**Exhibit 10.38**

**MASTERTERMS AND CONDITIONS FOR LICENSE AGREEMENTS**

**BETWEEN**

**ARIZONAPUBLIC SERVICE COMPANY**

**AND**

**MOUNTAINTELECOMMUNICATIONS, INC.**

**FOR**

**FIBEROPTIC CABLE ATTACHMENTS**
| **AGREEMENT NO. CE-99001** | **COPY NO. 1/3** |
|----------------------------|------------------|

 

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Agreement No. CE-99001

MASTER TERMS ANDCONDITIONS FOR LICENSE AGREEMENTBETWEEN ARIZONA PUBLIC SERVICE COMPANYAND MOUNTAIN TELECOMMUNICATIONS, INC.FOR FIBER OPTIC CABLE ATTACHMENTS

**TABLEOF 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 ANDEXHIBITS

APPENDIX A   -                                             SCHEDULEOF FEES AND CHARGES

APPENDIX B   -                                               INSURANCE

APPENDIX C   -                                               LICENSEPROCESS

EXHIBIT A    -                                                       FORMOF LICENSE

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MASTER TERMS ANDCONDITIONS FOR LICENSE AGREEMENTSBETWEENARIZONA PUBLIC SERVICE COMPANYANDMOUNTAIN TELECOMMUNICATIONS, INC.FORFIBER OPTIC ATTACHMENT TO APS FACILITIES

1..            PARTIES:

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

2.             DEFINITIONS:

When initiallycapitalized in this Agreement, or amendments hereto, the following words orphrases shall have the meanings specified:

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

APS Conduit Facilities - Shall meanthe ducts, conduits, manholes, handholes and vaults which are owned wholly byAPS.

APS Facilities - Shall mean APSAerial Facilities and APS Conduit Facilities

Cable - Shall mean the optical fibercable and associated hardware installed by MTI pursuant to any License grantedhereunder.

Communication Space - Shall meanthat space on APS distribution facilities designated by APS for use fortelecommunications purposes.

Distribution Facilities - Shall meanthe poles and associated facilities used for the distribution of electricity atlevels up to 12 kilovolts.

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

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

Make-Ready Work - Shall mean anymodification, replacement or other work which APS determines, in its reasonablediscretion, is necessary to facilitate the attachment, routing or rearrangementof Cable on APS Facilities.

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

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

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

3.             GENERAL:

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

3.2                                 Scope- These Master Terms and Conditions and any License granted hereunder shallonly 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                                 LicenseApplication - Prior to using APS Facilities for the purpose of installingor using any Cable, MTI shall secure a License pursuant to Appendix C, LICENSEPROCESS. The granting of such License shall be in the sole discretion of APS.

3.4                                 CableOwnership - Cable installed by MTI pursuant to any License shall be ownedby MTI. However, APS may, as a condition to granting any License, require thattitle to the Cable be conveyed to APS. In such case the parties shall executeany documents and take any steps reasonably necessary to reflect ownership ofthe Cable by APS.

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3.5                                 Licenseto Use APS Cable - In the event title to any Cable is conveyed to APSpursuant to Section 3.4 above, APS shall grant to MTI a license to use thatportion of the Cable agreed upon by the parties. Any such license shall begoverned by these Terms and Conditions.

3.6                                 OtherRights Reserved

3.6.1                        Except asprovided in Section 3.5 above, nothing contained in these Master Terms andConditions shall be construed to create any license or to constitute anyobligation on the part of APS to grant any license to MTI.

3.6.2                        Neitherthese Master Terms and Conditions nor any License shall create or vest in MTIany ownership or property rights in APS Facilities or constitute an assignmentof any of APS’ rights of way, easements, franchises or other rights to use thepublic or private property on which APS Facilities are located.

3.6.3                        Neitherthese Master Terms and Conditions nor any License shall be construed to compelAPS to construct, retain, extend, place, or maintain any facilities not neededfor APS’ own service requirements.

