Document:

ex10-5.htm

 

Exhibit 10.5

 

 

 

 

 

 

[FORM OF]

SALE SITE MASTER LEASE AGREEMENT

BY AND

AMONG

[T-MOBILE COLLOCATOR],

T-MOBILE USA, INC.

AND

[SALE SITE SUBSIDIARIES]

Dated as of [l], 2012

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

 

TABLE OF CONTENTS

 

Page

	
SECTION 1.

	
Definitions

	
1

	
SECTION 2.

	
Grant; Documents

	
14

	
SECTION 3.

	
Term and Termination Rights

	
16

	
SECTION 4.

	
Rent

	
17

	
SECTION 5.

	
Ground Leases

	
18

	
SECTION 6.

	
Condition of the Sites

	
19

	
SECTION 7.

	
Tower Operator Modifications

	
21

	
SECTION 8.

	
T-Mobile Collocator’s and Tower Operator’s Obligations With Respect to Tower Tenants; Interference

	
22

	
SECTION 9.

	
T-Mobile Collocation Space

	
23

	
SECTION 10.

	
Tower and Site Modifications, Replacement, Expansion and Substitution and Rights With Respect to Additional Ground Space and Tower Space

	
30

	
SECTION 11.

	
[Reserved]

	
33

	
SECTION 12.

	
Limitations on Liens

	
33

	
SECTION 13.

	
Tower Operator Indemnity; T-Mobile Collocator Indemnity; Procedure For All Indemnity Claims

	
33

	
SECTION 14.

	
Waiver of Subrogation; Insurance

	
36

	
SECTION 15.

	
Estoppel Certificate

	
39

	
SECTION 16.

	
Assignment and Transfer Rights

	
39

	
SECTION 17.

	
Environmental Covenants

	
41

	
SECTION 18.

	
Taxes

	
42

	
SECTION 19.

	
Utilities

	
43

	
SECTION 20.

	
Compliance with Law; Governmental Permits

	
44

	
SECTION 21.

	
Compliance with Specific FCC Regulations

	
45

	
SECTION 22.

	
Holding Over

	
46

	
SECTION 23.

	
Rights of Entry and Inspection

	
46

	
SECTION 24.

	
Right to Act for Tower Operator

	
46

	
SECTION 25.

	
Defaults and Remedies

	
47

	
SECTION 26.

	
Quiet Enjoyment

	
52

	
SECTION 27.

	
No Merger

	
52

 

 

  

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TABLE OF CONTENTS

(continued)

 

Page

 

	
SECTION 28.

	
Broker and Commission

	
53

	
SECTION 29.

	
Recording of Memorandum of Site Lease Agreement; Preparation and Amendment to the Site Lease Agreement

	
53

	
SECTION 30.

	
Damage to the Site, Tower or the Improvements

	
54

	
SECTION 31.

	
Condemnation

	
55

	
SECTION 32.

	
[Reserved]

	
56

	
SECTION 33.

	
CA/NV Purchase Option

	
56

	
SECTION 34.

	
General Provisions

	
57

	
SECTION 35.

	
T-Mobile Parent Guarantee

	
61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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EXHIBITS AND SCHEDULES

	
Exhibit A

	
List of Sites

	
Exhibit B

	
List of Assignable Sites

	
Exhibit C

	
Form of Site Lease Agreement

	
Exhibit D

	
Form of Memorandum of Site Lease Agreement

	
Exhibit E

	
Hypothetical Equipment Configuration

	
Exhibit F

	
Form of Agreement and Consent

	
Schedule 9(c)

	
Sample Wind Load Surface Area Calculations

 

 

 

  

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SALE SITE MASTER LEASE AGREEMENT

This SALE SITE MASTER LEASE AGREEMENT (this “Agreement”) is entered into this [l] day of [l], 2012 (the “Effective Date”), by and among [l] and [l], as Tower Operator, T-MOBILE COLLOCATOR (as defined herein), as tenant, and T-MOBILE USA, INC., a Delaware corporation (“T-Mobile Parent”).  Tower Operator, T-Mobile Collocator and T-Mobile Parent are sometimes individually referred to in this Agreement as a “Party” and collectively as the “Parties”.

RECITALS:

A.       Certain Affiliates of T-Mobile Parent operate the Sites, which include Towers and related equipment, and such Affiliates either own, ground lease or otherwise have an interest in the land on which such Towers are located;

B.       Pursuant to a sales transaction (the “Sales Transaction”), T-Mobile Parent and certain of its Affiliates have contributed, conveyed, assigned, transferred and delivered to Tower Operator their respective interests in the Sites or their right to operate the Sites and have sold, conveyed, assigned, transferred and delivered to Crown Castle International Corp. all membership interests in Tower Operator;

C.       Tower Operator desires to lease or give T-Mobile Collocator the right to use and operate on a portion of each of the Sites pursuant to the terms and conditions of this Agreement; and

D.       T-Mobile Collocator operates a significant portion of its wireless network through equipment located at the Sites and would not have entered into the Sales Transaction if Tower Operator did not agree to the terms and conditions set forth herein.

NOW, THEREFORE, the Parties agree as follows:

SECTION 1.       Definitions.

(a)       Certain Defined Terms.  In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following respective meanings when used herein with initial capital letters:

“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person.  As used in this definition, “control” means the beneficial ownership (as such term is defined in Rules 13d-3 and 13d-5 of the Securities Exchange Act of 1934, as amended) of 50% or more of the voting interests of the Person.

“Agreement” has the meaning set forth in the preamble and includes all subsequent modifications and amendments hereof.  References to this Agreement in respect of a particular Site shall include the Site Lease Agreement therefor; and references to this Agreement in general and as applied to all Sites shall include all Site Lease Agreements.

 

 

  

  

  

 

“Assignable Site” means the (i) Initial Assignable Sites and (ii) any Non-Assignable Site subject to this Agreement which is converted to an Assignable Site pursuant to a Conversion Closing.

“Assumption Requirements” means, with respect to any assignment by Tower Operator or T-Mobile Collocator of this Agreement (the “assigning party”), that (i) the applicable assignee has creditworthiness, or a guarantor with creditworthiness, reasonably sufficient to perform the obligations of the assigning party under this Agreement or that the assigning party remains liable for such obligations notwithstanding such assignment and (ii) the assignee assumes and agrees to perform all of the obligations of the assigning party hereunder.

“Available Space” means, as to any Site, the portion of the Tower and Land not constituting T-Mobile Collocation Space that is available for lease to or collocation by any Tower Tenant and all rights appurtenant to such portion, space or area.

“Award” means any amounts paid, recovered or recoverable as damages, compensation or proceeds by reason of any Taking, including all amounts paid pursuant to any agreement with any Person which was made in settlement or under threat of any such Taking, less the reasonable costs and expenses incurred in collecting such amounts.

“Bankruptcy” means a proceeding, whether voluntary or involuntary, under the federal bankruptcy laws, a foreclosure, an assignment for the benefit of creditors, trusteeship, conservatorship or other proceeding or transaction arising out of the insolvency of a Person or any of its Affiliates or involving the complete or partial exercise of a creditor’s rights or remedies in respect of payment upon a breach or default in respect of any obligation.

“Business Day” means any day other than a Saturday, Sunday or any other day on which national banks in New York, New York are not open for business.

“Cables” means co-axial cabling, electrical power cabling, ethernet cabling, fiber-optic cabling or any other cabling or wiring necessary for operating Communications Equipment together with any associated conduit piping necessary to encase or protect any such cabling.

“CA/NV Inclusion” means “CA/NV Inclusion” as defined in the Master Agreement.

“CA/NV Master Lease” means that certain Lease and Sublease, dated December 14, 2000, by and between SBC Tower Holdings LLC, as landlord, and T-Mobile West LLC (as successor in interest to the original tenant under such lease), as tenant, as amended, modified or supplemented from time to time.

“CA/NV Site” means any Site subject to the CA/NV Master Lease, which Sites are identified on Exhibit A and, if applicable, Exhibit B as “CA/NV Sites”.

 

 

  

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“CERCLA” means The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

“Claims” means any claims, demands, assessments, actions, suits, damages, obligations, fines, penalties, liabilities, losses, adjustments, costs and expenses (including those for bodily injury (including death) and property damage (including the loss of use thereof) and reasonable attorneys’ and accountants’ fees and expenses).

“Collateral Agreements” means “Collateral Agreements” as defined in the Master Agreement.

“Collocation Agreement” means an agreement, including master leases, between a T-Mobile Group Member (prior to the Effective Date) or Tower Operator (on or after the Effective Date), on the one hand, and a third party (provided that if such agreement is with a T-Mobile Group Member, such third party is not an Affiliate of such T-Mobile Group Member on the Effective Date), on the other hand, pursuant to which such T-Mobile Group Member or Tower Operator, as applicable, rents or licenses to such third party space at any Site (including space on a Tower), including all amendments, modifications, supplements, assignments, guaranties, side letters and other documents related thereto.

“Communications Equipment” means, as to any Site, all equipment now or hereafter installed at (i) the T-Mobile Collocation Space with respect to T-Mobile Collocator and (ii) any other portion of the Site with respect to a Tower Tenant, for the provision of current or future communication services, including voice, video, internet and other data services.  Such equipment shall include switches, antennas, including microwave antennas, panels, conduits, flexible transmission lines, Cables, radios, amplifiers, filters, interconnect transmission equipment and all associated software and hardware, and will include any modifications, replacements and upgrades to such equipment.

“Communications Facility” means, as to any Site, (i) the T-Mobile Collocation Space, together with all T-Mobile Communications Equipment and T-Mobile Improvements at such Site (with respect to T-Mobile Collocator) or (ii) any other portion of the Site leased to or used or occupied by a Tower Tenant, together with all of such Tower Tenant Communications Equipment and such Tower Tenant Improvements at such Site (with respect to a Tower Tenant).

“Conversion Closing” means the conversion of a Non-Assignable Site into an Assignable Site subsequent to the Effective Date.

“Conversion Closing Date” means, with respect to each Conversion Closing, the date on which such Conversion Closing is deemed to have occurred.

 

 

  

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“CPI” means the Consumer Price Index for all Urban Consumers, U.S., City Average (1982-84 = 100) All Items Index, published by the Bureau of Labor Statistics, United States Department of Labor.  If the CPI ceases to be compiled and published at any time during the Term of this Agreement, but a comparable successor index is compiled and published by the Bureau of Labor Statistics, United States Department of Labor, the adjustments provided for in this Agreement which are based on the change in CPI shall be computed according to such successor index, with appropriate adjustments in the index to reflect any material differences in the method of computation from the CPI.  If, at any time during the Term of this Agreement, neither the CPI nor a comparable successor index is compiled and published by the Bureau of Labor Statistics, the comparable index for “all items” compiled and published by any other branch or department of the federal government shall be used as a basis for calculation of the CPI-related adjustments provided for in this Agreement, and if no such index is compiled and published by any branch or department of the federal government, the statistics reflecting cost of living increases or decreases, as applicable, as compiled by any institution or organization or individual generally recognized as an authority by financial and insurance institutions shall be used, in each case with appropriate adjustments to the index to reflect any material differences in the method of computation from the CPI.

“Emergency” means any event that causes, has caused or is likely to cause (i) any bodily injury, personal injury or material property damage, (ii) the immediate suspension, revocation, termination or any other adverse effect as to any licenses or permits, (iii) any material adverse effect on the ability of T-Mobile Collocator, or any Tower Tenants, to operate Communications Equipment at any Site, (iv) any failure of any Site to comply in any material respect with applicable FCC or FAA regulations or other licensing requirements or (v) the termination of a Ground Lease.

“Environmental Law” or “Environmental Laws” means any federal, state or local statute, Law, ordinance, code, rule, regulation, order or decree, regulating, relating to or imposing liability or standards of conduct concerning protection of the environment or public or workplace health and safety as may now or at any time hereafter be in effect, including the following, as same may be amended or replaced from time to time, and all regulations promulgated under or in connection with the Superfund Amendments and Reauthorization Act of 1986; CERCLA; The Clean Air Act; The Clean Water Act; The Toxic Substances Control Act; The Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act; The Hazardous Materials Transportation Act; and The Occupational Safety and Health Act of 1970.

“Excluded Equipment” means (i) any T-Mobile Communications Equipment or T-Mobile Improvements and (ii) any Tower Tenant Communications Equipment or Tower Tenant Improvements.

“FAA” means the United States Federal Aviation Administration or any successor federal Governmental Authority performing a similar function.

 

 

  

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“FCC” means the United States Federal Communications Commission or any successor Governmental Authority performing a similar function.

“Force Majeure” means strike, riot, act of God, nationwide shortages of labor or materials, war, civil disturbance, act of the public enemy, explosion, hurricane, governmental Laws, regulations, orders or restrictions.

“Governmental Approvals” means all licenses, permits, franchises, certifications, waivers, variances, registrations, consents, approvals, qualifications and other authorizations to, from or with any Governmental Authority.

“Governmental Authority” means, with respect to any Person or any Site, any foreign, domestic, federal, territorial, state, tribal or local governmental authority, administrative body, quasi-governmental authority, court, government or self-regulatory organization, commission, board, administrative hearing body, arbitration panel, tribunal or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing, in each case having jurisdiction over such Person or such Site.

“Ground Lease” means, as to any Leased Site, the ground lease, sublease, or any easement, license or other agreement or document pursuant to which Tower Operator as to an Assignable Site, or the T-Mobile Ground Lease Additional Party as to a Non-Assignable Site, holds a leasehold or subleasehold interest, leasehold or subleasehold estate, easement, license, sublicense or other interest in such Site, together with any extensions of the term thereof (whether by exercise of any right or option contained therein or by execution of a new ground lease or other instrument providing for the use of such Site), and including all amendments, modifications, supplements, assignments, guarantees, side letters and other documents related thereto.  The CA/NV Master Lease shall be deemed a Ground Lease other than for purposes of Section 5.

“Ground Lessor” means, as to a Leased Site, the “lessor,” “sublessor,” “landlord,” “licensor,” “sublicensor” or similar Person under the related Ground Lease.

“Ground Rent” means, as to any Leased Site, all rents, fees and other charges payable by the ground lessee to the Ground Lessor under the Ground Lease for such Site.

“Hazardous Material” or “Hazardous Materials” means and includes petroleum products, flammable explosives, radioactive materials, asbestos or any material containing asbestos, polychlorinated biphenyls or any hazardous, toxic or dangerous waste, substance or material defined as such (or any similar term) or regulated by, in or for the purposes of Environmental Laws, including Section 101(14) of CERCLA.

“Improvements” means, as to each Site, (i) one or more equipment pads or raised platforms capable of accommodating exterior cabinets or equipment shelters, huts or buildings, electrical service and access for the placement and servicing of T-Mobile Collocator’s and, if applicable, each Tower Tenant Improvement; (ii) buildings, huts, equipment shelters or exterior cabinets; (iii) batteries, generators and associated fuel tanks or any other substances, products, materials or equipment used to provide backup power; (iv) grounding rings; (v) fencing; (vi) signage; (vii) connections for telephone service or utility service up to the meter; (viii) hardware constituting a Tower platform to hold T-Mobile Collocator’s and, if applicable, each Tower Tenant Communications Equipment; (ix) access road improvements; (x) common shelters, if any; (xi) all marking/lighting systems and light monitoring devices; and (xii) such other equipment, alterations, replacements, modifications, additions and improvements as may be installed on or made to all or any component of a Site (including the Land and the Tower).  Notwithstanding the foregoing, Improvements do not include Communications Equipment (including T-Mobile Communications Equipment or Tower Tenant’s Communications Equipment).

 

 

  

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“Included Property” means, with respect to each Site, (i) the Land related to such Site (including the interest in any Ground Lease), (ii) the Tower located on such Site (including the T-Mobile Collocation Space) and (iii) the related Tower Operator Equipment, Improvements (excluding T-Mobile Improvements and any Tower Tenant Improvements) and the Tower Related Assets with respect to such Site.

“Indemnified Party” means a T-Mobile Indemnitee or a Tower Operator Indemnitee, as the case may be.

“Initial Assignable Sites” means the Sites set forth on Exhibit B.

“Land” means the tract of land constituting a Site, together with all easements and other rights appurtenant thereto.

“Law” means any statute, rule, code, regulation, ordinance or Order of, or issued by, any Governmental Authority.

“Leased Site” means the Assignable Sites that are occupied by Tower Operator and the Non-Assignable Sites that are occupied by a T-Mobile Ground Lease Additional Party, in either case, pursuant to a Ground Lease, which Sites are identified on Exhibit A or Exhibit B as Leased Sites.  If a Site is not a Leased Site, such Site is an Owned Site hereunder.

“Liens” means, with respect to any asset, any mortgage, lien, pledge, security interest, charge, attachment or encumbrance of any kind in respect of such asset.

“Master Agreement” means the Master Agreement, dated as of September 28, 2012, by and among Crown Castle International Corp., Tower Operator, T-Mobile and the other parties thereto.

“Master Prepaid Lease” means the Master Prepaid Lease, dated as of [l], 2012, by and among [Tower Operator], T-Mobile Parent and [T-Mobile Lessors].

 

 

  

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“Memorandum of Site Lease Agreement” means as to any Site, a recordable memorandum of a Site Lease Agreement supplement to this Agreement, in substantially the form of Exhibit D attached to this Agreement.

“Modifications” means the construction or installation of Improvements on any Site or any part of any Site after the Effective Date, or the alteration, replacement, modification or addition to all or any component of a Site after the Effective Date, whether Severable or Non-Severable.

“Mortgage” means, as to any Site, any mortgage, deed to secure debt, deed of trust, trust deed or other conveyance of, or encumbrance against, the right, title and interest of a Party in and to the Land, Tower and Improvements on such Site as security for any debt, whether now existing or hereafter arising or created.

