**EXHIBIT 10.13****AGREEMENT CONCERNING THE REIMBURSEMENT OF FEES****AMONG****THE CONNECTICUT LIGHT AND POWER COMPANY****WESTERN MASSACHUSETTS ELECTRIC COMPANY****PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE****AND****MODE 1 COMMUNICATIONS, INC.****AND****NEON OPTICA, INC.****November 5, 2004**
 
 

 
**AGREEMENT CONCERNING THE REIMBURSEMENT OF FEES**This Agreement Concerning the Reimbursement of Fees (this “Agreement”) is entered into as ofNovember 5, 2004 among The Connecticut Light and Power Company, a Connecticut corporation, WesternMassachusetts Electric Company, a Massachusetts corporation, Public Service Company of NewHampshire, a New Hampshire corporation, and Mode 1 Communications, Inc., a Connecticut corporation,(“Mode 1”), on the one hand, and NEON Optica, Inc., a Delaware corporation (“NEON”) on the other.**W I T N E S S E T H:****WHEREAS,**The Connecticut Light and Power Company (“CL&P”), Western Massachusetts Electric Company(“WMECO”), Public Service Company of New Hampshire (“PSNH” and collectively with CL&P and WMECO,the “NU Companies”) and Northeast Utilities Service Company (“NUSCO”), each an affiliate of Mode 1,on the one hand and NEON, on the other hand, are parties to the Second Amended and RestatedAgreement for the Provision of Fiber Optic Facilities and Services (Phase 1), dated as of December23, 2002 (“Phase 1 Agreement”) and to the Second Amended and Restated Agreement for the Provisionof Fiber Optic Facilities and Services (Phase 2), dated as of December 23, 2002 (“Phase 2Agreement” and collectively with the Phase 1 Agreement, the “Fiber Agreements”), pursuant to whichthe NU Companies have agreed to grant to NEON the right to use certain of its transmissionstructures and other facilities and to grant the use of certain of the fiber filaments in the NUCompanies’ fiber optic cable to NEON in exchange for payment of certain annual payments and otherfees; and**WHEREAS,**Mode 1, the NU Companies and NUSCO are parties with NEON and its parent company, NEONCommunications, Inc., to a Common Stock Purchase Agreement dated as of December 23, 2002 (the“Common Stock Purchase Agreement”), pursuant to which Mode 1 acquired shares of common stock ofNEON Communications, Inc.; and**WHEREAS,**pursuant to the Common Stock Purchase Agreement, NEON has the right to requestreimbursement from Mode 1 of any amounts due from NEON to the NU Companies, under the FiberAgreements or otherwise, up to $3.5 million through December 31, 2004, in exchange for the issuanceto Mode 1 of additional shares of common stock by NEON Communications, Inc.; and**WHEREAS,**NEON has previously sought reimbursement from Mode 1 of certain amounts due and payable byNEON to the NU Companies and will be seeking reimbursement from Mode 1 of certain amounts due andpayable by NEON to the NU Companies during 2004 in exchange for additional shares of common stockof NEON Communications, Inc.; and**WHEREAS,**NEON, the NU Companies and Mode 1 now wish to enter into a payment reimbursementarrangement for amounts due from NEON to the NU Companies, under the Fiber Agreements or otherwise,beginning January 1, 2005 through December 31, 2007, pursuant to the terms hereof.**WHEREAS,**NEON Communications, Inc. approved the issuance of the additional shares to Mode 1 in 2004at $6.06 per share, the estimated fair market value, which is consideration for Mode 1 enteringinto this Agreement.
 
 