3.6.4                        Neitherthese Master Terms and Conditions nor any License shall be construed as alimitation, restriction, or prohibition against APS with respect to anyagreement and/or arrangement which APS has previously entered into or may inthe future enter into with other parties regarding the use of APS Facilities.

3.6.5                        No Licenseshall extend to any APS Facilities where the placement of Cable would result ina termination of the rights granted to APS to occupy the property on which APSFacilities are located.

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

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

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4.                                       INDEMNITY

4.1                                 MTIshall 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, anddamages of every kind and description, including but not limited to reasonableattorneys’ fees and/or litigation expenses, which may be brought or madeagainst or incurred by any Indemnitee i) on account of loss of or damage to anyproperty or for injury to or death of any person, caused by, arising out of, orcontributed 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                                 Inall cases of death or injury to employees, officers or agents of either MTI orits contractors or subcontractors, whether or not caused by MTI, eachIndemnitee shall be defended and indemnified by MTI for any and all liabilityexcept where such death or injury results from the sole negligence of anIndemnitee.

4.3                                 MTIshall defend each Indemnitee against all claims, demands, suits, actions, andproceedings for which MTI has, or potentially has, indemnificationresponsibility under this Section 4. Each Indemnitee shall have the right, atits sole cost and discretion, to provide for its own defense to whatever extentsuch Indemnitee deems necessary to protect its own interest or that of otherIndemnitees, and MTI shall cooperate fully with such Indemnitee in any suchparticipation.

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

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

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

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

4.7                                 Inno event shall APS or MTI be liable for any consequential, incidental or specialdamages incurred or alleged to have been incurred by anyone.

5.                                       LEGALREQUIREMENTS

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

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

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

6.                                       LIMITATIONOF LIABILITY:

6.l                                    APSshall not be liable to MTI, its customers or any user of its facilities for anyincidental, indirect, or consequential loss or damage arising in any manner outof 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 allclaims, demands, causes of action, cost, and fees or expenses of whatever kindresulting from any such loss or damage. APS reserves to itself, its successorsand assigns, the right to locate, maintain and operate its facilities in such amanner as will best enable APS to fulfill its service requirements withoutliability to MTI, its customers or any user of its facilities.

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6.2                                 Exceptto the extent of MTI’s gross negligence or willful misconduct, MTI shall not beliable 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 useof APS Facilities or MTI’s acts or omissions in connection therewith.

7.                                       STANDARDS:

7.1                                 Licensing

7.1.1                        AnyLicense granted hereunder shall be conditioned upon compliance by MTI with thestandards set forth herein and in Appendix C.

7.1.2                        MTI shallat all times bear full responsibility for the integrity and safety of itssystem. APS reserves the right, but shall not be obligated, to review MTI’sengineering plans and completed construction. Any such review by APS shall notrelieve MTI from or be deemed a waiver of APS’ right to insist on strictcompliance of MTI’s obligations under this Agreement, including Section 7.2.

7.1.3                        APSreserves the right to make immediate corrections of safety hazards caused byMTI and MTI will bear the full cost of these corrections.

7.2                                 Standards

7.2.1                        MTI shallconstruct, install, operate, and maintain the Cable in accordance with therequirements and standards of the latest editions of the National Electrical SafetyCode (NESC) and the Occupational Safety and Health Act (OSHA), the rules andregulations of any governing authority having jurisdiction over the subjectmatter of these Terms and Conditions or License granted hereunder, anyrequirements APS may from time to time prescribe, and these Terms andConditions. Where a difference in standards may exist, the more stringent shallapply.

7.2.2                        If anypart of the Cable is placed or maintained, or causes the facilities of othersto be in violation of the standards prescribed

 

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in Section 7.2.1 and MTI has not corrected theviolation within fifteen (15) days from the date of written notice thereof, APSmay, in addition to any other remedies it may have hereunder, remove or haveremoved the Cable from any or all of APS Poles or perform or have performedsuch other work and take such other action in connection with the Cable thatAPS deems necessary or advisable to comply with the applicable standards, atMTI’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 endangerthe safety of any person or any property, or interfere with the performance ofany service obligations of APS, APS may take such action without prior noticeto MTI.

