz Corporation, Anschutz Company or any of their employees, as a reference in connection with Hanson's pursuit of future employment. Hanson agrees that Qwest, The Anschutz Corporation, Anschutz Company or any of its employees or affiliates who Hanson lists as a reference shall in response to any request for a reference concerning Hanson be permitted to provide complete, truthful and accurate information concerning Hanson without creating any liability for himself or herself, Qwest, The Anschutz Corporation, Anschutz Company, any affiliated entity, or any employee, agent or representative of any of the foregoing. 12. Covenant of Nondisparagement. Hanson covenants never to disparage or speak ill of Qwest, Anschutz Company, The Anschutz Corporation or any of their products, services, affiliates, subsidiaries, officers, directors, employees or shareholders. Philip F. Anschutz shall not, and Qwest, The Anschutz Corporation and Anschutz Company will take reasonable steps to prevent and will not knowingly permit any of their respective employees or agents to, disparage or speak ill of Hanson, provided that responses to requests for references that may be made without liability pursuant to Paragraph 11 shall not constitute a violation of this paragraph. 13. Confidentiality. Hanson agrees that he shall not divulge, disclose, or make available in any manner, or to any person or entity, other than his legal counsel, financial adviser or spouse, the terms of this Agreement, except to the extent necessary for the payment of federal and state income taxes, if any. Qwest, Anschutz Company and The Anschutz Corporation agree that neither they nor any of their officers, employees, directors or affiliates shall divulge, disclose, or make available in any manner, or to any person or entity, other than their legal counsel, financial advisors and accountants, the terms of this Agreement, except to the extent necessary for the withholding of federal and state income and other taxes or as otherwise may be required by law. If any Party hereto makes a disclosure in violation of this paragraph, the other Party or Parties, in addition to any other remedies available at law or in equity, shall be entitled to disclose such previously disclosed information as may be reasonably necessary. 14. Nonreliance. The undersigned Parties agree that they expressly assume all risk that the facts or law may be, or become, different that the facts or law as presently believed by the them. Hanson, Qwest, Anschutz Company and The Anschutz Corporation expressly disclaim all reliance upon, and prospectively waive any fraud, misrepresentation, negligence or other claim based on information supplied by the other party, in any way relating to the subject matter of this Agreement, including specifically but not by way of limitation, information relating to the value of any rights Hanson may have under the Growth Share Plan. 15. Governing Law. This Agreement shall governed by the laws of the state of Colorado and may be enforced in any court of competent jurisdiction. 16. Signatures. By their signatures below, each party to this Agreement represents that he or it has read this Agreement in full, has voluntarily entered into this Agreement upon advice of legal counsel, or with the full opportunity to consult legal counsel, agrees that it is in his or its best interest to enter into this Agreement, agrees that he or it believes that this Agreement represents a fair and reasonable resolution of the differences between the parties and agrees to all of the terms and conditions specified in this Agreement. 17. Entire Agreement. This Agreement represents the entire agreement between the parties, and this Agreement may not be modified or otherwise amended without a document, in writing, subscribed to by each of the parties. DATED this 13th day of November, 1996. DOUGLAS H. HANSON /s/_____________________________________ QWEST COMMUNICATIONS CORPORATION By:/s/__________________________________ Authorized Agent/Representative THE ANSCHUTZ CORPORATION By:/s/__________________________________ Authorized Agent/Representative ANSCHUTZ COMPANY By:/s/__________________________________ Authorized Agent/Representative GUARANTY This GUARANTY, dated as of November 13, 1996, is from ANSCHUTZ COMPANY, a Delaware corporation (hereafter called "Guarantor"), to and for the benefit of DOUGLAS H. HANSON (hereafter called "Hanson"). Recital QWEST COMMUNICATIONS CORPORATION (hereafter called "QWEST"), a wholly-owned subsidiary of Guarantor, entered into a Settlement Agreement, General Release and Covenant Not to Sue dated as of November 11, 1996, by and between QWEST and Hanson (the "Agreement"). Hanson would not have entered into the Agreement except for the execution and delivery of this Guaranty. Agreement NOW, THEREFORE, as a material inducement to Hanson to enter into the Agreement with QWEST and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor and Hanson hereby agree as follows: 1. Guaranty. Guarantor hereby unconditionally and irrevocably guaranties to Hanson the full and punctual payment of the amounts payable by QWEST to Hanson under paragraph 1(a) of the Agreement (such payment obligations are collectively referred to as the "Obligations"). 2. Unconditional Obligations. Guarantor understands and agrees that this Guaranty is direct, immediate, absolute, continuing, unconditional and unlimited (except as provided in Section 12), and is a guaranty of payment and not of collection. If QWEST shall fail to pay or perform any of the Obligations, Guarantor shall pay, forthwith upon demand, to Hanson or to Hanson's designated agent, any and all such amounts as may be due and owning from QWEST to Hanson. 3. Guarantor's Waivers. Guarantor waives: (a) notice of the creation or extension of any Obligation by QWEST; (b) notice that QWEST has taken or omitted to take any action under the Agreement or any other instrument relating thereto or relating to any Obligation; (c) notice of acceptance of this Guaranty; (d) demand, presentation for payment and notice of demand, nonpayment or nonperformance; (e) any and all right to participate in any security held by Hanson now or in the future; (f) the right to require Hanson to (i) proceed against QWEST, (ii) proceed against or exhaust any security which Hanson now holds or may hold in the future from QWEST; (iii) pursue any other right or remedy available to Hanson, or (iv) have the property of QWEST first applied to the discharge of the Obligations; and (g) any defense by reason of bankruptcy, reorganization, discharge by the filing of bankruptcy or discharge in bankruptcy of QWEST. Guarantor further agrees that the Guaranty will not be discharged and shall remain in full force and effect until full payment and performance of all Obligations of QWEST and the liabilities of Guarantor hereunder. 4. Guarantor's Representations and Warrants. Guarantor represents and warrants that Guarantor has a financial interest in QWEST. 5. Consent. Guarantor understands and consents that from time to time, and without further notice to or consent of Guarantor, Hanson may take any or all of the following actions without releasing, discharging or in any way affecting the obligations of Guarantor under this Guaranty: (a) extend, renew, modify, compromise, settle, or release the Obligations; (b) any modification or amendment of or supplement to the Agreement; (c) release or compromise any liability of any party or parties with respect to the Obligations; or (d) exercise or refrain from exercising any right or remedy of Hanson under the Agreement. 6. Delay in Enforcement. Guarantor understands and agrees that any failure or delay of Hanson to enforce any of its rights under the Agreement or this Guaranty shall in no way affect Guarantor's obligations under this Guaranty. 7. Notices. Notices to Guarantor are not required under this Guaranty. However, if notice is delivered, unless otherwise provided herein, it shall be hand delivered, sent by registered or certified U.S. mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to Guarantor when received at the address set forth after the signature line below, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery service, or three (3) days after deposit in the mail when sent by U.S. mail. 8. Severability. In case any provision of this Guaranty shall be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Guaranty and the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9. Applicable Law and Jurisdiction. This Guaranty and the rights and obligations of the parties hereto shall be governed by and construed and enforced in accordance with the laws of the state of Colorado. Guarantor agrees that the exclusive venue for any actions related to this Guaranty shall be the federal district court of Colorado. 10. Amendments. No amendment, modification or alteration of this Guaranty shall be effective unless in writing and signed by the parties hereto or their respective successors or assigns. 11. Successors and Assigns. This Guaranty shall be binding upon and shall inure to the benefit of the successors permitted and assigns of the parties hereto. 12. Limited Maximum Liability. Notwithstanding anything contained herein to the contrary, the liability of Guarantor for the payment of the Obligations shall be limited to the aggregate sum of $9,000,000. THIS GUARANTY IS FREELY AND VOLUNTARILY GIVEN WITHOUT ANY DURESS OR COERCION AND AFTER GUARANTOR HAS EITHER CONSULTED WITH COUNSEL, OR HAS BEEN GIVEN AN OPPORTUNITY TO DO SO, AND GUARANTOR HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THE AGREEMENT AND THIS GUARANTY. IN WITNESS WHEREOF, this Guaranty has been executed as of the date first above written. GUARANTOR: ANSCHUTZ COMPANY, a Delaware corporation /s/_____________________________________ By: Craig D. Slater Title: Vice President Guarantor's Address: 2400 Anaconda Tower 555 Seventeenth Street Denver, Colorado 80202 Attn.: President EX-10.5 5 Exhibit 10.5 CONFIDENTIAL AND PROPRIETARY EXECUTION FORM - ------------------------------ ------------ - - ----------------------------------------------------------------------------- IRU AGREEMENT DATED AS OF OCTOBER 18, 1996 BY AND BETWEEN QWEST COMMUNICATIONS CORPORATION ("QWEST") AND FRONTIER COMMUNICATIONS INTERNATIONAL INC. ("FRONTIER") - - ----------------------------------------------------------------------------- TABLE OF CONTENTS Page ---- RECITALS........................................................ 1 ARTICLE I. GRANT OF IRU IN QWEST SYSTEM........................ 1 ARTICLE II. CONSIDERATION FOR GRANT............................ 7 ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM.................. 11 ARTICLE IV. ACCEPTANCE AND TESTING OF FRONTIER FIBERS.......... 13 ARTICLE V. DOCUMENTATION....................................... 14 ARTICLE VI. TERM............................................... 14 ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES........... 16 ARTICLE VIII. OPERATIONS....................................... 19 ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM......... 20 ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION.............. 20 ARTICLE XI. USE OF QWEST SYSTEM................................ 23 ARTICLE XII. INDEMNIFICATION................................... 26 ARTICLE XIII. LIMITATION OF LIABILITY.......................... 28 ARTICLE XIV. INSURANCE......................................... 28 ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS..... 30 ARTICLE XVI. NOTICE............................................ 34 ARTICLE XVII. CONFIDENTIALITY.................................. 36 ARTICLE XVIII. DEFAULT......................................... 37 ARTICLE XIX. TERMINATION....................................... 42 ARTICLE XX. FORCE MAJEURE...................................... 42 ARTICLE XXI. DISPUTE RESOLUTION................................ 43 ARTICLE XXII. WAIVER........................................... 45 ARTICLE XXIII. GOVERNING LAW................................... 45 ARTICLE XXIV. RULES OF CONSTRUCTION............................ 46 ARTICLE XXV. ASSIGNMENT AND DARK FIBER TRANSFERS............... 46 ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS.. 50 ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT..................... 52 ARTICLE XXVIII. NO PERSONAL LIABILITY.......................... 52 ARTICLE XXIX. RELATIONSHIP OF THE PARTIES...................... 53 ARTICLE XXX. LATE PAYMENTS..................................... 53 ARTICLE XXXI. SEVERABILITY..................................... 53 ARTICLE XXXII. COUNTERPARTS.................................... 53 ARTICLE XXXIII. CERTAIN DEFINITIONS............................ 54 EXHIBITS Exhibit A: QWEST System Description Exhibit A-1: QWEST System Description and Delivery Dates Exhibit A-2: General Route Map Exhibit A-3: Basic and Optional Detailed Route Maps Exhibit A-4: Designated Endpoint and Intermediate Point Cities Exhibit B: IRU Fee Payment Schedule Exhibit C: Construction Specifications Exhibit D: Fiber Cable Splicing, Testing, and Acceptance Procedures Exhibit E: Fiber Specifications Exhibit E-1: Fiber Deployment Diagram Exhibit F: Specifications for Regeneration Facilities Exhibit G: Regeneration Facility Sites Exhibit G-1: Temporary Space within Certain QWEST Facilities Exhibit H: QWEST System Maintenance Specifications and Procedures Exhibit I: Form of Surety Bond Exhibit J: Underlying Rights and Underlying Rights Requirements Exhibit K: Form of Frontier Corporation Guaranty Exhibit L: Form of Anschutz Guaranty IRU AGREEMENT THIS IRU AGREEMENT (this "Agreement") is made and entered into as of October 18, 1996, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware corporation ("QWEST"), and FRONTIER COMMUNICATIONS INTERNATIONAL INC. a Delaware corporation ("FRONTIER"). RECITALS -------- A. QWEST is planning to construct a continuous fiberoptic communication system, contiguous from end to end, as described in Exhibit A hereto as the "Basic Route," and between each of the city pairs identified in Exhibit A-1 hereto under the caption "Basic Route" (the fiberoptic communication system between each such city pair being referred to as a "Basic Segment"), and may elect to construct a continuation of such fiberoptic communication system along the routes described in Exhibit A hereto as the "Option 1 Route," "Option 1A Route" and the "Option 2 Route" (collectively, the "Optional Routes"), and between each of the city pairs identified in Exhibit A-1 hereto under the captions "Option 1 Route," "Option 1A Route" and "Option 2 Route" (the fiberoptic communication system between each such city pair being referred to as an "Optional Segment") (the Basic Segments, together with such of the Optional Segments, if any, that QWEST elects to construct hereunder, being referred to herein collectively as the "QWEST System"). B. FRONTIER desires to be granted the right to use (or, if and to the extent provided in Section 1.5 hereof, to own) certain optical fibers in the QWEST System. C. QWEST desires to grant FRONTIER an exclusive, indefeasible right to use (or, if and to the extent provided in Section 1.5 hereof, to convey title to) certain fibers and associated property in the QWEST System, all upon the terms and conditions set forth below. Accordingly, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I. GRANT OF IRU IN QWEST SYSTEM ---------------------------- 1.1 (a) Effective as of the effective date described in Section 6.1 below, for each particular Segment (as defined below in this Section 1.1) delivered by QWEST to FRONTIER hereunder and with respect to which an Acceptance Date (as defined in Section 4.2 below) has occurred, QWEST hereby grants to FRONTIER, and FRONTIER hereby purchases from QWEST, (i) an exclusive, Indefeasible Right of Use (as defined in Section 33.1(f)) (or, if and to the extent provided in Section 1.5 hereof, ownership) in, for the purposes described herein, twenty-four (24) (or, if and to the extent that FRONTIER timely exercises the options described in Section below, forty-eight (48)) "Dark Fibers" (as defined in Section 33.1(c)) to be specifically identified, in the QWEST System (A) in the Basic Segments and along the Basic Route more specifically described in the maps included in Exhibit A-3 hereto; and (B) if, pursuant to Section 1.3, QWEST elects, in its discretion, to construct either of Option Route 1 or Option Route 1A, and/or Option Route 2, or FRONTIER elects, in its discretion, to require QWEST to construct Option Route 1, in any case as identified in Exhibit A (and along the Option 1, Option 1A and Option 2 Routes more specifically described in the maps included in Exhibit A-3 hereto), in the Optional Segments included in any such Optional Routes so elected to be constructed, and (ii) an associated and non-exclusive Indefeasible Right of Use, for the purposes described herein, in the tangible and intangible property needed for the use of such Dark Fibers as Dark Fibers, including, but not limited to, the associated conduit, QWEST's rights in all "Underlying Rights" (as defined in Section 10.1) and, to the extent provided in Article VII herein, associated Regeneration Facilities (as defined in Section 7.2), but in any event excluding any electronic or optronic equipment (collectively, the "Associated Property"), for the Term (as defined in Section 6.1) respecting such Basic Segment or Optional Segment, and all on the terms and subject to the covenants and conditions set forth herein (collectively, the "IRUs"). The Dark Fibers subject to the IRUs are referred to collectively as the "FRONTIER Fibers." The Basic Segments, together with such of the Optional Segments, if any, that QWEST elects or is required to construct pursuant to Section 1.3 are referred to herein collectively as the "Segments." The Basic Route, together with such of the Optional Routes, if any, that QWEST elects or is required to construct pursuant to Section 1.3 are referred to herein collectively as the "System Route." (b) The parties acknowledge and agree that the specific route of any Segment that has not been finally designed or engineered, or with respect to which a right-of-way agreement has not been obtained as of the date hereof is subject to final determination by QWEST, based on specific engineering, right- of-way, permitting, authorization and other requirements; provided, however, ------------------ that (i) any such Segment route, as finally determined, must include all of the endpoint and intermediate point cities identified in Exhibit A-4 and all of the junction points identified in the System Route maps included in Exhibit A; (ii) no deviation in the route of any Segment as set forth in the maps included in Exhibit A-3 shall result in a Material Deviation (as defined below) in the System Route as set forth in Exhibit A, and (iii) once the final route of any Segment has been so determined, QWEST shall deliver to FRONTIER corresponding revisions to the relevant maps included in Exhibit A hereto. As used herein, the term "Material Deviation" shall mean a deviation in the general route of a Segment (A) that modifies the System Route architecture in a manner that breaks a ring, creates a spur or breaks the contiguous nature of Segments; (B) that modifies the route of the System Route through any city, identified in Exhibit A-3 as being the location of a FRONTIER POP site, from the detailed route map shown in Exhibit A-3 for such city in a manner that materially changes the proximity of such POP site to the System Route right-of- way (provided that, if any such detailed city map shows that the POP site is in direct proximity to the System Route right-of-way, any route modification which does not provide such direct proximity shall be considered a material change in proximity); (C) that modifies the route of the System Route through any city, as set forth in the detailed route map for such city set forth in Exhibit A-3, such that the location of the route at any point would be moved more than 1,200 feet in any direction, without the prior written approval of FRONTIER (such approval not to be unreasonably withheld or delayed); or (D) that modifies any parallel route shown within any city that is the subject of a detailed map included in Exhibit A-3 such that the distance between such parallel routes is less than 1,200 feet outside metropolitan areas and less than two city blocks within metropolitan areas. (c) If any deviation(s) in the routes of Segments (i) comprising the Basic Route and Option Route 1 cause(s) the aggregate route miles as reflected in Exhibit A estimated for the Basic Route and Option Route 1 taken together to increase by more than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) of such aggregate estimate or (ii) comprising Option Route 1A and/or Option Route 2 cause(s) the route miles as reflected in Exhibit A estimated for Option 1A and/or Option Route 2 taken separately to increase by more than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) of such estimate, then in each case under the foregoing clause (i) and clause (ii) such mileage shall be solely at QWEST's cost and expense and any route mileage in excess of the applicable ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) increase as aforesaid shall not be included in the route mileage for purposes of determining or redetermining the IRU Fee as defined and described in Section 2.1 below. 1.2 With respect to Segments 12A, 12B, 12C, 12D and 16, the parties acknowledge that (i) QWEST has represented that the conduit and Cable comprising such Segments have been constructed and installed as of the date hereof, and that only the regeneration and other technical facilities required to be provided with respect to each such Segment pursuant to Article VII remains to be constructed and installed, (ii) FRONTIER desires to use the FRONTIER Fibers in the Cable comprising each such Segment pending delivery of such facilities, and (iii) the Cable comprising such Segments currently is routed through such facilities of QWEST. Accordingly, with respect to Segments 12A, 12B, 12C, 12D and 16, the parties agree that notwithstanding any provisions of this Agreement to the contrary: (a) Promptly following execution of this Agreement, the Fiber Acceptance Testing procedures set forth in Article IV shall take place with respect to each such Segment, as the FRONTIER Fibers currently are routed through the QWEST facilities and, upon satisfactory completion thereof with respect to each such Segment in accordance with Article IV, the Acceptance Date with respect to such Segment shall occur. Upon such Acceptance Date, payment of an additional ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the IRU Fee with respect to such Segment shall be due and payable by FRONTIER. (b) Upon receipt of such payment, the IRUs with respect to the relevant Segment, other than the IRU in the Associated Property required to be delivered pursuant to Section 7.2, shall become effective. Thereupon, FRONTIER may temporarily install in the space within certain QWEST facilities described in Exhibit G-1 hereto, such electronic, optronic and other equipment as shall be necessary to operate the FRONTIER Fibers in such Segment; provided that such installation is done consistent with QWEST's co-location - ------------- policies and procedures substantially as set forth in the form of co-location agreement, a copy of which has been provided to and accepted by FRONTIER. (c) The Associated Property required to be delivered pursuant to Section 7.2 shall be delivered in accordance with the requirements of Section 3.2 with respect to each such Segment. The parties agree to cause their respective appropriate technical personnel to discuss and agree, in good faith, upon the procedures by which, upon such delivery, (i) the FRONTIER Fibers comprising such Segments shall be rerouted, at QWEST's cost and expense, in the Regeneration Facilities (or POPs or terminal facilities) required to be provided pursuant to Article VII, and (ii) tested, at QWEST's cost and expense, to confirm that, as rerouted, the FRONTIER Fibers continue to operate in conformity with the Fiber Acceptance Testing specifications set forth in Exhibit D and the procedures set forth in Article IV. (d) Upon the delivery of such Associated Property, the rerouting of the FRONTIER Fibers therein, and the confirmed testing described in Section 1.3(c)(ii), the remaining ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) of the IRU Fee with respect to each such Segment shall be due and payable by FRONTIER. Upon receipt of such payment, the IRU with respect to such Associated Property for such Segment shall become effective. 1.3 (a) Until 5:00 p.m. Eastern Standard (or Daylight, as applicable) Time on the date that is one hundred eighty (180) days after the date hereof (the "Option Period") (i) QWEST shall have the right to elect to construct and (ii) FRONTIER shall have the right to elect to require QWEST to construct, Option Route 1. Either party desiring to exercise such right shall notify the other in writing by such time and date whether or not it will construct or require the construction of Option Route 1. Failure of QWEST to notify FRONTIER of QWEST's election as to Option Route 1 as provided herein shall be deemed an election by QWEST not to undertake to construct Option Route 1, and failure of FRONTIER to notify QWEST of FRONTIER's election as to Option Route 1 as provided herein shall be deemed an election by FRONTIER not to require that QWEST construct Option Route 1. If neither QWEST nor FRONTIER timely exercises its right to construct or require the construction of Option Route 1 as provided herein, then, until 5:00 p.m. Eastern Standard (or Daylight, as applicable) Time on the day that is five (5) days following the last day of the Option Period, QWEST shall have the right to elect to construct Option Route 1A. QWEST shall notify FRONTIER in writing by such time and date whether or not it will construct Option Route 1A. Failure of QWEST to notify FRONTIER of QWEST's election as to Option Route 1A as provided herein shall be deemed an election by QWEST not to construct Option Route 1A. (b) QWEST shall have until 5:00 p.m. Eastern Standard (or Daylight, as applicable) Time on the last day of the Option Period to elect whether or not it will construct Option Route 2 as provided herein. QWEST shall notify FRONTIER in writing by such time and date whether or not it will construct Option Route 2 as provided herein. Failure of QWEST to timely notify FRONTIER of QWEST's election as to Option Route 2 as provided herein shall be deemed an election by QWEST not to undertake to construct Option Route 2 as provided herein. (c) The election or deemed election by QWEST not to construct any of the Optional Routes as provided herein shall not affect its obligations or rights with respect to the other Optional Routes or any of the Basic Segments and, from and after any such election or deemed election, neither party shall have any further rights or obligations with respect to such Optional Route hereunder. (d) From the date hereof until the expiration of the parties' rights under this Section 1.3, FRONTIER shall not enter into any agreement (oral or written) or initiate discussions or negotiations with any third party with respect to its acquisition of an alternative Dark Fiber system along the same or similar routes as any of the Optional Routes, and FRONTIER shall not engage in discussions with any third party who may initiate the same without prior notice to QWEST of the identity of such third party given promptly after such initiation by such third party and prior to FRONTIER's engaging in such discussions with such third party, and if FRONTIER engages in such discussions as aforesaid then FRONTIER shall keep QWEST informed generally of the material proposed terms and material changes to such terms with respect to such discussions relating to an acquisition by such third party of an alternative Dark Fiber system along the same or similar routes as any of the Optional Routes. If QWEST timely exercises its option hereunder to construct any of the Optional Routes or if FRONTIER timely exercises its right to require the construction of Option Route 1, in any such case as provided herein, then FRONTIER and QWEST shall be obligated to observe and perform their respective obligations hereunder with respect to such Optional Route, all on the terms and subject to the conditions set forth herein. 1.4 (a) FRONTIER shall have an option (the "System Fiber Option"), exercisable until 5:00 p.m. Eastern Standard (or Daylight, as applicable) Time on the date that is one hundred eighty-six (186) days after the date hereof (the "System Option Exercise Date"), to elect to increase the number of Dark Fibers subject to the IRU in the entire QWEST System to be delivered hereunder (including the Optional Segments, if and to the extent QWEST elects to construct the Optional Routes or is required to construct Option Route 1 pursuant to Section 1.3 hereof) from twenty-four (24) to forty-eighty (48) Dark Fibers (such additional twenty-four (24) Dark Fibers being referred to as the "Optional System Dark Fibers"), by delivering written notice of such election to QWEST by such time and date. If FRONTIER timely exercises the System Fiber Option, the IRU Fee with respect to all Segments shall be redetermined as described in Section 2.1(b) below. (ii) If, prior to the System Option Exercise Date, QWEST enters into an agreement with the party (or the successor in interest of such party or a subsidiary of such party) with whom QWEST and FRONTIER previously have engaged in extensive discussions concerning the provision by QWEST of a forty-eight (48) Dark Fiber system along the QWEST System (the "Third Party"), pursuant to which QWEST grants to the Third Party an IRU in twenty-four (24) Dark Fibers along some or all of the QWEST System, QWEST shall promptly notify FRONTIER thereof. In such event, FRONTIER may, at its election and at its sole discretion, at any time on or before the Option Exercise Date (A) if the Third Party acquires Dark Fibers along the entire QWEST System, elect to cancel the System Fiber Option in its entirety, in consideration for which the IRU Fee for all Segments shall be redetermined as described in Section 2.1(c) below, (B) if the Third Party acquires Dark Fibers in Segments comprising less than all of the QWEST System, elect to exercise the System Fiber Option only with respect to the Segments not so acquired by the Third Party and to cancel the System Fiber Option with respect to the Segments acquired by the Third Party, in consideration for which the IRU Fee with respect to all Segments shall be redetermined as described in Section 2.1(d) below, or (C) in any event, elect to exercise the System Fiber Option in its entirety pursuant to Section 1.4(a)(i), unaffected by QWEST's transaction with the Third Party. (iii) Failure of FRONTIER to timely notify QWEST of FRONTIER's election to exercise the System Fiber Option in whole or, as permitted, in part, as provided herein, shall be deemed an election by FRONTIER not to exercise the System Fiber Option. The election or deemed election of FRONTIER not to exercise the System Fiber Option shall not affect either party's rights or obligations with respect to the twenty-four (24) Dark Fiber QWEST System to be provided hereunder and, from and after any such election or deemed election, neither party shall have any further rights or obligations with respect to the Optional System Dark Fibers hereunder. (b) FRONTIER shall have an option (the "Sacramento/Seattle Fiber Option"), exercisable until 5:00 p.m. Eastern Standard (or Daylight, as applicable) Time on the date that is thirty (30) days after the date hereof, to elect to increase the number of Dark Fibers subject to the IRU in the Segments between the cities of Sacramento, California and Seattle, Washington identified in Exhibit A (the "Sacramento/Seattle Segments") from twenty-four (24) to forty-eight (48) Dark Fibers (such additional twenty-four (24) Dark Fibers being referred to as the "Optional Sacramento/Seattle Dark Fibers"), by delivering written notice of such election to QWEST by such time and date. If FRONTIER timely exercises the Sacramento/Seattle Fiber Option, the IRU Fee with respect to the Sacramento/Seattle Segments shall be redetermined as described in Section 2.1(e) below. Notwithstanding the foregoing, FRONTIER acknowledges that the Sacramento/Seattle Fiber Option is not to be redundant of the System Fiber Option and, accordingly, (i) the Sacramento/Seattle Fiber Option automatically shall be canceled if FRONTIER exercises the System Fiber Option or cancels the System Fiber Option pursuant to Section 1.4(a)(ii), and (ii) the maximum number of Dark Fibers deliverable by QWEST to FRONTIER with respect to either or both of the Sacramento/Seattle Fiber Option and the System Fiber Option shall not exceed forty-eight (48) Dark Fibers along the applicable route. Failure of FRONTIER to timely notify QWEST of FRONTIER's election to exercise the Sacramento/Seattle Fiber Option as provided herein shall be deemed an election by FRONTIER not to exercise the Sacramento/Seattle Fiber Option. The election or deemed election of FRONTIER not to exercise the Sacramento/Seattle Fiber Option shall not affect either party's rights or obligations with respect to the twenty-four (24) Dark Fibers in the Sacramento/Seattle Segments to be provided hereunder and, from and after any such election or deemed election, neither party shall have any further rights or obligations with respect to the Optional Sacramento/Seattle Dark Fibers hereunder. 1.5 Notwithstanding anything contained herein to the contrary: (a) if and to the extent allowed by the Underlying Right(s) for a particular Segment, and (b) if the Underlying Right(s) with respect to such Segment do not and will not impose upon QWEST any additional fees, costs or charges as a result thereof (unless FRONTIER shall pay the same or make arrangements satisfactory to QWEST to assure such payment), QWEST shall, upon the request of FRONTIER and on a Segment-by-Segment basis on or before the Acceptance Date with respect to such Segment: (i) grant a non-exclusive sub-easement, sub-right of way, or sub- underlying right (collectively a "Sub-Easement") to FRONTIER providing rights (but, subject to the foregoing clause (b) of this Section 1.5 above, at no additional cost to or monetary obligations of FRONTIER) to FRONTIER similar to the rights held by QWEST under the relevant Underlying Right(s), and (ii) transfer title to the Frontier Fibers to FRONTIER free and clear of all liens as provided in Section 11.4 hereof, and (iii) continue the grant of the IRU in the Associated Property. Nothing in this Section 1.5 shall relieve QWEST or FRONTIER of its (nor, except and only to the extent of the change in the nature of the property interest of FRONTIER in the FRONTIER Fibers or a Sub-Easement, or the case may be, diminish, enlarge or otherwise affect its) rights, duties and obligations set forth in this Agreement and if any Sub-Easement shall terminate or FRONTIER shall be otherwise prohibited from owning title to the Frontier Fibers, QWEST shall retain, maintain or replace the relevant Underlying Right in accordance with and pursuant to Article X, title to such Frontier Fibers shall revert and be reconveyed to QWEST and FRONTIER shall have and retain the IRU in such Frontier Fibers under and subject to the terms and conditions of this Agreement. If a Sub-Easement is granted or title to the FRONTIER Fibers transferred to FRONTIER in accordance with the foregoing provisions of this Section 1.5, then such Sub-Easement shall terminate and such title shall revert and be reconveyed to QWEST at the expiration or termination of the Term respecting the applicable Segment as provided in and pursuant to Article VI hereof. ARTICLE II. CONSIDERATION FOR GRANT ----------------------- 2.1 In consideration of the grant of the IRUs hereunder by QWEST to FRONTIER, FRONTIER agrees to pay to QWEST an IRU fee determined based on the QWEST System route mileage (and allocated among the Segments based on Segment route mileage) as follows (the "IRU Fee"): (a) Initially, the IRU Fee shall be determined based on the following per- route-mile pricing: (i) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for all Segments other than those (A) between the cities of Cleveland and Boston, as identified in Exhibit A, (B) between the City of Albany, New York and the location at 60 Hudson Street in New York City, as identified in Exhibit A, and (C) between the cities of Philadelphia and New York City, as identified in Exhibit A; and (ii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for all Segments identified in clause (a)(i)(A) above conditioned upon FRONTIER making available to QWEST at least twenty-four (24) non-zero dispersion shifted Dark Fibers between Boston and 60 Hudson Street at a price not to exceed $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## (failing which condition the IRU Fee shall be $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for such Segments identified in clause (a)(i)(A)) and clause (a)(i)(B) above; and (iii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile (unless the parties mutually agree on a lesser amount) for all Segments identified in clause (a)(i)(C) above. (b) If FRONTIER timely elects to exercise the System Fiber Option in its entirety as provided pursuant to Section 1.4(a)(i), the IRU Fee shall be redetermined based on the price of (i) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for all Segments identified in the clauses (a)(i) and (a)(ii) above; and (ii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile (unless the parties mutually agree on a lesser amount) for all Segments identified in clause (a)(iii) above. (c) If FRONTIER timely elects to cancel the System Fiber Option in its entirety as permitted pursuant to Section 1.4(a)(ii)(A), the IRU Fee shall be redetermined based on the price of (i) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for all Segments identified in the clauses (a)(i) and (a)(ii) above; and (ii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile (unless the parties mutually agree on a lesser amount) for all Segments identified in clauses (a)(iii) above. (d) If FRONTIER timely elects to exercise the System Fiber Option in part, as permitted pursuant to Section 1.4(a)(ii)(B), the IRU Fee shall be redetermined with respect to all Segments as follows: (i) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for all Segments identified in clauses (a)(i) and (a)(ii) above as to which the System Fiber Option is exercised; (ii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for all Segments identified in clauses (a)(i) and (a)(ii) above as to which the System Fiber Option is canceled; (iii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for route mile (unless the parties mutually agree on a lesser amount) for all Segments identified in clause (a)(iii) above as to which the System Fiber Option is exercised; and (iv) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile (unless the parties mutually agree on a lesser amount) for all Segments identified in clause (a)(iii) above as to which the System Fiber Option is cancelled. (e) If FRONTIER timely elects to exercise the Sacramento/Seattle Dark Fiber Option as permitted pursuant to Section 1.4(b), the IRU Fee with respect to the Sacramento/Seattle Segments (and only such Segments) shall be redetermined based on a price of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile. (f) The IRU Fee shall (except as provided in Sections 1.2, 2.4 and 2.5) be payable with respect to each Segment according to the payment schedule set forth in Exhibit B. 2.2 (a) In addition to the IRU Fee payable under Section 2.1, if and to the extent that the actual cost to QWEST (including freight and taxes) of the fiberoptic cable that includes the FRONTIER Fibers to be incorporated in any Segment is more than $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## /fiber foot, FRONTIER shall reimburse QWEST for the total amount of such cost difference attributable to the FRONTIER Fibers incorporated in such Segment (including slack); provided that QWEST shall give FRONTIER at ------------- least ten (10) days prior written notice before executing and submitting to a vendor a firm commitment for any such fiberoptic cable. If and to the extent that the actual cost to QWEST (including freight and taxes) of the fiberoptic cable that includes the FRONTIER Fibers to be incorporated in an Segment is less than $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## /fiber foot, FRONTIER shall receive a credit against amounts subsequently payable by FRONTIER hereunder equal to the total amount of such cost difference attributable to the FRONTIER Fibers incorporated in such Segment (including slack). (b) In the event that FRONTIER receives a bona fide quote from a fiberoptic cable vendor to provide the same fiberoptic cable that QWEST would acquire to install in a Segment hereunder in accordance with the QWEST System design and the fiber deployment plan and fiber specification requirements provided herein, at a price (including the business terms, handling charges and similar incidental charges) lower than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## the best price available to QWEST for such fiberoptic cable, FRONTIER shall notify QWEST in writing thereof, identifying the vendor, the quoted price, and the type and quantity of fiberoptic cable subject to such quote (each, a "Fiber Quote Notice"), such that QWEST may attempt to acquire such fiberoptic cable at such price from such vendor. If QWEST is able to acquire fiberoptic cable from the vendor and at the price set forth in a Fiber Quote Notice for inclusion in a Segment or Segments delivered hereunder, FRONTIER shall receive a credit against amounts subsequently payable by FRONTIER hereunder equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) of the difference between the best price available to QWEST for such fiberoptic cable and the price obtained from such vendor pursuant to the Fiber Quote Notice (the "Fiber Savings Credit") for the entire fiberoptic cable so acquired by QWEST for inclusion in such Segment or Segments. If QWEST is unable, for any reason, to acquire fiberoptic cable from the vendor identified in the Fiber Quote Notice or any other vendor at the price set forth in the Fiber Quote Notice then the foregoing provisions of this paragraph (b) shall have no further force and effect and QWEST shall acquire fiberoptic cable through its own sources, subject to paragraph (a) of this Section 2.2. (c) Notwithstanding the foregoing provisions of paragraphs (a) and (b) of this Section 2.2, no such reimbursement or credit shall be required with respect to any fiberoptic cable including FRONTIER Fibers that, as of the date hereof, has already been installed or delivered to QWEST for installation in the QWEST System or is subject to a binding purchase order for delivery to QWEST for installation in the QWEST System. The amount of any such reimbursement or credit shall be invoiced or credited, as appropriate, to FRONTIER at the time the fiberoptic cable incorporating such FRONTIER Fibers is invoiced to QWEST. FRONTIER and QWEST agree to reasonably consult and cooperate with each other in order to obtain the lowest possible price for fiberoptic cable to be included in a Segment. FRONTIER also shall pay directly or reimburse QWEST for all other costs, fees and expenses which are expressly provided to be paid, in whole or in part, by FRONTIER under this Agreement. FRONTIER shall have the right to review and audit, at its cost, all such costs, fees and expenses. 2.3 QWEST will fax or send by overnight delivery each invoice for payments to be made by FRONTIER hereunder. FRONTIER shall pay such invoiced amounts, less any reasonably disputed amounts, for receipt by QWEST within fifteen (15) days after receipt of such invoice by FRONTIER with respect to payments of the IRU Fee and within thirty (30) days after receipt of such invoice by FRONTIER for any other amounts owed to QWEST hereunder; provided that FRONTIER shall ------------- provide written notice describing in detail the basis for any disputed amounts; and provided further that any disputed amounts that are resolved in favor of --------------------- QWEST shall be due for payment based on the original invoice date. All payments to be made by FRONTIER hereunder of the IRU Fee and of any other amounts in excess of $100,000 shall be made by wire transfer of immediately available funds to the account or accounts as QWEST shall notify FRONTIER in writing from time to time. Payments of all other amounts by FRONTIER hereunder may be made by check payable to QWEST. QWEST agrees to provide FRONTIER from time to time, upon request, with QWEST's estimate of the next invoice date for a portion of the IRU Fee and the estimated amount of such IRU Fee payment; provided that ------------- failure to provide any such notice shall not in any way alter or impair FRONTIER's payment obligations hereunder. 2.4 QWEST and FRONTIER acknowledge and agree that with respect to Segment 23, notwithstanding the fact that Segment 23 has already been constructed and installed, delivery of Segment 23 shall occur in two installments of twelve (12) Dark Fibers each as indicated in Exhibit A, and payment of the IRU Fee therefor (other than the initial ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % due upon execution of this Agreement), shall be deferred until each such deferred installment delivery date as set forth in Exhibit B. QWEST and FRONTIER further acknowledge and agree that with respect to Segments 24A, 24B, 24C, 24D, 24E and 25, once constructed and installed, delivery of each such Segment likewise shall occur in two installments of twelve (12) Dark Fibers each as indicated in Exhibit A, and payment of the IRU Fee therefor shall be made as set forth in Exhibit B. 2.5 QWEST and FRONTIER acknowledge and agree that with respect to Segments 5, 6, 9A, 9B, 10A and 10B, notwithstanding the payment schedule set forth in Exhibit B and the fact that the conduit in such Segments has already been constructed and installed, FRONTIER shall be required to pay with respect to each of those Segments: (a) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the IRU Fee upon execution of this Agreement, (b) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the IRU Fee when (i) QWEST has commenced the placement of the Cable in the Segment, and (ii) all such Cable and other materials necessary to complete such placement within a reasonable time are on hand or scheduled for timely delivery in connection with such placement, and (c) the balance of the IRU Fee in accordance with the provisions of Exhibit B. 2.6 All of FRONTIER's payment obligations under this Agreement shall be guaranteed by Frontier Corporation pursuant to a Guaranty in the form of Exhibit K hereto, to be executed and delivered by Frontier Corporation as a condition to the effectiveness hereof and the performance by QWEST of its obligations hereunder. ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM -------------------------------- 3.1 QWEST shall, at QWEST's sole cost and expense, be responsible for and shall effect the design, engineering, installation, and construction of those portions of the QWEST System not already constructed as of the date hereof in accordance with the System Route (as it may be modified pursuant to Section 1.1) and in conformity with (i) the construction specifications set forth in Exhibit C, (ii) industry standards and practices, and (iii) applicable Underlying Rights Requirements (as defined in Section 11.1). Such responsibilities shall include, without limitation, preparation of construction drawings, bills of materials, materials specifications and materials requisitions. Except for the existing fibers on Segments 11A, 11B, 12A, 12B, 12C and 12D (which are Corning SMF-DS) and any alternative fibers approved pursuant to the following sentence, all fiber included in the FRONTIER Fibers shall be Corning SMF-LS non-zero dispersion-shifted or Lucent Technologies True Wave and shall meet or exceed the applicable fiber specifications set forth in Exhibit E. QWEST may use alternative types of fiber equivalent to either of the aforementioned fibers; provided that (i) prior to any such use, QWEST meets with FRONTIER (and FRONTIER hereby agrees to so meet) to, cooperatively and in good faith, jointly evaluate the use of any such fiber and (ii) thereafter, FRONTIER approves the use of such fiber, which approval shall not be unreasonably withheld or delayed. QWEST agrees that, to the extent possible in light of the fiber already incorporated in Segments that have been constructed, in whole or in part, prior to the date hereof and the availability and cost of the fiber of a particular type and manufacture hereafter, fiber utilized with respect to the loops, rings and regions of the QWEST System shall be of the same type and manufacture, as depicted in the fiber deployment diagram set forth in Exhibit E-1 hereto, indicating the type of fiber QWEST currently plans to use in each such Segment. Any deviation from the planned fiber use set forth in the diagram must be approved by FRONTIER, which approval shall not be unreasonably withheld or delayed. 3.2 Subject to extension for delays described in Article XX, QWEST shall complete at QWEST's sole cost and expense, all construction, installation, and satisfactory Fiber Acceptance Testing (as defined in Section 4.1) of each of the Segments, including the provision of such Regeneration Facilities on such Segment as are required to be provided pursuant to Section 7.2(a), by the applicable "Estimated Delivery Date" (as defined in Section 33.1(d)) respecting such Segment. 3.3 Except as may be provided herein, QWEST shall, at QWEST's sole cost and expense, procure all materials to be incorporated in and to become a permanent part of the QWEST System, including, without limitation, the Regeneration Facilities required to be provided pursuant to Section 7.2(a). 3.4 QWEST shall, at QWEST's sole cost and expense, obtain all Underlying Rights and other rights, licenses, permits and authorizations as required pursuant to Article X hereof. 3.5 In support of QWEST's obligation to construct the QWEST System hereunder, QWEST will provide, as a condition to FRONTIER's obligations hereunder, either (i) so long as the Surety Bond has not been delivered as provided in clause (ii) below, a guaranty up to a maximum aggregate amount of $175 millionby Anschutz Company in favor of FRONTIER of the payment obligations of QWEST under this Agreement pursuant to a Guaranty in the form of Exhibit L or (ii) six (6) surety bonds in favor of FRONTIER, each substantially in the form of and by the surety companies identified on Exhibit I hereto or such other companies rated "A" or better by Best's Key Rating Guide, which, in the aggregate, shall provide a total aggregate payment value of not less than $175 million (collectively, the "Surety Bond"), in each case clause (i) and (ii) over the entire construction period for all Segments to be delivered hereunder. 3.6 QWEST shall perform, at QWEST's sole cost and expense, substantially in accordance with industry standards and practices and as deemed necessary or appropriate in QWEST's reasonable business judgment, all supervisory and inspection services relating to the construction of the QWEST System, including, without limitation, performing construction inspections to assure that all construction shall be in material compliance with the specifications, drawings, Underlying Rights, provisions of this Agreement, and applicable governmental codes. During the course of construction of each Segment, QWEST shall prepare and provide to FRONTIER construction schedule and progress reports every two weeks. FRONTIER shall have the right, but not the obligation, to inspect the construction of each Segment, including the installation, splicing and testing of the FRONTIER Fiber incorporated therein, during the course and at the time of the relevant design, construction and installation period. No inspection or failure to inspect by FRONTIER shall impair or invalidate any rights and remedies of FRONTIER under this Agreement or modify, amend or otherwise affect any of the representations, warranties, covenants or agreements of QWEST under this Agreement. 3.7 Upon FRONTIER's written request, QWEST shall make available for inspection by FRONTIER, at QWEST's offices, copies of all information, documents, agreements, reports, permits, drawings and specifications generated, obtained or acquired by QWEST in performing its duties pursuant to this Article III that are material to grant of the IRUs to FRONTIER, including, without limitation, the Underlying Rights, subject only to the conditions that (i) the terms of each such document or the legal restrictions applicable to such information or document permits disclosure; provided that QWEST will use its ------------- best efforts (without requiring the expenditure of money) to obtain a waiver of any existing confidentiality and/or non-disclosure restrictions, and to exempt FRONTIER from subsequent confidentiality and/or non-disclosure restrictions, that would restrict QWEST's ability to make such documents and/or information available to FRONTIER for inspection; (ii) notwithstanding the existence or non- existence of such restrictions and/or waivers, QWEST may, in its sole discretion, redact portions of such documents it deems proprietary business terms prior to FRONTIER's inspection. No inspection or failure to inspect by FRONTIER shall impair or invalidate any rights and remedies of FRONTIER under this Agreement or modify, amend or otherwise affect any of the representations, warranties, covenants or agreements of QWEST under this Agreement. 3.8 QWEST shall use reasonable efforts to construct all of Segment 13C of the Basic Route within the territorial confines of the United States, using its reasonable efforts and reasonably cooperating with FRONTIER to determine a construction method, including a powerline build or other alternative, in each case that would be reasonably cost effective within the overall QWEST System design. If, notwithstanding such efforts and cooperation, no such alternative construction method is mutually agreed upon, then QWEST may construct the portion of such Segment as shown in Exhibit A-2 in Mexico. ARTICLE IV. ACCEPTANCE AND TESTING OF FRONTIER FIBERS ----------------------------------------- 4.1 QWEST shall test all FRONTIER Fibers in accordance with the procedures specified in Exhibit D ("Fiber Acceptance Testing") to verify that the FRONTIER Fibers are installed and operating in accordance with the specifications described in Exhibit D. Fiber Acceptance Testing shall progress span by span along each Segment as cable splicing progresses, so that test results may be reviewed in a timely manner. QWEST shall provide FRONTIER at least five (5) days advance notice of the date and time of each Fiber Acceptance Testing such that FRONTIER shall have the right, but not the obligation, to have a person or persons present to observe QWEST's Fiber Acceptance Testing. When QWEST has determined that the results of the Fiber Acceptance Testing with respect to a particular span show that the FRONTIER Fibers so tested are installed and operating in conformity with the applicable specifications set forth in Exhibit D, QWEST shall promptly provide FRONTIER with a copy of such test results. 4.2 When QWEST reasonably determines in good faith that the FRONTIER Fibers with respect to an entire Segment are installed and operating in conformity with the applicable specifications set forth in Exhibit D, QWEST shall promptly provide written notice of same to FRONTIER (a "Completion Notice"). FRONTIER shall, within thirty (30) days of receipt of the Completion Notice, either reject the Completion Notice specifying, in good faith, the defect or failure in such Fiber Acceptance Testing or give QWEST written notice of acceptance of such Fiber Acceptance Testing (the period from the date of FRONTIER's receipt of the Completion Notice to the date of QWEST's receipt of FRONTIER's notice of rejection or acceptance being referred to herein as the "FRONTIER Review Period"). In the event FRONTIER rejects the Completion Notice, QWEST shall promptly, and not later than seven days, and at no cost to FRONTIER, commence to remedy the defect or failure. Thereafter QWEST shall again give FRONTIER a Completion Notice with respect to such FRONTIER Fibers. The foregoing procedure shall apply again and successively thereafter for a total of two attempts to remedy the defect or failure. If QWEST fails to adequately remedy or complete the defect or failure after two attempts, FRONTIER shall have the right to proceed promptly and in an economically efficient manner to cure such defects or failures at QWEST's cost and expense, which shall be paid by QWEST to FRONTIER upon demand, or at the election of FRONTIER, offset from any IRU Fee payable by FRONTIER to QWEST with respect to such Segment or any other Segment. No acceptance of, or failure by FRONTIER to reject, the Completion Notice shall be deemed to be a waiver of any rights or remedies of FRONTIER under this Agreement; provided that, any failure by FRONTIER to timely reject as set forth ------------- above shall operate as a constructive acceptance for purposes of this Agreement. The date when FRONTIER accepts or is deemed to have accepted a Completion Notice or cures such defects at QWEST's cost and expense as provided above with respect to a Segment is herein defined as the "Acceptance Date". ARTICLE V. DOCUMENTATION ------------- 5.1 QWEST shall provide FRONTIER with a copy of all Underlying Right Requirements (as defined in Section 11.1) applicable to each Segment promptly following the grant to QWEST of the Underlying Right pursuant to which such Underlying Right Requirements are imposed and, in any event, on or before the date of completion of conduit installation in such Segment (as defined in Exhibit B, paragraph 6(ii)). 5.2 Not later than ninety (90) days after the Acceptance Date for each Segment, QWEST shall provide FRONTIER with the following documentation: (a) As-built drawings for such Segment in accordance with the requirements described in Exhibit C ("As-Builts"). (b) Technical specifications of the optical fiber cable and associated splices and other equipment placed in that Segment. 5.3 As a condition to, and effective upon receipt of, each IRU Fee payment installment that is due upon QWEST's achievement of a construction, installation, testing or acceptance milestone as set forth in Exhibit B, QWEST shall deliver to FRONTIER a lien waiver with respect to liens in favor of QWEST arising out of QWEST's services in accomplishing such milestone. Promptly following QWEST's receipt of each such payment, QWEST shall use reasonable efforts to obtain (and in any event on or before the Acceptance Date with respect to the relevant Segment shall obtain) from each subcontractor that provided services in accomplishing such milestone a lien waiver with respect to liens arising out of such services and, upon receipt, deliver a copy of each such lien waiver to FRONTIER. ARTICLE VI. TERM ---- 6.1 Except to the extent expressly modified by Section 1.2 with respect to the Segments identified therein, the grant of the IRUs hereunder with respect to each Segment shall become effective on the first day when both (i) the Acceptance Date with respect to that Segment has occurred and (ii) QWEST has received payment in full of the IRU Fee with respect to such Segment in accordance with Exhibit B, and, subject to the provisions of Article X, such grant shall terminate at the end of the economically useful life of the FRONTIER Fibers, as reasonably determined by FRONTIER pursuant to Section 6.2 below. The period of each such grant respecting each such Segment and IRU is herein defined as the "Term". 6.2 In the event that FRONTIER, at any time, reasonably determines that the FRONTIER Fibers comprising any Segment have reached the end of their economically useful life and desires to not retain the IRU in such Segment, FRONTIER shall have the right to abandon the IRU with respect to such Segment by written notice to QWEST. If, at any time during or after the last year of the Minimum Period (as defined in Section 10.2(ii) below), with respect to any Segment, FRONTIER fails to use any of the FRONTIER Fibers comprising such Segment for any period of thirty (30) consecutive days (except to the extent that such non-use is as a result of any of the events described in Article XX or as a result of QWEST System maintenance, restoration, relocation, or reconfiguration or as a result of the failure of QWEST to observe and perform the terms of this Agreement), QWEST shall have the right to request FRONTIER to acknowledge that the FRONTIER Fibers comprising such Segment have reached the end of their economic life and, accordingly, has abandoned the FRONTIER Fibers comprising such Segment (which acknowledgment shall not be unreasonably withheld or delayed). Upon any such notice of abandonment or acknowledgment, the Term shall expire with respect to such Segment and all rights to the use of such Segment shall revert to QWEST without reimbursement of any fees or other payments previously made with respect thereto, and from and after such time FRONTIER shall have no further rights or obligations hereunder with respect to such Segment (subject to the provisions of Article XIX). 6.3 It is understood and agreed as between the parties that the grant of the IRUs hereunder shall be treated for accounting and federal and all applicable state and local tax purposes as the sale and purchase of the FRONTIER Fibers and a corresponding interest in QWEST's rights in the Associated Property subject thereto, and that on and after the Acceptance Date with respect to each Segment, FRONTIER shall be treated as the owner of the FRONTIER Fibers and an interest in QWEST's rights in the Associated Property comprising such Segment for such purposes. The parties agree to file their respective income tax returns, property tax returns, and other returns and reports for their respective Impositions (as such term is defined in Section 33.1(e)) on such basis and, except as otherwise required by law, not to take any positions inconsistent therewith. QWEST shall retain legal title to the entire QWEST System (except if and to the extent provided in Section 1.5), including the FRONTIER Fibers and Associated Property subject to the IRUs hereunder. Each party agrees to indemnify the other with respect to any late filing penalties, interest or fees incurred as a result of such party's failure to provide the other with such information solely in such party's possession or control that may be necessary in order to timely make any such filing. 6.4 This Agreement shall become effective on the date hereof and shall terminate on the date when, after completion and delivery of all Segments required to be delivered hereunder, all the Terms of all such Segments shall have expired; provided that, those provisions of this Agreement which, by their ------------- express terms, are intended to survive such termination, shall survive. ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES --------------------------------------- 7.1 (a) QWEST shall provide FRONTIER with access to, and FRONTIER shall have the right to connect, at FRONTIER's sole cost and expense, its telecommunications system with, the FRONTIER Fibers at various network access points on the QWEST System right-of-way in each of the endpoint cities and intermediate point cities along the route of each Segment and at such additional locations along the QWEST System right-of-way as may be requested by FRONTIER (each such access point being referred to as a "Connecting Point"). The specific locations of each such Connecting Point shall be as mutually reasonably agreed upon by the parties in good faith, subject to the Underlying Rights Requirements and QWEST obtaining other required permits, authorizations and approvals (which QWEST agrees to use its best efforts to obtain). Any such connection will be performed by QWEST, at FRONTIER's sole cost and expense, in accordance with QWEST's applicable specifications and operating procedures. FRONTIER shall pay QWEST's Costs for each such connection within thirty (30) days of the date of FRONTIER's receipt of QWEST's invoice therefor. In order to schedule a connection of this type, FRONTIER shall request and coordinate such work not less than ninety (90) days in advance of the date the connection is requested to be completed. Such work will be restricted to a Planned System Work Period ("PSWP"), as defined in Section 33.1(i), unless otherwise agreed to in writing for specific projects. Subject to all applicable Underlying Rights Requirements, FRONTIER shall also be provided reasonable access by QWEST to any Connecting Point at all times. FRONTIER shall have no limitations on the types of electronics or technologies employed to utilize the FRONTIER Fibers, subject to mutually agreeable safety procedures and so long as such electronics or technologies do not interfere with the use of or present a risk of damage to any portion of the QWEST System. (b) QWEST may route the FRONTIER Fibers through QWEST's separate terminal, endlink, POP or Regeneration Facilities at its sole discretion so long as such routing does not have a material adverse effect on the security, the safety or FRONTIER's use of the FRONTIER Fibers or Associated Property hereunder and QWEST is responsible for all costs and expenses associated therewith. 7.2 (a) The IRU Fee includes QWEST's provision to FRONTIER for its use as permitted hereunder of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## regeneration site facilities along the Basic Route, and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## regeneration site facilities along the Optional Routes (consisting of up to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for Option Route 1, up to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for Option Route 1A and up to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for Option Route 2, depending upon which of the Optional Routes are elected or required to be constructed pursuant to Section 1.3 hereof) to be located at approximately sixty (60) mile intervals along the QWEST System right-of-way, in each case consisting of and providing space of approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet and amenities (except for the operating costs associated therewith expressly required to be paid by FRONTIER pursuant to Section 8.2), as described in Exhibit F ("Regeneration Facilities"). The parties acknowledge that (i) the locations of such Regeneration Facilities shall be coincident with the locations of QWEST's own Regeneration Facilities (and located at approximately 60-mile intervals), the locations of which QWEST shall notify FRONTIER with sufficient time (no less than ten working days) for FRONTIER to request a different location for any given facility, in which case the parties shall mutually agree on a mutually acceptable location for such facility, and (ii) Exhibit G sets forth the estimated number of such Regeneration Facilities by Segment, with the locations of such Regeneration Facilities being subject to final determination of the route of the applicable Segment, space and power availability and all applicable Underlying Rights Requirements. In addition, QWEST shall provide to FRONTIER at FRONTIER's Prorated Cost (as defined below in this paragraph (a)) POP or terminal facilities of approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet along the QWEST System right-of-way at such locations as may be mutually determined by FRONTIER and QWEST, subject to space and power availability and Underlying Rights Requirements ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## subject to space and power availability and underlying Rights Requirements. FRONTIER's occupancy of and access to all such Regeneration Facility Sites (or POP or terminal facilities) shall include separate, secured, 24-hour-per-day building access. Any Regeneration Facilities (or POP or terminal facilities) provided by QWEST to FRONTIER ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## with respect to any of the Basic Route and the applicable Optional Routes shall be at FRONTIER's Prorated Cost. For purposes of the foregoing two sentences, FRONTIER's Prorated Cost for Regeneration Facilities means $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility and for POP or terminal facilities means $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility, subject to any adjustment (lower or higher) pursuant to Section 7.2(b) below. (b) QWEST heretofore has requested (or promptly after execution of this Agreement will request) vendors to submit bids (collectively, the "Initial Bids") that cover all or substantially all of the proposed Basic Segments of the QWEST System (plus the Optional Routes as and when included in any bid requests by QWEST) for the building items listed below (collectively, the "Building Items"). QWEST has delivered (or promptly after receipt thereof will deliver) to FRONTIER copies of such Initial Bids. If the aggregate cost of the Building Items taking the lowest quoted cost per Building Item (subject to the last sentence of this paragraph) under any of the Initial Bids (the "Initial Bid Aggregate Cost") is equal to or less than the aggregate estimated cost for the Building Items set forth in the table below (the "Estimated Aggregate Cost"), then for 10 business days thereafter, or if the Initial Bid Aggregate Cost is more than the Estimated Aggregate Cost, then for 20 business days thereafter, FRONTIER may solicit from the same or other vendors bids that cover all or substantially all of the Basic Segments of the QWEST System (plus the Optional Routes as and when included in any bid requests by QWEST) covering any of the Building Items (the "FRONTIER Solicited Bids"). Without regard to what Building Items QWEST actually purchases in connection with construction of the QWEST System, the lowest quoted cost per Building Item obtained under any of the Initial Bids and the Frontier Solicited Bids (subject to the last sentence of this paragraph) shall then be used in place of the cost set forth in the table below for the respective Building Item, and the allocated percentage of the total cost (which excludes freight and taxes) attributable to FRONTIER as set forth in the table below shall be applied accordingly to the recalculated cost. The aggregate FRONTIER allocation set forth in the table below shall be recalculated, and the Prorated Cost for Regeneration Facilities of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility and the Prorated Cost of POPs (and terminal facilities) of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility shall be increased or decreased, as appropriate, by the difference between such recalculated aggregate FRONTIER allocation and $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . In determining whether a quote represents the "lowest quoted cost" for any particular Building Item, (i) such quote must meet all of QWEST's terms and specifications with respect to the applicable Building Item and (ii) QWEST shall take into account whether and to what extent such quote is contingent upon any other quote for one or more other Building Items. For purposes of this Section 7.2(b), the building items in Regeneration Facilities and/or POPs or terminal facilities, their respective total cost, the Estimated Aggregate Cost of them and the allocated FRONTIER percentage with respect to them are as follows:
Allocation Frontier Building Items Total Cost of Item Percentage Allocation --------------- ------------------ ---------- ---------- Equipment building, $ 12' x 30'0.0 ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 80 kW skid-mounted diesel generator (Regeneration Facility) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
100 kW skid-mounted diesel generator (POP) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Two 5 ton wall mounted HVAC units ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Battery Plant, 1,200 Amp @ 48 VDC each for 400A of rectifiers a. Power distribution ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## b. Rectifiers ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## c. Batteries (4 hr. reserve, dual 875 AH strings) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Estimated Aggregate Cost $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##
(c) Payment by FRONTIER of its Prorated Cost, adjusted to give effect to any adjustments (lower or higher) pursuant to Section 7.2(b), for any POP or terminal facilities shall be paid to QWEST upon commencement of the construction of the Segment of which they are a part. Payment by FRONTIER of its Prorated Cost adjusted to give effect to any adjustments (lower or higher) pursuant to Section 7.2(b), for Regeneration Facilities ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## shall be paid to QWEST upon commencement of the construction of the Segment of which they are a part ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . The foregoing amounts paid by FRONTIER shall be finally trued up, with QWEST reimbursing FRONTIER for any excess and FRONTIER paying QWEST for any deficiency, on (or as soon as thereafter as practicable) the last Acceptance Date with respect to the Basic Segments, the last Acceptance Date with respect to Segments in Option Route 1 or 1-A, and the last Acceptance Date with respect to Segments in Option Route 2, in each case (i) based on the actual number of Regeneration Facilities actually provided by QWEST ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or POPs (or terminal facilities) with respect to the Basic Route and the applicable Optional Route and (ii) adjusted to give effect to any adjustments (lower or higher) in the FRONTIER's Prorated Cost to which FRONTIER may be entitled under Section 7.2(b) above. ARTICLE VIII. OPERATIONS ---------- 8.1 Each party shall have full and complete control and responsibility for determining any network and service configuration or designs, routing configurations, regrooming, rearrangement or consolidation of channels or circuits and all related functions with regard to the use of that party's Dark Fiber. 8.2 FRONTIER shall reimburse QWEST for FRONTIER's proportionate share of all operating costs incurred by QWEST in connection with the Regeneration Facilities (or alternatively requested POP or terminal facilities) provided pursuant to Section 7.2(a), including its proportionate share of any monthly lease costs for any such facilities and/or underlying property that QWEST leases (including, to the extent included in such lease costs, base rent, maintenance, insurance, security and taxes), maintenance of such facilities, and all power and utility fees and charges. FRONTIER's proportionate share of such operating costs, including a proportionate share of common area costs, shall be the ratio that the floor space provided to FRONTIER in any such facility (including a proportionate share of the common area) bears to (i) in the case of lease costs, the total space in such facility, and (ii) in the case of all other costs (including common area costs), the total utilized space in such facility. QWEST shall submit invoices to FRONTIER on an annual basis for FRONTIER's pro rata share of such operating costs during the preceding twelve months. FRONTIER's reimbursement obligations for insurance and taxes pursuant to this Section 8.2 shall in no event be duplicative of FRONTIER's payment obligations for insurance or taxes, respectively, as provided in Article XIV and XV hereof, and in no event shall relieve QWEST of its payment obligations for insurance costs or taxes, respectively, as provided in Article XIV and XV hereof. 8.3 FRONTIER acknowledges and agrees that, except to the extent expressly provided pursuant to Sections 1.2 and 7.2, QWEST is not supplying nor is QWEST obligated to supply to FRONTIER any optronics or electronics or optical or electrical equipment or other facilities, including without limitation, generators, batteries, air conditioners, fire protection and monitoring and testing equipment, all of which are the sole responsibility of FRONTIER, nor is QWEST responsible for performing any work other than as specified in this Agreement. 8.4 Upon not less than one hundred twenty (120) days' written notice from QWEST to FRONTIER, QWEST may, subject to FRONTIER's prior written approval (which approval shall not be unreasonably delayed or withheld) substitute for the FRONTIER Fibers on the QWEST System, or any Segment or Segments comprising a portion of said QWEST System, an equal number of alternative fibers along the same or an alternative route; provided that in any such event, such substitution ------------- (i) shall be in accordance with FRONTIER's applicable specifications and operating procedures, (ii) shall be effected at the sole cost of QWEST, including, without limitation, all disconnect and reconnect costs, fees and expenses, (iii) shall be constructed and tested in accordance with the specifications and drawings set forth in Exhibits C and D and Section 4.2, and incorporate fiber meeting the specifications set forth in Exhibit E, and (iv) shall not interrupt or adversely affect the use, operation or performance of FRONTIER's network or business, or change any Connecting Points or endpoints of any Segment or change the location of any Regeneration Facilities (or POPs or terminal facilities) used by FRONTIER hereunder or any other FRONTIER POP, node or switch facilities, all as determined by FRONTIER, in its sole discretion; and provided further that QWEST shall give FRONTIER written notice prior to QWEST's placing any order for fiber for such alternative route segment or segments if the number of fibers to be placed in such alternative route segment or segments exceeds the number of fibers in the Segment or Segments to be so relocated, and FRONTIER shall have a period of thirty (30) days from receipt of such notice to commit, by written notice to QWEST, to acquire an IRU in an additional number of Dark Fibers (i.e., in excess of the number of FRONTIER Fibers to be so substituted) (subject to the availability of adequate conduit capacity) for a per-fiber IRU fee ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM ------------------------------------------ 9.1 From and after the Acceptance Date with respect to each Segment, the maintenance of the QWEST System comprising such Segment shall be provided in accordance with the maintenance requirements and procedures set forth in Exhibit H hereto. ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION -------------------------------------- 10.1 QWEST covenants and agrees that it shall obtain, during the course of construction of, and in any event on or before the completion of conduit installation with respect to, each Segment of conduit to be delivered hereunder all Underlying Rights (as defined below) and such other rights, licenses, permits, authorizations, and approvals (including, without limitation, any necessary local, state, federal or tribal authorizations and environmental permits) that are necessary in order to permit QWEST to construct, install and maintain the conduit and the FRONTIER Fibers to be encompassed in such Segment in accordance with the terms and conditions hereof. QWEST further covenants and agrees that it shall obtain, during the course of construction of and in any event on or before the Acceptance Date with respect to each Segment to be delivered hereunder, any and all rights-of way, easements, licenses and other agreements relating to the grant of rights and interests in and/or access to the real property underlying the QWEST System (collectively, the "Underlying Rights") and such other rights, licenses, permits, authorizations, and approvals (including without limitation, any necessary local, state, federal or tribal authorizations and environmental permits) that are necessary in order to permit QWEST to grant the IRUs, and otherwise to perform its obligations hereunder, in accordance with the terms and conditions hereof, and to (and all of which Underlying Rights shall) permit FRONTIER to use the FRONTIER Fibers and Associated Property as provided and permitted hereunder and in accordance with the terms and conditions hereof. QWEST shall use its best efforts to cause the terms of each such Underlying Right to provide FRONTIER with notice of any default on the part of QWEST and to permit FRONTIER to cure, on behalf of QWEST, any such default by QWEST and, thereafter, to continue the use of such Underlying Right in accordance with QWEST's rights and interests thereunder and, if FRONTIER at any time cures such default by QWEST, QWEST shall reimburse FRONTIER for any and all amounts reasonably paid by FRONTIER promptly upon demand. 10.2 QWEST further covenants and agrees that, with respect to each Underlying Right that is necessary in order to continue and maintain the IRUs granted hereunder, and to permit FRONTIER to exercise its rights to use the FRONTIER Fibers and Associated Property, in each case in accordance with the terms and conditions hereof: (i) QWEST shall, for a period of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years from the date hereof (or until the earlier to occur of (A) the expiration of the economically useful life of the FRONTIER Fibers, as determined pursuant to Section 6.2, or (B) the expiration or termination of the term of a particular Underlying Right, so long as any such termination is not effected as a result of any failure of QWEST (not caused as a result of FRONTIER's failure to observe and perform its obligations hereunder) to observe and perform its duties, obligations and responsibilities under such Underlying Right or under this Agreement, including under this Article X), observe and perform each and every of its obligations under each document, agreement or instrument granting or conveying to QWEST such an Underlying Right if the failure to observe and perform any such obligation or obligations would permit the grantor of such Underlying Right to terminate such Underlying Right prior to its stated expiration date, or would otherwise materially, adversely impair or affect FRONTIER's ability to use the FRONTIER Fibers and Associated Property, or exercise its rights with respect thereto, as provided and permitted hereunder; and (ii) QWEST shall either require that the initial stated term of each such Underlying Right be for a period that does not expire, in accordance with its ordinary terms, prior to the last day of the Minimum Period (as hereinafter defined with respect to each Segment) or, if the initial stated term of any such Underlying Right expires, in accordance with its ordinary terms, on a date earlier than the last day of the Minimum Period, QWEST shall at its cost exercise any renewal rights thereunder, or otherwise acquire such extensions, additions and/or replacements as may be necessary, in order to cause the stated term thereof to be continued until a date that is not earlier than the last day of the Minimum Period. The "Minimum Period" shall be, with respect to each Segment, the period from the date on which construction of such Segment commences until the ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## anniversary of such date; and (iii) From and after the last day of the Minimum Period, QWEST shall use its best efforts (without being required to expend commercially unreasonably amounts therefor) to obtain such extensions and/or renewals as may be necessary in order to cause the stated term of each such Underlying Right to be continued for an additional period or periods of, in the aggregate, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years following the Minimum Period or until the earlier expiration of the economically useful life of the FRONTIER Fibers, as determined pursuant to Section 6.2; provided that QWEST shall not be required to expend, as ------------- consideration for any such renewal or extension, more than the fair market rate payable at such time for similar rights and terms except to the extent that FRONTIER agrees at its option to pay directly or reimburse QWEST for any amounts required to be paid in excess of such fair market rate to renew or extend such an Underlying Right; and (iv) Throughout the term of each such Underlying Right, QWEST shall at its reasonable cost and expense defend and protect QWEST's rights in and interests under the Underlying Rights against interfering or infringing rights, interests or claims of third parties. 10.3 Upon the expiration or termination of any Underlying Right that is necessary in order to grant, continue or maintain an IRU granted hereunder in accordance with the terms and conditions hereof, so long as QWEST shall have fully observed and performed its obligations under this Article X with respect thereto, the Term of the IRUs hereunder with respect to any Segment or Segments affected thereby shall automatically expire upon such expiration or termination. 10.4 If, after the Acceptance Date with respect to a Segment, QWEST is required by a third party with legal authority to so require (including, without limitation, the grantor of an Underlying Right, but only to the extent that such relocation is not required as a result of a failure by QWEST to observe and perform its obligations under such Underlying Right or this Agreement), or if FRONTIER agrees, to relocate any portion of such Segment including any of the facilities used or required in providing the IRUs in such Segment hereunder, QWEST shall proceed with such relocation, including, but not limited to, the right, in good faith, to reasonably determine the extent of, the timing of, and methods to be used for such relocation; provided that (i) the route of any such ------------- relocation shall be subject to the good faith agreement of the parties with a bona fide interest therein, (ii) FRONTIER shall be kept fully informed of all other determinations made by QWEST in connection with such relocation, and (iii) any such relocation shall be constructed and tested in accordance with the specifications and drawings set forth in Exhibits C and D, and incorporate fiber meeting the specifications set forth in Exhibit E. FRONTIER shall reimburse QWEST for its proportionate share of the Costs of such relocation of the portion of the Segment so relocated, reduced by such amount, if any, of the portion of such Costs as are reimbursed to QWEST by the party requiring such relocation, as follows: (i) if the affected portion of the Segment includes any conduit other than the conduit housing the FRONTIER Fibers for which QWEST is responsible for relocation costs, the total Costs of relocation of the conduits (i.e., relocation of the conduits only without regard to whether the conduits contain fibers) shall be allocated based on the overall number of conduits relocated; (ii) such Costs allocated to the conduit carrying the FRONTIER Fibers plus the Costs specifically associated with the relocation of the fiber (i.e., relocation of the fiber only without regard to relocation of conduit) shall be further allocated to FRONTIER based on FRONTIER's proportionate share of (A) all Costs of fiber acquisitions, splicing and testing, prorated based on the total fiber count in the affected Cable, as so relocated, and (B) all other Costs associated with the relocation of the conduit housing the affected Cable, prorated based on the total number of owners (including QWEST) and holders of IRUs or equivalent interests (including long-term lessees) (each, an "Interest Holder") in the affected Cable, as so relocated. FRONTIER shall have the right to review and audit all Costs incurred in connection with such relocation. QWEST shall deliver to FRONTIER updated As-Builts with respect to the relocated Segment not later than sixty (60) days following the completion of such relocation. Any condemnation or taking under the power of eminent domain of all or any portion of a Segment shall be deemed a relocation required by a third party with legal authority to so require, and such affected Segment, or portion thereof, shall be relocated in accordance with this Section 10.4 and any condemnation proceeds received by QWEST shall be applied to such relocation as provided above. 