“Mortgagee” means, as to any Site, the holder of any Mortgage, together with the heirs, legal representatives, successors, transferees and assignees of the holder.

“Non-Assignable Site” means, for purposes of this Agreement and until any such Site is converted to an Assignable Site as provided herein, each Site that is identified on Exhibit A, but is not identified as an Assignable Site on Exhibit B and is therefore subject to this Agreement as a Non-Assignable Site as of the Effective Date, until such Site is converted to an Assignable Site as provided herein.

“Non-Restorable Site” means a Site that has suffered a casualty that damages or destroys all or a Substantial Portion of such Site, or a Site that constitutes a non-conforming use under applicable Zoning Laws prior to such casualty, in either case such that either (i) Zoning Laws would not allow Tower Operator to rebuild a comparable replacement Tower on the Site substantially similar to the Tower damaged or destroyed by the casualty or (ii) Restoration of such Site under applicable Zoning Law, using commercially reasonable efforts, in a period of time that would enable Restoration to be commenced (and a building permit issued) within one year after the casualty, would not be possible or would require either (A) obtaining a change in the zoning classification of the Site under applicable Zoning Laws, (B) the filing and prosecution of a lawsuit or other legal proceeding in a court of law or (C) obtaining a zoning variance, special use permit or any other permit or approval under applicable Zoning Laws that cannot reasonably be obtained by Tower Operator.

“Non-Severable” means, with respect to any Modification, any Modification that is not a Severable Modification.

 “Order” means an administrative, judicial, or regulatory injunction, order, decree, judgment, sanction, award or writ of any nature of any Governmental Authority of competent jurisdiction.

“Owned Sites” means the Sites which are owned by Tower Operator in fee simple, which Sites are identified on Exhibit A or Exhibit B as Owned Sites.

 

 

  

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“Permitted Encumbrances” has the meaning set forth in the Master Agreement.

“Person” means any individual, corporation, limited liability company, partnership, association, trust or any other entity or organization, including a Governmental Authority.

“Prime Rate” means the rate of interest reported in the “Money Rates” column or section of The Wall Street Journal (Eastern Edition) as being the prime rate on corporate loans of larger U.S. Money Center Banks, or if The Wall Street Journal is not in publication on the applicable date, or ceases prior to the applicable date to publish such rate, then the rate being published in any other publication acceptable to T-Mobile Collocator and Tower Operator as being the prime rate on corporate loans from larger U.S. money center banks shall be used.

“Proceeds” means all insurance moneys recovered or recoverable by any T-Mobile Ground Lease Additional Party, Tower Operator or T-Mobile Collocator as compensation for casualty damage to any Site (including the Tower and Improvements of such Site).

“Restoration” means, as to a Site that has suffered casualty damage or is the subject of a Taking, such restoration, repairs, replacements, rebuilding, changes and alterations, including the cost of temporary repairs for the protection of such Site, or any portion of such Site pending completion of action, required to restore the applicable Site (including the Tower and Improvements on such Site but excluding any T-Mobile Communications Equipment or T-Mobile Improvements the restoration of which shall be the sole cost and obligation of T-Mobile Collocator) to a condition that is at least as good as the condition that existed immediately prior to such damage or Taking (as applicable), and such other changes or alterations as may be reasonably acceptable to T-Mobile Collocator and Tower Operator or required by Law.

“Revenue Sharing” means any requirement under a Ground Lease to pay to Ground Lessor a share of the revenue derived from a sublease, license or other occupancy agreement at the Site subject to such Ground Lease.

“Right of Substitution” means the right of T-Mobile Collocator to remove T-Mobile Communications Equipment from the T-Mobile Primary Tower Space or T-Mobile Primary Ground Space at a Site and move same to Available Space on such Site by relocation of the portion of the Communications Facility in such Space to a portion of such Available Space not larger than the T-Mobile Primary Tower Space or T-Mobile Primary Ground Space, as applicable, in accordance with and subject to the limitations contained in Section 10.

“Severable” means, with respect to any Modification, any Modification that can be readily removed from a Site or portion of such Site without damaging it in any material respect or without diminishing or impairing the value, utility, useful life or condition that the Site or portion of such Site would have had if such Modification had not been made (assuming the Site or portion of such Site would have been in compliance with this Agreement without such Modification).  Notwithstanding the foregoing, a Modification shall not be considered Severable if such Modification is necessary to render the Site or portion of such Site complete for its intended use by Tower Operator (other than Modifications consisting of ancillary items of Tower Operator Equipment of a kind customarily furnished by lessees or operators of property comparable to the Site or portion of such Sites).

 

 

  

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“Site” means each parcel of Land subject to this Agreement, all of which are identified on Exhibit A hereto, as such exhibit may be amended or supplemented as provided in this Agreement and the Master Agreement and the Tower and Improvements located thereon.  As used in this Agreement, reference to a Site includes Non-Severable Modifications, but shall not include Severable Modifications, any T-Mobile Improvements, T-Mobile Communications Equipment, any Tower Tenant’s Improvements or Tower Tenant Communications Equipment.

“Site Expiration Date” means, as to any Leased Site, if arrangements have not been entered into to secure the tenure of the relevant Ground Lease pursuant to an extension, new Ground Lease or otherwise, one day prior to the expiration of the relevant Ground Lease (as the same may be amended, extended or renewed pursuant to the terms of this Agreement).

“Site Lease Agreement” means, as to any Site, a supplement to this Agreement, in substantially the form of Exhibit C attached to this Agreement.

“Substantial Portion” means, as to a Site, so much of such Site (including the Land, Tower and Improvements of such Site, or any portion of such Site) as, when subject to a Taking or damage as a result of a casualty, leaves the untaken or undamaged portion unsuitable for the continued feasible and economic operation of such Site for owning, operating, managing, maintaining and leasing towers and other wireless infrastructure.

 “Taking” means, as to any Site, any condemnation or exercise of the power of eminent domain by any Governmental Authority, or any taking in any other manner for public use, including a private purchase, in lieu of condemnation, by a Governmental Authority.

“Tax” means all forms of taxation, whenever created or imposed, whether imposed by a local, municipal, state, foreign, federal or other Governmental Authority, and whether imposed directly by a Governmental Authority or indirectly through any other Person and includes any federal, state, local or foreign income, gross receipts, ad valorem, excise, value-added, sales, use, transfer, franchise, license, stamp, occupation, withholding, employment, payroll, property or environmental tax, levy, charge, assessment or fee together with any interest, penalty, addition to tax or additional amount imposed by a Governmental Authority or indirectly through any other Person, as well as any liability for or in respect of the Taxes of, or determined by reference to the Tax liability of, another Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or otherwise.

 

 

  

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“Term” means (i) as to each Site, the term during which this Agreement is applicable to such Site as set forth in Section 3; and (ii) as to this Agreement, the period from the Effective Date until the expiration or earlier termination of this Agreement as to all Sites.

“Termination Cause” means, as to any Site, the inability of T-Mobile Collocator (after using commercially reasonable efforts) to obtain or maintain any Governmental Approval necessary for the operation of T-Mobile’s Communications Facility at such Site; provided, however, that T-Mobile Collocator may not assert a Termination Cause if T-Mobile Collocator (i) cannot maintain or obtain or otherwise forfeits a Governmental Approval as a result of the violation of any Laws by T-Mobile Collocator or its Affiliates or any enforcement action or proceeding brought by any Governmental Authority against T-Mobile Collocator or its Affiliates because of any alleged wrongdoing by T-Mobile Collocator or its Affiliates or (ii) does not have such Governmental Approval on the Effective Date and such Governmental Approval was required on the Effective Date.

“T-Mobile” means T-Mobile Parent and Affiliates thereof that are parties to the Master Agreement.

“T-Mobile Collocator” means, with respect to each Site, the Person identified as the “T-Mobile Collocator” opposite such Site on Exhibit A and, if applicable, Exhibit B hereto, and which shall be the “Lessee” under the Site Lease Agreement for such Site, in each case together with its permitted successors and assignees hereunder, to the extent the same are permitted to succeed to T-Mobile Collocator’s rights hereunder.

“T-Mobile Communications Equipment” means any Communications Equipment owned or leased and used exclusively (subject to the last sentence of Section 9(b)) by T-Mobile Collocator at a Site.

“T-Mobile Ground Lease Additional Party” means each T-Mobile Group Member that, at any applicable time during the Term of this Agreement, has not yet contributed its right, title and interest in the Included Property of a Non-Assignable Site to Tower Operator pursuant to the Master Agreement.

“T-Mobile Group” means, collectively, T-Mobile Parent and its Affiliates (including each T-Mobile Ground Lease Additional Party and T-Mobile Collocator) whose names are set forth in the signature pages of this Agreement or any Site Lease Agreement or the Master Agreement and any Affiliate of T-Mobile Parent that at any time becomes a “sublessor” under this Agreement in accordance with the provisions of this Agreement.

“T-Mobile Group Member” means each member of the T-Mobile Group.

 

 

  

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“T-Mobile Improvements” means any Improvements located at a Site that support, shelter, protect, enclose or provide power or back-up power to T-Mobile Communications Equipment other than a Tower.  All utility connections that provide service to T-Mobile Communications Equipment, including those providing Backhaul Services, shall be deemed T-Mobile Improvements.

“T-Mobile Indemnitee” means T-Mobile Collocator and its Affiliates, directors, officers, employees, agents and representatives (except Tower Operator and its Affiliates and any agents of Tower Operator or its Affiliates).

“T-Mobile Modernization” means the upgrade by T-Mobile Collocator and its Affiliates of its Communications Equipment to any next generation technology.

“T-Mobile Primary Tower Space RAD Center” means, in respect of each Site, the “T-Mobile Primary Tower Space RAD Center” identified in the applicable Site Lease Agreement for each Site.

“Tower” means the communications towers on the Sites from time to time.

“Tower Operator” means, with respect to each Site, the Person identified as the “Tower Operator” opposite such Site on Exhibit A and, if applicable, Exhibit B hereto, and which is the “Lessor” under the Site Lease Agreement for such Site, in each case together with its permitted successors and assignees hereunder, to the extent the same are permitted to succeed to Tower Operator’s rights hereunder.

“Tower Operator Equipment” means all physical assets (other than real property, interests in real property and Excluded Equipment), located at the applicable Site on or in, or attached to, the Land, Improvements or Towers leased to, owned by or operated by Tower Operator pursuant to this Agreement.

“Tower Operator Indemnitee” means Tower Operator and its Affiliates and its and their respective directors, officers, employees, agents and representatives.

“Tower Operator Negotiated Increased Revenue Sharing Payments” means, with respect to any Site, any requirement under a Ground Lease, or a Ground Lease amendment, renewal or extension, in each case entered into after the Effective Date, to pay to the applicable Ground Lessor a share of the revenue derived from the rent paid under this Agreement that is in excess of the Revenue Sharing payment obligation in effect prior to Tower Operator’s entry into such amendment, renewal or extension after the Effective Date for such Site with respect to the revenue derived from the rent paid under this Agreement; provided that “Tower Operator Negotiated Increased Revenue Sharing Payments” shall not include any such requirement or obligation (i) existing as of the Effective Date or (ii) arising under the terms of the applicable Ground Lease (as in effect as of the Effective Date) or under any amendment, renewal or extension the terms of which had been negotiated or agreed upon prior to the Effective Date.

 

 

  

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“Tower Operator Negotiated Renewal” means (i) an extension or renewal of any Ground Lease by Tower Operator in accordance with this Agreement or (ii) a new Ground Lease, successive to a previously existing Ground Lease, entered into by Tower Operator; provided that, in the case of this clause (ii), (A) the term of such new Ground Lease commences immediately upon the expiration of the previously existing Ground Lease and (B) the new Ground Lease is otherwise executed in accordance with this Agreement.

“Tower Related Assets” means “Tower Related Assets” as defined in the Master Agreement.

“Tower Tenant” means, as to any Site, any Person (other than T-Mobile Collocator) that (i) is a “lessee”, “sublessee”, “licensee” or “sublicensee” under any Collocation Agreement affecting such Site; or (ii) leases, subleases, licenses, sublicenses or otherwise acquires from Tower Operator the right to use Available Space on such Site.

“Tower Tenant Communications Equipment” means any Communications Equipment owned or leased by a Tower Tenant.

“Tower Tenant Improvements” means any Improvements located at a Site that support, shelter, protect, enclose or provide power or back-up power to Tower Tenant Communications Equipment other than a Tower.  All utility connections that provide service to Tower Tenant Communications Equipment shall be deemed Tower Tenant Improvements.

“Tower Tenant Related Party” means Tower Tenant and its Affiliates, and its and their respective directors, officers, employees, agents and representatives.

“Transition Services Agreement” means that certain Transition Services Agreement among T-Mobile Parent, Tower Operator and the other parties thereto of even date herewith.

“Wind Load Surface Area” means with respect to each antenna, remote radio unit or other tower mounted equipment, the area in square inches determined by multiplying the two largest dimensions of the length, width and depth of such antenna, remote radio unit or other tower mounted equipment, excluding all mounts and Cables.

“Zoning Laws” means any zoning, land use or similar Laws, including Laws relating to the use or occupancy of any communications towers or property, building codes, development orders, zoning ordinances, historic preservation laws and land use regulations.

Any other capitalized terms used in this Agreement shall have the respective meanings given to them elsewhere in this Agreement.

 

 

  

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(b)       Terms Defined Elsewhere in this Agreement.  In addition to the terms defined in Section 1(a), the following terms are defined in the Section or part of this Agreement specified below:

	
Defined Term

	
Section

	 	 
	
Additional Equipment

	
Section 9(d)

	
Additional Ground Space

	
Section 10(c)

	
Agreement

	
Preamble

	
ASR

	
Section 10(a)

	
Backhaul Operator

	
Section 19(c)

	
Backhaul Services

	
Section 19(c)

	
Casualty Notice

	
Section 30(a)

	
Disputes

	
Section 13(d)

	
Effective Date

	
Preamble

	
Effective Date Ground Space

	
Section 9(a)(i)

	
Effective Date Tower Space

	
Section 9(a)(ii)

	
Financial Advisors

	
Section 28(a)

	
Indemnifying Party

	
Section 13(c)(i)

	
Parties

	
Preamble

	
Party

	
Preamble

	
Qualified Tower Operator

	
Section 16(a)(i)

	
Reserved T-Mobile Loading Capacity

	
Section 6(a)(ii)

	
Restorable Site

	
Section 30(a)

	
Sales Transaction

	
Recitals

	
Site Engineering Application

	
Section 9(e)(i)

	
Subsequent Use

	
Section 8(a)

	
Termination Date

	
Section 3(b)

	
Termination Notice

	
Section 3(c)

	
Third Party Claim

	
Section 13(c)(i)

	
Third Party Communications Equipment

	
Section 6(a)(iii)

	
T-Mobile Assignee

	
Section 16(b)(i)

	
T-Mobile Collocation Rent

	
Section 4(a)

	
T-Mobile Collocation Rent Change Date

	
Section 4(a)

	
T-Mobile Collocation Space

	
Section 9(a)

	
T-Mobile Collocator Obligations

	
Section 35(a)

	
T-Mobile Modernization Reservation Period

	
Section 6(a)(ii)

	
T-Mobile Parent

	
Preamble

	
T-Mobile Primary Ground Space

	
Section 9(a)(i)

	
T-Mobile Primary Tower Space

	
Section 9(a)(ii)

	
T-Mobile Reserved Amount of Tower Equipment

	
Section 9(c)

	
T-Mobile Termination Right

	
Section 3(b)

	
T-Mobile Transfer

	
Section 16(b)(i)

	
Unused Existing Effective Date Capacity

	
Section 6(a)(ii)

 

 

  

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(c)       Construction.  The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Agreement.  Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns, pronouns and verbs shall include the plural and vice versa.  Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.  The use of the words “include” or “including” in this Agreement shall be by way of example rather than by limitation.  The use of the words “or,” “either” or “any” shall not be exclusive.  References to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement and references to a “Section,” “preamble” or “recital” are, unless otherwise specified, to a Section, preamble or recital of this Agreement.  The Parties have participated equally in the negotiation and drafting of this Agreement and the Collateral Agreements.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. If any provision of this Agreement provides that Tower Operator or any of its Affiliates shall “require” any Tower Tenant to engage or refrain from engaging in certain activities, or take or refrain from taking certain acts, such provision shall not be construed as an assurance by Tower Operator or such Affiliate of Tower Operator with respect to such Tower Tenant’s compliance therewith.

SECTION 2.       Grant; Documents.

(a)       Grant.  Subject to the terms and conditions of this Agreement, as of the Effective Date as to the Initial Assignable Sites, and thereafter as of the applicable Conversion Closing Date as to each Non-Assignable Site converted to an Assignable Site hereunder pursuant to a Conversion Closing, Tower Operator hereby leases to T-Mobile Collocator, and T-Mobile Collocator hereby leases from Tower Operator, the T-Mobile Collocation Space of all of the Assignable Sites.  Subject to the terms and conditions of this Agreement, as of the Effective Date as to each Non-Assignable Site, until the applicable Conversion Closing Date with respect to such Site (if any), Tower Operator hereby reserves and makes the T-Mobile Collocation Space available for the exclusive use and possession of T-Mobile Collocator except as otherwise expressly provided herein, whether or not such T-Mobile Collocation Space is now or hereafter occupied.  Notwithstanding anything to the contrary herein, no leasehold, subleasehold or other real property interest is granted pursuant to this Agreement in the T-Mobile Collocation Space at any Non-Assignable Site until the Conversion Closing at which such Non-Assignable Site is converted to an Assignable Site.  Tower Operator and T-Mobile Collocator acknowledge and agree that this single Agreement is indivisible, intended to cover all of the Sites and is not a separate lease and sublease or agreement with respect to individual Sites, and in the event of a Bankruptcy of any Party, all Parties intend that this Agreement be treated as a single indivisible Agreement.

