Exhibit 10.38

MASTER TERMS AND CONDITIONS FOR LICENSE AGREEMENTS

BETWEEN

ARIZONA PUBLIC SERVICE COMPANY

AND

MOUNTAIN TELECOMMUNICATIONS, INC.

FOR

FIBER OPTIC CABLE ATTACHMENTS

AGREEMENT NO. CE-99001

COPY NO. 1/3

 

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Agreement No. CE-99001

MASTER TERMS AND CONDITIONS FOR LICENSE AGREEMENT
BETWEEN
ARIZONA PUBLIC SERVICE COMPANY
AND
MOUNTAIN TELECOMMUNICATIONS, INC.
FOR
FIBER OPTIC CABLE ATTACHMENTS

TABLE OF CONTENTS

SECTION

 

TITLE

 

PAGE

 

 

 

 

 

1.

 

PARTIES

 

1

 

 

 

 

 

2.

 

DEFINITIONS

 

1

 

 

 

 

 

3.

 

GENERAL

 

2

 

 

 

 

 

4.

 

INDEMNITY

 

4

 

 

 

 

 

5.

 

LEGAL REQUIREMENTS

 

5

 

 

 

 

 

6.

 

LIMITATION OF LIABILITY

 

5

 

 

 

 

 

7.

 

STANDARDS

 

6

 

 

 

 

 

8.

 

ASSIGNMENT

 

7

 

 

 

 

 

9.

 

TERM AND TERMINATION

 

7

 

 

 

 

 

10.

 

SERVICE OF NOTICE

 

8

 

 

 

 

 

11.

 

DISPUTES

 

8

 

 

 

 

 

12.

 

ENTIRE AGREEMENT

 

9

 

 

 

 

 

13.

 

NON-WAIVER

 

9

 

 

 

 

 

14.

 

SEVERABILITY

 

10

 

 

 

 

 

15.

 

GOVERNING LAW AND VENUE

 

10

 

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16.

 

EXECUTION AND EFFECTIVE DATE

11

 

APPENDICES AND EXHIBITS

APPENDIX A   -                                             SCHEDULE OF FEES AND
CHARGES

APPENDIX B   -                                               INSURANCE

APPENDIX C   -                                               LICENSE PROCESS

EXHIBIT A    -                                                       FORM OF
LICENSE

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MASTER TERMS AND CONDITIONS FOR LICENSE AGREEMENTS
BETWEEN
ARIZONA PUBLIC SERVICE COMPANY
AND
MOUNTAIN TELECOMMUNICATIONS, INC.
FOR
FIBER OPTIC ATTACHMENT TO APS FACILITIES

1..            PARTIES:

The parties to these Master Terms and Conditions are MOUNTAIN
TELECOMMUNICATIONS, INC., an Arizona corporation, hereinafter referred to as
“MTI”, and ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation, hereinafter
referred to as “APS”.

2.             DEFINITIONS:

When initially capitalized in this Agreement, or amendments hereto, the
following words or phrases shall have the meanings specified:

APS Aerial Facilities - Shall mean Distribution Facilities and Transmission
facilities owned wholly by APS.

APS Conduit Facilities - Shall mean the ducts, conduits, manholes, handholes and
vaults which are owned wholly by APS.

APS Facilities - Shall mean APS Aerial Facilities and APS Conduit Facilities

Cable - Shall mean the optical fiber cable and associated hardware installed by
MTI pursuant to any License granted hereunder.

Communication Space - Shall mean that space on APS distribution facilities
designated by APS for use for telecommunications purposes.

Distribution Facilities - Shall mean the poles and associated facilities used
for the distribution of electricity at levels up to 12 kilovolts.

License - Shall mean a revocable, nonexclusive written authorization to attach
Cable to or route Cable through APS Facilities and, in the case where APS will
own the installed Cable, for the use by MTI of designated fibers within the
Cable.

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License Fee - Shall mean the fee set forth in Appendix A, SCHEDULE OF FEES AND
CHARGES, assessed annually with respect to any License granted by APS hereunder.

Make-Ready Work - Shall mean any modification, replacement or other work which
APS determines, in its reasonable discretion, is necessary to facilitate the
attachment, routing or rearrangement of Cable on APS Facilities.

Reciprocal License - Shall mean any license granted to APS by MTI for the use of
fiber within the Cable as part consideration for any License granted hereunder.

Sub-Transmission Facilities - Poles, towers and other facilities used for the
transmission of electric energy 69 kilovolts.

Transmission Facilities - Poles, towers and other associated facilities used for
the transmission of electric energy at levels greater than 69 kilovolts.

3.             GENERAL:

3.1                                 Purpose - These Master Terms and Conditions
prescribe the process by which Licenses may be secured by MTI from APS from time
to time and constitute the terms and conditions to which each such License shall
be subject. The Licenses granted hereunder are for the routing, attachment,
installation, use and maintenance of Cables used solely for the provision of
telecommunications services by MTI.

3.2                                 Scope - These Master Terms and Conditions
and any License granted hereunder shall only apply with respect to Cable
installed (i) on APS Transmission Facilities, (ii) on APS Distribution
Facilities outside of the Communication Space and (iii) within APS Conduit.

3.3                                 License Application - Prior to using APS
Facilities for the purpose of installing or using any Cable, MTI shall secure a
License pursuant to Appendix C, LICENSE PROCESS. The granting of such License
shall be in the sole discretion of APS.

3.4                                 Cable Ownership - Cable installed by MTI
pursuant to any License shall be owned by MTI. However, APS may, as a condition
to granting any License, require that title to the Cable be conveyed to APS. In
such case the parties shall execute any documents and take any steps reasonably
necessary to reflect ownership of the Cable by APS.