10.5 QWEST acknowledges that FRONTIER has previously committed to acquire a certain number of miles of right-of-way from ConRail (the "ConRail ROW"). If determined practical by QWEST in its reasonable business judgment, and provided that the cost and other terms and conditions of acquiring and utilizing part or all of the ConRail ROW are not greater or more restrictive and do not provide lesser rights than any other Underlying Right which QWEST may be hereafter required to acquire in constructing the QWEST System, QWEST shall cooperate with FRONTIER and acquire and utilize the ConRail ROW, or applicable portions thereof, in satisfaction of the FRONTIER commitment to ConRail. In such event, the IRU Fee payable hereunder with respect to any Segment on the ConRail ROW shall be adjusted as agreed by the parties. ARTICLE XI. USE OF QWEST SYSTEM ------------------- 11.1 The requirements, restrictions, and/or limitations upon FRONTIER's right to use the FRONTIER Fibers and Associated Property as provided and permitted under this Agreement imposed under, and associated safety, operational and other rules and regulations imposed in connection with, the Underlying Rights are referred to collectively as the "Underlying Rights Requirements." QWEST represents and warrants that, it has made available to FRONTIER for its review and inspection a copy of certain documents, agreements, or instruments pursuant to which QWEST has been granted an Underlying Right as of the date hereof (the "Existing Underlying Rights"), and certain associated safety, operational and other rules and regulations imposed in connection with the exercise of its rights thereunder (all of which are identified on Exhibit J hereto). FRONTIER hereby accepts the Existing Underlying Rights and the Underlying Rights Requirements associated therewith. QWEST represents that it is not in default under any of the Existing Underlying Rights that would permit the grantor of such Underlying Right to terminate such Underlying Right prior to its stated expiration date, or would otherwise materially, adversely impair or affect FRONTIER's ability to use the FRONTIER Fibers and Associated Property, or exercise its rights with respect thereto, as provided and permitted hereunder, and, to the best of its knowledge, none of the grantors are in default under the Existing Underlying Rights. With respect to each Underlying Right (other than the Existing Underlying Rights) obtained after the date hereof by QWEST (or an Underlying Right existing on the date hereof under any document, agreement or instrument delivered after the date hereof) in carrying out its obligations hereunder from the same type of grantor as a grantor of any Existing Underlying Right, QWEST represents and warrants that the terms and conditions thereof, and rules and regulations imposed in connection therewith, shall not impose materially more onerous limitations and restrictions on the rights of FRONTIER to use the FRONTIER Fibers and Associated Property as permitted and provided hereunder than those imposed by such type of grantor under and in connection with the Existing Underlying Rights and Underlying Rights Requirements associated therewith. To the extent that any such Underlying Right documents, agreements or instruments were or hereafter are provided in a redacted format to protect confidential and proprietary business terms, QWEST represents and warrants that no language or information so redacted constitutes an Underlying Rights Requirement nor otherwise imposes material requirements, restrictions and/or limitations upon FRONTIER's right to use the FRONTIER Fibers and Associated Property as provided and permitted hereunder. QWEST represents to FRONTIER that the map heretofore provided to FRONTIER delineating the general location of rights of way, easements and other rights held by QWEST under the principal agreements evidencing the Existing Underlying Rights is a true and complete depiction, in all material respects, with respect to the general location of such Existing Underlying Rights that relate to the FRONTIER Fibers to be installed along the QWEST System as contemplated by this Agreement. 11.2 FRONTIER represents, warrants and covenants that it will use the FRONTIER Fibers and Associated Property in compliance with (i) all applicable government codes, ordinances, laws, rules, regulations and/or restrictions, and (ii) subject to QWEST's obligations under Section 11.1, the Underlying Rights Requirements. 11.3 In addition to the other rights provided hereunder, but subject to the provisions of Article VII, the IRUs granted hereunder shall include the right at FRONTIER's cost to install additional equipment, or replace existing equipment, in the facility space provided to FRONTIER pursuant to Article VII, subject to the Underlying Rights Requirements. 11.4 QWEST agrees and acknowledges that it has no right to use the FRONTIER Fibers during the Term hereof, and that, from and after the effective date of the grant of each IRU hereunder, QWEST shall keep the FRONTIER Fibers, the Associated Property and the IRUs granted hereunder (other than any Associated Property (excluding any Associated Property that may be covered by the Pre-Existing Cal-Fiber Lien as to which QWEST agrees to use its best efforts to provide a nondisturbance agreement substantially to the effect described in the next sentence) as to which QWEST shall have provided to FRONTIER a nondisturbance agreement substantially to the effect as described in the next sentence) free from (i) any liens of any third party attributable to QWEST, and (ii) any rights or claims of any third party attributable to QWEST, as and to the extent required pursuant to Article X hereof. In addition, QWEST agrees that, from and after the execution of this Agreement and until the effective date of the grant of each IRU hereunder with respect to any Segment, it shall obtain from any entity in favor of which QWEST in its discretion shall have granted a security interest or lien on all or part of such Segment (excluding the Pre-Existing Cal-Fiber Lien) a written nondisturbance agreement substantially to the effect that such lienholder acknowledges FRONTIER's rights and interests in and to the FRONTIER Fibers, the Associated Property and the IRU's hereunder and agrees that the same shall not be diminished, disturbed, impaired or interfered with by such lienholder. 11.5 Subject to the provisions of Article XXV and this Article XI, FRONTIER may use the FRONTIER Fibers, the Associated Property and the IRUs for any lawful telecommunications purpose. For purposes of this Section 11.5 "telecommunications" shall have the meaning as used and interpreted in 47 U.S.C. ' 153(2)(43). FRONTIER agrees and acknowledges that it has no right to use any of the fibers, other than the FRONTIER Fibers, included in the Cable or otherwise incorporated in the QWEST System, and that FRONTIER shall keep any and all of the QWEST System, other than the IRU in the FRONTIER Fibers or in the Associated Property, free from any liens, rights or claims of any third party attributable to FRONTIER. 11.6 FRONTIER and QWEST shall promptly notify each other of any matters pertaining to, or the occurrence (or impending occurrence) of, any event which could give rise to any damage or impending damage to or loss of the QWEST System that are known to such party. Without limiting the generality of the foregoing, QWEST shall promptly forward to FRONTIER a copy of any notice of default received by QWEST with respect to its obligations under any Underlying Right if such default is not promptly cured by QWEST. 11.7 FRONTIER shall not use the FRONTIER Fibers in a way which physically interferes in any way with or adversely affects the use of the fibers or cable of any other person using the QWEST System, it being expressly acknowledged that the QWEST System includes or will include other participants, including QWEST and other owners and holders of Dark Fiber IRUs and telecommunication system operations. QWEST shall not use any other fibers in the QWEST System in a way which physically interferes with or adversely affects the use of the FRONTIER Fibers, and shall obtain a similar agreement from any person that acquires the right to use fibers in the QWEST System after the date hereof. 11.8 FRONTIER and QWEST each agree to cooperate with and support the other in complying with any requirements applicable to their respective rights and obligations hereunder by any governmental or regulatory agency or authority. 11.9 QWEST agrees, so long as any such action would not violate the terms of any Underlying Right, upon request of FRONTIER, to execute, file and/or record such documents or instruments as FRONTIER shall deem reasonably necessary or appropriate to evidence or safeguard the IRUs granted to FRONTIER hereunder. FRONTIER agrees to reimburse QWEST for all reasonable costs and out-of-pocket expenses (including, without limitation, reasonable fees and expenses of legal counsel) incurred by QWEST in fulfilling its obligations under this Section 11.9. ARTICLE XII. INDEMNIFICATION --------------- 12.1 Subject to the provisions of Articles XIII and XVIII, QWEST hereby releases and agrees to indemnify, defend, protect and hold harmless FRONTIER and its employees, officers and directors, from and against, and assumes liability for: (a) Any injury, loss or damage to any person (including FRONTIER), tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs) to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of QWEST, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors arising out of or in connection with a default (other than a default caused by a failure of FRONTIER to perform or comply with its obligations hereunder) by QWEST in the performance of its obligations or breach of its representations under this Agreement (including, without limitation, any default by QWEST in the performance of its obligations under Article X with respect to the Underlying Rights and under Article XI with respect to its use of the QWEST System); and (b) Any claims, liabilities or damages, including reasonable attorneys' fees and costs, arising out of any violation by QWEST of any regulation, rule, statute or court order of any local, state or federal governmental agency, court or body in connection with the performance of its obligations under this Agreement. 12.2 Subject to the provisions of Articles XIII and XVIII, FRONTIER hereby releases and agrees to indemnify, defend, protect and hold harmless QWEST, and its employees, officers and directors, from and against, and assumes liability for: (a) Any injury, loss or damage to any person (including QWEST), tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs) to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of FRONTIER, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors arising out of or in connection with a default (other than a default caused by a failure of QWEST to perform or comply with its obligations hereunder) by FRONTIER in the performance of its obligations or breach of its representations under this Agreement (including, without limitation, any default by FRONTIER in the performance of its obligations under Article XI with respect to its use of the QWEST System); and (b) Any claims, liabilities or damages, including reasonable attorneys' fees and costs, arising out of any violation by FRONTIER of any regulation, rule, statute or court order of any local, state or federal governmental agency, court or body in connection with its use of the IRUs and/or the FRONTIER Fibers and Associated Property hereunder. 12.3 The parties agree to promptly provide each other with notice of any lawsuit, judicial, administrative or other dispute resolution action or proceeding, or claim of which it becomes aware and which it believes may result in an indemnification obligation hereunder (each, an "Action"); provided that ------------- the failure to provide any such notice shall not affect the indemnifying party's indemnification obligation unless the indemnifying party is actually prejudiced by the failure to receive such notice. After receipt of any such notice, if the indemnifying party shall acknowledge in writing to the indemnified party that the indemnifying party shall be obligated under the terms of this indemnity hereunder in connection with such Action, then the indemnifying party shall be entitled, if it so elects (i) to take control of the defense and investigation of such Action, (ii) to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party's cost, risk and expense unless the named parties to such action or proceeding include both the indemnifying party and the indemnified party and the indemnified party has been advised in writing by counsel that there may be one or more legal defenses available to such indemnified party that are different from or additional to those available to the indemnifying party, in which case the indemnified party shall also have the right to employ its own counsel in any such case with the reasonable fees and expenses of such counsel being borne by the indemnifying party, and (iii) to compromise or settle such Action, which compromise or settlement shall be made only with the written consent of the indemnified party, such consent not to be unreasonably withheld. Notwithstanding anything in this Section 12.3 to the contrary, (i) if there is a reasonable probability that an indemnifiable claim may materially adversely affect the indemnified party, other than as a result of money damages or other money payments, the indemnified party shall have the right to participate in such defense, compromise or settlement and the indemnifying party shall not, without the indemnified party's written consent (which consent shall not be unreasonably withheld), settle or compromise any indemnifiable claim or consent to entry of any judgment in respect thereof unless such settlement, compromise or consent includes as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party a release from all liability in respect of such indemnifiable claim. 12.4 The parties hereby expressly recognize and agree that each party's said obligation to indemnify, defend, protect and save the other harmless is not a material obligation to the continuing performance of the parties' other obligations, if any, hereunder. In the event that a party shall fail for any reason to so indemnify, defend, protect and save the other harmless, the injured party hereby expressly recognizes that its sole remedy in such event shall be the right to bring legal proceedings against the other party for its damages as a result of the other party's said failure to indemnify, defend, protect and save harmless. The obligations of the parties under this Article XII shall survive the expiration or termination of this Agreement. 12.5 Nothing contained herein shall operate as a limitation on the right of either party hereto to bring an action for damages against any third party, including indirect, special or consequential damages, based on any acts or omissions of such third party as such acts or omissions may affect the construction, operation or use of the FRONTIER Fibers or the QWEST System; provided, however, that each party hereto shall assign such rights or claims, execute such documents and do whatever else may be reasonably necessary to enable the other party to pursue any such action against such third party. ARTICLE XIII. LIMITATION OF LIABILITY ----------------------- 13.1 Notwithstanding any provision of this Agreement to the contrary, except to the extent caused by its own willful misconduct, neither party shall be liable to the other party for any special, incidental, indirect, punitive or consequential damages, whether foreseeable or not, arising out of, or in connection with such party's failure to perform its respective obligations or breach of its respective representations hereunder, including, but not limited to, loss of profits or revenue (whether arising out of transmission interruptions or problems, any interruption or degradation of service or otherwise), cost of capital, or claims of customers, in each case whether occasioned by any construction, reconstruction, relocation, repair or maintenance performed by, or failed to be performed by, the other party or any other cause whatsoever, including breach of contract, breach of warranty, negligence, or strict liability, all claims with respect to which such special, incidental, indirect, punitive or consequential damages are hereby specifically waived. Nothing contained herein shall be construed to prohibit or reduce the payment by QWEST of the amounts described in Section 18.2 and which the parties acknowledge are the sole rights and remedies of FRONTIER to the extent provided in Section 18.2(e). ARTICLE XIV. INSURANCE --------- 14.1 During the construction period with respect to any Segment, and until the Acceptance Date with respect thereto, QWEST shall procure and maintain in force the following insurance coverage from companies lawfully approved to do business in the state where the construction will be performed: (a) not less than $5,000,000 combined single-limit liability insurance, on an occurrence basis, for personal injury and property damage, including, without limitation, injury or damage arising from the operation of vehicles or equipment and liability for completed operations; (b) workers' compensation insurance in amounts required by applicable law and employers' liability insurance with a limit of at least $1,000,000 per occurrence; (c) automobile liability insurance covering death or injury to any person or persons, or damage to property arising from the operation of vehicles or equipment, with limits of not less than $2,000,000 per occurrence; and (d) any other insurance coverages required pursuant to QWEST's right-of-way agreements with railroads or other third parties. QWEST shall require its subcontractors who are engaged in connection with the construction of the QWEST System to maintain insurance in the types and amounts as would be obtained by a prudent person to provide adequate protection against loss. In all circumstances, QWEST shall require its subcontractors to carry a minimum of $1,000,000 in commercial general liability; and (e) FRONTIER shall be listed as an additional insured on all policies set forth above, except workers' compensation. QWEST shall provide to FRONTIER a certificate of insurance evidencing such insurance coverage. Evidence of insurance furnished shall contain a clause stating FRONTIER "shall be notified in writing at least thirty (30) days prior to any cancellation of, or any material change or new exclusions in the policy." 14.2 Following the Acceptance Date with respect to each Segment, and throughout the remaining term of the IRU with respect to such Segment, each party shall procure and maintain in force, at its own expense: (a) not less than $5,000,000 combined single limit liability insurance, on an occurrence basis, for personal injury and property damage, including, without limitation, injury or damage arising from the operation of vehicles or equipment and liability for completed operations; (b) workers' compensation insurance in amounts required by applicable law and employers' liability insurance with a limit of at least $1,000,000 per occurrence; (c) automobile liability insurance covering death or injury to any person or persons, or damage to property arising from the operation of vehicles or equipment, with limits of not less than $2,000,000 per occurrence; and (d) any other insurance coverages specifically required of such party pursuant to QWEST's right-of-way agreements with railroads or other third parties. 14.3 Both parties expressly acknowledge that a party shall be deemed to be in compliance with the provisions of this Article if it maintains an approved self insurance program providing for a retention of up to $1,000,000. If either party provides any of the foregoing coverages on a claims-made basis, such policy or policies shall be for at least a three-year extended reporting or discovery period. Unless otherwise agreed, FRONTIER's and QWEST's insurance policies shall be obtained and maintained with companies rated "A" or better by Best's Key Rating Guide and each party shall provide the other with an insurance certificate confirming compliance with this requirement for each policy providing such required coverage. 14.4 In the event either party fails to obtain the required insurance or to obtain the required certificates from any contractor and a claim is made or suffered, such party shall indemnify and hold harmless the other party from any and all claims for which the required insurance would have provided coverage. Further, in the event of any such failure which continues after seven (7) days' written notice thereof by the other party, such other party may, but shall not be obligated to, obtain such insurance and will have the right to be reimbursed for the cost of such insurance by the party failing to obtain such insurance. 14.5 In the event coverage is denied or reimbursement of a properly presented claim is disputed by the carrier for insurance provided above, the party carrying such coverage shall make good-faith efforts to pursue such claim with its carrier. 14.6 FRONTIER and QWEST shall each obtain from the insurance companies providing the coverages required by this Agreement the permission of such insurers to allow such party to waive all rights of subrogation and such party does hereby waive all rights of said insurance companies to subrogation against the other party, its parent corporation, affiliates, subsidiaries, assignees, officers, directors, and employees or any other party entitled to indemnity under this Agreement. ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS ---------------------------------------------- 15.1 The parties acknowledge and agree that it is their mutual objective and intent to (i) minimize, to the extent feasible, the aggregate Impositions (as defined in Section 33.1(e)) payable with respect to the QWEST System and (ii) share such Impositions according to their respective interests in the QWEST System , and that they will cooperate with each other and coordinate their mutual efforts to achieve such objectives in accordance with the provisions of this Article XV. 15.2 QWEST shall be responsible for and shall timely pay any and all Impositions with respect to the construction or operation of the QWEST System which Impositions are (i) imposed or assessed prior to the Acceptance Date, (ii) imposed or assessed with respect to events which occurred or property rights or obligations of QWEST which existed prior to the acceptance date; or (iii) imposed or assessed (regardless of the time) with respect to the QWEST System in exchange for the approval of construction in the original agreement which resulted in the granting of an Underlying Right. Notwithstanding the foregoing obligations, QWEST shall have the right to challenge any such Impositions so long as the challenge of such Impositions does not materially, adversely affect the title, rights or property to be delivered to FRONTIER pursuant hereto. 15.3 Except as to Impositions described in paragraphs (ii) and (iii) of Section 15.2, following the Acceptance Date, QWEST shall timely pay any and all Impositions imposed upon or with respect to the QWEST System to the extent such Impositions may not feasibly be separately assessed or imposed upon or against the respective ownership interests of QWEST and FRONTIER in the QWEST System; provided that, upon receipt of a notice of any such Imposition, QWEST shall promptly notify FRONTIER of such Imposition and following payment of such Imposition by QWEST, FRONTIER shall promptly reimburse QWEST for its proportionate share of such Imposition, which share shall be determined (i) to the extent possible, based upon the manner and methodology used by the particular authority imposing such Impositions (e.g., on the cost of the relative property interests, historic or projected revenue derived therefrom, or any combination thereof) and, if based upon projected revenue or gross receipts, then based on the relative number of FRONTIER Fibers in the affected portion of the QWEST System compared to the total number of fibers in the affected portion of the QWEST System during the relevant tax period which are subject to an indefeasible right of use or are otherwise in use; or (ii) if the same cannot be so determined, then based upon FRONTIER's proportionate share of the total fiber count in the affected portion of the QWEST System. QWEST shall provide FRONTIER with reasonable supporting documentation for Impositions for which QWEST seeks reimbursement. If QWEST's assessed value, for property tax purposes, is based on its entire operation in any state (i.e., central assessment), QWEST and FRONTIER shall work together in good faith to allocate a proper portion of said assessment to the QWEST System and FRONTIER's ownership interest in the QWEST System. Any reimbursement made under this Section 15.3 shall be in an amount equal to the Impositions required to be paid by QWEST in respect of the receipt or accrual of such reimbursement less the net present value (computed at a 10% discount rate) of the tax benefit (e.g. from the deduction, depreciation or amortization of such payment or accrual of the Imposition) to which QWEST may be entitled with respect to the payment or accrual of the Impositions which have been reimbursed. Hereafter, such additional amount or amounts shall be referred to as the "Gross-up Amount." Such Gross-up Amount shall not include any tax on the amount of the Gross-up Amount itself. QWEST shall, upon request, provide FRONTIER with documentation in support of any Gross-up Amount so as to ensure that both parties are made whole in a manner that is consistent with the mutual objectives set forth in section 15.1 of the Agreement. If such Gross-up Amount exceeds $50,000, FRONTIER may elect to engage the services of an independent consultant, at FRONTIER's sole cost and expense, to review QWEST's computation of such Gross-up Amount. Any independent consultant selected by FRONTIER shall be subject to approval by QWEST, which such approval shall not be unreasonably withheld, and such independent consultant shall be subject to confidentiality restrictions as may be determined in QWEST's sole discretion. Further, if, after review of such documentation or otherwise, in the event the parties are unable to agree upon the amount of the Gross-up Amount, such dispute shall be resolved pursuant to Article XXI of the Agreement. 15.4 Upon notice of the assertion or proposed assertion of any imposition described in Section 15.3 (including Impositions that trigger a Gross-up Amount) QWEST shall promptly and in good faith consult with FRONTIER concerning the underlying facts and whether to contest or continue to contest such assertion or proposed assertion. Notwithstanding any provision herein to the contrary, QWEST shall have the right to contest any Imposition described in Section 15.3, above, (including Impositions which trigger a Gross-up Amount). Such contest may be pursued by any lawful means including by non-payment of such Imposition provided such non-payment does not materially, adversely affect the title, rights or property to be delivered to FRONTIER pursuant hereto). The out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by QWEST in any such contest shall be shared by QWEST and FRONTIER in the same proportion as to which the parties shared in any such Imposition, as it was originally assessed. Any refunds or credits resulting from a contest brought pursuant to this Section 15.4 shall be divided between QWEST and FRONTIER in the same proportion as to which such refunded or credited Impositions were borne by QWEST and FRONTIER. In any such event, QWEST shall provide timely notice of such challenge to FRONTIER. If QWEST chooses to proceed with such challenge after receipt of a written objection to the challenge from FRONTIER, QWEST shall conduct such challenge at its own costs and expense, provided that FRONTIER shall not receive the benefit of any refund or credit, if any, obtained as a result of a successful challenge. Further, where QWEST does not contest an Imposition, FRONTIER shall have the right, after notice to QWEST, to contest such Imposition as long as such contest does not materially, adversely affect the title property or rights of QWEST. The out-of-pocket costs and expenses (including reasonable attorney's fees) incurred by FRONTIER in any such contest shall be shared by FRONTIER and QWEST in the same proportion as to which the parties shared in such Imposition, as it was originally assessed. Any refunds or credits resulting from a contest shall be divided between FRONTIER and QWEST in the same proportion as to which such refunded or credited Imposition was borne by FRONTIER and QWEST. If FRONTIER chooses to proceed with such contest after receipt of written objection to the challenge from QWEST, FRONTIER shall conduct such challenge at its own costs and expense, provided that QWEST shall not receive the benefit of any refund or credit, if any, obtained as a result of a successful challenge. Provided, however, that notwithstanding anything to the contrary in this Article 15, QWEST shall have complete authority over and discretion to control (including the authority to dismiss or not pursue) any contests relating to Impositions based upon the computation of QWEST's taxable income under the Federal Internal Revenue Code or state income or franchise tax laws (hereinafter "Net Income Based Impositions"). FRONTIER shall, however, be consulted on the conduct and status of such contest. QWEST shall have no obligation to disclose to FRONTIER its income or franchise tax returns and records except as to the discrete portion of such return or record that directly relates to the computation and payment of such Net Income Based Impositions. Provided further, however, that in the event QWEST shall determine in its own discretion not to pursue a contest of any Net Income Based Imposition as to which FRONTIER has requested a contest pursuant to the provisions described above in this Section 15.4, then FRONTIER shall have no obligation to provide any reimbursement for such amount if FRONTIER shall have obtained and provided to QWEST an opinion of nationally recognized legal counsel confirming that a meritorious defense exists to such Net Income Based Imposition. 15.5 Except as to Impositions described in paragraph (iii) of Section 15.2, following the Acceptance Date QWEST and FRONTIER, respectively, shall be separately responsible for any and all Impositions (i) expressly or implicitly imposed upon, based upon, or otherwise measured by the gross receipts, gross income, net receipts or net income received by or accrued to such party due to its respective ownership or use of the QWEST System and/or the FRONTIER Fibers, or (ii) which have been separately assessed or imposed upon the respective ownership interest of such party in the QWEST System and/or the FRONTIER Fibers. If the FRONTIER Fibers are the only fibers located in the Cable from the point where the Cable leaves the QWEST System right-of-way to a FRONTIER POP, FRONTIER shall be solely responsible for any and all Impositions imposed on or with respect to such portion of the QWEST System. 15.6 Notwithstanding any provision herein to the contrary, FRONTIER shall have the right to protest by appropriate proceedings any Imposition described in Section 15.5, above. In such event, FRONTIER shall indemnify and hold QWEST harmless from any expense, legal action or cost, including reasonable attorneys' fees, resulting from FRONTIER's exercise of its rights hereunder. In the event of any refund, rebate, reduction or abatement to FRONTIER of any such Imposition imposed upon and/or paid by FRONTIER, FRONTIER shall be entitled to receive the entire benefit of such refund, rebate, reduction or abatement attributable to FRONTIER's use of the QWEST System. In the event FRONTIER has exhausted all its rights of appeal in protesting any Imposition and has failed to obtain the relief sought in such proceedings or appeals ("Finally Determined Taxes and Fees"), FRONTIER and QWEST may jointly agree (with the consent and participation of the other Interest Holders in the affected portion of the QWEST System) to relocate a portion of the QWEST System so as to bypass the jurisdiction which had imposed or assessed such Finally Determined Taxes and Fees with the total Costs thereof to be shared proportionately as follows: (i) if the affected portion of the QWEST System includes any conduit other than the conduit in which the FRONTIER Fibers are located, the total Costs of relocation of the conduits (i.e., relocation of the conduits only without regard to whether the conduits contain fibers) shall be allocated based on the overall number of conduits in the QWEST System which are relocated; and (ii) such Costs allocated to the conduit carrying the FRONTIER Fibers plus the Costs specifically associated with the relocation of the fiber (i.e., relocation of the fiber only without regard to relocation of conduit) to be further allocated to FRONTIER based upon FRONTIER's proportionate share of (A) all Costs of fiber acquisitions, splicing and testing, prorated based on the total fiber count in the Cable, as so relocated; and (B) all other Costs associated with the relocation of the conduit housing the affected Cable, prorated based upon the total number of Interest Holders in the affected Cable, as so relocated. QWEST shall deliver to FRONTIER updated As-Builts with respect to the relocated QWEST System not later than sixty (60) days following the completion of such relocation. If FRONTIER and QWEST do not determine to relocate the affected portion of the QWEST System, FRONTIER shall have the right to terminate its use of the FRONTIER Fibers in the affected portion of the QWEST System. Such termination shall be effective on the date specified by FRONTIER in a notice of termination, which date shall be at least ninety (90) days after the notice. Upon such termination, the IRU in the affected portion of the QWEST System shall immediately terminate, and the FRONTIER Fibers in the affected portion of the QWEST System shall thereupon revert to QWEST without reimbursement of any of the IRU Fee or other payments previously made with respect thereto. 15.7 Notwithstanding the provisions of Section 15.6, with respect to any Impositions relating to the QWEST System which are imposed upon both QWEST and FRONTIER (or both of their respective interests therein), QWEST, at its option and at its own expense, shall have the right to direct and manage any such contest; subject, however, to reasonable and appropriate consultation with FRONTIER which hereby agrees to cooperate with QWEST in any such contest. The right of QWEST to contest any Imposition pursuant to this Section 15.7 shall be contingent upon reasonable and appropriate assurances that any such contest will not adversely affect the title, property or rights of FRONTIER hereunder. 15.8 QWEST and FRONTIER agree to cooperate fully in the preparation of any returns or reports relating to the Impositions. QWEST and FRONTIER further acknowledge and agree that the provisions of this Article XV are intended to allocate the Impositions expected to be assessed against or imposed upon the parties with respect to the QWEST System based upon the procedures and methods of computation by which Impositions generally have been assessed and imposed to date, and that material changes in the procedures and methods of computation by which such assessments are assessed and imposed could significantly alter the fundamental economic assumptions underlying the transactions hereunder to the parties. Accordingly, the parties agree that, if in the future the procedures or methods of computation by which Impositions are assessed or imposed against the parties change materially from the procedures or methods of computation by which they are imposed as of the date hereof, the parties will negotiate in good faith an amendment to the provisions of this Article XV in order to preserve, to the extent reasonably possible, the economic intent and effect of this Article XV as of the date hereof. ARTICLE XVI. NOTICE ------ 16.1 Unless otherwise provided herein, all notices and communications concerning this Agreement shall be addressed to the other party as follows: If to QWEST: QWEST Communications Corporation ATTENTION: President 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 with a copy to: QWEST Communications Corporation ATTENTION: General Counsel 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 and a copy to: Martha Dugan Rehm, Esq. Holme Roberts & Owen LLP 1700 Lincoln, Suite 4100 Denver, Colorado 80206 Telephone No.: (303) 861-7000 Facsimile No.: (303) 866-0200 If to FRONTIER: FRONTIER Communications International Inc. ATTENTION: Director, Network Development 180 South Clinton Avenue Rochester, New York 14646 Telephone No.: (716) 777-6848 Facsimile No.: (716) 777-6770 with a copy to: Frontier Corporation ATTENTION: Vice President, Network Planning and Development 180 South Clinton Avenue Rochester, New York 14646 Telephone No.: (716) 777-8018 Facsimile No.: (716) 232-8154 and a copy to: Frontier Corporation ATTENTION: Vice President, Legal and Regulation 180 South Clinton Avenue Rochester, New York 14646 Telephone No.: (716) 777-6105 Facsimile No.: (716) 546-7823 or at such other address as either party may designated from time to time in writing to the other party. 16.2 Unless otherwise provided herein, notices shall be hand delivered, sent by registered or certified U.S. mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to the addressee or its office when received at the address for notice specified above when hand delivered, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery service, or three (3) days after deposit in the mail when sent by U.S. mail. 16.3 All invoices concerning payment obligations due to QWEST pursuant to this Agreement shall be addressed to FRONTIER as follows: Frontier Corporation ATTENTION: Treasurer 180 South Clinton Avenue Rochester, New York 14646 Telephone No.: (716) 777-7130 Facsimile No.: (716) 325-7633 with a copy to: Frontier Corporation ATTENTION: Director, Network Development 180 South Clinton Avenue Rochester, New York 14646 Telephone No.: (716) 777-6848 Facsimile No.: (716) 777-6770 ARTICLE XVII. CONFIDENTIALITY --------------- 17.1 QWEST and FRONTIER hereby agree that if either party provides (or, prior to the execution hereof, has provided) confidential or proprietary information to the other party ("Proprietary Information"), such Proprietary Information shall be held in confidence, and the receiving party shall afford such Proprietary Information the same care and protection as it affords generally to its own confidential and proprietary information (which in any case shall be not less than reasonable care) in order to avoid disclosure to or unauthorized use by any third party. The parties acknowledge and agree that this Agreement, including all of the terms, conditions and provisions hereof, and all drafts hereof, constitutes Proprietary Information. In addition, all information disclosed by either party to the other in connection with or pursuant to this Agreement, including prior to the date hereof, shall be deemed to be Proprietary Information. All Proprietary Information, unless otherwise specified in writing, shall remain the property of the disclosing party, shall be used by the receiving party only for the intended purpose, and such written Proprietary Information, including all copies thereof, shall be returned to the disclosing party or destroyed after the receiving party's need for it has expired or upon the request of the disclosing party. Proprietary Information shall not be reproduced except to the extent necessary to accomplish the purpose and intent of this Agreement, or as otherwise may be permitted in writing by the disclosing party. 17.2 The foregoing provisions of Section 17.1 shall not apply to any Proprietary Information which (i) becomes publicly available other than through the recipient; (ii) is required to be disclosed by a governmental or judicial law, order, rule or regulation; (iii) is independently developed by the disclosing party; (iv) becomes available to the disclosing party without restriction from a third party; or (v) becomes relevant to the settlement of any dispute or enforcement of either party's rights under this Agreement in accordance with the provisions of this Agreement, in which case appropriate protective measures shall be taken to preserve the confidentiality of such Proprietary Information as fully as possible within the confines of such settlement or enforcement process. If any Proprietary Information is required to be disclosed pursuant to the foregoing clause (ii), the party required to make such disclosure shall promptly inform the other party of the requirements of such disclosure. 17.3 Notwithstanding Sections 17.1 and 17.2 of this Article, either party may disclose Proprietary Information to its employees, agents, and legal, financial, and accounting advisors and providers (including its lenders and other financiers) to the extent necessary or appropriate in connection with the negotiation and/or performance of this Agreement or its obtaining of financing, provided that each such party is notified of the confidential and proprietary - - ------------- nature of such Proprietary Information and is subject to or agrees to be bound by similar restrictions on its use and disclosure. In addition, notwithstanding Sections 17.1 and 17.2 of this Article, FRONTIER may disclose this Agreement and its terms, conditions and provisions to the Permitted System Acquiror and/or the Permitted Sacramento/Seattle Acquiror (each as defined in Section 25.3(b)), provided that (i) such Permitted System Acquiror and/or Permitted - - ------------- Sacramento/Seattle Acquiror, prior to any such disclosure, shall have been notified of the confidential and proprietary nature of this Agreement and its terms, conditions and provisions and shall have entered into a written confidentiality agreement with substantially similar (and in no event less restrictive than the) terms of the Confidentiality Agreement between QWEST and FRONTIER dated February 15, 1995, (ii) copies of all or any portion of this Agreement (including Exhibits) may not be furnished to the Permitted System Acquiror and/or the Permitted Sacramento/Seattle Acquiror without the prior written consent of QWEST (not unreasonably withheld or delayed) of the proposed form of disclosure thereof (redacted or otherwise), and (iii) copies of all or any portion of any Underlying Right may not be furnished without the prior written consent of QWEST (not unreasonably withheld or delayed). 17.4 The provisions of this Article XVII shall survive expiration or termination of this Agreement. ARTICLE XVIII. DEFAULT ------- 18.1 With respect to all payments required to be made by FRONTIER hereunder, including, without limitation, payment of the IRU Fee and all other amounts payable by FRONTIER hereunder, in the event FRONTIER shall fail to make a payment by the date due and payable hereunder, from and after such date, (i) such unpaid amount shall bear interest until paid at a rate equal to the rate set forth in Article XXX and (ii) if such payment is due with respect to a Segment on or prior to the Acceptance Date of such Segment, the Estimated Delivery Date for such Segment shall be extended by a number of days equal to the number of days that elapse from the date such payment is due until paid. In the event any amount or amounts due and payable hereunder remain unpaid for a period of eighty (80) days after written notice from QWEST to FRONTIER, and the amount thereof is not in bona fide dispute, then QWEST may, in its sole and absolute discretion and in addition to its other rights and remedies hereunder, after ten (10) days prior written notice to FRONTIER and the failure of FRONTIER to pay such amount within such ten-day period, terminate any and all of its obligations hereunder with respect to any Segment or Segments as to which the Acceptance Date has not yet occurred or the grant of the IRU with respect to which has not yet become effective, and to apply any and all amounts previously paid by FRONTIER hereunder with respect to such Segment or Segments toward the payment of any other amounts then or thereafter payable by FRONTIER hereunder. With respect to all of its other obligations hereunder, in the event FRONTIER shall fail to perform a non-payment obligation and such failure shall continue for a period of thirty (30) days after QWEST shall have given FRONTIER written notice of such failure, FRONTIER shall be in default hereunder unless FRONTIER shall have cured such failure or such failure is otherwise waived in writing by QWEST within such thirty (30) days; provided, however, that where ----------------- such failure cannot reasonably be cured within such 30-day period, if FRONTIER shall proceed promptly to cure the same and prosecute such cure with due diligence, the time for curing such failure shall be extended for such period of time as may be necessary to complete such cure; and provided further that if ---------------- FRONTIER certifies in good faith to QWEST in writing that a non-payment failure has been cured, such failure shall be deemed to be cured unless QWEST otherwise notifies FRONTIER in writing within fifteen (15) days of receipt of such notice from FRONTIER. FRONTIER shall be in default hereunder (i) automatically upon the making by FRONTIER or Frontier Corporation of a general assignment for the benefit of its creditors, the filing by FRONTIER or Frontier Corporation of a voluntary petition in bankruptcy or the filing by FRONTIER or Frontier Corporation of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution, or similar relief; (ii) one hundred twenty (120) days after the filing of an involuntary petition in bankruptcy or other insolvency protection against FRONTIER or Frontier Corporation which is not dismissed within such one hundred twenty (120) days, or (iii) upon any default by Frontier Corporation under the Guaranty, which default is not cured within the relevant cure period, if any, provided with respect thereto under the Guaranty. Except as otherwise provided in this Section 18.1, upon any default by FRONTIER, after written notice thereof from QWEST, QWEST may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default and, subject to Section 13.1, recover from FRONTIER its reasonable costs incurred in correcting such default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such default, including specific performance. Notwithstanding any other provision of this Agreement, QWEST acknowledges and agrees that QWEST shall have no right to terminate the IRU or any of the rights and interests of FRONTIER hereunder with respect to any Segment for which the IRU Fee relating thereto has been fully paid. 18.2 (a) With respect to its obligation to complete the construction, installation, and satisfactory Fiber Acceptance Testing of the FRONTIER Fibers comprising a particular Segment by the Estimated Delivery Date with respect to such Segment pursuant to Section 3.2, the parties acknowledge and agree that it is in their mutual best interest to work together in a cooperative effort to determine whether and to what extent any event or occurrence that is reasonably likely to cause a delay in the delivery of a Segment hereunder, as a result of any force majeure event or other occurrence described in Article XX or otherwise, can be terminated, resolved or avoided, and to cause the construction, installation and delivery of the Segment to be completed in the most expeditious and practical manner feasible under the circumstances. Accordingly, within three (3) months following its discovery of an event or occurrence that QWEST reasonably believes is likely to cause (i) an extension of the Estimated Delivery Date of one hundred twenty (120) days or more pursuant to Article XX or (ii) a Delivery Default (as defined pursuant to Section 18.2(d) below), QWEST shall give written notice to FRONTIER of such event or occurrence. Thereupon, each of QWEST and FRONTIER (i) will designate a senior executive officer with decision-making authority and familiarity with this Agreement and the relevant issue hereunder, and (ii) may designate one technical representative and one financial representative, to participate in the following resolution efforts. Each of such designees shall participate in such meetings, promptly scheduled at mutually agreed upon times and places, as may be necessary or appropriate to discuss in good faith the status of construction of the affected Segment, the reason or reasons for the anticipated Estimated Delivery Date extension or Delivery Default, various possible and practical means by which the event(s) or occurrence(s) causing such anticipated Estimated Delivery Date extension or Delivery Default might be terminated, avoided or resolved, including, without limitation, possible modifications to the route, selection of right-of-way, or manner of construction of the affected Segment, and (iii) use their best efforts to settle upon and implement a procedure by which such event(s) or occurrence(s) may be terminated, avoided or resolved and the construction, installation and delivery of the affected Segment completed in an expeditious and economically practical and feasible manner under the circumstances. The parties acknowledge and agree that, because the QWEST System includes or will include other participants, including owners and holders of Dark Fiber IRUs and telecommunication system operations, such meetings may, and likely will, involve designees and representatives of such other participants, and the resolution of any matters so acted upon will require the cooperative efforts of, and have to be structured, to the extent feasible, in an effort to meet the needs of all such participants. The parties hereto further acknowledge and agree that no failure of the parties hereto to resolve, or to agree upon a manner in which they might resolve, any issue addressed hereunder shall impair, adversely affect or invalidate any of their respective rights, claims or remedies under this Agreement. (b) If, notwithstanding the efforts of the parties pursuant to Section 18.2(a): (i) (A) a force majeure event or occurrence described in Article XX causing an anticipated Estimated Delivery Date extension has not been terminated, avoided or resolved by the date that is twelve (12) months following QWEST's discovery of such event or occurrence, and (B) there is no "Reasonably Apparent Probability" (either as mutually determined by QWEST and FRONTIER or, if QWEST and FRONTIER are unable to make such a mutual determination, as determined by an independent third party mutually selected by QWEST and FRONTIER and familiar with large-scale fiberoptic system constructions projects or, if QWEST and FRONTIER are unable to make such a mutual selection, each of QWEST and FRONTIER shall designate such an independent third party, the two of which shall designate such an independent third party to make such determination) that the Acceptance Date with respect to any such affected Segment will occur within (1) twelve (12) months following the Estimated Delivery Date (without extension for any delay pursuant to Article XX) with respect to any Segment designated as a "priority" Segment on Exhibit A-1, or (2) eighteen (18) months following the Estimated Delivery Date (without extension for any delay pursuant to Article XX) with respect to any other Segment (such date with respect to each Segment being referred to as the "Outside Force Majeure Date"); or (ii) notwithstanding a determination pursuant to the foregoing clause (i) that there was a Reasonably Apparent Probability that the Acceptance Date with respect to the affected Segment would occur by the applicable Outside Force Majeure Date, nonetheless the event or occurrence described in Article XX causing such delay is continuing on such applicable Outside Force Majeure Date; or (iii) notwithstanding such a determination that there was a Reasonably Apparent Probability that the Acceptance Date with respect to the affected Segment would occur by the applicable Outside Force Majeure Date, nonetheless, on the applicable Outside Force Majeure Date, although the event or occurrence described in Article XX has been terminated, avoided or resolved and QWEST has resumed its construction, installation, splicing, and/or testing efforts, QWEST is unable to demonstrate to FRONTIER's reasonable satisfaction that the Acceptance Date for such Segment will occur, in all reasonable probability, by the date that is six (6) months following such Outside Force Majeure Date, then, in any such event described in foregoing clauses (i), (ii), and (iii), FRONTIER may elect, in its sole discretion, by written notice to QWEST, to delete such Segment from the System Route otherwise to be delivered pursuant to this Agreement, and recover from QWEST (1) the amount of the IRU Fee previously paid by FRONTIER hereunder with respect to such Segment, plus (2) interest at the prime rate interest published by The Wall Street Journal as the base rate on ----------------------- corporate loans posted by a substantial percentage of the nation's largest banks on such date, plus (3) an amount equal to ten percent (10%) of the IRU Fee for such Segment, as determined or redetermined pursuant to Section 2.1 (with such aggregate amount payable to FRONTIER promptly following QWEST's receipt of such election notice or, at the election of FRONTIER, offset against the unpaid amount of the IRU Fee payable hereunder with respect to any other Segment or Segments). Upon any such election and payment (or offset), neither party shall have any further rights or obligations with respect to such Segment hereunder. (c) If, notwithstanding the efforts of the parties pursuant to Section 18.2(a): (i) (A) an event or occurrence causing an anticipated Delivery Default (as defined in Section 18.2(d) below) has not been terminated, avoided, resolved or waived by the date that is twelve (12) months following QWEST's discovery of such event or occurrence; and (B) there is no Reasonably Apparent Probability that the Acceptance Date with respect to any such affected Segment will occur within (x) twelve (12) months following the Estimated Delivery Date with respect to each Segment designated as a "priority" Segment on Exhibit A-1, or (y) eighteen (18) months following the Estimated Delivery Date with respect to any other Segment (such dates being referred to collectively as the "Outside Delivery Default Date"); or (ii) notwithstanding a determination pursuant to the foregoing clause (i) that there was a Reasonably Apparent Probability that the Acceptance Date with respect to the affected Segment would occur by the applicable Outside Delivery Default Date, nonetheless, on the applicable Outside Delivery Default Date, the Acceptance Date for such Segment has not occurred; then, in any such event described in the foregoing clauses (i) and (ii), FRONTIER may elect, in its sole discretion, by written notice to QWEST, to delete such Segment from the System Route otherwise to be delivered pursuant to this Agreement, and recover from QWEST (1) the amount of the IRU Fee previously paid by FRONTIER hereunder with respect to such Segment, plus (2) interest thereon at the rate of interest applicable to late payments set forth in Article XXX, plus (3) an amount equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## ) of the IRU Fee for such Segment, as determined or redetermined pursuant to Section 2.1, but without reduction of such IRU fee under Section 18.2(d) (with such aggregate amount payable to FRONTIER promptly following QWEST's receipt of such election notice or, at the election of FRONTIER, offset against the unpaid amount of the IRU Fee payable hereunder with respect to any other Segment or Segments). Upon any such election and payment (or offset), neither party shall have any further rights or obligations with respect to such Segment hereunder. (d) In addition to the specific rights and remedies provided pursuant to the foregoing paragraphs (b) and (c) in connection with delays and anticipated delays in the delivery of Segments hereunder, QWEST shall be in default under this Agreement if the Acceptance Date with respect to any Segment has not occurred within one hundred twenty (120) days after the Estimated Delivery Date (a "Delivery Default"). From the date of any such Delivery Default, and until the Acceptance Date with respect to such Segment occurs, the IRU Fee with respect to such Segment, as determined or redetermined pursuant to Section 2.1 hereof, shall be reduced by an amount equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of such IRU Fee for each thirty (30) days (or a pro rata percentage of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % for any period of less than thirty (30) days) that elapse between such date of Delivery Default and the Acceptance Date. (e) The rights and remedies set forth in the foregoing Sections 18.2(c) and 18.2(d) shall be the sole remedies available to FRONTIER with respect to any failure by QWEST to construct, install, and conduct satisfactory Fiber Acceptance Testing with respect to the FRONTIER Fibers comprising any Segment by the relevant Estimated Delivery Date (it being expressly acknowledged and agreed that the rights provided to FRONTIER pursuant to Section 18.2(b) are provided only as an accommodation in the event of lengthy force majeure delays pursuant to Article XX, and that the events described in Section 18.2(b) do not constitute defaults hereunder). With respect to all of QWEST's other obligations hereunder, in the event that QWEST shall fail to perform an obligation and such failure shall continue for a period of thirty (30) days after FRONTIER shall have given QWEST written notice of such failure, QWEST shall be in default hereunder unless QWEST shall have cured such failure or such failure is otherwise waived in writing by FRONTIER within such thirty (30) days; provided however, that where such failure cannot reasonably be cured ---------------- within such 30-day period, if QWEST shall proceed promptly to cure the same and prosecute such cure with due diligence, the time for curing such failure shall be extended for such period of time as may be necessary to complete such cure; and provided further, that if QWEST certifies in good faith to FRONTIER in ---------------- writing that failure has been cured, such failure shall be deemed to be cured unless FRONTIER otherwise notifies QWEST in writing within fifteen (15) days of receipt of such notice from QWEST. QWEST shall be in default hereunder automatically upon the making by QWEST of a general assignment for the benefit of its creditors, the filing by QWEST of a voluntary petition in bankruptcy or the filing by QWEST of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution, or similar relief, or (ii) one hundred twenty (120) days after the involuntary filing of a petition in bankruptcy or other insolvency protection against QWEST which is not dismissed within such 120-day period. Except as otherwise provided in this Section 18.2, upon any default by QWEST, after notice thereof from FRONTIER, FRONTIER may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default, and, subject to Section 13.1, recover from QWEST its reasonable costs in correcting such default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such default including specific performance. ARTICLE XIX. TERMINATION ----------- 19.1 This Agreement automatically shall terminate with respect to a Segment upon the expiration or termination of the Term of the IRU respecting such Segment pursuant to Article VI or Section 18.2 hereof. 19.2 Upon the expiration or termination of this Agreement with respect to a Segment, the IRU in such Segment shall immediately terminate and all rights of FRONTIER to use the QWEST System, the FRONTIER Fibers, the Associated Property or any part thereof relating to such Segment, shall cease and QWEST shall owe FRONTIER no additional duties or consideration with respect to such Segment. Promptly thereupon, FRONTIER shall remove all of FRONTIER's electronics, equipment, separate Regeneration Facilities (as provided pursuant to Section 7.2) and other associated FRONTIER property from such Segment and any related QWEST facilities at its sole cost under QWEST's supervision (which supervision shall be without cost to FRONTIER). 19.3 Notwithstanding the foregoing, no termination or expiration of this Agreement shall affect the rights or obligations of any party hereto (i) with respect to any then existing defaults or the obligation to make any payment hereunder for services rendered prior to the date of termination or expiration or (ii) pursuant to Article XII, Article XIII, Article XV or Article XVII herein, which shall survive the expiration or termination hereof. ARTICLE XX. FORCE MAJEURE ------------- 20.1 Neither party shall be in default under this Agreement if and to the extent that any failure or delay in such party's performance of one or more of its obligations hereunder is caused by any of the following conditions, and such party's performance of such obligation or obligations shall be excused and extended for and during the period of any such delay: act of God; fire; flood; fiber, Cable, or other material failures, shortages or unavailability or other delay in delivery not resulting from the responsible party's failure to timely place orders therefor (it being expressly acknowledged that the Cable that is being acquired for and installed in the QWEST System and that will include the FRONTIER Fibers must include higher fiber counts than that necessary solely for the FRONTIER Fibers in order to permit completion of the entire QWEST System); lack of or delay in transportation; government codes, ordinances, laws, rules, regulations or restrictions (collectively, "Regulations"); war or civil disorder; strikes or other labor disputes; failure of a third party to grant or recognize an Underlying Right, or any other cause beyond the reasonable control of such party; provided that any delay caused by the failure of a third party to ------------- grant an Underlying Right shall constitute a force majeure delay hereunder only to the extent that such delay does not extend beyond a period of six months (such that the Estimated Delivery Date with respect to any Segment affected by such delay shall be extended only up to a period of six months of any such delay, and shall not be further extended if such delay extends beyond a period of six months). The party claiming relief under this Article shall notify the other in writing of the existence of the event relied on and the cessation or termination of said event. ARTICLE XXI DISPUTE RESOLUTION ------------------ 21.1 Except as provided in Sections 18.1 and 18.2, if the parties are unable to resolve any disagreement or dispute arising under or related to this Agreement, including without limitation, the failure to agree upon any item requiring a mutual agreement of the parties hereunder, they shall resolve the disagreement or dispute as follows: (a) Officers. Either party may refer the matter to the Chief Executive -------- Officers or the Chief Operating Officers (the "Officers") of the parties by giving the other party written notice (a "Notice"). Within fifteen (15) days after delivery of a Notice, the Officers of both parties shall meet at a mutually acceptable time and place to exchange relevant information and to attempt to resolve the dispute. (b) Negotiation. If the matter has not been resolved within thirty (30) ----------- days after delivery of such Notice, or if the Officers fail to meet within fifteen (15) days after delivery of such Notice, either party may initiate mediation and, if applicable, arbitration in accordance with the procedure set forth in subsections (c) and (d) below. All negotiations conducted by the Officers pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and State Rules of Evidence. (c) Mediation. In the event a dispute exists between the parties and the --------- respective Officers are unable to resolve the dispute, the parties agree to participate in a non-binding mediation procedure as follows: (i) A mediator will be selected by having counsel for each party agree on a single person to act as mediator. The parties' counsel as well as the Officers of each party and not more than two other participants from each party will appear before the mediator at a time and place determined by the mediator, but not more than sixty (60) days after delivery of a Notice. The fees of the mediator and other costs of mediation will be shared equally by the parties. (ii) Each party's counsel will have forty-five (45) minutes to present a review of the issue and argument before the mediator. After each counsel's presentation, the other counsel may present specific counter-arguments not to exceed ten (10) minutes. The 45-minute and 10-minute periods will be exclusive of the time required to answer questions from the mediator or attendees. (iii) After both presentations, the Officers may ask questions of the other side. At the conclusion of both presentations and the question periods, the Officers and their counsels will meet together to attempt to resolve the dispute. The length of the meeting will be as agreed between the parties. Either party may abandon the procedure at the end of the presentations and question periods if they feel it is not productive to go further. The mediation procedure is not binding on either party. (iv) The duties of the mediator are to be sure that the above set-out time periods are adhered to and to ask questions so as to clarify the issues and understandings of the parties. The mediator may also offer possible resolutions of the issues but has no duty to do so. (d) Arbitration. If the matter is not resolved after applying the ----------- mediation procedures set forth above, or if either party refuses to take part in the mediation process, the parties hereby agree to submit all controversies, claims and matters of difference that are unresolved to arbitration in Chicago, Illinois, according to the commercial rules and practices of the American Arbitration Association ("AAA") from time to time in force, and in accordance with the following provisions of this subsection (d), and unless otherwise agreed by the parties and subject to the rights of the parties as provided in Section 18.1 and Section 18.2 hereof (including the right not to continue to perform under this Agreement), they shall continue to perform under this Agreement during arbitration. (i) Arbitration discovery shall be conducted in accordance with the Federal Rules of Civil Procedure, with any disputes over the scope of discovery to be determined by the arbitrators, it being intended that the arbitrators shall allow limited, reasonable discovery prior to any hearing on the merits. (ii) Arbitration hereunder shall be by three independent and impartial arbitrators. Each of the parties shall appoint one arbitrator within thirty (30) days after initiation of arbitration and the two arbitrators so appointed shall select a third arbitrator within forty-five (45) days after initiation of arbitration. In the event that the parties or the arbitrators fail to select arbitrators as required above, the AAA shall select such arbitrators. (iii) The AAA shall have the authority to disqualify any arbitrator who it determines not to be independent and impartial. The arbitrators shall be entitled to a fee commensurate with their fees for professional services requiring similar time and effort. (iv) The arbitrators shall conduct a hearing no later than sixty (60) days after initiation of the matter to arbitration, and a decision shall be rendered by the arbitrators within thirty (30) days of the hearing. At the hearing, the parties shall present such evidence and witnesses as they may choose, with or without counsel. Adherence to formal rules of evidence shall not be required but the arbitration panel shall consider any evidence and testimony that it determines to be relevant, in accordance with procedures that it determines to be appropriate. The arbitration determination shall be in writing and shall specify the factual and legal bases for the determination. The arbitrators may award legal or equitable relief, including but not limited to specific performance. (v) The parties agree that this submission and agreement to arbitrate shall be governed by and specifically enforceable in accordance with the laws of the State of Illinois. Arbitration may proceed in the absence of any party if prior written notice of the proceedings has been given to such party. The parties agree to abide by all decisions and determinations rendered in such proceedings. Such decisions and determinations shall be final and binding on all parties. All decisions and determinations may be filed with the clerk of one or more courts, state, federal or foreign having jurisdiction over the party against whom it is rendered or its property, as a basis of judgment. (vi) The arbitrators' fees and other costs of the arbitration shall be borne by the party against whom the award is rendered, except as the arbitration panel may otherwise provide in its written opinion. ARTICLE XXII. WAIVER ------ 22.1 The failure of either party hereto to enforce any of the provisions of this Agreement, or the waiver thereof in any instance, shall not be construed as a general waiver or relinquishment on its part of any such provision, but the same shall nevertheless be and remain in full force and effect. ARTICLE XXIII. GOVERNING LAW ------------- 23.1 This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Illinois, without reference to its choice of law principles. Any litigation based hereon, or arising out of or in connection with a default by either party in the performance of its obligations hereunder, shall be brought and maintained exclusively in the courts of the State of Illinois or in the United States District Court for the Northern District of Illinois, and each party hereby irrevocable submits to the jurisdiction of such courts for the purpose of any such litigation and irrevocably agrees to be bound by any judgment rendered thereby in connection with such litigation. ARTICLE XXIV. RULES OF CONSTRUCTION --------------------- 24.1 The captions or headings in this Agreement are strictly for convenience and shall not be considered in interpreting this Agreement or as amplifying or limiting any of its content. Words in this Agreement which import the singular connotation shall be interpreted as plural, and words which import the plural connotation shall be interpreted as singular, as the identity of the parties or objects referred to may require. 24.2 Unless expressly defined herein, words having well known technical or trade meanings shall be so construed. All listing of items shall not be taken to be exclusive, but shall include other items, whether similar or dissimilar to those listed, as the context reasonably requires. 24.3 Except as set forth to the contrary herein, any right or remedy of FRONTIER or QWEST shall be cumulative and without prejudice to any other right or remedy, whether contained herein or not. 24.4 Except as expressly provided in Section 28.1, nothing in this Agreement is intended to provide any legal rights to anyone not an executing party of this Agreement. 24.5 This Agreement has been fully negotiated between and jointly drafted by the parties. 24.6 All actions, activities, consents, approvals and other undertakings of the parties in this Agreement shall be performed in a reasonable and timely manner, it being expressly acknowledged and understood that time is of the essence in the performance of obligations required to be performed by a date expressly specified herein. Except as specifically set forth herein, for the purpose of this Agreement the standards and practices of performance within the telecommunications industry in the relevant market shall be the measure of a party's performance. ARTICLE XXV. ASSIGNMENT AND DARK FIBER TRANSFERS ----------------------------------- 25.1 Except as provided below, QWEST shall not assign, encumber or otherwise transfer this Agreement or all or any portion of its rights or obligations hereunder to any other party without the prior written consent of FRONTIER, which consent will not be unreasonably withheld or delayed. Notwithstanding the foregoing, QWEST shall have the right, without FRONTIER's consent, to (i) subcontract any of its construction or maintenance obligations hereunder, or (ii) assign or otherwise transfer this Agreement in whole or in part (A) as collateral to any institutional lender to QWEST (or institutional lender to any permitted transferee or assignee of QWEST) subject to the prior rights and obligations of the parties hereunder, (B) to any parent, subsidiary or affiliate of QWEST, (C) to any person, firm or corporation which shall control, be under the control of or be under common control with QWEST, or (D) any corporation or other entity into which QWEST may be merged or consolidated or which purchases all or substantially all of the stock or assets of QWEST, or (E) any partnership, joint venture or other business entity of which QWEST or any wholly owned subsidiary of QWEST HOLDING CORPORATION owns at least 50 percent of the equity interests thereof and which cannot make major decisions without the consent of QWEST (or subsidiary of QWEST HOLDING CORPORATION); provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation, this Section 25.1 (except that any lender referred to in clause (A) above shall not incur any obligations under this Agreement nor shall it be restricted from exercising any right of enforcement or foreclosure with respect to any related security interest or lien, so long as the purchaser in foreclosure is subject to the provisions of this Agreement, including, without limitation, this Section 25.1); and provided further that promptly following any --------------------- such assignment or transfer, QWEST shall give FRONTIER written notice identifying the assignee or transferee. In the event of any permitted partial assignment of any rights hereunder, QWEST shall remain the sole point of contact with FRONTIER. No permitted partial or complete assignment shall release or discharge QWEST from its duties and obligations hereunder. 25.2 Except as provided in this Section 25.2 and the following Section 25.3, FRONTIER shall not assign, encumber or otherwise transfer this Agreement or all or any of portion of its rights or obligations hereunder to any other party without the prior written consent of QWEST, which consent will not be unreasonably withheld or delayed. Subject to the provisions of Section 25.3 (which provision shall be binding upon any permitted assignee or transferee hereunder), FRONTIER shall have the right, without QWEST's consent, to assign or otherwise transfer this Agreement in whole or in part (i) as collateral to any institutional lender to FRONTIER (or institutional lender to any permitted transferee or assignee of FRONTIER) subject to the prior rights and obligations of the parties hereunder, (ii) to any parent, subsidiary or affiliate of FRONTIER, (iii) to any person, firm or corporation which shall control, be under the control of or be under common control with FRONTIER, or (iv) any other entity into which FRONTIER may be merged or consolidated or which purchases all or substantially all of the stock or assets of FRONTIER or (v) any partnership, joint venture or other business entity of which FRONTIER or any wholly owned subsidiary of FRONTIER CORPORATION owns at least 50 percent of the equity interests thereof and which cannot make major decisions without the consent of FRONTIER CORPORATION (or subsidiary of FRONTIER CORPORATION); provided that no assignment or other transfer under this clause (v) shall be permitted hereunder if its purpose or effect would constitute, directly or indirectly, a Restricted Transaction (as defined in Section 25.3(a)) or otherwise violate the provisions of Section 25.3(a); provided that the assignee ------------- or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation this Section 25.2 and the following Section 25.3 (except that any lender referred to in clause (i) above shall not incur any obligations under this Agreement, nor shall it be restricted from exercising any right of enforcement or foreclosure with respect to any related security interest or lien, so long as the purchaser in foreclosure is subject to the provisions of this Agreement, including, without limitation, this Section 25.2 and the following Section 25.3); and provided -------- further that in any of circumstances described in clauses (ii), (iii) or (iv) - - ------------ all of the payment obligations of FRONTIER hereunder for the remainder of the Term shall be fully guaranteed by Frontier Corporation or shall be paid in full as a condition to such transfer or assignment; and provided further that --------------------- promptly following any such assignment or transfer, FRONTIER shall give QWEST written notice identifying the assignee or transferee. In the event of any permitted partial assignment of any rights hereunder, FRONTIER shall remain the sole party and point of contact with QWEST hereunder. No permitted partial or complete assignment shall release or discharge FRONTIER or Frontier Corporation from its duties and obligations hereunder. 25.3 (a) Notwithstanding the provisions of Article XI, except as expressly permitted in Section 25.2(i)-(v), inclusive, without the prior written consent of QWEST, which consent may be withheld in QWEST's sole discretion, until the Restriction Termination Date (as defined below) shall have occurred with respect to any Segment delivered hereunder, FRONTIER shall not sell, assign, lease, grant an IRU with respect to, exchange, encumber, or otherwise in any manner transfer or make available in any manner to any third party the ownership, right to use, or use of, or access in any manner to, any of FRONTIER's rights in the whole and discrete FRONTIER Fibers comprising such Segment as Dark Fibers (any of the foregoing, a "Restricted Transaction") (or engage in substantive discussions or negotiations with respect to a Restricted Transaction), or otherwise engage in a similar transaction with respect to any FRONTIER Fibers comprising such Segment in a manner designed or intended to circumvent the foregoing limitations. The restrictions and prohibitions imposed under this Section 25.3(a) apply to the FRONTIER Fibers as Dark Fibers only, and nothing contained herein shall restrict or prohibit FRONTIER from creating telecommunications capacity along or through the FRONTIER Fibers by the addition of FRONTIER's electronic and optronic equipment and selling or otherwise permitting third parties to use such telecommunications capacity. For purposes hereof, (i) with respect to each Segment for which the Estimated Delivery Date (without regard to any extension under 33.1(d)), as set forth in Exhibit A, is scheduled to occur on or before ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , the Restriction Termination Date shall mean ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## (A) plus such number of days, if any, by which the Estimated Delivery Date for such Segment is extended as provided in Section 33.1(d)(B), and (B) subject to the immediately following proviso, plus such number of days, if any, by which the Estimated Delivery Date for such Segment is extended as provided in Section 33.1(d)(A), provided that such extension by this clause (B) of this Section 25.3(a) shall not apply to a Restricted Transaction covering an aggregate of at least ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## route miles of the FRONTIER fibers within the QWEST System; and (ii) with respect to each Segment for which the Estimated Delivery Date (without regard to any extension under 33.1(d)), as set forth in Exhibit A, is scheduled to occur after ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , the Restriction Termination Date shall mean the date that is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## months after the actual Estimated Delivery Date for such Segment. (b) Notwithstanding the provisions of Section 25.3(a), if and to the extent that FRONTIER exercises the System Fiber Option pursuant to Section 1.4(a) or (b) hereof or the Sacramento/Seattle Fiber Option pursuant to Section 1.4(c) hereof, FRONTIER may sell, assign, lease, grant an IRU with respect to, exchange, or otherwise transfer the ownership, right to use, or use of FRONTIER's rights (each, a "Permitted Transfer") (i) in any or all of the Optional System Dark Fibers so acquired to that particular third party separately identified by FRONTIER to, and approved by, QWEST as of the date hereof for this purpose (the "Permitted System Acquiror"), or (ii) in any or all of the Optional Sacramento/Seattle Dark Fibers so acquired by FRONTIER to that particular third party separately identified by FRONTIER to QWEST as of the date hereof for this purpose (the "Permitted Sacramento/Seattle Acquiror"); provided that each of the Permitted System Acquiror and Permitted Sacramento/Seattle Acquiror shall be an Interest Holder as defined in Section 10.4 hereof and shall be subject to all of the obligations, limitations and requirements otherwise applicable to FRONTIER under this Agreement, including, without limitation, Article XXV, with respect to the Optional System Dark Fibers and Optional Sacramento/Seattle Dark Fibers, respectively, and FRONTIER shall provide to QWEST written evidence, reasonably satisfactory to QWEST, thereof; and provided further that the amount payable by the Permitted System Acquiror and Permitted Sacramento/Seattle Acquiror to FRONTIER in consideration of any such Permitted Transfer shall be not less than $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile. No such Permitted Transfer shall relieve FRONTIER from any of its obligations hereunder, or Frontier Corporation from any of its obligations under the Guaranty, and FRONTIER shall continue to be the sole party and point of contact with QWEST hereunder. Any and all of the Optional System Dark Fibers and Optional Sacramento/Seattle Dark Fibers acquired by FRONTIER that it does not transfer to the Permitted System Acquiror or Permitted Sacramento/Seattle Acquiror, respectively, shall remain subject to all of the requirements and limitations of this Article XXV. (c) Notwithstanding the provisions of Section 25.3(a), from the date hereof until the date that is thirty (30) days after the date hereof, FRONTIER may make a Permitted Transfer in up to twelve (12) of the Dark Fibers to be subject to the IRU in Segment 23 hereunder to a that particular third party separately identified by FRONTIER to, and approved by, QWEST as of the date hereof for this purpose (the "Permitted Segment 23 Acquiror"); provided that the Permitted Segment 23 Acquiror shall be an Interest Holder as - ------------- defined in Section 10.4 hereof and shall be subject to all of the obligations, limitations and requirements otherwise applicable to FRONTIER under this Agreement, including, without limitation, Article XXV, with respect to the Dark Fibers so transferred and FRONTIER shall provide to QWEST written evidence, reasonably acceptable to QWEST, thereof; and provided further that the amount payable by the Permitted --------------------- Segment 23 Acquiror to FRONTIER in consideration of any such Permitted Transfer shall not be less than $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile. No such Permitted Transfer shall relieve FRONTIER from any of its obligations hereunder, or Frontier Corporation from any of its obligations under the Guaranty, and FRONTIER shall continue to be the sole party and point of contact with QWEST hereunder. 25.4 QWEST and FRONTIER recognize that QWEST may desire to obtain tax- deferred exchange treatment pursuant to Section 1031 of the Internal Revenue Code, as amended, with respect to certain of the Dark Fibers and Associated Property in which the IRUs are to be granted hereunder and which are used or held for use by QWEST in its business as of the date hereof (the "Existing Properties"), and FRONTIER agrees to reasonably cooperate as provided herein in obtaining such treatment (at no cost or expense to FRONTIER). Accordingly, notwithstanding any provision contained in this Agreement to the contrary, QWEST may, at its sole option, on or prior to the Acceptance Date for any relevant Segment, appoint a third party (the "Intermediary") as agent for QWEST with respect to the transfer of the Existing Properties to FRONTIER, and assign its rights under this Agreement (insofar as they relate to the Existing Properties) to such Intermediary. If QWEST so elects to appoint an Intermediary, QWEST shall notify FRONTIER, in writing, on or prior to the Acceptance Date with respect to the relevant Segment, and shall provide FRONTIER with copies of all agreements between QWEST and the Intermediary. If QWEST appoints an Intermediary, QWEST shall transfer the Existing Properties or such portion thereof as designated by QWEST to the Intermediary, and FRONTIER shall pay the IRU Fee with respect to the Existing Properties (as designated by QWEST) to the Intermediary; provided that QWEST agrees that such transfer shall be expressly ------------- subject to this Agreement, and that QWEST shall remain liable for performance under this Agreement to the same extent as if it had not appointed an Intermediary; provided that in such event QWEST shall indemnify and hold ------------- harmless FRONTIER from and against any and all loss, damage, cost or expense suffered, sustained or incurred by FRONTIER in connection with any such cooperation and/or payment of such IRU Fee to such Intermediary. 25.5 This Agreement and each of the parties' respective rights and obligations under this Agreement, shall be binding upon and shall inure to the benefit of the parties hereto and each of their respective permitted successors and assigns. ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS ----------------------------------------------- 26.1 Each party represents and warrants that: (a) it has the full right and authority to enter into, execute, deliver and perform its obligations under this Agreement; (b) this Agreement constitutes a legal, valid and binding obligation enforceable against such party in accordance with its terms, subject to bankruptcy, insolvency, creditors' rights and general equitable principles; and (c) its execution of and performance under this Agreement shall not violate any applicable existing regulations, rules, statutes or court orders of any local, state or federal government agency, court or body. 26.2 QWEST represents and warrants that the Segments of the QWEST System that it has heretofore constructed or will construct pursuant hereto have been or shall be designed, engineered, installed, and constructed in compliance with the terms and provisions of this Agreement and in material compliance with any and all applicable building, construction and safety codes for such construction and installation, as well as any and all other applicable governmental laws, codes, ordinances, statutes and regulations. 26.3 With respect to each of the Segments that has been constructed prior to the date hereof, QWEST represents and warrants that such Segment, when constructed, generally was constructed substantially in accordance with the specifications set forth in Exhibit C hereto, and QWEST has no actual knowledge on the date hereof of any material deviation in the construction of such Segment from such specifications. If, within twelve (12) months from the respective Acceptance Date for each of the Segments referred to in this Section 26.3 , there is an event or occurrence that is caused by a material deviation in the construction or installation of any of such Segments from such specifications, and which has a material adverse affect on the operation or performance of the FRONTIER Fibers in such Segment, then, promptly following receipt of written notice thereof from FRONTIER, QWEST, at its sole cost and expense, shall undertake to repair the affected portion of such Segment to the relevant specifications. 26.4 QWEST represents and warrants that the Segments of the QWEST System that it constructs pursuant hereto shall be constructed in all material respects in accordance with the specifications set forth in Exhibit C hereto; provided that FRONTIER's sole rights and remedies with respect to any failure to so construct shall be (i) to inspect the construction, installation and splicing, and participate in the acceptance testing, of the FRONTIER Fibers incorporated in each such Segment, during the course and at the time of the relevant construction, installation and testing periods for each Segment, as provided in Articles III and IV, (ii) if, during the course of such construction, installation and testing any material deviation from the specifications set forth in Exhibit C is discovered, the construction or installation of the affected portion of the Segment shall be repaired to such specification by QWEST at QWEST's sole cost and expense, and (iii) if, at any time prior to the date that is twelve (12) months after the Acceptance Date, FRONTIER shall notify QWEST in writing of its discovery of a material deviation from the specifications set forth in Exhibit C with respect to any such Segment (which notice shall be given within thirty (30) days of such discovery) the construction or installation of the affected portion of such Segment shall be repaired to such specification by QWEST at QWEST's sole cost and expense. For purposes hereof, "material deviation" means a deviation which is reasonably likely to have a material adverse affect on the operation or performance of the FRONTIER Fibers affected thereby. 26.5 EXCEPT AS SET FORTH IN THE FOREGOING PARAGRAPHS 26.2, 26.3 AND 26.4, AND EXCEPT AS MAY BE SET FORTH SPECIFICALLY AND EXPRESSLY ELSEWHERE IN THIS AGREEMENT, QWEST MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE FRONTIER FIBERS OR THE SEGMENTS DELIVERABLE HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. 26.7 The parties acknowledge and agree that on and after the relevant Acceptance Date FRONTIER's sole rights and remedies with respect to any defect in or failure of the FRONTIER Fibers to perform in accordance with the applicable vendor's or manufacturer's specifications with respect to the FRONTIER Fibers shall be limited to the particular vendor's or manufacturer's warranty with respect thereto, which warranty, to the extent permitted by the terms thereof, shall be assigned to FRONTIER upon its request. In the event any maintenance or repairs to the QWEST System are required as a result of a breach of any warranty made by any manufacturers, contractors or vendors, unless FRONTIER shall elect to pursue such remedies itself, QWEST shall pursue all remedies against such manufacturers, contractors or vendors on behalf of FRONTIER, and QWEST shall reimburse FRONTIER's costs for any maintenance FRONTIER has incurred as a result of any such breach of warranty to the extent the manufacturer, contractor or vendor has paid such costs. 26.8 QWEST and FRONTIER acknowledge and agree: (a) that each grant of the IRU in the Frontier Fibers and Associated Property for a Segment hereunder (each herein called a "Grant") will be treated by each of them, vis-a-vis the other, as of and after the relevant effective date thereof as described in Section 6.1, an executed grant to FRONTIER of an interest in real property with respect to such Segment; and (b) that, from and after the effective date of a Grant with respect to a Segment, no material obligation of either QWEST or FRONTIER will remain to be performed with respect to such Grant or Segment; and (c) that, with respect to each such Grant, this Agreement is not intended as an executory contract or unexpired lease subject to assumption, rejection, or assignment by the trustee in bankruptcy of any party to this Agreement, including, without limitation, assumption, rejection, or assignment under Bankruptcy Code Section 365. ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT --------------------------- 27.1 This Agreement, together with any Confidentiality Agreement entered into in connection herewith and the letter identifying the Permitted System Acquiror and the Sacramento/Seattle Acquiror as contemplated by Section 25.3(b) hereof and the Permitted Segment 23 Acquiror as contemplated by Section 25.3(c) and the letter dated October 16, 1996 regarding certain state and local tax matters constitutes the entire and final agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof, which are of no further force or effect. The Exhibits referred to herein are integral parts hereof and are hereby made a part of this Agreement. To the extent that any of the provisions of any Exhibit hereto are inconsistent with the express terms of this Agreement, the terms of this Agreement shall prevail. This Agreement may only be modified or supplemented by an instrument in writing executed by a duly authorized representative of each party and delivered to the party relying on the writing. ARTICLE XXVIII. NO PERSONAL LIABILITY --------------------- 28.1 Each action or claim against any party arising under or relating to this Agreement shall be made only against such party as a corporation, and any liability relating thereto shall be enforceable only against the corporate assets of such party. No party shall seek to pierce the corporate veil or otherwise seek to impose any liability relating to, or arising from, this Agreement against any shareholder, employee, officer or director of the other party. Each of such persons is an intended beneficiary of the mutual promises set forth in this Article and shall be entitled to enforce the obligations of this Article. ARTICLE XXIX. RELATIONSHIP OF THE PARTIES --------------------------- 29.1 The relationship between FRONTIER and QWEST shall not be that of partners, agents, or joint venturers for one another, and nothing contained in this Agreement shall be deemed to constitute a partnership or agency agreement between them for any purposes, including, but not limited to federal income tax purposes. FRONTIER and QWEST, in performing any of their obligations hereunder, shall be independent contractors or independent parties and shall discharge their contractual obligations at their own risk subject, however, to the terms and conditions hereof. ARTICLE XXX. LATE PAYMENTS ------------- 30.1 In the event a party shall fail to make any payment under this Agreement when due, such amounts shall accrue interest, from the date such payment is due until paid, including accrued interest compounded monthly, at an annual rate equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## of the prime rate of interest published by The Wall Street Journal as the base rate on corporate loans posted by a substantial percentage of the nation's largest banks on the date any such payment is due or, if lower, the highest percentage allowed by law. ARTICLE XXXI. SEVERABILITY ------------ 31.1 If any term, covenant or condition contained herein shall, to any extent, be invalid or unenforceable in any respect under the laws governing this Agreement, the remainder of this Agreement shall not be affected thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. ARTICLE XXXII. COUNTERPARTS ------------ 32.1 This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. ARTICLE XXXIII. CERTAIN DEFINITIONS ------------------- 33.1 The following terms shall have the stated definitions in this Agreement. (a) "Cable" means the fiberoptic cable and the fibers contained therein, and associated splicing connections, splice boxes, and vaults to be installed by QWEST as part of the QWEST System. (b) "Costs" means actual, direct costs paid or payable in accordance with the established accounting procedures generally used by QWEST and which it utilizes in billing third parties for reimbursable projects which costs shall include, without limitation, the following: (i) internal labor costs, including wages and salaries, and benefits and overhead allocable to such labor costs (with the overhead allocation percentage equal to thirty percent (30%)), and (ii) other direct costs and out-of-pocket expenses on a pass-through basis (e.g., equipment, materials, supplies, contract services, etc.). (c) "Dark Fiber" means fiber provided without electronics or optronics, and which is not "lit" or activated; provided that such fiber may be used in any ------------- manner and for any purpose permitted under Article XI. (d) "Estimated Delivery Date" means, with respect to each Segment of the QWEST System to be delivered hereunder, the date set forth in Exhibit A hereto with respect to such Segment, as any such date may be extended for and during (A) the period of any delay described in Article XX and/or (B) the period of any payment default pursuant to Section 18.1 with respect to any Segment and/or (C) the aggregate number of days of the FRONTIER Review Period or Periods (in the event of multiple remedy attempts) under Section 4.2 with respect to such Segment. (e) "Impositions" means all taxes, fees, levies, imposts, duties, charges or withholdings of any nature (including, without limitation, gross receipts taxes and franchise, license and permit fees), together with any penalties, fines or interest thereon (except for penalties or interest imposed as a direct result of acts or failures to act on the part of QWEST) arising out of the transactions contemplated by this Agreement and/or imposed upon the QWEST System by any federal, state or local government or other public taxing authority. (f) "Indefeasible Right of Use" or "IRU" means (i) an exclusive, indefeasible right of use, for the purposes described herein, in the FRONTIER Fibers, as granted in Article II, and (ii) an associated non-exclusive, indefeasible right of use, for the purposes described herein, in the Associated Property; provided that the IRUs granted hereunder do not provide FRONTIER with ------------- any ownership interest in or other rights to physical access to, control of, modification of, encumbrance in any manner of, or other use of the QWEST System except as expressly set forth herein. (g) "Pre-Existing Cal-Fiber Lien" means any and all security interests and liens in favor of NTFC Capital Corporation (and its successors and assigns) securing up to $28,000,000 principal amount plus accrued interest of indebtedness of QWEST under the Term Loan Agreement dated as of June 16, 1994 between QWEST (then known as Southern Pacific Telecommunications Company) and NTFC Capital Corporation, as the same may be amended from time to time, on the collateral described therein, such collateral generally being described as the Cal-Fiber telecommunications system located between One Wilshire Building, 624 South Grand Avenue, Los Angeles, California and 101 Roseville Street, Roseville, California. (h) "POP" means the FRONTIER point of presence at locations along the QWEST System route. (i) "PSWP" means Planned System Work Period, which is a prearranged period of time reserved for performing certain work on the QWEST System that may potentially impact traffic. Generally, this will be restricted to weekends, avoiding the first and last weekend of each month and high-traffic weekends. The PSWP shall be agreed upon pursuant to Exhibit H. (j) "QWEST System" shall have the meaning ascribed thereto in Recital A. (k) When used herein in connection with a covenant of a party to this Agreement "best efforts" shall not obligate such party, unless otherwise specifically required by the operative covenant, to make unreimbursed expenditures (other than costs or expenditures that would have been required of such party in the absence of the requirements of such covenant) that are material in amount, in light of the circumstances to which the requirement to use best efforts applies. In confirmation of their consent and agreement to the terms and conditions contained in this IRU Agreement and intending to be legally bound hereby, the parties have executed this IRU Agreement as of the date first above written. "QWEST": QWEST COMMUNICATIONS CORPORATION, a Delaware corporation By: /s/ Robert S. Woodruff ____________________________________________________ Name: Robert S. Woodruff Title: Executive Vice President "FRONTIER": FRONTIER COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation By: /s/ Robert L. Barrett ____________________________________________________ Name: Robert L. Barrett Title: Executive Vice President Frontier - Exhibit A-1 System Description and Delivery Dates