8.                                       ASSIGNMENT:

MTI shall not assign or transfer the rights, nordelegate the duties, or otherwise dispose of any right, title, or interest inall 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 entitythat controls, is controlled by or is under common control of MTI. In no eventwill an assignment or transfer a release of MTI with respect to any liabilitiesor obligations under any License unless such release is expressly granted byAPS in writing.

9.                                       TERMAND TERMINATION:

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

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

9.3                                 Terminationfor 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 tocorrect such default, APS may, at its option and in addition to any otherrights or remedies it may have, immediately terminate such License.

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9.4                                 Terminationby MTI - MTI may terminate any License hereunder by providing thirty (30)days notice of such termination to APS. Any such termination shall notterminate any Reciprocal License or other right held by APS with respect to theuse of any Cable.

9.5                                 Removaland Ownership of Cable Upon Termination - Upon termination of any Licensehereunder APS may request that MTI remove such Cable from APS Facilities. IfMTI 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 orotherwise dispose of such Cable. MTI may remove any Cable affected suchtermination, provided, MTI shall not remove any Cable with respect to which APSholds a Reciprocal License or which is owned by APS.

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

10.                                 SERVICEOF NOTICE:

Any notice required or provided for hereunder shall bein writing and shall be delivered personally to the corporate representativesof APS and MTI designated below, or shall be mailed thereto by certified mail,postage prepaid, return receipt requested. Notice shall be effective on thedate 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 bodilyinjury including death at any time resulting therefrom, sustained by any personor persons, and except any claim for damages because of damage to ordestruction of property) arising out of, or relating to any License or itsbreach which may arise between MTI and APS, and which is not resolved by theauthorized representatives of the parties, shall be noticed in writing by thecomplaining party as provided in Section 10,

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SERVICE OF NOTICE. Such controversy or claim shallsubsequently be reviewed and discussed between the appropriate executiveofficers of APS and MTI as a condition precedent to any litigation or submittalto any other authority.

11.2                           FeeDisputes - In addition to the requirements of Section 11.1, any controversyor claim regarding the fees and charges established under this Agreement shallbe settled by arbitration in Phoenix, Arizona, in accordance with the rulesthen in effect of the American Arbitration Association, and judgment upon theaward rendered by the arbitrator(s) may be entered in any court havingjurisdiction thereof. MTI shall continue payment of all fees and charges whendue and performance of all obligations under this Agreement, during any suchperiod of controversy or claim.

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

12.                                 ENTIREAGREEMENT:

These Terms and Conditions, and any License grantedhereunder, shall constitute the entire understanding between APS and MTI andshall supersede all prior contracts, representations, negotiations, or letterspertaining to the subject matter of these Terms and Conditions, whether writtenor oral. The parties shall not be bound by or be liable for any statement,representation, promise, inducement, or understanding of any kind not set forthherein and in any License. These Terms and Conditions shall be deemedincorporated in each License granted hereunder. These Terms and Conditions andany License shall only be modified by an amendment signed by both parties.

13.           NON-WAIVER:

13.1                           Thefailure of APS to enforce or insist upon strict compliance with any of theseTerms and Conditions or of any License provision, or to exercise or delay theexercise of any rights or remedies provided therein, shall not release MTI fromany of its duties or obligations imposed by law or by

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

13.2                           Nothingcontained in these Terms and Conditions shall be construed in any way tofulfill, limit, restrict, substitute, or waive, in whole or in part, any of MTI’sobligations under Article 6.4, HIGH VOLTAGE POWER LINES AND SAFETYRESTRICTIONS, of Section 1, Title 40, Chapter 2 of the Arizona RevisedStatutes, or any other laws, regulations, codes, standards, or industrypractices pertaining to activities near overhead electric lines.