 
**NOW THEREFORE,**in consideration of the mutual covenants, terms, and conditions contained in thisAgreement, the parties agree as follows:1. Payment and Reimbursement of Fees owed to the NU Companies (a) Beginning January 1, 2005, and each year thereafter during the term of thisAgreement, Mode 1 and NEON will mutually agree by January 31 of each such year on areasonable estimate of all fees, under the Fiber Agreements or otherwise, due or tobecome due to each of CL&P, WMECO and PSNH for such year (such amount to include thetrue-up amount, if any, for the previous year as determined under paragraph 2 hereof),and Mode 1 shall send an invoice to NEON setting forth such amount (the “JanuaryInvoice”); ***provided***, ***however***, that failure to provide such an invoice shall not affectNEON’s obligations to pay any and all fees owed to Mode 1 hereunder or the NU Companiesunder the Fiber Agreements.  (b) After Mode 1 and NEON agree on the amount of the January Invoice, Mode 1 shallpay the NU Companies, on behalf of NEON, all undisputed amounts on the January Invoice,with such payments being made to the NU Companies when such payments are due andpayable; provided that Mode 1 shall not be required to make any payments to the NUCompanies hereunder if NEON is in default of any terms hereof or in default of anypayment obligations hereunder. Subject to paragraph 3 hereof, so long NEON is not indefault hereunder, the NU Companies agree to forebear from exercising any rightsagainst NEON that each may have under the Fiber Agreements as a result of the failureof Mode 1 to make the payments required hereunder.  (c) NEON shall pay Mode 1, in four equal installments payable on a quarterly basis,all amounts on the January Invoice. These amounts shall be payable by NEON to Mode 1on March 31, June 30, September 30 and December 31 of each year. NEON shall have aperiod of thirty (30) days from such quarterly due date to make such payments (i.e.,within thirty (30) days of March 31, June 30, September 30 and December 31 of eachyear).  (d) If payments by NEON are not made within such thirty (30) day period after eachquarterly due date, a default interest rate of 1.0% per month shall accrue on anyunpaid balance, or unpaid portion thereof, until paid.  (e) In the event such amounts due from NEON hereunder, or a portion thereof, remainunpaid for forty-five (45) days after the quarterly due date, such failure to pay shallbe deemed a default under this Agreement and, as a result, Mode 1 shall have the rightto terminate this Agreement after five (5) days written notice of such default to NEON,within which five day period NEON may cure such default. Mode 1 may reserve, however,all rights it may have against NEON, including the right to sue NEON for all unpaidamounts and resulting damages. In the event of a termination of this Agreement by Mode1 pursuant to this paragraph, (i) Mode 1 shall no longer be obligated to make anyadditional payments on the January Invoice to the NU Companies on NEON’s behalf, whichobligation shall revert to being an obligation of NEON, (ii) the NU Companies shallrefund to Mode 1 all amounts paid by Mode 1 on behalf of NEON and not reimbursed byNEON and (iii) the NU Companies may proceed directly against NEON for such paymentsunder the Fiber Agreements or otherwise as if such payments had not been made. Inno event shall this Agreement be deemed to be a waiver of any of the NU Companies’rights under the Fiber Agreements or otherwise.
 
 

 
2. True-upAt the end of each year, Mode 1 shall true up the estimated amounts set forth in the previousJanuary Invoice to the amounts actually due for such year, and shall provide a statement to NEON byJanuary 10 of the following year, showing such true-up amount; ***provided***, ***however***, that failure toprovide such a statement shall not (i) affect NEON’s obligations to pay any and all fees owed toMode 1 and the NU Companies or (ii) affect Mode 1’s obligation to credit or refund excess paymentsmade by NEON to Mode 1. If NEON objects to the amount of the true-up, it shall notify Mode 1 byJanuary 20 (or the next succeeding business day) of the amounts in dispute. The parties shallnegotiate in good faith to resolve the dispute and agree on the balance of the true-up. Suchnegotiations shall not excuse NEON from making the balance of its quarterly payments. Theundisputed amounts shall be reflected in and included in the next succeeding January Invoice and bepayable in the same manner as the other amounts included in the January Invoice, ***except that***, inthe case of the true-up for the year ending December 31, 2007, such amount shall be due withinthirty (30) days of the agreement between the parties of such true-up amount.3. DisputesIf NEON and Mode 1 are unable to agree on the amount to be included in a January Invoice priorto March 1 of such year, Mode 1 shall pay to the NU Companies, at the request of and on behalf ofNEON, any undisputed amount (or undisputed portion of amounts due) in accordance with Section 1(b)of this Agreement and NEON shall reimburse Mode 1 for such amount in accordance with Section 1(c)of this Agreement. Once the disputed amount is resolved and agreed upon by Mode 1 and NEON, NEONshall either pay such corrected amount directly to the respective NU Companies or request Mode 1 topay such amount (“Additional Amount”). If so requested, Mode 1 shall promptly pay such AdditionalAmount when due to the NU Companies and NEON shall reimburse Mode 1 for such Additional Amountpayable in accordance with paragraph 1(c) above.4. TermThe term of this Agreement shall commence on January 1, 2005 and, unless terminated earlierpursuant to paragraph 1(e) hereof, this Agreement shall remain in full force and effect until theearlier of (i) the date when the Fiber Agreements are no longer in full force and effect and (ii)December 31, 2007. Notwithstanding the foregoing, the true-up provisions of paragraph 2 hereofshall survive the termination or expiration of this Agreement until all amounts due are paid orrefunded as the case may be.
 