Estimated Estimated Segment System Route Delivery No. Segment (Priority Segments in Italics) Miles Date - - ------------------------------------------------------------------------------------------------------------------- Basic Route - - ------------------------------------------------ 1A Chicago - Detroit 305 1/31/98 1B Detroit - Cleveland 165 2/15/98 1C Cleveland - Pittsburgh 162 3/1/98 1D Pittsburgh - Philadelphia 356 3/31/98 1E Philadelphia - Washington, D.C. 138 4/30/98 Chicago - Detroit - Cleveland - Washington, DC TOTAL 1,126 4/30/98 2A Cleveland - Columbus 133 8/31/97 2B Columbus - Cincinnati 125 8/31/97 Cleveland - Cincinnati TOTAL 258 8/31/97 4 Indianapolis - Chicago 215 12/31/97 5 Indianapolis - St. Louis 248 7/31/97 6 St. Louis - Kansas City 297 7/1/97 7 Kansas City - Topeka 75 7/31/97 8 Denver - Topeka 565 7/31/97 9A Denver - Grand Junction 271 7/31/97 9B Grand Junction - Salt Lake City 295 7/31/97 Denver - Salt Lake City TOTAL 566 7/31/97 10A Salt Lake City - Reno 575 7/31/97 10B Reno - Roseville 136 7/31/97 Salt Lake - Roseville TOTAL 711 7/31/97 11A Roseville - Oakland 111 4/30/97 11B Oakland - San Jose 43 4/30/97 Roseville - San Jose TOTAL 154 4/30/97 12A San Jose - Salinas 71 7/1/97 12B Salinas - San Luis Obispo 132 7/1/97 12C San Luis Obispo - Santa Barbara 119 7/1/97 12D Santa Barbara - Los Angeles 107 7/1/97 San Jose - Los Angeles TOTAL 429 7/1/97
A-1 - 1 Frontier - Exhibit A-1 System Description and Delivery Dates
Estimated Estimated Segment System Route Delivery No. Segment (Priority Segments in Italics) Miles Date - - ------------------------------------------------------------------------------------------------------------------- 13A Los Angeles - Anaheim 2 7/1/97 13B Anaheim - San Diego 32 8/31/97 13C San Diego - Yuma 235 12/31/97 13D Yuma - Phoenix 187 1/31/98 Los Angeles - San Diego - Phoenix TOTAL 586 1/31/98 14A Phoenix - Tucson 123 2/28/98 14B Tucson - El Paso 310 3/31/98 Phoenix - Tucson - El Paso TOTAL 433 3/31/98 15A El Paso - San Antonio 586 5/31/98 15B San Antonio - Austin 85 1/31/98 15C Austin - Houston 221 12/31/97 El Paso - San Antonio - Houston TOTAL 892 5/31/98 16 Houston - Dallas 269 4/30/97 17A Dallas - Oklahoma City 264 1/31/98 17B Oklahoma City - Tulsa 119 1/31/98 17C Tulsa - Kansas City 256 1/31/98 Dallas - Kansas TOTAL 639 1/31/98 18 Cincinnati - Indianapolis 117 7/1/97 23 Denver - El Paso TOTAL 746* 3/31/98 24A Sacramento - Chico 98* 1/31/98 24B Chico - Redding 75* 1/31/98 24C Redding - Medford 177* 1/31/98 24D Medford - Eugene 206* 1/31/98 24E Eugene - Portland 123* 1/31/98 Sacramento - Portland TOTAL 679* 1/31/98 25 Portland - Seattle 182* 1/31/98
* Dates shown for segments indicated are for first 12 fibers; second 12 are due 12 months later A-1 - 2 Frontier - Exhibit A-1 System Description and Delivery Dates
Estimated Estimated Segment System Route Delivery No. Segment (Priority Segments in Italics) Miles Date - - ------------------------------------------------------------------------------------------------------------------- 27 San Jose - San Francisco 56 4/30/97 28A Boston - Albany 208 12/31/97 28B Albany - Buffalo 298 12/31/97 28C Buffalo - Cleveland 197 12/31/97 Boston - Cleveland TOTAL 703 12/31/97 29 Albany - New York City 157 5/31/98 30 New York City - Philadelphia 95 5/31/98 BASIC ROUTE 10,198 5/31/98 OPTION 1 Route - - ------------------------------------------------ 22A Chicago - Cedar Rapids 255 3/31/98 22B Cedar Rapids - Des Moines 120 4/30/98 22C Des Moines - Omaha 140 4/30/98 22D Omaha - Topeka 224 6/30/98 TOTAL - Chicago - Topeka, OPTION 1 739 6/30/98 BASIC ROUTE & OPTION 1 SUB TOTAL 10,937 6/30/98 OPTION 1A Route (assuming that Option 1 is not exercised) - - ------------------------------------------------ 21A Chicago - Milwaukee 84 10/31/98 21B Milwaukee - Green Bay 118 10/31/98 21C Green Bay - Minneapolis 295 10/31/98 21D Minneapolis - Des Moines 281 10/31/98 22C Des Moines - Omaha 140 10/31/98 22D Omaha - Topeka 224 10/31/98 TOTAL - Chicago - Des Moines, OPTION 1A 1,142 10/31/98 BASIC ROUTE & OPTION 1A SUB TOTAL 11,340 10/31/98
A-1 - 3 Frontier - Exhibit A-1 System Description and Delivery Dates
Estimated Estimated Segment System Route Delivery No. Segment (Priority Segments in Italics) Miles Date - - ------------------------------------------------------------------------------------------------------------------- OPTION 2 Route - - ------------------------------------------------ 3 Cincinnati - Louisville 107 7/30/98 19A Louisville - Nashville 189 9/30/98 19B Nashville - Chattanooga 147 10/31/98 19C Chattanooga - Atlanta 137 10/31/98 Louisville - Nashville - Atlanta TOTAL 473 10/31/98 20A Atlanta - Charlotte 261 10/31/98 20B Charlotte - Raleigh 174 8/31/98 20C Raleigh - Richmond 301 10/31/98 20D Richmond - Washington, DC 110 10/31/98 Atlanta - Raleigh - Washington TOTAL 846 10/31/98 OPTION 2 TOTAL 1,426 10/31/98 TOTAL (BASIC, OPTION 1 & OPTION 2 ROUTES) 12,363 10/31/98 TOTAL (BASIC, OPTION 1A & OPTION 2 ROUTES) 12,766 10/31/98
A-1 - 4 EXHIBIT A-2 [MAP APPEARS HERE] Exhibit A-2 is a map of the United States with the heading "General Route Map" showing state lines and routes of the fiber optic network upon completion. The legend shows that a red line is the Base Route, a blue line is Route 1, an orange line is Route 1A, a green line is Route 2, and one inch equals 225 miles. The Base Route travels east to west through Massachusetts, Connecticut, New York, Pennsylvania, New Jersey, Maryland, Michigan, Ohio, Indiana, Illinois, Missouri, Kansas, Colorado, Utah and Nevada to California. The Base Route also travels north to south through Washington, Oregon, California, Arizona, New Mexico, Texas and Oklahoma. Route 1 travels east to west through Illinois, Iowa, Nebraska and Kansas. Route 1A travels east to west through Illinois, Wisconsin, Minnesota and Iowa. Route 2 travels east to west through Maryland, Virginia, North Carolina, South Carolina, Georgia, Tennessee, Kentucky and Ohio. EXHIBIT A-3 BASIC AND OPTIONAL DETAILED ROUTE MAPS ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Exhibit A-4 Designated Endpoint and Intermediate Cities
CITY ST LATA LATA NAME CITY ST LATA LATA NAME - - ----------------- -- ---- --------------- -------------- -- ---- -------------- Phoenix AZ 666 Phoenix Youngstown OH 322 Youngstown Tucson AZ 668 Tucson Oklahoma City OK 536 Oklahoma City Yuma AZ 666 Phoenix Tulsa OK 538 Tulsa Anaheim CA 730 Los Angeles Eugene OR 670 Eugene Chico CA 724 Chico Medford OR 670 Eugene Los Angeles CA 730 Los Angeles Portland OR 672 Portland Oakland CA 722 San Francisco Salem OR 672 Portland Redding CA 724 Chico Harrisburg PA 226 Capitol, PA Roseville CA 726 Sacramento Philadelphia PA 228 Philadelphia Sacramento CA 726 Sacramento Pittsburgh PA 234 Pittsburgh Salinas CA 736 Monterey Austin TX 558 Austin San Diego CA 732 San Diego Bryan TX 570 Hearne San Francisco CA 722 San Francisco Dallas TX 552 Dallas San Jose CA 722 San Francisco El Paso TX 540 El Paso San Luis Obispo CA 740 San Luis Obispo Ft. Worth TX 552 Dallas Santa Barbara CA 730 Los Angeles Houston TX 560 Houston Colorado Springs CO 658 Colorado Spr. Mexia TX 556 Waco Denver CO 656 Denver San Antonio TX 566 San Antonio Grand Junction CO 656 Denver Provo UT 660 Utah Pueblo CO 658 Colorado Spr. Salt Lake City UT 660 Salt Lake City Washington DC 236 Washington DC Seattle WA 674 Seattle Chicago IL 358 Chicago OPTION 1 Indianapolis IN 336 Indianapolis Des Moines IA 632 Des Moines South Bend IN 332 South Bend Cedar Rapids IA 635 Cedar Rapids Topeka KS 534 Topeka Lincoln NE 958 Lincoln Boston MA 128 East Mass Omaha NE 644 Omaha Baltimore MD 238 Baltimore Battle Creek MI 348 Grand Rapids OPTION 1A Detroit MI 340 Detroit Des Moines IA 632 Des Moines Kansas City MO 524 Kansas City Minneapolis MN 628 Minneapolis St. Louis MO 520 St. Louis Owatonna MN 620 Rochester Newark NJ 224 North Jersey Lincoln NE 958 Lincoln Trenton NJ 222 Delaware Valley Omaha NE 644 Omaha Albuquerque NM 664 New Mexico Eau Claire WI 352 Northwest WI Santa Fe NM 664 New Mexico Green Bay WI 350 Northeast WI Reno NV 720 Reno Milwaukee WI 356 Southeast WI Albany NY 134 Albany OPTION 2 Buffalo NY 140 Buffalo Atlanta GA 438 Atlanta New York NY 132 New York Metro Bowling Green KY 464 Owensboro Poughkeepsie NY 133 Poughkeepsie Louisville KY 462 Louisville Rochester NY 974 Rochester Charlotte NC 422 Charlotte Syracuse NY 136 Syracuse Greensboro NC 424 Greensboro Utica NY 136 Syracuse Raleigh NC 426 Raleigh
A-4-1 Exhibit A-4 Designated Endpoint and Intermediate Cities
CITY ST LATA LATA NAME CITY ST LATA LATA NAME - - -------------- -- ---- -------------- -------------- -- ---- ----------- White Plains NY 132 New York Metro Rocky Mount NC 951 Rocky Mount Akron OH 325 Akron Greenville SC 430 Greenville Cincinnati OH 922 Cincinnati Chattanooga TN 472 Chattanooga Cleveland OH 320 Cleveland Nashville TN 470 Nashville Columbus OH 324 Columbus Fredericksburg VA 246 Culpeper Dayton OH 328 Dayton Portsmouth VA 252 Norfolk Toledo OH 326 Toledo Richmond VA 248 Richmond
EXHIBIT B IRU Fee Payment Schedule ------------------------ 1. Except as provided in paragraphs 2, 3 and 4 below, the IRU Fee for each Segment shall be paid in accordance with the following schedule: (i) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon execution of the IRU Agreement (ii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon commencement of construction of such Segment (iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of conduit installation of such Segment (iv) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of fiber cable placement in such Segment (v) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of fiber splicing and completion of civil construction in such Segment (vi) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % on the Acceptance Date for such Segment 2. The IRU Fee for Segment 23 shall be paid in accordance with the following schedule: (i) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon execution of the IRU Agreement (ii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon the Acceptance Date for the first 12 Dark Fibers delivered in accordance with Exhibit A (iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon the Acceptance Date for the second 12 Dark Fibers delivered in accordance with Exhibit A 3. The IRU Fee for Segments 24A, 24B, 24C, 24D, 24E and 25 shall be paid in accordance with the following schedule: (i) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon execution of the IRU Agreement (ii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon commencement of construction of such Segment (iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of conduit installation of such Segment (iv) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of fiber cable placement in such Segment (v) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of fiber splicing and completion of civil construction in such Segment (vi) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % on the Acceptance Date for the first 12 Dark Fibers delivered in accordance with Exhibit A (vii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % on the Acceptance Date for the second 12 Dark Fibers delivered in accordance with Exhibit A 4. Notwithstanding anything to the contrary contained in this Exhibit B or the IRU Agreement, no part of the IRU Fee for a Segment shall be payable by Frontier (other than the ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the IRU Fee due upon execution of the IRU Agreement), unless such Segment, when completed as planned, would be connected (whether through one or more other completed Segment or Segments scheduled for contemporaneous completion) or contiguous to one of the following cities where Frontier maintains a switch site: Los Angeles, California; San Francisco, California; Seattle, Washington; Denver, Colorado; Dallas, Texas; Atlanta, Georgia; Kansas City, Missouri; Chicago, Illinois; Milwaukee, Wisconsin; Detroit, Michigan; Cleveland, Ohio; Washington, D.C., Philadelphia, Pennsylvania; New York City; Boston, Massachusetts; and Rochester, New York. 5. Upon any election by FRONTIER pursuant to Section 1.4 that results in a redetermination of the IRU Fee pursuant to Section 2.1, (i) if such redetermination results in an increase in the IRU Fee with respect to any Segment, the increased amount with respect to that Segment shall be paid by FRONTIER to QWEST upon such election, in accordance with paragraph 1 above of the foregoing payment schedule, and (ii) if such redetermination results in a decrease in the IRU Fee with respect to any Segment, the amount representing the difference between the original IRU fee and the redetermined decreased IRU fee (the "Decrease") with respect to that Segment either (A) shall be credited ------ against the subsequent IRU Fee payment or payments to be made by FRONTIER in accordance with the percentages set forth in paragraph 1 of the foregoing payment schedule with respect to such Segment or other Segments to be delivered hereunder or, (B) if amounts shall have previously been paid by FRONTIER with -- respect to such Segment, at FRONTIER's election, shall be refunded to FRONTIER by QWEST. 6. For purposes of determining the occurrence of the construction milestones triggering payment obligations hereunder, the following shall apply: (i) Commencement of construction of a Segment shall mean the establishment of a field office followed promptly by mobilization of either in-house crews or the subcontract of a construction manager. (ii) Completion of conduit installation shall mean the completion of installation of the conduit system for the Segment, with handholds and manholes, ready for Cable pulling. (iii) Completion of fiber cable placement shall mean the fiber cable is either pulled into the conduit or completely installed in aerial installation, but without splicing. In the event of aerial construction, the IRU Fee installment otherwise due upon completion of conduit installation shall be due and payable at the same time as the installment due upon completion of fiber cable placement. (iv) Completion of fiber splicing and civil construction shall mean all fibers are spliced and ready for testing and civil facilities are ready for the customer to occupy and install their equipment (v) Acceptance Date shall have the meaning established in the IRU Agreement. EXHIBIT C Construction Specifications --------------------------- 1.0 General. ------- The intent of this document is to outline the specifications for construction of a fiber optic cable system. In all cases, the standards contained in this document or the standards of the federal, state, local or private agency having jurisdiction, whichever is stricter, shall be followed. 2.0 Material. -------- Steel or PVC conduit shall be minimum schedule ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wall thickness. Any exposed steel conduit, brackets or hardware (i.e., bridge attachments) shall be hot-dipped galvanized after fabrication. Handholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of cover. Manholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating. Innerducts used shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Buried cable warning tape shall be 3 inches wide and display "Warning: Buried Fiber Optic Cable," name and logo, and local and emergency One Call "800" numbers repeated every 24 inches. Warning signs will display universal "Do Not Dig" symbol, "Warning: Buried Fiber Optic Cable," company name and logo, and local and emergency One Call "800" numbers. Fiber optic cable shall be single armored. 3.0 Minimum Depths. -------------- Minimum cover required in the placement of conduit shall be 42 inches, except in the following instances: (a) The minimum cover in borrow ditches adjacent to roads, highways, railroads, and interstate highways is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the cleanout line or existing grade, whichever is greater. (b) The minimum cover across streams, river washes and other waterways is 60 inches below the cleanout line or existing grade, whichever is greater. Steel conduit will be placed at all such crossings unless the crossing is directional bored. (c) At locations where conduit crosses other subsurface utilities or other structures, the conduit shall be installed to provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of vertical clearance and applicable minimum depth can be maintained; otherwise the conduit will be installed under the existing utility or other structure. If, however, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches cannot be obtained, the cable shall be encased in steel pipe rather than conduit. No fiber optic cable shall be buried without being surrounded by conduit or steel pipe. (d) In rock, the conduit shall be placed to provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the surface of the solid rock, or provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of total cover, whichever requires the least rock excavation. PVC or HDPE conduit will be backfilled with 6 inches of select materials (padding) in rock areas. (e) In the case of the use/conversion of existing steel pipelines or salvaged conduit systems, the existing depth shall be considered adequate. 4.0 Buried Cable Warning Tape. ------------------------- All conduit will be installed with buried cable warning tape except where existing steel pipelines or salvaged conduit systems are used. The warning tape shall generally be placed at a depth of 12 inches below grade and directly above the conduit. 5.0 Conduit Construction. -------------------- Conduits may be placed by means of trenching, plowing, jack and bore, or directional bore. Conduits will generally be placed on a level grade parallel to the surface, with only gradual changes in grade elevation. Steel conduit will be joined with threaded collars, Zap-Lok or welding. All paved city, state, federal and interstate highways and railroad crossings will be encased in steel conduit. If the crossing is at grade, steel is not required if the cable is placed with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet of cover or more, and the crossing is directional bored. All crossings of major streams, rivers, bays and navigable waterways will be placed in HDPE, PVC or steel conduit. At all foreign utility/underground obstacle crossings, split/solid steel conduit will be placed and will extend at least 5 feet beyond the outer limits of the obstacle in both directions. All jack and bores will use steel conduit. All directional bores will use HDPE or steel conduit. Any cable placed in rock will be placed in HDPE, PVC or steel conduit. Any cable placed in swamp or wetland areas will be placed in HDPE, PVC or steel conduit. All conduits placed on bridges will be steel. All conduits placed on bridges shall have expansion joints placed at each structural (bridge) expansion joint or at least every 150 feet, whichever is the shorter distance. 6.0 Innerduct Installation. ---------------------- Innerduct(s) shall be installed in all steel conduits. No cable will be placed directly in any split/solid steel conduit without innerduct. Innerduct(s) shall extend beyond the end of all conduits a minimum of 18 inches. 7.0 Cable Installation. ------------------ The fiber optic cable shall be installed using a powered pulling winch and hydraulic-powered assist pulling wheels. The maximum pulling force to be applied to the fiber optic cable shall be 600 pounds. Bends of small radii (less than 20 times the outside diameter of the cable) and twists that may damage the cable shall be avoided during cable placement. The cable shall be lubricated and placed in accordance with the cable manufacturer specifications. A pulling swivel break-away rated at 600 pounds shall be used at all times. All splices will be contained in a handhole or manhole. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all intermediate handholes or manholes. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all splice locations. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all facility locations (i.e., POP sites, switch sites, regens or CEVs). 8.0 Manholes and Handholes. ---------------------- Manholes shall be placed in traveled surface streets and shall have locking lids. Handholes shall be placed in all other areas and be installed with a minimum of 18 inches of soil covering the lid. 9.0 EMS Markers. ----------- EMS markers shall be placed 6 inches directly above the lid of all buried handholes and assist points. EMS markers fabricated into the lids of handholes are acceptable. 10.0 Cable Markers (Warning Signs). ----------------------------- Cable markers (with the same information as buried cable warning tape) shall be installed at all changes in cable running line direction, splices, waterways, subsurface utilities, handholes and at both sides of street, highway, bridge or railroad crossings. At no time shall any markers be spaced more than 500 feet apart in metro areas and 1,000 feet apart in non- metro areas. Markers shall be positioned so that they can be seen from the location of the cable and generally set facing perpendicular to the cable running line. 11.0 Compliance. ---------- All work will be done in strict accordance with federal, state, local and applicable private rules and laws regarding safety and environmental issues, including those set forth by OSHA and the EPA. In addition, all work and the resulting fiber system will comply with the current requirements of all governing entities (FCC, NEC, DEC, and other national, state, and local codes). 12.0 As Built Drawings. ----------------- As-built drawings will contain a minimum of the following: 1) Information showing the location of running line, relative to permanent landmarks, including but not limited to, railroad mileposts, boundary crossings and utility crossings. 2) Splice locations 3) Manhole and handhole locations 4) Conduit information (type, length, expansion joints, etc.) 5) Cable information (manufacturer, type of fiber, type of cable, fiber assignments, final cable lengths) 6) Notation of all deviations from specifications (depth, etc.) 7) ROW detail (type, centerline distances, boundaries, waterways, road crossings, known utilities and obstacles) 8) Cable marker locations and stationing 9) Regeneration locations and floorplans to include FDP assignments (also labeled on site) Drawings will be updated with actual field data during and after construction. Metro areas scale shall not exceed 1 inch = 200 feet. Rural areas scale shall not exceed 1 inch = 500 feet. As-builts will be provided within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## days after acceptance, in both hard copy and electronic format (Auto-CAD version 13.0 or later). Updates to the as-builts will be provided within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## days of completion of change, like a relocation project. 13.0 Aerial Construction. ------------------- Subject to prior approval by both parties (which approval shall not be unreasonably withheld), aerial construction methods will only be used when buried construction techniques are impractical due to environmental conditions, schedule or economic considerations, right of way issues, or code restrictions. The parties acknowledge that aerial construction on utility towers (not utility poles) using optical groundwire or all dielectric self-support methods may be used without FRONTIER approval, provided QWEST agrees to give FRONTIER reasonable prior notice of its decision to use such aerial methods. Aerial design standards and construction techniques will conform with industry-accepted practices for aerial fiber optic cable systems. All aerial plant must comply with applicable national (NEC, NESC, etc.), state, and local codes. The fiber optic cable placed on an aerial system shall be armored and designed for aerial applications. The cable will be placed in accordance with manufacturer specifications. Cable tension will be monitored during placement. Cable rollers will be placed at a maximum interval of 35 feet. Cable expansion loops will be placed at every pole. Cable identification/warning tags will be placed at every pole. All cable splices will be buried in handholes or manholes. Cable sheath to suspension strand bonds and grounding will be performed at the first and last pole of the system and at 0.25 mile intervals. Fiber optic cable at all riser poles will be protected with galvanized steel U-guard from 12 inches below grade to a point 24 inches below the suspension strand. Conduit sweeps will be used to transition from the U- guard to either a handhole or manhole. All aerial plant will be designed and constructed with 10M EHS (Class A galvanized) suspension strand unless otherwise dictated by the pole owners or field conditions. The fiber optic cable will be doubled lashed to the suspension strand using 45 mil stainless lashing wire. Span length shall account for storm loading (wind and ice) in accordance with zones outlined in NESC code. Sags and tensions will be calculated in accordance with industry accepted practices and account for strand size, span length, ambient temperature at placement, and loading. The suspension strand will be tensioned with a strand dynamometer. A catenary suspension system may be used if the system exceeds maximum span length specifications. Prior to attachment to any existing pole line, the system will be inspected for compliance with applicable codes and standards, as well as the physical condition of the poles and existing hardware. Any make-ready work will be reviewed with the pole owner and specifically addressed prior to construction. If a pole line need be constructed, the preferred poles will be Class 4 (40 feet) and Class 5 (35 feet). Use of the preferred poles will make it unnecessary to calculate pole loading (horizontal, vertical, and bending moments) in most field conditions. Some unusual conditions may require the use of a stronger class pole. Depth of placement will be dictated by soil conditions, slope of terrain, and length of pole. Poles will be guyed in accordance with industry-accepted standards. All pole attachment hardware will be galvanized steel. Aerial cable will be placed below power attachments and above all other attachments unless otherwise dictated by the pole owner. Pole contact clearances and locations will be dictated by current NESC code and the presence of existing attachments; however, the following minimum objective clearances will apply: a) Power line - 40 inches (below) b) Non-current carrying power line - 30 inches c) Telephone, CATV, and other signal lines - 12 inches (above) Vertical clearances for crossings or parallel lines will be dictated by current NESC code; however, the objective clearance for most objects (roads, alleys, etc.) is 18 feet (at 100 degrees F) with the exception of railroad tracks and waterways which have an objective of 27 feet (at 100 degrees F). 14.0 Approval of Deviations From Specifications. ------------------------------------------ Qwest will seek the approval of FRONTIER, which approval shall not be unreasonably withheld or delayed, prior to undertaking any construction which will deviate from the Construction Specifications set forth in this Exhibit C. EXHIBIT D Fiber Cable Splicing, Testing and Acceptance Procedures ------------------------------------------------------- 1. All splices will be performed with an industry-accepted fusion splicing machine. Qwest will perform two stages of testing during the construction of a new fiber cable route. Initially, OTDR tests will be taken from one direction. As soon as fiber connectivity has been achieved to both regen sites, Qwest will verify and record the continuity of all fibers. Qwest will take and record power level readings on all fibers in both directions. Qwest will bi- directional OTDR test all fibers. 2. During the initial construction, it is only possible to measure the fiber from one direction. Because of this, splices will be qualified during initial construction with an OTDR from only one direction. The profile alignment system or light injection detection system on the fusion splicer may be used to qualify splices as long as a close correlation to OTDR data is established. The pigtails will also be qualified at this stage using an OTDR and a minimum 1 km launch reel. All measurements at this stage in construction will be taken at 1550 nm. 3. After Qwest has provided end-to-end connectivity on the fibers, bi- directional span testing will be done. These measurements must be made after the splice manhole or handhole is closed in order to check for macro-bending problems. Continuity tests will be done to verify that no fibers have been "frogged" or crossed in any of the splice points. Once the pigtails have been spliced, loss measurements will be recorded using an industry-accepted laser source and a power meter. OTDR traces will be taken and splice loss measurements will be recorded. Qwest will also store OTDR traces on diskette and on data sheets. Laser Precision format will be used on all traces. Qwest will provide three copies of all data sheets and tables, and one set of diskettes with all traces. a. The power loss measurements shall be made at 1550 nm, and performed bi-directionally. b. OTDR traces shall be taken in both directions at 1550 nm. 4. The splicing standards are as follows: a. The loss value of the pigtail connector and its associated splice will not exceed 0.50 dB. This value does not include the insertion loss from its connection to the FDP. For values greater than this, the splice will be broken and respliced until an acceptable loss value is achieved. If, after five attempts, Qwest is not able to produce a loss value less than 0.50 dB, the splice will be marked as Out-of-Spec ("OOS") on the data sheet. Each splicing attempt shall be documented on the data sheet. b. During initial uni-directional OTDR testing, the objective for each splice is a loss of 0.15 dB or less. If, after three attempts, Qwest is not able to produce a loss value of less than 0.15 dB, then 0.25 dB will be acceptable. If, after two additional attempts, a value of less than 0.25 dB is not achievable, then the splice will be marked as OOS on the data sheet. Each splicing attempt shall be documented on the data sheet. c. During end-to-end testing of a span (a span shall be FDP to FDP), the objective for each splice is a bi-directional average loss of 0.15 dB or less. d. The standard for each fiber within a span shall be an average bi- directional loss of 0.10 dB or less for each splice. For example, if a given span has 10 splices, each fiber shall have total bi-directional loss (due to the 10 splices) of 1.0 dB or less. Each individual splice may have a bi-directional loss of 0.15 dB or less, but the average bi-directional splice loss across the span must be 0.10 dB or less. 5. The entire fiber optic cable system shall be properly protected from foreign voltage and grounded with an industry-accepted system. The current system in use by Qwest is depicted in the attached schematic-DWG No. SAH-1 (typical for Surge Arrestor HH Placement). 6. Customer fiber assignments will be consecutive in count and in a separate buffer tube (or ribbon or fiber bundles) from others. The maximum number of fibers within a single buffer tube (or ribbon or fiber bundles) shall be 12. 7. The fibers shall be terminated to the FDP with Ultra FC-PC connectors, unless another type of connector is specified. The pigtails shall be manufactured with the same glass as the backbone cable to minimize splice loss. EXHIBIT E FIBER SPECIFICATIONS [This exhibit contains product specification information that is largely set forth in graphic format.] EXHIBIT E-1 [MAP APPEARS HERE] Exhibit E-1 is a map of the United States with the heading "Fiber Deployment Diagram" showing state lines and routes of the fiber optic network upon completion. The legend shows that a tan line represents Fiber not designated, a solid blue line is LS Fiber (Existing), a broken blue line is LS Fiber (Planned), a broken red line is Lucent TWF (Planned), a solid turquoise line is DS Fiber (Existing), and one inch equals 225 miles. The Fiber Not Designated Route travels east to west through Massachusetts, Connecticut, New York, Pennsylvania, New Jersey, Maryland, Virginia, North Carolina, South Carolina, Georgia, Tennessee, Kentucky, Ohio, Indiana, Illinois, Wisconsin, Minnesota, Iowa, Missouri, Kansas, Oklahoma, Texas, New Mexico, Arizona, California, Washington and Oregon. The LS Fiber (Existing) travels north to south through Texas, and also north to south through Colorado and New Mexico. The DS Fiber (Existing) travels north to south through California. The Lucent TWF (Planned) travels east to west through Ohio, Indiana, Illinois, Missouri, Kansas, Colorado, Utah, and Nevada. EXHIBIT F Specifications for Regeneration Facilities ------------------------------------------ Qwest will install modular, prefabricated, conditioned space along the right of way to house regeneration and other electronic equipment (supplied by Customer) necessary for the operation of the Qwest System. Regeneration site facilities consist of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet of caged space in such facilities with separate, lockable secured, 24-hour access. The buildings will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet wide by approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet interior length to provide such square footage. Also included is access to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amps of DC power provided from a common source backed up by a standby generator as described below. To the extent provided in the Agreement, any additional space and/or power required may be made available, with Frontier responsible for QWEST's incremental cost. Following are the general specifications of the buildings and support equipment. Standard production, metal-framed buildings with steel substructure or concrete; bullet resistant to 30-06 slugs from 15 feet; walls and ceilings R-19 insulated. Security-type weatherproof exterior light fixtures, equipped with motion sensors. Building is equipped with Marvair Compact II or equivalent redundant HVAC units. The building platform comes equipped with an external ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## kw backup generator designed to provide power during emergency periods. The generator fuel tanks will have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## gallon capacity. As part of the normal maintenance, the generator will be exercised twice monthly, running on a load bank for a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Fire extinguishers are provided one inside main door, and one located near the HVAC systems. A fire suppression system (FM-200) will be in place, as the main overall fire protection coverage. The building will have an earth ground termination bar (safety green wire ground) terminated to building steel and/or driven ground rod. The building will be equipped with A/C duplex isolated outlets for testing and miscellaneous equipment. Such outlets shall be national electronic code and placed every 6 feet around perimeter walls. The building will have sufficient lighting. Two properly sized cable racks will be installed, one from the DC power source and one from the FDP. Qwest will run properly sized cables from the common DC power plant to the Frontier-supplied fuse panel in the Frontier space. DC power in the amount of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amps shall be provided based upon a one (1) for N rectifier format (i.e., ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amp units or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amp units). A battery plant capable ---- of handling the load for a minimum of four (4) hours to ensure uninteruptable power will be installed in the building. At remote regeneration locations QWEST will also provide a battery plant designed to provide at least ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## at all other locations, in both cases with sufficient generator fuel to provide ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## backup in the event of a power outage. The battery plant shall incorporate load disconnect protection and batteries capable of recharging in 12 hours. The battery plant shall also include dual battery strings with battery disconnects for maintenance purposes. Power will be monitored twenty-four (24) hours per day, seven (7) days a week. Each party's fibers will be terminated in a separate bulkhead module within the QWEST fiber distribution panel. Upon execution of the IRU Agreement, the parties will finalize the locations of the regeneration facilities in accordance with Section 7.2 of the IRU Agreement. Exhibit G Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites Base System 1A Chicago to Detroit Chicago to South Bend 86 2 1 South Bend to Battle Creek 95 1 1 Battle Creek to Detroit 124 1 2 1B Detroit to Cleveland Detroit to Toledo 60 1 0 Toledo to Cleveland 105 1 1 1C Cleveland to Pittsburgh Cleveland to Akron 42 1 0 Akron to Youngstown 60 1 0 Youngstown to Pittsburgh 60 1 0 1D Pittsburgh to Philadelphia Pittsburgh to Harrisburg 238 1 3 Harrisburg to Philadelphia 118 1 1 1E Philadelphia to Washington Philadelphia to Baltimore 107 1 1 Baltimore to Washington 31 1 0 2A Cleveland to Columbus 133 1 2 2B Columbus to Cincinnati Columbus to Dayton 60 1 0 Dayton to Cincinnati 65 1 0 4 Indianapolis to Chicago 215 1 3 5 Indianapolis to St. Louis 248 1 4 6 St. Louis to Kansas City 297 1 4 7 Kansas City to Topeka 75 1 0
Exhibit G Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites 8 Topeka to Denver 565 1 9 9A Denver to Grand Junction 271 1 4 9B Grand Junction to Salt Lake City Grand Junction to Provo 265 1 4 Provo to Salt Lake City 30 1 0 10A Salt Lake City to Reno 575 1 9 10B Reno to Roseville 136 1 2 11A Roseville to Oakland Roseville to Sacramento 19 1 0 Sacramento to Oakland 92 1 1 11B Oakland to San Jose 43 1 0 12A San Jose to Salinas 71 1 0 12B Salinas to San Luis Obispo 132 1 2 12C San Luis Obispo to Santa Barbara 119 1 1 12D Santa Barbara to Los Angeles 107 1 1 13A Los Angeles to Anaheim 32 1 0 13B Anaheim to San Diego 132 1 2 13C San Diego to Yuma 235 1 3 13D Yuma to Phoenix 187 1 3 14A Phoenix to Tucson 123 1 1 14B Tucson to El Paso 310 1 5
Exhibit G Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites 15A El Paso to San Antonio 586 1 9 15B San Antonio to Austin 85 1 1 15C Austin to Houston 221 1 3 16 Houston to Dallas Houston to Bryan 90 1 1 Bryan to Mexia 90 1 1 Mexia to Dallas 89 1 1 17A Dallas to Oklahoma City Dallas to Ft. Worth 60 1 0 Ft. Worth to Oklahoma City 204 1 3 17B Oklahoma City to Tulsa 119 1 1 17C Tulsa to Kansas City 256 1 4 18 Cincinnati to Indianapolis 117 0 1 23 Denver to El Paso Denver to Colorado Springs 76 1 0 Colorado Springs to Pueblo 45 1 0 Pueblo to Lamy 288 1 4 Lamy to Albuquerque 67 1 0 Albuquerque to El Paso 252 0 3 Lamy to Santa Fe 18 1 0 24A Sacramento to Chico 98 1 1 24B Chico to Redding 75 1 0 24C Redding to Medford 177 1 2
Exhibit G Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites 24D Medford to Eugene 206 1 3 24E Eugene to Portland Eugene to Salem 69 1 0 Salem to Portland 54 1 0 25 Portland to Seattle 182 1 2 27 San Jose to San Francisco 56 1 0 28A Boston to Albany 208 2 3 28B Albany to Buffalo Albany to Utica 101 1 1 Utica to Syracuse 51 1 0 Syracuse to Rochester 86 1 1 Rochester to Buffalo 60 1 0 28C Buffalo to Cleveland 197 0 3 29 Albany to New York City Albany to Poughkeepsie 74 1 1 Poughkeepsie to White Plains 58 1 0 White Plains to New York City 25 1 0 30 New York City to Philadelphia New York City to Newark 13 1 0 Newark to Trenton 48 1 0 Trenton to Philadelphia 34 0 0 Sub Total Base System 10,198 73 119
Exhibit G Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites Option 1 22A Chicago to Cedar Rapids 255 1 3 22B Cedar Rapids to Des Moines 120 1 1 22C Des Moines to Omaha 140 1 2 22D Omaha to Topeka Omaha to Lincoln 80 1 1 Lincoln to Topeka 144 0 2 Sub Total Option 1 739 4 9 Option 1A 21A Chicago to Milwaukee 84 1 1 21B Milwaukee to Green Bay 118 1 1 21C Green Bay to Minneapolis Green Bay to Eau Claire 190 1 3 Eau Claire to Minneapolis 105 1 1 21D Minneapolis to Des Moines Minneapolis to Owatonna 104 1 1 Owatonna to Des Moines 177 1 3 22C Des Moines to Omaha 140 1 2 22D Omaha to Topeka Omaha to Lincoln 80 1 1 Lincoln to Topeka 144 0 2 Sub Total Option 1A 1,142 8 15
Exhibit G Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites Option 2 3 Cincinnati to Louisville 107 1 1 19A Louisville to Nashville Louisville to Bowling Green 115 1 1 Bowling Green to Nashville 74 1 0 19B Nashville to Chattanooga 147 1 2 19C Chattanooga to Atlanta 137 1 2 20A Atlanta to Charlotte Atlanta to Greenville 155 1 2 Greenville to Charlotte 106 1 1 20B Charlotte to Raleigh Charlotte to Greensboro 94 1 1 Greensboro to Raleigh 80 1 1 20C Raleigh to Richmond Raleigh to Rocky Mount 69 1 0 Rocky Mount to Portsmouth 114 1 1 Portsmouth to Richmond 118 1 1 20C Richmond to Washington Richmond to Fredericksburg 57 1 0 Fredericksburg to Washington 53 0 0 Sub Total Option 2 1,426 13 13 Total (Base System) 10,198 73 119 Total (Base and Option 1) 10,937 77 128 Total (Base and Option 1A) 11,340 81 134 Total (Base, Option 1 and Option 2) 12,363 90 141 Total (Base, Option 1A and Option 2) 12,766 94 147
EXHIBIT G-1 TEMPORARY SPACE WITHIN CERTAIN QWEST FACILITIES [This exhibit consists of floor plans in graphic format.] EXHIBIT H Qwest System Maintenance Specifications and Procedures ------------------------------------------------------ Any party responsible for providing maintenance of the Qwest System hereunder shall be referred to herein as the "Service Provider." The party receiving maintenance services from the Service Provider hereunder shall be referred to herein as the "Service Recipient". All other capitalized terms not otherwise defined herein shall have their respective meanings as set forth in the IRU Agreement of which this Exhibit forms a part. 1. Maintenance. ----------- (a) Scheduled Maintenance. Routine maintenance and repair of the --------------------- Qwest System described in this section ("Scheduled Maintenance") shall be performed by or under the direction of Service Provider, at Service Provider's reasonable discretion or at Service Recipient's request. Scheduled Maintenance shall commence with respect to each Segment upon the effective date of the grant of the IRU therein, as provided in the IRU Agreement. Scheduled Maintenance shall include the following activities: (i) Patrol of Qwest System route on a regularly scheduled basis, which will be weekly unless hyrail access is necessary in which case it will be quarterly; (ii) Maintenance of a "Call-Before-You-Dig" program and all required and related cable locates; (iii) Maintenance of sign posts along the Qwest System right-of-way with the number of the local "Call Before You Dig" organization and the 800 number for Qwest's "Call Before You Dig" program; and (iv) Assignment of fiber maintenance technicians to locations along the route of the Qwest System at approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT -mile intervals dependent upon terrain and accessibility. (b) Unscheduled Maintenance. Non-routine maintenance and repair of ----------------------- the Qwest System which is not included as Scheduled Maintenance ("Unscheduled Maintenance"), shall be performed by or under the direction of Service Provider. Unscheduled Maintenance shall commence with respect to each Segment upon the effective date of the grant of the IRU therein, as provided in the IRU Agreement. Unscheduled Maintenance shall consist of: (i) "Emergency Unscheduled Maintenance" in response to an alarm identification by Service Provider's Operations Center, notification by Service Recipient or notification by any third party of any failure, interruption or impairment in the operation of the Qwest System, or any event imminently likely to cause the failure, interruption or impairment in the operation of the Qwest System. (ii) "Non-Emergency Unscheduled Maintenance" in response to any potential service-affecting situation to prevent any failure, interruption or impairment in the operation of the Qwest System. Service Recipient shall immediately report the need for Unscheduled Maintenance to Service Provider in accordance with procedures promulgated by Service Provider from time to time. Service Provider will log the time of Service Recipient's report, verify the problem and will dispatch personnel immediately to take corrective action. 2. Operations Center. ----------------- Service Provider shall operate and maintain a Operations Center ("OC") staffed twenty-four (24) hours a day, seven (7) days a week by trained and qualified personnel. Service Provider's maintenance employees shall be available for dispatch twenty-four (24) hours a day, seven (7) days a week. Service Provider shall have its first maintenance employee at the site requiring Emergency Unscheduled Maintenance activity within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## after the time Service Provider becomes aware of an event requiring Emergency Unscheduled Maintenance, unless delayed by circumstances beyond the reasonable control of Service Provider. Service Provider shall maintain a toll-free telephone number to contact personnel at the OC. Service Provider's OC personnel shall dispatch maintenance and repair personnel along the system to handle and repair problems detected in the Qwest System, (i) through the Service Recipient's remote surveillance equipment and upon notification by Service Recipient to Service Provider, or (ii) upon notification by a third party. 3. Cooperation and Coordination. ---------------------------- (a) Service Recipient shall utilize an Operations Escalation List, as updated from time to time, to report and seek immediate initial redress of exceptions noted in the performance of Service Provider in meeting maintenance service objectives. Service Recipient will, as necessary, arrange for unescorted access for Service Provider to all sites of the Qwest System, subject to applicable contractual, underlying real property and other third-party limitations and restrictions. (c) In performing its services hereunder, Service Provider shall take workmanlike care to prevent impairment to the signal continuity and performance of the Qwest System. The precautions to be taken by Service Provider shall include notification to Service Recipient. In addition, Service Provider shall reasonably cooperate with Service Recipient in sharing information and analyzing the disturbances regarding the cable and/or fibers. In the event that any Scheduled or Unscheduled Maintenance hereunder requires a traffic roll or reconfiguration involving cable, fiber, electronic equipment, or regeneration or other facilities of the Service Recipient, then Service Recipient shall, at Service Provider's reasonable request, make such personnel of Service Recipient available as may be necessary in order to accomplish such maintenance, which personnel shall coordinate and cooperate with Service Provider in performing such maintenance as required of Service Provider hereunder. (d) Service Provider shall notify Service Recipient at least ten (10) business days prior to the date in connection with any PSWP of any Scheduled Maintenance and as soon as possible after becoming aware of the need for Unscheduled Maintenance. Service Recipient shall have the right to be present during the performance of any Scheduled Maintenance or Unscheduled Maintenance so long as this requirement does not interfere with Service Provider's ability to perform its obligations under this Agreement. In the event that Scheduled Maintenance is canceled or delayed for whatever reason as previously notified, Service Provider shall notify Service Recipient at Service Provider's earliest opportunity, and will comply with the provisions of the previous sentence to reschedule any delayed activity. 4. Facilities. ---------- (a) Service Provider shall maintain the Qwest System in a manner which will permit Service Recipient's use, in accordance with the terms and conditions of the IRU Agreement, of the IRU, the Frontier Fibers and the Associated Property required to be provided under the terms of the IRU Agreement. Except to the extent otherwise expressly provided in the IRU Agreement, Service Recipient will be solely responsible for providing and paying for any and all maintenance of all electronic, optronic and other equipment, materials and facilities used by Service Recipient in connection with the operation of the Dark Fibers, none of which is included in the maintenance services to be provided hereunder. 5. Cable/Fibers. ------------ (a) Service Provider shall perform appropriate Scheduled Maintenance on the Cable contained in the Qwest System in accordance with Service Provider's then current preventative maintenance procedures as agreed to by Service Recipient, which shall not substantially deviate from standard industry practice. Service Provider shall have qualified representatives on site any time Service Provider has reasonable advance knowledge that another person or entity is engaging in construction activities or otherwise digging within five (5) feet of the Cable. (c) Service Provider shall maintain sufficient capability to teleconference with Service Recipient during an Emergency Unscheduled Maintenance in order to provide regular communication during the repair process. When correcting or repairing Cable discontinuity or damage, including but not limited to in the event of Emergency Unscheduled Maintenance, Service Provider shall use reasonable efforts to repair traffic-affecting discontinuity within four (4) hours after the Service Provider maintenance employee's arrival at the problem site. In order to accomplish such objective, it is acknowledged that the repairs so effected may be temporary in nature. In such event, within twenty-four (24) hours after completion of any such Emergency Unscheduled Maintenance, Service Provider shall commence its planning for permanent repair, and thereafter promptly shall notify Service Recipient of such plans, and shall implement such permanent repair within an appropriate time thereafter. Restoration of open fibers on fiber strands not immediately required for service shall be completed on a mutually agreed-upon schedule. If the fiber is required for immediate service, the repair shall be scheduled for the next available Planned Service Work Period (PSWP). (d) In performing repairs, Service Provider shall comply with the splicing specifications as set forth in Exhibit D. Service Provider shall provide to Service Recipient any modifications to these specifications as may be necessary or appropriate in any particular instance for Service Recipient's approval, which approval shall not be unreasonably withheld. (e) Service Provider's representatives that are responsible for initial restoration of a cut Cable shall carry on their vehicles the typically appropriate equipment that would enable a temporary splice, with the objective of restoring operating capability in as little time as possible. Service Provider shall maintain and supply an inventory of spare Cable in storage facilities supplied and maintained by Service Provider at strategic locations to facilitate timely restoration. 6. Planned Service Work Period (PSWP). ---------------------------------- Scheduled Maintenance which is reasonably expected to produce any signal discontinuity must be coordinated between the parties. Generally, this work should be scheduled after midnight and before 6:00 a.m. local time. Major system work such as fiber rolls and hot cuts will be scheduled for PSWP weekends. A calendar showing approved PSWP will be agreed upon in the last quarter of every year for the year to come. The intent is to avoid jeopardy work on the first and last weekends of the month and high-traffic holidays. 7. Restoration. ----------- (a) Service Provider shall respond to any interruption of service or a failure of the Dark Fibers to operate in accordance with the specifications set forth in Exhibit D (in any event, an "Outage") as quickly as possible (allowing for delays caused by circumstances beyond the reasonable control of Service Provider) in accordance with the procedures set forth herein. When restoring a cut Cable in the Qwest System, the parties agree to work together to restore all traffic as quickly as possible. Service Provider, promptly upon arriving on the site of the cut, shall determine the course of action to be taken to restore the Cable and shall begin restoration efforts. Service Provider shall splice fibers tube by tube or ribbon by ribbon or fiber bundle by fiber bundle, rotating between tubes or ribbons operated by the separate Interest Holders (as defined in paragraph 9(a)), including Service Recipient, in accordance with the following described priority and rotation mechanics; provided that, lit fibers in all buffer tubes or ribbons or fiber -------------- bundles shall have priority over any dark fibers in order to allow transmission systems to come back on line; and provided further that, Service Provider will --------------------- continue such restoration efforts until all lit fibers in all buffer tubes or ribbons are spliced and all traffic restored. In general, priority among Interest Holders affected by a cut shall be determined on a rotating restoration-by-restoration and Segment-by-Segment basis, to provide fair and equitable restoration priority to all Interest Holders, subject only to such restoration priority to which Qwest is contractually obligated prior to the date of the Agreement. Service Provider shall use all reasonable efforts to implement a Qwest System-wide rotation mechanism on a Segment-by-Segment basis so that the initial rotation order of the Interest Holders in each Segment is varied (from earlier to later in the order), such that as restorations occur, each Interest Holder has approximately equivalent rotation order positions across the Qwest System. Additional participants in the Qwest System that become Interest Holders after the date hereof shall be added to the restoration rotation mechanism. (c) The goal of emergency restoration splicing shall be to restore service as quickly as possible. This may require the use of some type of mechanical splice, such as the "3M Fiber Lock" to complete the temporary restoration. Permanent restorations will take place as soon as possible after the temporary splice is complete. 8. Subcontracting. -------------- Service Provider may subcontract any of the maintenance services hereunder; provided that Service Provider shall require the subcontractor(s) to perform in accordance with the requirement and procedures set forth herein. The use of any such subcontractor shall not relieve Service Provider of any of its obligations hereunder. 9. Fees and Costs. --------------- (a) Scheduled Maintenance Fees. The fees payable for any and all -------------------------- Scheduled Maintenance hereunder shall be determined in accordance with the following provisions. During any time after the Acceptance Date for any Segment but subject to paragraph 10 below, Qwest shall be the Service Provider and provide Scheduled Maintenance at a cost not to exceed $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile per year, subject to the CPI adjustment described below (the "Qwest Fixed Fee") and Unscheduled Maintenance as provided in subparagraph 9 below. The Scheduled Maintenance fee payable by Service Recipient shall be equal to a pro rata share of Qwest's Costs, based first upon the number of conduits so maintained by Qwest and included in such Costs and second upon the number of Interest Holders (as defined in Section 10.4 of the Agreement) in the portion of the Qwest System so maintained by Qwest and included in such Costs; provided however, the total fee shall in no event exceed the amount of the Qwest Fixed Fee as adjusted by the CPI-U Adjustment. A quarter of the first such Scheduled Maintenance fee with respect to each Segment will be due and payable thirty (30) days after the Acceptance Date with respect to such Segment. Thereafter, one quarter of such fee shall be due quarterly. All fees shall be paid by Service Recipient within thirty (30) days of receipt of invoice therefor. The Qwest Fixed Fee, if applicable, may be adjusted annually, in Qwest's sole discretion, beginning with the first anniversary date of the execution date of this Agreement, for increases in the United States Bureau of Labor Statistics, CPI-U All Services Index (unadjusted), as originally published. Said adjustment shall be hereinafter referred to as "CPI-U Adjustment". Such fee, as adjusted by the CPI-U Adjustment, shall be equal to the product of the fee specified herein multiplied by the fraction (i) whose numerator is the CPI-U All Services for March of the previous calendar year for which the adjustment to the fee is being made, and (ii) whose denominator is the CPI-U All Services for March of the preceding year. The adjusted fee shall remain in effect until the next annual fee is due, when a new adjusted fee fixed pursuant to this provision shall become effective. In no event shall the amount of the fee as adjusted pursuant to this provision be less than the amount of fee in effect for the immediately-preceding year. The parties agree that the Index for March 1995 is defined as 151.4. In the event that the Bureau of Labor Statistics (or any successor organization) changes the current base of the CPI-U from 1982-84 = 100, the calculation of a fee under this provision shall be adjusted to ensure that Qwest receives the same amount as it would have had, had the base not been changed. In the event the Bureau of Labor Statistics or any successor organization no longer publishes the CPI-U, Qwest, subject to Service Recipient's agreement (which shall not be unreasonably withheld), designate the statistical index it deems most appropriate for calculation of adjustments to a fee and, from the date the CPI-U ceased to be published, such index shall be used to make adjustments in a fee under this provision. On and after the second anniversary of the execution of the Agreement, if either of FRONTIER or QWEST determines that the Scheduled and Unscheduled Maintenance to be provided hereunder should be put out to competitive bid process, then such party shall notify the other of such determination, and thereafter may obtain at least three bids in writing from national or regional maintenance providers of sound business and financial reputation to perform the Scheduled and Unscheduled Maintenance hereunder. Bids for maintenance services must be for both Scheduled and Unscheduled Maintenance and must be for portions of the QWEST System covering at least 1,000 contiguous route miles to provide for the most competitive bidding and the best overall maintenance practices at the lowest possible cost to Service Recipient. If a majority of the Interest Holders agree on acceptable bids, QWEST shall be entitled to elect either to continue to provide the Scheduled and Unscheduled Maintenance, or to subcontract the Scheduled and Unscheduled Maintenance obligations hereunder to the lowest such acceptable bidder, in either of which cases the Scheduled Maintenance fee payable by Service Recipient shall be equal to a pro rata share, based first upon the number of conduits maintained by QWEST and included in such Costs and second upon the Interest Holders in the portion of the QWEST System covered by the bid, of the sum of the lowest acceptable bid price plus a 10% G&A overhead allowance with QWEST in any such case retaining such overhead allowance. (b) Unscheduled Maintenance Fees. If the aggregate amount of the ---------------------------- Costs of Unscheduled Maintenance required as a result of any single event or multiple, closely-related events is less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## ), such Costs shall be borne by Service Provider. For any other Unscheduled Maintenance, the Costs thereof shall be allocated among the various Interest Holders in the conduit, cable and/or fibers affected thereby as follows: (i) Costs of Unscheduled Maintenance solely to or affecting a conduit or cable which houses fibers of a single Interest Holder shall be borne 100% by such Interest Holder; (ii) Costs of Unscheduled Maintenance to or affecting a conduit which houses multiple innerduct conduits, not including such Costs attributable to the repair or replacement of fiber therein, shall be borne proportionately by the Interest Holders in each of the affected innerduct conduits based on the ratio that such affected conduit bears to the total number of affected innerduct conduits, and (iii) Costs of Unscheduled Maintenance attributable to the repair or replacement of fiber, including the acquisition, installation, inspection, testing and splicing thereof, shall be borne proportionately by the Interest Holders in the affected fiber, based on the ratio that the number of affected fibers subject to the interest of each such Interest Holder bears to the total number of affected fibers. All such Costs which are allocated to Service Recipient pursuant to the foregoing provisions shall be the responsibility of and paid by Service Recipient within thirty (30) days after its receipt from Service Provider of an invoice therefor. (c) Costs. "Costs" means the actual, direct costs paid or payable in ----- accordance with the established accounting procedures generally used by each party, as the case may be, and which it utilizes in billing third parties for reimbursable projects, which costs shall include, without limitation, the following: (i) labor costs, including wages and salaries, and benefits and overhead allocable to such labor costs (overhead allocation percentage shall not exceed the lesser of (x) the percentage Service Provider typically allocates to its internal projects or (y) thirty percent (30%), and (ii) other direct costs and out-of-pocket expenses on a pass-through basis (e.g., equipment, materials, supplies, contract services, etc.). 10. Term. ---- Service Provider's obligation to perform maintenance on the relevant portion of the Qwest System shall be for an initial term expiring ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , and unless a different Service Provider is selected by the Interest Holders under a mutually agreed selection process, then Qwest shall be the Service Provider. Thereafter, Qwest shall have no obligation to provide Scheduled or Unscheduled Maintenance hereunder, but shall be entitled to participate in any process selected by the Interest Holders as a potential Service Provider. EXHIBIT I Form of Surety Bond AIU Insurance Company American Fidelity Company American Home Assurance Company Granite State Insurance Company Illinois National Insurance Company The Insurance Company of the State of Pennsylvania National Union Fire Insurance Company of Pittsburgh, Pa. New Hampshire Insurance Company Worldwide Bonding AMERICAN INTERNATIONAL COMPANIES Principal Bond Office 70 Pine Street, New York, N.Y. 10270 CONTRACT BOND KNOW ALL MEN BY THESE PRESENTS: That ---------------, as Principal, and ---------, as Surety, are held and firmly bound unto -------, as Obligee, in the sum of ----- Dollars($-----), for the payment of which sum, well and truly to be made, the Principal and Surety bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. WHEREAS, The principal has entered into a written contract dated ---------- with the Obligee for ---------- which contract is by reference made a part hereof. NOW, THEREFORE, THE CONDITION OF THE ABOVE OBLIGATION IS SUCH, That if the above bounden Principal shall well and truly keep, do and perform, each and every, all and singular, the matters and things in said contract set forth and specified to be by the said Principal kept, done and performed at the time and in the manner in said contract specified, and shall pay over, make good and reimburse to the above named Obligee, all loss and damage which said Obligee may sustain by reason of failure or default on the part of said Principal, then this obligation shall be void; otherwise, it shall remain in full force and effect. Signed, sealed and dated ---------- - - ---------- (Principal) (Seal) - - ----------- (Witness) By---------- (Title) - - ---------- (Surety) Bond No. ---------- By---------- Attorney in Fact OPERATIVE SURETY LANGUAGE: NOW, THEREFORE, THE CONDITION OF THE ABOVE OBLIGATION IS SUCH, that if the above bounden Principal shall well and truly keep, do and perform, each and every, all and singular, the matters and things in said contract set forth and specified to be by the said Principal kept, done and performed at the time and in the manner in said contract specified, and shall pay over, make good and reimburse to the above named Obligee, those amounts to which Obligee may be entitled under said contract (including without limitation, Section 18.2 thereof) by reason of failure or default on the part of said Principal, then this obligation shall be void; otherwise, it shall remain in full force and effect. EXHIBIT J UNDERLYING RIGHTS AND --------------------- UNDERLYING RIGHTS REQUIREMENTS ------------------------------ Note: Prior to April 6, 1995 Qwest Communications Corporation was known as "Southern Pacific Telecommunications Company," and the documents listed below that predate April 6, 1995 are in that former name. Pueblo Easements: Easement Agreement dated October 25, 1995 between the Pueblo of Santa Ana and Qwest Communications Corporation. Easement Agreement dated February 2, 1996 between the Pueblo of Santo Domingo and Qwest Communications Corporation. Easement Agreement dated February 26, 1996 between the Pueblo of San Felipe and Qwest Communications Corporation. Easement Agreement dated April 12, 1996 between the Pueblo of Isleta and Qwest Communications Corporation. Easement Agreement dated June 6, 1996 between the Pueblo of Sandia and Qwest Communications Corporation. SPTCo Easement: Easement Agreement dated September 30, 1991 between Southern Pacific Transportation Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Fifth Amendment to Easement Agreement dated August 9, 1996 between Southern Pacific Transportation Company, as Grantor, and Qwest Communications Corporation, as Grantee. D&RGW Easement: Easement Agreement dated September 30, 1991 between Denver and Rio Grande Western Railroad Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. First Amendment to Easement Agreement dated July 14, 1993 between Denver and Rio Grande Western Railroad Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Second Amendment to Easement Agreement dated May 1, 1995 between Denver and Rio Grande Western Railroad Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. SSW Easement: Easement Agreement dated September 30, 1991 between St. Louis Southwestern Railway, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Second Amendment to Easement Agreement dated November 16, 1994 between St. Louis Southwestern Railway, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. ATSF Easement Master Rail Corridor Fiber Optic Agreement dated December 5, 1994 between The Atchison, Topeka and Santa Fe Railway Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. CSX Easement: Fiber Optic Placement Agreement dated as of March 1, 1995 between CSX Transportation, Inc., as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Letter Agreement dated as of March 1, 1995 between CSX Transportation, Inc., as Grantor, and Southern Pacific Telecommunications Company, as Grantee. DART Easement: Fiber Optics Agreement dated as of February 3, 1994 between Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. First Amendment to Fiber Optics Agreement dated as of November 13, 1995 between Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Fiber Optics Easement dated as of December 21, 1994 between Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. MTA Easement: (SPTCo Easement Agreement dated September 30, 1991 was assigned as part of sale of route.) Amendment to Easement Agreement dated January 13, 1995 between the Los Angeles County Metropolitan Transportation Authority, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. First Severance Agreement and Amendment to Easement Agreement dated June 23, 1995 between Los Angeles County Metropolitan Transportation Authority and Southern Pacific Telecommunications Company. Public Easements: License Agreement dated March 2, 1993 between the Utah Department of Transportation and Southern Pacific Telecommunications Company. Agreement dated March 17, 1992 between The Moffat Tunnel Improvement District and Southern Pacific Telecommunications Company. License Agreement dated September 11, 1995 between the City and County of Denver, Board of Water Commissioners and SP Construction Services (covering the Highline Canal Property). License Agreement dated August 30, 1995 between the City and County of Denver, Board of Water Commissioners and SP Construction Services (covering Conduit Number 55). License Agreement dated August 30, 1995 between the City and County of Denver, Board of Water Commissioners and SP Construction Services (covering Conduit Number 96). License Agreement No. 95-01-25 dated July 24, 1995 between the City of Aurora, Director of Utilities and Qwest Communications Corporation. License Agreement dated August 18, 1995 between the City of Aurora, Director of Utilities and Qwest Communications Corporation. Arapahoe County Street Cut and R.O.W. Use Permit Nos. SC5212, SC5213, SC5193, SC5191, SC5190, SC5194, SC5195, and SC5192 issued to Southern Pacific Telecommunications Company by Arapahoe County. Utility Permit Nos. 596067, 595099, 95-145, 95-147, and 95-149 issued to Southern Pacific Telecommunications Company by the Colorado Department of Transportation. Permit for Right-of-Way Use and/or Construction Permit No. 1095 1262 E issued by SP Construction Services by Douglas County. Utility Permit Nos. 7528, 7526, and 7525 issued to Qwest Communications Corporation by the Colorado Department of Transportation. Permit dated March 3, 1995 issued to SP Telecom Construction Services by the Huerfano County Road and Bridge Department. Permit for Construction and Installation of Communication Facilities in Public Rights of Way (Permit No. TFI-95-002) dated February 21, 1995 issued to Southern Pacific Telecommunications Company by Las Animas County. Contractor License No. 70 dated May 9, 1995 issued to Southern Pacific Telecommunications by the Town of Aguilar. Permit dated April 28, 1995 issued to Southern Pacific Telecommunications Company by the Town of Aguilar. Right-of-Way 2983, Book 29, dated March 22, 1995 between the State of Colorado, State Board of Land Commissioners, as Grantor, and Qwest Communications Corporation, as Grantee. Letter dated April 25, 1995 from the City of Trinidad, authorizing SP Telecom to proceed with construction on the North Linden Avenue Communication Conduits. Ordinance No. 950310 issued by the City of Kansas City, Missouri, granting Southern Pacific Telecommunications Company and MCI Telecommunications Corporation the right to install and maintain underground telecommunication lines. Missouri Highway and Transportation Commission Permit Nos. 6-95-00288, 6-95- 00286, 6-95-00287, 4-95-00682, 4-95-00681, 4-95-00683, and 4-95-00662 and Excavation Permit(s) Receipts. Private Easements: Easement dated November 21, 1995 between American Federation of Human Rights, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated September 26, 1995 between Ray W. Harness and Dorothy Elaine Harness, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated December 4, 1995 between James G. Armstrong and Bessie M. Armstrong, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated March 29, 1995 between Louis P. Vezzani and Evelyn M. Vezzani, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated March 29, 1995 between Walsenburg Sand and Gravel Company, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated March 29, 1995 between Joe Mario Amedei, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated March 30, 1995 between Lindo P. Vezzani and Sharron L. Vezzani, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated May 19, 1995 between Ludvik Propane Gas, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated March 30, 1995 between Samuel J. Capps, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated April 17, 1995 between John James Fatur, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated May 15, 1995 between Mark Bracco and Vicki Lynn Graham, as Grantors and Qwest Communications Corporation, as Grantee. Easement between Pamela L. Breitbarth (2/19/96), Virginia A. Buczek (4/17/95), Ross A. Swanson (7/17/95), James R. Coressel (4/16/95) and Imogene Coressel (4/16/95), as Grantors and Qwest Communications Corporation, as Grantee. Easement dated March 30, 1995 between Bud Adams and Janna Adams, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated March 31, 1995 between Trinidad Properties, Inc. and MYBI Partnership, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated June 6, 1995 between Rose Wirth, as Grantor, and Qwest Communications Corporation, as Grantee. Easement dated May 5, 1995 between Harold A. Winter and Viola A. Winter, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated May 18, 1995 between Ayuda Me Dios, as Grantor, and Qwest Communications Corporation, as Grantee. Easement dated April 19, 1995 between Gabriel Saliba and Mary J. Saliba, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated June 1, 1995 between Interstate Underground Warehouse and Industrial Park, Inc., as Grantor, and Qwest Communications Corporation, as Grantee. Easement dated May 26, 1995 between Delbert Rustman and Juanita Rustman, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated August 28, 1996 between Red Creek Ranch, Inc., as Grantor and Qwest Communications, as Grantee (Pueblo, CO). Miscellaneous Easements Grant of Right of Way and Easement dated December 20, 1961 between J. A. Humphrey and A. Pollard Simons, as Grantors, and American Liberty Pipe Line Company, as Grantee. Amendment to Right-of-Way Agreement dated April 19, 1994 between Haynes/LICO Properties II, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Amendment to Right of Way Grant dated January 31, 1996 between Prestonwood Golf Club Corporation, as Grantor, and Qwest Communications Corporation, as Grantee. Miscellaneous Documents: SP Construction Services Safety Manual Railroad Safety-Rules Governing Contractors Working on Railroads Railroad Rules and Instructions for Maintenance of Way and Engineering and Operating Manuals for Southern Pacific Lines The Atchison, Topeka and Santa Fe Railway Company Manual EXHIBIT K GUARANTY -------- This GUARANTY, dated as of October 18, 1996, is from FRONTIER CORPORATION, a New York corporation (hereafter called "Guarantor"), to and for the benefit of QWEST COMMUNICATIONS CORPORATION, a Delaware corporation (hereafter called "QWEST"). Recital ------- FRONTIER COMMUNICATIONS INTERNATIONAL INC. (hereafter called "FCI"), a wholly-owned subsidiary of Guarantor, entered into a IRU Agreement dated as of October 18, 1996, by and between QWEST and FCI (the "Agreement"). QWEST would not have entered into the Agreement except for the request of Guarantor and the execution and delivery of this Guaranty. Agreement --------- NOW, THEREFORE, as a material inducement to QWEST to enter into the Agreement with FCI and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor and QWEST hereby agree as follows: 1. Guaranty. Guarantor hereby unconditionally and irrevocably guaranties -------- to QWEST the full and punctual payment of all IRU fees payable by FCI pursuant to the Agreement as set forth in Article II of the Agreement and on the IRU Fee Payment Schedule attached to the Agreement, and the full and punctual payment of all other amounts payable by FCI under the Agreement, including the payment of any interest and all costs and expenses, including reasonable attorneys' fees, incurred by QWEST in collecting payment or enforcing this Guaranty, pursuant to the terms of the Agreement (the payment and other obligations are collectively referred to as the "Obligations"). 