 

 

  

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(b)       Site Lease Agreements. The Site Lease Agreements shall be entered into by Tower Operator and T-Mobile Collocator in accordance with the terms of this Agreement and the Master Agreement.  The Site Lease Agreements shall be prepared by T-Mobile Collocator and delivered to Tower Operator within 180 days after the Effective Date; provided that if T-Mobile Collocator seeks to install any new T-Mobile Communications Equipment, or modify any existing T-Mobile Communications Equipment, at any Site at any time after the Effective Date, the Site Lease Agreement for such Site shall be delivered to Tower Operator prior to the installation or modification of such T-Mobile Communications Equipment.  If a Site Lease Agreement is not entered into with respect to a Site, the Parties shall still have all of the rights and obligations with respect to such Site as provided in this Agreement.  The form of the Site Lease Agreement may not be changed without the mutual agreement of Tower Operator and T-Mobile Collocator.  The terms and conditions of this Agreement shall govern and control in the event of a discrepancy or inconsistency with the terms and conditions of any Site Lease Agreement, except to the extent otherwise expressly provided in such Site Lease Agreement that has been duly executed and delivered by an authorized representative of T-Mobile Collocator having the title of director (or senior title) and by Tower Operator. Notwithstanding the foregoing, any specific requirements relating to the design or construction of the T-Mobile Communications Equipment or T-Mobile Improvements imposed by a state or local government and set forth in the “Special Provisions” section of a Site Lease Agreement, shall control over any terms in this Agreement that directly conflict with such specific requirements.

(c)       Documents.  This Agreement shall consist of the following documents, as amended from time to time as provided herein:

  (i)           this Agreement;

 

  (ii)          the following Exhibits, which are incorporated herein by this reference:

	
Exhibit A

	
List of Sites

	
Exhibit B

	
List of Assignable Sites

	
Exhibit C

	
Form of Site Lease Agreement

	
Exhibit D

	
Form of Memorandum of Site Lease Agreement

	
Exhibit E

	
Hypothetical Equipment Configuration

	
Exhibit F

	
Form of Agreement and Consent

 

  (iii)         Schedules to the Exhibits, which are incorporated herein by reference, and all Schedules to this Agreement, which are incorporated herein by reference; and

  (iv)         such additional documents as are incorporated by reference.

 

 

  

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(d)       Priority of Documents.  If any of the documents referenced in Section 2(c) are inconsistent, this Agreement shall prevail over the Exhibits, the Schedules and additional incorporated documents.

 

(e)       Survival of Terms and Provisions.  All terms defined in this Agreement and all provisions of this Agreement solely to the extent necessary to the interpretation of the Master Agreement or any other Collateral Agreement referred to in the Master Agreement shall survive after the termination or expiration of this Agreement and shall remain in full force and effect until the expiration or termination of such applicable agreement.

SECTION 3.       Term and Termination Rights.

(a)       Term.  The initial term of this Agreement as to each Site shall be for a 10 year period from the Effective Date. The term of this Agreement as to each Site shall be automatically extended for eight additional five year renewal terms, unless it is terminated earlier pursuant to a termination right exercised in accordance with this Section 3, Section 5, Section 25, Section 30, Section 31 or Section 33 with respect to a Site.  Notwithstanding the foregoing, in all cases the term of this Agreement as to any Site other than an Owned Site shall automatically expire on the Site Expiration Date for such Site.

(b)       T-Mobile Collocator Termination Right.  Notwithstanding anything to the contrary contained herein, T-Mobile Collocator shall have the right to terminate its lease or other right to occupy the T-Mobile Collocation Space at any Site (i) on the tenth anniversary of the Effective Date and on the last day of each successive five-year period thereafter or (ii) at any time after the tenth anniversary of the Effective Date if there is an occurrence of a Termination Cause (each such date, a “Termination Date” and such rights, collectively, the “T-Mobile Termination Right”).

(c)       Exercise by T-Mobile Collocator.  To exercise a T-Mobile Termination Right with respect to any Site, T-Mobile Collocator shall give Tower Operator written notice of such exercise (the “Termination Notice”), not less than 90 days prior to any Termination Date.  If T-Mobile Collocator exercises a T-Mobile Termination Right as to any Site, T-Mobile Collocator shall not be required to pay the T-Mobile Collocation Rent or any other amounts with respect to such Site for the period occurring after the Termination Date specified in the applicable Termination Notice and, as of such Termination Date, the Site Lease Agreement for such Site shall be terminated and the rights, duties and obligations of T-Mobile Collocator and Tower Operator in this Agreement with respect to such Site shall terminate as of the Termination Date for such Site except the rights, duties and obligations set forth in Section 3(d) and such other rights, duties and obligations with respect to such Site that expressly survive the termination of this Agreement with respect to such Site.

(d)       Obligations Following T-Mobile Collocator Termination.  Not later than the Termination Date of any Site, T-Mobile Collocator shall vacate the T-Mobile Collocation Space of such Site and remove, at T-Mobile Collocator’s cost and expense, all T-Mobile Communications Equipment and T-Mobile Improvements at such Site (and otherwise leave the vacant T-Mobile Collocation Space in good condition, repair and order (reasonable wear and tear and loss by casualty and condemnation excepted) and shall remove all T-Mobile Communications Equipment and T-Mobile Improvements therefrom and restore any damage thereto caused by, through or under any T-Mobile  Collocator; provided, however, that T-Mobile Collocator shall not be required to remove any equipment pads or foundations for T-Mobile Improvements).  T-Mobile Collocator’s right to occupy and use the T-Mobile Collocation Space of a Site pursuant to this Agreement shall be terminated as of the Termination Date of such Site.  At the request of either T-Mobile Collocator or Tower Operator, the appropriate Parties shall enter into documentation, in form and substance reasonably satisfactory to such Parties, evidencing any termination of T-Mobile Collocator’s rights at any Site pursuant to this Agreement.

 

 

  

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SECTION 4.       Rent.

(a)       Collocation Rent.  In advance on the first day of each calendar month during the Term as to each Site, subject to the provisions of Section 3(c) and Section 4(b), T-Mobile Collocator shall pay to Tower Operator the T-Mobile Collocation Rent.

“T-Mobile Collocation Rent” means, with respect to each Site, on the Effective Date, an amount equal to (i) if the CA/NV Inclusion occurs as of the Effective Date, $1,905 or (ii) if the CA/NV Inclusion does not occur as of the Effective Date, $1,850, which amount may be increased or decreased from time to time in accordance with the terms of this Agreement, subject to increase on an annual basis during the Term of this Agreement on the first day of the calendar month following the one year anniversary of the Effective Date and each one year anniversary thereafter (each such date, the “T-Mobile Collocation Rent Change Date”) based on the percentage change in CPI (to the extent it is a positive number) in an amount that is equal to the percentage change between the CPI published 15 months prior to the T-Mobile Collocation Rent Change Date and the CPI published three months prior to the T-Mobile Collocation Rent Change Date.

(b)       Prorated Rent Payments.  If the Effective Date is a day other than the first day of a calendar month, the applicable T-Mobile Collocation Rent for the period from the Effective Date through the end of the calendar month during which the Effective Date occurs shall be prorated on a daily basis, and shall be included in the calculation of and payable with the T-Mobile Collocation Rent for the first full calendar month of the Term.  If the date of the expiration of the Term as to any Site is a day other than the last day of a calendar month, the applicable T-Mobile Collocation Rent for such calendar month shall be prorated on a daily basis.

(c)       Revenue Sharing Payments.  T-Mobile Collocator shall pay to Tower Operator (or to the applicable Ground Lessor if required to be paid directly to Ground Lessor by the terms of the applicable Ground Lease or if so instructed by Tower Operator), as and when due and payable under any Ground Lease, T-Mobile’s Share of Transaction Revenue Sharing Payments (as defined in the Master Agreement) that are required to be made with respect to the T-Mobile Collocation Rent for any Site other than Tower Operator Negotiated Increased Revenue Sharing Payments.  Each payment of such Transaction Revenue Sharing Payments by T-Mobile Collocator shall identify and specify the Site in respect of which such payment is being made.  To the extent T-Mobile Collocator shall have a continuing obligation to make Revenue Sharing payments with respect to any Site for which T-Mobile Collocator has made an initial Revenue Sharing payment in accordance with the immediately preceding sentence, T-Mobile Collocator shall make such continuing Revenue Sharing payments on the same date that such payments are due and payable to the applicable Ground Lessor.  Tower Operator shall pay, as and when due and payable, Tower Operator Share of Transaction Revenue Sharing Payments (as defined in the Master Agreement) that are required to be made with respect to the T-Mobile Collocation Rent for any Site.

 

 

  

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(d)       Termination of Rent Obligation.  Notwithstanding anything to the contrary contained herein, if T-Mobile Collocator is not able to use or occupy the T-Mobile Collocation Space at a Site for the current or future business activities that it conducts at such Site because of the termination of the underlying Ground Lease, or the failure of Tower Operator to comply with the terms and conditions of this Agreement following applicable notice and cure periods, (i) T-Mobile Collocator shall have no further obligation to pay the T-Mobile Collocation Rent applicable to such Site and (ii) T-Mobile Collocator shall have the right to offset any amounts owed by Tower Operator to T-Mobile Collocator hereunder against the T-Mobile Collocation Rent or any other amounts that may become due from T-Mobile Collocator and payable to Tower Operator under this Agreement.  The foregoing shall not limit any other rights or remedies of T-Mobile Collocator hereunder.

(e)       T-Mobile Right to Cure Ground Rent Defaults.  If Tower Operator does not pay all or any portion of the Ground Rent when due and payable with respect to any Leased Site, T-Mobile Collocator may seek to cure such payment default under any applicable Ground Lease by making payment of the unpaid Ground Rent to the applicable Ground Lessor.  Within 10 days following receipt of any invoice therefor, Tower Operator shall reimburse T-Mobile Collocator for all such payments of Ground Rent made by T-Mobile Collocator.  If such reimbursement is not made within such 10-day period, T-Mobile Collocator may offset all such payments of Ground Rent made by T-Mobile Collocator against the T-Mobile Collocation Rent that may be due and payable from T-Mobile Collocator to Tower Operator under this Agreement.

SECTION 5.       Ground Leases.

(a)       Compliance With Ground Leases.  Tower Operator shall promptly pay or cause to be paid the Ground Rent under each Ground Lease for each of the Sites during the Term of this Agreement when such payments become due and payable.  With respect to the Non-Assignable Sites, Tower Operator shall abide by, comply with and perform all applicable terms, covenants, conditions and provisions of each Ground Lease (including terms, covenants, conditions and provisions relating to maintenance, insurance and alterations) as if Tower Operator were the “ground lessee” under the applicable Ground Lease, and to the extent evidence of such performance must be provided to a Ground Lessor, Tower Operator shall provide such evidence to such Ground Lessor.  In no event shall Tower Operator have any liability to any T-Mobile Group Member for any breach of, or default under, a Ground Lease caused by an act or omission of any T-Mobile Group Member.

 

 

  

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(b)       Exercise of Existing Ground Lease Extensions.  During the Term of any Ground Lease relating to any Site, Tower Operator agrees to exercise prior to the expiration of the applicable Ground Lease and in accordance with the provisions of the applicable Ground Lease, any and all extension options existing as of the Effective Date.  Notwithstanding the foregoing, Tower Operator shall not be required to exercise any Ground Lease extension option (A) if T-Mobile Collocator at the Site covered by such Ground Lease is in default of its obligations under this Agreement as to the Site beyond applicable notice and cure periods provided herein, (B) if the then remaining term of such Ground Lease (determined without regard to such extension option) shall extend beyond the term of this Agreement as to such Site taking into account all renewal options that may be exercised by T-Mobile Collocator under this Agreement or (C) if T-Mobile Collocator has given a Termination Notice relating to such Site.

(c)       Negotiation of Additional Ground Lease Extensions.  T-Mobile Collocator, if requested by Tower Operator, shall use commercially reasonable efforts to assist Tower Operator (and not interfere with Tower Operator) in obtaining further extensions of the term of any Ground Lease; provided that T-Mobile Collocator shall not be required to expend any funds in connection therewith.

(d)       This Section 5 shall not apply to the CA/NV Master Lease, which shall be governed by Section 33.

SECTION 6.       Condition of the Sites.

(a)       Repair and Maintenance of Tower.

  (i)           Repair and Maintenance Obligations of Tower Operator. Tower Operator has the obligation, right and responsibility to repair and maintain each Site in accordance with tower industry standards, including an obligation to maintain the structural integrity of all of the Towers and to ensure that all of the Towers have at all times the structural loading capacity to hold and support all Communications Equipment then mounted on the Tower.

 

  (ii)          Reserved T-Mobile Loading Capacity.  Tower Operator shall make structural modifications to any Tower when and to the extent necessary to provide sufficient structural loading capacity to enable T-Mobile Collocator to install the T-Mobile Reserved Amount of Tower Equipment in the T-Mobile Primary Tower Space on such Tower (the “Reserved T-Mobile Loading Capacity”), subject to obtaining all necessary Governmental Approvals and other approvals and further subject to the following:

 

 

  

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(A)         Tower Operator shall only be responsible for the costs of structural modifications to any Tower (including costs related to structural analysis, Governmental Approvals and other approvals) to increase the structural loading capacity:

(1)         to enable Tower Operator to permit any Person other than T-Mobile Collocator to install Communications Equipment; and

(2)         during the period beginning on the Effective Date and ending on the second anniversary of the Effective Date (the “T-Mobile Modernization Reservation Period”), to provide the portion of the Reserved T-Mobile Loading Capacity that (x) existed on such Tower but was not being used by T-Mobile Collocator as of the Effective Date (“Unused Existing Effective Date Capacity”), (y) is unavailable at the time that T-Mobile Collocator installs the T-Mobile Reserved Amount of Equipment and (z) is unavailable due to the prior installation (following the Effective Date) of Communications Equipment by any Tower Tenant or Tower Operator; and

(B)         Tower Operator shall not be responsible for the costs of structural modifications to any Tower (including costs related to structural analysis, Governmental Approvals and other approvals) to increase the structural loading capacity:

(1)         to provide the portion of the Reserved T-Mobile Loading Capacity in excess of the Unused Existing Effective Date Capacity; 

 

(2)         during the T-Mobile Modernization Reservation Period, to provide the portion of the Unused Existing Effective Date Capacity that is unavailable at the time T-Mobile Collocator installs the T-Mobile Reserved Amount of Equipment due to a change in applicable Law that became effective after the Effective Date; or

 

(3)         to enable the installation of any T-Mobile Communications Equipment after the T-Mobile Modernization Reservation Period.

 

                       (iii)         Tower Operator Right to Install Equipment. Tower Operator shall have the right to install its own Communications Equipment or Tower Tenant Communications Equipment (collectively, “Third Party Communications Equipment”) outside of the T-Mobile Collocation Space during or after the T-Mobile Modernization Reservation Period subject to the provisions of Section 6(a)(ii); provided, however, that if the application to install Third Party Communications Equipment is made after the T-Mobile Modernization Reservation Period and after Tower Operator has received an application from T-Mobile Collocator to install any of the T-Mobile Reserved Amount of Tower Equipment (regardless of whether such application from T-Mobile Collocator is made before or after the end of the T-Mobile Modernization Reservation Period), Tower Operator shall, to the extent sufficient structural loading capacity exists and provided that (x) T-Mobile Collocator’s application to install the T-Mobile Reserved Amount of Tower Equipment set forth in its application is approved and (y) the installation of the T-Mobile Reserved Amount of Tower Equipment occurs not later than 180 days after completion of structural review, allocate the currently available loading capacity first to the subject T-Mobile Reserved Amount of Tower Equipment and then to the subject Third Party Communications Equipment.  Notwithstanding the exclusivity of the T-Mobile Primary Tower Space, Tower Operator and Tower Tenants and their employees, contractors and agents shall have the right to enter the T-Mobile Primary Tower Space at any time, without notice to T-Mobile Collocator, to access other portions of the Tower and to install, operate, inspect, repair, maintain and replace Cables together with related mounting hardware and incidental equipment and to install, operate, inspect, repair, maintain, make improvements to and perform work on the Tower, tower-related components and equipment within the T-Mobile  Primary Tower Space.

 

  

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(b)       Compliance with Laws.  Tower Operator’s installation, maintenance and repair of each Site shall comply in all material respects with all Laws and shall be performed in a manner consistent with the general standard of care in the tower industry.  Tower Operator assumes all responsibilities, as to each Site, for any fines, levies or other penalties that are imposed as a result of non-compliance, commencing from and after the Effective Date with requirements of the applicable Governmental Authorities; provided that T-Mobile Collocator shall be responsible and shall indemnify Tower Operator for the portions of all such fines, levies or other penalties that are imposed for, or relating to, periods prior to the Effective Date and relate to non-compliance that existed prior to or on the Effective Date. T-Mobile Collocator assumes all responsibilities, as to each Site, for any fines, levies or other penalties imposed as a result of T-Mobile Collocator’s current or future non-compliance with such requirements of the applicable Governmental Authorities unless due to Tower Operator’s failure to perform its obligations under this Agreement.  Without limiting the foregoing, Tower Operator at its own cost and expense, shall make (or cause to be made) all Modifications to the Sites as may be required from time to time to meet in all material respects the requirements of applicable Laws.

(c)       Access.  Tower Operator agrees to maintain access roads to the Sites in such order and repair as would be required in accordance with tower industry standards and agrees not to take any action (except as required by Law, a Governmental Authority, a Ground Lease, a Collocation Agreement or any other agreement affecting the Site) that would materially diminish or impair any means of access to any Site existing as of the Effective Date.  In the event that T-Mobile Collocator requires access to a Site but snow or some other obstruction on or in the access area is preventing or materially hindering access to the Site, Tower Operator shall use commercially reasonable efforts to arrange, at its sole cost and expense, to have such snow or other obstruction removed within 48 hours of notice therefrom from T-Mobile Collocator.