14.                                 SEVERABILITY:

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

15.                                 GOVERNINGLAW AND VENUE:

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

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16.                                 EXECUTIONAND EFFECTIVE DATE:

These Terms and Conditions, have been approved andaccepted 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 ANDCHARGES

MASTER TERMS ANDCONDITIONS FOR LICENSE AGREEMENTSFORFIBER OPTIC CABLE ATTACHMENT TO APS FACILITIES

1.                                       ANNUALLICENSE FEE

1.1                                 MTIshall pay an Annual License Fee for each License as follows:

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

For Cable installed on APS Aerial Facilities (not in the communicationszone) and with respect to which APS is granted a license from MTI to use up to12 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 first50 feet of duct between the building and the first manhole, additional duct at$3.00 per linear foot.

1.2                                 TheAnnual License Fee shall be increased effective January 1 of each year. Theamount of the increase will be calculated utilizing the average of the monthlyConsumer Price Index figures for the preceding calendar year.

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

1.2.2                        The percentage of any increasein the annual average index numbers will be applied to the previous year’sAnnual 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 ofan annual billing.

1.4                                 TheAnnual License Fee for any License that is effective for less than a full yearshall be adjusted on a pro rata basis for the number of full or partial monthsthat such License is effective during the year.

2.                                       CHARGES

2.1                                 General- MTI shall advance funds to APS for all field surveys, engineering, and otherMake-Ready Work to be performed by APS, including, without limitation,inspections, supervision, removal, rearrangement, transfer, or othermodifications of MTI’s facilities and any other work performed for MTI, basedupon the full cost and expense to APS for performing such work or for havingsuch work performed. MTI shall advance funds to APS for other construction asmutually agreed.

2.2                                 NewConstruction - When APS plans to install any facilities for its use, andMTI requests that such installation be modified to accommodate its Cable, MTIshall be responsible for the difference in the costs between the facilitiesneeded 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 thatrequire APS to replace poles, MTI shall bear the responsibility of reattachingits Cable to the new poles. Should APS be required to move an MTI cable, MTIshall reimburse APS a reasonable amount for the work.

2.3                                 FacilityReplacements - MTI shall reimburse APS for replacement of any facilitiesrequired to accommodate MTI’s Cable, based on APS’ fully installed costs, plusoverhead, less salvage value of the replaced facilities, if any, plus the costof removal of the existing facilities.

2.4                                 Taxes- MTI shall pay any and all sales tax, transaction privilege tax or other taxassessed 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.                                       TERMSOF PAYMENT

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

3.2                                 PaymentDate - 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 inthe invoice.

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

**(END APPENDIX A)**

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**APPENDIX B**

**INSURANCE**

**MASTER LICENSE AGREEMENTFORFIBER OPTIC ATTACHMENT TO APS POLES**

1.                                       MTIshall provide and maintain, during the term of and until all obligations underthese Master Terms and Conditions and any License granted hereunder aresatisfied, with forms and insurers acceptable to APS, the following insurancecoverages:

1.1                                 Worker’sCompensation insurance to cover obligations imposed by federal and statestatutes having jurisdiction of its employees engaged in the performance of thework, and Employer’s Liability insurance with a minimum limit of FIVE HUNDREDTHOUSAND DOLLARS($500,000).

1.2                                 CommercialGeneral Liability insurance with a minimum combined single limit of FIVEMILLION DOLLARS($5,000,000) each occurrence. The policy shallinclude coverage for bodily injury liability, broad form property damageliability (including Completed Operations), personal injury liability(including coverage for contractual and employee acts), blanket contractual andproducts and completed operations. Said policy shall contain a severability ofinterests provision. On “occurrence” form policies the products and completedoperation coverage shall extend for two (2) years past termination of anyLicense granted under these Master Terms and Conditions.