2. Unconditional Obligations. Guarantor understands and agrees that this ------------------------- Guaranty is direct, immediate, absolute, continuing, unconditional and unlimited, and is a guaranty of payment and not of collection. If FCI shall fail to pay or perform any of the Obligations, Guarantor shall pay, forthwith upon demand, to QWEST or to QWEST's designated agent, any and all such amounts as may be due and owning from FCI to QWEST. 3. Guarantor's Waivers. Guarantor waives: ------------------- (a) notice of the creation or extension of any Obligation by FCI; (b) notice that FCI has taken or omitted to take any action under the Agreement or any other instrument relating thereto or relating to any Obligation; (c) notice of acceptance of this Guaranty; (d) demand, presentation for payment and notice of demand, nonpayment or nonperformance; (e) any and all right to participate in any security held by QWEST now or in the future; (f) the right to require QWEST to (i) proceed against FCI, (ii) proceed against or exhaust any security which QWEST now holds or may hold in the future from FCI; (iii) pursue any other right or remedy available to QWEST, or (iv) have the property of FCI first applied to the discharge of the Obligations; and (g) any defense by reason of bankruptcy, reorganization, discharge by the filing of bankruptcy or discharge in bankruptcy of FCI; Guarantor further agrees that the Guaranty will not be discharged and shall remain in full force and effect until full payment and performance of all Obligations of FCI and the liabilities of Guarantor hereunder. 4. Guarantor's Representations and Warrants. Guarantor represents and ---------------------------------------- warrants that: (a) any financial information provided by Guarantor to QWEST was prepared in accordance with generally accepted accounting principles and accurately and fairly represents the financial condition on the date stated and understands QWEST is relying on such information; and (b) Guarantor has a financial interest in FCI. 5. Consent. Guarantor understands and consents that from time to time, ------- and without further notice to or consent of Guarantor, QWEST may take any or all of the following actions without releasing, discharging or in any way affecting the obligations of Guarantor under this Guaranty: (a) extend, renew, modify, compromise, settle, or release the Obligations; (b) any modification or amendment of or supplement to the Agreement; (c) release or compromise any liability of any party or parties with respect to the Obligations; or (d) exercise or refrain from exercising any right or remedy of QWEST under the Agreement. 6. Assignment. Guarantor understands and agrees that any assignment of ---------- the Agreement, or any rights or obligations accruing thereunder, shall in no way affect Guarantor's obligations under this Guaranty. 7. Delay in Enforcement. Guarantor understands and agrees that any -------------------- failure or delay of QWEST to enforce any of its rights under the Agreement or this Guaranty shall in no way affect Guarantor's obligations under this Guaranty. 8. Notices. Notices to Guarantor are not required under this Guaranty. ------- However, if notice is delivered, unless otherwise provided herein, it shall be hand delivered, sent by registered or certified U.S. mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to Guarantor when received at the address set forth after the signature line below, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery service, or three (3) days after deposit in the mail when sent by U.S. mail. 9. Severability. In case any provision of this Guaranty shall be invalid, ------------ illegal or unenforceable, such provision shall be severable from the rest of this Guaranty and the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10. Applicable Law and Jurisdiction. This Guaranty and the rights and ------------------------------- obligations of the parties hereto shall be governed by and construed and enforced in accordance with the laws of the state of New York. Guarantor agrees that the exclusive venue for any actions related to this Guaranty shall be the Federal District Court for the New York or in the alternative the courts of Monroe County, New York. 11. Amendments. No amendment, modification or alteration of this Guaranty ---------- shall be effective unless in writing and signed by the parties hereto or their respective successors or assigns. 12. Successors and Assigns. This Guaranty shall be binding upon and shall ---------------------- inure to the benefit of the successors and assigns of the parties hereto. 13. Attorneys' Fees. If any action shall be instituted by either QWEST or --------------- Guarantor for the enforcement or interpretation of any of its rights, remedies or obligations in or under this Guaranty, the prevailing party shall be entitled to recover from the losing party all costs incurred by the prevailing party in such action and any appeal therefrom, including reasonable attorneys' fees and court costs to be fixed by the court therein. THIS GUARANTY IS FREELY AND VOLUNTARILY GIVEN WITHOUT ANY DURESS OR COERCION AND AFTER GUARANTOR HAS EITHER CONSULTED WITH COUNSEL, OR HAS BEEN GIVEN AN OPPORTUNITY TO DO SO, AND GUARANTOR HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THE AGREEMENT AND THIS GUARANTY. IN WITNESS WHEREOF, this Guaranty has been executed as of the date first above written. GUARANTOR: FRONTIER CORPORATION, a New York corporation /s/ Robert L. Barrett ___________________________________ By: Robert L. Barrett Title: Executive Vice President Guarantor's Address: 180 South Clinton Avenue Rochester, New York 14646 Attn.: Vice President __________________________________ Network Planning and Development EXHIBIT L GUARANTY -------- This GUARANTY, dated as of October 18, 1996, is from ANSCHUTZ COMPANY, a Delaware corporation (hereafter called "Guarantor"), to and for the benefit of FRONTIER COMMUNICATIONS INTERNATIONAL INC., a Delaware corporation (hereafter called "FCI"). Recital ------- QWEST COMMUNICATIONS CORPORATION (hereafter called "QWEST"), a wholly-owned subsidiary of Guarantor, entered into a IRU Agreement dated as of October 18, 1996, by and between QWEST and FCI (the "Agreement"). FCI would not have entered into the Agreement except for the request of Guarantor and the execution and delivery of this Guaranty. Agreement --------- NOW, THEREFORE, as a material inducement to FCI to enter into the Agreement with QWEST and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor and FCI hereby agree as follows: 1. Guaranty. Guarantor hereby unconditionally and irrevocably guaranties -------- to FCI the full and punctual payment of all amounts payable by QWEST to FCI under the Agreement, including, without limitation, Section 18.2 thereof (such payment obligations are collectively referred to as the "Obligations"). 2. Unconditional Obligations. Guarantor understands and agrees that this ------------------------- Guaranty is direct, immediate, absolute, continuing, unconditional and unlimited (except as provided in Section 14), and is a guaranty of payment and not of collection. If QWEST shall fail to pay or perform any of the Obligations, Guarantor shall pay, forthwith upon demand, to FCI or to FCI's designated agent, any and all such amounts as may be due and owning from QWEST to FCI. 3. Guarantor's Waivers. Guarantor waives: ------------------- (a) notice of the creation or extension of any Obligation by QWEST; (b) notice that QWEST has taken or omitted to take any action under the Agreement or any other instrument relating thereto or relating to any Obligation; (c) notice of acceptance of this Guaranty; (d) demand, presentation for payment and notice of demand, nonpayment or nonperformance; (e) any and all right to participate in any security held by FCI now or in the future; (f) the right to require FCI to (i) proceed against QWEST, (ii) proceed against or exhaust any security which FCI now holds or may hold in the future from QWEST; (iii) pursue any other right or remedy available to FCI, or (iv) have the property of QWEST first applied to the discharge of the Obligations; and (g) any defense by reason of bankruptcy, reorganization, discharge by the filing of bankruptcy or discharge in bankruptcy of QWEST. Guarantor further agrees that the Guaranty will not be discharged and shall remain in full force and effect until the earlier to occur of (a) full payment and performance of all Obligations of QWEST and the liabilities of Guarantor hereunder, or (b) substitution of the Surety Bond (as defined in and pursuant to Section 3.5 of the Agreement), in which case this Guaranty shall terminate as provided in Section 15 hereof. 4. Guarantor's Representations and Warrants. Guarantor represents and ---------------------------------------- warrants that Guarantor has a financial interest in QWEST. 5. Consent. Guarantor understands and consents that from time to time, ------- and without further notice to or consent of Guarantor, FCI may take any or all of the following actions without releasing, discharging or in any way affecting the obligations of Guarantor under this Guaranty: (a) extend, renew, modify, compromise, settle, or release the Obligations; (b) any modification or amendment of or supplement to the Agreement; (c) release or compromise any liability of any party or parties with respect to the Obligations; or (d) exercise or refrain from exercising any right or remedy of FCI under the Agreement. 6. Assignment. Guarantor understands and agrees that any assignment of ---------- the Agreement, or any rights or obligations accruing thereunder, shall in no way affect Guarantor's obligations under this Guaranty. 7. Delay in Enforcement. Guarantor understands and agrees that any -------------------- failure or delay of FCI to enforce any of its rights under the Agreement or this Guaranty shall in no way affect Guarantor's obligations under this Guaranty. 8. Notices. Notices to Guarantor are not required under this Guaranty. ------- However, if notice is delivered, unless otherwise provided herein, it shall be hand delivered, sent by registered or certified U.S. mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to Guarantor when received at the address set forth after the signature line below, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery service, or three (3) days after deposit in the mail when sent by U.S. mail. 9. Severability. In case any provision of this Guaranty shall be invalid, ------------ illegal or unenforceable, such provision shall be severable from the rest of this Guaranty and the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10. Applicable Law and Jurisdiction. This Guaranty and the rights and ------------------------------- obligations of the parties hereto shall be governed by and construed and enforced in accordance with the laws of the state of Colorado. Guarantor agrees that the exclusive venue for any actions related to this Guaranty shall be the federal district court of Colorado. 11. Amendments. No amendment, modification or alteration of this Guaranty ---------- shall be effective unless in writing and signed by the parties hereto or their respective successors or assigns. 12. Successors and Assigns. This Guaranty shall be binding upon and shall ---------------------- inure to the benefit of the successors and assigns of the parties hereto. 13. Attorneys' Fees. If any action shall be instituted by either FCI or --------------- Guarantor for the enforcement or interpretation of any of its rights, remedies or obligations in or under this Guaranty, the prevailing party shall be entitled to recover from the losing party all costs incurred by the prevailing party in such action and any appeal therefrom, including reasonable attorneys' fees and court costs to be fixed by the court therein. 14. Limited Maximum Liability. Notwithstanding anything contained herein ------------------------- to the contrary, the liability of Guarantor for the payment of the Obligations shall be limited to the aggregate sum of $175,000,000. 15. Termination. Notwithstanding anything contained herein to the ----------- contrary, this Guaranty and the Obligations of Guarantor hereunder shall terminate and be of no further force and effect automatically and without further action on the part of any person upon delivery of the Surety Bond (as defined in and pursuant to Section 3.5 of the Agreement) to FRONTIER. Upon such termination, FRONTIER shall return to Guarantor the original of this Guaranty marked Discharged and Terminated. THIS GUARANTY IS FREELY AND VOLUNTARILY GIVEN WITHOUT ANY DURESS OR COERCION AND AFTER GUARANTOR HAS EITHER CONSULTED WITH COUNSEL, OR HAS BEEN GIVEN AN OPPORTUNITY TO DO SO, AND GUARANTOR HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THE AGREEMENT AND THIS GUARANTY. IN WITNESS WHEREOF, this Guaranty has been executed as of the date first above written. GUARANTOR: ANSCHUTZ COMPANY, a Delaware corporation /s/ Craig D. Slater _________________________________________ By: Craig D. Slater Title: Vice President Guarantor's Address: 2400 Anaconda Tower 555 Seventeenth Street Denver, Colorado 80202 Attn.: President Agreement This Agreement is made on May 1 , 1997, by and between QWEST COMMUNICATIONS CORPORATION ("QWEST") and FRONTIER COMMUNICATIONS INTERNATIONAL INC. ("FRONTIER") (collectively referred to as the "Parties"). Recitals A. QWEST and FRONTIER are parties to an IRU Agreement dated as of October 18, 1996 (the "FRONTIER IRU") regarding FRONTIER's right to use twenty four (24) dark fibers comprising a part of a continuous fiberoptic communications system being constructed by QWEST (the "QWEST System"). B. Pursuant to Section 1.4 of the FRONTIER IRU, FRONTIER was granted a right to acquire the right to use an additional twenty four (24) dark fibers in the QWEST System. C. In lieu of exercising its rights under Section 1.4 of the FRONTIER IRU, FRONTIER has entered into negotiations with QWEST and GTE Intelligent Network Services, Inc. ("GTE") whereby GTE will acquire the right to use twenty four (24) dark fibers in the QWEST System pursuant to an IRU agreement with QWEST (the "GTE IRU"). D. Pursuant to the GTE IRU, GTE agrees to pay QWEST $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile of the QWEST System (the "GTE IRU Fee"). E. The Parties desire to address their mutual rights and obligations with regard to the GTE IRU, the GTE IRU Fee and other aspects of their relationship under the FRONTIER IRU. Agreement NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Parties agree as follows: 1. Definitions. All capitalized terms in this Agreement which are not otherwise defined herein shall have the meaning given to them in the FRONTIER IRU. 2. Payment of GTE IRU Fee. The GTE IRU Fee shall be divided between the Parties, as follows: 2.1 Allocation of GTE IRU Fee. The GTE IRU Fee of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## shall be paid to QWEST in periodic installments as provided in the GTE IRU. Out of each such payment, QWEST shall retain ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % and the remaining amount shall be treated as a reduction in the Frontier IRU fee and shall be credited against any amounts due to QWEST from FRONTIER pursuant to the FRONTIER IRU. The allocation provided for in this paragraph shall pertain only to the GTE IRU Fee set forth above and shall not be applicable to payments received by QWEST under the GTE IRU for regeneration and terminal facilities or maintenance costs or other costs not associated with GTE's IRU in 24 fibers in QWEST's 12,766 mile network. 3. Contingencies. The obligations of the Parties under this Agreement are contingent upon the execution of the GTE IRU by GTE and QWEST and the approval thereof by FRONTIER, which approval shall not be unreasonably withheld. Prior to executing the GTE IRU, QWEST shall provide a complete copy thereof to FRONTIER with a notice stating the date upon which the GTE IRU will be executed. At any time prior to the execution date, FRONTIER may give notice of any objection to the terms of such agreement which materially affect the compensation to be received by FRONTIER from the GTE IRU or the Obligations being guaranteed by FRONTIER under such agreement. The failure of FRONTIER to give timely notice of an objection shall constitute approval of the GTE IRU by FRONTIER. If notice of an objection is timely given and if the Parties fail to resolve or remove the objection within twenty (20) days of the date of such notice, this Agreement shall be void. 4. Satisfaction of Fiber Obligation. The parties hereby agree that the payments credited to FRONTIER under paragraph 2.1 of this Agreement shall fully and completely satisfy any and all obligations of the parties with respect to the fiber adjustment provided for under Section 2.2(a) of the FRONTIER IRU. 5. Miscellaneous 5.1 Severability. In case any provision of this Agreement is found to be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Agreement and the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 5.2 Dispute Resolution. This Agreement and the rights and obligations of the Parties shall be governed by and construed and enforced, and all disputes between the Parties shall be resolved, in accordance with Articles XXI and XXIII of the FRONTIER IRU. 5.3 Amendments. No amendment, modification or alteration of this Agreement shall be effective unless in writing and signed by the Parties or their respective successors or assigns. 5.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the successors and permitted assigns of the Parties. 5.5 Attorneys' Fees. If any action shall be instituted by either QWEST or FRONTIER for the enforcement or interpretation of any of its rights, remedies or obligations in or under this Agreement, the prevailing party shall be entitled to recover from the losing party all costs incurred by the prevailing party in such action and any appeal therefrom, including reasonable attorneys' fees and court costs to be fixed by the court therein. 5.6 Assignment. Neither of the Parties may assign any of its rights or obligations under this Agreement without the prior written consent of the other party, which consent will not unreasonably be withheld or delayed. 5.7 Notices. Any notice permitted or required under this Agreement shall be given in accordance with Article XVI of the FRONTIER IRU. 5.8 Release of Option. FRONTIER hereby waives and releases any options or rights under Section 1.4 of the FRONTIER IRU. 5.9 Termination. Unless otherwise agreed by the Parties, in writing, his Agreement shall terminate if the contingency expressed in Section 3 has not been satisfied within six (6) months of the date hereof. QWEST COMMUNICATIONS CORPORATION By: /s/ Albert D. Wandry Senior V.P.-NBD FRONTIER COMMUNICATIONS INTERNATIONAL INC By: /s/ VP Network Engineering EX-10.6 6 IRU AGREEMENT DATED AS OF FEBRUARY 26, 1996 BY AND BETWEEN QWEST COMMUNICATIONS CORPORATION ("QWEST") AND WORLDCOM NETWORK SERVICES, INC. ("WORLDCOM") TABLE OF CONTENTS Page RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 ARTICLE I. GRANT OF IRU IN QWEST SYSTEM. . . . . . . . . . . . .1 ARTICLE II. CONSIDERATION FOR GRANT . . . . . . . . . . . . . . .7 ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM. . . . . . . . . . .9 ARTICLE IV. ACCEPTANCE AND TESTING OF WORLDCOM FIBERS . . . . . 11 ARTICLE V. WORLDCOM CONDUIT SYSTEM . . . . . . . . . . . . . . 12 ARTICLE VI. DOCUMENTATION . . . . . . . . . . . . . . . . . . . 14 ARTICLE VII. ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## NEGOTIATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE VIII. TERM. . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE IX. SYSTEM CONNECTION . . . . . . . . . . . . . . . . . 16 ARTICLE X. OPERATIONS. . . . . . . . . . . . . . . . . . . . . 17 ARTICLE XI. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM AND THE QWEST CONDUIT . . . . . . . . . . . . . . . 17 ARTICLE XII. PERMITS: PHYSICAL PLANT AND REQUIRED RIGHTS . . . . 18 ARTICLE XIII. USE OF QWEST SYSTEM . . . . . . . . . . . . . . . . 19 ARTICLE XIV. INDEMNIFICATION . . . . . . . . . . . . . . . . . . 20 ARTICLE XV. LIMITATION OF LIABILITY . . . . . . . . . . . . . . 22 ARTICLE XVI. INSURANCE . . . . . . . . . . . . . . . . . . . . . 22 ARTICLE XVII. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS. . . 24 ARTICLE XVIII. NOTICE. . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE XIX. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . 29 ARTICLE XX. DEFAULT . . . . . . . . . . . . . . . . . . . . . . 30 ARTICLE XXI. TERMINATION . . . . . . . . . . . . . . . . . . . . 31 ARTICLE XXII. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . 32 ARTICLE XIII. ARBITRATION . . . . . . . . . . . . . . . . . . . . 32 ARTICLE XXIV. WAIVER. . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE XXV. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 33 ARTICLE XXVI. RULES OF CONSTRUCTION . . . . . . . . . . . . . . . 33 ARTICLE XXVII. ASSIGNMENT AND DARK FIBER TRANSFERS . . . . . . . . 34 ARTICLE XXVIII. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 35 ARTICLE XXIX. ENTIRE AGREEMENT- AMENDMENT . . . . . . . . . . . . 38 ARTICLE XXX. NO PERSONAL LIABILITY . . . . . . . . . . . . . . . 38 ARTICLE XXXI. CONFLICTS OF INTEREST . . . . . . . . . . . . . . . 38 ARTICLE XXXII. RELATIONSHIP OF THE PARTIES . . . . . . . . . . . . 38 ARTICLE XXXIII. LATE PAYMENTS . . . . . . . . . . . . . . . . . . . 39 ARTICLE XXXIV. SEVERABILITY. . . . . . . . . . . . . . . . . . . . 39 ARTICLE XXXV. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . 39 ARTICLE XXXVI. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . 39 ARTICLE XXXVII. THIRD PARTY WARRANTIES. . . . . . . . . . . . . . . 41 EXHIBITS Exhibit A: QWEST System Description Segment I Segment 2 Segment 2A Segment 3 Segment 4 Segment 5 Segment 6 Segment 7 Exhibit B: Construction Specifications Exhibit C: QWEST Construction Detail Drawings Exhibit D: Fiber Cable Splicing, Testing, and Acceptance Procedures Exhibit E: WORLDCOM Fiber Specifications Exhibit F: Exceptions to Warranty Exhibit G: Existing Regenerator Site Locations Exhibit H: WORLDCOM Conduit System Description and Map Exhibit I: Maintenance Agreement Exhibit J: Contract Price/Payment Schedule Exhibit K: As-Built Requirements IRU AGREEMENT THIS IRU AGREEMENT (this "Agreement") is made and entered into as of the 26th day of February, 1996, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware corporation ("QWEST"), and WORLDCOM NETWORK SERVICES, INC., a Delaware corporation ("WORLDCOM"). RECITALS A. QWEST has constructed or is planning to construct a fiber optic communication system as set forth in Exhibit A attached hereto (the "QWEST System"). B. WORLDCOM desires to be granted the right to use certain optical fibers in the WEST System. C. QWEST desires to grant WORLDCOM an exclusive, indefeasible right to use certain fibers in the QWEST System, all upon the terms and conditions set forth below. D. WORLDCOM has constructed or is planning to construct a fiber optic conduit system along a route extending from a point near Pevely, Missouri to a point near Indianapolis, Indiana as set forth on Exhibit H attached hereto (the "WORLDCOM Conduit System"). E. QWEST desires to be granted the right to use one conduit within the WORLDCOM Conduit System. F. WORLDCOM desires to grant to QWEST an exclusive, indefeasible right to use one conduit within the WORLDCOM Conduit System, all upon the terms and conditions set forth below. Accordingly, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I. GRANT OF IRU IN QWEST SYSTEM 1.1 (a) Effective as of the Acceptance Date (as defined in Section 4.3) for each particular Segment (as defined below in this Section 1. 1) delivered hereunder, and subject to the provisions of Sections 1.2 and 1.3 below, QWEST hereby grants to WORLDCOM (i) an exclusive, Indefeasible Right of Use (as defined in Section 36.1(f)), for the purposes described herein, in twenty-four (24) "Dark Fibers" (as defined in Section 36.1(c)), to be specifically identified, in the QWEST System between each of the city pairs identified below under "Basic Segments," "QWEST Optional Segments," and "WORLDCOM Optional Segments" (each being referred to as a "Segment"), and (ii) an associated and non-exclusive Indefeasible Right of Use, for the purposes described herein, in the tangible and intangible property needed for the operation of such Dark Fibers, including, but not limited to, the associated QWEST System rights-of-way, easements and conduit, subject to underlying real property and contractual limitations and restrictions, but in any event excluding any electronic or optronic equipment (collectively, the "QWEST Associated Property"), for the Term defined in Section 8.1, all on the terms and subject to the conditions set forth herein (collectively with the IRUs granted or to be granted under clauses (b) and (c) below, the "WORLDCOM IRU"). The Dark Fibers subject to the WORLDCOM IRU are referred to collectively as the "WORLDCOM Fibers." Basic Segments: 1: Dallas - Houston 2: Denver - El Paso 2A: Lamy - Santa Fe 3: Salt Lake City - Santa Clara QWEST Optional Segments: 4: Oakland - Portland 5: Cleveland - Boston 6: Portland - Seattle WORLDCOM Optional Segment: 7: Kansas City, Missouri - St. Louis (b) If, pursuant to Section 1.2, QWEST elects to construct Segment 4, QWEST hereby grants to WORLDCOM an option, exercisable at any time and from time to time until 5:00 p.m. Central Standard Time on the day that is five (5) business days following the date WORLDCOM receives QWEST's notice of its election to construct Segment 4, to acquire an Indefeasible Right of Use in up to an additional twenty-four (24) Dark Fibers, to be specifically identified (including the applicable QWEST Associated Property), in the QWEST System on that portion of Segment 3 between Santa Clara and Oakland, California for the Term and on the terms and subject to the conditions set forth herein (which, if fully exercised, will result in WORLDCOM having an IRU in a total of forty-eight (48) fibers along such portion of Segment 3). In consideration for such grant, WORLDCOM shall pay to QWEST an amount equal to the incremental cost to QWEST, as described in Exhibit J, of such twenty-four (24) additional fibers, including splicing and testing, payable pursuant to the payment schedule set forth in Section 2.1(b) with respect to Segment 4. WORLDCOM shall notify QWEST in writing by such time whether it has elected to exercise such option. Failure to notify QWEST by such time shall be deemed a waiver of all WORLDCOM's rights in such option, to the extent not theretofore exercised. If and to the extent that WORLDCOM exercises such option, notwithstanding that such Dark Fibers constitute a portion of Segment 3, the IRU in the Dark Fibers and QWEST Associated Property as to which the option is exercised automatically thereupon, effective as of the Acceptance Date of Segment 4, shall be granted hereunder without any further action by the parties, and shall be considered part of the WORLDCOM IRU for all purposes of this Agreement. (c) If, pursuant to Section 1.2, QWEST elects to construct Segment 6, effective as of the Acceptance Date for such Segment, QWEST hereby grants to WORLDCOM an Indefeasible Right of Use in an additional two (2) Dark Fibers (including the applicable QWEST Associated Property) on the portion of such Segment from WORLDCOM's "POP" (as defined in Section 36.1) in Portland to the point on the QWEST System right-of-way that passes closest to the Union Pacific Railroad Albina Yard (the "Portland/U.P. Fibers") at the Incremental Cost to QWEST of such two (2) Dark Fibers, including splicing and testing, payable according to the same payment schedule applicable to Segment 6 described in Section 2. 1 (b). 1.2 QWEST will have (i) until 5:00 p.m. Central Standard Time on June 19,1996 in which to determine whether or not it will construct either of Segments 4 or 5, and (ii) until __ 5:00 p.m. Central Standard Time on March 3, 1996 to decide whether or not it will construct Segment 6. QWEST shall notify WORLDCOM in writing by such relevant times whether it has elected to construct such Segment. Failure of QWEST to notify WORLDCOM of QWEST's intent within such times shall be deemed an election by QWEST not to undertake the obligation to proceed with construction. The election of QWEST not to construct any one of Segments 4, 5, or 6 shall not affect its obligations with respect to Segments 1, 2, 2A or 3 or any other Segment which it elects to construct. 1.3 WORLDCOM shall have an option exercisable until 5:00 p.m. Central Standard Time on June 19, 1996 to elect to obtain an Indefeasible Right of Use in twenty-four (24) Dark Fibers, to be specifically identified (including the applicable QWEST Associated Property), in the existing QWEST System Segment between Kansas City, Missouri and St. Louis, Missouri (Segment 7) at a price of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile, payable as set forth in Exhibit J. WORLDCOM shall notify QWEST in writing by such time whether it has elected to exercise such option. Failure to notify QWEST by such time shall be deemed a waiver of all WORLDCOM's rights in such option. Not more than ten (IO) days following WORLDCOM's receipt of written notice from QWEST of QWEST's intent to order fiber for Segment 7, WORLDCOM shall notify QWEST of the end points within the existing QWEST System for Segment 7. The construction schedule and delivery dates for this Segment shall be subject to the mutual agreement of the parties, which agreement (i) shall be entered into not later than September 3, 1996, (ii) shall provide for a delivery date that is not prior to the date that is 180 days after the date of such agreement and not more than three hundred sixty (360) days after the date of such agreement, and (W) otherwise shall be subject to the terms, conditions, and specifications of this Agreement. 1.4 Subject to extension for delays described in Article XXII, the Scheduled Delivery Date for completion of all construction, installation, Fiber Acceptance Testing and hand-over to WORLDCOM of the WORLDCOM Fibers on each of the following Segments shall be as set forth below:
Segment Scheduled Delivery Date 1: Dallas -Houston April 30, 1996 2: Denver -El Paso July 19, 1996 2A: Lamy -Santa Fe July 19, 1996 3: Salt Lake City - Santa Clara July 19, 1996 4: Oakland - Portland Within 540 days following QWEST's decision required pursuant to Section 1.2 above. 5: Cleveland - Boston Within 540 days following the QWEST decision required pursuant to Section 1.2 above. 6: Portland - Seattle January 31, 1997
1.5 (a) Subject to extension for delays described in Article XXII, QWEST shall use reasonable commercial efforts to complete all construction and testing obligations with respect to each Segment by the applicable Scheduled Delivery Date. In the event QWEST does not deliver a Segment by the respective Scheduled Delivery Date, during the first ten (10) days of the cure period with respect to such default provided in Section 20.2, a designated senior representative with decision-making authority of each of QWEST and WORLDCOM shall meet to discuss the status of construction, the reason(s) for the failure to meet the Scheduled Delivery Date, and possible mutual efforts that could be undertaken in order to complete the construction of the relevant Segment in the most expeditious manner feasible under the circumstances. If such representatives, using their best efforts, are unable within such period to mutually agree upon the manner in which construction of such Segment is to be completed, and such default is not otherwise cured within the period permitted under Section 20.2, then WORLDCOM shall have the option, at its sole discretion, to take over the design, engineering, installation, construction, splicing and testing (including, without limitation, all the activities referred to in Articles III and IV) of such Segment. In the event WORLDCOM takes over such activities on any Segment as permitted hereunder, QWEST will cooperate fully with WORLDCOM to finish such Segment and shall directly pay WORLDCOM, when due, for all Costs of WORLDCOM associated with, or incurred in connection with, the completion of such Segment. (b) If the Scheduled Delivery Date for any Segment has been extended as the result of a Force Majeure delay described in Article XXII for a period of six (6) months (the "Six-Month Force-Majeure Period"), and at the end of such Six-Month Force Majeure Period there is no reasonably apparent probability of the cessation, termination or resolution of the event or occurrence causing such Force Majeure delay within ninety (90) days after the end of the Six-Month Force Majeure Period, then (i) if the Segment or Segments affected by such Force Majeure event include any of Segments 1, 2, 3 or 7, WORLDCOM shall have the right, in its sole discretion, to terminate this Agreement with respect to such Segment or Segments, in which case all rights and obligations of WORLDCOM with respect to such Segment or Segments shall terminate, and QWEST shall repay to WORLDCOM any and all amounts previously paid hereunder with respect to such Segment or Segments (which repayment shall be WORLDCOM's sole and exclusive remedy in the event it exercises such right to terminate) and (ii) if the Segment or Segments affected by such Force Majeure event include any other Segment to be delivered hereunder, each of QWEST and WORLDCOM shall designate one or more senior representatives with decision-making authority who shall promptly and, thereafter during a period of not less than sixty (60) days after the Six-Month Force Majeure Period, (A) meet to discuss in good faith and (B) use their mutual best efforts to implement, all possible and practical means by which such delay might be terminated, avoided or resolved, including, without limitation, possible modifications to the route or manner of construction of the affected Segment. If, by the end of such sixty-day discussion period the parties determine that there is no reasonably possible course of action available that would serve to terminate, avoid or resolve the Force Majeure delay, then the provisions of this Agreement with respect to the affected Segment, and all rights and obligations of the parties with respect to such Segment, shall terminate, subject to the provisions of Section 21.3; provided that the amount of consideration, if any, to be paid in respect of such termination shall be negotiated by the parties in good faith based upon the applicable facts and circumstances at the time, including, without limitation, the percentage completion of the affected Segment, the cities or POPs to which connectivity has been established prior to such delay, and the resultant commercial value or potential commercial value of the completed portion of the affected Segment, and the particular facts and circumstances of the delay event. 1.6 QWEST shall have an option, exercisable until 5:00 p.m. Central Standard Time on June 19, 1996, to elect to obtain an Indefeasible Right of Use in twelve (12) Dark Fibers in WORLDCOM's existing fiber optic cable between San Jose and San Francisco, California, including the applicable WORLDCOM Associated Property (as defined in Section 5.1) (the "Optional QWEST IRU"). QWEST shall notify WORLDCOM in writing by such time whether it has elected to exercise such option. Failure to notify WORLDCOM by such time shall be deemed a waiver of all QWEST's rights in such option. If such option is exercised, the Optional QWEST IRU shall be for a term of forty-eight (48) months, or until such earlier time as QWEST, at its sole option and discretion, shall have constructed, installed and activated its own fiber optic cable system along such route; provided that QWEST shall give WORLDCOM not less than six (6) months prior written notice of the earlier date on which the Optional QWEST IRU shall terminate. As consideration for the grant to QWEST of the Optional QWEST IRU, QWEST shall grant to WORLDCOM, for a term running concurrently with the term of the Optional QWEST IRU, (i) an assignment of, or other equivalent access interest in, the right to use twelve (12) Dark Fibers in the CalTrans fiber optic cable system spanning the Bay Bridge (the "CalTrans Fibers"), (ii) an Indefeasible Right-of Use in twelve (12) Dark Fibers in QWEST's fiber optic system from each of the end points of the CalTrans Fibers to WORLDCOM's POP located at 274 Brannon Street in San Francisco, on the one hand, and WORLDCOM's POP in Oakland identified in Exhibit A with respect to Segment 4, on the other, including the applicable QWEST Associated Property (the "Connective IRU'), and (iii) an Indefeasible Right of Use in twelve (12) Dark Fibers in the QWEST System in that portion of Segment 3 from Oakland to Santa Clara, including the applicable QWEST Associated Property (the "O/SC IRU"); provided that, to the extent the aggregate route miles of the CalTrans Fibers, the Connective IRU and the O/SC IRU exceed the route miles of the Optional QWEST IRU, WORLDCOM shall pay to QWEST an amount equal to the incremental Cost to QWEST, as indicated in Exhibit J, of the twelve (12) Dark Fibers subject to the O/SC IRU, including splicing and testing, for the number of route miles by which the aggregate route miles of the CalTrans Fibers, the Connective IRU and the O/SC IRU exceed the route miles of the Optional QWEST IRU. Upon the expiration of the term of the Optional QWEST IRU, all rights of WORLDCOM in, to and under the CalTrans Fibers, the Connective IRU and the O/SC IRU shall terminate; provided that if QWEST elects to terminate the Optional QWEST IRU earlier than forty-eight (48) months from the date hereof, WORLDCOM may elect, by written notice to QWEST, to extend and continue its rights in the CalTrans Fibers for the remainder of such forty-eight (48) months, in which case WORLDCOM shall pay to QWEST any and all costs incurred by QWEST in maintaining its rights in and to the CalTrans Fibers during such period; and provided further that WORLDCOM may elect, by written notice to QWEST, to extend and continue the Connective IRU and the O/SC IRU for the remaining Term of the WORLDCOM IRU (in which case, from and after such time the Connective IRU and the O/SC IRU shall be part of the WORLDCOM IRU hereunder). In consideration of any such extension of the O/SC IRU, WORLDCOM shall pay to QWEST an amount equal to the difference between (A) the payment made by WORLDCOM pursuant to the proviso in the preceding sentence, and (B) QWEST's total incremental Cost of the twelve (12) Dark Fibers subject to the Connective IRU and the O/SC IRU, including splicing and testing. If QWEST elects to exercise its option to acquire the Optional QWEST IRU, all of the foregoing shall be memorialized in a separate definitive agreement, incorporating the foregoing provisions and generally providing for the same rights and obligations of the parties as are provided herein with respect to the WORLDCOM IRU. 1.7 If, pursuant to Section 1.2, QWEST does not elect to build Segment 6, WORLDCOM hereby grants QWEST an option, exercisable at any time until 5:00 p.m. Central Standard Time on March 3, 1996, to acquire from WORLDCOM an Indefeasible Right of Use in forty-eight (48) Dark Fibers, to be specifically identified (including applicable WORLDCOM Associated Property), in any fiber optic communications system along substantially the same route as that of Segment 6 that WORLDCOM may elect to build (the "WORLDCOM Portland/Seattle System"), for the Term and on the terms and subject to the conditions set forth herein. QWEST shall notify WORLDCOM in writing by such date whether it has elected to exercise such option, and failure to notify WORLDCOM by such date shall be deemed a waiver of all QWEST's rights in such option. In consideration of the grant of such IRU, QWEST shall pay to WORLDCOM (i) with respect to twenty-four (24) of the Dark Fibers subject to such IRU, an amount equal to the route miles of the WORLDCOM Portland/Seattle System multiplied by $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile, and (ii) with respect to twenty-four (24) of the Dark Fibers subject to such IRU, an amount equal to the incremental cost to WORLDCOM of such twenty-four (24) Dark Fibers, including installation, splicing and testing as set forth in Exhibit J; provided that, with respect to the twenty-four (24) Dark Fibers subject to the foregoing clause (ii), the grant of the IRU in, and the delivery to QWEST of, such Dark Fibers shall be subject to and conditioned upon QWEST's prior written notification to WORLDCOM that QWEST has commenced construction of the Optional Phoenix/Los Angeles Segment, as that term is defined in Section 1.8. All such amounts shall be payable according to the payment methodology applicable under Section 2.2(b). 1.8 If, after the date hereof, QWEST shall notify WORLDCOM in writing that it has determined, in its sole discretion, to design, engineer, construct and install a fiber optic communications system between the cities of Phoenix, Arizona and Los Angeles, California (the route of which system includes San Diego, California) (the "Optional Phoenix/Los Angeles Segment"), then WORLDCOM shall have the option, exercisable at any time until 5:00 p.m. Central Standard Time, or the date that is thirty (30) days after WORLDCOM's receipt of such notice from QWEST, to acquire from QWEST an IRU in twenty-four (24) Dark Fibers, to be specifically identified, in the Optional Phoenix/Los Angeles Segment for the remaining Term of this Agreement. WORLDCOM shall notify QWEST in writing by such time whether it has elected to exercise the option with respect to the Optional Phoenix/Los Angeles Segment, and failure to notify QWEST by such time shall be deemed a waiver of all of WORLDCOM's rights in such option. If QWEST elects to construct the Optional Phoenix/Los Angeles Segment, then (i) the end points and construction and delivery schedule for the Optional Phoenix/Los Angeles Segment shall be as the parties shall mutually agree at the time of such exercise of the option and (H) in consideration of the grant by QWEST of the IRU in the Optional Phoenix/Los Angeles Segment, WORLDCOM shall pay to QWEST an amount equal to the route miles of the Optional Phoenix/San Diego Segment multiplied by $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile. ARTICLE II. CONSIDERATION FOR GRANT 2.1 In addition to the amounts required to be paid pursuant to Sections 1.1(b) and 1.1(c) as full and complete payment for the grant of the WORLDCOM IRU as contemplated in Article I, and subject to performance by QWEST of its obligations hereunder, WORLDCOM agrees to pay to QWEST (i) the aggregate amount of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for Segments 1, 2 and 3 (the "Segment 1-3 Contract Price"), allocated among such Segments as set forth in Exhibit J and payable according to the schedule set forth in clause (a) below, (ii) the aggregate amount of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for Segments 4, 5 and 6 (the "Segment 4-6 Contract Price"), allocated among such Segments as set forth in Exhibit J and payable according to the schedule set forth in clause (b) below, (iii) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## for Segment 2A (the "Segment 2A Contract Price"), payable according to the schedule set forth in clause (a) below, and (iv) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for Segment 7 (in the aggregate, the "Segment 7 Contract Price"), payable according to the schedule set forth in clause (b) below. (a) The Segment 1-3 Contract Price and the Segment 2A Contract Price shall be paid as follows: (i) An initial deposit of (A) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the Segment 1-3 Contract Price and (B) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the Segment 2A Contract Price is due and payable ten (10) days after execution hereof. (ii) The prorated cost of the WORLDCOM Fiber to be incorporated in each of Segments 1, 2, 2A and 3, including any and all taxes thereon (the aggregate cost of which for each Segment is as set forth in Exhibit J), is due and payable ten (10) days after each submission by QWEST to WORLDCOM of an invoice it has received from the fiber vendor for such WORLDCOM Fiber. (iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the remaining balance of (A) the Segment 1-3 Contract Price attributable to each of Segments 1, 2 and 3, as indicated in Exhibit J, and (B) the Segment 2A Contract Price, in each case after taking into account the foregoing payments under clauses (i) and (ii) above (with respect to each such Segment, the "Remaining Balance"), is payable ten (10) days after QWEST notifies WORLDCOM in writing that such Segment is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completed, based on percentage installation of the fiber in such Segment. (iv) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the Remaining Balance is payable ten (10) days after QWEST notifies WORLDCOM in writing that the Segment is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completed, based on percentage installation of the fiber in such Segment. (v) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the Remaining Balance is payable ten (10) days after QWEST notifies WORLDCOM in writing that the Segment is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completed, based on percentage installation of the fiber in such Segment. (vi) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the Remaining Balance is payable ten (10) days after the Acceptance Date of such Segment. (vii) A final payment of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of the Remaining Balance is due and payable ten (10) days after the delivery of final As-Builts for such Segment. (b) The Segment 4-6 Contract Price and the Segment 7 Contract Price shall be paid as follows: (i) An initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of (A) the Segment 4-6 Contract Price attributable to each of Segments 4, 5 and 6, as indicated in Exhibit J, is due and payable ten (10) days after notification by QWEST that it has elected to construct any such Segment and (B) the Segment 7 Contract Price is due and payable ten (10) days after notification by WORLDCOM that it has exercised its option with respect to such Segment. (ii) The prorated cost of the WORLDCOM Fiber to be incorporated in each of Segments 4, 5, 6 and 7, including any and all taxes thereon (the aggregate cost of which for each Segment is as set forth in Exhibit J), is due and payable within ten (10) days after each submission by QWEST to WORLDCOM of an invoice it has received from the fiber vendor for such WORLDCOM Fiber. (iii) Monthly progress payments shall be made with respect to each such Segment as it is being constructed, such that, after taking into account the foregoing payments under clauses (i) and (ii) above, and the reserve required to be paid pursuant to clause (iv) below, the remaining balance is paid on a pro rata basis according to the progress payment schedule described in Exhibit J. (iv) A final payment of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of (A) the Segment 4-6 Contract Price attributable to each of Segments 4, 5 and 6, as indicated in Exhibit J, and (B) the Segment 7 Contract Price is due and payable within ten (10) days after the delivery of final As-Builts for each such Segment. 2.2 In addition to the amounts payable under Section 2. 1, WORLDCOM shall be responsible to pay directly or reimburse QWEST for the pass-through expenses required to be paid pursuant to Article XVII. 2.3 All payments to QWEST set forth in this Article II shall be made by wire transfer of immediately available funds to the account or accounts designated by QWEST. ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM 3.1 To the extent any Segment is not completed as of the date hereof, subject to the provisions of Sections 1.2 and 1.3, as applicable, QWEST shall design, engineer, install, construct, and test the QWEST System comprised of such Segments on the terms and subject to the conditions set forth herein. 3.2 Subject to the provisions of Sections 1.2 and 1.3, as applicable, QWEST shall engineer and design Segments 4, 5 and 6 (and any other Segment if and to the extent that conduit construction is not completed on the date hereof) consistent with the construction specifications set forth in Exhibit B, including preparation of construction drawings, bills of materials, materials specifications and materials requisitions. The specifications covering the construction and testing of such Segments shall be as set forth in Exhibit C and Exhibit D, respectively. 3.3 Subject to the provisions of Sections 1.2 and 1.3, as applicable, with respect to Segments 4, 5 and 6 (and any other Segment if and to the extent that conduit construction is not completed on the date hereof), QWEST shall perform, in accordance with QWEST's standard engineering practices, all necessary engineering, design and construction activities necessary to install, test and deliver the WORLDCOM Fibers in accordance with the provisions hereof. 3.4 Subject to the provisions of Sections 1.2 and 1.3, as applicable, with respect to Segments 4, 5 and 6 (and any other Segment if and to the extent that conduit construction is not completed on the date hereof), QWEST shall perform, in accordance with QWEST's standard commercial practices and as deemed necessary or appropriate in QWEST's reasonable business judgment, all necessary right-of-way, easement and land acquisition activities necessary to install, test and deliver the WORLDCOM Fibers in accordance with the provisions hereof, free from interference by, or infringement of the rights of, third parties. 3.5 QWEST shall procure all materials to be incorporated in and to become a permanent part of the QWEST System with respect to the Segments delivered hereunder. 3.6 Subject to the provisions of Sections 1.2 and 1.3, as applicable, QWEST shall perform, in accordance with its standard commercial practices, all supervisory and inspection services relating to the construction of Segments 4, 5 and 6 (and any other Segment if and to the extent that conduit construction is not completed on the date hereof), including, without limitation: (a) Performing construction inspection prior to completion of each such Segment to assure that all construction shall be in accordance with the specifications, drawings, easement provisions, provisions of this Agreement, and applicable codes. WORLDCOM shall have the right, but not the obligation, to inspect all right-of-way documents pertinent to each such Segment (to the extent that the terms of each such document permits disclosure to WORLDCOM), and the installation, splicing and testing of the WORLDCOM Fiber incorporated in such Segments during the course and at the time of the relevant design, construction and installation periods for each portion of such Segment. (b) Preparing bimonthly engineering progress reports and construction progress reports. 3.7 Upon WORLDCOM's written request, QWEST shall make available for inspection by WORLDCOM copies of all information, documents, reports, permits, drawings and specifications generated, obtained or acquired by QWEST in performing its duties pursuant to this Article III (to the extent that the terms of each such document or the legal restrictions applicable to such information or document permits disclosure to WORLDCOM). 3.8 Exhibit G ("Existing Regeneration Sites") sets forth the existing sites along the QWEST System right-of-way at which regeneration facilities currently are located on that portion of Segment 3 between Santa Clara and Salt Lake City. In the event that WORLDCOM desires to locate and construct or share regeneration facilities at any of such sites, or at any additional potential sites along the QWEST System that QWEST may make available, assuming (i) the availability of adequate and sufficient real property rights, space, and right-of-way access, and (ii) the receipt of all requisite permits, approvals and authorizations, either (A) QWEST shall grant to WORLDCOM an IRU for the purpose of permitting WORLDCOM to locate and construct regeneration facilities at such sites, or (B) if the parties desire to share regeneration facilities, and further assuming that the parties are able to agree upon the specific location, specifications and costs applicable thereto, QWEST and WORLDCOM shall enter into a separate Regeneration Sharing Agreement setting forth the terms and conditions with respect thereto. 3.9 Except for such portions of the Segments that are already so constructed, no aerial construction or installation of the Segments shall be allowed, except for discrete short pieces of Segments for which QWEST presents to WORLDCOM its proposed design for WORLDCOM's review and approval, which approval shall not be unreasonably withheld. 3.10 With the exception of those existing fibers on that portion of Segment 3 between Santa Clara, California and Roseville, California (which are Coming SNT-DS), all fiber included in the WORLDCOM Fibers and all fibers incorporated in the WORLDCOM Portland/Seattle System shall be Coming SNT-LS non-zero dispersion-shifted or equivalent, and shall meet or exceed the fiber specifications set forth in Exhibit E. The fibers subject to the Optional QWEST IRU shall be the equivalent of Coming SMR-28. Wherever feasible, other than the Portland/U.P. Fibers, all such fibers shall be contained in discrete buffer tubes that are not shared with any other third party. ARTICLE IV. ACCEPTANCE AND TESTING OF WORLDCOM FIBERS 4.1 QWEST shall test all WORLDCOM Fibers in accordance with the procedures specified in Exhibit D ("Fiber Acceptance Testing") to verify that the WORLDCOM Fibers are installed and operating in accordance with the specifications described in Exhibits D and E. Fiber Acceptance Testing shall progress span by span along each Segment to be constructed hereunder as cable splicing progresses, so that test results may be reviewed in a timely manner. QWEST shall provide WORLDCOM reasonable advance notice of the date and time of each Fiber Acceptance Testing (each of which shall take place during normal business hours) such that WORLDCOM shall have the right, but not the obligation, to have a person or persons present to observe QWEST's Fiber Acceptance Testing. QWEST shall promptly provide WORLDCOM with a copy of the test results. 4.2 In the event the results of the tests of the WORLDCOM Fibers show the WORLDCOM Fibers not to be operating within the parameters of the applicable specifications, WORLDCOM shall notify QWEST in writing that some or all portions of the WORLDCOM Fibers are unacceptable. Thereupon, QWEST shall expeditiously take such action as shall be reasonably necessary, with respect to such portion of the WORLDCOM Fibers as do not operate within the parameters of the applicable specifications, to bring the operating standards of such portion of the WORLDCOM Fibers within such parameters. 4.3 If and when QWEST notifies WORLDCOM that the test results of the Fiber Acceptance Testing are within the parameters of the specifications in Exhibits D and E with respect to an entire Segment, WORLDCOM shall provide QWEST with a written notice accepting the WORLDCOM Fibers. If WORLDCOM fails to notify QWEST of its acceptance or rejection of the final test results with respect to the WORLDCOM Fibers comprising a Segment within ten (10) days after WORLDCOM's receipt of notice of such test results, WORLDCOM shall be deemed to have accepted such Segment. The date of such notice of acceptance (or deemed acceptance) of all WORLDCOM Fibers for each Segment shall be the "Acceptance Date" for such Segment. ARTICLE V. WORLDCOM CONDUIT SYSTEM 5.1 QWEST is hereby granted the option, exercisable until 5:00 p.m. Central Standard Time on March 3, 1996, to elect to obtain from WORLDCOM (i) an exclusive, Indefeasible Right of Use, for the purposes described herein, in an installed, empty innerduct fiber optic conduit between Pevely, Missouri and Indianapolis, Indiana (the "QWEST Conduit"), and (ii) the associated non-exclusive Indefeasible Right of Use, for the purposes described herein, in the tangible and intangible property needed for the operation of such conduit, including, but not limited to, the associated WORLDCOM Conduit System rights-of-way, easements and conduit, subject to underlying real property and contractual limitations and restrictions, but in any event excluding any electronic or optronic equipment (collectively, the "WORLDCOM Associated Property"), for the Term defined in Section 8.1 and for the consideration described in Section 5.6 below. QWEST shall notify WORLDCOM in writing by such time whether it has elected to exercise such option. Failure to notify WORLDCOM by such time shall be deemed a waiver of all QWEST's rights in such option. In the event QWEST exercises this option, WORLDCOM shall install in the QWEST Conduit a fiber optic cable to be supplied by QWEST. Such cable supplied by QWEST shall be sufficient to meet the Cable Installation specifications set forth in Exhibit B. QWEST shall be responsible for its own splicing and testing of such cable. QWEST shall reimburse WORLDCOM for WORLDCOM's actual cost of such installation and any related inspection and supervision (not to exceed WORLDCOM's actual contract cost for installation plus up to $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile for supervision costs, provided that such supervision costs shall not be duplicative of the maintenance fee payable with respect to the QWEST Conduit under the Maintenance Agreement (to be entered into pursuant to Article XI). Such installation shall be made at such time as QWEST shall notify WORLDCOM in writing, but in any event not later than two (2) years after the date hereof. 5.2 If QWEST exercises the option as set forth in Section 5.1, WORLDCOM shall design, engineer, install and construct the WORLDCOM Conduit System and the QWEST Conduit, including preparation of necessary construction drawings, bills of materials, materials specifications and materials requisitions, and the performance of all necessary surveying, mapping and permitting, all in accordance with the specifications and drawings set forth in Exhibits B and H. 5.3 WORLDCOM shall perform, in accordance with WORLDCOM's standard commercial practices and as deemed necessary or appropriate in WORLDCOM's reasonable business judgment, all right-of-way, easement, and other land acquisition activities necessary to install, test and deliver the QWEST Conduit in accordance with the provisions hereof, free from interference by, or infringement of the rights of, third parties. 5.4 WORLDCOM shall procure all materials to be incorporated in and to become a permanent part of the WORLDCOM Conduit System. 5.5 WORLDCOM shall perform all supervisory and inspection services, including, without limitation: (a) Performing construction inspection prior to completion of the WORLDCOM Conduit System to assure that all construction shall be in accordance with the specifications, drawings, easement provisions, provisions of this Agreement, and applicable codes. QWEST shall have the right, but not the obligation, to inspect all right-of-way documents pertinent to the WORLDCOM Conduit System (to the extent that the terms of such documents permit such disclosure) and to inspect the construction and installation of the WORLDCOM Conduit System and the subsequent installation of the QWEST cable installed therein. (b) Preparing bimonthly construction progress reports. 5.6 As full and complete payment for the grant of an IRU in the QWEST Conduit, QWEST, if it exercises the option set forth in Section 5.1, shall pay to WORLDCOM an amount equal to $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## multiplied by the total route miles of the QWEST Conduit as shown by WORLDCOM's drawings, which aggregate amount shall be payable according to the following schedule: (i) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % shall be due and payable ten (10) days after QWEST's exercise of the option; ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % shall be due and payable ten (10) days after WORLDCOM notifies QWEST in writing that the QWEST Conduit is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completed; (iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % shall be due and payable ten (10) days after WORLDCOM notifies QWEST in writing that construction of the QWEST Conduit has been ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completed in accordance with the specifications set forth in Exhibit B (which payment by QWEST shall constitute QWEST's acceptance of the QWEST Conduit as of such date (the "QWEST Conduit Acceptance Date")); and (iv) a final payment of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % shall be due and payable ten (10) days after the delivery of final As-Builts for the QWEST Conduit. All payments to WORLDCOM set forth in this Section 5.6 shall be made by wire transfer of immediately available funds to the account or accounts designated by QWEST. 5.7 QWEST acknowledges and agrees that the QWEST Conduit may only be used as a conduit for fiber optic or other telecommunications cable. WORLDCOM acknowledges and agrees that it has no right to use the QWEST Conduit during the Term hereof, and that WORLDCOM shall keep the QWEST Conduit free from any liens, rights or claims of any third party attributable to WORLDCOM that adversely affects or impairs QWEST's exclusive use of the QWEST Conduit hereunder. ARTICLE VI DOCUMENTATION 6.1 Not later than one hundred eighty (180) days after the Acceptance Date for each Segment, QWEST shall provide WORLDCOM with the following documentation with respect to such Segment: (a) As-built drawings in accordance with the requirements described in Exhibit K ("As-Builts"). (b) Technical specifications of the optical fiber cable and associated splices and other equipment placed in the Segment. 6.2 Not later than one hundred eighty (180) days after the QWEST Conduit Acceptance Date, WORLDCOM shall provide QWEST with As-Built drawings in accordance with the requirements described in Exhibit K. ARTICLE VII ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## NEGOTIATION 7.1 WORLDCOM and QWEST shall commence promptly hereafter, and thereafter participate together in good faith negotiations with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Corporation, in order to remove with respect to QWEST the existing exclusivity provisions contained in WORLDCOM's existing right-of-way agreement with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . This negotiation would include issues related to the consideration to be received by WORLDCOM for relief of such exclusivity provisions (the sufficiency of which shall be determined solely by WORLDCOM), the terms and conditions of QWEST's right to construct on such portions of the ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## right-of-way, as well as the operational limitations to be applied in the event of any construction by QWEST on ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## right-of-way subject to such exclusivity provisions. The parties acknowledge that it is their objective to reach a definitive agreement with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## within one hundred eighty (180) days after the date hereof and shall use their mutual best efforts to meet such goal; provided that if for any reason no agreement has been reached within one year after the date hereof, the parties shall have no further obligation under this Section 7.1. If such negotiations prove to be successful, the parties agree to negotiate in good faith the terms and conditions on which QWEST would construct a fiber optic system on the ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## right-of-way, the definitive agreement for which in any event shall provide that (i) QWEST shall be responsible for the cost of any and all damage to any WORLDCOM property or facilities on ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## right-of-way as a result of QWEST's activities thereon and (ii) QWEST shall be responsible for the cost of all reasonable construction oversight and inspection undertaken by WORLDCOM with respect to QWEST's construction activities. If such negotiations are unsuccessful, there shall be no effect on the IRUs granted hereunder. ARTICLE VIII. TERM 8.1 The term of this Agreement shall begin on the date hereof and, subject to the provisions of Sections 8.2 and 8.3, terminate with respect to the QWEST System and the WORLDCOM Conduit System at the end of the economically useful life of the WORLDCOM Fibers and the QWEST Conduit, respectively (the "Term"). 8.2 In any event, unless the parties otherwise agree to the contrary in writing with respect to either, the end of the economically useful life of the WORLDCOM Fibers and the QWEST Conduit shall not be earlier than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years, nor later than the date of the expiration or termination of the real property rights-of-way and/or easements underlying the QWEST System and the WORLDCOM Conduit System, respectively (subject to the obligations of QWEST and WORLDCOM under Sections 12.1 and 12.3, respectively, to maintain such underlying real property rights for a period of not less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years from the date hereof). 8.3 In the event that WORLDCOM determines that any one or more of the Segments has reached the end of its economically useful life and desires to not retain the IRU with respect to any such Segment or Segments, WORLDCOM shall have the right to abandon its IRU with respect to such Segment(s), in which event all rights to the use thereof shall revert to QWEST without reimbursement of any fees or other payments previously made with respect thereto, and from and after such time WORLDCOM shall have no further rights or obligations hereunder with respect to such abandoned Segment(s). In the event that QWEST determines that the QWEST Conduit or any portion thereof has reached the end of its economically useful life and desires to no longer operate or maintain all or any portion of the QWEST Conduit, QWEST shall have the right to abandon its IRU with respect thereto, in which event all rights to the use thereof shall revert to WORLDCOM without reimbursement of any fees or other payments previously made with respect thereto and, from and after such time, QWEST shall have no further rights or obligations hereunder with respect to such abandoned portion of the QWEST Conduit. 8.4 It is understood and agreed by the parties that QWEST must and does maintain legal title to the entire QWEST System subject to the WORLDCOM IRU. Notwithstanding this, it is understood and agreed that the grant of the WORLDCOM IRU shall be treated for accounting and federal and all applicable state income tax purposes as the sale and purchase of the WORLDCOM Fibers and the WEST Associated Property, and that on and after the Acceptance Date for each particular Segment, WORLDCOM shall be treated as the owner of the WORLDCOM Fibers and the QWEST Associated Property associated with such Segment for such purposes. Similarly, WORLDCOM shall retain legal title to any and all of the WORLDCOM Conduit System, subject to the IRU granted to QWEST in the QWEST Conduit hereunder. However, it is understood and agreed that the grant of the IRU in the QWEST Conduit and the WORLDCOM Associated Property shall be treated for accounting and federal and all state income tax purposes as the sale and purchase of the QWEST Conduit, and that on and after the QWEST Conduit Acceptance Date, QWEST shall be treated as the owner of the QWEST Conduit for such purposes. The parties agree to file their respective income tax returns and other returns and reports for their respective Impositions on such basis and, except as otherwise required by law, not to take any positions inconsistent therewith. ARTICLE IX. SYSTEM CONNECTION 9.1 Subject to the provisions herein, QWEST shall be responsible for all costs to construct and pull the WORLDCOM Fibers to the WORLDCOM POP at each of the end point and intermediate point locations designated in Exhibit A, at which points QWEST shall hand off the WORLDCOM Fibers to WORLDCOM and at which points WORLDCOM may access the WORLDCOM Fibers. It shall be the responsibility of WORLDCOM to (i) obtain all location, occupancy and other necessary access rights, permits and approvals to permit QWEST to construct and install the Cable from the manhole nearest each POP location to the POP, and (H) provide riser conduits to each POP. Where WORLDCOM has conduit available from the manhole nearest to the POP or another location adjacent to the POP that would assist in connecting the WORLDCOM Fibers from the QWEST System right-of-way to a particular WORLDCOM POP location, WORLDCOM agrees to make such conduit available for such purpose at no charge to QWEST, including, without limitation, in the specific locations described in Exhibit A, and in all other circumstances QWEST shall be responsible for providing the conduit from the manhole nearest to the POP to the bottom of the riser. WORLDCOM further agrees that, if it has conduit, housed in steel pipe, that has not been committed or reserved for other use from another location and that would assist in connecting the WORLDCOM Fibers from the QWEST System right-of-way to a particular POP location, it will, subject to existing permits, approvals and authorizations, grant to QWEST an IRU in such conduit for such purpose at a price of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per conduit foot. QWEST may install, maintain and route the WORLDCOM Fibers within QWEST facilities at its sole discretion. Unless the parties otherwise expressly agree, in no event will WORLDCOM's equipment be located in QWEST facilities. 9.2 WORLDCOM may, at its sole option and at any time during the Term, connect its telecommunications system with the WORLDCOM Fibers at WORLDCOM's sole cost, at any point along the Segments delivered hereunder which is specifically identified in Exhibit A or which otherwise is approved by QWEST in writing, which approval shall not be unreasonably withheld (each a "Connecting Point"); provided, however, any such connection will be performed by QWEST, in accordance with QWEST's applicable specifications and operating procedures, and shall be subject to applicable contractual, underlying real property and other third-party limitations and restrictions, and WORLDCOM shall pay QWEST's Costs for each such connection within thirty (30) days of the date of WORLDCOM's receipt of QWEST's invoice therefor. In order to schedule a connection of this type, WORLDCOM shall request and coordinate such work not less than thirty (30) days in advance of the date the connection is requested to be completed. Such work will be restricted to a Planned System Work Period ("'PSWP"), as defined in Section 36. 1, unless otherwise agreed to in writing for specific projects. Subject to QWEST's underlying real property rights and applicable restrictions, WORLDCOM shall also be provided reasonable access by QWEST to any Connecting Point during the term of this Agreement. WORLDCOM shall have no limitations on the types of electronics or technologies employed to utilize the WORLDCOM Fibers, subject to mutually agreeable safety procedures and so long as such electronics or technologies do not interfere with the use of or present a risk of damage to any portion of the QWEST System. ARTICLE X. OPERATIONS 10.1 Each party shall have full and complete control and responsibility for determining any network and service configuration or designs, routing configurations, regrooming, rearrangement or consolidation of channels or circuits and all related functions with regard to the use of that party's fiber. 10.2 Neither party hereto is supplying or is obligated to supply to the other party any optronics, or electronics or optical or electrical equipment or other facilities, including without limitation, generators, batteries, air conditioners, fire protection and monitoring and testing equipment, nor is either party responsible for performing any work other than as specified in this Agreement. 10.3 At any time during the term of this Agreement, by not less than 120 days' written notice from QWEST to WORLDCOM, QWEST may, with WORLDCOM's prior written approval (which approval shall not be unreasonably delayed or withheld) substitute for the WORLDCOM Fibers on the QWEST System, or any Segment or Segments comprising a portion of said QWEST System, an equal number of alternative fibers along an alternative route, as determined by QWEST in its sole discretion; provided that in any such event, such substitution (i) shall be without unreasonable interruption of service and use by WORLDCOM, (H) shall be at the sole cost of QWEST, including, without limitation, all disconnect and reconnect costs, fees and expenses, (iii) shall be constructed and tested in accordance with the specifications and drawings set forth in Exhibits B, C and D, and incorporate fiber meeting the specifications set forth in Exhibit E, and (iv) shall not result in an adverse change to the operations, performance, connection points with the network of WORLDCOM, or endpoints of any Segment included in the QWEST System. ARTICLE XI MAINTENANCE AND REPAIR OF THE QWEST SYSTEM AND THE QWEST CONDUIT 11.1 Upon the execution of this Agreement, WORLDCOM and QWEST shall enter into and execute the Maintenance Agreement in the form of Exhibit I hereto, providing for the maintenance of (i) the WORLDCOM Fibers by QWEST and WORLDCOM, as set forth therein, and (ii) if QWEST exercises the option as set forth in Section 5.1, the QWEST Conduit, including the cable installed therein, by WORLDCOM. 11.2 Maintenance of and QWEST's access to, the QWEST Conduit, and maintenance of, and WORLDCOM's access to, the QWEST System, shall be on the terms and subject to the conditions set forth in the Maintenance Agreement to be entered into by the parties pursuant to Section 11.1; provided that if the Maintenance Agreement expires or terminates prior to the end of the Term with respect to the QWEST Conduit or the QWEST System, those provisions of the Maintenance Agreement relating to access by QWEST to the QWEST Conduit, or by WORLDCOM to the QWEST System, for purposes of maintenance thereof shall survive the termination or expiration thereof and continue to apply for the remaining Term hereof. ARTICLE XII PERMITS: PHYSICAL PLANT AND REQUIRED RIGHTS 12.1 Except as provided in Section 9.1, QWEST shall obtain (and cause to remain effective for a period of not less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years from the date hereof) all rights, licenses, authorizations, rights-of-way and other agreements necessary for the use of conduit, cable or other physical plant facilities, as well as any other such rights, licenses, authorizations (including any necessary state, tribal or federal authorizations such as environmental permits), rights-of-way and other agreements necessary for the installation and use of the WORLDCOM Fibers hereunder (all of which are referred to as "QWEST Required Rights"); provided that if the WORLDCOM Fibers are the only fibers to be located in the Cable from the point where the Cable leaves the QWEST System right-of-way to the POP, and WORLDCOM previously has obtained any of the necessary rights, licenses, authorizations, rights-of-way and other agreements with respect thereto, WORLDCOM agrees, to the extent permitted by the terms thereof, to assign or otherwise make such rights available to QWEST upon reimbursement by QWEST of WORLDCOM's costs incurred in obtaining such rights. To the extent permitted by the terms of such documents, WORLDCOM shall have the right to review all documents reflecting the QWEST Required Rights. 12.2 If, for any reason, QWEST determines in its reasonable business judgment, or is required by a third party with legal authority to so require, to relocate any of the facilities used or required in providing the WORLDCOM IRU, QWEST shall have the right to proceed with such relocation, including but not limited to the right to determine the extent of, the timing of, and methods to be used for such relocation; provided that any such relocation (i) shall be constructed and tested in accordance with the specifications and drawings set forth in Exhibits B, C and D and incorporate fiber meeting the specifications set forth in Exhibit E, and (ii) if such relocation is at the determination of QWEST, shall not result in an adverse change to the operations, performance, connection points with the network of WORLDCOM, or end points of any Segment included in the QWEST System. QWEST shall give WORLDCOM sixty (60) days' prior notice of any such relocation, if possible. QWEST shall relocate the affected portion of the QWEST System and, so long as such relocation is not necessitated by a breach of QWEST's obligations under this Agreement, including, without limitation, under Section 12.1, and except as otherwise expressly provided in this Section 12.2, WORLDCOM shall reimburse QWEST for its proportionate share of (i) all Costs of fiber acquisition, splicing and testing, prorated based on the total fiber count in the affected fiber cable as so relocated, and (ii) all other Costs associated with the relocation of the Cable, prorated based on the total number of owners and holders of an IRU or equivalent interest in the affected Segment as so relocated. QWEST shall deliver to WORLDCOM updated As-Builts with respect to a relocated Segment not later than one hundred eighty (180) days following the completion of such relocation. 12.3 WORLDCOM shall obtain (and cause to remain effective for a period of not less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years from the date hereof) all rights, licenses, authorizations, rights-of-way and other agreements necessary for the use of poles, conduit, cable, wire or other physical plant facilities, as well as any other such rights, licenses, authorizations (including any necessary state, tribal or federal authorizations such as environmental permits), rights-of-way and other agreements necessary for the installation and use of the QWEST Conduit hereunder (all of which are referred to as "WORLDCOM Required Rights"). To the extent permitted by the terms of such documents, QWEST shall have the right to review all documents reflecting the WORLDCOM Required Rights. 12.4 If for any reason, WORLDCOM determines in its reasonable business judgment, or is required by a third party with legal authority to so require, to relocate any of the facilities used or required in providing the QWEST Conduit or any portion thereof, WORLDCOM shall have the right to proceed with such relocation, including but not limited to the right to determine the extent of, the timing of, and methods to be used for such relocation; provided that any such relocation (i) shall be constructed in accordance with the specifications and drawings set forth in Exhibits B and H, and (ii) if such relocation is at the determination of WORLDCOM, shall (A) incorporate fiber meeting the specifications set forth in Exhibit E (at WORLDCOM's sole cost and expense, including splicing and testing in accordance with the specifications set forth in Exhibit D) and (B) not result in an adverse change to the operations, performance, connection points with the QWEST System network, or end points of the QWEST Conduit. WORLDCOM shall give QWEST sixty (60) days' prior notice of any such relocation, if possible. WORLDCOM shall relocate the affected portion of the QWEST Conduit and, so long as such relocation is not necessitated by a breach of WORLDCOM's obligations under this Agreement, including, without limitation, under Section 12.3 and, except as otherwise expressly provided in this Section 12.4, QWEST shall reimburse WORLDCOM for its proportionate share (based on the ratio that the QWEST Conduit bears to the total number of conduits in use in the WORLDCOM Conduit System) of the Costs of the relocation of such conduit, but not including any costs attributable to the replacement of cable or fibers within the other conduits in the affected portion of the WORLDCOM Conduit System. WORLDCOM shall deliver to QWEST updated As-Builts with respect to the QVT-ST Conduit not later than one hundred eighty (180) days following the completion of any such relocation. ARTICLE XIII. USE OF QWEST SYSTEM 13.1 WORLDCOM warrants that its use of the QWEST System shall comply with all applicable government codes, ordinances, laws, rules, regulations and/or restrictions. 13.2 In addition to the other rights provided hereunder, but subject to the provisions of Article IX, the WORLDCOM IRU shall include the right to install additional equipment, or replace existing equipment, at any point where WORLDCOM is permitted to access the WORLDCOM Fibers under the provisions of this Agreement. 13.3 Subject to the provisions of Article XXVII, WORLDCOM may use its IRU for any lawful purpose. QWEST agrees and acknowledges that it has no right to use the WORLDCOM Fibers during the Term hereof, and that QWEST shall keep the WORLDCOM Fibers free from any liens, rights or claims of any third party attributable to QWEST that adversely affects or impairs WORLDCOM's exclusive use of the WORLDCOM Fibers hereunder. 13.4 WORLDCOM and QWEST shall promptly notify each other of any matters pertaining to any damage or impending damage to or loss of the QWEST System WORLDCOM Conduit System, respectively, that are known to such party. 13.5 Each party shall take all reasonable precautions against, and shall assume liability, subject to the terms herein, for, any damage caused by such party to the other's fibers within the Cable. WORLDCOM shall not use the WORLDCOM Fibers, and QWEST shall not use the QWEST Conduit, in a way which physically interferes in any way with or adversely affects the use of the fibers or cable of any other person using the QWEST System or the WORLDCOM Conduit System, respectively. 13.6 WORLDCOM and QWEST each agree to cooperate with and support the other in complying with any requirements applicable to their respective rights and obligations hereunder by any governmental or regulatory agency or authority. 13.7 Except as otherwise explicitly set forth in this Agreement, in the Maintenance Agreement or in any Regeneration Sharing Agreement, neither party shall charge the other party any maintenance or right-of- way charges. ARTICLE XIV INDEMNIFICATION 14.1 Subject to the provisions of Article XV, QWEST hereby releases and agrees to indemnify, defend, protect and hold harmless WORLDCOM, its employees, officers, directors, agents, shareholders and affiliates, from and against, and assumes liability for: (a) Any injury, loss or damage to any person, tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs) to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of QWEST, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors in connection with its performance under this Agreement; (b) Any claims, liabilities or damages arising out of any violation by QWEST of regulations, rules, statutes or court orders of any local, state or federal governmental agency, court or body in connection with its performance under this Agreement; and (c) Any claims, liabilities or damages arising out of any interference with or infringement of the rights of any third party as a result of WORLDCOM's use of the WORLDCOM IRU and the WORLDCOM Fibers in accordance with the provisions of this Agreement. 14.2 Subject to the provisions of Article XV, WORLDCOM hereby releases and agrees to indemnify, defend, protect and hold harmless QWEST, its employees, officers, directors, agents, shareholders and affiliates, from and against, and assumes liability for: (a) Any injury, loss or damage to any person, tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs) to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of WORLDCOM, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors in connection with its performance under this Agreement; (b) Any claims, liabilities or damages arising out of any violation by WORLDCOM or regulations, rules, statutes or court orders of any local, state or federal governmental agency, court or body in connection with its performance under this Agreement; and (c) Any claims, liabilities or damages arising out of any interference with or infringement of the rights of any third party as a result of QWEST's use of the QWEST Conduit in accordance with the provisions of this Agreement. 14.3 The parties hereby expressly recognize and agree that each party's said obligation to indemnify, defend, protect and save the other harmless is not a material obligation to the continuing performance of the-parties' other obligations, if any, hereunder. In the event that a party shall fail for any reason to so indemnify, defend, protect and save the other harmless, the injured party hereby expressly recognizes that its sole remedy in such event shall be the right to bring an arbitration proceeding pursuant to the terms of this Agreement against the other party for its damages as a result of the other party's said failure to indemnify, defend, protect and save harmless. These obligations shall survive the expiration or termination of this Agreement. 14.4 Nothing contained herein shall operate as a limitation on the right of either party hereto to bring an action for damages against any third party, including indirect, special or consequential damages, based on any acts or omissions of such third party as such acts or omissions may affect the construction, operation or use of the WORLDCOM Fibers or the QWEST System, or the WORLDCOM Conduit System or the QWEST Conduit, as the case may be; provided, however, that each party hereto shall assign such rights or claims, execute such documents and do whatever else may be reasonably necessary to enable the other party to pursue any such action against such third party. ARTICLE XV. LIMITATION OF LIABILITY 15.1 Notwithstanding any provision of this Agreement to the contrary, in no event shall either party be liable to the other party for any special, incidental, indirect, punitive or consequential damages, whether foreseeable or not, arising out of, or in connection with, transmission interruptions or problems, or any interruption or degradation of service, including, but not limited to, damage or loss of property or equipment, loss of profits or revenue, cost of capital, cost of replacement services, or claims of customers, whether occasioned by any construction, reconstruction, relocation, repair or maintenance performed by, or failed to be performed by, the other party or any other cause whatsoever, including, without limitation, breach of contract, breach of warranty, negligence, or strict liability all claims for which damages are hereby specifically waived. ARTICLE XVI. INSURANCE 16.1 During the term of this Agreement, each party shall obtain and maintain, and shall require any of its permitted subcontractors to obtain and maintain, the following insurance, naming the other party as an additional insured: (a) Not less than $5,000,000 combined single limit liability insurance, on an occurrence basis, for personal injury and property damage, including, without limitation, injury or damage arising from the operation of vehicles or equipment and liability for completed operations; (b) Worker's Compensation Insurance in amounts required by applicable law and Employer's Liability insurance with a limit of at least One Million Dollars ($1,000,000.00) per occurrence; (c) Automobile liability insurance covering death or injury to any person or persons, or damage to property arising from the operation of vehicles or equipment, with limits of not less than One Million Dollars ($1,000,000.00) per occurrence; (d) "All Risk" property insurance in an amount equal to the replacement cost of the property of such party subject to the IRUs granted hereunder; and (e) Any other insurance coverages required pursuant to QWEST's right-of-way agreements with railroads or other third parties, 16.2 Both parties expressly acknowledge that a party shall be deemed to be in compliance with the provisions of this Article if it maintains an approved self-insurance program providing for a retention of up to One Million Dollars ($1,000,000.00). If either party provides any of the foregoing coverages on a claims made basis, such policy or policies shall be for at least a three (3) year extended reporting or discovery period. 