SECTION 7.       Tower Operator Modifications.

 

Tower Operator may from time to time make such Modifications as Tower Operator deems desirable in the proper conduct of its business in accordance with this Agreement, including the addition or removal of land, construction, modification or addition to the Tower or any other structure it owns or the reconstruction, replacement or alteration thereof.  Notwithstanding anything to the contrary contained herein, in no event may Tower Operator make any Modification to any T-Mobile Improvement or modify or replace any T-Mobile Communications Equipment except in the event of an Emergency.

 

 

  

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SECTION 8.       T-Mobile Collocator’s and Tower Operator’s Obligations With Respect to Tower Tenants; Interference.

(a)       Interference to T-Mobile Collocator’s Operations.  Tower Operator agrees that neither Tower Operator nor any Tower Tenant whose Communications Equipment is installed or modified (including modifying the frequency at which such equipment is operated) subsequently to T-Mobile Communications Equipment (a “Subsequent Use”), shall permit their equipment to interfere with T-Mobile Collocator’s permitted FCC licensed transmissions or reception.  In the event that T-Mobile Collocator experiences RF interference in excess of levels permitted by the FCC caused by such Subsequent Use, then (i) T-Mobile Collocator shall notify Tower Operator in writing of such RF interference and (ii) Tower Operator shall use commercially reasonable efforts to cause the party whose Subsequent Use is causing such RF interference to immediately take necessary steps to determine the cause of and eliminate such RF interference.  If such interference continues for a period in excess of 72 hours after Tower Operator’s receipt of notice from T-Mobile Collocator, Tower Operator shall request that Tower Tenant reduce power or cease operations until such time as Tower Tenant can make repairs to the interfering equipment.  In the event that such Tower Tenant fails to promptly reduce power or cease operations as requested, then Tower Operator shall terminate the operation of the Communications Equipment causing such RF interference at Tower Operator’s (or such Tower Tenant’s) cost if and to the extent permitted by the terms of any applicable Collocation Agreements.

 

(b)       Interference by T-Mobile Collocator.  Notwithstanding any prior approval by Tower Operator of T-Mobile Communications Equipment, T-Mobile Collocator agrees that it shall not allow T-Mobile Communications Equipment installed or modified subsequently to any Tower Operator or Tower Tenant’s Communications Equipment to cause RF interference to Tower Operator’s or any Tower Tenant’s permitted FCC licensed transmissions or reception in excess of levels permitted by the FCC.  If T-Mobile Collocator is notified in writing that its operations are causing such RF interference, T-Mobile Collocator shall immediately take all commercially reasonable efforts and necessary steps to determine the cause of and eliminate such RF interference.  If the interference continues for a period in excess of 72 hours following such notification, Tower Operator shall have the right to require T-Mobile Collocator to reduce power or cease operations until such time as T-Mobile Collocator can make repairs to the interfering Communications Equipment.  In the event that T-Mobile Collocator fails to promptly take such action as agreed, then Tower Operator shall have the right to terminate the operation of the Communications Equipment causing such RF interference, at T-Mobile Collocator’s cost, and notwithstanding anything to the contrary contained herein without liability to Tower Operator for any inconvenience, disturbance, loss of business or other damage to T-Mobile Collocator as the result of such actions. T-Mobile Collocator also agrees that it shall neither install T-Mobile Communications Equipment nor subsequently modify it such that it is not authorized by, or violates, any applicable Laws or is not made or installed in accordance with good engineering practices.

 

 

  

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(c)       Rights of Tower Tenants under Collocation Agreements. Notwithstanding anything to the contrary contained herein, the obligations of Tower Operator hereunder as to any Site are subject to any limitations imposed by any applicable Law and to the rights of any Tower Tenant under any Collocation Agreement in existence as of the Effective Date at such Site.  To the extent that any such Collocation Agreement or any applicable Law prohibits Tower Operator from performing the obligations of Tower Operator hereunder, Tower Operator shall be required to perform such obligations only to the extent not so prohibited and shall have no liability with respect thereto to T-Mobile Collocator.

SECTION 9.       T-Mobile Collocation Space.

(a)       Collocation Space.  As used herein, “T-Mobile Collocation Space,” as to each Site, means:

  (i)          The portions of the Land comprising such Site on which any portion of the T-Mobile Improvements or T-Mobile Communications Equipment is located, operated or maintained as of the Effective Date, including the air space above such portion of the Land, to the extent such air space is not occupied by a third party or the tower or Communications Equipment owned by Tower Operator on the Effective Date (the “Effective Date Ground Space”).  In the event that T-Mobile Collocator, as of the Effective Date, occupies less than 240 square feet of Land at such Site, T-Mobile Collocator shall have the exclusive right to occupy up to a maximum area of 240 square feet of contiguous and usable ground space in a 12 foot by 20 foot configuration and the air space above such ground space, to the extent such air space is not occupied by a Tower or Communications Equipment on such Tower or otherwise by a third party on the Effective Date and such space shall be part of the T-Mobile Collocation Space (the greater of such space and the Effective Date Ground Space, the “T-Mobile Primary Ground Space”).  The T-Mobile Primary Ground Space at any Site shall be documented in the Site Lease Agreement for such Site.  If contiguous and usable ground space is not available at a Site in a 12 foot by 20 foot configuration, T-Mobile Collocator shall have the exclusive right to occupy 240 square feet of contiguous and usable ground space such Site in such configuration as T-Mobile Collocator elects and such space shall be deemed to be the T-Mobile Primary Ground Space at such Site and shall be documented in the Site Lease Agreement for such Site. If on the Effective Date, at any Site there is less than 240 square feet of ground space available for T-Mobile Collocator’s exclusive use within such Site, the T-Mobile Primary Ground Space at such Site shall be the ground space within such Site occupied by T-Mobile Collocator on the Effective Date and any additional available ground space within such Site on the Effective Date, and the T-Mobile Primary Ground Space shall be documented in the Site Lease Agreement for such Site. Notwithstanding the foregoing, if a Site has less than 1,000 square feet of ground space in the aggregate and T-Mobile Collocator’s Effective Date Ground Space is less than 240 square feet within such Site, then Tower Operator shall not be obligated to reserve any additional ground space available within such Site as of the Effective Date for T-Mobile Collocator, and the Effective Date Ground Space shall be documented in the Site Lease Agreement for such Site as the T-Mobile Primary Ground Space, and Tower Operator may, at any time during the Term of this Agreement, use or permit a Tower Tenant to use any ground space that is not then being used by T-Mobile Collocator as part of the Effective Date Ground Space without obtaining T-Mobile Collocator’s consent; provided, however, that if, at any point after the Effective Date, T-Mobile Collocator desires to use additional ground space and increase its T-Mobile Primary Ground Space within such Site to up to 240 square feet and such space is not then being used (including committed to use) by Tower Operator or a Tower Tenant, T-Mobile Collocator shall have the right, after completion of the application and amendment process described in Section 9(e) and entering into an amendment to the Site Lease Agreement for such Site, to increase the T-Mobile Primary Ground Space within such Site to up to 240 square feet by adding such additional ground space and to use such additional ground space at no additional cost to T-Mobile Collocator. If there is insufficient ground space at any Site for the use of other Tower Tenants, Tower Operator shall have the right to permit such other Tower Tenants, at their sole cost and expense, to stack ground equipment above the ground equipment maintained by T-Mobile Collocator in the T-Mobile Primary Ground Space;pace]

 

  

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  (ii)          The portion of the Tower on such Site on or within which any portion of T-Mobile Communications Equipment is located, operated or maintained (including portions of the Tower on which any antennas, transmission lines, amplifiers, filters and other Tower mounted equipment are located) as of the Effective Date (the “Effective Date Tower Space”).  In the event T- Mobile Collocator occupies less than eight contiguous vertical feet of space on such Tower, T-Mobile Collocator’s exclusive reserved space on such Tower shall include any additional and unoccupied vertical space adjacent to the space occupied by T-Mobile Collocator as is necessary to provide T-Mobile Collocator with such eight contiguous vertical feet of space on such Tower which shall be four contiguous feet of vertical space on each Tower above and below the T-Mobile Primary Tower Space RAD Center on such Tower on the Effective Date (eight feet of vertical space in total) (the greater of such space or the Effective Date Tower Space, the “T-Mobile Primary Tower Space”).  Notwithstanding the exclusivity of the T-Mobile Primary Tower Space, Tower Operator and Tower Tenants and their employees, contractors and agents shall have the right to enter the T-Mobile Primary Tower Space at any time, without notice to T-Mobile Collocator, to access other portions of the Tower and to install, operate, inspect, repair, maintain and replace Cables together with related mounting hardware and incidental equipment and to install, operate, inspect, repair, maintain, make improvements to and perform work on the Tower, tower-related components and equipment within the T-Mobile  Primary Tower Space.  If such additional space is occupied by a Tower Tenant on the Effective Date or such configuration is prohibited by Law, Tower Operator shall be required to provide only such additional space as is available or allowed by Law, as applicable.  Notwithstanding the foregoing, with respect to Towers that are less than 100 feet in height, upon obtaining T-Mobile Collocator’s prior written consent, which consent cannot be subject to any conditions and cannot be unreasonably withheld or delayed (and T-Mobile Collocator’s failure to respond to such notice within 10 Business Days shall be deemed to constitute consent thereto), Tower Operator shall have the right to install Communications Equipment of other Tower Tenants within the T-Mobile Primary Tower Space; provided that such Communications Equipment may not be installed within the vertical envelope of space then occupied by the primary antenna array of the T-Mobile Communications Equipment located within the T-Mobile Primary Tower Space;

 

 

  

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  (iii)         Any Additional Ground Space;

 

  (iv)         Any and all rights pursuant to Section 9(c), Section 9(d), Section 9(g), Section 9(h) and Section 10 and all appurtenant rights reasonably inferable to permit T-Mobile Collocator’s full use and enjoyment of the T-Mobile Collocation Space including the rights specifically described in this Section 9, all in accordance with this Section 9; and

 

  (v)          Tower Operator shall prevent and eliminate obstructions on a Site that prevent T-Mobile Collocator from having access to repair and replace all of the T-Mobile Communications Equipment and T-Mobile Improvements (including related Cables) or from being able to fully open any equipment cabinet doors in such space and repair and replace equipment therein.

(b)       T-Mobile Collocator Permitted Use.  T-Mobile Collocator shall use the T-Mobile Collocation Space at each Site only for installation, modification, use, operation, repair and replacement of T-Mobile’s Communications Facility.  T-Mobile Collocator shall not use the T-Mobile Collocation Space at any Site in a manner that would reasonably be expected to materially impair Tower Operator’s rights or interest in such Site or in a manner that would reasonably make possible a Claim or Claims of adverse possession by the public, as such, or any other Person (other than T-Mobile Collocator), or of implied dedication of such T-Mobile Collocation Space.  Except as specifically permitted hereunder, T-Mobile Collocator shall have no right to use or occupy any space at any Site other than the T-Mobile Collocation Space that it occupies from time to time in accordance with the terms of this Agreement nor to share the use of its T-Mobile Collocation Space with any Affiliate or third party (except with exclusive Backhaul Operators as specifically permitted in Section 19(c)).  T-Mobile Collocator’s use of the T-Mobile Collocation Space and its Communication Equipment (except as specifically permitted hereunder) shall not compete with Tower Operator’s collocation business, operations or collocation activities at the Sites or in any way prevent, diminish, hinder or interfere with Tower Operator’s opportunity to derive collocation revenue from the Sites (it being understood and agreed that the foregoing would prohibit T-Mobile Collocator from utilizing the T-Mobile Collocation Space or its Communication Equipment to engage in network hosting without entering into a collocation agreement with Tower Operator that permits such use (which collocation agreement must be reasonably satisfactory to Tower Operator and provide additional compensation to Tower Operator)). Notwithstanding anything to the contrary herein, T-Mobile Collocator shall be permitted to use the radio frequency signal generated by the T-Mobile Communications Equipment to provide third parties with customary, industry standard roaming or mobile virtual network services.

 

 

  

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(c)       Reserved Amount of Tower Equipment in T-Mobile Collocation Space. As to each Site, T-Mobile Collocator shall have the right, at any time, to install, maintain, modify, replace and operate in the T-Mobile Collocation Space on the Tower any Communications Equipment consisting of the greater of (i) antennas, remote radio units and associated tower mounting equipment having an aggregate Wind Load Surface Area of 21,000 square inches and up to 24 lines of Cables or (ii) antennas (including microwave antennas and dishes), remote radio units and associated tower mounting equipment and Cables having an aggregate Wind Load Surface Area that is not in excess of the aggregate Wind Load Surface Area of the antennas, remote radio units and associated tower mounting equipment and Cables located on the applicable Tower as of the Effective Date (collectively, the “T-Mobile Reserved Amount of Tower Equipment”).  Schedule 9(c) attached hereto contains sample calculations of the Wind Load Surface Area for hypothetical configurations of Communications Equipment; provided that the example calculations set forth in Schedule 9(c) are intended as examples only and not as a limitation or prescription on the configurations of the actual T-Mobile Communications Equipment.  The foregoing shall not limit T-Mobile Collocator’s rights to place in the T-Mobile Collocation Space on a Tower, panel antennas or Cables of different size or structural loading characteristics or equipment of a different shape or technology or a different transmission frequency than that which exists on such Tower on the Effective Date; provided that (x) T-Mobile Collocator shall comply with Tower Operator’s standard application and amendment process set forth in Section 9(e) and (y) such antennas, Cables and equipment do not exceed the Wind Load Surface Area and the structural loading capacity of the T-Mobile Reserved Amount of Tower Equipment.  Subject to the foregoing limitations, as to each Site, T-Mobile Collocator shall have the right to install, maintain, modify, replace and operate, at no additional collocation rent, any Communications Equipment and Improvements that it deems necessary in the T-Mobile Primary Ground Space.  All modifications, additions and replacements of any Communications Equipment in the T-Mobile Collocation Space on the Tower that do not constitute Additional Equipment pursuant to Section 9(d) may be made without any increase in the T-Mobile Collocation Rent.  Notwithstanding the above, the windloading of Communications Equipment on a Tower for structural capacity and other purposes shall be determined in accordance with Tower Operator’s standard protocols and procedures for determining effective projected area.  Exhibit E attached hereto contains sample calculations of the effective projected area for the hypothetical configuration of Communications Equipment set forth in Schedule 9(c).

 

 

  

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(d)       Additional T-Mobile Communications Equipment In the T-Mobile Collocation Space.  T-Mobile Collocator may apply to Tower Operator to install, maintain, modify, replace and operate Communications Equipment in the T-Mobile Primary Tower Space in excess of the T-Mobile Reserved Amount of Tower Equipment (collectively “Additional Equipment”); provided that there is sufficient structural load capacity available on the Tower at the time T-Mobile Collocator applies to install such Additional Equipment.  The application shall be processed and an amendment to the subject Site Lease Agreement shall be executed to document any Additional Equipment or any changes to existing equipment as of the Effective Date in accordance with Section 9(e).

 

(e)       Application and Amendment Process.

  (i)           T-Mobile Collocator’s rights to install and operate any T-Mobile Communications Equipment at a Site in addition to or in replacement of the T-Mobile Communications Equipment existing at the Site as of the Effective Date shall not become effective, and installation of such additional T-Mobile Communications Equipment or modification of the existing T-Mobile Communications Equipment at a Site shall not commence, until the following conditions are satisfied:  (A) Tower Operator has received any written consent required under the Ground Lease to allow Tower Operator to permit such installation or modification, (B) T-Mobile Collocator has submitted to Tower Operator and Tower Operator has approved T-Mobile Collocator’s application for such installation or modification (a “Site Engineering Application”); (C) Tower Operator has received and approved T-Mobile Collocator’s drawings showing the installation or modification of the T-Mobile Communications Equipment; (D) Tower Operator has reviewed and accepted all permits obtained by T-Mobile Collocator for its installation or Modification of the T-Mobile Communications Equipment and all required regulatory or governmental approvals of T-Mobile Collocator’s proposed installation or modification at the Site; (E) Tower Operator has received a waiver of any applicable rights of first refusal in and to the space in which any new equipment shall be located as identified by T-Mobile Collocator in the Site Engineering Application; (F) any Site Application Fee, Application Revision Fee, Inspection Fee for Third Party Work, Regulatory Fees, Structural Analysis Fee, Intermodulation Study Fee and fee for AM Detuning Study and any other applicable fees have been paid (such fees shall be determined from time to time in accordance with Tower Operator’s current business practices and prevailing rates), (G) a Site Lease Agreement and an amendment to the Site Lease Agreement have been executed; and (H) Tower Operator has issued a notice to proceed with the proposed installation or modification; provided that if the conditions precedent listed in clauses (A) through (H) of this sentence are satisfied or determined not to be applicable, then Tower Operator’s approval of the subject Site Engineering Application to install T-Mobile Communications Equipment that is within the T-Mobile Reserved Amount of Tower Equipment shall not be unreasonably withheld, conditioned or delayed.  If any applicable condition precedent is not satisfied within 180 days of the date of the amendment of the subject Site Lease Agreement or within such other period as may be specified in the subject amendment of the Site Lease Agreement, Tower Operator and T-Mobile Collocator shall each have the right to terminate the subject amendment of the subject Site Lease Agreement. The terminating party shall provide notice to the other party in the event that the amendment of the subject Site Lease Agreement is terminated due to failure to satisfy conditions precedent.  Tower Operator shall endeavor to obtain, and T-Mobile Collocator shall cooperate to assist in obtaining, prompt satisfaction of any conditions precedent.