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

1.4                                 Ifapplicable, Aircraft Public Liability insurance covering fixed wing androtorcraft aircraft whether owned, hired, or non-owned with a combined singlelimit for bodily injury and property damage of not less than TWO

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

2.                                       Thepolicies required by Sections 1.2, 1.3, and 1.4 herein shall be endorsed toinclude APS, its officers and employees as additional insureds and shallstipulate that the insurance afforded for APS, its officers and employees shallbe primary insurance and that any insurance carried by APS, its officers oremployees shall be excess and not contributory insurance.

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

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

Arizona Public Service CompanyP.O. Box 53999Phoenix, AZ 85072-3999Attn:              Don Tellis                      CommunicationsSystems, Mail Station 3874

5.                                       APSreserves the right to request and receive certified copies of any or all of theabove policies and/or endorsements.

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

7.                                       Thestipulation of insurance coverages in this Appendix B shall not be construed tolimit or waive any liabilities or other obligations of MTI to APS, or any otherparties, in connection with these Master Terms and Conditions or Licensegranted hereunder.

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**(END APPENDIX B)**

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**APPENDIX C**

LICENSE PROCESS

MASTER TERMS ANDCONDITIONS FOR LICENSE AGREEMENTFORFIBER OPTIC ATTACHMENT

1.                                       LicenseRequests and Make Ready Work

1.1                                 LicenseRequests - All requests for a License shall be in writing to the APSCommunications Systems Department and shall include a description of the routeover which MTI desires to run Cable. When a request is submitted by MTI, APSmay require that a field survey be conducted, at MTI’s expense, for the entireCable route.

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

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

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

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

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

1.3.3                        If during the course of thisprocess, APS receives a request from another person for use of the samefacilities, APS will send written notification of such request to MTI. MTIshall have 15 days from the date of the notification to submit payment foreither the invoice for Make-Ready Work, if issued, or for the estimatedcharges, if prior to billing.

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

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

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

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

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1.8                                 ThirdParty Requests Prior to Payment by MTI - In the event APS receives arequest for a license from a third party for attachment to the same facilitiesfor which MTI has submitted a request for a License, but for which APS has notreceived payment from MTI of the Annual Attachment Fees and Make-Ready Workcosts, APS may allocate the costs of Make Ready Work between MTI and such otherapplicant in a manner which reflects to degree of Make Ready work necessitatedby each applicants attachments.

1.9                                 ThirdParty Requests Pending Construction of Cable - If, prior to completion ofthe installation of the Cable authorized by a License, APS receives a request froma third party for attachment to the same APS Facilities, APS shall verballynotify MTI within twenty-four (24) hours thereof, followed by writtenconfirmation. Thereafter MTI shall complete the installation of the Cableduring the remainder of its one hundred twenty (120) day installation period,if any, or within fifteen (15) days of receipt of such verbal notice, whicheveris greater. Should MTI fail to complete the installation of the said Cablewithin the allowed period, APS may deem the License for such attachmentabandoned and may terminate such License. In such case MTI shall not beentitled to reimbursement for any Annual Attachment Fees paid by MTI.

2.                                       ConstructionStandards:

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

2.2                                 WorkSchedules and Notices - Prior to any work commencing near any APSFacilities, MTI and APS shall agree upon a work schedule and shall designaterepresentatives responsible for receiving notice of work to be performed. MTIshall not permit any work to commence near APS facilities until authorizationhas 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 installationspecifications for the Cable to be installed under any License. APS may provideassistance to the engineering process if desired by APS. MTI shall not commenceconstruction under this agreement until APS has given final

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

2.4                               CableType - 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 theCable is to be attached to Transmission Facilities or Sub-TransmissionFacilities, 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 cableinformation, splice locations, landowner information and any other informationas APS may reasonably require. Such drawings will be updated with actual fielddata during and after construction. The scale of such drawings coveringmetropolitan areas shall not exceed 1” = 200’ and for those covering ruralareas shall not exceed 1” = 500’. Information to be provided by MTI to APSshall include sag/tension charts, cable diameter, cable weight and loadingdata.