16.3 Unless otherwise agreed, WORLDCOM's insurance policies shall be obtained and maintained with companies rated A or better by Best's Key Rating Guide and QWEST shall be expressly named as an additional insured on all of WORLDCOM's insurance policies providing the required coverage, or any portion thereof, described in this Article, and WORLDCOM shall provide QWEST with an insurance certificate confirming compliance with this requirement for each policy providing such required coverage. The insurance certificate shall indicate that the additional insured party shall be notified not less than thirty (30) days prior to any cancellation or material change in coverage. 16.4 Unless otherwise agreed, QWEST's insurance policies shall be obtained and maintained with companies rated A or better by Best's Key Rating Guide and WORLDCOM shall be expressly named as an additional insured on all of QWEST's insurance policies providing the required coverage, or any portion thereof, described in this Article, and QWEST shall provide WORLDCOM with an insurance certificate confirming compliance with this requirement for each policy providing such required coverage. The insurance certificate shall indicate that the additional insured party shall be notified not less than thirty (30) days prior to any cancellation or material change in coverage. 16.5 In the event either party fails to obtain the required insurance or to obtain the required certificates from any contractor and a claim is made or suffered, such party shall indemnify and hold harmless the other party from any and all claims for which the required insurance would have provided coverage. Further, in the event of any such failure which continues after seven (7) days' written notice thereof by the other party, such other partly, may, but shall not be obligated to, obtain such insurance and will have the right to be reimbursed for the cost of such insurance by the party failing to obtain such insurance. 16.6 In the event coverage is denied or reimbursement of a properly presented claim is disputed by the carrier for insurance provided above, the party carrying such coverage shall make good faith efforts to pursue such claim with its carrier. 16.7 WORLDCOM and QWEST shall each obtain from the insurance companies providing the coverages required by this Agreement, the permission of such insurers to allow such party to waive all rights of subrogation and such party does hereby waive all rights of said insurance companies to subrogation against the other party, its parent corporation, affiliates, subsidiaries, assignees, officers, directors and employees or any other party entitled to indemnity under this Agreement. ARTICLE XVII. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS 17.1 The parties acknowledge and agree that it is their mutual objective and intent to (i) minimize, to the extent feasible, the aggregate Impositions payable with respect to the QWEST System and the WORLDCOM Conduit System and (ii) share such Impositions according to their respective interests in each of the QWEST System and the WORLDCOM Conduit System, and that they will cooperate with each other and coordinate their mutual efforts to achieve such objectives in accordance with the provisions of this Article XVII. 17.2 QWEST shall be responsible for and shall timely pay any and all "Impositions" (as defined in Section 3 6. 1 ) with respect to the construction or operation of each Segment of the QWEST System which Impositions are (i) imposed or assessed prior to the Acceptance Date with respect to such Segment or (ii) imposed or assessed (regardless of the time) with respect to such Segment in exchange for the approval of construction in or the original agreement which resulted in the granting of an interest in public property or a public right-of-way relating to the QWEST System. WORLDCOM shall be responsible for and shall timely pay any and all Impositions imposed with respect to the construction or operation of the WORLDCOM Conduit System which Impositions are (iii) imposed or assessed prior to the QWEST Conduit Acceptance Date or (iv) imposed or assessed (regardless of the time) in exchange for the approval of construction in or the original agreement which resulted in the granting of an interest in public property or public right-of-way relating to the QWEST Conduit. Notwithstanding the foregoing obligations, QWEST and WORLDCOM, respectively, shall have the right to challenge any such Impositions so long as the challenge of such Impositions does not adversely affect the title, rights or property to be delivered pursuant hereto. 17.3 Except as to Impositions described in paragraph (ii) of Section 17.2, following the Acceptance Date with respect to each Segment delivered hereunder, QWEST shall timely pay any and all Impositions imposed upon or with respect to such Segment to the extent such Impositions may not feasibly be separately assessed or imposed upon or against the respective ownership interests of QWEST and WORLDCOM in the QWEST System; provided that, upon receipt of a notice of any such Imposition, QWEST shall promptly notify WORLDCOM of such Imposition and following payment of such Imposition by QWEST, WORLDCOM shall promptly reimburse QWEST for its proportionate share of such Impositions, which share shall be determined (i) to the extent possible, based upon the manner and methodology used by the particular authority imposing such Impositions (e.g., on the cost of the relative property interests, historic or projected revenue derived therefrom, or any combination thereof) or (ii) if the same cannot be so determined, based on the relative number of WORLDCOM Fibers in the affected Segment compared to the total number of fibers in such Segment during the relevant tax period. Any reimbursement made under this Section 17.3 shall be in an amount that, after deduction of all Impositions required to be paid by QWEST in respect of the receipt or accrual of such reimbursement and after consideration of any deduction to which QWEST may be entitled with respect to the payment or accrual of the Impositions which have been reimbursed, shall be equal to the amount otherwise required to be paid by QWEST hereunder. 17.4 Except as to Impositions described in paragraph (iv) of Section 17.2, following QWEST's acceptance of the QWEST Conduit delivered hereunder, WORLDCOM shall timely pay any and all Impositions imposed upon or with respect to the QWEST Conduit to the extent such Impositions may not feasibly be separately assessed or imposed upon or against the respective ownership interests of WORLDCOM and QWEST in the QWEST Conduit; provided that upon receipt of a notice of any such Imposition, WORLDCOM shall promptly notify QWEST of such Imposition and following payment of such Imposition by WORLDCOM, QWEST shall promptly reimburse WORLDCOM for its proportionate share of such Impositions, which share shall be determined (i) to the extent possible, based upon the manner and basis upon which the particular authority imposed such Impositions (e.g., based on the cost of relative property interests, historic or projected revenue derived therefrom, or any combination thereof) or (ii) if the same cannot be so determined, based on the ratio that the QWEST Conduit bears to the total number of conduits in use in the WORLDCOM Conduit System during the relevant tax period. Any reimbursement made under this Section 17.4 shall be in an amount that, after deduction of all Impositions required to be paid by WORLDCOM in respect of the receipt or accrual of such reimbursement and after consideration of any deduction to which WORLDCOM may be entitled with respect to the payment or accrual of the Impositions which have been reimbursed, shall be equal to the amount otherwise required to be paid by WORLDCOM hereunder. 17.5 Notwithstanding any provision herein to the contrary, QWEST shall have the right to, and, subject to the following provisos, at WORLDCOM's request QWEST shall, contest any Imposition described in Section 17.3, above, (including by non-payment of such Imposition); provided that notwithstanding any such request by WORLDCOM (i) if the aggregate amount of any such Imposition imposed by a single public authority for any single tax year does not exceed $30,000.00, then QWEST shall not have the obligation to protest such Imposition (although it may do so in its own discretion), and (ii) if QWEST determines, in its sole discretion, not to contest any such Impositions other than those described in the foregoing clause (i), QWEST shall be solely responsible for the payment thereof. The out- of-pocket costs and expenses (including reasonable attorneys' fees) incurred by QWEST in any such contest shall be shared by QWEST and WORLDCOM in the same proportion as to which the parties would have shared in such Impositions, as they were originally assessed. Any refunds or credits resulting from a contest brought pursuant to this Section 17.5 shall be divided between QWEST and WORLDCOM in the same proportion as to which such refunded or credited Impositions were borne by QWEST and WORLDCOM. In any such event, QWEST shall provide timely notice of such challenge to WORLDCOM and QWEST shall have determined, in good faith, that such contest and/or nonpayment does not adversely affect the title, property or rights of WORLDCOM to the WORLDCOM Fibers. 17.6 Notwithstanding any provision herein to the contrary, WORLDCOM shall have the right to, and, subject to the following provisos, at QWEST's request WORLDCOM shall, contest any Imposition described in Section 17.4, above, (including by non-payment of such Imposition); provided that, notwithstanding any such request by QWEST (i) if the aggregate amount of any such Imposition imposed by a single public authority for any single tax year does not exceed $30,000.00, then WORLDCOM shall not have the obligation to protest such Imposition (although it may do so in its own discretion), and (ii) if WORLDCOM determines, in its sole discretion, not to contest any such Impositions other than those described in the foregoing clause (i), WORLDCOM shall be solely responsible for the payment thereof. The out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by WORLDCOM in any such contest shall be shared by WORLDCOM and QWEST in the same proportion as to which the parties would have shared in such Impositions, as they were originally assessed. Any refunds or credits resulting from a contest brought pursuant to this Section 17.6 shall be divided between WORLDCOM and QWEST in the same proportion as to which such refunded or credited Impositions were borne by WORLDCOM and QWEST. WORLDCOM shall provide timely notice of such challenge to QWEST and WORLDCOM shall have determined, in good faith, that such contest and/or non-payment does not adversely affect the title, property or rights of QWEST to the QWEST Conduit. 17.7 Except as to Impositions described in paragraphs (ii) and (iv) of Section 17.2 following the Acceptance Date with respect to each Segment delivered hereunder on the one hand, and following the acceptance by QWEST of the QWEST Conduit on the other hand, QWEST and WORLDCOM, respectively, shall be separately responsible for any and all Impositions (i) expressly or implicitly imposed upon, based upon, or otherwise measured by the gross receipts, gross income, net receipts or net income received by or accrued to such party due to its respective ownership or use of the QWEST System, the WORLDCOM Fibers, the WORLDCOM Conduit System, or the QWEST Conduit or (ii) which have been separately assessed or imposed upon the respective ownership interest of such party in the QWEST System, the WORLDCOM Fibers, the WORLDCOM Conduit System, or the QWEST Conduit. If the WORLDCOM Fibers are the only fibers to be located in the Cable from the point where the Cable leaves the QWEST System right-of-way to the POP, WORLDCOM shall be solely responsible for any and all Impositions imposed on or with respect to such portion of any Segment. 17.8 Notwithstanding any provision herein to the contrary, WORLDCOM shall have the right to protest by appropriate proceedings any Imposition described in Section 17.7, above. In such event, WORLDCOM shall indemnify and hold QWEST harmless from any expense, legal action or cost, including reasonable attorneys' fees, resulting from WORLDCOM's exercise of its rights hereunder. In the event of any refund, rebate, reduction or abatement to WORLDCOM of any such Imposition imposed upon and/or paid by WORLDCOM, WORLDCOM shall be entitled to receive the entire benefit of such refund, rebate, reduction or abatement attributable to WORLDCOM's use of the QWEST System. In the event WORLDCOM has exhausted all its rights of appeal in protesting any Imposition and has failed to obtain the relief sought in such proceedings or appeals ("Finally Determined Taxes and Fees"), WORLDCOM and QWEST may jointly agree, at a cost to be shared proportionately based on respective fiber counts, or either WORLDCOM or QWEST may at its sole option and cost, agree to relocate a portion of the fiber optic system so as to bypass the jurisdiction which had imposed or assessed such Finally Determined Taxes and Fees. If WORLDCOM and QWEST, or either of them, do not determine to relocate the fiber optic system, WORLDCOM shall have the right to terminate its use of the WORLDCOM Fibers in any Segment. Such termination shall be effective on the date specified by WORLDCOM in a notice of termination, which date shall be at least ninety (90) days after the notice. Upon such termination, WORLDCOM's IRU in the affected Segment shall immediately terminate, and the WORLDCOM Fiber in the affected Segment shall revert to QWEST without reimbursement of any IRU fees or other payments previously made with respect thereto. 17.9 Notwithstanding any provision herein to the contrary, QWEST shall have the right to protest by appropriate proceedings any Imposition described in Section 17.7, above. In such event, QWEST shall indemnify and hold WORLDCOM harmless from any expense, legal action or cost, including reasonable attorneys' fees, resulting from QWEST's exercise of its rights hereunder. In the event of any refund, rebate, reduction or abatement to QWEST of any such Imposition imposed upon and/or paid by QWEST, QWEST shall be entitled to receive the entire benefit of such refund, rebate, reduction or abatement attributable to QWEST's use of the WORLDCOM Conduit System. In the event QWEST has exhausted all its rights of appeal in protesting any Imposition and has failed to obtain the relief sought in such proceedings or appeals ("Finally Determined Taxes and Fees"), WORLDCOM and QWEST may jointly agree, at a cost to be shared proportionately based on respective fiber counts, or either WORLDCOM or QWEST may at its sole option and cost, agree to relocate a portion of the fiber optic system so as to bypass the jurisdiction which had imposed or assessed such Finally Determined Taxes and Fees. If WORLDCOM and QWEST, or either of them, do not determine to relocate the fiber optic system, QWEST shall have the right to terminate its use of the QWEST Conduit in any Segment. Such termination shall be effective on the date specified by QWEST in a notice of termination, which date shall be at least ninety (90) days after the notice. Upon such termination, QWEST's IRU in the affected Segment shall immediately terminate, and the QWEST Conduit in the affected Segment shall revert to WORLDCOM without reimbursement of any fees or other payments previously paid. 17.10 Notwithstanding the provisions of Section 17.8, with respect to any Impositions relating to the Segments of the QWEST System which are imposed upon both QWEST and WORLDCOM (or both of their respective interests therein), QWEST, at its option and at its own expense, shall have the right to direct and manage any such contest; subject, however, to reasonable and appropriate consultation with WORLDCOM which hereby agrees to cooperate with QWEST in any such contest. Notwithstanding the provisions of Section 17.9, with respect to any Impositions relating to the WORLDCOM Conduit which are imposed upon both WORLDCOM and QWEST (or both of their respective interests therein), WORLDCOM, at its option and at its own expense, shall have the right to direct and manage any such contest; subject, however, to reasonable and appropriate consultation with QWEST which hereby agrees to cooperate with WORLDCOM in any such contest. 'Me individual rights of QWEST and WORLDCOM to contest any Imposition pursuant to this Section 17.10 shall be contingent upon reasonable and appropriate assurances that any such contest will not adversely affect the title, property or right of the other party in the QWEST System or WORLDCOM Conduit System. 17.11 QWEST and WORLDCOM agree to cooperate fully in the preparation of any returns or reports relating to the Impositions. QWEST and WORLDCOM further acknowledge and agree that the provisions of this Article XVII are intended to allocate the Impositions expected to be assessed against or imposed upon the parties with respect to the QWEST System and the WORLDCOM Conduit System based upon the procedures and methods of computation by which Impositions generally have been assessed and imposed to date, and that material changes in the procedures and methods of computation by which such assessments are assessed and imposed could significantly alter the fundamental economic assumptions underlying the transactions hereunder to the parties. Accordingly, the parties agree that, if in the future the procedures or methods of computation by which Impositions are assessed or imposed against the parties change materially from the procedures or methods of computation by which they are imposed as of the date hereof (e.g., by the imposition or assessment of a right-of-way fee that is in substance a "tax" because it substantially exceeds the fair market value of the right-of-way rights), the parties will negotiate in good faith an amendment to the provisions of this Article XVII in order to preserve, to the extent reasonably possible, the economic intent and effect of this Article XVII as of the date hereof. ARTICLE XVIII. NOTICE 18.1 Unless otherwise provided herein, all notices and communications concerning this Agreement shall be addressed to the other party as follows: If to QWEST: QWEST Communications Corporation ATTENTION: President 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 with a copy to: QWEST Communications Corporation ATTENTION: General Counsel 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 If to WORLDCOM: WORLDCOM, Inc. c/o WORLDCOM Network Services, Inc. ATTENTION: Vice President - Network Operations One Williams Center Tulsa, Oklahoma 74172 Facsimile No.: (918)590-5598 and to: WORLDCOM Network Services, Inc. ATTENTION: Contract Administration One Williams Center Tulsa, Oklahoma 74172 Facsimile No.: (918) 590-3293 and, if claiming an event of default, with a copy to: Michael D. Cooke Hall, Estill, Hardwick, Gable, Golden & Nelson 320 S. Boston Avenue, Suite 400 Tulsa, Oklahoma 74105 Facsimile No.: (918) 594-0505 or at such other address as may be designated in writing to the other party. 18.2 Unless otherwise provided herein, notices shall be hand delivered, sent by registered or certified U.S. Mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to the addressee or its office when received at the address for notice specified above when hand delivered, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery service, or three (3) days after deposit in the mail when sent by U.S. mail. ARTICLE XIX. CONFIDENTIALITY 19.1 If the parties to this Agreement have entered into (or later enter into) a Confidentiality Agreement, the terms of such an agreement shall control and Section 19.1 of this Article shall not apply; however, if any such Confidentiality Agreement expires or is no longer effective at any time during the Term of this Agreement, this Section 19.1 shall be in effect during those periods. 19.2 In the absence of a separate Confidentiality Agreement between the parties, if either party provides confidential information to the other in writing and identified as such, the receiving party shall protect the confidential information from disclosure to third parties with the same degree of care accorded its own confidential and proprietary information. Neither party shall be required to hold confidential any information which (i) becomes publicly available other than through the recipient; (ii) is required to be disclosed by a governmental or judicial order, rule or regulation; (iii) is independently developed by the disclosing party; or (iv) becomes available to the disclosing party without restriction from a third party. These obligations shall survive expiration or termination of this Agreement 19.3 Notwithstanding Sections 19.1 and 19.2 of this Article, confidential information shall not include information disclosed by the receiving party as required by applicable law or regulation; provided that the information disclosed is limited to the existence and general nature of the relationship between the parties, including, as required, the scope, approximate revenues, purposes and expectations related to such relationship and a description of any disputes relating thereto. Notwithstanding the foregoing, this Agreement may be provided to any governmental agency or court of competent jurisdiction to the extent required by applicable law. ARTICLE XX. DEFAULT 20.1 With respect to all payments required to be made by WORLDCOM hereunder, WORLDCOM shall be in default hereunder if such payment is not paid on the date due and payable hereunder, and from and after such date such unpaid amount shall bear interest until paid at a rate equal to the rate set forth in Article XXVII. With respect to all non-payment obligations, WORLDCOM shall be in default under this Agreement thirty (30) days after QWEST shall have given WORLDCOM written notice of such default unless WORLDCOM shall have cured such default or such default is otherwise waived within such thirty (30) days; provided, however, that where such default cannot reasonably be cured within such thirty (30) day-period, if WORLDCOM shall proceed promptly to cure the same and prosecute such curing with due diligence, the time for curing such default shall be extended for such period of time as may be necessary to complete such curing. Events of default also shall include, but not be limited to, the making by WORLDCOM of a general assignment for the benefit of its creditors, the filing of a voluntary petition in bankruptcy or the filing of a petition in bankruptcy or other insolvency protection against WORLDCOM which is not dismissed within ninety (90) days thereafter, or the filing by WORLDCOM of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment composition, liquidation, dissolution, or similar relief. Any event of default by WORLDCOM may be waived under the terms of this Agreement at QWEST's option. Upon the failure by WORLDCOM to timely cure any such default after notice thereof from QWEST, QWEST may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such breach. Notwithstanding the above, if WORLDCOM certifies in good faith to QWEST in writing that a default has been cured, such default shall be deemed to be cured unless QWEST otherwise notifies WORLDCOM in writing within fifteen (15) days of receipt of such notice from WORLDCOM. 20.2. With respect to all payments required to be made by QWEST hereunder, QWEST shall be in default hereunder if such payment is not paid on the date due and payable hereunder, and from and after such date such unpaid amount shall bear interest until paid at a rate equal to the rate set forth in Article XXXIII With respect to its obligation to deliver the various Segments by the respective Scheduled Delivery Dates, QWEST shall be in default under this Agreement sixty (60) days after WORLDCOM shall have given QWEST written notice of its failure to deliver a Segment by the relevant Scheduled Delivery Date unless QWEST shall have cured such default or such default is otherwise waived within such sixty (60) days. With respect to all other non-payment obligations, QWEST shall be in default under this Agreement thirty (30) days after WORLDCOM shall have given QWEST written notice of such default unless QWEST shall have cured such default or such default is otherwise waived within thirty (30) days; provided, however, that where such default cannot reasonably be cured within such thirty (30) day-period, if QWEST shall proceed promptly to cure the same and prosecute such curing with due diligence, the time for curing such default shall be extended for such period of time as may be necessary to complete such curing. Events of default also shall include, but not be limited to, the making by QWEST of a general assignment for the benefit of its creditors, the filing of a voluntary petition in bankruptcy or the filing of a petition in bankruptcy or other insolvency protection against QWEST which is not dismissed within ninety (90) days thereafter, or the filing by QWEST of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution, or similar relief. Any event of default by QWEST may be waived under the terms of this Agreement at WORLDCOM's option. Upon the failure by QWEST to timely cure any such default after notice thereof from WORLDCOM, WORLDCOM may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such breach. Notwithstanding the above, if QWEST certifies in good faith to WORLDCOM in writing that a default has been cured, such default shall be deemed to be cured unless WORLDCOM otherwise notifies QWEST in writing within fifteen (15) days of receipt of such notice from QWEST. ARTICLE XXI. TERMINATION 21.1 Upon the expiration of this Agreement, QWEST's IRU in the WORLDCOM Conduit System shall immediately terminate and all rights of QWEST to use the QWEST Conduit, or any part thereof, shall cease and WORLDCOM shall owe QWEST no additional duties or consideration with respect to the QWEST Conduit. QWEST shall remove all electronics and equipment from any WORLDCOM facilities at its sole cost under WORLDCOM's supervision. 21.2 Upon the expiration of this Agreement, WORLDCOM's IRU in the QWEST System shall immediately terminate and all rights of WORLDCOM to use the QWEST System, or any part thereof, shall cease and QWEST shall owe WORLDCOM no additional duties or consideration with respect to the QWEST System. WORLDCOM shall remove all electronics, equipment and regeneration facilities from any QWEST facilities at its sole cost under QWEST's supervision. 21.3 Notwithstanding the foregoing, no termination or expiration of this Agreement shall affect the rights or obligations of any party hereto (i) with respect to any then existing defaults or the obligation to make any payment hereunder for services rendered prior to the date of termination or expiration or (ii) pursuant to Article XIV, Article XV, Article XVII or Article XIX herein, which shall survive the expiration or termination hereof. ARTICLE XXII. FORCE MAJEURE 22.1 Neither party shall be in default under this Agreement to the extent that any delay in such party's performance is caused by any of the following conditions, and such party's performance shall be excused and extended during the period of any such delay: act of God; fire; flood; fiber, Cable, or other material shortages or unavailability or other delay in delivery not resulting from the responsible party's failure to timely place orders therefor (it being expressly acknowledged that the fiber optic cable that is being acquired for and installed in the QWEST System and that will include the WORLDCOM Fiber must include higher fiber counts than that necessary solely for the WORLDCOM Fiber in order to permit completion of the entire QWEST System); lack of or delay in transportation; government codes, ordinances, laws, rules, regulations or restrictions (collectively, "Regulations") (but not to the extent the delay caused by such Regulations could be reasonably avoided by rerouting the Cable); war or civil disorder; failure of a third party to grant a required permit easement, or other required authorization for use of the intended right-of-way (provided that such required authorization was sought and pursued on a timely and reasonable best efforts basis), or any other cause beyond the commercially reasonable control of such party, provided that the party claiming relief under this Article shall promptly notify the other in writing of the existence of the event relied on and the cessation or termination of said event. The party claiming relief under this Article shall exercise reasonable efforts to minimize the time for any such delay. ARTICLE XIII. ARBITRATION 23.1 Any dispute or disagreement arising between QWEST and WORLDCOM in connection with this Agreement which is not settled to the mutual satisfaction of QWEST and WORLDCOM within thirty (30) days from the date that either party informs the other in writing that such dispute or disagreement exists, shall be settled by arbitration in Kansas City, Missouri, in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect on the date that such notice is given. If the parties are unable to agree on a single arbitrator within fifteen (15) days, each party shall select an arbitrator and the two (2) arbitrators shall mutually select a third arbitrator, the three of whom shall serve as an arbitration panel. The decision of the arbitrator(s) shall be final and binding upon the parties and shall include written findings of law and fact, and judgment may be obtained thereon by either party in a court of competent jurisdiction. Each party shall bear the cost of preparing and presenting its own case. The cost of the arbitration, including the fees and expenses of the arbitrator(s), shall be shared equally by the parties hereto unless the award otherwise provides. 23.2 The obligation herein to arbitrate shall not be binding upon any party with respect to requests for preliminary injunctions, temporary restraining orders or other similar temporary procedures in a court of competent jurisdiction to obtain interim relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution by arbitration of the actual dispute. It is not the intention of the parties that such injunctive procedures shall be in lieu of, or cause substantial delay to, any arbitration proceeding commenced under Section 23.1 above. ARTICLE XXIV. WAIVER 24.1 The failure of either party hereto to enforce any of the provisions of this Agreement, or the waiver thereof in any instance, shall not be construed as a general waiver or relinquishment on its part of any such provision, but the same shall nevertheless be and remain in full force and effect. ARTICLE XXV. GOVERNING LAW 25.1 This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado, without reference to its choice of law principles. ARTICLE XXVI. RULES OF CONSTRUCTION 26.1 The captions or headings in this Agreement are strictly for convenience and shall not be considered in interpreting this Agreement or as amplifying or limiting any of its content. Words in this Agreement which import the singular connotation shall be interpreted as plural, and words which import the plural connotation shall be interpreted as singular, as the identity of the parties or objects referred to may require. 26.2 Unless expressly defined herein, words having well known technical or trade meanings shall be so construed. All listing of items shall not be taken to be exclusive, but shall include other items, whether similar or dissimilar to those listed, as the context reasonably requires. 26.3 Except as set forth to the contrary herein, any right or remedy of WORLDCOM or QWEST shall be cumulative and without prejudice to any other right or remedy, whether contained herein or not. 26.4 Nothing in this Agreement is intended to provide any legal rights to anyone not an executing party of this Agreement. 26.5 This Agreement has been fully negotiated between and jointly drafted by the parties. 26.6 In the event of a conflict between the provisions of this Agreement and those of any Exhibit, the provisions of this Agreement shall prevail and such Exhibits shall be corrected accordingly. In the event of any conflict between the provisions of Exhibit B and those of Exhibit C, the provisions of Exhibit B shall prevail and Exhibit C shall be corrected accordingly. 26.7 All actions, activities, consents, approvals and other undertakings of the parties in this Agreement shall be performed in a reasonable and timely manner, it being expressly acknowledged and understood that time is of the essence in the performance of obligations required to be performed by a date expressly specified herein. Except as specifically set forth herein, for the purpose of this Article the normal standards of performance within the telecommunications industry in the relevant market shall be the measure of whether a party's performance is reasonable and timely. ARTICLE XXVII. ASSIGNMENT AND DARK FIBER TRANSFERS 27.1 Except as provided below, QWEST shall not assign, encumber or otherwise transfer this Agreement or its rights or obligations hereunder to any other party without the prior written consent of WORLDCOM, which consent will not be unreasonably withheld or delayed. QWEST shall have the right, without WORLDCOM's consent, to assign or otherwise transfer this Agreement (i) as collateral to any institutional lender to QWEST (or to any permitted transferee or assignee of QWEST) subject to the prior rights and obligations of the parties hereunder, (ii) to any parent, subsidiary or affiliate of QWEST, (iii) to any person, firm or corporation which shall control, be under the control of or be under common control with QWEST, or (iv) any corporation or other entity into which QWEST may be merged or consolidated or which purchases all or substantially all of the assets of QWEST; provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation, this Section 27.1 (except that any lender referred to in clause (i) above shall not incur any obligations under this Agreement nor shall it be restricted from exercising any right of enforcement or foreclosure with respect to any related security interest or lien, so long as the purchaser in foreclosure is subject to the provisions of this Agreement, including, without limitation, this Section 27. 1); provided further that promptly following any such assignment or transfer QWEST shall give WORLDCOM written notice identifying the assignee or transferees and provided further that any such assignment or transfer shall be conditioned upon the corresponding assignment or transfer of QWEST's rights and obligations under the Maintenance Agreement. In the event of any permitted partial assignment of any rights hereunder, QWEST shall remain the sole point of contact with WORLDCOM. 27.2 Except as provided below, WORLDCOM shall not assign, encumber or otherwise transfer this Agreement or its rights or obligations hereunder to any other party without the prior written consent of QWEST, which consent will not be unreasonably withheld or delayed. Subject to the provisions of Section 27.3 (which provision shall be binding upon any permitted assignee or transferee hereunder), WORLDCOM shall have the right, without QWEST's consent, to assign or otherwise transfer this Agreement (i) as collateral to any institutional lender to WORLDCOM (or to any permitted transferee or assignee of WORLDCOM) subject to the prior rights and obligations of the parties hereunder, (ii) to any parent, subsidiary or affiliate of WORLDCOM, (iii) to any person, firm or corporation which shall control, be under the control of or be under common control with WORLDCOM, or (iv) any corporation into which WORLDCOM may be merged or consolidated or which purchases all or substantially all of the assets of WORLDCOM; provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation this Section 27.2 and the following Section 27.3 (except that any lender referred to in clause (i) above shall not incur any obligations under this Agreement nor shall it be restricted from exercising any right of enforcement or foreclosure with respect to any related security interest or lien, so long as the purchaser in foreclosure is subject to the provisions of this Agreement, including, without limitation, this Section 27.1 and the following Section 27.3); provided further that, promptly following any such assignment or transfer, WORLDCOM shall give QWEST written notice identifying the assignee or transferee; and provided further that any such assignment or transfer shall be conditioned upon the corresponding assignment or transfer of WORLDCOM's rights and obligations under the Maintenance Agreement. In the event of any permitted partial assignment of any rights hereunder, WORLDCOM shall remain the sole point of contact with QWEST. 27.3 Notwithstanding the provisions of Article XIII, without the prior written consent of QWEST, which consent may be withheld in QWEST's sole discretion, WORLDCOM, for a period of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## from the date of this Agreement, shall not sell, lease, grant an IRU with respect to, exchange, or otherwise in any manner transfer or make available in any manner to any third party the ownership, right to use, use of, or access in any manner to any of the whole and discrete WORLDCOM Fibers (other than the Portland/U.P. Fibers) as Dark Fibers, or otherwise engage in a similar transaction with respect to WORLDCOM Fibers in a manner designed or intended to circumvent the foregoing limitations; provided that the foregoing restriction shall not apply to the single partial assignment by WORLDCOM of the right to use one of the WORLDCOM Fibers as a Dark Fiber for video and radio transmission services and/or related applications, including, without limitation, graphic, visual, imaging, interactive and multimedia applications. 27.4 This Agreement and each of the parties' respective rights and obligations under this Agreement, shall be binding upon and shall inure to the benefit of the parties hereto and each of their respective permitted successors and assigns. ARTICLE XXVIII. REPRESENTATIONS AND WARRANTIES 28.1 Each party represents and warrants that: (a) It has the full right and authority to enter into, execute, deliver and perform its obligations under this Agreement; (b) It has taken all requisite corporate action to approve the execution, delivery and performance of this Agreement; (c) This Agreement constitutes a legal, valid and binding obligation enforceable against such party in accordance with its terms, subject to bankruptcy, insolvency, creditors' rights and general equitable principles; and (d) Its execution of and performance under this Agreement shall not violate any applicable existing regulations, rules, statutes or court orders of any local, state or federal government agency, court or body. 28.2 QWEST warrants and represents that the Segments of the QWEST System that it has constructed or will construct either have been or shall be designed, engineered, installed, and constructed in material compliance with any and all applicable building, construction and safety codes for such construction and installation, as well as any and all other applicable governmental laws, codes, ordinances, statutes and regulations. 28.3 With respect to Segments 1, 2, 2A, 3 and 7, QWEST represents and warrants that (i) such Segments, when constructed, generally were constructed substantially in accordance with the specifications set forth in Exhibit B hereto, and (ii) except as set forth on Exhibit F hereto, QWEST has no actual knowledge on the date hereof of any material deviation in the construction of such Segments from such specifications. With respect to Segment 3, QWEST represents and warrants that, other than as set forth in Exhibit F, it has no actual knowledge on the date hereof of any material deviation in the construction thereof from the As-Builts provided with respect thereto. If, within twenty-four (24) months from the respective Acceptance Date for each of Segments 1, 2, 2A, 3 and 7, there is an event or occurrence that is caused by a material deviation in the construction or installation of any of such Segments from such specifications, and which has a material adverse effect on the operation or performance of the WORLDCOM Fibers in such Segment, then QWEST, at its sole cost and expense (including Impositions with respect thereto), shall repair the affected portion of such Segment to the relevant specifications. 28.4 With respect to Segments 4, 5 and 6, subject to the provisions of Sections 1.2 and 1.3, QWEST represents and warrants that such Segments shall be constructed in all material respects in accordance with the specifications set forth in Exhibit B hereto; provided that WORLDCOM's sole rights and remedies with respect to any failure to so construct such Segments shall be (i) to inspect the construction, installation and splicing, and participate in the acceptance testing, of the WORLDCOM Fiber incorporated in such Segments, during the course and at the time of the relevant construction, installation and testing periods for each portion of such Segment, as provided in Articles III and IV, (ii) if, during the course of such construction, installation and testing of a Segment any material deviation from the specifications set forth in Exhibit B is discovered, the construction or installation of the affected portion of such Segment shall be repaired to such specification by QWEST at QWEST's sole cost and expense, and (iii) if, at any time prior to the date that is twelve (12) months after the Acceptance Date for a particular Segment, WORLDCOM shall notify QWEST in writing of its discovery of a material deviation from the specifications set forth in Exhibit B with respect to such Segment (which notice shall be given promptly following the date of such discovery, but in any event not later than the last day of such 12-month period) the construction or installation of the affected portion of such Segment shall be repaired to such specification by QWEST at QWEST's sole cost and expense. For purposes hereof, "material deviation" means a deviation which is reasonably likely to have a material adverse affect on the operation or performance of the WORLDCOM Fibers affected thereby. 28.5 WORLDCOM warrants and represents that the WORLDCOM Conduit System shall be designed, engineered, installed and constructed in material compliance with any and all applicable building, construction and safety codes for such construction and installation, as well as any and all other applicable governmental laws, codes, ordinances, statutes and regulations. 28.6 WORLDCOM represents and warrants that the QWEST Conduit shall be constructed in all material respects in accordance with the specifications set forth in Exhibit B hereto; provided that QWEST's sole rights and remedies with respect to any failure to so construct the QWEST Conduit shall be (i) to inspect the construction and installation of the QWEST Conduit and the subsequent installation of the cable installed therein during the course and the time of their construction and installation as provided in Article V, (ii) if, during the course of such construction and installation any material deviation from the specifications set forth in Exhibit B is discovered, the construction or installation of the affected portion of the QWEST Conduit shall be repaired to such specification by WORLDCOM at WORLDCOM's sole cost and expense, and (iii) if, at any time prior to the date that is twelve (12) months after the QWEST Conduit Acceptance Date, QWEST shall notify WORLDCOM in writing of its discovery of a material deviation from the specifications set forth in Exhibit B (which notice shall be given promptly following the date of such discovery, but in any event not later than the last day of such 12-month period) the construction or installation of the affected portion of the QWEST Conduit shall be repaired to such specification at WORLDCOM's sole cost and expense. For purposes hereof, "material deviation" means a deviation which is reasonably likely to have a material adverse affect on the operation or performance of QWEST Conduit or QWEST's fiber optic cable housed therein. 28.7 EXCEPT AS SET FORTH IN THE FOREGOING PARAGRAPHS 28.2, 28.3 AND 28.4, QWEST MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE WORLDCOM FIBERS OR THE SEGMENTS OF THE QWEST SYSTEM DELIVERABLE HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. 28.8 EXCEPT AS SET FORTH IN THE FOREGOING PARAGRAPHS 28.5 AND 28.6, WORLDCOM MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE WORLDCOM CONDUIT, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. ARTICLE XXIX. ENTIRE AGREEMENT- AMENDMENT 29.1 This Agreement, together with the Maintenance Agreement, any Regeneration Sharing Agreement, and any Confidentiality Agreement entered into in connection herewith, constitutes the entire and final agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof (including, without limitation that certain letter agreement between the parties dated February 2, 1996), which are of no further force or effect. The Exhibits referred to herein are integral parts hereof and are hereby made a part of this Agreement. This Agreement may only be modified or supplemented by an instrument in writing executed by a duly authorized representative of each party. ARTICLE XXX. NO PERSONAL LIABILITY 30.1 Each action or claim against any party arising under or relating to this Agreement shall be made only against such party as a corporation, and any liability relating thereto shall be enforceable only against the corporate assets of such party. No party shall seek to pierce the corporate veil or otherwise seek to impose any liability relating to, or arising from, this Agreement against any shareholder, employee, officer or director of the other party. Each of such persons is an intended beneficiary of the mutual promises set forth in this Article and shall be entitled to enforce the obligations of this Article. ARTICLE XXXI. CONFLICTS OF INTEREST 31.1 Neither party shall use any funds received under this Agreement for illegal purposes. Neither party shall pay any commission, fees or rebates to any employee of the other party, or favor any employee of such other party with gifts or entertainment of significant cost or value intended to influence the actions of such employee in a manner inconsistent with that employee's duty of loyalty to its employer. If either party has reasonable cause to believe that one of the provisions in this Article has been violated, it, or its representative, may audit the relevant books and records of the other party for the sole purpose of establishing compliance with such provisions. ARTICLE XXXII. RELATIONSHIP OF THE PARTIES 32.1 The relationship between WORLDCOM and QWEST shall not be that of partners, agents, or joint venturers for one another, and nothing contained in this Agreement shall be deemed to constitute a partnership or agency agreement between them for any purposes, including but not limited to federal income tax purposes. WORLDCOM and QWEST, in performing any of their obligations hereunder, shall be independent contractors or independent parties and shall discharge their contractual obligations at their own risk. ARTICLE XXXIII. LATE PAYMENTS 33.1 In the event a party shall fail to make any payment under this Agreement when due, such amounts shall accrue interest, from the date such payment is due until paid, including accrued interest, at an annual rate equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## of the prime rate of interest published by The Wall Street Journal as the base rate on corporate loans posted by a percentage of the nation's largest banks on the date any such payment is due or, if lower, the highest percentage allowed by law. ARTICLE XXXIV. SEVERABILITY 34.1 If any term, covenant or condition contained herein shall, to any extent, be invalid or unenforceable in any respect under the laws governing this Agreement, the remainder of this Agreement shall not be affected thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. ARTICLE XXXV. COUNTERPARTS 35.1 This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. ARTICLE XXXVI. CERTAIN DEFINITIONS 36.1 The following terms hall have the stated definitions in this Agreement. (a) "Cable" means the fiber optic cable and the fibers contained therein, and associated splicing connections, splice boxes and vaults, and conduit, to be installed by QWEST as part of the QWEST System. (b) "Costs" means actual, direct costs paid or payable in accordance with the established accounting procedures generally used by WORLDCOM or QWEST, as the case may be, and which it utilizes in billing third parties for reimbursable projects which costs shall include, without limitation, the following: (i) labor costs, including wages and salaries, and benefits and overhead allowable to such labor costs (overhead allocation percentage shall not exceed the lesser of (x) the percentage QWEST or WORLDCOM, as applicable, allocates to its internal projects or (y) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , and (ii) other direct costs and out-of-pocket expenses on a pass- through basis (e.g., equipment, materials, supplies, contract services, etc.). (c) "Dark Fiber" means fiber provided without electronics or optronics, and which is not "lit" or activated; provided that such fiber may be used in any manner and for any purpose permitted under Article XIII. (d) "Final Acceptance Date" means the last date on which WORLDCOM has accepted the latest of the Segments to be accepted. (e) "Impositions" means all taxes, fees, levies, imposts, duties, charges or withholdings of any nature (including, without limitation, franchise, license and permit fees), together with any penalties, fines or interest thereon arising out of the transactions contemplated by this Agreement and imposed upon the QWEST System or the WORLDCOM Conduit System by any federal, state or local government or other public taxing authority. (f) "Indefeasible Right of Use" or "IRU" means (i) an exclusive, indefeasible right of use, for the purposes described herein, in the WORLDCOM Fibers or the QWEST Conduit, as applicable, as granted in Article II or Article V, as applicable, and (ii) an associated non-exclusive, indefeasible right of use, for the purposes described herein, in the QWEST Associated Property or the WORLDCOM Associated Property, as applicable; provided that, IRUs granted hereunder do not provide the grantee with any ownership interest in or other rights to physical access to, control of, modification of, encumbrance in any manner of, or other use of the WORLDCOM Conduit System or the QWEST System except as expressly set forth herein. (g) "POP" means the point of presence at each of the end point and intermediate point locations identified in Exhibit A. (h) "PSWP" means Planned System Work Period, which is a prearranged period of time reserved for performing certain work on the System that may potentially impact traffic. Generally, this will be restricted to weekends, avoiding the first and last weekend of each month and high-traffic weekends. (i) "QWEST System" shall have the meaning ascribed thereto in Recital A. (j) "Scheduled Delivery Date" for the completion of the installation of any Segment shall mean the applicable date shown in Section 1.4, as extended to the extent of any delay described in Article XXII. (k) "Segment" means any one of those city pairs identified in Article II. (l) "WORLDCOM Conduit System" shall have the meaning ascribed thereto in Recital D. ARTICLE XXXVII. THIRD PARTY WARRANTIES 37.1 In the event any maintenance or repairs to the QWEST System are required as a result of a breach of any warranty made by any manufacturers, contractors or vendors, QWEST, as applicable, shall pursue any remedies it may have against such manufacturers, contractors or vendors, and QWEST shall reimburse WORLDCOM's costs for any maintenance WORLDCOM has incurred as a result of any such breach of warranty to the extent the manufacturer, contractor or vendor has paid such costs. In the event any maintenance or repairs to the WORLDCOM Conduit System are required as a result of a breach of any warranty made by any manufacturers, contractors or vendors, WORLDCOM, as applicable, shall pursue any remedies it may have against such manufacturers, contractors or vendors, and WORLDCOM shall reimburse QWEST's costs for any maintenance QWEST has incurred as a result of any such breach of warranty to the extent the manufacturer, contractor or vendor has paid such costs. In confirmation of their consent and agreement to the terms and conditions contained in this IRU Agreement and intending to be legally bound hereby, the parties have executed this IRU Agreement as of the date first above written. "QWEST": QWEST COMMUNICATIONS CORPORATION, a Delaware corporation By:/s/ Name: Douglas H. Hanson Title: President and Chief Executive Officer "WORLDCOM": WORLDCOM NETWORK SERVICES, INC., a Delaware corporation By:/s/ Name: Scott Sullivan Title: Chief Financial Officer EXHIBIT A QWEST System Description EXHIBIT A Segment 1 DALLAS-HOUSTON Dallas - 1201 Main Street End Point Houston - the existing WorldCom cable at the End Point intersection of Hardy and Lyons Street DALLAS, TX. TO HOUSTON, TX. REQUIRES STREET BUILD OF 7,550' FROM 1201 MAIN STREET TO EXISTING DUCT SYSTEM AT INTERSECTION OF HALL STREET AND D.A.R.T. PROPERTY. USE EXISTING FIBER PLACED ON QWEST PROPERTY AT 777 WALKER STREET IN HOUSTON. REQUIRES 850' STREET BUILD OR USE OF WORLDCOM DUCT FROM 777 WALKER STREET TO INTERSECTION OF LYONS & HARDY STREET IN HOUSTON. DALLAS (1201 MAIN STREET) TOTAL LENGTH OF SEGMENT APPROX. 269 MILES MEXIA BRYAN EUREKA HOUSTON (INTERSECTION OF LYONS & HARDY STREET) EXHIBIT A Segment 2 DALLAS-EL PASO Denver - 910 15th Street End Point Albuquerque - 200 Lomas Boulevard Intermediate Point El Paso - 201 East Main Street End Point Colorado Springs Connecting Point Pueblo Connecting Point DENVER, CO TO EL PASO, TX PULL CABLE FROM 910 15TH STREET IN DENVER TO 200 LOMAS BLVD. IN ALBUQUERQUE AND FROM 200 LOMAS BLVD. TO 201 E. MAIN STREET IN EL PASO. THIS WILL REQUIRE A 3,500' STREET BUILD IN DENVER, AN ADDITIONAL 13.8 MILE RAILROAD BUILD FROM DENVER TO LITTLETON, THE USE OF EXISTING CONDUIT FROM LITTLETON TO ALBUQUERQUE, A 700' STREET BUILD TO LOMAS BLVD., AND THE USE OF EXISTING CONDUIT FROM ALBUQUERQUE TO 201 E. MAIN STREET IN EL PASO. DENVER (910 15TH ST.) 3,500' STREET BUILD TOTAL LENGTH OF SEGMENT APPROX. 749 MILES LAMY, NM ALBUQUERQUE 200 E. LOMAS BLVD. 700' STREET BUILD EL PASO (201 E. MAIN ST.) EXHIBIT A Segment 2A LAMY, NM - SANTA FE, NM Lamy - Qwest System Handhole on Right-of-Way End Point Santa Fe - Qwest System Terminus on Right-of-Way End Point LAMY, NM. TO SANTA FE, NM. USE EXISTING QWEST CONDUIT SYSTEM BETWEEN LAMY AND SANTA FE TOTAL LENGTH OF SEGMENT APPROX. 17 MI. SANTA FE LAMY NM. EXHIBIT A Segment 3 SANTA CLARA, CALIFORNIA - SALT LAKE CITY, UTAH Santa Clara - 2300 Walsh Street, Building K End Point Sacramento - 770 L Street Intermediate Point Salt Lake City - 136 E. South Temple Street End Point Reno Connecting Point Oakland Connecting Point SANTA CLARA, CA. TO SALT LAKE CITY, UT. PULL CABLE FROM 2300 WALSH STREET (SANTA CLARA) TO JULIAN STREET (SAN JOSE). USE EXISTING FIBER FROM JULIAN STREET TO ROSEVILLE, CA. (SOUTHERN PACIFIC RAILROAD PROPERTY). IN SACRAMENTO USE EXISTING FIBER ON 6,600' STREET BUILD TO 770 L STREET. FROM ROSEVILLE TO RENO PULL CABLE THRU EXISTING DUCT ON SOUTHERN PACIFIC PROPERTY. FROM RENO TO WELLS PULL CABLE THRU EXISTING DUCT ON SOUTHERN PACIFIC PROPERTY. FROM WELLS TO SALT LAKE CITY PULL CABLE THRU EXISTING DUCT ON UNION PACIFIC PROPERTY. IN SALT LAKE CITY AN ADDITIONAL STREET BUILD WILL BE REQUIRED FROM THE EXISTING CONDUIT ON RAILROAD PROPERTY TO 136 E. SOUTH TEMPLE (7,450') TOTAL LENGTH OF SEGMENT APPROX. 871 MILES RENO SALT LAKE CITY MP 242.7 (136 E. SOUTH TEMPLE) 7,450' STREET BUILD ROSEVILLE MP 106.6 SACRAMENTO MP 89.86 (A) 770 L STREET SANTA CLARA JULIAN STREET (SAN JOSE) MP 47.36 (DA) EXHIBIT A Segment 4 OAKLAND - PORTLAND Oakland - 290 5th Street End Point Portland - 707 SW Washington Street End Point OAKLAND, CA. TO PORTLAND, ORE. USE EXISTING FIBER PREVIOUSLY PULLED FROM SANTA CLARA TO SAN JOSE, EXISTING CALFIBER CABLE FROM JULIAN STREET (SAN JOSE) TO ROSEVILLE. IN SACRAMENTO USE EXISTING FIBER ON 6,600' STREET BUILD TO 770 L STREET. FROM ROSEVILLE TO PORTLAND FINAL DETERMINATION HAS NOT BEEN MADE ON ROUTE. TOTAL LENGTH OF SEGMENT APPROX. 752 MILES PORTLAND (707 SW WASHINGTON STREET) ROSEVILLE MP 108.6 SACRAMENTO MP 89.86 (A) 770 L STREET OAKLAND MP 6.23 (D) EXHIBIT A Segment 5 CLEVELAND - BOSTON Cleveland - 1150 West 3rd Street End Point Boston - 800 Boylston Street End Point CLEVELAND, OHIO TO BOSTON, MASS. CLEVELAND - 1150 W 3RD STREET BUILD TO BE DETERMINED BOSTON - 800 BOYLSTON STREET BUILD TO BE DETERMINED TOTAL LENGTH OF SEGMENT APPROX. 691 MILES CLEVELAND BOSTON (1150 W 3RD STREET) (800 BOYLSTON STREET) EXHIBIT A Segment 6 PORTLAND - SEATTLE Portland - 707 SW Washington Street End Point Seattle - 2001 6th Avenue End Point PORTLAND, OR. TO SEATTLE, WA. PORTLAND 707 SW. WASHINGTON STREET BUILD AND RIGHT OF WAY TO BE DETERMINED SEATTLE 2001 6TH AVE. SEATTLE (2001 6TH AVE) TOTAL LENGTH OF SEGMENT APPROX. 182 MILES PORTLAND (707 SW WASHINGTON STREET) EXHIBIT A Segment 7 KANSAS CITY - ST. LOUIS Kansas City - location to be determined along route of existing conduit system St. louis - location to be determined along route of existing conduit system KANSAS CITY, MO. TO ST. LOUIS, MO USE EXISTING QWEST CONDUIT SYSTEM BETWEEN KANSAS CITY AND ST. LOUIS TOTAL LENGTH OF SEGMENT APPROX. 300 MI. KANSAS CITY ST. LOUIS EXHIBIT H WORLDCOM CONDUIT SYSTEM DESCRIPTION ROUTE DESCRIPTION: THE ROUTE BEGINS AT A POINT NEAR PEVELY, MISSOURI, AND PROCEEDS IN A NORTHEASTERLY DIRECTION TO A POINT APPROXIMATELY 10 MILES SOUTHEAST OF INDIANAPOLIS, INDIANA NEAR INDIANAPOLIS, IN. APPROX. 245 MILES PEVELY, MO. EXHIBIT B Construction Specifications Outside Plant Buried Cable Specifications Summary 1.0 General. The intent of this document is to outline the specifications for construction of a fiber optic cable system. In all cases, the standards contained in this document or the standards of the federal, state, local or private agency having jurisdiction, whichever is stricter, shall be followed. 2.0 Material. Steel or PVC conduit shall be minimum schedule ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wall thickness. Any exposed steel conduit, brackets or hardware (i.e., bridge attachments) shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Handholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of cover. Manholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating. Innerducts used shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Buried cable warning tape shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wide and display " ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Warning signs will display ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Fiber optic cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . All cable shall have a ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## ; no ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## cable will be used except to enter buildings. Cable will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## construction with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## fibers per tube. Splice cases will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## ; splice trays shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or equivalent, and heat shrinks shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or equivalent. 3.0 Minimum Depths. Minimum cover required in the placement of conduit/cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches, except in the following instances: (a) The minimum cover in borrow ditches adjacent to roads, highways, railroads, and interstate highways is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the cleanout line or existing grade, whichever is greater. (b) The minimum cover across streams, river washes and other waterways is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the cleanout line or existing grade, whichever is greater. (c) At locations where fiber optic cable crosses other subsurface utilities or other structures, the fiber optic cable/conduit shall be installed to provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of vertical clearance and applicable minimum depth can be maintained; otherwise the fiber optic cable/conduit will be installed under the existing utility or other structure. If, however, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches cannot be obtained, the cable shall be encased in steel pipe. (d) In rock, the conduit/cable shall be placed to provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the surface of the solid rock, or provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of total cover, whichever requires the least rock excavation. (e) In the case of the use/conversion of existing steel pipelines or salvaged conduit systems, the existing depth shall be considered adequate. 4.0 Buried Cable Warning Tape. All cable/conduit will be installed with buried cable warning tape except where existing steel pipelines or salvaged conduit systems are used. The warning tape shall generally be placed at a depth of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below grade and directly above the cable/conduit. 5.0 Conduit Construction. Conduits may be placed by means of trenching, plowing, jack and bore, mini-directional bore or directional bore. Conduits will generally be placed on a level grade parallel to the surface, with only gradual changes in grade elevation. Steel conduit will be joined with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## is the preferred method). All paved city, state, federal and interstate highways and railroad crossings will be encased in steel conduit. If the crossing is at grade, steel is not required if the cable is placed with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet of cover or more. All longitudinal cable runs under paved streets will be placed in steel or concrete encased PVS conduit or buried with a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet of cover, except that the system in Dallas has ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## installed at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of cover. Metro areas shall be defined as areas where at least one of the following conditions exist: (a) There are more than three paved public road crossings per mile; (b) There are more than six utility crossings per mile; (c) Developed and improved areas; (d) High growth areas. Construction within railroad right-of-way, however, is not considered to be metro. All crossings of major streams, rivers, bays and navigable waterways will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. At all foreign utility/underground obstacle crossings, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit will be placed and will extend at least ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet beyond the outer limits of the obstacle in both directions. All jack and bores will use steel conduit. All directional or mini-directional bores will use ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. Any cable placed in rock will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. Any cable placed in swamp or wetland areas will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. All conduits placed on bridges will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . All conduits placed on bridges shall have expansion joints placed at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or at least every ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , whichever is the shorter distance. 6.0 Innerduct Installation. Innerduct(s) shall be installed in all steel conduits. No cable will be placed directly in any split/solid steel conduit without innerduct. Innerduct(s) shall extend beyond the end of all conduits a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches. 7.0 Cable Installation. The fiber optic cable shall be installed using a powered pulling winch and hydraulic-powered assist pulling wheels. The maximum pulling force to be applied to the fiber optic cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## pounds. Sufficient pulling assists will be available and used to insure the maximum pulling force is not exceeded at any point along the pull. The cable shall be lubricated. A pulling swivel break-away rated at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## pounds shall be used at all times. All splices will be contained in a handhole or manhole. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all intermediate handholes or manholes. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all splice locations. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all facility locations (i.e., POP sites, switch sites, regens or CEVs). 8.0 Manholes and Handholes. Manholes shall be laced in traveled surface streets and shall have locking lids. Handholes shall be placed in all other areas and be installed with a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of soil-covering lid. 9.0 EMS Markers. EMS markers shall be placed ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches directly above the lid of all buried handholes and assist points. EMS markers fabricated into the lids of handholes are acceptable. 10.0 Cable Markers (Warning Signs). Cable markers shall be installed at all changes in cable running line direction, splices, pullboxes, assist pulling locations and at both sides of street, highway or railroad crossings. At no time shall any markers be spaced more than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet apart in metro areas and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet apart in non-metro areas. Markers shall be positioned so that they can be seen from the location of the cable and generally set facing perpendicular to the cable running line. Splices, pullboxes and assists shall be marked on the cable marker post. At splice points an ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## will be mounted to cable marker for termination of splice grounding or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## system (see attached). 11.0 Safety and Environmental. All work will be done in strict accordance with federal, state, local and applicable private rules and laws regarding safety and environmental issues, including those set forth by OSHA and the EPA. 12.0 Field Cable Splicing and Testing. All cables entering the splice cases shall be on the same side of the case; no "inline" splices are allowed. Only splices from one buffer tube will be housed in any splice tray. No jumpers from tray to tray will be allowed. Splices shall match up color-to-color in both the buffer tube and cladding; no frogs are allowed. All splices shall be made with a profile alignment fusion splicing machine. All splices shall be housed and protected in heat shrinks. 13.0 Fiber Termination. WORLDCOM Fibers will not appear at any bulkhead outside of WORLDCOM's facilities. EXHIBIT C ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## EXHIBIT D Fiber Cable Splicing, Testing and Acceptance Procedures 1. QWEST will perform all tests as laid out in Paragraphs 2, 3 and 4. The tests should follow the requirements and meet the criteria as laid out in Paragraphs 5 and 6. QWEST will use the test equipment and follow the testing standards as laid out in Paragraph 7. QWEST will provide test data to WORLDCOM according to the standards as laid out in Paragraph 8. 2. QWEST will perform two states of testing during the construction of a new fiber cable route. Initially, OTDR tests will be taken from one direction because both ends of the cable may not have connectors. As son as fiber connectivity has been achieved to both regen sites. QWEST will verify and record the continuity of all fibers. During this time, QWEST will take and record power level readings on all fibers at both wave lengths in both directions. QWEST will then begin bi-directional OTDR testing of all fibers. When requested in the following Paragraphs, QWEST will provide WORLDCOM with copies of the OTDR traces on diskette recorded according to the standards in Paragraph 8. 3. During the initial construction, it is only possible to measure the fiber from one direction. Because of this, splices will be qualified during initial construction by being measured with an OTDR from only one direction. The pigtails will also be qualified at this stage using an OTDR and a 1 km launch reel. All measurements at this stage in construction will be taken at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm. a. A 1 km launch reel will be attached between the OTDR and the pigtail. The loss of the pigtail splice and connector will be measured and recorded. QWEST will provide WORLDCOM with a copy of the OTDR trace of the pigtail stored on diskette. b. As splice points are completed, OTDR measurements of the splice losses will be made and recorded. These measurements MUST BE MADE AFTER THE SPLICE HANDHOLE OR MANHOLE IS CLOSED in order to check for macro-bending problems. c. When pigtails are attached to the opposite side of the cable, the pigtail test will be performed for that site. 4. After QWEST has provided end-to-end connectivity on the fibers, bi-directional end-to-end testing will be done. Continuity tests will e done to verify that no fibers have been "frogged" or crossed in any of the splice points. Loss measurements will be recorded using a laser source and a power meter. OTDR traces will be taken and splice loss measurements will be recorded. QWEST will also store OTDR traces on diskette. a. It is imperative to verify that all fibers have one-to-one continuity on the new cable. This should be done at the fiber level, not just the pigtail level. For each pigtail, an HE-NE laser will be used to verify fiber color and buffer tube color. Once the fiber color and buffer tube color have been recorded, a laser light course will be attached and a power meter reading will be taken at the far end. Then, at the far end, an HE-NE laser should be used to verify the fiber color and the buffer tube color of the fiber receiving the light. Then power level readings should be taken in the opposite direction. The power measurements should be made at both ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm. b. OTDR traces should be taken in both directions at both ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Loss measurements for each splice point should be measured and recorded in both directions. These loss values should then be averaged. The traces for all fibers should be recorded on diskette and provided to WORLDCOM. 5. The test requirements for the initial uni-directional testing are as follows (for all testing, it is critical that all test connections are clean during all testing procedures): a. The loss value of the pigtail connector and its associated splice will not exceed ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB. For values greater than this, the splice will be broken and respliced until an acceptable loss value is achieved. If, after five attempts, QWEST is not able to produce a loss value less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB, the splice will be marked as Out-of-Spec ("OOS") and will be initialed by WORLDCOM representative on the data sheet. WORLDCOM will then make a decision as to how to act upon this condition. b. The objective for each splice is a loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB. Since this may not always be achievable, when measured in one direction with an OTDR, a loss of less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB will be acceptable. If, after three attempts, QWEST is not able to produce a loss value of less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB, then ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB will be acceptable. If, after two additional attempts, a value of less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB is not achievable, then the splice will be marked as OOS and initiated by WORLDCOM representative on the data sheet. It should be noted that final acceptance of a splice is made based on bi-directional OTDR data. Since this data is not available until construction is complete, and a gauge for performance is needed during construction, the value of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB will be satisfactory during this initial phase. If bi-directional OTDR data proves to be unacceptable, QWEST will have to take measures to remedy the situation. 6. The test requirements for the final bi-directional testing are as follows (for all testing, it is critical that all test connections are clean during all testing procedures): a. The continuity test should prove that there is a one-to- one correspondence of all fibers. Any "frogs" or fibers that cross in route will be remedied by QWEST. b. Bi-directional OTDR data will be the tool used to make final acceptance of the fibers. The average loss of each splice should not exceed ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB. Any splice points that exceed this value will be marked OOS and initialed by WORLDCOM representative on the data sheet. WORLDCOM will then make a decision as to how to act upon this condition. 7. The OTDRs that are acceptable for testing are the ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or compatible. These must have a floppy disk drive for storing the trace files. Again, it should be noted that it is vital that during all tests (OTDR, power meter, etc.) that all connectors are clean. This can dramatically affect results if this is not resolved. The following settings should be used during the various tests: For all OTDRs, the following index of refraction settings should be used: for AT&T fiber for Corning SMF-21 for Corning SMF-28 for Sumitomo fiber for Corning SMF-LS TD1000A ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Pigtail ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Uni-Directional ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Bi-Directional ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## For spans which are longer than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## km between regens, a ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## will be required set at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## km range setting. Bi-directional data will only be required at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm. 8. On the attached data sheets, all cable information must be filled in by QWEST and verified by WORLDCOM representative. These three forms are to contain the following information: a. Form #RLA-1-101995 is used to verify fiber continuity from end-to-end. In addition, the power level readings taken with a laser source and power meter must be recorded for every fiber on this sheet. In the column marked "fiber," the fiber color must be recorded. In the buffer column, the buffer tube or ribbon color must be recorded. The pigtail column is for recording the pigtail number which is attached to that particular fiber. On the opposite side of the page the corresponding values at the far end of the cable must be recorded. Each fiber between two sites should fill up both sides of the page, so that a total of 24 fibers will fit on each sheet. Additional sheets may be used if needed. The laser source power at both ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm must be recorded, followed by the received power at the far end of the cable. b. Form #RLA-2-101995 is for recording the loss at each splice point during initial construction, as well as the bi-directional test data taken as a final measurement on a cable installation. One sheet should be used for each fiber. The distance from site A must be recorded for all splice points. Each attempt made on a particular splice point must be noted with the value measured by the OTDR in one direction. OOS splices will be initiated by WORLDCOM representative. For the bi-directional OTDR testing, distance from site A must be recorded for each splice point. The loss at each splice point must be recorded at both wave lengths in both directions on the spaces provided. QWEST must then average these numbers to obtain the average splice loss at each splice point for the fiber. Again, OOS splices will be initialed by WORLDCOM representative. c. Form #RLA-3-10995 is used to record information about the fiber cable between two sites. One sheet should be used for each pair of sites. Cable manufacturer, cable type (buffer/ribbon), glass type, cable reel number, number of fibers, and number of fibers per tube must be recorded for each section of cable between splice points. The distance from site A must be recorded for each splice point. The distance value may be written in at the same time the OTDR data is being accumulated. d. OTDR traces taken for bi-directional testing and the OTDR traces of the pigtail launch splice must be recorded on floppy diskette. The eight-character file name, plus three-character file extension name should follow this example: For bi-directional trade data, assume an OTDR reading is being taken from Los Angeles to Lemon. (i) Look up the four-letter alpha abbreviation for the site the OTDR is shooting from; i.e., Los Angeles = LSAN. Filename = LSAN; (ii) Look up the four-letter alpha abbreviation for the site the OTDR is shooting from; i.e., Lemon = LMAN. Only use the first two in the file name. Filename = LSANLM; (iii) The next character indicates the cable number. For sites where there is only one cable, this will be the number one (1). If there are multiple cables, then the second cable will be number two (2), etc. Assuming there is only one cable between Los Angeles and Lemon, the file name is: Filename = LSANLM1; (iv) The next character indicates the wave length the trace is being shot at. If the trace is at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm, the number will be three (3). If the trace is a ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm, this number will be a five (5). Assuming that the reading between Los Angeles and Lemon is being taken at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm, the file name is: Filename = LSANLM13; (v) The three-digit file extension is used to indicate the fiber number that trace is being shot on. Fiber number one (1) is noted as "001." Fiber number 23 is noted as "023." Assuming that the trace is being taken on fiber number six (6), we now have a complete file name. Filename = LSANLM13.006. For a trace being taken from Lemon to Los Angeles at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## on fiber 17, the filename would be: Filename = LMONLS15.017. For pigtail/launch trade data, assume an OTDR reading is being taken from Los Angeles. (i) Look up the four-letter alpha abbreviation for the site the OTDR is shooting from; i.e., Los Angeles = LSAN. Filename = LSAN; (ii) The next three characters of the file name will be "PIG" to indicate that this is a trace of the pigtail. Filename = LSANPIG; (iii) The next character indicates the cable number. For sites where there is only one cable, this will be the number one (1). If there are multiple cables, then the second cable will be number two (2), etc. Assuming there is only one cable between Los Angeles and Lemon, the file name is: Filename = LSANPIG1; (iv) The three-digit file extension is used to indicate the fiber number that race is being shot on. Fiber number one (1) is noted as "001." Fiber number 23 is noted as "023." Assuming that the trace is being taken on fiber number six (6), we now have a complete file name. Filename = LSANPIG1.006. For trace being taken from Lemon to Los Angeles on fiber 17, the filename would be: Filename = LMONPIG.017. EXHIBIT E WorldCom Fiber Specifications [This exhibit contains product specification information that is largely set forth in graphic format] EXHIBIT F Exceptions to Warranty None EXHIBIT G EXISTING REGENERATOR SITE LOCATIONS Existing regenerator site locations on railroad right-of-way San Jose to Salt Lake City. SITE MP LOCATION FACILITY OWNER RAILROAD 1 Niles 40.60 DA MCI Southern Pacific 2 Richmond 13.96 A MCI Southern Pacific 3 Benecia 34.98 A MCI Southern Pacific 4 El Mira 60.68 A MCI Southern Pacific 5 Sacramento 86.37 A MCI Southern Pacific 6 Loomis 114.20 A MCI Southern Pacific 7 New England 137.47 A MCI Southern Pacific 8 Blue Canyon 165.33 A MCI Southern Pacific 9 Norden 190.76 A MCI Southern Pacific 10 Floriston 222.55 A MCI Southern Pacific 11 Vista 248.97 A MCI Southern Pacific 12 Gilpin 269.29 A MCI Southern Pacific 13 Hazen 287.00 A MCI Southern Pacific Parran 313.34 A MCI Southern Pacific Lovelock 340.20 A MCI Southern Pacific Ry Patch 366.07 A MCI Southern Pacific Mill City 388.38 A MCI Southern Pacific Winnemucca 413.53 A MCI Southern Pacific Preble 439.09 A MCI Southern Pacific Mote 466.84 A MCI Southern Pacific Argenta 488.98 A MCI Southern Pacific Beowawe 510.40 A MCI Southern Pacific Carlin 536.97 A MCI Southern Pacific Osino 562.07 A MCI Southern Pacific Deeth 589.21 A MCI Southern Pacific Wells 717.03 MCI Southern Pacific Ventosa 740.32 MCI Union Pacific Shafter 766.04 MCI Union Pacific Pilot 795.30 MCI Union Pacific Salduro 820.77 MCI Union Pacific Knolls 845.51 MCI Union Pacific Low 870.11 MCI Union Pacific Burmester 896.78 MCI Union Pacific EQ 911.45=766.42 MCI Union Pacific Saltair 776.10 MCI Union Pacific Salt Lake City MCI Union Pacific Note: Between Wells and Wendover, Nevada there are several US Sprint regenerators. They are at same locations as MCI because power sources are very limited. EXHIBIT H WORLDCOM CONDUIT SYSTEM DESCRIPTION ROUTE DESCRIPTION: THE ROUTE BEGINS AT A POINT NEAR PEVELY, MISSOURI, AND PROCEEDS IN A NORTHEASTERLY DIRECTION TO A POINT APPROXIMATELY 10 MILES SOUTHEAST OF INDIANAPOLIS, INDIANA NEAR INDIANAPOLIS, IN. APPROX. 245 MILES PEVELY, MO. EXHIBIT I MAINTENANCE AGREEMENT THIS MAINTENANCE AGREEMENT (this "Agreement") is entered into this ____ day of February, 1996 by and between QWEST COMMUNICATIONS CORPORATION, a Delaware corporation ("QWEST"), and WORLDCOM NETWORK SERVICES, INC., a Delaware corporation ("WORLDCOM"). RECITALS A. QWEST and WORLDCOM are party to that certain IRU Agreement dated February ___, 1996, providing, among other things, (i) a grant by QWEST to WORLDCOM of an indefeasible right of use ("IRU") in certain fibers in the QWEST System; and (ii) a grant by WORLDCOM to QWEST of an option to elect to obtain an IRU in an installed, empty innerduct fiber optic conduit between Pevely, Missouri and Indianapolis, Indiana (the "QWEST Conduit") in the WORLDCOM Conduit System. Capitalized terms used herein and not otherwise defined shall have the meaning set forth in the IRU Agreement. B. QWEST and WORLDCOM have agreed in the IRU Agreement to enter into this reciprocal Agreement to provide for the maintenance of (i) Segments of the QWEST System and (ii) the QWEST Conduit. Accordingly, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I. GENERAL 1.1 QWEST or WORLDCOM shall provide Scheduled and Unscheduled Maintenance, as defined in Section 1.2 herein, on Segments 1 through 7 on the QWEST System on the terms and conditions set forth herein. The party responsible for operating and maintaining certain Segments of the QWEST System or the QWEST Conduit shall be referred to herein as the "Service Provider." The party receiving benefit from the Service Provider shall be referred to herein as the "Service Recipient." QWEST shall be the Service Provider and WORLDCOM shall be the Service Recipient for Segments 1, 2, 2A and 3. Subject to Sections 1.2 and 1.3 of the IRU Agreement and upon completion thereof, QWEST shall be the Service Provider and WORLDCOM shall be the Service Recipient for Segments 4, 6 and 7. Subject to Section 1.2 of the IRU Agreement and upon completion thereof, WORLDCOM shall be the Service Provider and QWEST shall be the Service Recipient for Segment 5. Subject to Section 5.1 of the IRU Agreement, WORLDCOM shall be the Service Provider and QWEST shall be the Service Recipient for the QWEST Conduit. 1.2 (a) Routine maintenance and repair of the QWEST System or QWEST Conduit, as the case may be, shall be performed by or under the direction of Service Provider ("Scheduled Maintenance"), at Service Provider's reasonable discretion. Scheduled maintenance shall include the following activities: (i) Patrol of Segments of QWEST System route on a regularly scheduled basis; (ii) Maintenance of a "Call-Before-You-Dig" program and all required and related cable locates; (iii) Sign postings along the QWEST System or QWEST Conduit, as the case may be, right-of-way with the number of the local "Call Before You Dig" organization and the 800 number for Service Provider's "Call Before You Dig" program; and (iv) Assignment of fiber maintenance technicians to locations along the route of the QWEST System or QWEST Conduit, as the case may be. (b) Maintenance and repair of the QWEST System or QWEST Conduit, as the case may be, which is not Scheduled Maintenance ("Unscheduled Maintenance"), shall be performed by or under the direction of Service Provider. Notwithstanding Service Provider's obligation with respect to the QWEST Conduit, Service Recipient shall have the right to perform restoration and splicing of its cable (the "QWEST Cable") and/or fibers contained in the QWEST Conduit. If Service Recipient elects to perform restoration and splicing on the QWEST Cable and/or fibers, Service Provider shall open the steel conduit and provide access to the QWEST Cable to Service Recipient. Such opening of the steel conduit and access to the QWEST Cable shall be done by Service Provider expeditiously. Service Recipient agrees that WORLDCOM shall be in control of any restoration scene involving the QWEST Conduit. Unscheduled Maintenance shall consist of: (i) "Emergency Unscheduled Maintenance" in response to an alarm identification by Service Provider's NCC (as defined in Section 1.4 below), notification by Service Recipient or notification by any third party of any failure, interruption or impairment in the operation of the QWEST System or QWEST Conduit, as the case may be, or any event imminently likely to cause the failure, interruption or impairment in the operation of the QWEST System or the QWEST Conduit, as the case may be. (ii) "Non-Emergency Unscheduled Maintenance" in response to any potential service-affecting situation to prevent any failure, interruption or impairment in the operation of the QWEST System or QWEST Conduit, as the case may be. Service Recipient shall immediately report the need for Unscheduled Maintenance to Service Provider in accordance with procedures promulgated by Service Provider from time to time. Service Provider will log the time of Service Recipient s report, verify the problem and will dispatch personnel as early as possible to take corrective action. 