 

 

  

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  (ii)           T-Mobile Collocator must provide Tower Operator with copies of any zoning application or amendment that T-Mobile Collocator submits to the applicable zoning authority in relation to its installation or modification of Equipment at a Site at least 72 hours prior to submission to the applicable zoning authority. Tower Operator also reserves the right, prior to any decision by the applicable zoning authority, to approve or reject any conditions of approval, limitations or other obligations that would apply to the owner of the Site or property, or any existing or future Tower Tenant, as a condition of such zoning authority’s approval and that would or could reduce the duration of the use of the subject Site or the operations thereon or decrease the value of the Site or its use or impair or impede Tower Operator’s or the Tower Tenants’ operations at the Site, or create a risk of regulatory violations; provided, however, that Tower Operator shall not unreasonably reject any conditions of approval if none of the foregoing factors are present in Tower Operator’s judgment and T-Mobile Collocator agrees to pay the cost of satisfying such conditions of approval. T-Mobile Collocator shall be solely responsible for all costs and expenses associated with (i) any zoning application or amendment submitted by T-Mobile Collocator, (ii) making any improvements or performing any other obligations required as a condition of approval with respect to same and (iii) any other related expenses.

(f)        Lease; Appurtenant Rights.  T-Mobile Collocator and Tower Operator expressly acknowledge that the T-Mobile Collocation Space at each Site shall be deemed leased to, reserved for or otherwise be made available to T-Mobile Collocator pursuant to this Agreement, in each case at each Site for the exclusive possession (subject to Section 9(a)(ii)) and use by T-Mobile Collocator (except as otherwise expressly provided herein), whether or not such T-Mobile Collocation Space is now or hereafter occupied.  T-Mobile Collocator shall have the right to occupy at all times the portions of Land, the Improvements and Tower occupied as of the Effective Date and any additional space constituting T-Mobile Collocation Space and to repair, replace and modify any equipment of T-Mobile Collocator therein or thereon.  Tower Operator also grants to T-Mobile Collocator as to each Site, and T-Mobile Collocator reserves and shall at all times retain (for the benefit of T-Mobile Collocator), subject to the terms of this Agreement, the Ground Leases, the rights of Tower Tenants and applicable laws:

  (i)           Site Access.  A non-exclusive right and easement (over the surface of the Site) for ingress to and egress from the entire Site, and access to the entire Tower and all Improvements to such Site and Tower, at such times (on a 24-hour, seven day per week basis unless otherwise limited by the Ground Lease, but subject to giving Tower Operator at least one Business Day’s prior notice), to such extent, and in such means and manners (on foot or by motor vehicle, including trucks and other heavy equipment), as T-Mobile Collocator (and its authorized contractors, subcontractors, engineers, agents, advisors consultants, representatives, or other persons authorized by T-Mobile Collocator) deems reasonably necessary in connection with its full use and enjoyment of the T-Mobile Collocation Space, including a right to construct, install, use, operate, maintain, repair and replace all of its equipment now or hereafter located in the applicable T-Mobile Collocation Space;

 

 

  

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  (ii)          Tower Access.  The right to undertake any activity that involves having T-Mobile Collocator or its contractors, subcontractors, engineers, agents, advisors, consultants, representatives, or other Persons authorized by T-Mobile Collocator climb the Tower at any Site; provided, however, that T-Mobile Collocator must ensure that any such Person must work for a vendor approved by Tower Operator; provided further that T-Mobile Collocator shall, except in the event of an Emergency, give Tower Operator at least one Business Day’s prior written notice of its intention to exercise such right;

 

  (iii)         Storage.  The right, exercisable during periods in which T-Mobile Collocator is actively performing work at a Site, to use any unoccupied portion of the ground space at the applicable Site for purposes of temporary location and storage of any of its equipment and for performing any repairs or replacements; provided, however, that T-Mobile Collocator shall be required to remove any of its stored Communications Equipment on any unoccupied portion of the Site upon 10 days’ prior written notice from Tower Operator if such unoccupied portion of the Site is under sublease or other occupancy arrangement with a Tower Tenant that is prepared to take occupancy of such portion of the Site or is otherwise required for use by Tower Operator for work or storage at such Site; and

 

  (iv)         Utility Lines.  A non-exclusive right and easement for the use, operation, maintenance, repair and replacement of all utility lines, Cables and all equipment and appurtenances located on the Site and providing electrical, gas and any other utility service to T-Mobile’s Communications Facility on the Site, which right and easement includes the right of T-Mobile Collocator and its agents, employees and contractors to enter upon the Site to repair, maintain and replace such utility facilities.  T-Mobile Collocator shall have the absolute right to contract with any utility service providers it elects, from time to time, for utility services.

(g)       Maintenance.  T-Mobile Collocator shall, at all times during the Term as to any Site, at T-Mobile Collocator’s sole cost and expense, keep and maintain T-Mobile Communications Equipment and T-Mobile Improvements in a structurally safe and sound condition and in working order, in accordance with the general standard of care in the telecommunications industry, subject to Tower Operator’s obligations with respect to the maintenance, repair and reinforcement of the Tower hereunder.

 

(h)       No Obligation With Respect to Communications Facility.  In addition to, and not in limitation of any right of T-Mobile Collocator under Section 3, and notwithstanding anything in this Agreement to the contrary, without limiting or diminishing T-Mobile Collocator’s payment obligations hereunder in any manner, including its obligation to pay T-Mobile Collocation Rent, T-Mobile Collocator shall not have any obligation to occupy or to operate a Communications Facility on the T-Mobile Collocation Space of any Site, and T-Mobile Collocator shall have the right, exercisable at any time during the Term as to any Site, to cease occupying or operating T-Mobile Collocator’s Communications Facility on the T-Mobile Collocation Space of such Site, and retain its right to such T-Mobile Collocation Space.

 

 

  

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(i)        Restoration.  T-Mobile Collocator shall restore any property damage (normal wear and tear excepted) to any Site or appurtenant property or any access roads thereto caused, following the Effective Date, by motor vehicles, trucks or heavy equipment of T-Mobile Collocator or any of its employees, agents, contractors or designees.  If such restoration work is not performed by T-Mobile Collocator within 30 days after written notice from Tower Operator (or if not capable of being performed within such 30-day period, then within a reasonable period of time, provided that T-Mobile Collocator is actively and diligently pursuing completion of such restoration work), Tower Operator may, but shall not be obligated to perform such work on behalf of and for the account of T-Mobile Collocator, and T-Mobile Collocator shall reimburse Tower Operator for the reasonable costs of such restoration work within 30 days after Tower Operator delivers to T-Mobile Collocator a written invoice therefor, together with reasonable evidence of the incurrence of such costs.  For the avoidance of doubt, any damage caused by T-Mobile Collocator to any Site or appurtenant property or access roads and any failure by T-Mobile Collocator to cure such damage as required hereby, shall not constitute a breach of or default by Tower Operator under this Agreement or give rise to any obligation by Tower Operator to indemnify T-Mobile Collocator’s Indemnitees under this Agreement.

 

(j)        Waiver.  Tower Operator agrees to and does hereby waive and relinquish any lien of any kind and any and all rights, statutory or otherwise, including levy, execution and sale for unpaid rents, that Tower Operator may have or obtain on or with respect to any T-Mobile Communications Equipment or T-Mobile Improvements which shall be deemed personal property for the purposes of this Agreement, whether or not the same is real or personal property under applicable Law.

SECTION 10.     Tower and Site Modifications, Replacement, Expansion and Substitution and Rights With Respect to Additional Ground Space and Tower Space.

(a)       Tower and Site Modifications.  With respect to any Site for which the structural capacity of the Tower is not sufficient as of the Effective Date to support the T-Mobile Reserved Amount of Tower Equipment, Tower Operator may, upon request by T-Mobile Collocator and at T-Mobile Collocator’s cost and expense (as a T-Mobile Collocator capital expenditure, without any increase in the T-Mobile Collocation Rent or payment of any fee or charge to Tower Operator), make any Modifications to a Tower that it reasonably deems necessary to increase the structural capacity of such Tower to support the T-Mobile Reserved Amount of Tower Equipment; provided that the costs of such Modifications shall be as mutually agreed to by the Parties acting in good faith and shall be consistent with prevailing commercial prices at the relevant time.  The structural loading capacity of a Tower and the structural loading thereon shall be determined based on a structural report obtained by Tower Operator at T-Mobile Collocator’s cost.  If Tower Operator increasing the height of a Tower at the request of T-Mobile Collocator results in a requirement for FAA mandated lighting of such Tower, T-Mobile Collocator shall pay the cost of installing such lighting, the cost of obtaining or amending the FCC Antenna Structure Registration for the Tower (“ASR”), including any environmental studies, and the cost of industry-standard lighting equipment for Tower Operator to monitor the lighting of such Tower, similar to the monitoring equipment at other lighted Sites and the reasonable and customary ongoing electrical expense and other operating expenses associated with maintaining such Tower lighting.  If the increase in Tower height at the request of T-Mobile Collocator results in a requirement to detune the Tower, T-Mobile Collocator shall pay the cost of the related detuning equipment and its installation.  If T-Mobile Collocator desires to replace or reinforce a Tower and requests that Tower Operator perform such work, Tower Operator shall or shall cause such work to be performed, and T-Mobile Collocator shall pay the actual, customary and reasonable one-time cost of such work (as a T-Mobile Collocator capital expenditure, without any increase in the T-Mobile Collocation Rent or payment of any fee or charge to Tower Operator), together with all actual, customary and reasonable costs incident thereto and a mutually acceptable construction management fee, within 30 days after Tower Operator delivers to T-Mobile Collocator a written invoice and reasonable supporting documentation for the cost of such work.

 

 

  

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(b)       Right of Substitution.  (i)  Notwithstanding anything to the contrary contained in this Agreement, within 15 Business Days after request by T-Mobile Collocator, Tower Operator shall notify T-Mobile Collocator whether there is any Available Space in respect of any Site.  If any such Available Space then exists, T-Mobile Collocator shall have the one-time Right of Substitution as to such Available Space upon completing Tower Operator’s standard application and amendment procedures, as described in Section 9(e), and obtaining the prior written consent of Tower Operator, which consent shall not be unreasonably withheld, conditioned or delayed; provided that Tower Operator shall be entitled to perform, in its reasonable discretion, a structural analysis, at T-Mobile Collocator’s sole cost and expense, prior to consenting to such Right of Substitution.  For the avoidance of doubt, T-Mobile Collocator may only exercise a Right of Substitution one time with respect to each Site.

(ii)       If T-Mobile Collocator elects to exercise its Right of Substitution, then, upon completion of the relocation of the Communications Equipment and Improvements of T-Mobile Collocator on the Site (at T-Mobile Collocator’s expense) the previously existing T-Mobile Collocation Space of the applicable Site shall automatically be released by T-Mobile Collocator and become a part of the Available Space of such Site and T-Mobile Collocator shall deliver such space in good condition, repair and order, reasonable wear and tear excepted, and shall remove all T-Mobile Communications Equipment therefrom and restore any damage thereto caused by, through or under any T-Mobile Group Member.  Subject to the terms of this Agreement, and concurrently therewith, the Available Space on such Site to which the Communications Equipment and Improvements of T-Mobile Collocator have been relocated shall automatically become and constitute the T-Mobile Collocation Space.

 

 

  

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(iii)      The Parties shall promptly execute an amendment to the applicable Site Lease Agreement for the Site at which such Right of Substitution was exercised.  T-Mobile Collocator shall, at its cost and expense, complete the relocation of its Communications Equipment.

(c)       Additional Ground Space.  If T-Mobile Collocator deems it necessary to obtain additional ground space (“Additional Ground Space”) to accommodate T-Mobile Collocator’s needs at any Site, T-Mobile Collocator and Tower Operator shall cooperate to determine the availability of such space and negotiate the lease of such additional space if available on such Site or determine how to secure such space if it is not available on such Site and shall follow Tower Operator’s standard application and amendment procedures as described in Section 9(e).  If Tower Operator determines in its reasonable discretion that such Additional Ground Space is currently available at such Site, Tower Operator and T-Mobile Collocator shall enter into an amendment to the applicable Site Lease Agreement setting forth the terms under which T-Mobile Collocator shall lease any Additional Ground Space, which shall be negotiated by the Parties in good faith at the time T-Mobile Collocator deems it necessary to obtain such Additional Ground Space.  Tower Operator shall be entitled to additional rent from T-Mobile Collocator if (i) the Additional Ground Space includes space outside of the ground space of the Site at the Effective Date or (ii) space in excess of the greater of (x) the Effective Date Ground Space and (y) 240 square feet of ground space.

 

(d)       Required Ground Lessor and Governmental Consents.  If the installation of any T-Mobile Communications Equipment, T-Mobile Improvement or any Tower Modification that T-Mobile Collocator desires to make requires the consent, approval, obtaining a zoning variance, or other action of a Ground Lessor, Governmental Authority or any other Person, as applicable, T-Mobile Collocator shall be responsible for obtaining the same at its sole cost and expense.  If the installation of any Communications Equipment, Improvement or any Tower Modification that Tower Operator desires to make requires the consent, approval, obtaining a zoning variance, or other action of a Ground Lessor, Governmental Authority or any other Person, as applicable, Tower Operator shall be responsible for obtaining the same at its sole cost and expense or at the cost and expense of the applicable Tower Tenant.

 

 

  

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SECTION 11.     [Reserved].

SECTION 12.     Limitations on Liens.  T-Mobile Collocator shall not create or incur (and shall cause its Affiliates not to create or incur) any Lien (other than Permitted Encumbrances) against all or any part of any Site.  If any such Lien (other than Permitted Encumbrances) is filed against all or any part of any Site as a result of the acts or omissions of T-Mobile Collocator or any of its Affiliates, T-Mobile Collocator shall cause the same to be promptly discharged by payment, satisfaction or posting of bond within 30 days after obtaining knowledge of such Lien.  If T-Mobile Collocator fails to cause any such Lien (other than Permitted Encumbrances) to be discharged within such 30-day period, Tower Operator shall have the right, but not the obligation, to cause such Lien to be discharged and may pay the amount of such Lien in order to do so.  If Tower Operator makes any such payment, all amounts paid by Tower Operator shall be payable by T-Mobile Collocator to Tower Operator within 30 days after Tower Operator delivers a written invoice to T-Mobile Collocator for the same.

SECTION 13.     Tower Operator Indemnity; T-Mobile Collocator Indemnity; Procedure For All Indemnity Claims.

(a)       Tower Operator Indemnity.

  (i)           Without limiting Tower Operator’s other obligations under this Agreement, Tower Operator agrees to indemnify, defend and hold each T-Mobile Indemnitee harmless from, against and in respect of any and all Claims that arise out of or relate to:

(A)        any default, breach or nonperformance by Tower Operator of its obligations and covenants under this Agreement;

(B)        the acts or omissions of a Tower Operator Indemnitee or any of its  engineers, contractors or subcontractors;

(C)        Tower Operator’s use, operation, maintenance or occupancy of any part of a Non-Assignable Site in violation of the terms of any applicable Ground Lease; and

(D)        all brokers, agents and other intermediaries alleging a commission, fee or other payment to be owing by reason of their respective dealings, negotiations or communications with Tower Operator and its Affiliates agents, employees, engineers, contractors, subcontractors, licensees or invitees in connection with this Agreement;

provided, however, that notwithstanding the foregoing, Tower Operator will not be obliged to indemnify, defend and hold the T-Mobile Indemnitees harmless from, against and in respect of Claims arising from or relating to any default, breach or nonperformance of any term of this Agreement that requires Tower Operator to comply in all respects with any applicable Law (including, for the avoidance of doubt, any applicable Environmental Law) or any Ground Lease if (1) Tower Operator complies with such Law or such Ground Lease, as applicable, in all material respects and (2) no claims, demands, assessments, actions, suits, fines, levies or other penalties have been asserted against or imposed on T-Mobile Collocator by any Governmental Authority as a result of Tower Operator’s non-compliance in all respects with such Law or by the applicable Ground Lessor as a result of Tower Operator’s non-compliance in all respects with such Ground Lease.

 

 

  

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  (ii)          Tower Operator further agrees to indemnify, defend and hold each T-Mobile Indemnitee harmless under any other provision of this Agreement which expressly provides that Tower Operator shall indemnify, defend and hold harmless any T-Mobile Indemnitee with respect to the matters covered in such provision.

(b)       T-Mobile Collocator Indemnity.

  (i)           Without limiting T-Mobile Collocator’s other obligations under this Agreement, T-Mobile Collocator agrees to indemnify, defend and hold each Tower Operator Indemnitee harmless from, against and in respect of any and all Claims that arise out of or relate to:

(A)        any default, breach or nonperformance of its obligations and covenants under this Agreement;

 

(B)        the acts or omissions of a T-Mobile Indemnitee or any of their respective engineers, contractors or subcontractors;

 

(C)        any work at a Site performed at by or at the direction of a T-Mobile Indemnitee (but not including any work at any Site that Tower Operator is required to perform pursuant to this Agreement that T-Mobile Collocator elects to perform under Section 24);

 

(D)        any T-Mobile Indemnitee’s use, operation, maintenance or occupancy of any T-Mobile Communications Equipment or any portion of any Site (including the T-Mobile Collocation Space) in violation of the terms of this Agreement or any applicable Ground Lease; and

 

(E)        all brokers, agents and other intermediaries alleging a commission, fee or other payment to be owing by reason of their respective dealings, negotiations or communications with T-Mobile Collocator or its agents, employees, engineers, contractors, subcontractors, licensees or invitees in connection with this Agreement.