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3.5                                 License to Use APS Cable - In the event
title to any Cable is conveyed to APS pursuant to Section 3.4 above, APS shall
grant to MTI a license to use that portion of the Cable agreed upon by the
parties. Any such license shall be governed by these Terms and Conditions.

3.6                                 Other Rights Reserved

3.6.1                        Except as provided in Section 3.5 above, nothing
contained in these Master Terms and Conditions shall be construed to create any
license or to constitute any obligation on the part of APS to grant any license
to MTI.

3.6.2                        Neither these Master Terms and Conditions nor any
License shall create or vest in MTI any ownership or property rights in APS
Facilities or constitute an assignment of any of APS’ rights of way, easements,
franchises or other rights to use the public or private property on which APS
Facilities are located.

3.6.3                        Neither these Master Terms and Conditions nor any
License shall be construed to compel APS to construct, retain, extend, place, or
maintain any facilities not needed for APS’ own service requirements.

3.6.4                        Neither these Master Terms and Conditions nor any
License shall be construed as a limitation, restriction, or prohibition against
APS with respect to any agreement and/or arrangement which APS has previously
entered into or may in the future enter into with other parties regarding the
use of APS Facilities.

3.6.5                        No License shall extend to any APS Facilities where
the placement of Cable would result in a termination of the rights granted to
APS to occupy the property on which APS Facilities are located.

3.7                                 Fees and Charges - With respect to each
License, MTI shall pay APS the fees and charges as specified in and in
accordance with Appendix A, SCHEDULE OF FEES AND CHARGES, which shall be subject
to adjustment by APS as provided therein or as identified in the specific
Attachment for each License.

3.8                                 Insurance - MTI shall provide and maintain
the insurance coverages and shall comply with the insurance requirements set
forth in Appendix B, INSURANCE.

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4.                                       INDEMNITY

4.1                                 MTI shall indemnify, defend, and save
harmless APS and all of its employees, agents, representatives, and insurers
(each hereinafter referred to as “Indemnitee”) from any and all claims, demands,
suits, actions, proceedings, loss, cost, and damages of every kind and
description, including but not limited to reasonable attorneys’ fees and/or
litigation expenses, which may be brought or made against or incurred by any
Indemnitee i) on account of loss of or damage to any property or for injury to
or death of any person, caused by, arising out of, or contributed to, in whole
or in part, by reasons of any alleged act, omission, fault, mistake, or
negligence of MTI, its employees, agents, representatives, contractors or
subcontractors, their employees, agents, or representatives.

4.2                                 In all cases of death or injury to
employees, officers or agents of either MTI or its contractors or
subcontractors, whether or not caused by MTI, each Indemnitee shall be defended
and indemnified by MTI for any and all liability except where such death or
injury results from the sole negligence of an Indemnitee.

4.3                                 MTI shall defend each Indemnitee against all
claims, demands, suits, actions, and proceedings for which MTI has, or
potentially has, indemnification responsibility under this Section 4. Each
Indemnitee shall have the right, at its sole cost and discretion, to provide for
its own defense to whatever extent such Indemnitee deems necessary to protect
its own interest or that of other Indemnitees, and MTI shall cooperate fully
with such Indemnitee in any such participation.

4.4                                 If requested by APS, MTI shall furnish a
bond or other adequate evidence of financial security or assurance of
performance, in a form satisfactory to APS and in such amount as APS from time
to time may require, to guarantee the performance of all of MTI’s obligations
hereunder. The amount of the bond or financial security shall not operate as a
limitation upon the liability of the MTI hereunder.

4.5                                 If requested by APS, MTI shall furnish a
bond or other adequate evidence of financial security or assurance of
performance, in a form reasonably satisfactory to APS and in an amount not to
exceed fifty percent (50%) of the amount of the construction to be performed on
MTI’s behalf, to guarantee the performance of all of MTI’s obligations
hereunder. The

4

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bond, if requested, shall only be in effect during the time MTI is constructing
on or in APS facilities. The amount of the bond or financial security shall not
operate as a limitation upon the liability of the MTI hereunder.

4.6                                 The indemnification obligations of MTI
contained in this Section 4 are not limited in any respect by the insurance
coverage required under Appendix B.

4.7                                 In no event shall APS or MTI be liable for
any consequential, incidental or special damages incurred or alleged to have
been incurred by anyone.

5.                                       LEGAL REQUIREMENTS

5.1                                 Laws and Regulations - MTI shall at all
times observe and comply with all applicable laws, ordinances, statutes, rules
or regulations which in any manner relate to the rights and obligations of MTI
under any License.

5.2                                 Permits - MTI shall obtain from the
appropriate public and/or private authority any required authorizations,
licenses, or permits to construct, operate, and/or maintain the Cable on public
and private property at the location of APS Facilities. MTI shall submit to APS
such evidence of compliance with the foregoing requirements, as APS may require.

5.3                                 Authorized Personnel - Only “Authorized
Persons”, as defined in Arizona Revised Statutes Section 40-360.41, shall
install, maintain, repair, transfer, or otherwise engage in activities on or
near APS Facilities.

6.                                       LIMITATION OF LIABILITY:

6.l                                    APS shall not be liable to MTI, its
customers or any user of its facilities for any incidental, indirect, or
consequential loss or damage arising in any manner out of the use of APS
Facilities or APS’ acts or omissions in connection therewith, and MTI shall
indemnify and save harmless APS from and against any and all claims, demands,
causes of action, cost, and fees or expenses of whatever kind resulting from any
such loss or damage. APS reserves to itself, its successors and assigns, the
right to locate, maintain and operate its facilities in such a manner as will
best enable APS to fulfill its service requirements without liability to MTI,
its customers or any user of its facilities.

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6.2                                 Except to the extent of MTI’s gross
negligence or willful misconduct, MTI shall not be liable to APS, its customers
or any user of its facilities for any incidental, indirect, or consequential
loss or damage arising in any manner out of the use of APS Facilities or MTI’s
acts or omissions in connection therewith.