1.3 It is understood that Service Provider's maintenance and repair duties under this Agreement shall not include maintenance of Service Recipient's electronics, nor do maintenance and repair duties include replacement of equipment, materials or facilities. The maintenance of electronics and the cost of replacement of equipment, materials and facilities shall be borne by Service Recipient. 1.4 Service Provider shall operate and maintain a Network Control Center ("NCC") staffed twenty-four (24) hours a day, seven (7) days a week by trained and qualified personnel. Service Provider's maintenance employees shall be available for dispatch twenty-four (24) hours a day, seven (7) days a week. Service Provider will use reasonable efforts to have its first maintenance employee at the site requiring Emergency Unscheduled Maintenance activity within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## hours after the time Service Provider becomes aware of an event requiring Emergency Unscheduled Maintenance. Service Provider shall maintain a toll-free telephone number to contact personnel at the NCC. Service Provider's NCC personnel shall dispatch maintenance and repair personnel along the system to handle and repair problems detected in the QWEST System or QWEST Conduit, as the case may be, (i) through the NCC's remote surveillance equipment, (ii) through the Service Recipient's remote surveillance equipment and upon notification by Service Recipient to Service Provider, or (iii) upon notification by a third party. 1.5 Service Recipient shall utilize an Operations Escalation List, as updated from time to time to report and seek immediate initial redress of exceptions noted in the performance of Service Provider in meeting maintenance service objectives. 1.6 Service Recipient will, as necessary, arrange for unescorted access for Service Provider to all sites of the QWEST System or the QWEST Conduit, as the case may be, subject to applicable contractual, underlying, real property and other third-party limitations and restrictions. 1.7 In performing its services hereunder, Service Provider shall take workmanlike care to prevent impairment to the signal continuity and performance of the QWEST System or QWEST Conduit, as the case may be. The precautions to be taken by Service Provider shall include notification to Service Recipient. In addition, Service Provider shall reasonably cooperate with Service Recipient in sharing information and analyzing the disturbances regarding the Cable or the QWEST Cable, as the case may be, and/or fibers. In the event that any Scheduled or Unscheduled Maintenance hereunder requires a traffic roll or reconfiguration involving cable, fiber, electronic equipment, or regeneration or other facilities of the Service Recipient, then Service Recipient shall, at Service Provider's reasonable request, make such personnel of Service Recipient available as may be necessary in order to accomplish such maintenance, which personnel shall coordinate and cooperate with Service Provider in performing such maintenance as required of Service Provider hereunder. 1.8 Service Provider shall use its best effort to notify Service Recipient ten (10) days prior to the date of any Scheduled Maintenance. In the event that Scheduled Maintenance is canceled or delayed for whatever reason as previously notified, Service Provider shall notify Service Recipient at Service Provider's earliest opportunity, and will comply with the provisions of the previous sentence to reschedule any delayed activity. ARTICLE II. FACILITIES 2.1 Service Provider shall maintain Segment(s) in a manner which will permit normal operation of the equipment associated with each Segment. 2.2 Service Provider shall perform appropriate Scheduled Maintenance on the Cable and QWEST Cable in accordance with Service Provider's then current preventative maintenance procedures, which shall not substantially deviate from industry practice. 2.3 Service Recipient will perform all maintenance on Service Recipient equipment. 2.4 In no event shall Service Recipient attempt to open the pipeline or other facility in which the QWEST Conduit is encased. ARTICLE III. CABLE/FIBERS 3.1 Subject to the provisions of Section 3.2 hereof, Service Provider shall maintain the Cable and the QWEST Cable, as the case may be, in good and operable condition and shall repair the Cable and QWEST Cable, as the case may be, in a workmanlike manner pursuant to Section 3.4 hereof. 3.2 Service Provider shall have qualified representatives on site any time Service Provider has knowledge that another person or entity is crossing the Cable or QWEST Cable, as the case may be, or digging within five (5) feet of the Cable or QWEST Cable, as the case may be. 3.2 Service Provider maintenance employees shall be responsible for correcting or repairing cable discontinuity or damage, including but not limited to, Emergency Unscheduled Maintenance of the Cable or QWEST Cable, as the case may be. Service Provider shall use reasonable efforts to repair cable traffic-affecting discontinuity within four (4) hours after the Service Provider maintenance employee's arrival at the problem site. Service Provider shall maintain sufficient capability to teleconference with Service Recipient during an Emergency Unscheduled Maintenance in order to provide continuous communication. Within twenty-four (24) hours after completion of an Emergency Unscheduled Maintenance, Service Provider shall commence its planning for permanent repair, shall notify Service Recipient of such plans, and shall implement such permanent repair within an appropriate time thereafter. Restoration of open fibers on fiber strands not immediately required for service shall be completed on a mutually-agreed-upon schedule. If the fiber is required for immediate service, the repair shall be scheduled for the next available Planned Service Work Period (PSWP) weekend. 3.4 Service Provider shall comply with the Splicing Specifications as provided in Exhibit D to the IRU Agreement. Service Provider shall provide to Service Recipient any modifications to these Specifications for Service Recipient's approval, which shall not be unreasonably withheld. 3.5 Service Provider's representatives that are responsible for initial restoration of a cut cable shall carry on their vehicles the appropriate equipment to be able to quickly put the cut cable back together using a temporary splice. The objective is to get the cut cable back in an operating condition in as little time as possible. Service Provider shall also maintain an inventory of spare cable in storage facilities supplied and maintained by Service Provider at strategic locations to facilitate timely restoration; provided that such inventory of cable shall be as provided on cable reel trailers by QWEST to the Service Provider at QWEST's initial cost, subject to subsequent reimbursement to QWEST to the extent that the cost of such fiber is allocated to other Interest Holders (as that term is defined in Section 7.2 below) in connection with the allocation of the Costs associated with Unscheduled Maintenance pursuant to Section 7.2. ARTICLE IV. PLANNED SERVICE WORK PERIOD (PSWP) 4.1 Scheduled Maintenance which is reasonably expected to produce any signal discontinuity must be coordinated between the parties. Generally, this work should be scheduled after midnight and before 6:00 a.m. local time. Major system work such as fiber rolls and hot cuts will be scheduled for PSWP weekends. A calendar showing approved PSWP weekends will be agreed upon in the last quarter of every year for the year to come. The intent is to avoid jeopardy work on the first and last weekends of the month and high traffic holidays. ARTICLE V. RESTORATION 5.1 Service Provider shall use its best efforts to respond to any interruption of service or a failure of the fibers to perform in accordance with the specifications in Exhibit D (in any event, an "Outage") as quickly as possible in accordance with the procedures set forth herein. In the event the Outage is not cured within twelve (12) hours, Emergency Unscheduled Maintenance may be performed by Service Recipient ("Service Recipient Emergency Unscheduled Maintenance"), provided that the parties have agreed in writing prior to such Outage as to the emergency operational procedures, notifications and other limitations applicable to such Service Recipient Emergency Unscheduled Maintenance. The written agreement regarding Service Recipient Unscheduled Emergency Maintenance shall provide, among such other terms as the parties may agree upon, that (i) Service Recipient may access any part of the QWEST System or QWEST Conduit, as the case may be, to perform such service subject to underlying real property or other contractual rights applicable to any such location; (ii) in the event Service Recipient requires Service Provider personnel to unlock any facility, Service Provider shall cooperate fully with Service Recipient to allow Service Recipient access; and (iii) in those parts of the QWEST System or QWEST Conduit, as the case may be, that Service Recipient does not require Service Provider personnel to enter Service Provider facilities, Service Recipient shall provide Service Provider with oral notification of those parts of the QWEST System or QWEST Conduit, as the case may be, that were entered as soon as possible. Service Recipient shall only use the preceding rights to enter the QWEST System or QWEST Conduit, as the case may be, to the extent necessary for the emergency situation and in a manner consistent with the written agreement of the parties pertaining thereto. Service Provider shall reimburse Service Recipient its Costs, as defined in Section 7.3 ) hereof, of providing such Service Recipient Emergency Unscheduled Maintenance. Service Recipient shall provide supporting documentation for such Costs. 5.2 (a) When restoring a cut Cable in the QWEST System, the parties agree to work together to restore all traffic as quickly as possible. Service Provider, immediately upon arriving on the site of the cut, shall determine the course of action to be taken to restore the Cable and shall begin restoration efforts. Service Provider shall initially splice the lit fibers in a buffer tube of its choice. Once continuity is established in such lit fibers allowing transmission systems to come back on line, Service Provider shall then begin splicing a buffer tube chosen by Service Recipient to restore all lit fibers in such buffer tube. Thereafter, Service Provider will alternate this process between Service Provider and Service Recipient chosen buffer tubes until all lit fibers in all buffer tubes are spliced and all traffic restored. (b) When working on the WORLDCOM Conduit System, Service Provider immediately upon arriving on the site of the cut shall determine the course of action to be taken to restore the cables (including the QWEST Cable) therein and shall begin restoration efforts. Service Provider will lay out the restoration cables and shall initially splice the lit fibers in the Service Provider's cables. Once all of Service Provider's lit fibers are restored, Service Provider will immediately begin splicing and restoration of the lit fibers in the QWEST Cable: provided that throughout the restoration process QWEST shall be permitted to participate in the restoration of the QWEST Cable as provided in Section 1.2(b). 5.3 Emergency restoration splicing has as its goal to get service up as quickly as possible. This requires the use of some type of mechanical splice, such as the "3M Fiber Lock" to complete the temporary restoration. Permanent restorations will take place as soon as possible after the temporary splice is complete. 5.4 If at any time it becomes apparent that an Outage is going to extend beyond eight (8) hours, the corresponding Vice President of each company will work together to determine a plan to restore the Cable or QWEST Cable, as the case may be. 5.5 Subject to the provisions of Article XXVIII of the IRU Agreement, in the event all or any part of the QWEST System or QWEST Conduit, as the case may be, shall require replacement as a result of the negligent acts or omissions of a party (without contribution to such negligence by the other party) or intentional misconduct of either party, its agents or subcontractors. Such replacement shall be made by Service Provider at the earliest possible time, at the sole cost of the party hereto which is responsible, directly or by delegation, for such negligence or intentional misconduct. In the event all or any part of the QWEST System or QWEST Conduit, as the case may be, shall at any time during the term be found to have not been designed, built, installed or constructed in material accordance with the provisions of the IRU Agreement and Service Recipient reasonably demonstrates that such noncompliance materially and adversely affects the expected economic life of or operating specifications of the fibers, then Service Provider shall within ninety (90) days after such discovery, at its sole cost and expense, correct such defect. ARTICLE VI. SUBCONTRACTING 6.1 Service Provider may subcontract for maintenance and restoration services hereunder. Notwithstanding any other provisions of this Agreement, Service Provider shall require the subcontractor(s) to meet maintenance and repair standards for the QWEST System or QWEST Conduit, as the case may be, which shall be at least as high as those standards utilized by Service Provider for the maintenance and repair of other portions of its communications systems. The use of any such subcontractor shall not relieve Service Provider of any of its obligations hereunder. In the event Service Provider determines to subcontract for a period exceeding sixty (60) days any substantial portion of its maintenance or restoration work on the QWEST System or QWEST Conduit, as the case may be, it shall give Service Recipient the opportunity to perform such work if Service Recipient agrees to match the rates offered for such work by a mutually approved qualified vendor. ARTICLE VII. FEES AND COSTS 7.1. Scheduled Maintenance Fees. Subsequent to the Acceptance Date for each Segment, Service Recipient shall pay to Service Provider for performing Scheduled Maintenance an annual fee of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for each of Segments 1, 2, 2A and 3 during the Initial Term. Subject to Sections 1.2 and 1.3 of the IRU Agreement and subsequent to the Acceptance Date for each Segment, Service Recipient shall pay to Service Provider for performing Scheduled Maintenance an annual fee of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for each of Segments 4, 6 and 7 during the Initial Term. Subject to Section 1.2 of the IRU Agreement and subsequent to the Acceptance Date for each Segment, Service Recipient shall pay to Service Provider for performing Scheduled Maintenance an annual fee of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for Segment 5 during the Initial Term. Subject to Section 5.1 of the IRU Agreement and subsequent to the QWEST Conduit Acceptance Date, Service Recipient shall pay to Service Provider for performing Scheduled Maintenance an annual fee of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for the QWEST Conduit. A quarter of the first such fees for Segments 1 through 7 hereunder will be due and payable thirty (30) days after the Acceptance Date for each Segment. A quarter of the first such fee for the QWEST Conduit will be due thirty (30) days after the QWEST Conduit Acceptance Date. Thereafter, one quarter of each such fee shall be due quarterly during the Initial Tenn. All fees shall be paid by Service Recipient within thirty (30) days of receipt of invoice therefor. Fees hereunder may be adjusted annually, at Service Provider's sole discretion, beginning with the first anniversary date, for increases in the United States Bureau of Labor Statistics, CPI-U All Services Index (unadjusted), as originally published. Said adjustment shall be hereinafter referred to as "CPI-U Adjustment". Each fee, as adjusted by the CPI-U Adjustment, shall be equal to the product of the fee specified herein multiplied by the fraction (i) whose numerator is the CPI-U All Services for March of the previous calendar year for which the adjustment to the fee is being made, and (ii) whose denominator is the CPI-U All Services for March of the preceding year. The adjusted fee shall remain in effect until the next annual fee is due, when a new adjusted fee fixed pursuant to this provision shall become effective. In no event shall the amount of the fee as adjusted pursuant to this provision be less than the amount of fee in effect for the immediately-preceding year. The parties agree that the Index for March 1995 is defined as 151.4. In the event that the Bureau of Labor Statistics (or any successor organization) changes the current base of the CPI-U from 1982-84 = 100, the calculation of a fee under this provision shall be adjusted to ensure that Service Provider receives the same amount as it would have had, had the base not been changed. In the event the Bureau of Labor Statistics or any successor organization no longer publishes the CPI-U, QWEST shall, subject to WORLDCOM's agreement (which shall not be unreasonably withheld), designate the statistical index it deems most appropriate for calculation of adjustments to a fee and, from the date the CPI-U ceased to be published, such index shall be used to make adjustments in a fee under this provision. 7.2 Unscheduled Maintenance Fees If the aggregate amount of the Costs of Unscheduled Maintenance required as a result of any single event or multiple, closely related events is less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , such Costs shall be borne by Service Provider. For any other Unscheduled Maintenance, the Costs thereof shall be allocated among the various owners and holders of an IRU or equivalent interest (each, an "Interest Holder") in the conduit, cable and/or fibers affected thereby as follows: (i) Costs of Unscheduled Maintenance solely to or affecting a conduit or cable which houses fibers of a single Interest Holder shall be borne 100% by such Interest Holder; (ii) Costs of Unscheduled Maintenance to or affecting a conduit which houses multiple innerduct conduits, not including such Costs attributable to the repair or replacement of fiber therein, shall be borne proportionately by the Interest Holders in each of the affected innerduct conduits based on the ratio that such affected conduit bears to the total number of affected innerduct conduits, and (iii) Costs of Unscheduled Maintenance attributable to the repair or replacement of fiber, including the acquisition, installation, inspection, testing and splicing thereof, shall be borne proportionately by the Interest Holders in the affected fiber, based on the ratio that the number of affected fibers subject to the interest of each such Interest Holder bears to the total number of affected fibers. All such Costs which are allocated to Service Recipient pursuant to the foregoing provisions shall be the responsibility of and paid by Service Recipient within thirty (30) days after receipt from Service Provider of an invoice therefor. 7.3 Costs. "Costs" means the actual, direct costs paid or payable in accordance with the established accounting procedures generally used by WORLDCOM or QWEST, as the case may be, and which it utilizes in billing third parties for reimbursable projects, which costs shall include, without limitation, the following: (i) labor costs, including wages and salaries, and benefits and overhead allocable to such labor costs (overhead allocation percentage shall not exceed the lesser of (x) the percentage QWEST or WORLDCOM, as applicable, allocates to its internal projects or ( ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , and (ii) other direct costs and out-of-pocket expenses on a pass- through basis (e.g., equipment, materials, supplies, contract services, etc.). ARTICLE VIII. INDEMNIFICATION 8.1 Subject to the provisions of Article IX, QWEST hereby releases and agrees to indemnify, defend, protect and hold harmless WORLDCOM, its employees, officers, directors, agents, shareholders and affiliates. from and against and assumes liability for: (a) Any injury, loss or damage to any person, tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs), to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of QWEST, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors in connection with its performance under this Agreement; (b) Any claims, liabilities or damages arising out of any violation by QWEST of regulations, rules, statutes or court orders of any local, state or federal governmental agency, court or body in connection with its performance under this Agreement; and (c) Any claims, liabilities or damages arising out of any interference with or infringement of the rights of any third party as a result of WORLDCOM's use of the WORLDCOM IRU and the WORLDCOM Fibers in accordance with the provisions of this Agreement. 8.2 Subject to the provisions of Article IX, WORLDCOM hereby releases and agrees to indemnify, defend, protect and hold harmless QWEST, its employees, officers, directors, agents, shareholders and affiliates, from and against, and assumes liability for: (a) Any injury, loss or damage to any person, tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs), to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of WORLDCOM, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors in connection with its performance under this Agreement; (b) Any claims, liabilities or damages arising out of any violation by WORLDCOM or regulations, rules, statutes or court orders of any local, state or federal governmental agency, court or body in connection with its performance under this Agreement; and (c) Any claims, liabilities or damages arising out of any interference with or infringement of the rights of any third party as a result of QWEST's use of the QWEST Conduit accordance with the provisions of this Agreement. 8.3 The parties hereby expressly recognize and agree that each party's said obligation to indemnify, defend, protect and save the other harmless is not a material obligation to the continuing performance of the parties' other obligations, if any, hereunder. In the event that a party shall fail for any reason to so indemnify, defend, protect and save the other harmless, the injured party hereby expressly recognizes that its sole remedy in such event shall be the right to bring an arbitration proceeding pursuant to the terms of this Agreement against the other party for its damages as a result of the other party's said failure to indemnify, defend, protect and save harmless. These obligations shall survive the expiration or termination of this Agreement. 8.4 Nothing contained herein shall operate as a limitation on the right of either party hereto to bring an action for damages against any third party, including indirect, special or consequential damages, based on any acts or omissions of such third party as such acts or omissions may affect the construction, operation or use of the WORLDCOM Fibers or the QWEST System or the WORLDCOM Conduit System or the QWEST Conduit, as the case may be; provided, however, that each party hereto shall assign such rights or claims, execute such documents and do whatever else may be reasonably necessary to enable the other party to pursue any such action against such third party. ARTICLE IX. LIMITATION OF LIABILITY 9.1 Notwithstanding any provision of this Agreement to the contrary, in no event shall either party be liable to the other party for any special, incidental, indirect, punitive or consequential damages, whether foreseeable or not, arising out, of or in connection with transmission interruptions or problems, or any interruption or degradation of service, including, but not limited to, damage or loss of property or equipment, loss of profits or revenue, cost of capital, cost of replacement services, or claims of customers, whether occasioned by any construction, reconstruction, relocation, repair or maintenance performed by, or failed to be performed by the other party or any other cause whatsoever, including, without limitation, breach of contract, breach of warranty, negligence or strict liability all claims for which damages are hereby specifically waived. ARTICLE X NOTICE 10.1 Except as provided in the Operations Escalation List, all notices and communications concerning this Agreement shall be addressed to the other party as follows: If to QWEST: QWEST Communications Corporation ATTENTION: President 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 with a copy to: QWEST Communications Corporation ATTENTION: General Counsel 555 Seventeenth Street Denver, Colorado 80202 Telephone No,: (303) 291-1400 Facsimile No.: (303) 291-1724 If to WORLDCOM: WORLDCOM, Inc. c/o WORLDCOM Network Services, Inc. ATTENTION: Vice President - Network Operations One Williams Center Tulsa, Oklahoma 74172 Facsimile No.: (918) 590-5598 and to: WORLDCOM Network Services, Inc. ATTENTION: Contract Administration One Williams Center Tulsa, Oklahoma 74172 Facsimile No.: (918) 590-3293 and, if claiming an event of default, with a copy to: Michael D. Cooke Hall, Estill, Hardwick, Gable, Golden & Nelson 310 S. Boston Avenue, Suite 400 Tulsa, Oklahoma 74105 Facsimile No.: (918) 594-0505 or at such other address as may be designated in writing to the other party. 10.2 Unless otherwise provided herein, notices shall be hand delivered, sent by registered or certified U.S. Mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to the addressee or its office when received at the address for notice specified above when hand delivered, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery services or three (3) days after deposit in the mail when sent by U.S. mail. ARTICLE XI. CONFIDENTIALITY 11.1 If the parties to this Agreement have entered into (or later enter into) a Confidentiality Agreement, the terms of such an agreement shall control and Section 11.1 of this Article shall not apply; however, if any such Confidentiality Agreement expires or is no longer effective at any time during the Term of this Agreement, this Section 11.1 shall be in effect during those periods. 11.2 In the absence of a separate Confidentiality Agreement between the parties, if either party provides confidential information to the other in writing and identified as such, the receiving party shall protect the confidential information from disclosure to third parties with the same degree of care accorded its own confidential and proprietary information. Neither party shall be required to hold confidential any information which (i) becomes publicly available other than through the recipient; (ii) is required to be disclosed by a governmental or judicial order, rule or regulation; (iii) is independently developed by the disclosing party; or (iv) becomes available to the disclosing party without restriction from a third party. These obligations shall survive expiration or termination of this Agreement. 11.3 Notwithstanding Sections 11.1 and 11.2 of this Article, confidential information shall not include information disclosed by the receiving party as required by applicable law or regulation; provided that the information disclosed is limited to the existence and general nature of the relationship between the parties, including, as required, the scope, approximate revenues, purposes and expectations related to such relationship and a description of any disputes relating thereto. Notwithstanding the foregoing, this Agreement may be provided to any governmental agency or court of competent jurisdiction to the extent required by applicable law. ARTICLE XII. FORCE MAJEURE 12.1 Neither party shall be in default under this Agreement to the extent that any delay in such party's performance is caused by any of the following conditions, and such party's performance shall be excused and extended during the period of any such delay: act of God; fire; flood; fiber, cable or other material shortages or unavailability or other delay in delivery not resulting from the responsible party's failure to timely place orders therefor (it being expressly acknowledged that the fiber optic cable that is being acquired for and installed in the QWEST System and that will include the WORLDCOM Fiber must include higher fiber counts than that necessary solely for the WORLDCOM Fiber in order to permit completion of the entire QWEST System), lack of delay in transportation" government codes, ordinances, laws, rules, regulations or restrictions (collectively, "Regulations") (but not to the extent the delay caused by such Regulations could be reasonably avoided by rerouting the Cable); war or civil disorder; failure of a third party to grant a required permit, easement or other required authorization for use of the intended right-of-way (provided that such required authorization was sought and pursued on a timely and reasonable best efforts basis) or any other cause beyond the commercially-reasonable control of such party, provided that the party claiming relief under this Article shall promptly notify the other in writing of the existence of the event relied on and the cessation or termination of said event. The party claiming relief under this Article shall exercise reasonable efforts to minimize the time for any such delay. ARTICLE XIII. ARBITRATION 13.1 Any dispute or disagreement arising between QWEST and WORLDCOM in connection with this Agreement which is not settled to the mutual satisfaction of QWEST and WORLDCOM within thirty (30) days from the date that either party informs the other in writing that such dispute or disagreement exists, shall be settled by arbitration in Kansas City, Missouri, in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect on the date that such notice is given. If the parties are unable to agree on a single arbitrator within fifteen (15) days, each party shall select an arbitrator and the two (2) arbitrators shall mutually select a third arbitrator, the three of whom shall serve as an arbitration panel. The decision of the arbitrator(s) shall be final and binding upon the parties and shall include written findings of law and fact, and judgment may be obtained thereon by either party in a court of competent Jurisdiction. Each party shall bear the cost of preparing and presenting its own case. The cost of the arbitration, including the fees and expenses of the arbitrator(s), shall be shared equally by the parties hereto unless the award otherwise provides. 13.2 The obligation herein to arbitrate shall not be binding upon any party with respect to requests for preliminary injunctions, temporary restraining orders or other similar temporary procedures in a court of competent jurisdiction to obtain interim relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution by arbitration of the actual dispute. It is not the intention of the parties that such injunctive procedures shall be in lieu of, or cause substantial delay to, any arbitration proceeding commenced under Section 13.1 above. ARTICLE XIV. WAIVER 14.1 The failure of either party hereto to enforce any of the provisions of this Agreement, or the waiver thereof in any instance, shall not be construed as a general waiver or relinquishment on its part of any such provision, but the same shall nevertheless be and remain in full force and effect. ARTICLE XV. ASSIGNMENT 15.1 Except as provided in Section 6.1, QWEST shall not assign, encumber or otherwise transfer this Agreement or its rights or obligations hereunder to any other party without the prior written consent of WORLDCOM, which consent will not be unreasonably withheld or delayed. QWEST shall have the right, without WORLDCOM's consent, to assign or otherwise transfer this Agreement (i) as collateral to any institutional lender to QWEST subject to the prior rights and obligations of the parties hereunder, (ii) to any parent, subsidiary or affiliate of QWEST, (iii) to any person, firm or corporation which shall control, be under the control of or be under common control with QWEST, or (iv) any corporation or other entity into which QWEST may be merged or consolidated or which purchases all or substantially all of the assets of QWEST; provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation, this Section 15.1; and provided further that, promptly following any such assignment or transfer, QWEST shall give WORLDCOM written notice identifying the assignee or transferee; and provided further that any such assignment or transfer shall be conditioned upon the corresponding assignment or transfer of QWEST's rights and obligations under the IRU Agreement. In the event of any permitted partial assignment of any rights hereunder, QWEST shall remain the sole point of contact with WORLDCOM. 15.2 Except as provided in 6.1, WORLDCOM shall not assign, encumber or otherwise transfer this Agreement or its rights or obligations hereunder to any other party without the prior written consent of QWEST, which consent will not be unreasonably withheld or delayed. WORLDCOM shall have the right, without QWEST's consent, to assign or otherwise transfer this Agreement (i) as collateral to any institutional lender to WORLDCOM subject to the prior rights and obligations of the parties hereunder, (ii) to any parent, subsidiary or affiliate of WORLDCOM, (iii) to any person, firm or corporation which shall control, be under the control of or be under common control with WORLDCOM, or (iv) any corporation into which WORLDCOM may be merged or consolidated or which purchases all or substantially all of the assets of WORLDCOM; provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation this Section 15.2; and provided further that, promptly following any such assignment or transfer, WORLDCOM shall give written notice identifying the assignee or transferee; and provided further that any such assignment or transfer shall be conditioned upon the corresponding assignment or transfer of WORLDCOM's rights and obligations under the IRU Agreement. In the event of any permitted partial assignment of any rights hereunder, WORLDCOM shall remain the sole point of contact with QWEST. 15.3 This Agreement and each of the parties' respective rights and obligations under this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and each of their respective permitted successors and assigns. ARTICLE XVI. GOVERNING LAW 16.1 This Agreement shall be governed by, and construed in accordance with the domestic laws of the State of Colorado, without reference to its choice of law principles. ARTICLE XVII. RULES OF CONSTRUCTION 17.1 The captions or headings in this Agreement are strictly for convenience and shall not be considered in interpreting this Agreement or as amplifying or limiting any of its content. Words in this Agreement which import the singular connotation shall be interpreted as plural, and words which import the plural connotation shall be interpreted as singular, as the identity of the parties or objects referred to may require. 17.2 Unless expressly defined herein, words having well known technical or trade meanings shall be so construed. All listing of items shall not be taken to be exclusive, but shall include other items, whether similar or dissimilar to those listed, as the context reasonably requires. 17.3 Except as set forth to the contrary herein, any right or remedy of WORLDCOM or QWEST shall be cumulative and without prejudice to any other right or remedy, whether contained herein or not. 17.4 Nothing in this Agreement is intended to provide any legal rights to anyone not an executing party of this Agreement. 17.5 This Agreement has been fully negotiated between and jointly drafted by the parties. 17.6 In the event of a conflict between the provisions of this Agreement and those of any Exhibit, the provisions of this Agreement shall prevail and such Exhibits shall be corrected accordingly. 17.7 All actions, activities, consents, approvals and other undertakings of the parties in this Agreement shall be performed in a reasonable and timely manner, it being expressly acknowledged and understood that time is of the essence in the performance of obligations required to be performed by a date expressly specified herein. Except as specifically set forth herein, for the purpose of this Article the normal standards of performance within the telecommunications industry in the relevant market shall be the measure of whether a party's performance is reasonable and timely. ARTICLE XVIII. ENTIRE AGREEMENT; AMENDMENT 18.1 This Agreement, together with the IRU Agreement, any Regeneration Sharing Agreement, and any Confidentiality Agreement entered into in connection herewith, constitutes the entire and final agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof (including, without limitation that certain letter agreement between the parties dated February 2, 1996) which are of no further force or effect. The Exhibits referred to herein are integral parts hereof and are hereby made a part of this Agreement. This Agreement may only be modified or supplemented by an instrument in writing executed by a duly authorized representative of each party. ARTICLE XIX. NO PERSONAL LIABILITY 19.1 Each action or claim against any party arising under or relating to this Agreement shall be made only against such party as a corporation and any liability relating thereto shall be enforceable only against the corporate assets of such party. No party shall seek to pierce the corporate veil or otherwise seek to impose any liability relating to, or arising from, this Agreement against any shareholder, employee, officer or director of the other party. Each of such persons is an intended beneficiary of the mutual promises set forth in this Article and shall be entitled to enforce the obligations of this Article. ARTICLE XX. CONFLICTS OF INTEREST 20.1 Neither party shall use any funds received under this Agreement for illegal purposes. Neither party shall pay any commission, fees or rebates to any employee of the other party, or favor any employee of such other party with gifts or entertainment of significant cost or value intended to influence the actions of such employee in a manner inconsistent with that employee's duty of loyalty to its employer. If either party has reasonable cause to believe that one of the provisions in this Article has been violated, it, or its representative, may audit the relevant books and records of the other party for the sole purpose of establishing compliance with such provisions. ARTICLE XXI. RELATIONSHIP OF THE PARTIES 21.1 The relationship between WORLDCOM and QWEST shall not be that of partners, agents or joint venturers for one another, and nothing contained in this Agreement shall be deemed to constitute a partnership or agency agreement between them for any purposes, including but not limited to federal income tax purposes. WORLDCOM and QWEST, in performing any of their obligations hereunder, shall be independent contractors or independent parties and shall discharge their contractual obligations at their own risk. ARTICLE XXII. DEFAULT 22.1 With respect to all payments required to be made by WORLDCOM hereunder, WORLDCOM shall be in default hereunder if such payment is not paid on the date due and payable hereunder, and from and after such date such unpaid amount shall bear interest until paid at a rate equal to the rate set forth in Article XXIV. With respect to all non- payment obligations, WORLDCOM shall be in default under this Agreement thirty (30) days after QWEST shall have given WORLDCOM written notice of such default unless WORLDCOM shall have cured such default or such default is otherwise waived within such thirty (30) days; provided, however, that where such default cannot reasonably be cured within such thirty (30) day period, if WORLDCOM shall proceed promptly to cure the same and prosecute such curing with due diligence, the time for curing such default shall be extended for such period of time as may be necessary to complete such curing. Events of default also shall include, but not be limited to, the making by WORLDCOM of a general assignment for the benefit of its creditors, the filing of a voluntary petition in bankruptcy or the filing of a petition in bankruptcy or other insolvency, protection against WORLDCOM which is not dismissed within ninety (90) days thereafter, or the filing by WORLDCOM of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution or similar relief. Any event of default by WORLDCOM may be waived under the terms of this Agreement at QWEST's option. Upon the failure by WORLDCOM to timely cure any such default after notice thereof from QWEST, QWEST may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such breach. Notwithstanding the above, if WORLDCOM certifies in good faith to QWEST in writing that a default has been cured, such default shall be deemed to be cured unless QWEST otherwise notifies WORLDCOM in writing within fifteen (15) days of receipt of such notice from WORLDCOM. 22.2. With respect to all payments required to be made by QWEST hereunder, QWEST shall be in default hereunder if such payment is not paid on the date due and payable hereunder, and from and after such date such unpaid amount shall bear interest until paid at a rate equal to the rate set forth in Article XXIV. With respect to all non- payment obligations, QWEST shall be in default under this Agreement thirty (30) days after WORLDCOM shall have given QWEST written notice of such default unless QWEST shall have cured such default or such default is otherwise waived within such thirty (30) days; provided, however, that where such default cannot reasonably be cured within such thirty (30) day period, if QWEST shall proceed promptly to cure the same and prosecute such curing with due diligence, the time for curing such default shall be extended for such period of time as may be necessary to complete such curing. Events of default shall also include, but not be limited to, the making by QWEST of a general assignment for the benefit of its creditors, the filing of a voluntary petition in bankruptcy or the filing of a petition in bankruptcy or other insolvency protection against QWEST which is not dismissed within ninety (90) days thereafter, or the filing by QWEST of any petition or answer seeking, consenting to or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution or similar relief. Any event of default by QWEST may be waived under the terms of this Agreement at WORLDCOM's option. Upon the failure by QWEST to timely cure any such default after notice thereof from WORLDCOM, WORLDCOM may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity, relating to such breach. Notwithstanding the above, if QWEST certifies in good faith to WORLDCOM in writing that a default has been cured, such default shall be deemed to be cured unless WORLDCOM otherwise notifies QWEST in writing within fifteen (15) days of receipt of such notice from QWEST. ARTICLE XXII. TERM 23.1 The initial term of this Agreement shall begin on the date hereof and terminate on a date ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years from the date hereof (the "Initial Term"). This Agreement shall be renewable for three succeeding additional ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## year terms (each, an "Additional Term") at the election of Service Recipient for the maintenance of each Segment of the QWEST System or the QWEST Conduit, as the case may be, provided by Service Provider hereunder. Any fees to be made under any such Additional Term shall be negotiated in good faith by both parties at the time of such renewal. 23.2 If this Agreement expires or terminates prior to the end of the Term of the IRU Agreement with respect to the QWEST Conduit or the QWEST System, the provisions of this Agreement relating to access by QWEST to the QWEST Conduit, or by WORLDCOM to the QWEST System for purposes of maintenance thereof, shall survive the expiration or termination hereof and continue to apply for the remaining Term of the IRU Agreement with respect to the QWEST Conduit and the QWEST System, respectively. ARTICLE XXIV. LATE PAYMENTS 24.1 In the event a party shall fail to make any payment under this Agreement when due, such amounts shall accrue interest, from the date such payment is due until paid, including accrued interest, at an annual rate equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## of the prime rate of interest published by The Wall Street Journal as the base rate on corporate loans posted by a percentage of the nation's largest banks on the date any such payment is due or, if lower, the highest percentage allowed by law. ARTICLE XXV. SEVERABILITY 25.1 If any term, covenant or condition contained herein shall, to any extent, be invalid or unenforceable in any respect under the laws governing this Agreement, the remainder of this Agreement shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. ARTICLE XXVI. THIRD PARTY WARRANTIES 26.1 In the event any maintenance or repairs to the QWEST System are required as a result of a breach of any warranty made by any manufacturers, contractors or vendors, QWEST, as applicable, shall pursue any remedies it may have against such manufacturers, contractors or vendors, and QWEST shall reimburse WORLDCOM's costs for any maintenance WORLDCOM has incurred as a result of any such breach of warranty to the extent the manufacturer, contractor or vendor has paid such costs. In the event any maintenance or repairs to the WORLDCOM Conduit System are required as a result of a breach of any warranty made by any manufacturers, contractors or vendors, WORLDCOM, as applicable, shall pursue any remedies it may have against such manufacturers, contractors or vendors. and WORLDCOM shall reimburse QWEST's costs for any maintenance QWEST has incurred as a result of any such breach of warranty to the extent the manufacturer, contractor or vendor has paid such costs. 27.1 This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. In confirmation of their consent and agreement to the terms and conditions contained in this Maintenance Agreement and, intending to be legally bound hereby, the parties have executed this Maintenance Agreement as of the date first above written. "QWEST": QWEST COMMUNICATIONS CORPORATION, a Delaware corporation By: Name: Douglas H. Hanson Title: President and Chief Executive Officer "WORLDCOM": WORLDCOM NETWORK SERVICES, INC., a Delaware corporation By: Name: Scott Sullivan Title: Chief Financial Officer EXHIBIT J Contract Pricing/Payment Schedule A. Allocated Segment Pricing (Segments 1, 2, 3, 4, 5 and 6) Distance Segment City Pairs Price 269 miles Segment 1 Dallas-Houston $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 749 miles Segment 2 Denver-El Paso $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 871 miles Segment 3 Santa Clara - Salt Lake City $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 1,889 miles Segments 1,2,3 $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 752 miles Segment 4 Oakland-Portland $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 691 miles Segment 5 Cleveland-Boston $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 182 miles Segment 6 Portland-Seattle $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 1,625 miles Segments 4,5,6 $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3,514 miles Segments 1,2,3,4,5,6 $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## B. Payment Schedule SEGMENT 1: DALLAS TO HOUSTON Assumed Distance: 269 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Payment 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 1 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 1 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 5. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 6. Due upon Acceptance Date of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 7. Due upon delivery of final "As-Builts" for Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 2: DENVER TO EL PASO Assumed Distance: 749 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 2 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 2 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 5. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 6. Due upon Acceptance Date of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 7. Due upon delivery of final "As-Builts" for Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 2A: LAMY TO SANTA FE Assumed Distance: 17 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 2A Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 2A fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 5. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 6. Due upon Acceptance Date of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 7. Due upon delivery of final "As-Builts" for Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 3: SANTA CLARA TO SALT LAKE CITY Assumed Distance: 871 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 3 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 3 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 5. Due upon ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % completion of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 6. Due upon Acceptance Date of Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 7. Due upon delivery of final "As-Builts" for Segment $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 4: OAKLAND TO PORTLAND Assumed Distance: 752 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Payment 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 4 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 4 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Aggregate monthly progress payments**: (a) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable ready conduit $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## (b) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable installed and spliced $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % As-Built Reserve $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 5: CLEVELAND TO BOSTON Assumed Distance: 691 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Payment 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 5 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 5 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Aggregate monthly progress payments**: (a) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable ready conduit $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## (b) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable installed and spliced $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % As-Built Reserve $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 6: PORTLAND TO SEATTLE Assumed Distance: 182 miles Allocated Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## Payment 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 6 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 2. Total Segment 6 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 3. Aggregate monthly progress payments**: (a) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable ready conduit $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## (b) $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable installed and spliced $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## 4. ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % As-Built Reserve $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## SEGMENT 7: KANSAS CITY TO ST. LOUIS Contract Price: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile Payment 1. Initial deposit of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of Segment 7 Contract Price $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile 2. Total Segment 7 fiber cost* $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile 3. Monthly progress payments: $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per foot of cable installed and spliced $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile 4. ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % As-Built Reserve $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile TOTAL $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile _________________________ * All payments for the cost of the WORLDCOM Fiber to be incorporated in each Segment are based on an assumed cost of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per fiber foot, or $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per 24 fiber foot, and assume ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % excess fiber for slack. Fiber cost for each Segment will be billed as QWEST receives invoices from the fiber vendor, but in no event shall the invoices to be paid by WORLDCOM for the WORLDCOM Fiber incorporated in any Segment exceed the amount reflected for each Segment as the total fiber cost for such Segment. ** Monthly progress payments not to be invoiced until construction starts between Roseville and Portland C. Incremental Fiber Cost Under Section 1.1(b). The incremental Cost to WORLDCOM of the additional twenty-four (24) Dark Fibers (Corning SMF-DS) on that portion of Segment 3 between Santa Clara and Oakland pursuant to Section 1.1(b) shall be $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per 24 fiber foot. D. Incremental Fiber Cost Under Section 1.7(ii). The incremental Cost to QWEST of the twenty-four (24) Dark Fibers (Corning SMF-LS) described in Section 1.7(ii) in the WORLDCOM Portland/Seattle System shall be $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per 24 fiber foot. E. Incremental Fiber Cost Under Section 1.6. The incremental Cost to WORLDCOM of the twelve (12) Dark Fibers (Corning SMF-DS) subject to the Connective IRU and the O/SC IRU shall be $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per 12 fiber foot. EXHIBIT K As-Built Drawing Specifications As Built Alignment Sheets. Survey information (either from existing date or new information) will be put on drawings. Drawings will contain cable information, splice locations, assist point locations with permanent structures, landowner information, conduit information, regen locations and optical distances to each regen from each splice location. Railroad mile posts are used as fixed points for stationing. Drawings will be updated with actual field data during and after construction. Metro areas scale shall not exceed 1 inch = 200 feet. Rural areas scale shall not exceed 1 inch = 500 feet. Cable information shall include manufacturer and type of fiber, and manufacturer and style of cable. Red line drawings will be provided at the time of acceptance. Final as-builts will be provided within 180 days after acceptance. FIRST AMENDMENT TO IRU AGREEMENT This FIRST AMENDMENT TO IRU AGREEMENT (this "Amendment") is made and entered into as of the ___ day of June, 1996, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware Corporation ("QWEST"), and WORLDCOM NETWORK SERVICES, INC., a Delaware corporation ("WORLDCOM"). RECITALS A. QWEST and WORLDCOM are parties to that certain IRU Agreement dated February 26, 1996, providing, among other things, for the grant by QWEST to WORLDCOM of an exclusive IRU in certain Dark Fibers in the QWEST System. All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the IRU Agreement. B. QWEST and WORLDCOM desire to amend the IRU Agreement to include twelve (12) additional Dark Fibers on a portion of Segment 2 of the QWEST System. Accordingly, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to amend the IRU Agreement as follows: 1. Section 1.1(a) of the IRU Agreement is hereby amended by adding at the end of such Section the following: Effective as of the Acceptance Date for Segment 2 delivered hereunder, QWEST hereby grants to WORLDCOM an Indefeasible Right of Use, for the purposes described herein, in twelve (12) Dark Fibers (the "Additional Fibers"), to be specifically identified, in the QWEST System between the WORLDCOM POP in Denver and the point on the QWEST System right-of-way where the MCI Telecommunications Corporation cable leaves the right-of-way in the downtown area of Colorado Springs, Colorado (the "Additional IRU"), for the Term, all on the terms and subject to the conditions set forth herein. Each reference in this Agreement to the "WORLDCOM Fibers" shall include the Additional Fibers, and each reference in this Agreement to the "WORLDCOM IRU" shall include the Additional IRU. 2. Section 2.1 of the IRU Agreement is hereby amended to increase the Segment 1-3 Contact Price to $ ATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , to reflect the aggregate price of the Additional Fibers of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## (based on $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile for approximately 75 miles; the "Additional Segment 2 Contract Price"). The Additional Segment 2 Contract Price ;shall be due and payable in accordance with Section 2.1(a)(ii), i.e. ten (10) days after submission by QWEST to WORLDCOM of the invoice(s) QWEST receives from the fiber vendor for the Cable including the Additional Fibers. Exhibit J to the IRU Agreement is hereby amended to reflect the foregoing by (i) amending Part A thereof to increase (A) the Contract Price allocated to Segment 2 from $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## to $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## and (B) the total Contract Price for Segments 1, 2 and 3 from $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## to $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## and (ii) amending Part B thereof to increase (A) the total Allocated Contract Price from $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## to $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## and (B) the amount of the total Segment 2 fiber cost from $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## to $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . 3. On and after the execution of this Amendment, each reference in the IRU Agreement to "this Agreement," "hereunder," "hereof," or words of like import referring to the IRU Agreement and each reference in the Maintenance Agreement dated February 26, 1996 by and between QWEST and WORLDCOM to the "IRU Agreement," "thereunder," "thereof" or words of like import referring to the IRU Agreement shall mean the IRU Agreement as amended and modified by this Amendment. The IRU Agreement as amended and modified by this Amendment is and shall continue to be in full force and effect. 4. This Amendment may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. In confirmation of their consent and agreement to amend the IRU Agreement and intending to be legally bound hereby, the parties have executed this Amendment to the IRU Agreement as of the date first above written. "QWEST" QWEST COMMUNICATIONS CORPORATION, a Delaware corporation By:/s/ Name: Douglas H. Hanson Title: President and Chief Executive Officer "WORLDCOM" WORLDCOM NETWORK SERVICES, INC., a Delaware corporation By:/s/ Name: Gary V. Shaw Title: V.P. Network Planning and Operations SECOND AMENDMENT TO IRU AGREEMENT This SECOND AMENDMENT TO IRU AGREEMENT (this "Amendment") is made and entered into as of the ___ day of July, 1996, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware Corporation ("QWEST"), and WORLDCOM NETWORK SERVICES, INC., a Delaware corporation ("WORLDCOM"). RECITALS A. QWEST and WORLDCOM are parties to that certain IRU Agreement dated February 26, 1996, as amended by the First Amendment to IRU Agreement dated as of June 13, 1996 (the "IRU Agreement"), providing, among other things, for the grant by QWEST to WORLDCOM of an exclusive IRU in certain Dark Fibers in the QWEST System. All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the IRU Agreement. B. QWEST and WORLDCOM desire to amend the IRU Agreement to, among other things, provide for the acquisition by QWEST of an IRU with respect to twenty-four (24) additional Dark Fibers on the WORLDCOM Portland/Seattle System. Accordingly, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to amend the IRU Agreement as follows: 1. The last sentence of Section 1.7 of the IRU Agreement is hereby amended to change the Section referred to therein from "Section 2.2(b)" to "Section 2.1(b)." 2. The IRU Agreement is hereby amended to add a new Section 1.9 to such Agreement, which Section will read in its entirety as follows: 1.9 WORLDCOM hereby acknowledges QWEST'S timely exercise of the option set forth in Section 1.7 above and, in addition to the IRU in forty-eight (48) Dark Fibers to be acquired by QWEST thereunder, hereby grants to QWEST an Indefeasible Right of Use in twenty-four (24) Dark Fibers, to be specifically identified (including WORLDCOM Associated Property), in the WORLDCOM Portland/Seattle System, for the Term and on the terms and subject to the conditions set forth herein; provided that the grant of the foregoing IRU in, and the delivery to QWEST of, such twenty-four (24) Dark Fibers shall be subject to and conditioned upon QWEST's prior written notification to WORLDCOM that QWEST has commenced construction of the Optional Phoenix/Los Angeles Segment, as that term is defined in Section 1.8. In consideration of the grant of such IRU, QWEST shall pay to WORLDCOM an amount equal to the route miles of the WORLDCOM Portland/Seattle multiplied by $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile, which amount shall be payable according to the payment methodology applicable under Section 2.1(b). 3. The IRU Agreement is hereby amended to add a new Section 1.10 to such Agreement, which Section will read in its entirety as follows: 1.10 Each grant of an IRU by WORLDCOM to QWEST under this IRU Agreement is governed by the same terms and subject to the same conditions as the IRUs granted by QWEST to WORLDCOM hereunder, except, for purposes of the IRUs granted by WORLDCOM to QWEST, the references in such terms and conditions to "QWEST" shall refer to "WORLDCOM" and the references to "WORLDCOM" shall refer to "QWEST." 4. On and after the execution of this Amendment, each reference in the IRU Agreement to "this Agreement," "hereunder," "hereof," or words of like import referring to the IRU Agreement and each reference in the Maintenance Agreement dated February 26, 1996 by and between QWEST and WORLDCOM to the "IRU Agreement," "thereunder," "thereof," or words of like import referring to the IRU Agreement shall mean the IRU Agreement as amended and modified by this Amendment. The IRU Agreement as amended and modified by this Amendment is and shall continue to be in full force and effect. 5. This Amendment may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. [Signature page follows] In confirmation of their consent and agreement to amend the IRU Agreement and intending to be legally bound hereby, the parties have executed this Amendment to the IRU Agreement as of the date first above written. "QWEST" QWEST COMMUNICATIONS CORPORATION, a Delaware corporation By:/s/ Name: Douglas H. Hanson Title: President and Chief Executive Officer "WORLDCOM" WORLDCOM NETWORK SERVICES, INC., a Delaware corporation By: /s/ Name: Title: EX-10.7 7 CONFIDENTIAL AND PROPRIETARY IRU AGREEMENT DATED AS OF MAY 2, 1997 BY AND BETWEEN QWEST COMMUNICATIONS CORPORATION ("QWEST") AND GTE INTELLIGENT NETWORK SERVICES INCORPORATED ("GTE") TABLE OF CONTENTS Page RECITALS ARTICLE I. GRANT OF IRU IN QWEST SYSTEM ARTICLE II. CONSIDERATION FOR GRANT ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM ARTICLE IV. ACCEPTANCE AND TESTING OF GTE FIBERS ARTICLE V. DOCUMENTATION ARTICLE VI. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES . . . . . . . . . . . ARTICLE VIII. OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM . . . . . . . . . . ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION. . . . . . . . . . . . . ARTICLE XI. USE OF QWEST SYSTEM. . . . . . . . . . . . . . . . . . . . . . ARTICLE XII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XIII. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . ARTICLE XIV. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS . . . . . . . . ARTICLE XVI. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XVII. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . ARTICLE XVIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XIX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XX. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XXI. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . ARTICLE XXII. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XXIII.GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XXIV. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . ARTICLE XXV. ASSIGNMENT AND TRANSFER RESTRICTIONS. . . . . . . . . . . . . ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS. . . . . . . ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . . . . . . . . ARTICLE XXVIII. NO PERSONAL LIABILITY. . . . . . . . . . . . . . . . . . . ARTICLE XXIX. RELATIONSHIP OF THE PARTIES. . . . . . . . . . . . . . . . . ARTICLE XXX. LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XXXI. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XXXII. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . ARTICLE XXXIII. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . EXHIBITS Exhibit A: QWEST System Description Exhibit A-1: QWEST System Description and Delivery Dates Exhibit A-2: General Route Map Exhibit A-3: Detailed Route Maps Exhibit A-4: Designated Endpoint and Intermediate Point Cities Exhibit B: IRU Fee Payment Schedule Exhibit C: Construction Specifications Exhibit D: Fiber Cable Splicing, Testing, and Acceptance Procedures Exhibit E: Fiber Specifications Exhibit E-1: Fiber Deployment Diagram Exhibit F: Specifications for Regeneration Facilities Exhibit G: Regeneration Facility Sites Exhibit H: QWEST System Maintenance Specifications and Procedures Exhibit I: Underlying Rights and Underlying Rights Requirements IRU AGREEMENT THIS IRU AGREEMENT (this "Agreement") is made and entered into as of May 2, 1997, by and between QWEST COMMUNICATIONS CORPORATION, a Delaware corporation ("QWEST"), and GTE INTELLIGENT NETWORK SERVICES INCORPORATED, a Delaware corporation ("GTE"). RECITALS A. QWEST is planning to construct a continuous fiberoptic communication system, contiguous from end to end, as described in Exhibit A hereto, and between each of the city pairs identified in Exhibit A-1 hereto (the fiberoptic communication system between each such city pair being referred to as a "Segment"), being referred to herein collectively as the "QWEST System". The route that the QWEST System shall follow as described in this paragraph is referred to herein as the "System Route." B. GTE desires to be granted the right to use certain optical fibers in the QWEST System. C. QWEST desires to grant GTE an exclusive, indefeasible right to use certain fibers and associated property in the QWEST System, all upon the terms and conditions set forth below. Accordingly, in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I. GRANT OF IRU IN QWEST SYSTEM 1.1 (a) Effective as of the effective date described in Section 6.1 below, for each particular Segment delivered by QWEST to GTE hereunder and with respect to which an Acceptance Date (as defined in Section 4.2 below) has occurred, QWEST hereby grants to GTE, and GTE hereby purchases from QWEST, (i) an exclusive, Indefeasible Right of Use (as defined in Section 33.1(f), for the purposes described herein, in twenty-four (24) "Dark Fibers" (as defined in Section 33.1(c)), to be specifically identified, in the QWEST System in the Segments and more specifically described in the maps included in Exhibit A-3 hereto and (ii) an associated and non-exclusive Indefeasible Right of Use, for the purposes described herein, in the tangible and intangible property needed for the use of such Dark Fibers as Dark Fibers, including, but not limited to, the associated conduit, QWEST's rights in all "Underlying Rights" (as defined in Section 10.1), but in any event excluding any electronic or optronic equipment (collectively, the "Associated Property"), for the Term (as defined in Section 6.1) respecting such Segment, and all on the terms and subject to the covenants and conditions set forth herein (collectively, the "IRUs"). The Dark Fibers subject to the IRUs are referred to collectively as the "GTE Fibers." (b) The parties acknowledge and agree that the specific route of any Segment that has not been finally designed or engineered, or with respect to which a right-of-way agreement has not been obtained as of the date hereof is subject to final determination by QWEST, based on specific engineering, right-of-way, permitting, authorization and other requirements; provided, however, that (i) any such Segment route, as finally determined, must include all of the endpoint and intermediate point cities identified in Exhibit A-4 and all of the junction points identified in the System Route maps included in Exhibit A; (ii) no deviation in the route of any Segment as set forth in the maps included in Exhibit A-3 shall result in a Material Deviation (as defined below) in the System Route as set forth in Exhibit A, and (iii) once the final route of any Segment has been so determined, QWEST shall deliver to GTE corresponding revisions to the relevant maps included in Exhibit A hereto. As used herein, the term "Material Deviation" shall mean a deviation in the general route of a Segment (A) that modifies the System Route architecture in a manner that breaks a ring, creates a spur or breaks the contiguous nature of Segments; (B) that modifies the route of the System Route through any city, identified in Exhibit A-3 as being the location of a GTE POP site, from the detailed route map shown in Exhibit A-3 for such city in a manner that materially changes the proximity of such POP site to the System Route right-of-way (provided that, if any such detailed city map shows that the POP site is in direct proximity to the System Route right-of-way, any route modification which does not provide such direct proximity shall be considered a material change in proximity); (C) that modifies the route of the System Route through any city, as set forth in the detailed route map for such city set forth in Exhibit A-3, such that the location of the route at any point would be moved more than 1,200 feet in any direction, without the prior written approval of GTE (such approval not to be unreasonably withheld or delayed); or (D) that modifies any parallel route shown within any city that is the subject of a detailed map included in Exhibit A-3 such that the distance between such parallel routes is less than 1,200 feet outside metropolitan areas and less than two city blocks within metropolitan areas. (c) If any deviation(s) in the routes of Segments comprising the System Route cause(s) the aggregate route miles as reflected in Exhibit A estimated for the System Route to increase by more than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) of such estimate such mileage shall be solely at QWEST's cost and expense and any route mileage in excess of the applicable ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## %) increase as aforesaid shall not be included in the route mileage for purposes of determining the IRU Fee as defined and described in Section 2.1 below. ARTICLE II. CONSIDERATION FOR GRANT 2.1 In consideration of the grant of the IRUs hereunder by QWEST to GTE, GTE agrees to pay to QWEST an IRU fee determined based on the QWEST mileage (and allocated among the Segments based on Segment Rate mileage as set forth in Exhibit B. (the "IRU Fee"). The IRU Fee shall be payable with respect to each Segment according to the payment schedule set forth in Exhibit B. 2.2 QWEST will fax or send by overnight delivery each invoice for payments to be made by GTE hereunder. GTE shall pay such invoiced amounts, less any reasonably disputed amounts, for receipt by QWEST within thirty (30) days after receipt of such invoice by GTE with respect to payments of the IRU Fee and within thirty (30) days after receipt of such invoice by GTE for any other amounts owed to QWEST hereunder; provided that GTE shall provide written notice describing in detail the basis for any disputed amounts; and provided further that any disputed amounts that are resolved in favor of QWEST shall be due for payment based on the original invoice date. All payments to be made by GTE hereunder of the IRU Fee and of any other amounts in excess of $100,000 shall be made by wire transfer of immediately available funds to the account or accounts as QWEST shall notify GTE in writing from time to time. Payments of all other amounts by GTE hereunder may be made by check payable to QWEST. QWEST agrees to provide GTE from time to time, upon request, with QWEST's estimate of the next invoice date for a portion of the IRU Fee and the estimated amount of such IRU Fee payment; provided that failure to provide any such notice shall not in any way alter or impair GTE's payment obligations hereunder. 2.3 QWEST and GTE acknowledge and agree that with respect to Segment 23, notwithstanding the fact that Segment 23 has already been constructed and installed, delivery of Segment 23 shall occur in two installments of twelve (12) Dark Fibers each as indicated in Exhibit A, and payment of the IRU Fee established pursuant to Section 2.1 therefor (other than the initial ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % due upon execution of this Agreement), shall be deferred until each such deferred installment delivery date as set forth in Exhibit B. ARTICLE III. CONSTRUCTION OF THE QWEST SYSTEM 3.1 QWEST shall, at QWEST's sole cost and expense, be responsible for and shall effect the design, engineering, installation, and construction of those portions of the QWEST System not already constructed as of the date hereof in accordance with the System Route (as it may be modified pursuant to Section 1.1) and in conformity with (i) the construction specifications set forth in Exhibit C, (ii) industry standards and practices, and (iii) applicable Underlying Rights Requirements (as defined in Section 11.1). Such responsibilities shall include, without limitation, preparation of construction drawings, bills of materials, materials specifications and materials requisitions. Except for the existing fibers on Segments 11A, 11B, 12A, 12B, 12C and 12D (which are Corning SMF-DS) and any alternative fibers approved pursuant to the following sentence, all fiber included in the GTE Fibers shall be Corning SMF-LS non-zero dispersion-shifted or Lucent Technologies True Wave and shall meet or exceed the applicable fiber specifications set forth in Exhibit E. QWEST may use alternative types of fiber equivalent to either of the aforementioned fibers; provided that (i) prior to any such use, QWEST meets with GTE (and GTE hereby agrees to so meet) to, cooperatively and in good faith, jointly evaluate the use of any such fiber and (ii) thereafter, GTE approves the use of such fiber, which approval shall not be unreasonably withheld or delayed. QWEST agrees that, to the extent possible in light of the fiber already incorporated in Segments that have been constructed, in whole or in part, prior to the date hereof and the availability and cost of the fiber of a particular type and manufacture hereafter, fiber utilized with respect to the loops, rings and regions of the QWEST System shall be of the same type and manufacture, as depicted in the fiber deployment diagram set forth in Exhibit E-1 hereto, indicating the type of fiber QWEST currently plans to use in each such Segment. Any deviation from the planned fiber use set forth in the diagram must be approved by GTE, which approval shall not be unreasonably withheld or delayed. 3.2 Subject to extension for delays described in Article XX, QWEST shall complete at QWEST's sole cost and expense, all construction, installation, and satisfactory Fiber Acceptance Testing (as defined in Section 4.1) of each of the Segments, including the provision of such Regeneration Facilities on such Segment as may be provided pursuant to Section 7.2(a), by the applicable "Estimated Delivery Date" (as defined in Section 33.1(d)) respecting such Segment. 3.3 Except as may be provided herein, QWEST shall, at QWEST's sole cost and expense, procure all materials to be incorporated in and to become a permanent part of the QWEST System, including, without limitation, the Regeneration Facilities provided pursuant to Section 7.2(a). 3.4 QWEST shall, at QWEST's sole cost and expense, obtain all Underlying Rights and other rights, licenses, permits and authorizations as required pursuant to Article X hereof. 3.5 QWEST shall perform, at QWEST's sole cost and expense, substantially in accordance with industry standards and practices and as deemed necessary or appropriate in QWEST's reasonable business judgment, all supervisory and inspection services relating to the construction of the QWEST System, including, without limitation, performing construction inspections to assure that all construction shall be in material compliance with the specifications, drawings, Underlying Rights, provisions of this Agreement, and applicable governmental codes. During the course of construction of each Segment, QWEST shall prepare and provide to GTE construction schedule and progress reports every two weeks. GTE shall have the right, but not the obligation, to inspect the construction of each Segment, including the installation, splicing and testing of the GTE Fiber incorporated therein, during the course and at the time of the relevant design, construction and installation period. No inspection or failure to inspect by GTE shall impair or invalidate any rights and remedies of GTE under this Agreement or modify, amend or otherwise affect any of the representations, warranties, covenants or agreements of QWEST under this Agreement. 3.6 Upon GTE's written request, QWEST shall make available for inspection by GTE, at QWEST's offices, copies of all information, documents, agreements, reports, permits, drawings and specifications generated, obtained or acquired by QWEST in performing its duties pursuant to this Article III that are material to grant of the IRUs to GTE, including, without limitation, the Underlying Rights, subject only to the conditions that (i) the terms of each such document or the legal restrictions applicable to such information or document permits disclosure; provided that QWEST will use its best efforts (without requiring the expenditure of money) to obtain a waiver of any existing confidentiality and/or non-disclosure restrictions, and to exempt GTE from subsequent confidentiality and/or non-disclosure restrictions, that would restrict QWEST's ability to make such documents and/or information available to GTE for inspection; (ii) notwithstanding the existence or non-existence of such restrictions and/or waivers, QWEST may, in its sole discretion, redact portions of such documents it deems proprietary business terms prior to GTE's inspection. No inspection or failure to inspect by GTE shall impair or invalidate any rights and remedies of GTE under this Agreement or modify, amend or otherwise affect any of the representations, warranties, covenants or agreements of QWEST under this Agreement. ARTICLE IV. ACCEPTANCE AND TESTING OF GTE FIBERS 4.1 QWEST shall test all GTE Fibers in accordance with the procedures specified in Exhibit D ("Fiber Acceptance Testing") to verify that the GTE Fibers are installed and operating in accordance with the specifications described in Exhibit D. Fiber Acceptance Testing shall progress span by span along each Segment as cable splicing progresses, so that test results may be reviewed in a timely manner. QWEST shall provide GTE at least five (5) days advance notice of the date and time of each Fiber Acceptance Testing such that GTE shall have the right, but not the obligation, to have a person or persons present to observe QWEST's Fiber Acceptance Testing. When QWEST has determined that the results of the Fiber Acceptance Testing with respect to a particular span show that the GTE Fibers so tested are installed and operating in conformity with the applicable specifications set forth in Exhibit D, QWEST shall promptly provide GTE with a copy of such test results. 4.2 When QWEST reasonably determines in good faith that the GTE Fibers with respect to an entire Segment are installed and operating in conformity with the applicable specifications set forth in Exhibit D, QWEST shall promptly provide written notice of same to GTE (a "Completion Notice"). GTE shall, within thirty (30) days of receipt of the Completion Notice, either reject the Completion Notice specifying, in good faith, the defect or failure in such Fiber Acceptance Testing or give QWEST written notice of acceptance of such Fiber Acceptance Testing (the period from the date of GTE's receipt of the Completion Notice to the date of QWEST's receipt of GTE's notice of rejection or acceptance being referred to herein as the "GTE Review Period"). In the event GTE rejects the Completion Notice, QWEST shall promptly, and not later than seven days, and at no cost to GTE, commence to remedy the defect or failure. Thereafter QWEST shall again give GTE a Completion Notice with respect to such GTE Fibers. The foregoing procedure shall apply again and successively thereafter for a total of two attempts to remedy the defect or failure. If QWEST fails to adequately remedy or complete the defect or failure after two attempts, GTE shall have the right to proceed promptly and in an economically efficient manner to cure such defects or failures at QWEST's cost and expense, which shall be paid by QWEST to GTE upon demand, or at the election of GTE, offset from any IRU Fee payable by GTE to QWEST with respect to such Segment or any other Segment. No acceptance of, or failure by GTE to reject, the Completion Notice shall be deemed to be a waiver of any rights or remedies of GTE under this Agreement; provided that, any failure by GTE to timely reject as set forth above shall operate as a constructive acceptance for purposes of this Agreement. The date when GTE accepts or is deemed to have accepted a Completion Notice or cures such defects at QWEST's cost and expense as provided above with respect to a Segment is herein defined as the "Acceptance Date". ARTICLE V. DOCUMENTATION 5.1 Notwithstanding the conditions and limitations set forth in Section 3.6, QWEST shall provide GTE with a copy of all Underlying Right Requirements (as defined in Section 11.1) applicable to each Segment promptly following the grant to QWEST of the Underlying Right pursuant to which such Underlying Right Requirements are imposed and, in any event, on or before the date of completion of conduit installation in such Segment (as defined in Exhibit B, paragraph 3(ii)). 5.2 Not later than ninety (90) days after the Acceptance Date for each Segment, QWEST shall provide GTE with the following documentation: (a) As-built drawings for such Segment in accordance with the requirements described in Exhibit C ("As-Builts"). (b) Technical specifications of the optical fiber cable and associated splices and other equipment placed in that Segment. 5.3 As a condition to, and effective upon receipt of, each IRU Fee payment installment that is due upon QWEST's achievement of a construction, installation, testing or acceptance milestone as set forth in Exhibit B, QWEST shall deliver to GTE a lien waiver with respect to liens in favor of QWEST arising out of QWEST's services in accomplishing such milestone. Promptly following QWEST's receipt of each such payment, QWEST shall use reasonable efforts to obtain (and in any event on or before the Acceptance Date with respect to the relevant Segment shall obtain) from each subcontractor that provided services in accomplishing such milestone a lien waiver with respect to liens arising out of such services and, upon receipt, deliver a copy of each such lien waiver to GTE. ARTICLE VI. TERM 6.1 The grant of the IRUs hereunder with respect to each Segment shall become effective on the first day when both (i) the Acceptance Date with respect to that Segment has occurred and (ii) QWEST has received payment in full of the IRU Fee with respect to such Segment in accordance with Exhibit B, and, subject to the provisions of Article X, such grant shall terminate at the end of the economically useful life of the GTE Fibers, as reasonably determined by GTE pursuant to Section 6.2 below. The period of each such grant respecting each such Segment and IRU is herein defined as the "Term". 6.2 In the event that GTE, at any time, reasonably determines that the GTE Fibers comprising any Segment have reached the end of their economically useful life and desires to not retain the IRU in such Segment, GTE shall have the right to abandon the IRU with respect to such Segment by written notice to QWEST. If, at any time during or after the last year of the Minimum Period (as defined in Section 10.2(ii) below), with respect to any Segment, GTE fails to use any of the GTE Fibers comprising such Segment for any period of thirty (30) consecutive days (except to the extent that such non-use is as a result of any of the events described in Article XX or as a result of QWEST System maintenance, restoration, relocation, or reconfiguration or as a result of the failure of QWEST to observe and perform the terms of this Agreement), QWEST shall have the right to request GTE to acknowledge that the GTE Fibers comprising such Segment have reached the end of their economic life and, accordingly, has abandoned the GTE Fibers comprising such Segment (which acknowledgment shall not be unreasonably withheld or delayed). Upon any such notice of abandonment or acknowledgment, the Term shall expire with respect to such Segment and all rights to the use of such Segment shall revert to QWEST without reimbursement of any fees or other payments previously made with respect thereto, and from and after such time GTE shall have no further rights or obligations hereunder with respect to such Segment (subject to the provisions of Article XIX). 6.3 It is understood and agreed as between the parties that the grant of the IRUs hereunder shall be treated for accounting and federal and all applicable state and local tax purposes as the sale and purchase of the GTE Fibers and a corresponding interest in QWEST's rights in the Associated Property subject thereto, and that on and after the Acceptance Date with respect to each Segment, GTE shall be treated as the owner of the GTE Fibers and an interest in QWEST's rights in the Associated Property comprising such Segment for such purposes. The parties agree to file their respective financial reports, income tax returns, property tax returns, and other returns and reports for their respective Impositions (as such term is defined in Section 33.1(e)) on such basis and, except as otherwise required by law, not to take any positions inconsistent therewith. QWEST shall retain legal title to the entire QWEST System, including the GTE Fibers and Associated Property subject to the IRUs hereunder. In the event the grant is not treated as a sale and purchase for tax purposes, the parties shall pay any taxes arising by reason of such tax treatment on the same basis as if it had been treated as a sale and purchase. Each party agrees to indemnify the other with respect to any late filing penalties, interest or fees incurred as a result of such party's failure to provide the other with such information solely in such party's possession or control that may be necessary in order to timely make any such filing. 