  (ii)          T-Mobile Collocator further agrees to indemnify, defend and hold each Tower Operator Indemnitee harmless under any other provision of this Agreement which expressly provides that T-Mobile Collocator shall indemnify, defend and hold harmless any Tower Operator Indemnitee with respect to the matters covered in such provision.

 

 

  

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(c)       Indemnification Claim Procedure.

  (i)           Any Indemnified Party shall promptly notify the Party or Parties alleged to be obligated to indemnify (the “Indemnifying Party”) in writing of any relevant pending or threatened Claim by a third party (a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of the Claim; provided, however, that delay in providing such notice shall not release the Indemnifying Party from any of its obligations under Section 13(a) or Section 13(b), except to the extent (and only to the extent) the delay actually and materially prejudices the Indemnifying Party’s ability to defend such Claim.

 

  (ii)          The Indemnifying Party may assume and control the defense of any Third Party Claim with counsel selected by the Indemnifying Party that is reasonably acceptable to the Indemnified Party by accepting its obligation to defend in writing and agreeing to pay defense costs (including attorney’s fees and expenses) within 30 days of receiving notice of the Third Party Claim.  If the Indemnifying Party declines, fails to respond to the notice, or fails to assume defense of the Third Party Claim within such 30-day period, then the Indemnified Party may control the defense and the Indemnifying Party shall pay all defense costs as incurred by the Indemnified Party.  The Party that is not controlling the defense of the Third Party Claim shall have the right to participate in the defense and to retain separate counsel at its own expense.  The Party that is controlling the defense shall use reasonable efforts to inform the other Party about the status of the defense.  The Parties shall cooperate in good faith in the defense of any Third Party Claim.  Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to assume the defense of any Third Party Claim (and shall be liable for the reasonable fees and expenses of counsel incurred by the Indemnified Party in defending such Third Party Claim) if the Third Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the Indemnified Party that the Indemnified Party reasonably determines, after conferring with its outside counsel, cannot reasonably be separated from any related claim for money damages.  If such equitable relief or other relief portion of the Third Party Claim can be so separated from that for money damages, the Indemnifying Party shall be entitled to assume the defense of the portion relating to money damages.

 

  (iii)         The Indemnifying Party shall not consent to a settlement of, or the entry of any judgment arising out of or in connection with, any Third Party Claim, without the consent of any Indemnified Party; provided, however, that the Indemnified Party shall not withhold its consent if such settlement or judgment involves solely the payment of money, without any finding or admission of any violation of Law or admission of any wrongdoing.  The Indemnifying Party shall pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement and obtain, as a condition of any settlement or judgment, a complete and unconditional release of each relevant Indemnified Party from any and all liability in respect of such Third Party Claim.

 

 

  

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  (iv)         For indemnification Claims other than Third Party Claims, the Indemnified Party promptly shall notify the Indemnifying Party in writing of any Claim for indemnification, describing in reasonable detail the basis for such Claim.  Within 30 days following receipt of this notice, the Indemnifying Party shall respond, stating whether it disputes the existence or scope of an obligation to indemnify the Indemnified Party under this Section 13.  If the Indemnifying Party does not notify the Indemnified party within such 30-day period that the Indemnifying Party disputes its liability to the Indemnified Party under Section 13(a) or Section 13(b), as applicable, such Claim specified by the Indemnified Party in such notice shall be conclusively deemed a liability of the Indemnifying Party under Section 13(a) or Section 13(b), as applicable, and the Indemnifying Party shall pay the amount of such Claim to the Indemnified Party on demand or, in the case of any notice in which the amount of the Claim (or any portion thereof) is estimated, on such later date when the amount of such claim (or such portion thereof) becomes finally determined.  If the Indemnifying Party disputes the existence or scope of an obligation to indemnify for the Claim within such 30-day period, it shall explain in reasonable detail the basis for the dispute.  If the Parties disagree on the scope or existence of an indemnification obligation for the Claim, management representatives of the Indemnified Party and the Indemnifying Party, at the Vice President level or higher, shall meet or confer by telephone within 20 Business Days in an attempt in good faith to resolve such dispute.  If such Persons are unable to resolve the dispute, either Party may act to resolve the dispute in accordance with Sections 34(i) and 34(j).

(d)       During the Term, for any dispute or litigation that arises during the Term in connection with any Ground Lessor, Ground Lease, Collocation Agreement, Tower Tenant or any other issue relating to the operation of the Sites (collectively, “Disputes”), Tower Operator shall have the right to control, prosecute, settle or compromise such Disputes; provided, however, that Tower Operator shall not settle or compromise such Disputes (i) for which Tower Operator is seeking a claim for indemnification under the Master Agreement or (ii) if the settlement or compromise involves an admission of any violation of Law or admission of wrongdoing by T-Mobile Collocator, in each case without T-Mobile Collocator’s consent which shall not be unreasonably withheld, conditioned or delayed.

SECTION 14.     Waiver of Subrogation; Insurance.

(a)       Mutual Waiver of Subrogation.  To the fullest extent permitted by applicable Law, Tower Operator and T-Mobile Collocator each hereby waives any and all rights of recovery, claim, action or cause of action against the other and the other’s Affiliates, for any loss or damage that occurs or is claimed to occur to its property at any Site, by reason of any cause insured against, or required to be insured against, by the waiving party under the terms of this Agreement, regardless of cause or origin.  In addition, Tower Operator and T-Mobile Collocator shall each ensure that any property insurance policy it carries with respect to each Site shall provide that the insurer waives all rights of recovery, claim, action or cause of action by way of subrogation against any other Party with respect to Claims for damage to property covered by such policy.

 

 

  

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(b)       Tower Operator Insurance.  For each Site, Tower Operator shall procure, and shall maintain in full force and effect at all times during the Term as to such  Site, the following types of insurance with respect to such Site, including the Tower and Improvements on such Site (but excluding T-Mobile Communications Equipment or any other Tower Tenant’s Communications Equipment), paying as they become due all premiums for such insurance:

 

(i)        commercial general liability insurance insuring against all liability of Tower Operator and Tower Operator’s officers, employees, agents, licensees and invitees arising out of, by reason of or in connection with the use, occupancy or maintenance of each Site (including Tower and the Improvements), in an amount of not less than $1.0 million for bodily injury or property damage or as a result of one occurrence, and not less than $2.0 million for bodily injury or property damage in the aggregate;

 

(ii)       umbrella or excess liability insurance with limits not less than $25.0 million per occurrence and in the aggregate;

 

(iii)      property insurance (in an amount not less than $100.0 million in the aggregate for all Sites) against direct and indirect loss or damage by fire and all other casualties and risks covered under “all risk” insurance respecting the Tower and Improvements (but excluding any T-Mobile Communications Equipment and T-Mobile Improvements);

 

(iv)       workers’ compensation insurance affording statutory coverage for all employees of Tower Operator and any employees of its Affiliates performing activities on all Sites, with employer’s liability coverage with a minimum limit of $1.0 million each occurrence;

 

(v)       commercial automobile liability insurance, including coverage for all owned, hired and non-owned automobiles.  The amount of such coverage shall not be less than $1.0 million combined single limit for each accident and for bodily injury and property damage; and

 

(vi)       any other insurance required under the terms of the applicable Ground Lease.

(c)       T-Mobile Collocator Insurance. For each Site, T-Mobile Collocator shall procure, and shall maintain in full force and effect at all times during the Term as to such Site, the following types of insurance with respect to its T-Mobile Collocation Space at such Site, paying as they become due all premiums for such insurance:

  (i)          Commercial general liability insurance insuring against all liability of T-Mobile Collocator and its officers, employees, agents, licensees and invitees arising out of, by reason of or in connection with the use, occupancy or maintenance of the T-Mobile Collocation Space of such Site, in an amount of not less than $1.0 million for bodily injury or property damage or as a result of one occurrence, and not less than $2.0 million for bodily injury or property damage in the aggregate;

 

 

  

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  (ii)          Umbrella or excess liability insurance with limits not less than $5.0 million per occurrence and in the aggregate;

 

  (iii)         Workers’ compensation insurance affording statutory coverage for all employees of T-Mobile Collocator and any employees of its Affiliates performing activities on all Sites, with employer’s liability coverage with a minimum limit of $1.0 million each occurrence; and

 

  (iv)         Commercial automobile liability insurance, including coverage for all owned, hired and non-owned automobiles.  The amount of such coverage shall not be less than $1.0 million combined single limit for each accident and for bodily injury and property damage.

(d)       Insurance Premiums; Additional Insureds and Notice of Cancellation.  Tower Operator and T-Mobile Collocator shall each pay all premiums for the insurance coverage which such Party is required to procure and maintain under this Agreement.  Each insurance policy maintained by Tower Operator and T-Mobile Collocator (i) shall name the other Party as an additional insured if such insurance policy is for liability insurance (other than any workers’ compensation policies) or a loss payee if such insurance policy is for casualty insurance; and (ii) shall provide that the policy cannot be canceled by the insurer as to the other Party except after the insurer gives the other Party 30 days’ written notice of cancellation except for non-payment of premium. Regardless of the prior notice of cancellation required of the insurer(s), each party agrees to provide the other with at least 20 days’ written notice of cancellation of any and all policies of insurance required by this Agreement.  Tower Operator and T-Mobile Collocator shall deliver to the other a certificate or certificates of insurance evidencing the existence of all insurance with respect to each Site that such Party is required to maintain hereunder, such delivery to be made promptly after such insurance is obtained (but not later than the Effective Date) and prior to the expiration date of any such insurance.

 

(e)       Increased Policy Amounts.  All policy amounts set forth in this Section 14 shall be evaluated by Tower Operator and increased (if Tower Operator deems necessary) every five years during the Term of this Agreement to such amounts as are customarily carried by prudent landlords and tenants in the telecommunications industry to insure risks associated with their respective interests in facilities comparable to the Sites.  All policies of insurance required under this Section 14 shall be written on companies rated “A-VII” by AM Best or a comparable rating and licensed in the state where the applicable Site to which such insurance applies is located.

 

(f)        Other Insurance.  Tower Operator and T-Mobile Collocator each agrees that it shall not, on its own initiative or pursuant to the request or requirement of any Tower Tenant or other Person, take out separate insurance concurrent in form or contributing in the event of loss with that required to be carried by it pursuant to this Section 14, unless the other is named in the policy as an additional insured or loss payee, if and to the extent applicable. Tower Operator and T-Mobile Collocator shall each immediately notify the other whenever any such separate insurance is taken out by it and shall deliver to the other original certificates evidencing such insurance.

 

 

  

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SECTION 15.     Estoppel Certificate.  Tower Operator and T-Mobile Collocator each, from time to time upon 30 days’ prior request by the other, shall execute, acknowledge and deliver to the other, or to a Person designated by the other, a certificate stating that this Agreement is unmodified and in full effect (or, if there have been modifications, that this Agreement is in full effect as modified, and setting forth such modifications) and the dates to which the T-Mobile Collocation Rent and other sums payable under this Agreement have been paid, and either stating that to the knowledge of the signer of such certificate no default exists under this Agreement or specifying each such default of which the signer has knowledge.  The Party requesting such certificate shall, at its cost and expense, cause such certificate to be prepared for execution by the requested Party.  Any such certificate may be relied upon by any prospective Mortgagee or purchaser of any portion of a Site.

SECTION 16.     Assignment and Transfer Rights.

(a)       Tower Operator Assignment and Transfer Rights.

  (i)           Without the prior written consent of T-Mobile Collocator, Tower Operator may not assign this Agreement; provided that T-Mobile Collocator’s consent shall not be required if the assignee meets the Assumption Requirements and is (x) a Qualified Tower Operator (as defined below), (y) an Affiliate of Tower Operator or (z) a successor Person of Tower Operator by way of merger, consolidation or other reorganization or by the operation of law or a Person acquiring all or substantially all of the assets of Tower Operator.  For the avoidance of doubt, and notwithstanding anything to the contrary contained in this Agreement, nothing herein shall affect or impair (i) Tower Operator’s ability to transfer any revenue, rents, issues or profits derived from the Sites (including under or pursuant to this Agreement or any Collocation Agreements) or its rights to receive the same, (ii) Tower Operator’s ability to incur, grant or permit to exist any Liens on any revenue, rents, issues or profits derived from the Sites (including under or pursuant to this Agreement or any Collocation Agreement), (iii) the ability of any parent company of Tower Operator to pledge any equity interests in Tower Operator, (iv) Tower Operator’s ability, subject to any required consent of any Ground Lessor, to enter into Mortgages or Liens in favor of any Tower Operator Lender (in which case such Tower Operator Lender shall have the right to exercise remedies under any such Mortgage or Lien in a manner consistent with the provisions of this Agreement and any Collateral Agreement) or (v) Tower Operator’s right, subject to any required consent of any Ground Lessor and otherwise in accordance with the terms of this Agreement, to lease, sublease, license or otherwise make available Available Space to Tower Tenants.  A “Qualified Tower Operator” means a tower operator that has a good business reputation and is experienced in the management and operation of communication towers.

 

  (ii)          Tower Operator shall deliver to T-Mobile Collocator documentation reasonably satisfactory to it confirming that any party to which Tower Operator assigns any of its duties and obligations hereunder in accordance with this Agreement shall, from and after the date of any such assignment, assume all such duties and obligations to the extent of any such assignment.

 

 

  

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  (iii)         If Tower Operator assigns, in accordance with this Agreement, its rights, interests, duties or obligations under this Agreement with respect to less than all of the Sites, the Parties hereto shall, simultaneously therewith, enter into such agreements as are reasonably necessary to appropriately bifurcate the rights, interests, duties and obligations of Tower Operator under this Agreement.

 

  (iv)          Tower Operator hereby agrees that any attempt of Tower Operator to assign its interest in this Agreement, in whole or in part, in violation of this Section 16 shall constitute a default under this Agreement and shall be null and void ab initio.

(b)       T-Mobile Collocator Assignment and Transfer Rights.

  (i)           T-Mobile Collocator may not, without the prior written consent of Tower Operator, assign this Agreement or any of its rights, duties or obligations under this Agreement, including its rights to any Site or the T-Mobile Collocation Space at such Site, to any Person or, except as permitted under Section 19(c), sublease or grant concessions or other rights for the occupancy or use of any portion of the T-Mobile Collocation Space to any Person; provided that Tower Operator’s consent shall not be required if the assignee meets the Assumption Requirements and is (A) an Affiliate of T-Mobile Collocator, (B) a successor Person by way of merger, consolidation, or other reorganization or by operation of law or to any Person acquiring substantially all of the assets of T-Mobile Collocator or (C) in any market in which T-Mobile Collocator has ceased to operate or shall cease to operate after the consummation of the transaction that is the subject of the assignment in a manner that requires the use of the Towers in such market, T-Mobile Collocator may assign the T-Mobile Collocation Space at any Site to any wireless communications end user that intends to use the T-Mobile Collocation Space for its own wireless communications business and that enters into an agreement and consent with Tower Operator that is reasonably satisfactory to Tower Operator (collectively, a “T-Mobile Assignee,” and such assignment, a “T-Mobile Transfer”).  In the case of clause (C) of the preceding sentence, an agreement and consent entered into by a T-Mobile Assignee and Tower Operator substantially in the form of Exhibit F hereto shall be deemed to be reasonably satisfactory to Tower Operator.

 

  (ii)          If T-Mobile Collocator effects a T-Mobile Transfer, then, in the case of a T-Mobile Transfer to any Person with a rating of BBB- or higher from Standard & Poor’s Ratings Services or Baa3 or higher from Moody’s Investor Services, the obligations of T-Mobile Collocator with respect to the portion of the T-Mobile Collocation Space that is the subject of the T-Mobile Transfer shall cease and terminate, and Tower Operator shall look only and solely to the Person that is the Qualifying Transferee of T-Mobile Collocator’s interest in and to such portion of the T-Mobile Collocation Space for performance of all of the duties and obligations of T-Mobile Collocator under this Agreement with respect to such T-Mobile Collocation Space from and after the date of the T-Mobile Transfer.  Otherwise, in the event of any T-Mobile Transfer, T-Mobile Collocator shall remain liable under this Agreement for the performance of T-Mobile Collocator’s duties and obligations hereunder as to such applicable T-Mobile Collocation Space that is the subject of the T-Mobile Transfer.

 

 

  

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  (iii)         If T-Mobile Collocator assigns, in accordance with this Agreement, its rights, interests, duties or obligations under this Agreement with respect to less than its entire interest in the T-Mobile Collocation Space at any Site to a T-Mobile Assignee, the Parties hereto shall, simultaneously therewith, enter into such agreements as are reasonably necessary to appropriately bifurcate the rights, interests, duties and obligations of T-Mobile Collocator under this Agreement.

  (iv)          T-Mobile Collocator shall deliver to Tower Operator documentation reasonably satisfactory to Tower Operator confirming that any party to which T-Mobile Collocator assigns any of its duties and obligations hereunder in accordance with this Agreement shall, from and after the date of any such assignment, assume all such duties and obligations of T-Mobile Collocator under this Agreement to the extent of any such assignment (provided that T-Mobile Collocator’s delivery of documentation substantially in the form of Exhibit F hereto shall be deemed to be reasonably satisfactory to Tower Operator).

  (v)           T-Mobile Parent may not, without the prior written consent of Tower Operator, assign this Agreement or any of its rights, duties or obligations  under this Agreement, including under Section 35, to any Person.  Each of T-Mobile Parent and T-Mobile Collocator hereby agrees that any attempt of T-Mobile Parent or T-Mobile Collocator to assign its interest in this Agreement or any of its rights, duties or obligations under this Agreement, in whole or in part, in violation of this Section 16(b) shall constitute a default under this Agreement and shall be null and void ab initio.