7.                                       STANDARDS:

7.1                                 Licensing

7.1.1                        Any License granted hereunder shall be conditioned
upon compliance by MTI with the standards set forth herein and in Appendix C.

7.1.2                        MTI shall at all times bear full responsibility for
the integrity and safety of its system. APS reserves the right, but shall not be
obligated, to review MTI’s engineering plans and completed construction. Any
such review by APS shall not relieve MTI from or be deemed a waiver of APS’
right to insist on strict compliance of MTI’s obligations under this Agreement,
including Section 7.2.

7.1.3                        APS reserves the right to make immediate
corrections of safety hazards caused by MTI and MTI will bear the full cost of
these corrections.

7.2                                 Standards

7.2.1                        MTI shall construct, install, operate, and maintain
the Cable in accordance with the requirements and standards of the latest
editions of the National Electrical Safety Code (NESC) and the Occupational
Safety and Health Act (OSHA), the rules and regulations of any governing
authority having jurisdiction over the subject matter of these Terms and
Conditions or License granted hereunder, any requirements APS may from time to
time prescribe, and these Terms and Conditions. Where a difference in standards
may exist, the more stringent shall apply.

7.2.2                        If any part of the Cable is placed or maintained,
or causes the facilities of others to be in violation of the standards
prescribed

 

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in Section 7.2.1 and MTI has not corrected the violation within fifteen (15)
days from the date of written notice thereof, APS may, in addition to any other
remedies it may have hereunder, remove or have removed the Cable from any or all
of APS Poles or perform or have performed such other work and take such other
action in connection with the Cable that APS deems necessary or advisable to
comply with the applicable standards, at MTI’s cost and expense and without any
liability on the part of APS; provided, however, that when in the sole judgment
of APS such a condition may endanger the safety of any person or any property,
or interfere with the performance of any service obligations of APS, APS may
take such action without prior notice to MTI.

8.                                       ASSIGNMENT:

MTI shall not assign or transfer the rights, nor delegate the duties, or
otherwise dispose of any right, title, or interest in all or any part of any
License without the prior written consent of APS. However, MTI may assign or
transfer a License without such consent to an entity that controls, is
controlled by or is under common control of MTI. In no event will an assignment
or transfer a release of MTI with respect to any liabilities or obligations
under any License unless such release is expressly granted by APS in writing.

9.                                       TERM AND TERMINATION:

9.1                                 Term - These Terms and Conditions shall be
effective with respect to any License granted as of the date specified in
Section 16, EXECUTION AND EFFECTIVE DATE.

9.2                                 Termination by APS - In the event that APS
determines, in its reasonable discretion, that any of the space on within APS
Facilities which has been licensed hereunder is necessary for its use in serving
any of its customers or in meeting any of its regulatory obligations, it may
terminate any License issued hereunder by giving MTI at least six (6) months
prior written notice thereof.

9.3                                 Termination for Default - If MTI defaults in
any of its obligations under any License, and fails within thirty (30) days
after the date of written notice from APS to correct such default, APS may, at
its option and in addition to any other rights or remedies it may have,
immediately terminate such License.

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9.4                                 Termination by MTI - MTI may terminate any
License hereunder by providing thirty (30) days notice of such termination to
APS. Any such termination shall not terminate any Reciprocal License or other
right held by APS with respect to the use of any Cable.

9.5                                 Removal and Ownership of Cable Upon
Termination - Upon termination of any License hereunder APS may request that MTI
remove such Cable from APS Facilities. If MTI fails to remove any Cable within
90 days after APS has requested removal, APS may retain the Cable for its use,
the use of others or may remove, sell or otherwise dispose of such Cable. MTI
may remove any Cable affected such termination, provided, MTI shall not remove
any Cable with respect to which APS holds a Reciprocal License or which is owned
by APS.

9.6                                 Survival of Obligations - Termination of any
License issued hereunder, in whole or in part, for any reason shall not affect
MTI’s liabilities and obligations under such License which arise prior to the
effective date of such termination.

10.                                 SERVICE OF NOTICE:

Any notice required or provided for hereunder shall be in writing and shall be
delivered personally to the corporate representatives of APS and MTI designated
below, or shall be mailed thereto by certified mail, postage prepaid, return
receipt requested. Notice shall be effective on the date delivered.

To APS:

To MTI:

 

 

 

Arizona Public Service Co.

Mountain Telecommunications, Inc.

P. O. Box 53999

10190 E. McKellips

Phoenix, AZ 85072-3999

Scottsdale, AZ 85243

Attn: Telecommunications Network

Attn: Mike Hazel

Engineering Mail Station 3864

 

 

11.                                 DISPUTES:

11.1                           General - Any controversy or claim (except any
claim for damages because of bodily injury including death at any time resulting
therefrom, sustained by any person or persons, and except any claim for damages
because of damage to or destruction of property) arising out of, or relating to
any License or its breach which may arise between MTI and APS, and which is not
resolved by the authorized representatives of the parties, shall be noticed in
writing by the complaining party as provided in Section 10,

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SERVICE OF NOTICE. Such controversy or claim shall subsequently be reviewed and
discussed between the appropriate executive officers of APS and MTI as a
condition precedent to any litigation or submittal to any other authority.

11.2                           Fee Disputes - In addition to the requirements of
Section 11.1, any controversy or claim regarding the fees and charges
established under this Agreement shall be settled by arbitration in Phoenix,
Arizona, in accordance with the rules then in effect of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. MTI shall continue payment of
all fees and charges when due and performance of all obligations under this
Agreement, during any such period of controversy or claim.