6.4 This Agreement shall become effective on the date hereof and shall terminate on the date when, after completion and delivery of all Segments required to be delivered hereunder, all the Terms of all such Segments shall have expired; provided that, those provisions of this Agreement which, by their express terms, are intended to survive such ter mination, shall survive. ARTICLE VII. NETWORK ACCESS; REGENERATION FACILITIES 7.1 (a) QWEST shall provide GTE with access to, and GTE shall have the right to connect, at GTE's sole cost and expense, its telecommunications system with, the GTE Fibers at various network access points on the QWEST System right-of-way in each of the endpoint cities and intermediate point cities along the route of each Segment and at such additional locations along the QWEST System right-of-way as may be requested by GTE (each such access point being referred to as a "Connecting Point"). The specific locations of each such Connecting Point shall be as mutually reasonably agreed upon by the parties in good faith, subject to the Underlying Rights Requirements and QWEST obtaining other required permits, authorizations and approvals (which QWEST agrees to use its best efforts to obtain). Any such connection will be performed by QWEST, at GTE's sole cost and expense, in accordance with QWEST's applicable specifications and operating procedures. GTE shall pay QWEST's Costs for each such connection within thirty (30) days of the date of GTE's receipt of QWEST's invoice therefor. In order to schedule a connection of this type, GTE shall request and coordinate such work not less than ninety (90) days in advance of the date the connection is requested to be completed. Such work will be restricted to a Planned System Work Period ("PSWP"), as defined in Section 33.1(i), unless otherwise agreed to in writing for specific projects. Subject to all applicable Underlying Rights Requirements, GTE shall also be provided reasonable access by QWEST to any Connecting Point at all times. GTE shall have no limitations on the types of electronics or technologies employed to utilize the GTE Fibers, subject to mutually agreeable safety procedures and so long as such electronics or technologies do not interfere with the use of or present a risk of damage to any portion of the QWEST System. (b) QWEST may route the GTE Fibers through QWEST's separate terminal, endlink, POP or Regeneration Facilities at its sole discretion so long as such routing does not have a material adverse effect on the security, the safety or GTE's use of the GTE Fibers or Associated Property hereunder and QWEST is responsible for all costs and expenses associated therewith. 7.2 (a) QWEST will provide GTE with regeneration site facilities as identified on Exhibit F or as mutually agreed by the parties to be located at approximately sixty (60) mile intervals along the QWEST System right-of-way, in each case consisting of and providing space of approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet and amenities (except for the operating costs associated therewith expressly required to be paid by GTE pursuant to Section 8.2), as described in Exhibit F ("Regeneration Facilities") at the rates set forth below. The parties acknowledge that (i) the locations of such Regeneration Facilities shall be coincident with the locations of QWEST's own Regeneration Facilities. In addition, QWEST shall provide to GTE at GTE's Prorated Cost (as defined below in this paragraph (a)) POP or terminal facilities of approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet along the QWEST System right-of-way at such locations as may be mutually determined by GTE and QWEST, subject to space and power availability and Underlying Rights Requirements. GTE's Occupancy of and access to all such Regeneration Facility Sites (or POP or terminal facilities) shall include separate, secured, 24- hour-per-day building access. Any Regeneration Facilities (or POP or terminal facilities) provided by QWEST to GTE shall be at GTE's Prorated Cost. For purposes of the foregoing two sentences, GTE's Prorated Cost for Regeneration facilities means $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility and for POP or terminal facilities means $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per facility. (b) Except as provided in Section 8.2 or as otherwise agreed upon, in writing, by the parties, all amounts payable under this Section 7.2 shall be due upon the date that the subject facility is available for occupancy by GTE and shall be paid in the manner specified in Section 2.2. 7.3 Notwithstanding any qualifications or limitations on QWEST's obligations under this Article or elsewhere in this Agreement, including but not limited to the qualification that any obligation of QWEST is subject to the Underlying Rights Requirements, QWEST is obligated to use its best efforts to obtain and provide any requisite consents, approvals, permits, authorizations and rights as may be necessary in order for GTE to be able to install necessary equipment and/or facilities, to have access to and to maintain its equipment and facilities, to fully utilize the GTE Fibers, Associated Property, and the IRU granted or to be granted to GTE under the Agreement, and to provide maintenance on the Qwest System should QWEST not provide the maintenance services set out in Exhibit H. QWEST agrees that in the event GTE's ability to utilize and maintain the GTE Fibers as herein described is impeded in a material way as a result of the Underlying Rights Requirements, QWEST agrees to use all commercially reasonable efforts to amend the Underlying Rights or secure additional rights in order to provide GTE with full access to the GTE Fibers. ARTICLE VIII. OPERATIONS 8.1 Each party shall have full and complete control and responsibility for determining any network and service configuration or designs, routing configurations, regrooming, rearrangement or consolidation of channels or circuits and all related functions with regard to the use of that party's Dark Fiber. 8.2 GTE shall reimburse QWEST for GTE's proportionate share of all reasonable and necessary operating costs incurred by QWEST in connection with the Regeneration Facilities (or alternatively requested POP or terminal facilities) provided pursuant to Section 7.2(a), including its proportionate share of any monthly lease costs for any such facilities and/or underlying property that QWEST leases (including, to the extent included in such lease costs, base rent, maintenance, insurance, security and taxes), maintenance of such facilities, and all power and utility fees and charges, excluding any lease costs for underlying rights on the right-of-way. GTE's proportionate share of such operating costs, including a proportionate share of common area costs, shall be the ratio that the floor space provided to GTE in any such facility (including a proportionate share of the common area) bears to (i) in the case of lease costs, the total space in such facility, and (ii) in the case of all other costs (including common area costs), the total utilized space in such facility. QWEST shall submit invoices to GTE on an annual basis for GTE's pro rata share of such operating costs during the preceding twelve months. GTE's reimbursement obligations for insurance and taxes pursuant to this Section 8.2 shall in no event be duplicative of GTE's payment obligations for insurance or taxes, respectively, as provided in Article XIV and XV hereof, and in no event shall relieve QWEST of its payment obligations for insurance costs or taxes, respectively, as provided in Article XIV and XV hereof. 8.3 GTE acknowledges and agrees that, except to the extent expressly provided pursuant to Section 7.2, QWEST is not supplying nor is QWEST obligated to supply to GTE any optronics or electronics or optical or electrical equipment or other facilities, including without limitation, generators, batteries, air conditioners, fire protection and monitoring and testing equipment, all of which are the sole responsibility of GTE, nor is QWEST responsible for performing any work other than as specified in this Agreement. 8.4 Upon not less than one hundred twenty (120) days' written notice from QWEST to GTE, QWEST may, subject to GTE's prior written approval (which approval shall not be unreasonably delayed or withheld) substitute for the GTE Fibers on the QWEST System, or any Segment or Segments comprising a portion of said QWEST System, an equal number of alternative fibers along the same or an alternative route; provided that in any such event, such substitution (i) shall be in accordance with GTE's applicable specifications and operating procedures, (ii) shall be effected at the sole cost of QWEST, including, without limitation, all disconnect and reconnect costs, fees and expenses, (iii) shall be constructed and tested in accordance with the specifications and drawings set forth in Exhibits C and D and Section 4.2, and incorporate fiber meeting the specifications set forth in Exhibit E, and (iv) shall not interrupt or adversely affect the use, operation or performance of GTE's network or business, or change any Connecting Points or endpoints of any Segment or change the location of any Regeneration Facilities (or POPs or terminal facilities) used by GTE hereunder or any other GTE POP, node or switch facilities, all as determined by GTE, in its sole discretion. ARTICLE IX. MAINTENANCE AND REPAIR OF THE QWEST SYSTEM 9.1 From and after the Acceptance Date with respect to each Segment, the maintenance of the QWEST System comprising such Segment shall be provided in accordance with the maintenance requirements and procedures set forth in Exhibit H hereto. ARTICLE X. PERMITS; UNDERLYING RIGHTS; RELOCATION 10.1 QWEST covenants and agrees that it shall obtain, during the course of construction of, and in any event on or before the completion of conduit installation with respect to, each Segment of conduit to be delivered hereunder all Underlying Rights (as defined below) and such other rights, licenses, permits, authorizations, consents and approvals (including, without limitation, any necessary local, state, federal or tribal authorizations and environmental permits) that are necessary in order to permit QWEST to construct, install and maintain the conduit and the GTE Fibers to be encompassed in such Segment in accordance with the terms and conditions hereof. QWEST further covenants and agrees that it shall obtain, during the course of construction of and in any event on or before the Acceptance Date with respect to each Segment to be delivered hereunder, any and all rights-of way, easements, licenses and other agreements relating to the grant of rights and interests in and/or access to the real property underlying the QWEST System (collectively, the "Underlying Rights") and such other rights, licenses, permits, authorizations, consents and approvals (including without limitation, any necessary local, state, federal or tribal authorizations and environmental permits) that are necessary in order to permit QWEST to grant the IRUs, and otherwise to perform its obligations hereunder, in accordance with the terms and conditions hereof, and to (and all of which Underlying Rights shall) permit GTE to use the GTE Fibers and Associated Property as provided and permitted hereunder and in accordance with the terms and conditions hereof. QWEST shall use its best efforts to cause the terms of each such Underlying Right to provide GTE with notice of any default on the part of QWEST and to permit GTE to cure, on behalf of QWEST, any such default by QWEST and, thereafter, to continue the use of such Underlying Right in accordance with QWEST's rights and interests thereunder and, if GTE at any time cures such default by QWEST, QWEST shall reimburse GTE for any and all amounts reasonably paid by GTE promptly upon demand. 10.2 QWEST further covenants and agrees that, with respect to each Underlying Right that is necessary in order to continue and maintain the IRUs granted hereunder, and to permit GTE to exercise its rights to use the GTE Fibers and Associated Property, in each case in accordance with the terms and conditions hereof: (i) QWEST shall, for a period of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years from the date hereof (or until the earlier to occur of (A) the expiration of the economically useful life of the GTE Fibers, as determined pursuant to Section 6.2, or (B) the expiration or termination of the term of a particular Underlying Right, so long as any such termination is not effected as a result of any failure of QWEST (not caused as a result of GTE's failure to observe and perform its obligations hereunder) to observe and perform its duties, obligations and responsibilities under such Underlying Right or under this Agreement, including under this Article X), observe and perform each and every of its obligations under each document, agreement or instrument granting or conveying to QWEST such an Underlying Right if the failure to observe and perform any such obligation or obligations would permit the grantor of such Underlying Right to terminate such Underlying Right prior to its stated expiration date, or would otherwise materially, adversely impair or affect GTE's ability to use the GTE Fibers and Associated Property, or exercise its rights with respect thereto, as provided and permitted hereunder; and (ii) QWEST shall either require that the initial stated term of each such Underlying Right be for a period that does not expire, in accordance with its ordinary terms, prior to the last day of the Minimum Period (as hereinafter defined with respect to each Segment) or, if the initial stated term of any such Underlying Right expires, in accordance with its ordinary terms, on a date earlier than the last day of the Minimum Period, QWEST shall at its cost exercise any renewal rights thereunder, or otherwise acquire such extensions, additions and/or replacements as may be necessary, in order to cause the stated term thereof to be continued until a date that is not earlier than the last day of the Minimum Period. The "Minimum Period" shall be, with respect to each Segment, the period from the date on which construction of such Segment commences until the ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## anniversary of such date; and (iii) From and after the last day of the Minimum Period, QWEST at its sole cost shall use its best efforts (without being required to expend commercially unreasonably amounts therefor) to obtain such extensions and/or renewals as may be necessary in order to cause the stated term of each such Underlying Right to be continued for an additional period or periods of, in the aggregate, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## years following the Minimum Period or until the earlier expiration of the economically useful life of the GTE Fibers, as determined pursuant to Section 6.2; provided that QWEST shall not be required to expend, as consideration for any such renewal or extension, more than the fair market rate payable at such time for similar rights and terms except to the extent that GTE agrees at its option to pay directly or reimburse QWEST for any amounts required to be paid in excess of such fair market rate to renew or extend such an Underlying Right; and (iv) Throughout the term of each such Underlying Right, QWEST shall at its reasonable cost and expense defend and protect QWEST's rights in and interests under the Underlying Rights and GTE's right to use the GTE Fibers and Associated Property as provided and permitted hereunder against interfering or infringing rights, interests or claims of third parties. 10.3 Upon the expiration or termination of any Underlying Right that is necessary in order to grant, continue or maintain an IRU granted hereunder in accordance with the terms and conditions hereof, so long as QWEST shall have fully observed and performed its obligations under this Article X with respect thereto, the Term of the IRUs hereunder with respect to any Segment or Segments affected thereby shall automatically expire upon such expiration or termination. 10.4 If, after the Acceptance Date with respect to a Segment, QWEST is required by a third party with legal authority to so require (including, without limitation, the grantor of an Underlying Right, but only to the extent that such relocation is not required as a result of a failure by QWEST to observe and perform its obligations under such Underlying Right or this Agreement), or if GTE agrees, to relocate any portion of such Segment including any of the facilities used or required in providing the IRUs in such Segment hereunder, QWEST shall proceed with such relocation, including, but not limited to, the right, in good faith, to reasonably determine the extent of, the timing of, and methods to be used for such relocation; provided that (i) the route of any such relocation shall be subject to the good faith agreement of the parties with a bona fide interest therein, (ii) GTE shall be kept fully informed of all other determinations made by QWEST in connection with such relocation, and (iii) any such relocation shall be constructed and tested in accordance with the specifications and drawings set forth in Exhibits C and D, and incorporate fiber meeting the specifications set forth in Exhibit E. GTE shall reimburse QWEST for its proportionate share of the Costs of such relocation of the portion of the Segment so relocated, reduced by such amount, if any, of the portion of such Costs as are reimbursed to QWEST by the party requiring such relocation, as follows: (i) if the affected portion of the Segment includes any conduit other than the conduit housing the GTE Fibers for which QWEST is responsible for relocation costs, the total Costs of relocation of the conduits (i.e., relocation of the conduits only without regard to whether the conduits contain fibers) shall be allocated based on the overall number of conduits relocated; (ii) such Costs allocated to the conduit carrying the GTE Fibers plus the Costs specifically associated with the relocation of the fiber (i.e., relocation of the fiber only without regard to relocation of conduit) shall be further allocated to GTE based on GTE's proportionate share of (A) all Costs of fiber acquisitions, splicing and testing, prorated based on the total fiber count in the affected Cable, as so relocated, and (B) all other Costs associated with the relocation of the conduit housing the affected Cable, prorated based on the total number of owners (including QWEST) and holders of IRUs or equivalent interests (including long-term lessees) (each, an "Interest Holder") in the affected Cable, as so relocated. GTE shall have the right to review and audit all Costs incurred in connection with such relocation. QWEST shall deliver to GTE updated As-Builts with respect to the relocated Segment not later than sixty (60) days following the completion of such relocation. Any condemnation or taking under the power of eminent domain of all or any portion of a Segment shall be deemed a relocation required by a third party with legal authority to so require, and such affected Segment, or portion thereof, shall be relocated in accordance with this Section 10.4 and any condemnation proceeds received by QWEST shall be applied to such relocation as provided above. ARTICLE XI. USE OF QWEST SYSTEM 11.1 The requirements, restrictions, and/or limitations upon GTE's right to use the GTE Fibers and Associated Property as provided and permitted under this Agreement imposed under, and associated safety, operational and other rules and regulations imposed in connection with, the Underlying Rights are referred to collectively as the "Underlying Rights Requirements." QWEST represents and warrants that, it has made available to GTE for its review and inspection a copy of certain documents, agreements, or instruments pursuant to which QWEST has been granted an Underlying Right as of the date hereof (the "Existing Underlying Rights"), and certain associated safety, operational and other rules and regulations imposed in connection with the exercise of its rights thereunder (all of which are identified on Exhibit I hereto). GTE hereby accepts the Existing Underlying Rights and the Underlying Rights Requirements associated therewith. QWEST represents that it is not in default under any of the Existing Underlying Rights that would permit the grantor of such Underlying Right to terminate such Underlying Right prior to its stated expiration date, or would otherwise materially, adversely impair or affect GTE's ability to use the GTE Fibers and Associated Property, or exercise its rights with respect thereto, as provided and permitted hereunder, and, to the best of its knowledge, none of the grantors are in default under the Existing Underlying Rights. With respect to each Underlying Right (other than the Existing Underlying Rights) obtained after the date hereof by QWEST (or an Underlying Right existing on the date hereof under any document, agreement or instrument delivered after the date hereof) in carrying out its obligations hereunder from the same type of grantor as a grantor of any Existing Underlying Right, QWEST represents and warrants that the terms and conditions thereof, and rules and regulations imposed in connection therewith, shall not impose materially more onerous limitations and restrictions on the rights of GTE to use the GTE Fibers and Associated Property as permitted and provided hereunder than those imposed by such type of grantor under and in connection with the Existing Underlying Rights and Underlying Rights Requirements associated therewith. To the extent that any such Underlying Right documents, agreements or instruments were or hereafter are provided in a redacted format to protect confidential and proprietary business terms, QWEST represents and warrants that no language or information so redacted constitutes an Underlying Rights Requirement nor otherwise imposes material requirements, restrictions and/or limitations upon GTE's right to use the GTE Fibers and Associated Property as provided and permitted hereunder. QWEST represents to GTE that the map heretofore provided to GTE delineating the general location of rights of way, easements and other rights held by QWEST under the principal agreements evidencing the Existing Underlying Rights is a true and complete depiction, in all material respects, with respect to the general location of such Existing Underlying Rights that relate to the GTE Fibers to be installed along the QWEST System as contemplated by this Agreement. 11.2 GTE represents, warrants and covenants that it will use the GTE Fibers and Associated Property in compliance with (i) all applicable government codes, ordinances, laws, rules, regulations and/or restrictions, and (ii) subject to QWEST's obligations under Section 11.1, the Underlying Rights Requirements. 11.3 In addition to the other rights provided hereunder, but subject to the provisions of Article VII, the IRUs granted hereunder shall include the right at GTE's cost to install additional equipment, or replace existing equipment, in the facility space provided to GTE pursuant to Article VII, subject to the Underlying Rights Requirements. 11.4 QWEST agrees and acknowledges that it has no right to use the GTE Fibers during the Term hereof, and that, from and after the effective date of the grant of each IRU hereunder, QWEST shall keep the GTE Fibers, the Associated Property and the IRUs granted hereunder free from (i) any liens of any third party attributable to QWEST, and (ii) any rights or claims of any third party attributable to QWEST, as and to the extent required pursuant to Article X hereof. In addition, QWEST agrees that, from and after the execution of this Agreement and until the effective date of the grant of each IRU hereunder with respect to any Segment, it shall obtain from any entity in favor of which QWEST in its discretion shall have granted a security interest or lien on all or part of such Segment a written nondisturbance agreement substantially to the effect that such lienholder acknowledges GTE's rights and interests in and to the GTE Fibers, the Associated Property and the IRU's hereunder and agrees that the same shall not be diminished, disturbed, impaired or interfered with by such lienholder. 11.5 Subject to the provisions of Article XXV and this Article XI, GTE may use the GTE Fibers, the Associated Property and the IRUs for any lawful telecommunications purpose. For purposes of this Section 11.5 "telecommunications" shall have the meaning as used and interpreted in 47 U.S.C. Sec.153(2)(43). GTE agrees and acknowledges that it has no right to use any of the fibers, other than the GTE Fibers, included in the Cable or otherwise incorporated in the QWEST System, and that GTE shall keep any and all of the QWEST System, other than the IRU in the GTE Fibers or in the Associated Property, free from any liens, rights or claims of any third party attributable to GTE. 11.6 GTE and QWEST shall promptly notify each other of any matters pertaining to, or the occurrence (or impending occurrence) of, any event which could give rise to any damage or impending damage to or loss of the QWEST System that are known to such party. Without limiting the generality of the foregoing, QWEST shall promptly forward to GTE a copy of any notice of default received by QWEST with respect to its obligations under any Underlying Right if such default is not promptly cured by QWEST. 11.7 GTE shall not use the GTE Fibers or any related facilities or equipment in a way which physically interferes in any way with or adversely affects the use of the fibers or cable of any other person using the QWEST System, it being expressly acknowledged that the QWEST System includes or will include other participants, including QWEST and other owners and holders of Dark Fiber IRUs and telecommunication system operations. QWEST shall not use any other fibers in the QWEST System in a way which physically interferes with or adversely affects the use of the GTE Fibers, and shall obtain a similar agreement from any person that acquires the right to use fibers in the QWEST System after the date hereof. 11.8 GTE and QWEST each agree to cooperate with and support the other in complying with any requirements applicable to their respective rights and obligations hereunder by any governmental or regulatory agency or authority. 11.9 QWEST agrees, so long as any such action would not violate the terms of any Underlying Right, upon request of GTE, to execute, file and/or record such documents or instruments as GTE shall deem reasonably necessary or appropriate to evidence or safeguard the IRUs granted to GTE hereunder. GTE agrees to reimburse QWEST for all reasonable costs and out-of-pocket expenses (including, without limitation, reasonable fees and expenses of legal counsel) incurred by QWEST in fulfilling its obligations under this Section 11.9. ARTICLE XII. INDEMNIFICATION 12.1 Subject to the provisions of Articles XIII and XVIII, QWEST hereby releases and agrees to indemnify, defend, protect and hold harmless GTE and its employees, officers and directors, from and against, and assumes liability for: (a) Any injury, loss or damage to any person (including GTE), tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs) to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of QWEST, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors arising out of or in connection with a default (other than a default caused by a failure of GTE to perform or comply with its obligations hereunder) by QWEST in the performance of its obligations or breach of its representations under this Agreement (including, without limitation, any default by QWEST in the performance of its obligations under Article X with respect to the Underlying Rights and under Article XI with respect to its use of the QWEST System); and (b) Any claims, liabilities or damages, including reasonable attorneys' fees and costs, arising out of any violation by QWEST of any regulation, rule, statute or court order of any local, state or federal governmental agency, court or body in connection with the performance of its obligations under this Agreement. 12.2 Subject to the provisions of Articles XIII and XVIII, GTE hereby releases and agrees to indemnify, defend, protect and hold harmless QWEST, and its employees, officers and directors, from and against, and assumes liability for: (a) Any injury, loss or damage to any person (including QWEST), tangible property or facilities of any person or entity (including reasonable attorneys' fees and costs) to the extent arising out of or resulting from the acts or omissions, negligent or otherwise, of GTE, its officers, employees, servants, affiliates, agents, contractors, licensees, invitees or vendors arising out of or in connection with a default (other than a default caused by a failure of QWEST to perform or comply with its obligations hereunder) by GTE in the performance of its obligations or breach of its representations under this Agreement (including, without limitation, any default by GTE in the performance of its obligations under Article XI with respect to its use of the QWEST System); and (b) Any claims, liabilities or damages, including reasonable attorneys' fees and costs, arising out of any violation by GTE of any regulation, rule, statute or court order of any local, state or federal governmental agency, court or body in connection with its use of the IRUs and/or the GTE Fibers and Associated Property hereunder. 12.3 The parties agree to promptly provide each other with notice of any lawsuit, judicial, administrative or other dispute resolution action or proceeding, or claim of which it becomes aware and which it believes may result in an indemnification obligation hereunder (each, an "Action"); provided that the failure to provide any such notice shall not affect the indemnifying party's indemnification obligation unless the indemnifying party is actually prejudiced by the failure to receive such notice. After receipt of any such notice, if the indemnifying party shall acknowledge in writing to the indemnified party that the indemnifying party shall be obligated under the terms of this indemnity hereunder in connection with such Action, then the indemnifying party shall be entitled, if it so elects (i) to take control of the defense and investigation of such Action, (ii) to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party's cost, risk and expense unless the named parties to such action or proceeding include both the indemnifying party and the indemnified party and the indemnified party has been advised in writing by counsel that there may be one or more legal defenses available to such indemnified party that are different from or additional to those available to the indemnifying party, in which case the indemnified party shall also have the right to employ its own counsel in any such case with the reasonable fees and expenses of such counsel being borne by the indemnifying party, and (iii) to compromise or settle such Action, which compromise or settlement shall be made only with the written consent of the indemnified party, such consent not to be unreasonably withheld. Notwithstanding anything in this Section 12.3 to the contrary, (i) if there is a reasonable probability that an indemnifiable claim may materially adversely affect the indemnified party, other than as a result of money damages or other money payments, the indemnified party shall have the right to participate in such defense, compromise or settlement and the indemnifying party shall not, without the indemnified party's written consent (which consent shall not be unreasonably withheld), settle or compromise any indemnifiable claim or consent to entry of any judgment in respect thereof unless such settlement, compromise or consent includes as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party a release from all liability in respect of such indemnifiable claim. 12.4 The parties hereby expressly recognize and agree that each party's said obligation to indemnify, defend, protect and save the other harmless is not a material obligation to the continuing performance of the parties' other obligations, if any, hereunder. In the event that a party shall fail for any reason to so indemnify, defend, protect and save the other harmless, the injured party hereby expressly recognizes that its sole remedy in such event shall be the right to bring legal proceedings against the other party for its damages as a result of the other party's said failure to indemnify, defend, protect and save harmless. The obligations of the parties under this Article XII shall survive the expiration or termination of this Agreement. 12.5 Nothing contained herein shall operate as a limitation on the right of either party hereto to bring an action for damages against any third party, including indirect, special or consequential damages, based on any acts or omissions of such third party as such acts or omissions may affect the construction, operation or use of the GTE Fibers or the QWEST System; provided, however, that each party hereto shall assign such rights or claims, execute such documents and do whatever else may be reasonably necessary to enable the other party to pursue any such action against such third party. ARTICLE XIII. LIMITATION OF LIABILITY 13.1 Notwithstanding any provision of this Agreement to the contrary, except to the extent caused by its own willful misconduct, neither party shall be liable to the other party for any special, incidental, indirect, punitive or consequential damages, whether foreseeable or not, arising out of, or in connection with such party's failure to perform its respective obligations or breach of its respective representations hereunder, including, but not limited to, loss of profits or revenue (whether arising out of transmission interruptions or problems, any interruption or degradation of service or otherwise), cost of capital, or claims of customers, in each case whether occasioned by any construction, reconstruction, relocation, repair or maintenance performed by, or failed to be performed by, the other party or any other cause whatsoever, including breach of contract, breach of warranty, negligence, or strict liability, all claims with respect to which such special, incidental, indirect, punitive or consequential damages are hereby specifically waived. Nothing contained herein shall be construed to prohibit or reduce the payment by QWEST of the amounts described in Section 18.2 and which the parties acknowledge are the sole rights and remedies of GTE to the extent provided in Section 18.2(e). ARTICLE XIV. INSURANCE 14.1 During the construction period with respect to any Segment, and until the Acceptance Date with respect thereto, QWEST shall procure and maintain in force the following insurance coverage from companies lawfully approved to do business in the state where the construction will be performed: (a) not less than $5,000,000 combined single-limit liability insurance, on an occurrence basis, for personal injury and property damage, including, without limitation, injury or damage arising from the operation of vehicles or equipment and liability for completed operations; (b) workers' compensation insurance in amounts required by applicable law and employers' liability insurance with a limit of at least $1,000,000 per occurrence; (c) automobile liability insurance covering death or injury to any person or persons, or damage to property arising from the operation of vehicles or equipment, with limits of not less than $2,000,000 per occurrence; and (d) any other insurance coverages required pursuant to QWEST's right-of-way agreements with railroads or other third parties. QWEST shall require its subcontractors who are engaged in connection with the construction of the QWEST System to maintain insurance in the types and amounts as would be obtained by a prudent person to provide adequate protection against loss. In all circumstances, QWEST shall require its subcontractors to carry a minimum of $1,000,000 in commercial general liability; and (e) GTE shall be listed as an additional insured on all policies set forth above, except workers' compensation. QWEST shall provide to GTE a certificate of insurance evidencing such insurance coverage. Evidence of insurance furnished shall contain a clause stating GTE "shall be notified in writing at least thirty (30) days prior to any cancellation of, or any material change or new exclusions in the policy." 14.2 Following the Acceptance Date with respect to each Segment, and throughout the remaining term of the IRU with respect to such Segment, each party shall procure and maintain in force, at its own expense: (a) not less than $5,000,000 combined single limit liability insurance, on an occurrence basis, for personal injury and property damage, including, without limitation, injury or damage arising from the operation of vehicles or equipment and liability for completed operations; (b) workers' compensation insurance in amounts required by applicable law and employers' liability insurance with a limit of at least $1,000,000 per occurrence; (c) automobile liability insurance covering death or injury to any person or persons, or damage to property arising from the operation of vehicles or equipment, with limits of not less than $2,000,000 per occurrence; and (d) any other insurance coverages specifically required of such party pursuant to QWEST's right-of-way agreements with railroads or other third parties. 14.3 Both parties expressly acknowledge that a party shall be deemed to be in compliance with the provisions of this Article if it maintains an approved self insurance program providing for a retention of up to $1,000,000. If either party provides any of the foregoing coverages on a claims-made basis, such policy or policies shall be for at least a three-year extended reporting or discovery period. Unless otherwise agreed, GTE's and QWEST's insurance policies shall be obtained and maintained with companies rated "A" or better by Best's Key Rating Guide and each party shall provide the other with an insurance certificate confirming compliance with this requirement for each policy providing such required coverage. 14.4 In the event either party fails to obtain the required insurance or to obtain the required certificates from any contractor and a claim is made or suffered, such party shall indemnify and hold harmless the other party from any and all claims for which the required insurance would have provided coverage. Further, in the event of any such failure which continues after seven (7) days' written notice thereof by the other party, such other party may, but shall not be obligated to, obtain such insurance and will have the right to be reimbursed for the cost of such insurance by the party failing to obtain such insurance. 14.5 In the event coverage is denied or reimbursement of a properly presented claim is disputed by the carrier for insurance provided above, the party carrying such coverage shall make good-faith efforts to pursue such claim with its carrier. 14.6 GTE and QWEST shall each obtain from the insurance companies providing the coverages required by this Agreement the permission of such insurers to allow such party to waive all rights of subrogation and such party does hereby waive all rights of said insurance companies to subrogation against the other party, its parent corporation, affiliates, subsidiaries, assignees, officers, directors, and employees or any other party entitled to indemnity under this Agreement. ARTICLE XV. TAXES, FEES AND OTHER GOVERNMENTAL IMPOSITIONS 15.1 The parties acknowledge and agree that it is their mutual objective and intent to (i) minimize, to the extent feasible, the aggregate Impositions (as defined in Section 33.1(e)) payable with respect to the QWEST System and (ii) share such Impositions according to their respective interests in the QWEST System , and that they will cooperate with each other and coordinate their mutual efforts to achieve such objectives in accordance with the provisions of this Article XV. 15.2 (a) QWEST shall be responsible for and shall timely pay any and all Impositions with respect to the construction or operation of the QWEST System which Impositions are (i) imposed or assessed prior to the Acceptance Date, (ii) imposed or assessed with respect to events which occurred or property rights or obligations of QWEST which existed prior to the acceptance date; or (iii) imposed or assessed (regardless of the time) with respect to the QWEST System in exchange for the approval of construction in the original agreement which resulted in the granting of an Underlying Right. Notwithstanding the foregoing obligations, QWEST shall have the right to challenge any such Impositions so long as the challenge of such Impositions does not materially, adversely affect the title, rights or property to be delivered to GTE pursuant hereto. (b) Real and/or personal property or ad valorem taxes shall be prorated between QWEST and GTE based on the period the Property was owned by each respective party during the fiscal period for which such taxes were imposed by the taxing jurisdiction (as such fiscal period is reflected on the bill rendered by such taxing jurisdiction). If the fiscal period is not identified on the tax bill, proration between QWEST and GTE shall be calculated based on the privilege period of the taxing jurisdiction. QWEST and GTE shall pay or be reimbursed for real and/or personal property taxes (including instances in which such property taxes have been paid before the Acceptance Date) prorated on this basis. 15.3 Except as to Impositions described in paragraphs (ii) and (iii) of Section 15.2, which are clearly for QWEST's account following the Acceptance Date, QWEST shall timely pay any and all Impositions imposed upon or with respect to the QWEST System to the extent such Impositions may not feasibly be separately assessed or imposed upon or against the respective ownership interests of QWEST and GTE in the QWEST System; provided that, upon receipt of a notice of any such Imposition, QWEST shall promptly notify GTE of such Imposition and following payment of such Imposition by QWEST, GTE shall promptly reimburse QWEST for its proportionate share of such Imposition, which share shall be determined (i) to the extent possible, based upon the manner and methodology used by the particular authority imposing such Impositions (e.g., on the cost of the relative property interests, historic or projected revenue derived therefrom, or any combination thereof) and, if based upon projected revenue or gross receipts, then based on the relative number of GTE Fibers in the affected portion of the QWEST System compared to the total number of fibers in the affected portion of the QWEST System during the relevant tax period which are subject to an indefeasible right of use or are otherwise in use; or (ii) if the same cannot be so determined, then based upon GTE's proportionate share of the total fiber count in the affected portion of the QWEST System. If QWEST's assessed value, for property tax purposes, is based on its entire operation in any state (i.e., central assessment), QWEST and GTE shall work together in good faith to allocate a proper portion n of said assessment to the QWEST System and GTE's ownership interest in the QWEST System. If GTE's assessed value, for property tax purposes, is based on a duplicate assessment of the same property as QWEST, QWEST and GTE shall work together in good faith to allocate a portion of this duplicate assessment to each party. QWEST and GTE shall work together in good faith to aggressively defend against such duplicate assessment in any state which attempts to impose a duplicate assessment. QWEST shall provide GTE with reasonable supporting documentation for Impositions for which QWEST seeks reimbursement. Any reimbursement made under this Section 15.3 shall be in an amount that, after deductions of all Impositions required to be paid by QWEST in respect of the receipt or accrual of such reimbursement and after consideration of any deduction to which QWEST may be entitled with respect to the payment or accrual of the Impositions which have been reimbursed shall be equal to the amount otherwise required to be paid by QWEST hereunder. Hereafter, such additional amount or amounts shall be referred to as the "Gross- up Amount." QWEST shall, upon request, provide GTE with documentation in support of any Gross-up Amount so as to ensure that both parties are made whole in a manner that is consistent with the mutual objectives set forth in section 15.1 of the Agreement. If such Gross- up Amount exceeds $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , GTE may elect to engage the services of an independent consultant, at GTE's sole cost and expense, to review QWEST's computation of such Gross-up Amount. Any independent consultant selected by GTE shall be subject to approval by QWEST, which such approval shall not be unreasonably withheld, and such independent consultant shall be subject to confidentiality restrictions as may be determined in QWEST's sole discretion. Further, if, after review of such documentation or otherwise, in the event the parties are unable to agree upon the amount of the Gross-up Amount, such dispute shall be resolved pursuant to Article XXI of the Agreement. 15.4 Upon notice of the assertion or proposed assertion of any Imposition described in Section 15.3 (including Impositions that trigger a Gross-up Amount) QWEST shall promptly and in good faith consult with GTE concerning the underlying facts and whether to contest or continue to contest such assertion or proposed assertion. Notwithstanding any provision herein to the contrary, QWEST shall have the right to contest any Imposition described in Section 15.3, above, (including Impositions which trigger a Gross-up Amount), provided that such contest does not materially adversely affect GTE. Such contest may be pursued by any lawful means including by non-payment of such Imposition provided such non-payment contest does not materially, adversely affect the title, rights or property to be delivered to GTE pursuant hereto. The out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by QWEST in any such contest shall be shared by QWEST and GTE in the same proportion as to which the parties shared in any such Imposition, as it was originally assessed. Any refunds or credits resulting from a contest brought pursuant to this Section 15.4 shall be divided between QWEST and GTE in the same proportion as to which such refunded or credited Impositions were borne by QWEST and GTE. In any such event, QWEST shall provide timely notice of such challenge to GTE. If QWEST chooses to proceed with such challenge after receipt of a written objection to the challenge from GTE, QWEST shall conduct such challenge at its own costs and expense, provided that GTE shall not receive the benefit of any refund or credit, if any, obtained as a result of a successful challenge. Further, where QWEST does not contest an Imposition, GTE shall have the right, after notice to QWEST, to contest such Imposition as long as such contest does not materially, adversely affect the title property or rights of QWEST. The out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by GTE in any such contest shall be shared by GTE and QWEST in the same proportion as to which the parties shared in such Imposition, as it was originally assessed. Any refunds or credits resulting from a contest shall be divided between GTE and QWEST in the same proportion as to which such refunded or credited Imposition was borne by GTE and QWEST. If GTE chooses to proceed with such contest after receipt of written objection to the challenge from QWEST, GTE shall conduct such challenge at its own costs and expense, provided that QWEST shall not receive the benefit of any refund or credit, if any, obtained as a result of a successful challenge. Provided, however, that notwithstanding anything to the contrary in this Article XV, QWEST shall have complete authority over and discretion to control (including the authority to dismiss or not pursue) any contests relating to Impositions based upon the computation of QWEST's taxable income under the Federal Internal Revenue Code or state income or franchise tax laws (hereinafter "Net Income Based Impositions"). GTE shall, however, be consulted on the conduct and status of such contest. QWEST shall have no obligation to disclose to GTE its income or franchise tax returns and records except as to the discrete portion of such return or record that directly relates to the computation and payment of such Net Income Based Impositions. Provided further, however, that in the event QWEST shall determine in its own discretion not to pursue a contest of any Net Income Based Imposition as to which GTE has requested a contest pursuant to the provisions described above in this Section 15.4, then GTE shall have no obligation to provide any reimbursement for such amount if GTE shall have obtained and provided to QWEST an opinion of nationally recognized legal counsel confirming that a meritorious defense exists to such Net Income Based Imposition. 15.5 Except as to Impositions described in paragraph (iii) of Section 15.2, following the Acceptance Date QWEST and GTE, respectively, shall be separately responsible for any and all Impositions (i) expressly or implicitly imposed upon, based upon, or otherwise measured by the gross receipts, gross income, net receipts or net income received by or accrued to such party due to its respective ownership or use of the QWEST System and/or the GTE Fibers, or (ii) which have been separately assessed or imposed upon the respective ownership interest of such party in the QWEST System and/or the GTE Fibers. If the GTE Fibers are the only fibers located in the Cable from the point where the Cable leaves the QWEST System right-of- way to a GTE POP, GTE shall be solely responsible for any and all Impositions imposed on or with respect to such portion of the QWEST System. 15.6 Notwithstanding any provision herein to the contrary, GTE shall have the right to protest by appropriate proceedings any Imposition described in Section 15.5, above. In such event, GTE shall indemnify and hold QWEST harmless from any expense, legal action or cost, including reasonable attorneys' fees, resulting from GTE's exercise of its rights hereunder. In the event of any refund, rebate, reduction or abatement to GTE of any such Imposition imposed upon and/or paid by GTE, GTE shall be entitled to receive the entire benefit of such refund, rebate, reduction or abatement attributable to GTE's use of the QWEST System. In the event GTE has exhausted all its rights of appeal in protesting any Imposition and has failed to obtain the relief sought in such proceedings or appeals ("Finally Determined Taxes and Fees"), GTE and QWEST may jointly agree (with the consent and participation of the other Interest Holders in the affected portion of the QWEST System) to relocate a portion of the QWEST System so as to bypass the jurisdiction which had imposed or assessed such Finally Determined Taxes and Fees with the total Costs thereof to be shared proportionately as follows: (i) if the affected portion of the QWEST System includes any conduit other than the conduit in which the GTE Fibers are located, the total Costs of relocation of the conduits (i.e., relocation of the conduits only without regard to whether the conduits contain fibers) shall be allocated based on the overall number of conduits in the QWEST System which are relocated; and (ii) such Costs allocated to the conduit carrying the GTE Fibers plus the Costs specifically associated with the relocation of the fiber (i.e., relocation of the fiber only without regard to relocation of conduit) to be further allocated to GTE based upon GTE's proportionate share of (A) all Costs of fiber acquisitions, splicing and testing, prorated based on the total fiber count in the Cable, as so relocated; and (B) all other Costs associated with the relocation of the conduit housing the affected Cable, prorated based upon the total number of Interest Holders in the affected Cable, as so relocated. QWEST shall deliver to GTE updated As-Builts with respect to the relocated QWEST System not later than sixty (60) days following the completion of such relocation. If GTE and QWEST do not determine to relocate the affected portion of the QWEST System, GTE shall have the right to terminate its use of the GTE Fibers in the affected portion of the QWEST System. Such termination shall be effective on the date specified by GTE in a notice of termination, which date shall be at least ninety (90) days after the notice. Upon such termination, the IRU in the affected portion of the QWEST System shall immediately terminate, and the GTE Fibers in the affected portion of the QWEST System shall thereupon revert to QWEST without reimbursement of any of the IRU Fee or other payments previously made with respect thereto. 15.7 Notwithstanding the provisions of Section 15.6, with respect to any Impositions relating to the QWEST System which are imposed upon both QWEST and GTE (or both of their respective interests therein), QWEST, at its option and at its own expense, shall have the right to direct and manage in good faith any such contest; subject, however, to reasonable and appropriate consultation with GTE which hereby agrees to reasonably cooperate with QWEST in any such contest. The right of QWEST to contest any Imposition pursuant to this Section 15.7 shall be contingent upon reasonable and appropriate assurances that any such contest will not adversely affect the title, property or rights of GTE hereunder. 15.8 QWEST and GTE agree to cooperate fully in the preparation of any returns or reports relating to the Impositions. QWEST and GTE further acknowledge and agree that the provisions of this Article XV are intended to allocate the Impositions expected to be assessed against or imposed upon the parties with respect to the QWEST System based upon the procedures and methods of computation by which Impositions generally have been assessed and imposed to date, and that material changes in the procedures and methods of computation by which such assessments are assessed and imposed could significantly alter the fundamental economic assumptions underlying the transactions hereunder to the parties. Accordingly, the parties agree that, if in the future the procedures or methods of computation by which Impositions are assessed or imposed against the parties change materially from the procedures or methods of computation by which they are imposed as of the date hereof, the parties will negotiate in good faith an amendment to the provisions of this Article XV in order to preserve, to the extent reasonably possible, the economic intent and effect of this Article XV as of the date hereof. ARTICLE XVI. NOTICE 16.1 Unless otherwise provided herein, all notices and communications concerning this Agreement shall be addressed to the other party as follows: If to QWEST: QWEST Communications Corporation ATTENTION: President 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 with a copy to: QWEST Communications Corporation ATTENTION: General Counsel 555 Seventeenth Street Denver, Colorado 80202 Telephone No.: (303) 291-1400 Facsimile No.: (303) 291-1724 If to GTE: GTE Intelligent Network Services Incorporated ATTENTION: President 600 Hidden Ridge P.O. Box 152092 Irving, Texas 75038 Telephone No.: Facsimile No: with a copy to: or at such other address as either party may designated from time to time in writing to the other party. 16.2 Unless otherwise provided herein, notices shall be hand delivered, sent by registered or certified U.S. mail, postage prepaid, or by commercial overnight delivery service, or transmitted by facsimile, and shall be deemed served or delivered to the addressee or its office when received at the address for notice specified above when hand delivered, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery service, or three (3) days after deposit in the mail when sent by U.S. mail. 16.3 All invoices concerning payment obligations due to QWEST pursuant to this Agreement shall be addressed to GTE as follows: GTE Intelligent Network Services Incorporated 600 Hidden Ridge P.O. Box 152092 Irving, Texas 75038 ATTENTION: Accounts Payable with a copy to: ARTICLE XVII. CONFIDENTIALITY 17.1 QWEST and GTE hereby agree that if either party provides (or, prior to the execution hereof, has provided) confidential or proprietary information to the other party ("Proprietary Information"), such Proprietary Information shall be held in confidence, and the receiving party shall afford such Proprietary Information the same care and protection as it affords generally to its own confidential and proprietary information (which in any case shall be not less than reasonable care) in order to avoid disclosure to or unauthorized use by any third party. The parties acknowledge and agree that this Agreement, including all of the terms, conditions and provisions hereof, and all drafts hereof, constitutes Proprietary Information. In addition, all information disclosed by either party to the other in connection with or pursuant to this Agreement, including prior to the date hereof, shall be deemed to be Proprietary Information. All Proprietary Information, unless otherwise specified in writing, shall remain the property of the disclosing party, shall be used by the receiving party only for the intended purpose, and such written Proprietary Information, including all copies thereof, shall be returned to the disclosing party or destroyed after the receiving party's need for it has expired or upon the request of the disclosing party. Proprietary Information shall not be reproduced except to the extent necessary to accomplish the purpose and intent of this Agreement, or as otherwise may be permitted in writing by the disclosing party. 17.2 The foregoing provisions of Section 17.1 shall not apply to any Proprietary Information which (i) becomes publicly available other than through the recipient; (ii) is required to be disclosed by a governmental or judicial law, order, rule or regulation; (iii) is independently developed by the disclosing party; (iv) becomes available to the disclosing party without restriction from a third party; or (v) becomes relevant to the settlement of any dispute or enforcement of either party's rights under this Agreement in accordance with the provisions of this Agreement, in which case appropriate protective measures shall be taken to preserve the confidentiality of such Proprietary Information as fully as possible within the confines of such settlement or enforcement process. If any Proprietary Information is required to be disclosed pursuant to the foregoing clause (ii), the party required to make such disclosure shall promptly inform the other party of the requirements of such disclosure. 17.3 Notwithstanding Sections 17.1 and 17.2 of this Article, either party may disclose Proprietary Information to its employees, agents, and legal, financial, and accounting advisors and providers (including its lenders and other financiers) to the extent necessary or appropriate in connection with the negotiation and/or performance of this Agreement or its obtaining of financing, provided that each such party is notified of the confidential and proprietary nature of such Proprietary Information and is subject to or agrees to be bound by similar restrictions on its use and disclosure. 17.4 Notwithstanding the foregoing sections of this Article 17, the parties may provide public statements concerning their participation in this Agreement that do not disclose Proprietary Information of the other party. Any news release, public announcement, advertising or any form of publicity pertaining to this Agreement, provision of services pursuant to it, or association of the parties with respect to the subject of this Agreement shall be subject to prior written approval of both parties which approval shall not be unreasonably withheld. 17.5 The provisions of this Article XVII shall survive expiration or termination of this Agreement. ARTICLE XVIII. DEFAULT 18.1 With respect to all payments required to be made by GTE hereunder, including, without limitation, payment of the IRU Fee and all other amounts payable by GTE hereunder, in the event GTE shall fail to make a payment by the date due and payable hereunder, from and after such date, (i) such unpaid amount shall bear interest until paid at a rate equal to the rate set forth in Article XXX and (ii) if such payment is due with respect to a Segment on or prior to the Acceptance Date of such Segment, the Estimated Delivery Date for such Segment shall be extended by a number of days equal to the number of days that elapse from the date such payment is due until paid. In the event any amount or amounts due and payable hereunder remain unpaid for a period of eighty (80) days after written notice from QWEST to GTE, and the amount thereof is not in bona fide dispute, then QWEST may, in its sole and absolute discretion and in addition to its other rights and remedies hereunder, after ten (10) days prior written notice to GTE and the failure of GTE to pay such amount within such ten-day period, terminate any and all of its obligations hereunder with respect to any Segment or Segments as to which the Acceptance Date has not yet occurred or the grant of the IRU with respect to which has not yet become effective, and to apply any and all amounts previously paid by GTE hereunder with respect to such Segment or Segments toward the payment of any other amounts then or thereafter payable by GTE hereunder. With respect to all of its other obligations hereunder, in the event GTE shall fail to perform a non-payment obligation and such failure shall continue for a period of thirty (30) days after QWEST shall have given GTE written notice of such failure, GTE shall be in default hereunder unless GTE shall have cured such failure or such failure is otherwise waived in writing by QWEST within such thirty (30) days; provided, however, that where such failure cannot reasonably be cured within such 30-day period, if GTE shall proceed promptly to cure the same and prosecute such cure with due diligence, the time for curing such failure shall be extended for such period of time as may be necessary to complete such cure; and provided further that if GTE certifies in good faith to QWEST in writing that a non- payment failure has been cured, such failure shall be deemed to be cured unless QWEST otherwise notifies GTE in writing within fifteen (15) days of receipt of such notice from GTE. GTE shall be in default hereunder (i) automatically upon the making by GTE of a general assignment for the benefit of its creditors, the filing by GTE of a voluntary petition in bankruptcy or the filing by GTE of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution, or similar relief; (ii) one hundred twenty (120) days after the filing of an involuntary petition in bankruptcy or other insolvency protection against GTE which is not dismissed within such one hundred twenty (120) days, or (iii) upon any default by GTE under the Guaranty, which default is not cured within the relevant cure period, if any, provided with respect thereto under the Guaranty. Except as otherwise provided in this Section 18.1, upon any default by GTE, after written notice thereof from QWEST, QWEST may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default and, subject to Section 13.1, recover from GTE its reasonable costs incurred in correcting such default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such default, including specific performance. Notwithstanding any other provision of this Agreement, QWEST acknowledges and agrees that QWEST shall have no right to terminate the IRU or any of the rights and interests of GTE hereunder with respect to any Segment for which the IRU Fee relating thereto has been fully paid. 18.2 (a) With respect to its obligation to complete the construction, installation, and satisfactory Fiber Acceptance Testing of the GTE Fibers comprising a particular Segment by the Estimated Delivery Date with respect to such Segment pursuant to Section 3.2, the parties acknowledge and agree that it is in their mutual best interest to work together in a cooperative effort to determine whether and to what extent any event or occurrence that is reasonably likely to cause a delay in the delivery of a Segment hereunder, as a result of any force majeure event or other occurrence described in Article XX or otherwise, can be terminated, resolved or avoided, and to cause the construction, installation and delivery of the Segment to be completed in the most expeditious and practical manner feasible under the circumstances. Accordingly, within three (3) months following its discovery of an event or occurrence that QWEST reasonably believes is likely to cause (i) an extension of the Estimated Delivery Date of one hundred twenty (120) days or more pursuant to Article XX or (ii) a Delivery Default (as defined pursuant to Section 18.2(d) below), QWEST shall give written notice to GTE of such event or occurrence. Thereupon, each of QWEST and GTE (i) will designate a senior executive officer with decision-making authority and familiarity with this Agreement and the relevant issue hereunder, and (ii) may designate one technical representative and one financial representative, to participate in the following resolution efforts. Each of such designees shall participate in such meetings, promptly scheduled at mutually agreed upon times and places, as may be necessary or appropriate to discuss in good faith the status of construction of the affected Segment, the reason or reasons for the anticipated Estimated Delivery Date extension or Delivery Default, various possible and practical means by which the event(s) or occurrence(s) causing such anticipated Estimated Delivery Date extension or Delivery Default might be terminated, avoided or resolved, including, without limitation, possible modifications to the route, selection of right-of- way, or manner of construction of the affected Segment, and (iii) use their best efforts to settle upon and implement a procedure by which such event(s) or occurrence(s) may be terminated, avoided or resolved and the construction, installation and delivery of the affected Segment completed in an expeditious and economically practical and feasible manner under the circumstances. The parties acknowledge and agree that, because the QWEST System includes or will include other participants, including owners and holders of Dark Fiber IRUs and telecommunication system operations, such meetings may, and likely will, involve designees and representatives of such other participants, and the resolution of any matters so acted upon will require the cooperative efforts of, and have to be structured, to the extent feasible, in an effort to meet the needs of all such participants. The parties hereto further acknowledge and agree that no failure of the parties hereto to resolve, or to agree upon a manner in which they might resolve, any issue addressed hereunder shall impair, adversely affect or invalidate any of their respective rights, claims or remedies under this Agreement. (b) If, notwithstanding the efforts of the parties pursuant to Section 18.2(a): (i) (A) a force majeure event or occurrence described in Article XX causing an anticipated Estimated Delivery Date extension has not been terminated, avoided or resolved by the date that is twelve (12) months following QWEST's discovery of such event or occurrence, and (B) there is no "Reasonably Apparent Probability" (either as mutually determined by QWEST and GTE or, if QWEST and GTE are unable to make such a mutual determination, as determined by an independent third party mutually selected by QWEST and GTE and familiar with large-scale fiberoptic system constructions projects or, if QWEST and GTE are unable to make such a mutual selection, each of QWEST and GTE shall designate such an independent third party, the two of which shall designate such an independent third party to make such determination) that the Acceptance Date with respect to any such affected Segment will occur within (1) twelve (12) months following the Estimated Delivery Date (without extension for any delay pursuant to Article XX) with respect to any Segment designated as a "priority" Segment on Exhibit A-1, or (2) eighteen (18) months following the Estimated Delivery Date (without extension for any delay pursuant to Article XX) with respect to any other Segment (such date with respect to each Segment being referred to as the "Outside Force Majeure Date"); or (ii) notwithstanding a determination pursuant to the foregoing clause (i) that there was a Reasonably Apparent Probability that the Acceptance Date with respect to the affected Segment would occur by the applicable Outside Force Majeure Date, nonetheless the event or occurrence described in Article XX causing such delay is continuing on such applicable Outside Force Majeure Date; or (iii) notwithstanding such a determination that there was a Reasonably Apparent Probability that the Acceptance Date with respect to the affected Segment would occur by the applicable Outside Force Majeure Date, nonetheless, on the applicable Outside Force Majeure Date, although the event or occurrence described in Article XX has been terminated, avoided or resolved and QWEST has resumed its construction, installation, splicing, and/or testing efforts, QWEST is unable to demonstrate to GTE's reasonable satisfaction that the Acceptance Date for such Segment will occur, in all reasonable probability, by the date that is six (6) months following such Outside Force Majeure Date, then, in any such event described in foregoing clauses (i), (ii), and (iii), GTE may elect, in its sole discretion, by written notice to QWEST, to delete such Segment from the System Route otherwise to be delivered pursuant to this Agreement, and recover from QWEST (1) the amount of the IRU Fee previously paid by GTE hereunder with respect to such Segment, plus (2) interest at the prime rate interest published by The Wall Street Journal as the base rate on corporate loans posted by a substantial percentage of the nation's largest banks on such date, plus (3) an amount equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## of the IRU Fee for such Segment, as determined pursuant to Section 2.1 (with such aggregate amount payable to GTE promptly following QWEST's receipt of such election notice or, at the election of GTE, offset against the unpaid amount of the IRU Fee payable hereunder with respect to any other Segment or Segments). Upon any such election and payment (or offset), neither party shall have any further rights or obligations with respect to such Segment hereunder. (c) If, notwithstanding the efforts of the parties pursuant to Section 18.2(a): (i) (A) an event or occurrence causing an anticipated Delivery Default (as defined in Section 18.2(d) below) has not been terminated, avoided, resolved or waived by the date that is twelve (12) months following QWEST's discovery of such event or occurrence; and (B) there is no Reasonably Apparent Probability that the Acceptance Date with respect to any such affected Segment will occur within (x) twelve (12) months following the Estimated Delivery Date with respect to each Segment designated as a "Priority" Segment on Exhibit A-1, or (y) eighteen (18) months following the Estimated Delivery Date with respect to any other Segment (such dates being referred to collectively as the "Outside Delivery Default Date"); or (ii) notwithstanding a determination pursuant to the foregoing clause (i) that there was a Reasonably Apparent Probability that the Acceptance Date with respect to the affected Segment would occur by the applicable Outside Delivery Default Date, nonetheless, on the applicable Outside Delivery Default Date, the Acceptance Date for such Segment has not occurred; then, in any such event described in the foregoing clauses (i) and (ii), GTE may elect, in its sole discretion, by written notice to QWEST, to delete such Segment from the System Route otherwise to be delivered pursuant to this Agreement, and recover from QWEST (1) the amount of the IRU Fee previously paid by GTE hereunder with respect to such Segment, plus (2) interest thereon at the rate of interest applicable to late payments set forth in Article XXX, plus (3) an amount equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## of the IRU Fee for such Segment, as determined pursuant to Section 2.1, but without reduction of such IRU fee under Section 18.2(d) (with such aggregate amount payable to GTE promptly following QWEST's receipt of such election notice or, at the election of GTE, offset against the unpaid amount of the IRU Fee payable hereunder with respect to any other Segment or Segments). Upon any such election and payment (or offset), neither party shall have any further rights or obligations with respect to such Segment hereunder. (d) In addition to the specific rights and remedies provided pursuant to the foregoing paragraphs (b) and (c) in connection with delays and anticipated delays in the delivery of Segments hereunder, QWEST shall be in default under this Agreement if the Acceptance Date with respect to any Segment has not occurred within one hundred twenty (120) days after the Estimated Delivery Date (a "Delivery Default"). From the date of any such Delivery Default, and until the Acceptance Date with respect to such Segment occurs, the IRU Fee with respect to such Segment, as determined or redetermined pursuant to Section 2.1 hereof, shall be reduced by an amount equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % of such IRU Fee for each thirty (30) days (or a pro rata percentage of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % for any period of less than thirty (30) days) that elapse between such date of Delivery Default and the Acceptance Date. (e) The rights and remedies set forth in the foregoing Sections 18.2(c) and 18.2(d) shall be the sole remedies available to GTE with respect to any failure by QWEST to construct, install, and conduct satisfactory Fiber Acceptance Testing with respect to the GTE Fibers comprising any Segment by the relevant Estimated Delivery Date (it being expressly acknowledged and agreed that the rights provided to GTE pursuant to Section 18.2(b) are provided only as an accommodation in the event of lengthy force majeure delays pursuant to Article XX, and that the events described in Section 18.2(b) do not constitute defaults hereunder). With respect to all of QWEST's other obligations hereunder, in the event that QWEST shall fail to perform an obligation and such failure shall continue for a period of thirty (30) days after GTE shall have given QWEST written notice of such failure, QWEST shall be in default hereunder unless QWEST shall have cured such failure or such failure is otherwise waived in writing by GTE within such thirty (30) days; provided however, that where such failure cannot reasonably be cured within such 30-day period, if QWEST shall proceed promptly to cure the same and prosecute such cure with due diligence, the time for curing such failure shall be extended for such period of time as may be necessary to complete such cure; and provided further, that if QWEST certifies in good faith to GTE in writing that failure has been cured, such failure shall be deemed to be cured unless GTE otherwise notifies QWEST in writing within fifteen (15) days of receipt of such notice from QWEST. QWEST shall be in default hereunder automatically upon the making by QWEST of a general assignment for the benefit of its creditors, the filing by QWEST of a voluntary petition in bankruptcy or the filing by QWEST of any petition or answer seeking, consenting to, or acquiescing in reorganization, arrangement, adjustment, composition, liquidation, dissolution, or similar relief, or (ii) one hundred twenty (120) days after the involuntary filing of a petition in bankruptcy or other insolvency protection against QWEST which is not dismissed within such 120-day period. Except as otherwise provided in this Section 18.2, upon any default by QWEST, after notice thereof from GTE, GTE may (i) take such action as it determines, in its sole discretion, to be necessary to correct the default, and, subject to Section 13.1, recover from QWEST its reasonable costs in correcting such default, and (ii) pursue any legal remedies it may have under applicable law or principles of equity relating to such default including specific performance. ARTICLE XIX. TERMINATION 19.1 This Agreement automatically shall terminate with respect to a Segment upon the expiration or termination of the Term of the IRU respecting such Segment pursuant to Article VI or Section 18.2 hereof. 19.2 Upon the expiration or termination of this Agreement with respect to a Segment, the IRU in such Segment shall immediately terminate and all rights of GTE to use the QWEST System, the GTE Fibers, the Associated Property or any part thereof relating to such Segment, shall cease and QWEST shall owe GTE no additional duties or consideration with respect to such Segment. Promptly thereupon, GTE shall remove all of GTE's electronics, equipment, separate Regeneration Facilities (as provided pursuant to Section 7.2) and other associated GTE property from such Segment and any related QWEST facilities at its sole cost under QWEST's supervision (which supervision shall be without cost to GTE). 19.3 Notwithstanding the foregoing, no termination or expiration of this Agreement shall affect the rights or obligations of any party hereto (i) with respect to any then existing defaults or the obligation to make any payment hereunder for services rendered prior to the date of termination or expiration or (ii) pursuant to Article XII, Article XIII, Article XV or Article XVII herein, which shall survive the expiration or termination hereof. ARTICLE XX. FORCE MAJEURE 20.1 Neither party shall be in default under this Agreement if and to the extent that any failure or delay in such party's performance of one or more of its obligations hereunder is caused by any of the following conditions, and such party's performance of such obligation or obligations shall be excused and extended for and during the period of any such delay: act of God; fire; flood; fiber, Cable, or other material failures, shortages or unavailability or other delay in delivery not resulting from the responsible party's failure to timely place orders therefor (it being expressly acknowledged that the Cable that is being acquired for and installed in the QWEST System and that will include the GTE Fibers must include higher fiber counts than that necessary solely for the GTE Fibers in order to permit completion of the entire QWEST System); lack of or delay in transportation; government codes, ordinances, laws, rules, regulations or restrictions (collectively, "Regulations"); war or civil disorder; strikes or other labor disputes; failure of a third party to grant or recognize an Underlying Right, or any other cause beyond the reasonable control of such party; provided that any delay caused by the failure of a third party to grant an Underlying Right shall constitute a force majeure delay hereunder only to the extent that such delay does not extend beyond a period of six months (such that the Estimated Delivery Date with respect to any Segment affected by such delay shall be extended only up to a period of six months of any such delay, and shall not be further extended if such delay extends beyond a period of six months). The party claiming relief under this Article shall notify the other in writing of the existence of the event relied on and the cessation or termination of said event. ARTICLE XXI DISPUTE RESOLUTION 21.1 Except as provided in Sections 18.1 and 18.2, if the parties are unable to resolve any disagreement or dispute arising under or related to this Agreement, including without limitation, the failure to agree upon any item requiring a mutual agreement of the parties hereunder, they shall resolve the disagreement or dispute as follows: (a) Officers. Either party may refer the matter to the Chief Executive Officers or the Chief Operating Officers (the "Officers") of the parties by giving the other party written notice (a "Notice"). Within fifteen (15) days after delivery of a Notice, the Officers of both parties shall meet at a mutually acceptable time and place to exchange relevant information and to attempt to resolve the dispute. (b) Negotiation. If the matter has not been resolved within thirty (30) days after delivery of such Notice, or if the Officers fail to meet within fifteen (15) days after delivery of such Notice, either party may initiate mediation and, if applicable, arbitration in accordance with the procedure set forth in subsections (c) and (d) below. All negotiations conducted by the Officers pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and State Rules of Evidence. (c) Mediation. In the event a dispute exists between the parties and the respective Officers are unable to resolve the dispute, the parties agree to participate in a non-binding mediation procedure as follows: (i) A mediator will be selected by having counsel for each party agree on a single person to act as mediator. The parties' counsel as well as the Officers of each party and not more than two other participants from each party will appear before the mediator at a time and place determined by the mediator, but not more than sixty (60) days after delivery of a Notice. The fees of the mediator and other costs of mediation will be shared equally by the parties. (ii) Each party's counsel will have forty-five (45) minutes to present a review of the issue and argument before the mediator. After each counsel's presentation, the other counsel may present specific counter-arguments not to exceed ten (10) minutes. The 45-minute and 10-minute periods will be exclusive of the time required to answer questions from the mediator or attendees. (iii) After both presentations, the Officers may ask questions of the other side. At the conclusion of both presentations and the question periods, the Officers and their counsels will meet together to attempt to resolve the dispute. The length of the meeting will be as agreed between the parties. Either party may abandon the procedure at the end of the presentations and question periods if they feel it is not productive to go further. The mediation procedure is not binding on either party. (iv) The duties of the mediator are to be sure that the above set-out time periods are adhered to and to ask questions so as to clarify the issues and understandings of the parties. The mediator may also offer possible resolutions of the issues but has no duty to do so. (d) Arbitration. If the matter is not resolved after applying the mediation procedures set forth above, or if either party refuses to take part in the mediation process, the parties hereby agree to submit all controversies, claims and matters of difference that are unresolved to arbitration in Denver, Colorado, according to the commercial rules and practices of the American Arbitration Association ("AAA") from time to time in force, and in accordance with the following provisions of this subsection (d), and unless otherwise agreed by the parties and subject to the rights of the parties as provided in Section 18.1 and Section 18.2 hereof (including the right not to continue to perform under this Agreement), they shall continue to perform under this Agreement during arbitration. (i) Arbitration discovery shall be conducted in accordance with the Federal Rules of Civil Procedure, with any disputes over the scope of discovery to be determined by the arbitrators, it being intended that the arbitrators shall allow limited, reasonable discovery prior to any hearing on the merits. (ii) Arbitration hereunder shall be by three independent and impartial arbitrators. Each of the parties shall appoint one arbitrator within thirty (30) days after initiation of arbitration and the two arbitrators so appointed shall select a third arbitrator within forty-five (45) days after initiation of arbitration. In the event that the parties or the arbitrators fail to select arbitrators as required above, the AAA shall select such arbitrators. (iii) The AAA shall have the authority to disqualify any arbitrator who it determines not to be independent and impartial. The arbitrators shall be entitled to a fee commensurate with their fees for professional services requiring similar time and effort. (iv) The arbitrators shall conduct a hearing no later than sixty (60) days after initiation of the matter to arbitration, and a decision shall be rendered by the arbitrators within thirty (30) days of the hearing. At the hearing, the parties shall present such evidence and witnesses as they may choose, with or without counsel. Adherence to formal rules of evidence shall not be required but the arbitration panel shall consider any evidence and testimony that it determines to be relevant, in accordance with procedures that it determines to be appropriate. The arbitration determination shall be in writing and shall specify the factual and legal bases for the determination. The arbitrators may award legal or equitable relief, including but not limited to specific performance. (v) The parties agree that this submission and agreement to arbitrate shall be governed by and specifically enforceable in accordance with the laws of the State of Colorado. Arbitration may proceed in the absence of any party if prior written notice of the proceedings has been given to such party. The parties agree to abide by all decisions and determinations rendered in such proceedings. Such decisions and determinations shall be final and binding on all parties. All decisions and determinations may be filed with the clerk of one or more courts, state, federal or foreign having jurisdiction over the party against whom it is rendered or its property, as a basis of judgment. (vi) The arbitrators' fees and other costs of the arbitration shall be borne by the party against whom the award is rendered, except as the arbitration panel may otherwise provide in its written opinion. ARTICLE XXII. WAIVER 22.1 The failure of either party hereto to enforce any of the provisions of this Agreement, or the waiver thereof in any instance, shall not be construed as a general waiver or relinquishment on its part of any such provision, but the same shall nevertheless be and remain in full force and effect. ARTICLE XXIII. GOVERNING LAW 23.1 This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Colorado, without reference to its choice of law principles. Any litigation based hereon, or arising out of or in connection with a default by either party in the performance of its obligations hereunder, shall be brought and maintained exclusively in the courts of the State of Colorado or in the United States District Court for the District of Colorado, and each party hereby irrevocable submits to the jurisdiction of such courts for the purpose of any such litigation and irrevocably agrees to be bound by any judgment rendered thereby in connection with such litigation. ARTICLE XXIV. RULES OF CONSTRUCTION 24.1 The captions or headings in this Agreement are strictly for convenience and shall not be considered in interpreting this Agreement or as amplifying or limiting any of its content. Words in this Agreement which import the singular connotation shall be interpreted as plural, and words which import the plural connotation shall be interpreted as singular, as the identity of the parties or objects referred to may require. 24.2 Unless expressly defined herein, words having well known technical or trade meanings shall be so construed. All listing of items shall not be taken to be exclusive, but shall include other items, whether similar or dissimilar to those listed, as the context reasonably requires. 24.3 Except as set forth to the contrary herein, any right or remedy of GTE or QWEST shall be cumulative and without prejudice to any other right or remedy, whether contained herein or not. 24.4 Except as expressly provided in Section 28.1, nothing in this Agreement is intended to provide any legal rights to anyone not an executing party of this Agreement. 24.5 This Agreement has been fully negotiated between and jointly drafted by the parties. 