  (vi)          In the event of any T-Mobile Transfer or other disposition by T-Mobile Collocator of its interest in the T-Mobile Collocation Space to any Person that is a competitor of Tower Operator or any of its Affiliates, all rights of T-Mobile Collocator relating to, and the associated obligations of Tower Operator with respect to, the T-Mobile Reserved Amount of Tower Equipment and the  Reserved T-Mobile Loading Capacity shall automatically terminate and in no event shall such rights transfer to or otherwise benefit such Person.

SECTION 17.     Environmental Covenants.

(a)       Tower Operator Environmental Covenants. Tower Operator covenants and agrees that Tower Operator shall carry on its business and operations at each Site in compliance with all applicable Environmental Laws.

 

(b)       T-Mobile Collocator Environmental Covenants. T-Mobile Collocator covenants and agrees that, from and after the Effective Date, as to each Site upon which it leases or otherwise uses or occupies any T-Mobile Collocation Space (i) T-Mobile Collocator shall not conduct or allow to be conducted upon any such T-Mobile Collocation Space of any Site any business operations or activities, or employ or use a T-Mobile Collocation Space of any Site, to generate, manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce, or process Hazardous Materials; provided, however, that T-Mobile Collocator shall have the right to bring, use and keep on the T-Mobile Collocation Space of any Site in customary quantities and in compliance with all applicable Laws, batteries, generators and associated fuel tanks and other Hazardous Materials commonly used in the telecommunications industry reasonably necessary for the operation and maintenance of each T-Mobile Collocation Space of any Site or that are being used at the relevant Site on the Effective Date; (ii) T-Mobile Collocator shall carry on its business and operations on the T-Mobile Collocation Space of any Site in compliance with, and shall remain in compliance with, all applicable Environmental Laws unless non-compliance results from the acts or omissions of Tower Operator or any Tower Tenant; (iii) T-Mobile Collocator shall not create or permit to be created any Lien against any Site for the costs of any response, removal or remedial action or clean-up of Hazardous Materials unless non-compliance results from the acts or omissions of Tower Operator or any Tower Tenant; (iv) to the extent such Hazardous Materials were deposited by T-Mobile Collocator or any of its Affiliates, agents, employees, engineers, contractors or subcontractors, T-Mobile Collocator shall promptly conduct and complete all investigations, studies, sampling and testing, and all remedial, removal, and other actions necessary to clean up and remove all such Hazardous Materials on, from or affecting each Site in accordance with, and to the extent necessary to comply with, all applicable Environmental Laws; and (v) T-Mobile Collocator shall promptly notify Tower Operator in writing if T-Mobile Collocator receives any notice, letter, citation, order, warning, complaint, claim or demand that (A) T-Mobile Collocator has violated, or is about to violate, any Environmental Law, (B) there has been a release or there is a threat of release, of Hazardous Materials at or from the T-Mobile Collocation Space of, or otherwise affecting, any Site, (C) T-Mobile Collocator may be or is liable, in whole or in part, for the costs of cleaning up, remediating, removing or responding to a release of Hazardous Materials, or (D) the T-Mobile Collocation Space of any Site or the Site is subject to a Lien in favor of any Governmental Authority for any liability, cost or damages under any Environmental Law. To the extent requested by Tower Operator, T-Mobile Collocator agrees to provide copies of all material safety data sheets for approved Hazardous Materials brought to any Site and annual inventories of such Hazardous Materials present at any Site to Tower Operator, no later than December 31 of each year. In addition to any other notification to Tower Operator required pursuant to this Agreement, T-Mobile Collocator must provide notice to Tower Operator of any above ground or underground storage tank installed by T-Mobile Collocator at any Site and provide copies of registration documents to Tower Operator, if registration is required by the governing state agencies. T-Mobile Collocator shall promptly notify Tower Operator of any release of Hazardous Materials at any Site upon obtaining knowledge of such release.

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SECTION 18.     Taxes.  T-Mobile Collocator shall be responsible for and shall pay all sales Taxes or Taxes in the nature of sales Taxes (including Taxes such as the Arizona privilege Tax and the New Mexico gross receipts Tax) with respect to any rent payments under this Agreement; provided, however, that T-Mobile Collocator shall not be responsible for any such Tax unless (i) Tower Operator notifies T-Mobile Collocator of its obligation under this Section 18 within 18 months after the billing date for the corresponding rent payment or (ii) the liability for such Tax is based on an administrative ruling or judicial decision that occurs after the end of such 18-month period.  In the case of clause (ii) of the preceding sentence, Tower Operator shall promptly give notice to T-Mobile Collocator of the applicable ruling or decision and give T-Mobile Collocator a reasonable opportunity to contest its liability for the Tax.

 

 

  

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SECTION 19.     Utilities.

(a)       As among T-Mobile Collocator and all new Tower Tenants, Tower Operator shall cause utility charges to be separately metered.  T-Mobile Collocator shall pay to the applicable utility service provider the charges for all separately metered utility services used by T-Mobile Collocator at each Site in the operation of T-Mobile’s Communications Facility at such Site.  Notwithstanding the foregoing provisions of this Section 19, if the applicable utility service provider shall not render a separate bill for T-Mobile Collocator’s usage, T-Mobile Collocator shall reimburse Tower Operator monthly for T-Mobile Collocator’s actual metered usage at the rate charged to Tower Operator by the applicable utility service provider, or if Tower Operator is prohibited from installing a separate meter to measure T-Mobile Collocator’s usage, T-Mobile Collocator may use Tower Operator’s utility sources to provide utility service to the Communications Facility, and T-Mobile Collocator shall reimburse Tower Operator monthly for T-Mobile Collocator’s actual usage at the rate charged to Tower Operator by the applicable service provider (and Tower Operator and T-Mobile Collocator agree to cooperate in determining a method by which to measure or estimate T-Mobile Collocator’s usage if the usage is not capable of actual measurement). Notwithstanding anything to the contrary contained herein, Tower Operator shall have no obligation to provide, maintain or pay for utility services related to T-Mobile Communications Equipment.  T-Mobile Collocator shall pay for all utility services utilized by T-Mobile Collocator and its Affiliates in its operations at each Site prior to delinquency.

 

(b)       If not prohibited by applicable Laws, T-Mobile Collocator shall allow Tower Operator to use T-Mobile Collocator’s power sources at all Sites with tower lighting systems, solely for the purpose of providing electrical power for Tower Operator’s light monitoring equipment on such Site and to maintain Tower lighting on such Site as required under this Agreement and applicable Law, and subject to the terms of the Transition Services Agreement.  Connecting Tower Operator’s light monitoring equipment to T-Mobile Collocator’s electrical power source (unless necessary as a result of an increase in the height of a Tower due to a Modification made at the request of T-Mobile Collocator) shall be at Tower Operator’s sole cost and expense.  Notwithstanding the foregoing, at any Site where Tower Operator uses T-Mobile Collocator’s power sources, Tower Operator may continue to use such T-Mobile Collocator power sources in consideration of a monthly payment of $50.00 for incandescent lighting or $20.00 for strobe and LED lighting.  Tower Operator may connect to its own power source and stop using T-Mobile Collocator’s power source at any time, upon which its obligation to make such monthly payments shall cease.  Notwithstanding anything to the contrary contained herein, Tower Operator is not required to obtain its own power source for lighting and monitoring equipment if lighting at a Site is not required under applicable Law (including approvals granted by any local zoning board) or other existing written agreement.

 

 

  

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(c)       T-Mobile Collocator may sublease, license or sublicense all or any portion of the T-Mobile Collocation Space at any Site to any Backhaul Operator (as defined below) providing Backhaul Services (as defined below) exclusively to T-Mobile Collocator in connection with the operation of T-Mobile Collocator’s communications network and allow such Backhaul Operator to use its network, T-Mobile Communications Equipment, T-Mobile Improvements or Communications Facility; provided, however, that (i) T-Mobile Collocator shall follow the application and amendment requirements set forth in Section 9(e) with respect to such sublease, license or sublicense and (ii) substantially concurrently with and as a condition precedent to such sublease, license or sublicense T-Mobile Collocator shall enter into a three-party agreement with Tower Operator and such Backhaul Operator, which agreement shall, among other things, provide that if at any time such Backhaul Operator provides Backhaul Services to any Tower Tenant, then such Backhaul Operator shall pay rent to Tower Operator for the space occupied by its equipment at fair market rates (to be further described in such three-party agreement).  “Backhaul Operator” means a Person providing services to transmit voice, video, internet or data from a Site to another location. “Backhaul Services” means, with respect to a Site, the transmission of voice, video, internet or data originating from T-Mobile Collocator or a Tower Tenant Communications Equipment base station appurtenant to such Site.

SECTION 20.     Compliance with Law; Governmental Permits.

(a)       Tower Operator shall, at its own cost and expense, obtain and maintain in effect all certificates, permits, licenses and other approvals relating to Government Approvals (including those relating to FCC and FAA regulations) and comply with all Laws, required or imposed by Governmental Authorities, in connection with the operation and maintenance of the Included Property at each Site (including the Tower on such Site).  Tower Operator shall conduct annual inspections of all Sites; provided that until the requisite waiver from the FCC has been obtained by the T-Mobile Ground Lease Additional Party with respect to the Non-Assignable Sites, Tower Operator shall conduct quarterly inspections of all Non-Assignable Sites with lighted Towers of such T-Mobile Ground Lease Additional Party.  T-Mobile Collocator shall, at its own cost and expense, comply with all Laws, required or imposed by Governmental Authorities, in connection with its use of each Site.

 

(b)       Tower Operator shall, at its own cost and expense, reasonably cooperate with T-Mobile Collocator or its Affiliates in their efforts to obtain and maintain in effect any certificates, permits, licenses and other approvals and to comply with any Laws required or imposed on T-Mobile Collocator by Governmental Authorities applicable to the T-Mobile Communications Equipment and the T-Mobile Collocation Space.  Without limiting the generality of the immediately preceding sentence, Tower Operator shall, at its own cost and expense, provide to T-Mobile Collocator any documentation that may be necessary for T-Mobile Collocator to comply with all FCC reporting requirements relating to the T-Mobile Communications Equipment and the T-Mobile Collocation Space.

 

 

  

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(c)       Notwithstanding anything herein to the contrary, Tower Operator shall have no obligation to provide any information necessary for T-Mobile Collocator to obtain any certificate, permit or other approval relating to the T-Mobile Communications Equipment itself (e.g., FCC type certification).

 

(d)       T-Mobile Collocator shall reasonably cooperate with Tower Operator in Tower Operator’s efforts to provide required information and to comply with all Laws required or imposed by Governmental Authorities applicable to each Site.

SECTION 21.     Compliance with Specific FCC Regulations.

(a)       From and after the Effective Date, T-Mobile Collocator shall cooperate (and cause its Affiliates to cooperate) with each Tower Tenant with respect to each Site regarding compliance with applicable FCC regulations.

 

(b)       T-Mobile Collocator acknowledges and agrees that T-Mobile Communications Equipment at each Site is subject to the regulations of the FCC, including regulations regarding exposure by workers and members of the public to the radio frequency emissions generated by T-Mobile Communications Equipment, and T-Mobile Collocator agrees to comply (and T-Mobile Collocator shall cause its Affiliates to comply) with all FCC Regulations and all other Applicable Laws.  T-Mobile Collocator acknowledges that such regulations prescribe the permissible exposure levels to emissions from its Communications Equipment, which can generally be met by maintaining safe distances from such Communications Equipment.  T-Mobile Collocator shall install at its expense such marking, signage, or barriers to restrict access to any T-Mobile Communications Equipment on a Site in respect of any T-Mobile Collocation Space on such Site as T-Mobile Collocator deems necessary in order to comply with the applicable FCC regulations. T-Mobile Collocator shall cooperate in good faith with Tower Operator to minimize any confusion or unnecessary duplication that could result in similar signage being posted with respect to any T-Mobile Communications Equipment at or near any Site in respect of any T-Mobile Collocation Space on such Site.  T-Mobile Collocator, at its option, may also install signage at any Site identifying T-Mobile’s Communications Facility at such Site and providing for contact information in the case of an Emergency.

 

(c)       T-Mobile Collocator further agrees to alert all personnel working at or near each Site, including T-Mobile Collocator’s maintenance and inspection personnel, to maintain the prescribed distance from the Communications Equipment and to otherwise follow the posted instructions of Tower Operator.

 

 

  

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(d)       The Parties acknowledge that T-Mobile Collocator (or an Affiliate thereof) is licensed by the FCC to provide telecommunications services and that the Sites are used to provide those services.  Nothing in this Agreement shall be construed to transfer control of any FCC authorization held by T-Mobile Collocator (or an Affiliate thereof) to Tower Operator with respect to telecommunications services provided by T-Mobile Collocator or its Affiliates, to allow Tower Operator to in any manner control the T-Mobile Communications Equipment, or to limit the right of T-Mobile Collocator (or an Affiliate thereof) to take all necessary actions to comply with its obligations as an FCC licensee or with any other legal obligations to which it is or may become subject (subject to the other terms of this Agreement with respect to actions T-Mobile Collocator or its Affiliates may take with respect to a Site).

SECTION 22.    Holding Over.  If during the Term of this Agreement T-Mobile Collocator remains in possession of the T-Mobile Collocation Space at any Site after expiration or termination of T-Mobile Collocator’s leaseback of or other right to use and occupy the T-Mobile Collocation Space at such Site without any express written agreement by Tower Operator, then T-Mobile Collocator shall be a month-to-month tenant with the monthly T-Mobile Collocation Rent equal to 150% of the monthly T-Mobile Collocation Rent last applicable to the T-Mobile Collocation Space and subject to all of the other terms set forth in this Agreement. If T-Mobile Collocator remains a month-to-month holdover tenant at any Site for more than 12 consecutive months, T-Mobile Collocator shall be deemed to have renewed its leaseback or other right to use and occupy the T-Mobile Collocation Space at such Site for a renewal term of five years, with the monthly T-Mobile Collocation Rent being equal to the monthly T-Mobile Collocation Rent applicable during the period of such month-to-month tenancy (provided such rent shall not be less than the fair market rent of such Site at that time) and subject to all of the other terms set forth in this Agreement (including with respect to any escalation of such T-Mobile Collocation Rent by reference to CPI or any other increases in or adjustments to such T-Mobile Collocation Rent).

SECTION 23.    Rights of Entry and Inspection.  T-Mobile Collocator shall permit Tower Operator and Tower Operator’s representatives to conduct visual inspections of T-Mobile Communications Equipment located on the Tower in accordance with the general standard of care in the tower industry to ascertain compliance with the provisions of this Agreement.  Tower Operator may visually inspect, but shall not be entitled to have any access to any enclosed T-Mobile Communications Equipment.  Nothing in this Section 23 shall imply or impose any duty or obligation upon Tower Operator to enter upon any Site at any time for any purpose, or to inspect T-Mobile Communications Equipment at any time, or to perform, or pay the cost of, any work that T-Mobile Collocator or its Affiliates is required to perform under any provision of this Agreement, and Tower Operator has no such duty or obligation.

SECTION 24.     Right to Act for Tower Operator.  In addition to and not in limitation of any other remedy T-Mobile Collocator may have under this Agreement, if Tower Operator fails to make any payment or to take any other action when and as required under this Agreement in order to correct a condition the continued existence of which is imminently likely to cause bodily injury or have a material adverse effect on the ability of T-Mobile Collocator to operate the T-Mobile Communications Equipment at any Site, then subject to the following sentence, T-Mobile Collocator may, without demand upon Tower Operator and without waiving or releasing Tower Operator from any duty, obligation or liability under this Agreement, make any such payment or take any such other action required of Tower Operator (except any work on the tower), in each case in compliance with applicable Law in all material respects and in a manner consistent with the general standard of care in the tower industry. Unless Tower Operator’s failure results in or relates to an Emergency, T-Mobile Collocator shall give Tower Operator at least 10 Business Days’ prior written notice of T-Mobile Collocator’s intended action and Tower Operator shall have the right to cure such failure within such 10 Business Day period unless the same is not able to be remedied in such 10 Business Day period, in which event such 10 Business Day period shall be extended; provided Tower Operator has commenced such cure within such 10 Business Day period and continuously prosecutes the performance of the same to completion with due diligence. No prior notice shall be required in the event of an Emergency. The actions that T-Mobile Collocator may take include, in addition to any actions permitted under Section 4, the payment of insurance premiums that Tower Operator is required to pay under this Agreement and the payment of Ground Rent that Tower Operator is required to pay under the Ground Leases. T-Mobile Collocator may pay all incidental costs and expenses incurred in exercising its rights under this Agreement, including reasonable attorneys’ fees and expenses, penalties, re-instatement fees, late charges, and interest. An amount equal to 120% of the total amount of the costs and expenses incurred by T-Mobile Collocator in accordance with this Section 24 shall be due and payable by Tower Operator upon demand and bear interest at the rate of the lesser of (A) the Prime Rate or (B) 10% per annum from the date five days after demand until paid by Tower Operator.[space]

 

 

  

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SECTION 25.     Defaults and Remedies.