11.3                           Expenses - The prevailing party in any
controversy or claim between APS and MTI shall be entitled to recover from the
other party, in addition to any other recovery awarded, any reasonable
attorney’s fees, litigation expenses, and/or arbitration expenses incurred by
such prevailing party in connection with or incident to the controversy or
claim; provided, however, that in the event APS brings an action for declaratory
relief to resolve a dispute involving MTI, APS shall be entitled to recover its
attorney’s fees and litigation expenses.

12.                                 ENTIRE AGREEMENT:

These Terms and Conditions, and any License granted hereunder, shall constitute
the entire understanding between APS and MTI and shall supersede all prior
contracts, representations, negotiations, or letters pertaining to the subject
matter of these Terms and Conditions, whether written or oral. The parties shall
not be bound by or be liable for any statement, representation, promise,
inducement, or understanding of any kind not set forth herein and in any
License. These Terms and Conditions shall be deemed incorporated in each License
granted hereunder. These Terms and Conditions and any License shall only be
modified by an amendment signed by both parties.

13.           NON-WAIVER:

13.1                           The failure of APS to enforce or insist upon
strict compliance with any of these Terms and Conditions or of any License
provision, or to exercise or delay the exercise of any rights or remedies
provided therein, shall not release MTI from any of its duties or obligations
imposed by law or by

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these Terms and Conditions and shall not be deemed a general waiver or
relinquishment of any rights or remedies of APS.

13.2                           Nothing contained in these Terms and Conditions
shall be construed in any way to fulfill, limit, restrict, substitute, or waive,
in whole or in part, any of MTI’s obligations under Article 6.4, HIGH VOLTAGE
POWER LINES AND SAFETY RESTRICTIONS, of Section 1, Title 40, Chapter 2 of the
Arizona Revised Statutes, or any other laws, regulations, codes, standards, or
industry practices pertaining to activities near overhead electric lines.

14.                                 SEVERABILITY:

Should any provision of these Terms and Conditions or any License be determined
to be unenforceable or illegal, then said provisions shall be severed from these
Terms and Conditions and the remainder shall remain in full force and effect.

15.                                 GOVERNING LAW AND VENUE:

These Terms and Conditions and any License shall be interpreted in accordance
with the substantive laws of the State of Arizona. Any action at law or judicial
proceeding shall be instituted only in the state or federal courts of the State
of Arizona.

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16.                                 EXECUTION AND EFFECTIVE DATE:

These Terms and Conditions, have been approved and accepted by the duly
authorized representatives of the parties as of the 4th day of FEB, 1999

 

ARIZONA PUBLIC SERVICE COMPANY

 

 

 

 

 

 

 

 

SIGNATURE

/s/ Don Tellis

 

 

 

 

 

 

NAME

Don Tellis

 

 

 

 

 

 

TITLE

Manager Communication Systems

 

 

 

“APS”

 

 

 

MOUNTAIN TELECOMMUNICATIONS, INC.

 

 

 

 

 

 

 

 

SIGNATURE

/s/ Michael L. Kreel

 

 

 

 

 

 

NAME

Michael L. Kreel

 

 

 

 

 

 

TITLE

Vice President Networks

 

 

 

“MTI”

 

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APPENDIX A

SCHEDULE OF FEES AND CHARGES

MASTER TERMS AND CONDITIONS FOR LICENSE AGREEMENTS
FOR
FIBER OPTIC CABLE ATTACHMENT TO APS FACILITIES

1.                                       ANNUAL LICENSE FEE

1.1                                 MTI shall pay an Annual License Fee for each
License as follows:

For Cable installed on APS Aerial Facilities (not in the communications zone),
$2,000 per Route mile.

For Cable installed on APS Aerial Facilities (not in the communications zone)
and with respect to which APS is granted a license from MTI to use up to 12
fibers, $500 per route mile.

For Cable installed in APS Conduit, $3.00 per linear foot.

For building entrances, $500 per building entrance including the first 50 feet
of duct between the building and the first manhole, additional duct at $3.00 per
linear foot.

1.2                                 The Annual License Fee shall be increased
effective January 1 of each year. The amount of the increase will be calculated
utilizing the average of the monthly Consumer Price Index figures for the
preceding calendar year.

1.2.1                        The annual February release of the Economic
Indicators Prepared for the Joint Economic Committee by the Council of Economic
Advisers and specifically the index category “All Items, Not Seasonally Adjusted
(NSA)” shall be used in computing each of the Annual License Fee increases.

1.2.2                        The percentage of any increase in the annual
average index numbers will be applied to the previous year’s Annual License Fee
to determine the current year’s Annual License Fee.

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1.2.3                        APS will provide the MTI sixty (60) days notice of
the increased Annual Attachment Fee prior to the issue of an annual billing.

1.4                                 The Annual License Fee for any License that
is effective for less than a full year shall be adjusted on a pro rata basis for
the number of full or partial months that such License is effective during the
year.

2.                                       CHARGES

2.1                                 General - MTI shall advance funds to APS for
all field surveys, engineering, and other Make-Ready Work to be performed by
APS, including, without limitation, inspections, supervision, removal,
rearrangement, transfer, or other modifications of MTI’s facilities and any
other work performed for MTI, based upon the full cost and expense to APS for
performing such work or for having such work performed. MTI shall advance funds
to APS for other construction as mutually agreed.

2.2                                 New Construction - When APS plans to install
any facilities for its use, and MTI requests that such installation be modified
to accommodate its Cable, MTI shall be responsible for the difference in the
costs between the facilities needed to meet APS needs and the facilities needed
to accommodate MTI’s Cable. In the event of road widening projects, knocked down
poles, or occurrences that require APS to replace poles, MTI shall bear the
responsibility of reattaching its Cable to the new poles. Should APS be required
to move an MTI cable, MTI shall reimburse APS a reasonable amount for the work.