 

 
5. Governing Law.This Agreement shall be governed in all respects by the laws of the State of Connecticut asapplied to contracts made and to be fully performed entirely within such state between residents ofsuch state.6. Successors and Assigns.Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, andbe binding upon, the successors, assigns, heirs, executors and administrators of the partieshereto. Notwithstanding the foregoing, this Agreement may not be assigned by any party hereto(whether directly by assignment or indirectly through merger, consolidation or reorganization ofany party) without the prior written consent of the other parties, except that, without the priorconsent of NEON and the NU Companies, Mode 1 may assign its rights, obligations and interesthereunder, either directly or by merger, sale of assets or other consolidation, to any parent,subsidiary or affiliate of Mode 1 which shall control, be under the control of or be under commoncontrol with Mode 1.7. Entire Agreement, Amendment.This Agreement constitutes the full and entire understanding and agreement among the partieswith regard to the subjects hereof and thereof. Neither this Agreement nor any term hereof may beamended, waived, discharged or terminated other than by a written instrument signed by the partieshereto.8. Notices, Etc.All notices and other communications required or permitted hereunder shall be in writing andshall be deemed effectively given upon personal delivery or five (5) days following deposit withthe United States Post Office, by registered or certified mail, postage prepaid, addressed (a) ifto Mode 1, then to David R. McHale, Vice President and Treasurer, 107 Selden Street, Berlin, CT06037, or at such other address as such company shall have furnished to NEON in writing, with acopy to Gregory B. Butler, Senior Vice President, Secretary and General Counsel, at the sameaddress, and (b) if to the NU Companies, then addressed to such companies, attention Manager ofReal Estate and Land Planning with a copy to the Director of Transmission Engineering, 107 SeldenStreet, Berlin, CT 06037, or at such other address as such company shall have furnished in writingto NEON, with a copy to Gregory B. Butler, Senior Vice President, Secretary and General Counsel, athe same address, (c) if to NEON, at 2200 West Park Drive, Westborough, MA 02154 and addressed tothe attention of Chief Financial Officer, with a copy to the President and Chief Executive Officerand a copy to the Company’s General Counsel, or at such other address as NEON shall have furnishedto Mode 1 and the NU Companies in writing.
 
 

 
9. Delay or Omissions.No delay or omission to exercise any right, power or remedy accruing upon any breach ordefault under this Agreement, shall impair any such right, power or remedy of the other party norshall it be construed to be a waiver of any such breach or default, or an acquiescence therein, orof or in any similar breach or default thereafter occurring; nor shall any waiver of anysingle breach or default be deemed a waiver of any other breach or default theretofore orthereafter occurring. Any waiver, permit, consent or approval of any kind or character on the partof party of any breach or default under this Agreement, or any waiver on the part of such holder ofany provisions or conditions of this Agreement, must be in writing and shall be effective only tothe extent specifically set forth in such writing. All remedies, either under this Agreement or bylaw or otherwise afforded, shall be cumulative and not alternative.10. CounterpartsThis Agreement may be executed in any number of counterparts, each of which shall beenforceable against the party actually executing such counterparts, and all of which together shallconstitute one instrument.11. Severability.In the event that any provision of this Agreement becomes or is declared by a court ofcompetent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in fullforce and effect without said provision; provided, however, that no such severability shall beeffective if it materially changes the economic benefit of this Agreement to any party.***[Signature Page to Follow]***
 
 

 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first writtenabove.NEON OPTICA, INC.     By: /s/ William A. Marshall        Name: William A. Marshall         Title: Chief Financial Officer            MODE 1 COMMUNICATIONS, INC.THE CONNECTICUT LIGHT AND POWER COMPANYWESTERN MASSACHUSETTS ELECTRIC COMPANYPUBLIC SERVICE COMPANY OF NEW HAMPSHIRE     By: /s/ John H. Forsgren         Name: John H. Forsgren         Title: Executive Vice President & CFO    of Northeast Utilities Service Company,