24.6 All actions, activities, consents, approvals and other undertakings of the parties in this Agreement shall be performed in a reasonable and timely manner, it being expressly acknowledged and understood that time is of the essence in the performance of obligations required to be performed by a date expressly specified herein. Except as specifically set forth herein, for the purpose of this Agreement the standards and practices of performance within the telecommunications industry in the relevant market shall be the measure of a party's performance. ARTICLE XXV. ASSIGNMENT AND TRANSFER RESTRICTIONS 25.1 Except as provided below, QWEST shall not assign, encumber or otherwise transfer this Agreement or all or any portion of its rights or obligations hereunder to any other party without the prior written consent of GTE, which consent will not be unreasonably withheld or delayed. Notwithstanding the foregoing, QWEST shall have the right, without GTE's consent, to (i) subcontract any of its construction or maintenance obligations hereunder, or (ii) assign or otherwise transfer this Agreement in whole or in part (A) as collateral to any institutional lender to QWEST (or institutional lender to any permitted transferee or assignee of QWEST) subject to the prior rights and obligations of the parties hereunder, (B) to any parent, subsidiary or affiliate of QWEST, (C) to any person, firm or corporation which shall control, be under the control of or be under common control with QWEST, or (D) any corporation or other entity into which QWEST may be merged or consolidated or which purchases all or substantially all of the stock or assets of QWEST, or (E) any partnership, joint venture or other business entity of which QWEST or any wholly owned subsidiary of QWEST HOLDING CORPORATION owns at least 50 percent of the equity interests thereof and which cannot make major decisions without the consent of QWEST (or subsidiary of QWEST HOLDING CORPORATION); provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation, this Section 25.1 (except that any lender referred to in clause (A) above shall not incur any obligations under this Agreement nor shall it be restricted from exercising any right of enforcement or foreclosure with respect to any related security interest or lien, so long as the purchaser in foreclosure is subject to the provisions of this Agreement, including, without limitation, this Section 25.1); and provided further that promptly following any such assignment or transfer, QWEST shall give GTE written notice identifying the assignee or transferee. In the event of any permitted partial assignment of any rights hereunder, QWEST shall remain the sole point of contact with GTE. No permitted partial or complete assignment shall release or discharge QWEST from its duties and obligations hereunder. 25.2 Except as provided in this Section 25.2 and the following Section 25.3, GTE shall not assign, encumber or otherwise transfer this Agreement or all or any of portion of its rights or obligations hereunder to any other party without the prior written consent of QWEST, which consent will not be unreasonably withheld or delayed. Subject to the provisions of Section 25.3 (which provision shall be binding upon any permitted assignee or transferee hereunder), GTE shall have the right, without QWEST's consent, to assign or otherwise transfer this Agreement in whole or in part (i) as collateral to any institutional lender to GTE (or institutional lender to any permitted transferee or assignee of GTE) subject to the prior rights and obligations of the parties hereunder, (ii) to any parent, subsidiary or affiliate of GTE, (iii) to any person, firm or corporation which shall control, be under the control of or be under common control with GTE, or (iv) any other entity into which GTE may be merged or consolidated or which purchases all or substantially all of the stock or assets of GTE or (v) any partnership, joint venture or other business entity of which GTE or any wholly owned subsidiary of GTE owns at least 50 percent of the equity interests thereof and which cannot make major decisions without the consent of GTE (or subsidiary of GTE); provided that no assignment or other transfer under this clause (v) shall be permitted hereunder if its purpose or effect would constitute, directly or indirectly, a Restricted Transaction (as defined in Section 25.3) or otherwise violate the provisions of Section 25.3; provided that the assignee or transferee in any such circumstance shall continue to be subject to all of the provisions of this Agreement, including without limitation this Section 25.2 and the following Section 25.3 (except that any lender referred to in clause (i) above shall not incur any obligations under this Agreement, nor shall it be restricted from exercising any right of enforcement or foreclosure with respect to any related security interest or lien, so long as the purchaser in foreclosure is subject to the provisions of this Agreement, including, without limitation, this Section 25.2 and the following Section 25.3); and provided further that in any of circumstances described in clauses (ii), (iii) or (iv) all of the payment obligations of GTE hereunder for the remainder of the Term shall be fully guaranteed by GTE or shall be paid in full as a condition to such transfer or assignment; and provided further that promptly following any such assignment or transfer, GTE shall give QWEST written notice identifying the assignee or transferee. In the event of any permitted partial assignment of any rights hereunder, GTE shall remain the sole party and point of contact with QWEST hereunder. No permitted partial or complete assignment shall release or discharge GTE from its duties and obligations hereunder. 25.3 Notwithstanding the provisions of Article XI, except as expressly permitted in Section 25.2(i)-(v), inclusive, without the prior written consent of QWEST, which consent may be withheld in QWEST's sole discretion, for a period of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## following the date that the last Segment of the QWEST System is accepted by GTE: (a) GTE shall not sell, assign, lease, grant an IRU with respect to, exchange, encumber, or otherwise in any manner transfer or make available in any manner to any third party the ownership, right to use, use of, or access in any manner to, any of GTE's rights in the whole or discrete GTE Fibers which at the time of such transaction are Dark Fibers, or engage in substantive discussions or negotiations with respect thereto, or otherwise engage in a similar transaction with respect to any GTE Fibers in a manner designed or intended to circumvent the foregoing limitations. (b) GTE shall not sell, assign, lease, grant an IRU with respect to, exchange, encumber, or otherwise in any manner transfer or make available in any manner to a Capacity Reseller (as defined below) any of GTE's rights in the whole or discrete GTE Fibers at a capacity in excess of OC-12, or engage in substantive discussions or negotiations with respect thereto, or otherwise engage in a similar transaction with respect to any GTE Fibers in a manner designed or intended to circumvent the foregoing limitations. As used in this subparagraph, a Capacity Reseller is any person or entity which, in whole or in part, seeks to obtain such capacity for the purpose of reselling or otherwise providing access thereto to third parties for profit, whether or not such person or entity actually realizes a profit as a result of such transaction. (c) Each transaction prohibited in subparagraphs (a) or (b) of this Section 25.3 shall constitute a "Restricted Transaction." Except as provided in subparagraph (b) of this Section 25.3, nothing contained herein shall restrict or prohibit GTE from creating telecommunications capacity along or through the GTE Fibers by the addition of GTE's electronic and optronic equipment and selling or otherwise permitting third parties to use such telecommunications capacity. 25.4 QWEST and GTE recognize that QWEST may desire to obtain tax-deferred exchange treatment pursuant to Section 1031 of the Internal Revenue Code, as amended, with respect to certain of the Dark Fibers and Associated Property in which the IRUs are to be granted hereunder and which are used or held for use by QWEST in its business as of the date hereof (the "Existing Properties"), and GTE agrees to reasonably cooperate as provided herein in obtaining such treatment (at no cost or expense to GTE). Accordingly, notwithstanding any provision contained in this Agreement to the contrary, QWEST may, at its sole option, on or prior to the Acceptance Date for any relevant Segment, appoint a third party (the "Intermediary") as agent for QWEST with respect to the transfer of the Existing Properties to GTE, and assign its rights under this Agreement (insofar as they relate to the Existing Properties) to such Intermediary. If QWEST so elects to appoint an Intermediary, QWEST shall notify GTE, in writing, on or prior to the Acceptance Date with respect to the relevant Segment, and shall provide GTE with copies of all agreements between QWEST and the Intermediary. If QWEST appoints an Intermediary, QWEST shall transfer the Existing Properties or such portion thereof as designated by QWEST to the Intermediary, and GTE shall pay the IRU Fee with respect to the Existing Properties (as designated by QWEST) to the Intermediary; provided that QWEST agrees that such transfer shall be expressly subject to this Agreement, and that QWEST shall remain liable for performance under this Agreement to the same extent as if it had not appointed an Intermediary; provided that in such event QWEST shall indemnify and hold harmless GTE from and against any and all loss, damage, cost or expense suffered, sustained or incurred by GTE in connection with any such cooperation and/or payment of such IRU Fee to such Intermediary. 25.5 This Agreement and each of the parties' respective rights and obligations under this Agreement, shall be binding upon and shall inure to the benefit of the parties hereto and each of their respective permitted successors and assigns. ARTICLE XXVI. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS 26.1 Each party represents and warrants that: (a) it has the full right and authority to enter into, execute, deliver and perform its obligations under this Agreement; (b) this Agreement constitutes a legal, valid and binding obligation enforceable against such party in accordance with its terms, subject to bankruptcy, insolvency, creditors' rights and general equitable principles; and (c) its execution of and performance under this Agreement shall not violate any applicable existing regulations, rules, statutes or court orders of any local, state or federal government agency, court or body. 26.2 QWEST represents and warrants that the Segments of the QWEST System that it has heretofore constructed or will construct pursuant hereto have been or shall be designed, engineered, installed, and constructed in compliance with the terms and provisions of this Agreement and in material compliance with any and all applicable building, construction and safety codes for such construction and installation, as well as any and all other applicable governmental laws, codes, ordinances, statutes and regulations. 26.3 With respect to each of the Segments that has been constructed prior to the date hereof, QWEST represents and warrants that such Segment, when constructed, generally was constructed substantially in accordance with the specifications set forth in Exhibit C hereto, and QWEST has no actual knowledge on the date hereof of any material deviation in the construction of such Segment from such specifications. If, within twelve (12) months from the respective Acceptance Date for each of the Segments referred to in this Section 26.3 , there is an event or occurrence that is caused by a material deviation in the construction or installation of any of such Segments from such specifications, and which has a material adverse affect on the operation or performance of the GTE Fibers in such Segment, then, promptly following receipt of written notice thereof from GTE, QWEST, at its sole cost and expense, shall undertake to repair the affected portion of such Segment to the relevant specifications. 26.4 QWEST represents and warrants that the Segments of the QWEST System that it constructs pursuant hereto shall be constructed in all material respects in accordance with the specifications set forth in Exhibit C hereto; provided that GTE's sole rights and remedies with respect to any failure to so construct shall be (i) to inspect the construction, installation and splicing, and participate in the acceptance testing, of the GTE Fibers incorporated in each such Segment, during the course and at the time of the relevant construction, installation and testing periods for each Segment, as provided in Articles III and IV, (ii) if, during the course of such construction, installation and testing any material deviation from the specifications set forth in Exhibit C is discovered, the construction or installation of the affected portion of the Segment shall be repaired to such specification by QWEST at QWEST's sole cost and expense, and (iii) if, at any time prior to the date that is twelve (12) months after the Acceptance Date, GTE shall notify QWEST in writing of its discovery of a material deviation from the specifications set forth in Exhibit C with respect to any such Segment (which notice shall be given within thirty (30) days of such discovery) the construction or installation of the affected portion of such Segment shall be repaired to such specification by QWEST at QWEST's sole cost and expense. For purposes hereof, "material deviation" means a deviation which is reasonably likely to have a material adverse affect on the operation or performance of the GTE Fibers affected thereby. 26.5 EXCEPT AS SET FORTH IN THE FOREGOING PARAGRAPHS 26.2, 26.3 AND 26.4, AND EXCEPT AS MAY BE SET FORTH SPECIFICALLY AND EXPRESSLY ELSEWHERE IN THIS AGREEMENT, QWEST MAKES NO WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE GTE FIBERS OR THE SEGMENTS DELIVERABLE HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. 26.7 The parties acknowledge and agree that on and after the relevant Acceptance Date GTE's sole rights and remedies with respect to any defect in or failure of the GTE Fibers to perform in accordance with the applicable vendor's or manufacturer's specifications with respect to the GTE Fibers shall be limited to the particular vendor's or manufacturer's warranty with respect thereto, which warranty, to the extent permitted by the terms thereof, shall be assigned to GTE upon its request. In the event any maintenance or repairs to the QWEST System are required as a result of a breach of any warranty made by any manufacturers, contractors or vendors, unless GTE shall elect to pursue such remedies itself, QWEST shall pursue all remedies against such manufacturers, contractors or vendors on behalf of GTE, and QWEST shall reimburse GTE's costs for any maintenance GTE has incurred as a result of any such breach of warranty to the extent the manufacturer, contractor or vendor has paid such costs. 26.8 QWEST and GTE acknowledge and agree: (a) that each grant of the IRU in the GTE Fibers and Associated Property for a Segment hereunder (each herein called a "Grant") will be treated by each of them, vis-a-vis the other, as of and after the relevant effective date thereof as described in Section 6.1, an executed grant to GTE of an interest in real property with respect to such Segment; and (b) that, from and after the effective date of a Grant with respect to a Segment, no material obligation of either QWEST or GTE will remain to be performed with respect to such Grant or Segment; and (c) that, with respect to each such Grant, this Agreement is not intended as an executory contract or unexpired lease subject to assumption, rejection, or assignment by the trustee in bankruptcy of any party to this Agreement, including, without limitation, assumption, rejection, or assignment under Bankruptcy Code Section 365. ARTICLE XXVII. ENTIRE AGREEMENT; AMENDMENT 27.1 This Agreement, together with any Confidentiality Agreement entered into in connection herewith constitutes the entire and final agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof, which are of no further force or effect. The Exhibits referred to herein are integral parts hereof and are hereby made a part of this Agreement. To the extent that any of the provisions of any Exhibit hereto are inconsistent with the express terms of this Agreement, the terms of this Agreement shall prevail. This Agreement may only be modified or supplemented by an instrument in writing executed by a duly authorized representative of each party and delivered to the party relying on the writing. ARTICLE XXVIII. NO PERSONAL LIABILITY 28.1 Each action or claim against any party arising under or relating to this Agreement shall be made only against such party as a corporation, and any liability relating thereto shall be enforceable only against the corporate assets of such party. No party shall seek to pierce the corporate veil or otherwise seek to impose any liability relating to, or arising from, this Agreement against any shareholder, employee, officer or director of the other party. Each of such persons is an intended beneficiary of the mutual promises set forth in this Article and shall be entitled to enforce the obligations of this Article. ARTICLE XXIX. RELATIONSHIP OF THE PARTIES 29.1 The relationship between GTE and QWEST shall not be that of partners, agents, or joint venturers for one another, and nothing contained in this Agreement shall be deemed to constitute a partnership or agency agreement between them for any purposes, including, but not limited to federal income tax purposes. GTE and QWEST, in performing any of their obligations hereunder, shall be independent contractors or independent parties and shall discharge their contractual obligations at their own risk subject, however, to the terms and conditions hereof. ARTICLE XXX. LATE PAYMENTS 30.1 In the event a party shall fail to make any payment under this Agreement when due, such amounts shall accrue interest, from the date such payment is due until paid, including accrued interest compounded monthly, at an annual rate equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## of the prime rate of interest published by The Wall Street Journal as the base rate on corporate loans posted by a substantial percentage of the nation's largest banks on the date any such payment is due or, if lower, the highest percentage allowed by law. ARTICLE XXXI. SEVERABILITY 31.1 If any term, covenant or condition contained herein shall, to any extent, be invalid or unenforceable in any respect under the laws governing this Agreement, the remainder of this Agreement shall not be affected thereby, and each term, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. ARTICLE XXXII. COUNTERPARTS 32.1 This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument. ARTICLE XXXIII. CERTAIN DEFINITIONS 33.1 The following terms shall have the stated definitions in this Agreement. (a) "Cable" means the fiberoptic cable and the fibers contained therein, and associated splicing connections, splice boxes, and vaults to be installed by QWEST as part of the QWEST System. (b) "Costs" means actual, direct costs paid or payable in accordance with the established accounting procedures generally used by QWEST and which it utilizes in billing third parties for reimbursable projects which costs shall include, without limitation, the following: (i) internal labor costs, including wages and salaries, and benefits and overhead allocable to such labor costs (with the overhead allocation percentage equal to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## ), and (ii) other direct costs and out-of-pocket expenses on a pass-through basis (e.g., equipment, materials, supplies, contract services, etc.). (c) "Dark Fiber" means fiber provided without electronics or optronics, and which is not "lit" or activated; provided that such fiber may be used in any manner and for any purpose permitted under Article XI. (d) "Estimated Delivery Date" means, with respect to each Segment of the QWEST System to be delivered hereunder, the date set forth in Exhibit A hereto with respect to such Segment, as any such date may be extended for and during (A) the period of any delay described in Article XX and/or (B) the period of any payment default pursuant to Section 18.1 with respect to any Segment and/or (C) the aggregate number of days of the GTE Review Period or Periods (in the event of multiple remedy attempts) under Section 4.2 with respect to such Segment. (e) "Impositions" means all taxes, fees, levies, imposts, duties, charges or withholdings of any nature (including, without limitation, gross receipts taxes and franchise, license and permit fees), together with any penalties, fines or interest thereon (except for penalties or interest imposed as a direct result of acts or failures to act on the part of QWEST) arising out of the transactions contemplated by this Agreement and/or imposed upon the QWEST System by any federal, state or local government or other public taxing authority. (f) "Indefeasible Right of Use" or "IRU" means (i) an exclusive, indefeasible right of use, for the purposes described herein, in the GTE Fibers, as granted in Article II, and (ii) an associated non-exclusive, indefeasible right of use, for the purposes described herein, in the Associated Property; provided that the IRUs granted hereunder do not provide GTE with any ownership interest in or other rights to physical access to, control of, modification of, encumbrance in any manner of, or other use of the QWEST System except as expressly set forth herein. (g) This item left blank intentionally. (h) "POP" means the GTE point of presence at locations along the QWEST System route. (i) "PSWP" means Planned System Work Period, which is a prearranged period of time reserved for performing certain work on the QWEST System that may potentially impact traffic. Generally, this will be restricted to weekends, avoiding the first and last weekend of each month and high-traffic weekends. The PSWP shall be agreed upon pursuant to Exhibit H. (j) "QWEST System" shall have the meaning ascribed thereto in Recital A. (k) When used herein in connection with a covenant of a party to this Agreement "best efforts" shall not obligate such party, unless otherwise specifically required by the operative covenant, to make unreimbursed expenditures (other than costs or expenditures that would have been required of such party in the absence of the requirements of such covenant) that are material in amount, in light of the circumstances to which the requirement to use best efforts applies. In confirmation of their consent and agreement to the terms and conditions contained in this IRU Agreement and intending to be legally bound hereby, the parties have executed this IRU Agreement as of the date first above written. "QWEST": QWEST COMMUNICATIONS CORPORATION, a Delaware corporation By:_/s/___________________________________________________ Name: Title: "GTE": GTE INTELLIGENT NETWORK SERVICES INCORPORATED, a Delaware corporation By:___/s/_________________________________________________ Name: Title: EXHIBIT A QWEST System Description EXHIBIT A-1: QWEST System Description and Delivery Dates GTE - Exhibit A-1 System Description and Delivery Dates
Estimated Estimated Segment System Route Delivery No. Segment Miles Date 1A Chicago - Detroit 305 1/31/98 1B Detroit - Cleveland 165 2/15/98 1C Cleveland - Pittsburgh 162 3/1/98 1D Pittsburgh - Philadelphia 356 3/31/98 1E Philadelphia - Washington, D.C. 138 4/30/98 Chicago - Detroit - Cleveland - 1 Washington DC Total 1,126 4/30/98 2A Cleveland - Columbus 133 10/31/97 2B Columbus - Cincinnati 125 10/31/97 2 Cleveland - Columbus Total 258 10/31/97 3 Cincinnati - Louisville 107 7/30/98 4 Indianapolis - Chicago 215 12/31/97 5 Indianapolis - St. Louis 248 10/31/97 6 St. Louis - Kansas City 297 10/31/97 7 Kansas City - Topeka 75 10/31/97 8 Denver - Topeka 565 10/31/97 9A Denver - Grand Junction 271 10/31/97 9B Grand Junction - Salt Lake City 295 10/31/97 9 Denver - Salt Lake Total 566 10/31/97 10A Salt Lake City - Reno 575 10/31/97 10B Reno - Roseville 136 10/31/97 10 Salt Lake - Roseville Total 711 10/31/97 11A Roseville - Oakland 111 10/31/97 11B Oakland - San Jose 43 10/31/97 11 Roseville - San Jose Total 154 10/31/97 12A San Jose - Salinas 71 10/31/97 12B Salinas - San Luis Obispo 132 10/31/97 12C San Luis Obispo - Santa Barbara 119 10/31/97 12D Santa Barbara - Los Angeles 107 10/31/97 12 San Jose - Los Angeles Total 429 10/31/97 13A Los Angeles - Anaheim 32 10/31/97 13B Anaheim - San Diego 132 10/31/97 13C San Diego - Yuma 235 12/31/97 13D Yuma - Phoenix 187 1/31/98 13 LA - San Diego - Phoenix Total 586 1/31/98 14A Phoenix - Tucson 123 2/29/98 14B Tucson - El Paso 310 3/31/98 14 Phoenix - Tucson - El Paso Total 433 3/31/98 15A El Paso - San Antonio 586 5/31/98 15B San Antonio - Austin 85 1/31/98 15C Austin - Houston 221 12/31/97 15 El Paso - San Antonio - Houston Total 892 5/31/98 16 Houston - Dallas 269 10/31/97 17A Dallas - Oklahoma City 264 1/31/98 17B Oklahoma City - Tulsa 119 1/31/98 17C Tulsa - Kansas City 256 1/31/98 17 Dallas - Kansas City Total 639 1/31/98 18 Cincinnati - Indianapolis 117 10/31/97 19A Louisville - Nashville 189 9/30/98 19B Nashville - Chattanooga 147 10/31/98 19C Chattanooga - Atlanta 137 10/31/98 19 Louisville - Nashville - Atlanta Total 473 10/31/98 20A Atlanta - Charlotte 261 10/31/98 20B Charlotte - Raleigh 174 8/31/98 20C Raleigh - Richmond 301 10/31/98 20D Richmond - Washington D.C. 110 10/31/98 20 Atlanta - Raleigh - Washington Total 846 10/31/98 21A Chicago - Milwaukee 84 10/31/98 21B Milwaukee - Green Bay 118 10/31/98 21C Green Bay - Minneapolis 295 10/31/98 21D Minneapolis - Des Moines 281 10/31/98 21 Chicago - Des Moines Total 778 10/31/98 22C Des Moines - Omaha 140 10/31/98 22D Omaha - Topeka 224 10/31/98 22 Des Moines - Topeka Total 364 10/31/98 23 Denver - El Paso Total 746 3/31/98 24A Roseville - Chico 98 1/31/98 24B Chico - Redding 75 1/31/98 24C Redding - Medford 177 1/31/98 24D Medford - Eugene 206 1/31/98 24E Eugene - Portland 123 1/31/98 24 Roseville - Portland Total 679 1/31/98 25 Portland - Seattle 182 1/31/98 27 San Jose - San Francisco 56 10/31/97 28A Boston - Albany 208 12/31/97 28B Albany - Buffalo 298 12/31/97 28C Buffalo - Cleveland 197 12/31/97 28 Boston - Cleveland Total 703 12/31/97 29 Albany - New York City 157 5/31/98 30 New York City - Philadelphia 95 5/31/98 Total 12,766 10/31/98
EXHIBIT A-2: General Route Map [MAP APPEARS HERE] EXHIBIT A-3: Detailed Route Maps [MAPS APPEAR HERE] EXHIBIT A-4: Designated End Point and Intermediate Point Cities Exhibit A-4 DESIGNATED ENDPOINT and INTERMEDIATE CITIES
CITY ST LATA LATA NAME Base Phoenix AZ 666 PHOENIX Tucson AZ 668 TUCSON Yuma AZ 666 PHOENIX Anaheim CA 730 LOS ANGELES Chico CA 724 CHICO Los Angeles CA 730 LOS ANGELES Oakland CA 722 SAN FRANCISCO Redding CA 724 CHICO Roseville CA 726 SACRAMENTO Sacramento CA 726 SACRAMENTO Salinas CA 736 MONTEREY San Diego CA 732 SAN DIEGO San Francisco CA 722 SAN FRANCISCO San Jose CA 722 SAN FRANCISCO San Luis Obispo CA 740 SAN LUIS OBISPO Santa Barbara CA 730 LOS ANGELES Colorado Springs CO 658 COLORADO SPR. Denver CO 656 DENVER Grand Junction CO 656 DENVER Pueblo CO 658 COLORADO SPR. Washington DC 236 WASH DC Atlanta GA 438 ATLANTA Des Moines IA 632 DES MOINES Chicago IL 358 CHICAGO Indianapolis IN 336 INDIANAPOLIS South Bend IN 332 SOUTH BEND Topeka KS 534 TOPEKA Bowling Green KY 464 OWENSBORO Louisville KY 462 LOUISVILLE Boston MA 128 EAST MASS Baltimore MD 238 BALTIMORE Battle Creek MI 348 GRAND RAPIDS Detroit MI 340 DETROIT Minneapolis MN 628 MINNEAPOLIS Owatonna MN 620 ROCHESTER Kansas City MO 524 KANSAS CITY St. Louis MO 520 ST.LOUIS Charlotte NC 422 CHARLOTTE Greensboro NC 424 GREENSBORO Raleigh NC 426 RALEIGH Rocky Mount NC 951 ROCKY MOUNT Lincoln NE 958 LINCOLN Omaha NE 644 OMAHA Newark NJ 224 NORTH JERSEY Trenton NJ 222 DELAWARE VALLEY Albuquerque NM 664 NEW MEXICO Santa Fe NM 664 NEW MEXICO Reno NV 720 RENO Albany NY 134 ALBANY Buffalo NY 140 BUFFALO New York NY 132 NEW YORK METRO Poughkeepsie NY 133 POUGHKEEPSIE Rochester NY 974 ROCHESTER Syracuse NY 136 SYRACUSE Utica NY 136 SYRACUSE White Plains NY 132 NEW YORK METRO Akron OH 325 AKRON Cincinnati OH 922 CINCINNATI Cleveland OH 320 CLEVELAND Columbus OH 324 COLUMBUS Dayton OH 328 DAYTON Toledo OH 326 TOLEDO Youngstown OH 322 YOUNGSTOWN Oklahoma City OK 536 OKLAHOMA CITY Tulsa OK 538 TULSA Eugene OR 670 EUGENE Medford OR 670 EUGENE Portland OR 672 PORTLAND Salem OR 672 PORTLAND Harrisburg PA 226 CAPITOL,PA Philadelphia PA 228 PHILADELPHIA Pittsburgh PA 234 PITTSBURGH Greenville SC 430 GREENVILLE Chattanooga TN 472 CHATTANOOGA Nashville TN 470 NASHVILLE Austin TX 558 AUSTIN Bryan TX 570 HEARNE Dallas TX 552 DALLAS El Paso TX 540 EL PASO Ft. Worth TX 552 DALLAS Houston TX 560 HOUSTON Mexia TX 556 WACO San Antonio TX 566 SAN ANTONIO Provo UT 660 UTAH Salt Lake City UT 660 SALT LAKE CITY Fredericksburg VA 246 CULPEPER Portsmouth VA 252 NORFOLK Richmond VA 248 RICHMOND Seattle WA 674 SEATTLE Eau Claire WI 352 NORTHWEST WI Green Bay WI 350 NORTHEAST WI Milwaukee WI 356 SOUTHEAST WI
EXHIBIT B IRU Fee Payment Schedule 1. The IRU fee for each Segment shall be paid in accordance with the following schedule: i) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon execution of the IRU Agreement. ii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon commencement of the construction of a Segment. iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of conduit installation of such Segment. iv) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of fiber cable placement in such Segment. v) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon completion of fiber splicing and completion of civil construction in such Segment. vi) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % on the Acceptance Date for such Segment. 2. The IRU fee for Segment 23 shall be paid in accordance with the following schedule: i) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon execution of the IRU agreement. ii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon the Acceptance Date for the first 12 Dark Fibers delivered in accordance with Exhibit A. iii) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## % upon the Acceptance Date for the second 12 Dark Fibers delivered in accordance with Exhibit A. 3. For purposes of determining the occurrence of the construction milestones triggering payment obligations hereunder, the following shall apply: i) Commencement of construction of a Segment shall mean the establishment of a field office followed promptly by mobilization of either in-house crews or the subcontract of a construction manager. ii) Completion of conduit installation shall mean the completion of installation of the conduit system for the Segment, with handholds and manholes, ready for Cable pulling. C. Completion of fiber cable placement shall mean the fiber cable is either pulled into the conduit or completely installed in aerial installation, but without splicing. In the event of aerial construction, the IRU Fee installment otherwise due upon completion of conduit installation shall be due and payable at the same time as the installment due upon completion of fiber cable placement. D. Completion of fiber splicing and civil construction shall mean all fibers are spliced and ready for testing and civil facilities are ready for the customer to occupy and install their equipment. E. Acceptance Date shall have the meaning established in the IRU Agreement. IV. The IRU Fee shall be calculated at the rate of $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per mile. V. Upon execution of the IRU Agreement, GTE shall pay QWEST an amount equal to the sum of all payments due pursuant to Section 1 clauses (ii), (iii), (iv), (v), and (vi) of this Exhibit B for each Segment for which construction has commenced. EXHIBIT C Construction Specifications 1.0 General. The intent of this document is to outline the specifications for construction of a fiber optic cable system. In all cases, the standards contained in this document or the standards of the federal, state, local or private agency having jurisdiction, whichever is stricter, shall be followed. 2.0 Material. Steel or PVC conduit shall be minimum schedule ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wall thickness. Any exposed steel conduit, brackets or hardware (i.e., bridge attachments) shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##. Handholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of cover. Manholes shall have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## loading rating. Innerducts used shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Buried cable warning tape shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## wide and display ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##. Warning signs will display ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##. Fiber optic cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT##. 3.0 Minimum Depths. Minimum cover required in the placement of conduit shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches, except in the following instances: (a) The minimum cover in borrow ditches adjacent to roads, highways, railroads and interstate highways is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the cleanout line or existing grade, whichever is greater. (b) The minimum cover across streams, river washes and other waterways is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the cleanout line or existing grade, whichever is greater. Steel conduit will be placed at all such crossings unless the crossing is directional bored. (c) At locations where conduit crosses other subsurface utilities or other structures, the conduit shall be installed to provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of vertical clearance and applicable minimum depth can be maintained; otherwise, the conduit will be installed under the existing utility or other structure. If, however, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches cannot be obtained, the cable shall be encased in steel pipe rather than conduit. No fiber optic cable shall be buried without being surrounded by conduit or steel pipe. (d) In rock, the conduit shall be placed to provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the surface of the solid rock, or provide a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of total cover, whichever requires the least rock excavation. PVC or HDPE conduit will be backfilled with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of select materials (padding) in rock areas. (e) In the case of the use/conversion of existing steel pipelines or salvaged conduit systems, the existing depth shall be considered adequate. 4.0 Buried Cable Warning Tape. All conduit will be installed with buried cable warning tape except where existing steel pipelines or salvaged conduit systems are used. The warning tape shall generally be placed at a depth of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below grade and directly above the conduit. 5.0 Conduit Construction. Conduits may be placed by means of trenching, plowing, jack and bore, or directional bore. Conduits will generally be placed on a level grade parallel to the surface, with only gradual changes in grade elevation. Steel conduit will be joined with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . All paved city, state, federal and interstate highways and railroad crossings will be encased in steel conduit. If the crossing is at grade, steel is not required if the cable is placed with ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet of cover or more, and the crossing is directional bored. All crossings of major streams, rivers, bays and navigable waterways will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. At all foreign utility/underground obstacle crossings, ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit will be placed and will extend at least ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet beyond the outer limits of the obstacle in both directions. All jack and bores will use steel conduit. All directional bores will use ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. Any cable placed in rock will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. Any cable placed in swamp or wetland areas will be placed in ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## conduit. All conduits placed on bridges will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . All conduits placed on bridges shall have expansion joints placed ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or at least every ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet, whichever is the shorter distance. 6.0 Innerduct Installation. Innerduct(s) shall be installed in all steel conduits. No cable will be placed directly in any split/solid steel conduit without innerduct. Innerduct(s) shall extend beyond the end of all conduits a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches. 7.0 Cable Installation. The fiber optic cable shall be installed using a powered pulling winch and hydraulic-powered assist pulling wheels. The maximum pulling force to be applied to the fiber optic cable shall be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## pounds. Bends of small radii (less than 20 times the outside diameter of the cable) and twists that may damage the cable shall be avoided during cable placement. The cable shall be lubricated and placed in accordance with the cable manufacturer specifications. A pulling swivel break-away rated at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## pounds shall be used at all times. All splices will be contained in a handhole or manhole. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all intermediate handholes or manholes. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all splice locations. A minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## meters of slack cable will be left in all facility locations (i.e., POP sites, switch sites, regens or CEVs). 8.0 Manholes and Handholes. Manholes shall be placed in traveled surface streets and shall have locking lids. Handholes shall be placed in all other areas and be installed with a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches of soil covering the lid. 9.0 EMS Markers. EMS markers shall be placed 6 inches directly above the lid of all buried handholes and assist points. EMS markers fabricated into the lids of handholes are acceptable. 10.0 Cable Markers (Warning Signs). Cable markers (with the same information as buried cable warning tape) shall be installed at all changes in cable running line direction, splices, waterways, subsurface utilities, handholes and at both sides of street, highway, bridge or railroad crossings. At no time shall any markers be spaced more than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet apart in metro areas and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet apart in non-metro areas. Markers shall be positioned so that they can be seen from the location of the cable and generally set facing perpendicular to the cable running line. 11.0 Compliance. All work will be done in strict accordance with federal, state, local and applicable private rules and laws regarding safety and environmental issues, including those set forth by OSHA and the EPA. In addition, all work and the resulting fiber system will comply with the current requirements of all governing entities (FCC, NEC, DEC and other national, state and local codes). 12.0 As Built Drawings. As built drawings will contain a minimum of the following: 1) Information showing the location of running line, relative to permanent landmarks, including but not limited to, railroad mileposts, boundary crossings and utility crossings. 2) Splice locations 3) Manhole and handhole locations 4) Conduit information (type, length, expansion joints, etc.) 5) Cable information (manufacturer, type of fiber, type of cable, fiber assignments, final cable lengths) 6) Notation of all deviations from specifications (depth, etc.) 7) ROW detail (type, centerline distances, boundaries, waterways, road crossings, known utilities and obstacles) 8) Cable marker locations and stationing 9) Regeneration locations and floorplans to include FDP assignments (also labeled on site) Drawings will be updated with actual field data during and after construction. Metro areas scale shall not exceed 1 inch = 200 feet. Rural areas scale shall not exceed 1 inch = 500 feet. As-builts will be provided within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## days after acceptance, in both hard copy and electronic format (Auto-CAD version 13.0 or later). Updates to the as-builts will be provided within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## days of completion of change, like a relocation project. 13.0 Aerial Construction. Subject to prior approval by both parties (which approval shall not be unreasonably withheld), aerial construction methods will only be used when buried construction techniques are impractical due to environmental conditions, schedule or economic considerations, right-of-way issues, or code restrictions. The parties acknowledge that aerial construction on utility towers (not utility poles) using optical groundwire or all dielectric self-support methods may be used without GTE approval provided QWEST agrees to give GTE reasonable prior notice of its decision to use such aerial methods.. Aerial design standards and construction techniques will conform with industry-accepted practices for aerial fiber optic cable systems. All aerial plant must comply with applicable national (NEC, NESC, etc.), state and local codes. The fiber optic cable placed on an aerial system shall be armored and designed for aerial applications. The cable will be placed in accordance with manufacturer specifications. Cable tension will be monitored during placement. Cable rollers will be placed at a maximum interval of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet. Cable expansion loops will be placed at every pole. Cable identification/warning tags will be placed at every pole. All cable splices will be buried in handholes or manholes. Cable sheath to suspension strand bonds and grounding will be performed at the first and last pole of the system and at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## mile intervals. Fiber optic cable at all riser poles will be protected with galvanized steel U-guard from ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below grade to a point ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches below the suspension strand. Conduit sweeps will be used to transition from the U-guard to either a handhole or manhole. All aerial plant will be designed and constructed with 10M EHS (Class A galvanized) suspension strand unless otherwise dictated by the pole owners or field conditions. The fiber optic cable will be double lashed to the suspension strand using 45 mil stainless lashing wire. Span length shall account for storm loading (wind and ice) in accordance with zones outlined in NESC code. Sags and tensions will be calculated in accordance with industry accepted practices and account for strand size, span length, ambient temperature at placement and loading. The suspension strand will be tensioned with a strand dynamometer. A catenary suspension system may be used if the system exceeds maximum span length specifications. Prior to attachment to any existing pole line, the system will be inspected for compliance with applicable codes and standards, as well as the physical condition of the poles and existing hardware. Any make-ready work will be reviewed with the pole owner and specifically addressed prior to construction. If a pole line need be constructed, the preferred poles will be Class 4 (40 feet) and Class 5 (35 feet). Use of the preferred poles will make it unnecessary to calculate pole loading (horizontal, vertical and bending moments) in most field conditions. Some unusual conditions may require the use of a stronger class pole. Depth of placement will be dictated by soil conditions, slope of terrain and length of pole. Poles will be guyed in accordance with industry-accepted standards. All pole attachment hardware will be galvanized steel. Aerial cable will be placed below power attachments and above all other attachments unless otherwise dictated by the pole owner. Pole contact clearances and locations will be dictated by current NESC code and the presence of existing attachments; however, the following minimum objective clearances will apply: a) Power line - ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches (below) b) Non-current carrying power line - ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches c) Telephone, CATV and other signal lines - ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## inches (above) Verticle clearances for crossings or parallel lines will be dictated by current NESC code; however, the objective clearance for most objects (roads, alleys, etc.) Is ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet (at 100 F) with the exception of railroad tracks and waterways which have an objective of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet (at 100 F). 14.0 Approval of Deviations From Specifications. QWEST will seek the approval of GTE, which approval shall not be unreasonably withheld or delayed, prior to undertaking any construction which will deviate from the Construction Specifications set forth in this Exhibit C. EXHIBIT D Fiber Cable Splicing, Testing and Acceptance Procedures 1. All splices will be performed with an industry-accepted fusion splicing machine. Qwest will perform two stages of testing during the construction of a new fiber cable route. Initially, OTDR tests will be taken from one direction. As soon as fiber connectivity has been achieved to both regen sites, Qwest will verify and record the continuity of all fibers. Qwest will take and record power level readings on all fibers in both directions. Qwest will bi-directional OTDR test all fibers. 2. During the initial construction, it is only possible to measure the fiber from one direction. Because of this, splices will be qualified during initial construction with an OTDR from only one direction. The profile alignment system or light injection detection system on the fusion splicer may be used to qualify splices as long as a close correlation to OTDR data is established. The pigtails will also be qualified at this stage using an OTDR and a minimum 1 km launch reel. All measurements at this stage in construction will be taken at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm. 3. After Qwest has provided end-to-end connectivity on the fibers, bi-directional span testing will be done. These measurements must be made after the splice manhole or handhole is closed in order to check for macro-bending problems. Continuity tests will be done to verify that no fibers have been "frogged" or crossed in any of the splice points. Once the pigtails have been spliced, loss measurements will be recorded using an industry-accepted laser source and a power meter. OTDR traces will be taken and splice loss measurements will be recorded. Qwest will also store OTDR traces on diskette and on data sheets. Laser Precision format will be used on all traces. Qwest will provide three copies of all data sheets and tables, and one set of diskettes with all traces. a. The power loss measurements shall be made at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm, and performed bi-directionally. b. OTDR traces shall be taken in both directions at ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## nm. 4. The splicing standards are as follows: a. The loss value of the pigtail connector and its associated splice will not exceed ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB. This value does not include the insertion loss from its connection to the FDP. For values greater than this, the splice will be broken and respliced until an acceptable loss value is achieved. If, after five attempts, Qwest is not able to produce a loss value less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB, the splice will be marked as Out-of-Spec ("OOS") on the data sheet. Each splicing attempt shall be documented on the data sheet. b. During initial uni-directional OTDR testing, the objective for each splice is a loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or less. If, after three attempts, Qwest is not able to produce a loss value of less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB, then ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB will be acceptable. If, after two additional attempts, a value of less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB is not achievable, then the splice will be marked as OOS on the data sheet. Each splicing attempt shall be documented on the data sheet. c. During end-to-end testing of a span (a span shall be FDP to FDP), the objective for each splice is a bi-directional average loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB or less. d. The standard for each fiber within a span shall be an average bi-directional loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB or less for each splice. For example, if a given span has 10 splices, each fiber shall have total bi-directional loss (due to the 10 splices) of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## or less. Each individual splice may have a bi-directional loss of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB or less, but the average bi-directional splice loss across the span must be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## dB or less. 5. The entire fiber optic cable system shall be properly protected from foreign voltage and grounded with an industry-accepted system. The current system in use by Qwest is depicted in the attached schematic-DWG No. SAH-1 (typical for Surge Arrestor HH Placement). 6. Customer fiber assignments will be consecutive in count and in a separate buffer tube (or ribbon or fiber bundles) from others. The maximum number of fibers within a single buffer tube (or ribbon or fiber bundles) shall be 12. 7. The fibers shall be terminated to the FDP with Ultra FC-PC connectors, unless another type of connector is specified. The pigtails shall be manufactured with the same glass as the backbone cable to minimize splice loss. EXHIBIT E Fiber Specifications [This exhibit contains product specification information that is largely set forth in graphic format] EXHIBIT E-1 Fiber Deployment Diagram [Exhibit E-1 is a map of the United States with the heading "Fiber Deployment Diagram" showing state lines and routes of the fiber optic network upon completion.] EXHIBIT F Specifications for Regeneration Facilities Qwest will install modular, prefabricated, conditioned space along the right-of-way to house regenerations and other electronic equipment (supplied by User) necessary for the operation of the Qwest System. Regeneration site facilities consist of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## square feet of caged space in such facilities with separate, lockable, secured 24 hour access. The buildings will be ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet wide by approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## feet interior length to provide such square footage. Also included is access to ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amps of DC power provided from a common source backed up by a standby generator as described below. To the extent provided in the Agreement, any additional space and/or power required may be made available, with User responsible for QWEST'S incremental cost. Following are the general specifications of the buildings and support equipment. Standard production, metal-framed buildings with steel substructure or concrete; bullet resistant to 30-06 slugs from 15 feet; walls and ceilings R-19 insulated. Security-type weatherproof exterior light fixtures, equipped with motion sensors. Building is equipped with Marvair Compact II or equivalent redundant HVAC units. The building platform comes equipped with an external ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## kw backup generator designed to provide power during emergency periods. The generator fuel tanks will have a minimum ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## gallon capacity. As part of the normal maintenance, the generator will be exercised twice monthly, running on a load bank for a minimum of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## . Fire extinguishers are provided one inside the main door, and one located near the HVAC systems. A fire suppression system (FM-200) will be in place as the main overall fire protection coverage. The building will have an earth ground termination bar (safety green wire ground) terminated to building steel and/or driven ground rod. The building will be equipped with A/C duplex isolated outlets for testing and miscellaneous equipment. Such outlets shall be national electronic code and placed every 6 feet around perimeter walls. The building will have sufficient lighting. Two properly sized cable racks will be installed, one from the DC power source and once from the FDP. Qwest will run properly sized cables from the common DC power plant to the User-supplied fuse panel in the User space. DC power in the amount of ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amps shall be provided based upon a one (1) for N rectifier format (i.e., ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amp units or ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## amp units). A battery plant capable of handling the load for a minimum of four (4) hours to ensure uninterruptable power will be installed in the building. At remote regeneration locations, QWEST will also provide a battery plant designed to provide at least ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , and ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## at all other locations, in both cases with sufficient generator fuel to provide ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## backup in the event of a power outage. The battery plant shall incorporate load disconnect protection and batteries capable of recharging in 12 hours. The battery plant shall also include dual battery strings with battery disconnects for maintenance purposes. Power will be monitored twenty-four (24) hours per day, seven (7) days a week. Each party's fibers will be terminated in a separate bulkhead module within the QWEST fiber distribution panel. Upon execution of the IRU Agreement, the parties will finalize the locations of the regeneration facilities in accordance with Section 7.2 of the IRU Agreement. Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites Exhibit G POP/Regeneration Facility Sites
Estimated Points Segment Route of Amplifier No. Segment Miles Presence Sites 1A Chicago to Detroit 305 Chicago to South Bend 2 1 South Bend to Battle Creek 1 1 Battle Creek to Detroit 1 2 1B Detroit to Cleveland 165 Detroit to Toledo 1 0 Toledo to Cleveland 1 1C Cleveland to Pittsburgh 162 1 0 Akron to Youngstown 1 0 Youngstown to Pittsburgh 1 0 1D Pittsburgh to Philadelphia 356 Pittsburgh to Harrisburg 1 3 Harrisburg to Philadelphia 1 1 1E Philadelphia to Washington 138 Philadelphia to Baltimore 2 0 Baltimore to Washington 1 0 2A Cleveland to Columbus 133 1 2 2B Columbus to Cincinnati 125 Columbus to Dayton 1 1 Dayton to Cincinnati 1 0 4 Indianapolis to Chicago 215 1 3 5 Indianapolis to St. Louis 248 1 4 6 St. Louis to Kansas City 297 1 4 7 Kansas City to Topeka 75 1 0 8 Topeka to Denver 565 1 9 9A Denver to Grand Junction 271 1 4 9B Grand Junction to Salt Lake City 295 Grand Junction to Provo 1 4 Provo to Salt Lake City 1 0 10A Salt Lake City to Reno 575 1 9 10B Reno to Roseville 136 1 2 11A Roseville to Oakland 111 Roseville to Sacramento 1 0 Sacramento to Oakland 1 1 11B Oakland to San Jose 43 1 0 12A San Jose to Salinas 71 1 1 12B Salinas to San Luis Obispo 132 1 2 12C San Luis Obispo to Santa Barbara 119 1 1 12D Santa Barbara to Los Angeles 107 1 1 13A Los Angeles to Anaheim 32 1 0 13B Anaheim to San Diego 132 1 2 13C San Diego to Yuma 235 1 3 13D Yuma to Phoenix 187 1 3 14A Phoenix to Tucson 123 1 1 14B Tucson to El Paso 310 1 5 15A El Paso to San Antonio 586 1 9 15B San Antonio to Austin 85 1 1 15C Austin to Houston 221 1 3 16 Houston to Dallas 269 Houston to Bryan 1 1 Bryan to Dallas 1 2 17A Dallas to Oklahoma City 264 1 0 Ft. Worth to Oklahoma City 1 3 17B Oklahoma City to Tulsa 119 1 1 17C Tulsa to Kansas City 256 1 4 18 Cincinnati to Indianapolis 117 0 1 23 Denver to El Paso 746 Denver to Colorado Springs 1 0 Colorado Springs to Pueblo 1 0 Pueblo to Lamy 1 4 Lamy to Albuquerque 1 0 Albuquerque to El Paso 0 4 Lamy to Santa Fe 1 0 24A Sacramento to Chico 98 1 1 24B Chico to Redding 75 1 0 24C Redding to Medford 177 1 2 24D Medford to Eugene 206 1 3 24E Eugene to Portland 123 Eugene to Salem 0 Salem to Portland 1 0 25 Portland to Seattle 182 1 2 27 San Jose to San Francisco 56 1 0 28A Boston to Albany 208 2 3 28B Albany to Buffalo 298 Albany to Syracuse 2 1 Syracuse to Rochester 1 1 Rochester to Buffalo 1 0 28C Buffalo to Cleveland 197 0 3 29 Albany to New York City 157 3 1 30 New York City to Philadelphia 95 2 0 21A Chicago to Milwaukee 84 1 1 21B Milwaukee to Green Bay 118 1 1 21C Green Bay to Minneapolis 295 Green Bay to Eau Claire 1 3 Eau Claire to Minneapolis 1 1 21D Minneapolis to Des Moines 281 Minneapolis to Owatonna 1 1 Owatonna to Des Moines 1 3 22C Des Moines to Omaha 140 1 2 22D Omaha to Topeka 224 Omaha to Lincoln 1 1 Lincoln to Topeka 0 2 3 Cincinnati to Louisville 107 0 1 19A Louisville to Nashville 189 Louisville to Bowling Green 1 1 Bowling Green to Nashville 1 0 19B Nashville to Chattanooga 147 1 2 19C Chattanooga to Atlanta 137 1 2 20A Atlanta to Charlotte 261 Atlanta to Greenville 1 2 Greenville to Charlotte 1 1 20B Charlotte to Raleigh 174 Charlotte to Greensboro 1 1 Greensboro to Raleigh 1 1 20C Raleigh to Richmond 301 Raleigh to Rocky Mount 1 0 Rocky Mount to Portsmouth 1 1 Portsmouth to Richmond 1 1 20D Richmond to Washington 110 Richmond to Fredericksburg 1 0 Fredericksburg to Washington 0 0 Total 12,766 93 149
EXHIBIT H Qwest System Maintenance Specifications and Procedures Any party responsible for providing maintenance of the Qwest System hereunder shall be referred to herein as the "Service Provider". The Party receiving maintenance services from the Service Provider hereunder shall be referred to herein as the "Service Recipient". All other capitalized terms not otherwise defined herein shall have their respective meanings as set forth in the IRU Agreement of which this Exhibit forms a part. 1. Maintenance. (a) Scheduled Maintenance. Routine maintenance and repair of the Qwest System described in this section ("Scheduled Maintenance") shall be performed by or under the direction of Service Provider, at Service Provider's reasonable discretion or at Service Recipient's request. Scheduled Maintenance shall commence with respect to each Segment upon the effective date of the grant of the IRU therein, as provided in the IRU Agreement. Scheduled Maintenance shall include the following activities: (i) Patrol of Qwest System route on a regularly scheduled basis, which will be weekly unless hyrail access is necessary, in which case, it will be quarterly; (ii) Maintenance of a "Call-Before-You-Dig" program and all required and related cable locates; (iii) Maintenance of sign posts along the Qwest System right-of-way with the number of the local "Call-Before- You-Dig" organization and the "800" number for Qwest's "Call-Before-You-Dig" program; and (iv) Assignment of fiber maintenance technicians to locations along the route of the Qwest System at approximately ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## intervals dependent upon terrain and accessability. (b) Unscheduled Maintenance. Non-routine maintenance and repair of the Qwest System which is not included as Scheduled Maintenance ("Unscheduled Maintenance"), shall be performed by or under the direction of Service Provider. Unscheduled Maintenance shall commence with respect to each Segment upon the effective date of the grant of the IRU therein, as provided in the IRU Agreement. Unscheduled Maintenance shall consist of: (i) "Emergency Unscheduled Maintenance" in response to an alarm identification by Service Provider's Operations Center, notification by Service Recipient or notification by any third party of any failure, interruption or impairment in the operation of the Qwest System, or any event imminently likely to cause the failure, interruption or impairment in the operation of the Qwest System. (ii) "Non-Emergency Unscheduled Maintenance" in response to any potential service-affecting situation to prevent any failure, interruption or impairment in the operation of the Qwest System. Service Recipient shall immediately report the need for Unscheduled Maintenance to Service Provider in accordance with procedures promulgated by Service Provider from time to time. Service Provider will log the time of Service Recipient's report, verify the problem and dispatch personnel immediately to take corrective action. 2. Operations Center. Service Provider shall operate and maintain an Operations Center ("OC") staffed twenty-four (24) hours a day, seven (7) days a week by trained and qualified personnel. Service Provider's maintenance employees shall be available for dispatch twenty-four (24) hours a day, seven (7) days a week. Service Provider shall have its first maintenance employee at the site requiring Emergency Unscheduled Maintenance activity within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## after the time Service Provider becomes aware of an event requiring Emergency Unscheduled Maintenance, unless delayed by circumstances beyond the reasonable control of Service Provider. Service Provider shall maintain a toll-free telephone number to contact personnel at the OC. Service Provider's OC personnel shall dispatch maintenance and repair personnel along the system to handle and repair problems detected in the Qwest System, (i) through the Service Recipient's remote surveillance equipment and upon notification by Service Recipient to Service Provider, or (ii) upon notification by a third party. 3. Cooperation and Coordination. (a) Service Recipient shall utilize an Operations Escalation List, as updated from time to time, to report and seek immediate initial redress of exceptions noted in the performance of Service Provider in meeting maintenance service objectives. (b) Service Recipient will, as necessary, arrange for unescorted access for Service Provider to all sites of the Qwest System, subject to applicable contractual, underlying real property and other third-party limitations and restrictions. (c) In performing its services hereunder, Service Provider shall take workmanlike care to prevent impairment to the signal continuity and performance of the Qwest System. The precautions to be taken by Service Provider shall include notifications to Service Recipient. In addition, Service Provider shall reasonably cooperate with Service Recipient in sharing information and analyzing the disturbances regarding the cable and/or fibers. In the event that any Scheduled or Unscheduled Maintenance hereunder requires a traffic roll or reconfiguration involving cable, fiber, electronic equipment, or regeneration or other facilities of the Service Recipient, then Service Recipient shall, at Service Provider's reasonable request, make such personnel of Service Recipient available as may be necessary in order to accomplish such maintenance, which personnel shall coordinate and cooperate with Service Provider in performing such maintenance as required of Service Provider hereunder. (d) Service Provider shall notify Service Recipient at least ten (10) business days prior to the date in connection with any PSWP of any Scheduled Maintenance and as soon as possible after becoming aware of the need for Unscheduled Maintenance. Service Recipient shall have the right to be present during the performance of any Scheduled Maintenance or Unscheduled Maintenance so long as this requirement does not interfere with Service Provider's ability to perform its obligations under this Agreement. In the event that Scheduled Maintenance is canceled or delayed for whatever reason as previously notified, Service Provider shall notify Service Recipient at Service Provider's earliest opportunity, and will comply with the provisions of the previous sentence to reschedule any delayed activity. 4. Facilities. (a) Service Provider shall maintain the Qwest System in a manner which will permit Service Recipient's use, in accordance with the terms and conditions of the IRU Agreement, of the IRU, the User Fibers and the Associated Property required to be provided under the terms of the IRU Agreement. (b) Except to the extent otherwise expressly provided in the IRU Agreement, Service Recipient will be solely responsible for providing and paying for any and all maintenance of all electronic, optronic and other equipment, materials and facilities used by Service Recipient in connection with the operation of the Dark Fibers, none of which is included in the maintenance services to be provided hereunder. 5. Cable/Fibers. (a) Service Provider shall perform appropriate Scheduled Maintenance on the Cable contained in the Qwest System in accordance with Service Provider's then current preventative maintenance procedures as agreed to by Service Recipient, which shall not substantially deviate from standard industry practice. (b) Service Provider shall have qualified representatives on site any time Service Provider has reasonable advance knowledge that another person or entity is engaging in construction activities or otherwise digging within five (5) feet of the Cable. (c) Service Provider shall maintain sufficient capability to teleconference with Service Recipient during an Emergency Unscheduled Maintenance in order to provide regular communications during the repair process. When correcting or repairing Cable discontinuity or damage, including but not limited to in the event of Emergency Unscheduled Maintenance, Service Provider shall use reasonable efforts to repair traffic- affecting discontinuity within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## after the Service Provider maintenance employee's arrival at the problem site. In order to accomplish such objective, it is acknowledged that the repairs so effected may be temporary in nature. In such event, within ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## after completion of any such Emergency Unscheduled Maintenance, Service Provider shall commence its planning for permanent repair, and thereafter promptly shall notify Service Recipient of such plans, and shall implement such permanent repair within an appropriate time thereafter. Restoration of open fibers on fiber strands not immediately required for service shall be completed on a mutually agreed-upon schedule. If the fiber is required for immediate service, the repair shall be scheduled for the next available Planned Service Work Period (PSWP). (d) In performing repairs, Service Provider shall comply with the splicing specifications as set forth in Exhibit D. Service Provider shall provide to Service Recipient any modifications to these specifications as may be necessary or appropriate in any particular instance for Service Recipient's approval, which approval shall not be unreasonably withheld. (e) Service Provider's representatives that are responsible for initial restoration of a cut Cable shall carry on their vehicles the typically appropriate equipment that would enable a temporary splice, with the objective of restoring operating capability in as little time as possible. Service Provider shall maintain and supply an inventory of spare Cable in storage facilities supplied and maintained by Service Provider at strategic locations to facilitate timely restoration. 6. Planned Service Work Period (PSWP). Scheduled Maintenance which is reasonably expected to produce any signal discontinuity must be coordinated between the parties. Generally, this work should be scheduled after midnight and before 6:00 a.m. local time. Major system work, such as fiber rolls and hot cuts, will be scheduled for PSWP weekends. A calendar showing approved PSWP will be agreed upon in the last quarter of every year for the year to come. The intent is to avoid jeopardy work on the first and last weekends of the month and high-traffic holidays. 7. Restoration. (a) Service Provider shall respond to any interruption of service or a failure of the Dark Fibers to operate in accordance with the specifications set forth in Exhibit D (in any event, an "Outage") as quickly as possible (allowing for delays caused by circumstances beyond the reasonable control of Service Provider) in accordance with the procedures set forth herein. (b) When restoring a cut Cable in the Qwest System, the parties agree to work together to restore all traffic as quickly as possible. Service Provider, promptly upon arriving on the site of the cut, shall determine the course of action to be taken to restore the Cable and shall begin restoration efforts. Service Provider shall splice fibers tube by tube or ribbon by ribbon or fiber bundle by fiber bundle, rotating between tubes or ribbons operated by the separate Interest Holders (as defined in paragraph 9(a)), including Service Recipient, in accordance with the following described priority and rotation mechanics; provided that, lit fibers in all buffer tubes or ribbons or fiber bundles shall have priority over any dark fibers in order to allow transmission systems to come back on line; and provided further that, Service Provider will continue such restoration efforts until all lit fibers in all buffer tubes or ribbons are spliced and all traffic restored. In general, priority among Interest Holders affected by a cut shall be determined on a rotating restoration-by-restoration and Segment-by-Segment basis, to provide fair and equitable restoration priority to all Interest Holders, subject only to such restoration priority to which Qwest is contractually obligated prior to the date of the Agreement. Service Provider shall use all reasonable efforts to implement a Qwest System-wide rotation mechanism on a Segment-by-Segment basis so that the initial rotation order of the Interest Holders in each Segment is varied (from earlier to later in the order), such that as restorations occur, each Interest Holder has approximately equivalent rotation order positions across the Qwest System. Additional participants in the Qwest System that become Interest Holders after the date hereof shall be added to the restoration rotation mechanism. (c) The goal of emergency restoration splicing shall be to restore service as quickly as possible. This may require the use of some type of mechanical splice, such as the "3M Fiber Lock" to complete the temporary restoration. Permanent restorations will take place as soon as possible after the temporary splice is complete. 8. Subcontracting. Service Provider may subcontract any of the maintenance services hereunder; provided that Service Provider shall require the subcontractor(s) to perform in accordance with the requirement and procedures set forth herein. The use of any such subcontractor shall not relieve Service Provider of any of its obligations hereunder. 9. Fees and Costs. (a) Scheduled Maintenance Fees. The fees payable for any and all Scheduled Maintenance hereunder shall be determined in accordance with the following provisions. During any time after the Acceptance Date for any Segment but subject to paragraph 10 below, Qwest shall be the Service Provider and provide Scheduled Maintenance at a cost not to exceed $ ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## per route mile per year, subject to the CPI adjustment described below (the "Qwest Fixed Fee") and Unscheduled Maintenance as provided in subparagraph 9 below. The Scheduled Maintenance fee payable by Service Recipient shall be equal to a pro rata share of Qwest's Costs based first upon the number of conduits so maintained by Qwest and included in such Costs and second upon the number of Interest Holders (as defined in Section 10.4 of the Agreement) in the portion of the Qwest System so maintained by Qwest and included in such Costs; provided however, the total fee shall in no event exceed the amount of the Qwest Fixed Fee as adjusted by the CPI-U Adjustment. A quarter of the first such Scheduled Maintenance fee with respect to each Segment will be due and payable thirty (30) days after the Acceptance Date with respect to such Segment. Thereafter, one quarter of such fee shall be due quarterly. All fees shall be paid by Service Recipient within thirty (30) days of receipt of invoice therefor. The Qwest Fixed Fee, if applicable, may be adjusted annually, in Qwest's Sole discretion, beginning with the first anniversary date of the execution date of this Agreement, for increases in the United States Bureau of Labor Statistics, CPI-U All Services Index (unadjusted), as originally published. Said adjustment shall be hereinafter referred to as "CPI-U Adjustment". Such fee, as adjusted by the CPI-U Adjustment, shall be equal to the product of the fee specified herein multiplied by the fraction (i) whose numerator is the CPI-U All Services for March of the previous calendar year for which the adjustment to the fee is being made, and (ii) whose denominator is the CPI-U All Services for March of the preceding year. The adjusted fee shall remain in effect until the next annual fee is due, when a new adjusted fee fixed pursuant to this provision shall become effective. In no event shall the amount of the fee as adjusted pursuant to this provision be less than the amount of fee in effect for the immediately-preceding year. The parties agree that the Index for March 1995 is defined as 151.4. In the event that the Bureau of Labor Statistics (or any successor organization) changes the current base of the CPI-U from 1982-84 = 100, the calculation of a fee under this provision shall be adjusted to ensure that Qwest receives the same amount as it would have had, had the base not been changed. In the event the Bureau of Labor Statistics (or any successor organization) no longer publishes the CPI-U, Qwest may, subject to Service Recipient's agreement (which shall not be unreasonably withheld), designate the statistical index it deems most appropriate for collocation of adjustments to a fee and, from the date the CPI-U ceased to be published, such index shall be used to make adjustments in a fee under this provision. (b) Unscheduled Maintenance Fees. If the aggregate amount of the Costs of Unscheduled Maintenance required as a result of any single event or multiple, closely-related events is less than ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , such Costs shall be borne by Service Provider. For any other Unscheduled Maintenance, the Costs thereof shall be allocated among the various Interest Holders in the conduit, cable an/or fibers affected thereby as follows: (i) Costs of Unscheduled Maintenance solely to or affecting a conduit or cable which houses fibers of a single Interest Holder shall be borne 100% by such Interest Holder; (ii) Costs of Unscheduled Maintenance to or affecting a conduit which houses multiple innerduct conduits, not including such Costs attributable to the repair or replacement of fiber therein, shall be borne proportionately by the Interest Holds in each of the affected innerduct conduits based on the ratio that such affected conduit bears to the total number of affected innerduct conduits, and (iii) Costs of Unscheduled Maintenance attributable to the repair or replacement of fiber, including the acquisition, installation, inspection, testing and splicing thereof, shall be borne proportionately by the Interest Holders in the affected fiber, based on the ratio that the number of affected fibers subject to the interest of each such Interest Holder bears to the total number of affected fibers. All such Costs which are allocated to Service Recipient pursuant to the foregoing provisions shall be the responsibility of and paid by Service Recipient within thirty (30) days after its receipt from Service Provider of an invoice therefor. (c) Costs. "Costs" means the actual, direct costs paid or payable in accordance with the established accounting procedures generally used by each party, as the case may be, and which it utilizes in billing third parties for reimbursable projects, which costs shall include, without limitation, the following: (i) labor costs, including wages and salaries, and benefits and overhead allocable to such labor costs (overhead allocation percentage shall not exceed the lesser of (x) the percentage Service Provider typically allocates to its internal projects or (y) ##MATERIAL OMITTED AND SEPARATELY FILED UNDER AN APPLICATION FOR CONFIDENTIAL TREATMENT## , and (ii) other direct costs and out-of-pocket expenses on a pass- through basis (e.g., equipment, materials, supplies, contract services, etc.). 10. Term. (a) Service Provider's obligation to perform maintenance on the relevant portion of the Qwest System shall be for an initial term expiring June 30, 2006. Qwest shall be the Service Provider. Thereafter, Qwest shall have no obligation to provide Scheduled or Unscheduled Maintenance hereunder, but shall be entitled to continue to provide maintenance under the terms and conditions of this agreement. (b) Notwithstanding Section 10(a) above, Qwest represents and warrants that it shall either (1) make a proposal not later than June 30, 2004, to the several Service Recipients to continue to serve as the Service Provider for the services described in this Exhibit H under commercially reasonable terms for the remainder of the Minimum Period following June 30, 2006, or (2) provide notice to the Service Recipients that Qwest shall not continue to provide those services beyond June 30, 2006. Should Qwest make a proposal under clause (1), the Service Recipients and Qwest shall negotiate in good faith toward reaching agreement on those services. If the parties have not concluded an agreement for continuing services by December 31, 2004, the Service Recipients shall be entitled to solicit proposals from other vendors and may select whichever vendor or vendors they jointly agree to use for all or separate portions of the Qwest System and Service Recipient's fibers and Associated Property, to include Qwest or separate vendors as each Service Recipient individually selects for its portion of the Qwest System and for its own fibers and Associated Property. Should Qwest provide notice under clause (2), the Service Recipients may solicit proposals from other vendors and may select another vendor or vendors to assume after June 30, 2006, the Service Provider responsibilities, and Qwest agrees to cooperate fully in the negotiations and transition period. EXHIBIT I UNDERLYING RIGHTS AND --------------------- UNDERLYING RIGHTS REQUIREMENTS ------------------------------ Note: Prior to April 6, 1995 Qwest Communications Corporation was known as "Southern Pacific Telecommunications Company," and the documents listed below that predate April 6, 1995 are in that former name. Pueblo Easements: Easement Agreement dated October 25, 1995 between the Pueblo of Santa Ana and Qwest Communications Corporation. Easement Agreement dated February 2, 1996 between the Pueblo of Santo Domingo and Qwest Communications Corporation. Easement Agreement dated February 26, 1996 between the Pueblo of San Felipe and Qwest Communications Corporation. Easement Agreement dated April 12, 1996 between the Pueblo of Isleta and Qwest Communications Corporation. Easement Agreement dated June 6, 1996 between the Pueblo of Sandia and Qwest Communications Corporation. SPTCo Easement: Easement Agreement dated September 30, 1991 between Southern Pacific Transportation Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Fifth Amendment to Easement Agreement dated August 9, 1996 between Southern Pacific Transportation Company, as Grantor, and Qwest Communications Corporation, as Grantee. D&RGW Easement: Easement Agreement dated September 30, 1991 between Denver and Rio Grande Western Railroad Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. First Amendment to Easement Agreement dated July 14, 1993 between Denver and Rio Grande Western Railroad Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Second Amendment to Easement Agreement dated May 1, 1995 between Denver and Rio Grande Western Railroad Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. SSW Easement: Easement Agreement dated September 30, 1991 between St. Louis Southwestern Railway, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Second Amendment to Easement Agreement dated November 16, 1994 between St. Louis Southwestern Railway, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. ATSF Easement Master Rail Corridor Fiber Optic Agreement dated December 5, 1994 between The Atchison, Topeka and Santa Fe Railway Company, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. CSX Easement: Fiber Optic Placement Agreement dated as of March 1, 1995 between CSX Transportation, Inc., as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Letter Agreement dated as of March 1, 1995 between CSX Transportation, Inc., as Grantor, and Southern Pacific Telecommunications Company, as Grantee. DART Easement: Fiber Optics Agreement dated as of February 3, 1994 between Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. First Amendment to Fiber Optics Agreement dated as of November 13, 1995 between Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Fiber Optics Easement dated as of December 21, 1994 between Dallas Area Rapid Transit, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. MTA Easement: (SPTCo Easement Agreement dated September 30, 1991 was assigned as part of sale of route.) Amendment to Easement Agreement dated January 13, 1995 between the Los Angeles County Metropolitan Transportation Authority, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. First Severance Agreement and Amendment to Easement Agreement dated June 23, 1995 between Los Angeles County Metropolitan Transportation Authority and Southern Pacific Telecommunications Company. Public Easements: License Agreement dated March 2, 1993 between the Utah Department of Transportation and Southern Pacific Telecommunications Company. Agreement dated March 17, 1992 between The Moffat Tunnel Improvement District and Southern Pacific Telecommunications Company. License Agreement dated September 11, 1995 between the City and County of Denver, Board of Water Commissioners and SP Construction Services (covering the Highline Canal Property). License Agreement dated August 30, 1995 between the City and County of Denver, Board of Water Commissioners and SP Construction Services (covering Conduit Number 55). License Agreement dated August 30, 1995 between the City and County of Denver, Board of Water Commissioners and SP Construction Services (covering Conduit Number 96). License Agreement No. 95-01-25 dated July 24, 1995 between the City of Aurora, Director of Utilities and Qwest Communications Corporation. License Agreement dated August 18, 1995 between the City of Aurora, Director of Utilities and Qwest Communications Corporation. Arapahoe County Street Cut and R.O.W. Use Permit Nos. SC5212, SC5213, SC5193, SC5191, SC5190, SC5194, SC5195, and SC5192 issued to Southern Pacific Telecommunications Company by Arapahoe County. Utility Permit Nos. 596067, 595099, 95-145, 95-147, and 95-149 issued to Southern Pacific Telecommunications Company by the Colorado Department of Transportation. Permit for Right-of-Way Use and/or Construction Permit No. 1095 1262 E issued by SP Construction Services by Douglas County. Utility Permit Nos. 7528, 7526, and 7525 issued to Qwest Communications Corporation by the Colorado Department of Transportation. Permit dated March 3, 1995 issued to SP Telecom Construction Services by the Huerfano County Road and Bridge Department. Permit for Construction and Installation of Communication Facilities in Public Rights of Way (Permit No. TFI-95-002) dated February 21, 1995 issued to Southern Pacific Telecommunications Company by Las Animas County. Contractor License No. 70 dated May 9, 1995 issued to Southern Pacific Telecommunications by the Town of Aguilar. Permit dated April 28, 1995 issued to Southern Pacific Telecommunications Company by the Town of Aguilar. Right-of-Way 2983, Book 29, dated March 22, 1995 between the State of Colorado, State Board of Land Commissioners, as Grantor, and Qwest Communications Corporation, as Grantee. Letter dated April 25, 1995 from the City of Trinidad, authorizing SP Telecom to proceed with construction on the North Linden Avenue Communication Conduits. Ordinance No. 950310 issued by the City of Kansas City, Missouri, granting Southern Pacific Telecommunications Company and MCI Telecommunications Corporation the right to install and maintain underground telecommunication lines. Missouri Highway and Transportation Commission Permit Nos. 6-95-00288, 6-95- 00286, 6-95-00287, 4-95-00682, 4-95-00681, 4-95-00683, and 4-95-00662 and Excavation Permit(s) Receipts. Private Easements: Easement dated November 21, 1995 between American Federation of Human Rights, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated September 26, 1995 between Ray W. Harness and Dorothy Elaine Harness, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated December 4, 1995 between James G. Armstrong and Bessie M. Armstrong, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated March 29, 1995 between Louis P. Vezzani and Evelyn M. Vezzani, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated March 29, 1995 between Walsenburg Sand and Gravel Company, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated March 29, 1995 between Joe Mario Amedei, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated March 30, 1995 between Lindo P. Vezzani and Sharron L. Vezzani, as Grantors and Qwest Communications Corporation, as Grantee. Easement dated May 19, 1995 between Ludvik Propane Gas, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated March 30, 1995 between Samuel J. Capps, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated April 17, 1995 between John James Fatur, as Grantor and Qwest Communications Corporation, as Grantee. Easement dated May 15, 1995 between Mark Bracco and Vicki Lynn Graham, as Grantors and Qwest Communications Corporation, as Grantee. Easement between Pamela L. Breitbarth (2/19/96), Virginia A. Buczek (4/17/95), Ross A. Swanson (7/17/95), James R. Coressel (4/16/95) and Imogene Coressel (4/16/95), as Grantors and Qwest Communications Corporation, as Grantee. Easement dated March 30, 1995 between Bud Adams and Janna Adams, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated March 31, 1995 between Trinidad Properties, Inc. and MYBI Partnership, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated June 6, 1995 between Rose Wirth, as Grantor, and Qwest Communications Corporation, as Grantee. Easement dated May 5, 1995 between Harold A. Winter and Viola A. Winter, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated May 18, 1995 between Ayuda Me Dios, as Grantor, and Qwest Communications Corporation, as Grantee. Easement dated April 19, 1995 between Gabriel Saliba and Mary J. Saliba, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated June 1, 1995 between Interstate Underground Warehouse and Industrial Park, Inc., as Grantor, and Qwest Communications Corporation, as Grantee. Easement dated May 26, 1995 between Delbert Rustman and Juanita Rustman, as Grantors, and Qwest Communications Corporation, as Grantee. Easement dated August 28, 1996 between Red Creek Ranch, Inc., as Grantor and Qwest Communications, as Grantee (Pueblo, CO). Miscellaneous Easements Grant of Right of Way and Easement dated December 20, 1961 between J. A. Humphrey and A. Pollard Simons, as Grantors, and American Liberty Pipe Line Company, as Grantee. Amendment to Right-of-Way Agreement dated April 19, 1994 between Haynes/LICO Properties II, as Grantor, and Southern Pacific Telecommunications Company, as Grantee. Amendment to Right of Way Grant dated January 31, 1996 between Prestonwood Golf Club Corporation, as Grantor, and Qwest Communications Corporation, as Grantee. Miscellaneous Documents: SP Construction Services Safety Manual Railroad Safety-Rules Governing Contractors Working on Railroads Railroad Rules and Instructions for Maintenance of Way and Engineering and Operating Manuals for Southern Pacific Lines The Atchison, Topeka and Santa Fe Railway Company Manual -----END PRIVACY-ENHANCED MESSAGE-----