2.3                                 Facility Replacements - MTI shall reimburse
APS for replacement of any facilities required to accommodate MTI’s Cable, based
on APS’ fully installed costs, plus overhead, less salvage value of the replaced
facilities, if any, plus the cost of removal of the existing facilities.

2.4                                 Taxes - MTI shall pay any and all sales tax,
transaction privilege tax or other tax assessed or assessable as the result of
its occupancy or use of APS Facilities, including any such tax payable by APS,
when due.

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3.                                       TERMS OF PAYMENT

3.1                                 Annual Attachment Fee - The initial Annual
Attachment Fee shall be payable as of the effective date of the License, as
appropriate. Thereafter, the Annual Attachment Fee shall be payable in advance,
as of the first day of January of the applicable year. Annual Attachment Fees
are not fully or partially refundable due to an early termination of a License.

3.2                                 Payment Date - All fees and charges, except
taxes, shall be paid within thirty (30) days after the date of an invoice
therefor or by any payment date indicated in the invoice.

3.3                                 Late Payment - Amounts past due shall incur
a late charge (which is subject to change from time to time at APS’ discretion)
equal to the prime rate plus three percent (3%) (per annum) charged by the
CitiBank, N.A., New York, New York, on the first day of the month in which the
unpaid amount became delinquent. Payment or acceptance of such late charge,
however, shall not constitute a waiver of any rights or remedies granted
hereunder.

(END APPENDIX A)

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APPENDIX B

INSURANCE

MASTER LICENSE AGREEMENT
FOR
FIBER OPTIC ATTACHMENT TO APS POLES

1.                                       MTI shall provide and maintain, during
the term of and until all obligations under these Master Terms and Conditions
and any License granted hereunder are satisfied, with forms and insurers
acceptable to APS, the following insurance coverages:

1.1                                 Worker’s Compensation insurance to cover
obligations imposed by federal and state statutes having jurisdiction of its
employees engaged in the performance of the work, and Employer’s Liability
insurance with a minimum limit of FIVE HUNDRED THOUSAND DOLLARS ($500,000).

1.2                                 Commercial General Liability insurance with
a minimum combined single limit of FIVE MILLION DOLLARS ($5,000,000) each
occurrence. The policy shall include coverage for bodily injury liability, broad
form property damage liability (including Completed Operations), personal injury
liability (including coverage for contractual and employee acts), blanket
contractual and products and completed operations. Said policy shall contain a
severability of interests provision. On “occurrence” form policies the products
and completed operation coverage shall extend for two (2) years past termination
of any License granted under these Master Terms and Conditions.

1.3                                 Comprehensive Automobile Liability insurance
with a combined single limit for bodily injury and property damage of not less
than ONE MILLION DOLLARS ($1,000,000) each occurrence with respect to MTI’s
vehicles whether owned, hired, or non-owned, assigned to or used by MTI.

1.4                                 If applicable, Aircraft Public Liability
insurance covering fixed wing and rotorcraft aircraft whether owned, hired, or
non-owned with a combined single limit for bodily injury and property damage of
not less than TWO

B-1

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MILLION DOLLARS ($2,000,000), including passenger liability coverage.

2.                                       The policies required by Sections 1.2,
1.3, and 1.4 herein shall be endorsed to include APS, its officers and employees
as additional insureds and shall stipulate that the insurance afforded for APS,
its officers and employees shall be primary insurance and that any insurance
carried by APS, its officers or employees shall be excess and not contributory
insurance.

3.                                       MTI and its insurers providing the
required coverages shall waive all rights of recovery against APS and their
directors, officers, employees, and agents.

4.                                       Prior to the issuance of any License
under these Master Terms and Conditions, MTI shall furnish APS with Certificates
of Insurance as evidence that policies providing the required coverages,
conditions, and limits are in full force and effect. The certificates shall
identify the number of these Master Terms and Conditions and License, and
provide that not less than thirty (30) days’ advance notice of cancellation,
termination, or alteration shall be sent directly to APS addressed as follows:

Arizona Public Service Company
P.O. Box 53999
Phoenix, AZ 85072-3999
Attn:              Don Tellis
                      Communications Systems, Mail Station 3874

5.                                       APS reserves the right to request and
receive certified copies of any or all of the above policies and/or
endorsements.

6.                                       APS shall not, however, be obligated to
review any of MTI’s certificates of insurance, insurance policies, and/or
endorsements or to advise MTI of any deficiencies in such documents, and any
receipt of copies or review by APS of such documents shall not relieve MTI from
or be deemed a waiver of APS’ right to insist on strict fulfillment of MTI’s
obligations under this Appendix B.

7.                                       The stipulation of insurance coverages
in this Appendix B shall not be construed to limit or waive any liabilities or
other obligations of MTI to APS, or any other parties, in connection with these
Master Terms and Conditions or License granted hereunder.

B-2

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(END APPENDIX B)

B-3

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APPENDIX C

LICENSE PROCESS

MASTER TERMS AND CONDITIONS FOR LICENSE AGREEMENT
FOR
FIBER OPTIC ATTACHMENT

1.                                       License Requests and Make Ready Work

1.1                                 License Requests - All requests for a
License shall be in writing to the APS Communications Systems Department and
shall include a description of the route over which MTI desires to run Cable.
When a request is submitted by MTI, APS may require that a field survey be
conducted, at MTI’s expense, for the entire Cable route.

1.2                                 Field Surveys - The field survey shall be
performed jointly by representatives of APS and MTI. MTI shall furnish to APS
data necessary to perform the field survey, in a format specified by APS and
according to standards of accuracy and completeness satisfactory to APS.