2.6                               ConnectionPoints - MTI and APS will jointly determine the location of all connectionpoints involving fibers used by APS. Such connection points will typically beremote splice enclosures.

3.                                     Maintenanceand 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 byMTI at its sole cost. APS shall also have the right to perform maintenance,repair or modification on that portion of the Cable containing fibers reservedor licensed for APS’ use.

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

3.3                                 AlternateSource of Electricity - If MTI, at any time, intends to use an alternatesource of electricity to energize any part of its facilities, the electricalconnection for such alternate source of electricity shall be made utilizing asingle pole, double throw switch. All such contemplated installations must beapproved in writing by an authorized representative of APS, prior to any suchinstallation.

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4.                                       Inspections

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

4.2                                 FinalCable Inspection - After MTI has completed installation of Cable, APS willperform an inspection of the attachments. MTI shall provide a representative toparticipate in this inspection and shall reimburse APS all costs of performingsuch inspection. Any such corrective work shall also be subject to inspectionby APS.

4.3                                 PeriodicCable Inspection - APS may make periodic inspections of any part of theCable, and MTI shall reimburse APS for one (1) inspection of the entire MTIfiber system on or in APS Facilities every twenty-four (24) months; for anysuch inspection resulting from a serious safety violation or a series of threeor more violations of the standards set forth in these Terms and Conditions,during a twelve (12) month period; or for inspections made in connection withany unauthorized attachment to poles or anchors of APS. Such reimbursementshall be as set forth in Appendix A, SCHEDULE OF FEES AND CHARGES. If anyattachments are found to be in violation of any provision of these Terms andConditions or License granted hereunder, MTI shall be responsible forcorrecting all such violations and shall reimburse APS the cost of anyadditional Make-Ready Work that may be required for such corrections. Themaking of periodic inspections, or the failure to do so, shall not operate torelieve MTI of any responsibility, obligation or liability assumed under anyLicense. Should five (5) safety violations occur on a License which MTI hasfailed to cure pursuant to Paragraph 9.3, within a twenty-four (24) monthperiod, APS shall void the License and paragraph 9.5 of this Agreement shallapply. APS reserves the right to terminate the Agreement if three or moreindividual events of unauthorized attachments are made my MTI and are not curedpursuant to paragraph 9.3 herein.

5.                                     Modificationor Relocation of Cable:

5.1                               Modificationor Relocation Requested by MTI - In the event MTI desires to modify orrelocate existing Cable, MTI shall notify APS and provide complete and accuratedata necessary to perform the field survey of proposed modifications orrelocation. MTI will bear full costs of the relocation including any costsincurred to re-install to its original function any fibers dedicated to APS’suse. All

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

5.3                                 RelocationsRequested by Third Parties - In the event that APS is required by any thirdparty to relocate APS Facilities on which Cable utilized by its electricdistribution and transmission lines on which any Cable is attached or runs, thecost of Cable relocation shall be apportioned equitably between MTI and APSbased on the numbers of fibers allocated. The cost of relocation of the cablesolely at the request and convenience of APS or MTI shall be borne by therequesting party. MTI shall not be required to pay any amount which APS is legallyentitled to receive and does in fact receive from a third party asreimbursement for the cost of relocating cable. Other than with respect to theallocation of costs, APS shall not charge MTI for placement of Cable onrelocated facilities.

6.                                     Noticesand Safety

6.1                               OutageScheduling - MTI shall not permit any employee, contractor or subcontractoror any employee of any contractor of subcontractor, to commence anyconstruction, maintenance, repair or relocation of work until satisfactoryarrangements, including coordination of work, construction schedules andoutages, have been made with APS. When APS determines in its sole discretionthat it is necessary to de-energize any of its facilities in order for work tocommence, MTI shall not permit work to commence until such facilities have beende-energized.