1.3                                 Engineering and Make Ready Work - As soon as
practicable after completion of the field survey, or after submission of a
request for a License if APS does not require a field survey, APS shall provide
MTI with a written description of any Make Ready Work required to accommodate
any of the Cable. At such time APS shall also specify whether it desires to
reserve or receive a license from MTI for the use of any fibers within the
Cable. Within thirty (30) days after receipt of such description, MTI shall
notify APS whether it intends to proceed with the Cable installation and whether
APS should proceed with the detailed engineering work. MTI shall also notify APS
whether it desires to perform the Make Ready Work, however, APS reserves the
right to perform any or all of the Make Ready Work.

1.3.1                        MTI will be responsible for all engineering costs
expended by APS as a direct result of work approved by MTI on this estimate.
After response to the estimate is received, APS will complete the engineering
for the approved work and submit an invoice to the MTI, payable in accordance
with Appendix A, SCHEDULE OF FEES AND CHARGES. Costs reflected on the invoice
will include costs for the field survey, engineering,

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and, if APS is to perform the Make Ready Work, the cost of proposed
construction.

1.3.2                        If MTI delays approval of the estimate or payment
of the invoice, and said delay causes the time elapsed from the date of the
initial field survey to exceed 120 days, a second field survey may be required,
at MTI’s expense, to determine any changes in the field that would impact
Make-Ready Work requirements.

1.3.3                        If during the course of this process, APS receives
a request from another person for use of the same facilities, APS will send
written notification of such request to MTI. MTI shall have 15 days from the
date of the notification to submit payment for either the invoice for Make-Ready
Work, if issued, or for the estimated charges, if prior to billing.

1.4                                 Make Ready Work Performed by APS - Any
Make-Ready Work to be completed by APS shall begin following receipt of payment
from MTI for such Make-Ready Work, and shall be performed in accordance with
APS’ normal work load schedule. APS shall provide MTI with an estimated schedule
of the Make-Ready Work. However, APS may adjust the schedule at any time to
satisfy its own service requirements, and APS shall not be liable to MTI or any
of its customers for any delays caused by such adjustment. MTI shall not be
entitled to reimbursement of any amounts paid to APS for pole replacements or
for rearrangement of facilities by reason of the use by APS of any additional
capacity resulting from such replacement or rearrangement.

1.5                                 Make Ready Work Performed by MTI - All Make
Ready Work performed by MTI shall be performed by MTI in accordance with the
standards set forth in herein.

1.6                                 Completion of Installation - All Cable
authorized by a License for attachment to APS Facilities shall be installed and
ready for use within one hundred twenty (120) days from the date of APS’
authorization for attachments provided. If construction is not completed within
one hundred twenty (120) days, APS may require an additional field survey, at
MTI’s expense, to determine any changes in the field that would impact Make
Ready Work requirements.

1.7                                 Notice of Completion - MTI shall notify APS,
in writing, within thirty (30) days after completion of the installation of
Cable.

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1.8                                 Third Party Requests Prior to Payment by MTI
- In the event APS receives a request for a license from a third party for
attachment to the same facilities for which MTI has submitted a request for a
License, but for which APS has not received payment from MTI of the Annual
Attachment Fees and Make-Ready Work costs, APS may allocate the costs of Make
Ready Work between MTI and such other applicant in a manner which reflects to
degree of Make Ready work necessitated by each applicants attachments.

1.9                                 Third Party Requests Pending Construction of
Cable - If, prior to completion of the installation of the Cable authorized by a
License, APS receives a request from a third party for attachment to the same
APS Facilities, APS shall verbally notify MTI within twenty-four (24) hours
thereof, followed by written confirmation. Thereafter MTI shall complete the
installation of the Cable during the remainder of its one hundred twenty (120)
day installation period, if any, or within fifteen (15) days of receipt of such
verbal notice, whichever is greater. Should MTI fail to complete the
installation of the said Cable within the allowed period, APS may deem the
License for such attachment abandoned and may terminate such License. In such
case MTI shall not be entitled to reimbursement for any Annual Attachment Fees
paid by MTI.

2.                                       Construction Standards:

2.1                                 Use of Contractors - Any contractors and
subcontractors retained by MTI for the construction, installation, maintenance
and repair of any Cable shall be experienced and qualified to work on such
electrical facilities. In addition, any contractor or subcontractor retained to
work on or near any Transmission or Sub-Transmission Facilities shall be chosen
from a list of contractors approved by APS, or otherwise approved by APS in
writing.

2.2                                 Work Schedules and Notices - Prior to any
work commencing near any APS Facilities, MTI and APS shall agree upon a work
schedule and shall designate representatives responsible for receiving notice of
work to be performed. MTI shall not permit any work to commence near APS
facilities until authorization has been received from APS pursuant to Section 6
of this Appendix C.

2.3                                 Engineering - MTI, at its sole cost, shall
prepare all engineering, design and installation specifications for the Cable to
be installed under any License. APS may provide assistance to the engineering
process if desired by APS. MTI shall not commence construction under this
agreement until APS has given final

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approval of the engineering and design specifications, construction methods and
construction schedule.

2.4                               Cable Type - MTI will determine the type and
fiber capacity of cable to be used. Where any portion of the Cable is to be
licensed for APS’ use, or where the Cable is to be attached to Transmission
Facilities or Sub-Transmission Facilities, APS may specify strength
characteristics, specifications, lengths, type and count of attachment hardware,
splice enclosures and hardware.

2.5                               Drawings - Prior to construction, MTI will
provide drawings that will contain cable information, splice locations,
landowner information and any other information as APS may reasonably require.
Such drawings will be updated with actual field data during and after
construction. The scale of such drawings covering metropolitan areas shall not
exceed 1” = 200’ and for those covering rural areas shall not exceed 1” = 500’.
Information to be provided by MTI to APS shall include sag/tension charts, cable
diameter, cable weight and loading data.

2.6                               Connection Points - MTI and APS will jointly
determine the location of all connection points involving fibers used by APS.
Such connection points will typically be remote splice enclosures.

3.                                     Maintenance and Repair of Cable

3.1                                 Maintenance - Throughout the term of any
License, maintenance and repair of any Cable, including those fibers licensed or
reserved for APS’ use, shall be performed by MTI at its sole cost. APS shall
also have the right to perform maintenance, repair or modification on that
portion of the Cable containing fibers reserved or licensed for APS’ use.

3.2                                 Replacement - Any attachment hardware to be
replaced shall be of the same kind and quality as required by the design
specification or as expressly approved by APS.

3.3                                 Alternate Source of Electricity - If MTI, at
any time, intends to use an alternate source of electricity to energize any part
of its facilities, the electrical connection for such alternate source of
electricity shall be made utilizing a single pole, double throw switch. All such
contemplated installations must be approved in writing by an authorized
representative of APS, prior to any such installation.

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4.                                       Inspections

4.1                                 Inspection of Work - APS shall have the
right, but not the obligation, to inspect the work performed and the manner in
which it is performed by MTI and any of its contractors or subcontractors. If,
in APS’ sole discretion, any work on or around APS Facilities is being performed
in an unsafe manner or in a manner which does not conform to the NESC or APS
standards, APS may order that the work cease until corrective action is taken.

4.2                                 Final Cable Inspection - After MTI has
completed installation of Cable, APS will perform an inspection of the
attachments. MTI shall provide a representative to participate in this
inspection and shall reimburse APS all costs of performing such inspection. Any
such corrective work shall also be subject to inspection by APS.

4.3                                 Periodic Cable Inspection - APS may make
periodic inspections of any part of the Cable, and MTI shall reimburse APS for
one (1) inspection of the entire MTI fiber system on or in APS Facilities every
twenty-four (24) months; for any such inspection resulting from a serious safety
violation or a series of three or more violations of the standards set forth in
these Terms and Conditions, during a twelve (12) month period; or for
inspections made in connection with any unauthorized attachment to poles or
anchors of APS. Such reimbursement shall be as set forth in Appendix A, SCHEDULE
OF FEES AND CHARGES. If any attachments are found to be in violation of any
provision of these Terms and Conditions or License granted hereunder, MTI shall
be responsible for correcting all such violations and shall reimburse APS the
cost of any additional Make-Ready Work that may be required for such
corrections. The making of periodic inspections, or the failure to do so, shall
not operate to relieve MTI of any responsibility, obligation or liability
assumed under any License. Should five (5) safety violations occur on a License
which MTI has failed to cure pursuant to Paragraph 9.3, within a twenty-four
(24) month period, APS shall void the License and paragraph 9.5 of this
Agreement shall apply. APS reserves the right to terminate the Agreement if
three or more individual events of unauthorized attachments are made my MTI and
are not cured pursuant to paragraph 9.3 herein.

5.                                     Modification or Relocation of Cable:

5.1                               Modification or Relocation Requested by MTI -
In the event MTI desires to modify or relocate existing Cable, MTI shall notify
APS and provide complete and accurate data necessary to perform the field survey
of proposed modifications or relocation. MTI will bear full costs of the
relocation including any costs incurred to re-install to its original function
any fibers dedicated to APS’s use. All

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requests MTI for relocation shall be treated in the same manner as new
construction and Make Ready Work, as described above.

5.3                                 Relocations Requested by Third Parties - In
the event that APS is required by any third party to relocate APS Facilities on
which Cable utilized by its electric distribution and transmission lines on
which any Cable is attached or runs, the cost of Cable relocation shall be
apportioned equitably between MTI and APS based on the numbers of fibers
allocated. The cost of relocation of the cable solely at the request and
convenience of APS or MTI shall be borne by the requesting party. MTI shall not
be required to pay any amount which APS is legally entitled to receive and does
in fact receive from a third party as reimbursement for the cost of relocating
cable. Other than with respect to the allocation of costs, APS shall not charge
MTI for placement of Cable on relocated facilities.

6.                                     Notices and Safety

6.1                               Outage Scheduling - MTI shall not permit any
employee, contractor or subcontractor or any employee of any contractor of
subcontractor, to commence any construction, maintenance, repair or relocation
of work until satisfactory arrangements, including coordination of work,
construction schedules and outages, have been made with APS. When APS determines
in its sole discretion that it is necessary to de-energize any of its facilities
in order for work to commence, MTI shall not permit work to commence until such
facilities have been de-energized.

6.2                               Safety - Nothing contained in this the Terms
and Conditions or in any License granted hereunder shall be construed in any way
to fulfill, limit, restrict, substitute, or waive, in whole or in part,
obligations of any party under Article 6.4, HIGH VOLTAGE POWER LINES AND SAFETY
RESTRICTIONS, of Section 1, Title 40, Chapter 2 of the Arizona Revised Statutes,
or any other laws, regulations, codes, standards, or industry practices
pertaining to activity near overhead electric lines. Neither Terms and
Conditions nor any License shall not constitute authorization to conduct any
activity around such facilities as that term is used in such statutes. MTI, its
contractors or subcontractors shall obtain specific authorization on a
case-by-case basis from APS as set forth in such statutes prior to commencing
any work.

6.3                               Emergencies - In the event of an emergency
requiring repair or relocation of MTI’s cable or facilities, MTI shall give APS
notice as soon as practicable and

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shall coordinate such work to be performed with APS. MTI shall not commence any
work in or on APS Facilities without prior verbal permission from an authorized
APS representative. Prior to accessing the cable for maintenance purposes, MTI
personnel must contact the APS-ECC at (602) 250-1080.

6.4                               APS Accident Prevention Manual - Any employee,
contractor, subcontractor and employees of contractors and subcontractors of MTI
which is or will perform construction, maintenance, repair or relocation work on
or around APS’ electric conductors, including transmission and distribution
facilities and facilities located at ground level, shall be provided with a copy
of the APS Accident Prevention Manual, copies of which are available from APS.
MTI shall distribute copies of this manual to all employees, contractors and
subcontractors, and MTI shall ensure that all work performed around electric
facilities by such persons is performed in conformance with the APS Accident
Prevention Manual.