6.2                               Safety- Nothing contained in this the Terms and Conditions or in any License grantedhereunder shall be construed in any way to fulfill, limit, restrict,substitute, or waive, in whole or in part, obligations of any party underArticle 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 activitynear overhead electric lines. Neither Terms and Conditions nor any Licenseshall not constitute authorization to conduct any activity around suchfacilities as that term is used in such statutes. MTI, its contractors orsubcontractors shall obtain specific authorization on a case-by-case basis fromAPS 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 orfacilities, 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 notcommence any work in or on APS Facilities without prior verbal permission froman authorized APS representative. Prior to accessing the cable for maintenancepurposes, MTI personnel must contact the APS-ECC at (602) 250-1080.

6.4                               APSAccident Prevention Manual - Any employee, contractor, subcontractor andemployees of contractors and subcontractors of MTI which is or will performconstruction, maintenance, repair or relocation work on or around APS’ electricconductors, including transmission and distribution facilities and facilitieslocated at ground level, shall be provided with a copy of the APS AccidentPrevention Manual, copies of which are available from APS. MTI shall distributecopies of this manual to all employees, contractors and subcontractors, and MTIshall ensure that all work performed around electric facilities by such personsis performed in conformance with the APS Accident Prevention Manual.

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AgreementNo.        -               

 

Exhibit A

LICENSE FOR ATTACHMENT OFFIBER OPTIC CABLETO 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 FiberOptic cable and appurtenant facilities to APS overhead and undergroundfacilities identified on the attached drawings and specifications. This Licenseis granted conditioned upon and subject to the provisions of the Master Termsand Conditions for License Agreements referenced above, which are expresslyincorporated herein by this reference. This License shall be for the purpose ofallowing MTI to install, operate, maintain and repair its Cable on APSFacilities in accordance with such Master Terms and Conditions.
|        |   | Arizona Public  Service Company |
|--------|--------|---------------------------------|
| Date   |   |                            | By |   |   |
|   |   | Its                             |   |   |
|   |   |                            |
|   |   | MTI Company                     |
| Date   |   |                            |   | By |   |   |
|   |   | Its                             |   |   |
|        |        |                                 |  |  |  |  |  |  |  |  |

 

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AgreementNo.        -               

 

Exhibit B

RECIPROCAL LICENSE FORUSE OF FIBER WITHIN FIBER OPTIC CABLELOCATED 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 beinstalled by MTI on the route designated in the attached diagram. This licenseis granted in consideration for the License granted by APS to MTI for theattachment of MTI’s Fiber Optic cable and appurtenant facilities to APSoverhead and underground facilities, dated             .This license is granted for the purpose of allowing APS the use of such fiberand shall be perpetual in duration.

 
|        |   | Arizona Public  Service Company |
|--------|--------|---------------------------------|
| Date   |   |                            | By |   |   |
|   |   | Its                             |   |   |
|   |   |                            |
|   |   | MTI Company                     |
| Date   |   |                            |   | By |   |   |
|   |   | Its                             |   |   |
|        |        |                                 |  |  |  |  |  |  |  |  |

 

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**Attachment 1**

LICENSE FOR USE OF APSDARK 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 kVtransmission line pole number 22/2 southwest of Alma School and McKellips Road,approximately 550 feet south of the MTI Scottsdale Office; to APS’ 502 buildingand from APS’ 502 building to US West’s Phoenix Point of Presence (PhoenixMain) for the express purpose of collocating in the US West facility. Thiscollocation shall provide APS with a choice of Internet Service Providers. ThisLicense is granted conditioned upon and subject to the provisions of the MasterTerms and Conditions for License Agreements referenced above, which areexpressly incorporated herein by this reference. This License shall be for thepurpose of allowing MTI the full use of agreed upon fibers as stipulated inthis Attachment in accordance with such Master Terms and Conditions.

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

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

Attachment No. 1 Revision 0

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

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

The effective date of this agreement shall be July 1, 1999. Thisagreement 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       |   |
|        |                     |        |        |                                    |                        |  |  |  |  |

 

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