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Agreement No.        -               

 

Exhibit A

LICENSE FOR ATTACHMENT OF FIBER OPTIC CABLE
TO APS FACILITIES

Licensee:

MTI Company

 

 

 

 

 

 

Date:

 

 

 

 

Terms and Conditions Reference No.                   

Township

Range

Quarter

Section

 

 

 

 

 

Annual License Fee                      

 

This License is hereby granted for the attachment of Licensee’s Fiber Optic
cable and appurtenant facilities to APS overhead and underground facilities
identified on the attached drawings and specifications. This License is granted
conditioned upon and subject to the provisions of the Master Terms and
Conditions for License Agreements referenced above, which are expressly
incorporated herein by this reference. This License shall be for the purpose of
allowing MTI to install, operate, maintain and repair its Cable on APS
Facilities in accordance with such Master Terms and Conditions.

 

Arizona Public Service Company

Date

 

 

By

 

 

 

 

Its

 

 

 

 

 

 

 

MTI Company

Date

 

 

 

By

 

 

 

 

Its

 

 

 

1

--------------------------------------------------------------------------------

Agreement No.        -               

 

Exhibit B

RECIPROCAL LICENSE FOR USE OF FIBER WITHIN FIBER OPTIC CABLE
LOCATED ON APS FACILITIES

Licensee:

MTI Company

 

 

 

 

 

 

Date:

 

 

 

 

Terms and Conditions Reference No.                   

Township

Range

Quarter

Section

 

 

 

 

 

This license is hereby granted to APS by MTI for the use of    pairs of fibers
located in Cable belonging to MTI and which has been or will be installed by MTI
on the route designated in the attached diagram. This license is granted in
consideration for the License granted by APS to MTI for the attachment of MTI’s
Fiber Optic cable and appurtenant facilities to APS overhead and underground
facilities, dated             . This license is granted for the purpose of
allowing APS the use of such fiber and shall be perpetual in duration.

 

 

Arizona Public Service Company

Date

 

 

By

 

 

 

 

Its

 

 

 

 

 

 

 

MTI Company

Date

 

 

 

By

 

 

 

 

Its

 

 

 

2

--------------------------------------------------------------------------------

Attachment 1

LICENSE FOR USE OF APS DARK FIBER

Licensee:

Mountain Telecommunications, Inc.

Date:

May 10, 1999

 

 

Terms and Conditions Reference No.

This License is hereby granted to Mountain Telecommunications, Inc. (MTI) for
the use of dark fibers from the Ocotillo-Pinnacle Peak 230 kV transmission line
pole number 22/2 southwest of Alma School and McKellips Road, approximately 550
feet south of the MTI Scottsdale Office; to APS’ 502 building and from APS’ 502
building to US West’s Phoenix Point of Presence (Phoenix Main) for the express
purpose of collocating in the US West facility. This collocation shall provide
APS with a choice of Internet Service Providers. This License is granted
conditioned upon and subject to the provisions of the Master Terms and
Conditions for License Agreements referenced above, which are expressly
incorporated herein by this reference. This License shall be for the purpose of
allowing MTI the full use of agreed upon fibers as stipulated in this Attachment
in accordance with such Master Terms and Conditions.

MTI shall be granted the use of four (4) fibers on the route specified above.
MTI shall provide a non-metallic fiber optic cable from their office to the
existing splice on the transmission line pole, and provide for any fiber optic
splicing required at this location. The four MTI fibers shall be delivered to
MTI in the transformer room in the basement of Phoenix Main. MTI shall be
responsible for any conduit, cable, construction, patch panels, splice cases,
splices, etc. necessary to utilize the four fibers. In addition, MTI shall be
granted the use of one rack space in the APS 502 building to install a fiber
optic node. APS shall supply 48 VDC power to the node.

In consideration, MTI shall provide to APS in their Scottsdale Office
collocation facility space, rack space and power for APS and APS affiliates
network components, which shall include floor space and 48 VDC power for 2 racks
of equipment. MTI shall provide to APS a minimum of eight (8) fibers in the
cable from the above referenced Transmission line pole into the MTI Scottsdale
Office, for APS’ sole use. MTI shall provide fiber optic patchpanel connections
in the proximity of the collocation area for these fibers. In addition, MTI
shall provide to APS one clear channel DS3 delivered from Phoenix Main to the
APS demarc at the 502 Building. This DS3 will provide APS with a redundant path
to a second Tier 1 Internet Service Provider of which MTI shall have access
through their collocation at Phoenix Main. MTI will provide two additional DS3’s
for APS use when required.

Attachment No. 1 Revision 0

1

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Prior to this attachment going into effect, MTI shall obtain the rights from the
Salt River Indian Community allowing MTI, APS and any other carrier to carry
traffic on the APS fiber crossing the reservation.

The terms of this agreement shall be for five (5) years, renewable in additional
five (5) year increments. Each party shall have the right to terminate the
agreement at the end of any term by giving a minimum of 60 days notice to the
other party.

The effective date of this agreement shall be July 1, 1999. This agreement shall
expire June 30, 2004.

 

 

 

 

Arizona Public Service Company

 

Date

  6/14/99

 

 

 

By

/s/ Don Tellis

 

 

 

 

 

Name

Don Tellis

 

 

 

 

 

Its

 Manager Communication System

 

 

 

 

 

Mountain Telecommunications, Inc.

 

Date

  6/23/99

 

 

 

By

 /s/ Michael L Kreel

 

 

 

 

 

Name

 Michael L Kreel

 

 

 

 

 

Its

 VP-Network

 

 

2

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