(a)       T-Mobile Collocator Events of Default.  The following events constitute events of default by T-Mobile Collocator:  (i)  In respect of this Agreement or any Site Lease Agreement, T-Mobile Collocator fails to timely pay any portion of the T-Mobile Collocation Rent, and any such failure continues for 10 Business Days after written notice from Tower Operator;

  (ii)          T-Mobile Collocator fails to timely pay any other amount payable hereunder not constituting a portion of the T-Mobile Collocation Rent, and such failure continues for 10 Business Days after written notice from Tower Operator;

  (iii)         T-Mobile Collocator violates or breaches any term of this Agreement in respect of any Site, and T-Mobile Collocator fails to cure such breach or violation within 30 days of receiving notice thereof from Tower Operator or, if the violation or breach cannot be cured within 30 days (other than a failure to pay money), fails to take steps to cure such violation or breach within such 30 days and act continuously and diligently to complete the cure of such breach or violation within a reasonable time; provided that if any such default causes Tower Operator to be in default under any Collocation Agreement existing prior to the Effective Date, the 30 day period referenced above in this Section 25(a)(iii) shall be reduced to such lesser time period as Tower Operator notifies such T-Mobile Collocator in writing that Tower Operator has to comply under such Collocation Agreement;

 

 

  

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(iv)           A Bankruptcy event occurs with respect to T-Mobile Collocator; or T-Mobile Collocator becomes insolvent or makes an assignment for the benefit of creditors; or any action is brought by T-Mobile Collocator seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property; or if T-Mobile Collocator commences a voluntary proceeding under the federal Bankruptcy Code; or any action or petition is otherwise brought by T-Mobile Collocator seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature; or any action is brought against T-Mobile Collocator seeking its dissolution or liquidation of any of its assets, or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and any such action is consented to or acquiesced in by T-Mobile Collocator or is not dismissed within 90 days after the date upon which it was instituted; or any proceeding under the federal Bankruptcy Code is instituted against T-Mobile Collocator and (A) an Order for relief is entered in such proceeding, or (B) such proceeding is consented to or acquiesced in by T-Mobile Collocator or is not dismissed within 90 days after the date upon which it was instituted; or any action or petition is otherwise brought against T-Mobile Collocator seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by T-Mobile Collocator or is not dismissed within 90 days after the date upon which it was brought; or

  (v)          T-Mobile Collocator rejects its rights to sublease or right to use any Site under Section 365 of the federal Bankruptcy Code.

(b)       Tower Operator Remedies With Respect to T-Mobile Collocator Defaults; T-Mobile Collocator Cure Rights. (i)  Upon the occurrence of any event of default by T-Mobile Collocator under Section 25(a)(i) or Section 25(a)(ii), Tower Operator may terminate this Agreement as to the leaseback or other use and occupancy of the T-Mobile Collocation Space at any or all Sites leased, used or occupied by T-Mobile Collocator only if such event of default is then occurring in respect of 10% or more of the Sites, in the aggregate.  If an event of default by T-Mobile Collocator under Section 25(a)(i) or Section 25(a)(ii) is then occurring in respect of less than 10% of the Sites, in the aggregate, then subject to the terms of this Agreement, Tower Operator may terminate this Agreement as to the leaseback or other use and occupancy of the T-Mobile Collocation Space only as to those Sites leased, used or occupied by T-Mobile Collocator with respect to which such event of default is occurring.  Tower Operator may terminate this Agreement as to such Site or Sites, as applicable, by giving T-Mobile Collocator written notice of termination; termination with respect to the affected Site or Sites, as applicable, shall be effective 30 days after T-Mobile Collocator’s receipt of the termination notice; provided, however, that this Agreement shall otherwise remain in full force and effect.

 

 

  

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  (ii)          Upon the occurrence of any event of default by T-Mobile Collocator under Section 25(a)(iii) as to the T-Mobile Collocation Space of a Site, Tower Operator may terminate this Agreement as to the applicable Site and T-Mobile Collocator’s leaseback or other use and occupancy of the T-Mobile Collocation Space at such Site by giving T-Mobile Collocator written notice of termination, and this Agreement shall be terminated as to the applicable Site and as to the applicable T-Mobile Collocation Space, 30 days after T-Mobile Collocator’s receipt of such termination notice.

 

  (iii)         Upon the occurrence of any event of default by T-Mobile Collocator under Section 25(a)(iv) or Section 25(a)(v), Tower Operator may terminate this Agreement as to the leaseback or other use and occupancy of the T-Mobile Collocation Space at any or all Sites leased, used or occupied by T-Mobile Collocator by giving T-Mobile Collocator written notice of termination, and this Agreement shall be terminated as to such Sites 30 days after T-Mobile Collocator’s receipt of such termination notice.

 

  (iv)         Notwithstanding anything to the contrary contained herein, if T-Mobile Collocator is determined to be in default pursuant to Section 25(f), then T-Mobile Collocator shall have 20 days following such determination to initiate a cure of such default and so long as such cure is diligently completed, an event of default with respect to T-Mobile Collocator shall not be deemed to have occurred.

(c)       Tower Operator Events of Default.  The following events constitute events of default by Tower Operator:

  (i)           Tower Operator violates or breaches any material term of this Agreement in respect of any Site, and Tower Operator fails to cure such breach or violation within 30 days of receiving notice thereof from T-Mobile Collocator or, if the violation or breach cannot be cured within 30 days (other than a failure to pay money), fails to take steps to cure such violation or breach within such 30 days and act diligently to complete the cure of such violation or breach within a reasonable time;

  (ii)          A Bankruptcy event occurs with respect to Tower Operator; or Tower Operator becomes insolvent or makes an assignment for the benefit of creditors; or any action is brought by Tower Operator seeking its dissolution or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property; or Tower Operator commences a voluntary proceeding under the federal Bankruptcy Code; or any action or petition is otherwise brought by Tower Operator seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature; or any action is brought against Tower Operator seeking its dissolution or liquidation of any of its assets, or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and any such action is consented to or acquiesced in by Tower Operator or is not dismissed within 90 days after the date upon which it was instituted; or any Bankruptcy proceeding is instituted against Tower Operator and (A) an Order for relief is entered in such proceeding, or (B) such proceeding is consented to or acquiesced in by Tower Operator or is not dismissed within 90 days after the date upon which it was instituted; or any action or petition is otherwise brought against Tower Operator seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by Tower Operator or is not dismissed within 90 days after the date upon which it was brought; or

 

 

  

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  (iii)         The leaseback to T-Mobile Collocator or other right by T-Mobile Collocator to use and occupy the T-Mobile Collocation Space is rejected by Tower Operator under Section 365 of the federal Bankruptcy Code.

Notwithstanding anything to the contrary contained herein, no event of default shall be deemed to occur and exist under this Agreement as a result of a violation or breach by Tower Operator of (i) any term of this Agreement as a result of the occurrence of any Force Majeure, (ii) any term of this Agreement that requires Tower Operator to comply in all respects with any applicable Law (including, for the avoidance of doubt, any applicable Environmental Law) or any Ground Lease if (x) Tower Operator complies with such Law or such Ground Lease, as applicable, in all material respects and (y) no claims, demands, assessments, actions, suits, fines, levies or other penalties have been asserted against or imposed on T-Mobile Collocator by any Governmental Authority as a result of Tower Operator’s non-compliance in all respects with such Law or by the applicable Ground Lessor as a result of Tower Operator’s non-compliance in all respects with such Ground Lease and (iii) Section 5(a), Section 6, Section 8(a), Section 8(c), Section 17, Section 20 or Section 21 if such violation or breach arises out of or relates to any event, condition or occurrence that occurred prior to, or is in existence as of, the Effective Date unless such violation or breach has not been cured on or prior to the first anniversary of the Effective Date; provided, however, that if T-Mobile Collocator gives Tower Operator notice of any event, condition or occurrence giving rise to an obligation of Tower Operator to repair, maintain or modify a Tower under Section 6(a), or Tower Operator otherwise obtains knowledge thereof, Tower Operator shall remedy such event, condition or occurrence in accordance with its standard protocol and procedures for remedying similar events, conditions or occurrences with respect to its portfolio of telecommunications tower sites (taking into account whether such event, condition or occurrence is deemed an emergency, a priority or a routine matter in accordance with Tower Operator’s then current practices).

(d)       T-Mobile Collocator Remedies.

  (i)           Upon the occurrence of any event of default by Tower Operator under Section 25(c)(i) in respect of any Site, T-Mobile Collocator may terminate this Agreement as to such Site by giving Tower Operator written notice of termination, and this Agreement shall be terminated as to such Site 30 days after Tower Operator’s receipt of such termination notice; provided, however, that this Agreement shall otherwise remain in full force and effect.

 

 

  

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  (ii)          Upon the occurrence of any event of default by Tower Operator under Section 25(c)(ii) or Section 25(c)(iii), T-Mobile Collocator may terminate this Agreement as to such Site by giving Tower Operator written notice of termination; termination with respect to the affected Site shall be effective 30 days after Tower Operator’s receipt of such termination notice; provided, however, that this Agreement shall otherwise remain in full force and effect.

 

  (iii)         Upon the occurrence of events of default by Tower Operator (excluding those resulting from any default of T-Mobile Collocator or the occurrence of any Force Majeure) not cured as provided for in Section 25(c) by Tower Operator relating to more than 20% of the Sites, in the aggregate, during any consecutive five-year period, so that the aggregate impact of those uncured defaults results in material harm to the business and operations of T-Mobile Collocator and subject to arbitration under Section 25(f), T-Mobile Collocator may, upon giving 60 days’ prior written notice to Tower Operator, terminate this Agreement as to all Sites (which notice shall contain a reasonably specific description of each of such events of default), and this Agreement shall be terminated as to all Sites at the time designated by T-Mobile Collocator in its notice of termination to Tower Operator.

 

  (iv)         Notwithstanding anything to the contrary contained herein, if Tower Operator is determined to be in default pursuant to Section 25(f), then Tower Operator shall have 20 days following such determination to initiate a cure of such default and so long as such cure is diligently completed, an event of default with respect to Tower Operator shall not be deemed to have occurred.

(e)       No Limitation on Remedies.  T-Mobile Collocator or Tower Operator, as applicable, may pursue any remedy or remedies provided in this Agreement or any remedy or remedies provided for or allowed by law or in equity, separately or concurrently or in any combination, including (i) specific performance or other equitable remedies, (ii) money damages arising out of such default or (iii) in the case of Tower Operator’s default, T-Mobile Collocator may perform, on behalf of Tower Operator, Tower Operator’s obligations under the terms of this Agreement pursuant to Section 24.

 

(f)        Arbitration.  Notwithstanding anything in this Agreement to the contrary, any Party receiving notice of a default or termination under this Agreement may, within 10 days after receiving the notice, initiate arbitration proceedings to determine the existence of any such default or termination right.  Such arbitration proceedings shall be conducted in accordance with and subject to the procedures for arbitration set forth in the Master Agreement.

 

(g)       Remedies Not Exclusive.  Unless expressly provided herein, a Party’s pursuit of any one or more of the remedies provided in this Agreement shall not constitute an election of remedies excluding the election of another remedy or other remedies, a forfeiture or waiver of any amounts payable under this Agreement as to the applicable Site by such Party or waiver of any relief or damages or other sums accruing to such Party by reason of the other Party’s failure to fully and completely keep, observe, perform, satisfy and comply with all of the agreements, terms, covenants, conditions, requirements, provisions and restrictions of this Agreement.

 

 

  

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(h)       No Waiver.  Either Party’s forbearance in pursuing or exercising one or more of its remedies shall not be deemed or construed to constitute a waiver of any event of default or of any remedy.  No waiver by either Party of any right or remedy on one occasion shall be construed as a waiver of that right or remedy on any subsequent occasion or as a waiver of any other right or remedy then or thereafter existing.  No failure of either Party to pursue or exercise any of its powers, rights or remedies or to insist upon strict and exact compliance by the other Party with any agreement, term, covenant, condition, requirement, provision or restriction of this Agreement, and no custom or practice at variance with the terms of this Agreement, shall constitute a waiver by either Party of the right to demand strict and exact compliance with the terms and conditions of this Agreement.  Except as otherwise provided herein, any termination of this Agreement pursuant to this Section 25, or partial termination of a Party’s rights hereunder, shall not terminate or diminish any Parties’ rights with respect to the obligations that were to be performed on or before the date of such termination.

 

(i)        Continuing Obligations.  Any termination by Tower Operator of T-Mobile Collocator’s rights with respect to any or all Sites pursuant to Section 25(b) shall not diminish or limit any obligation of T-Mobile Collocator to pay the T-Mobile Collocation Rent provided for herein or any other amounts with respect to such Site(s).

SECTION 26.    Quiet Enjoyment.  Tower Operator covenants that T-Mobile Collocator shall, subject to the terms and conditions of this Agreement, peaceably and quietly hold and enjoy the T-Mobile Collocation Space at each Site and shall have the right provided herein to operate its equipment at each Site without hindrance or interruption from Tower Operator.

SECTION 27.     No Merger.  There shall be no merger of this Agreement or any subleasehold interest or estate created by this Agreement in any Site with any superior estate held by a Party by reason of the fact that the same Person may acquire, own or hold, directly or indirectly, both the subleasehold interest or estate created by this Agreement in any Site and such superior estate; and this Agreement shall not be terminated, in whole or as to any Site, except as expressly provided in this Agreement.  Without limiting the generality of the foregoing provisions of this Section 27, there shall be no merger of the subleasehold interest or estate created by this Agreement in Tower Operator in any Site with any underlying fee interest that Tower Operator may acquire in any Site that is superior or prior to such subleasehold interest or estate created by this Agreement in Tower Operator.

 

 

  

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SECTION 28.     Broker and Commission.

(a)       All negotiations in connection with this Agreement have been conducted by and between Tower Operator and T-Mobile Collocator and their respective Affiliates without the intervention of any Person or other party as agent or broker other than TAP Advisors and Deutsche Bank (the “Financial Advisors”), which are advising T-Mobile Parent in connection with this Agreement and related transactions and which shall be paid solely by T-Mobile Parent.

 

(b)       Tower Operator and T-Mobile Collocator warrants and represents to the other that there are no broker’s commissions or fees payable by it in connection with this Agreement by reason of its respective dealings, negotiations or communications other than the advisor’s fees payable to the Financial Advisors which shall be payable by T-Mobile Parent.

SECTION 29.     Recording of Memorandum of Site Lease Agreement; Preparation and Amendment to the Site Lease Agreement.

(a)       Subject to the applicable provisions of the Master Agreement, for each T-Mobile Collocation Space at an Assignable Site, following the execution of this Agreement or after any Conversion Closing, T-Mobile Collocator and Tower Operator shall each have the right, at its sole cost and expense, to cause a Memorandum of Site Lease Agreement to be filed in the appropriate County property records (unless the Ground Lease for any applicable Assignable Site prohibits such recording) to provide constructive notice to third parties of the existence of this Agreement and shall promptly thereafter provide or cause to be provided in electronic form a recorded copy of same to the other Party.

 

(b)       In addition to and not in limitation of any other provision of this Agreement, the Parties shall have the right to review and make corrections, if necessary, to any and all exhibits to this Agreement or to the applicable Memorandum of Site Lease Agreement.  After making such corrections, the Party that recorded the Memorandum of Site Lease Agreement shall re-record such Memorandum of Site Lease Agreement to reflect such corrections, at the sole cost and expense of the Party that requested such correction, and shall promptly provide in electronic form a recorded copy of same to the other Party.

 

(c)       The Parties shall cooperate with each other to cause changes to be made in the Memorandum of Site Lease Agreement for such Site, if such changes are requested by either Party to evidence any permitted changes in the description of the T-Mobile Collocation Space respecting such Site or equipment or improvements thereof, and the Party that requested such changes to the Memorandum of Site Lease Agreement shall record same at its sole cost and expense and shall promptly provide in electronic form a recorded copy of same to the other Party.

 

 

  

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SECTION 30.     Damage to the Site, Tower or the Improvements.

(a)       If there occurs a casualty that damages or destroys all or a Substantial Portion of any Site, then within 60 days after the date of the casualty, Tower Operator shall notify T-Mobile Collocator in writing as to whether the Site is a Non-Restorable Site, which notice shall specify in detail the reasons for such determination by Tower Operator, and if such Site is not a Non-Restorable Site (a “Restorable Site”) the estimated time, in Tower Operator’s reasonable judgment, required for Restoration of the Site (a “Casualty Notice”).  If the Casualty Notice states that such Site is a Non-Restorable Site, then Tower Operator or T-Mobile Collocator shall have the right to terminate T-Mobile Collocator’s leaseback or other use and occupancy of the T-Mobile Collocation Space at such Site, upon written notice to the other Party (given within the time period required below) and such leaseback or other use and occupancy at such Site shall terminate as of the date of such notice.  Any such notice of termination shall be given not later than 30 days after receipt of the Casualty Notice (or after final determination that the Site is a Non-Restorable Site if arbitration is instituted as provided above).  In all instances Tower Operator shall have the sole right to retain all insurance Proceeds related to a Non-Restorable Site.

 

(b)       If there occurs, as to any Site, a casualty that damages such Site but Tower Operator determines that the Site is a Restorable Site, then Tower Operator, at its sole cost and expense, shall promptly commence and diligently prosecute to completion, within a period of 60 days after the date of the damage, the adjustment of Tower Operator’s insurance Claims with respect to such event and, thereafter, promptly commence, and diligently prosecute to completion, the Restoration of the Site.  The Restoration shall be carried on and completed in accordance with the provisions and conditions of this Section 30.

 

(c)       Without limiting Tower Operator’s obligations under this Agreement in respect of a Site subject to a casualty, if Tower Operator undertakes the Restoration of a Site that has suffered a casualty, Tower Operator shall, if commercially feasible, make available to T-Mobile Collocator a portion of the Included Property of such Site for the purpose of T-Mobile Collocator locating, at its sole cost and expense, a temporary communications facility, and shall give T-Mobile Collocator priority over Tower Tenants at such Site as to the use of such portion of the Site; provided, however, that (i) the placement of such temporary communications facility shall not interfere in any material respect with Tower Operator’s Restoration or the continued operations of any Tower Tenant; (ii) T-Mobile Collocator shall obtain any permits and approvals, at T-Mobile Collocator’s cost, required for the location of such temporary communications facility on such Site; and (iii) there must be Available Space on the Site for locating such temporary communications facility.

 

(d)       If Tower Operator undertakes the Restoration of a Site but fails at any time to diligently pursue the substantial completion of the Restoration (subject to delay for Force Majeure or the inability to obtain Governmental Approvals, as opposed to merely a delay in obtaining Governmental Approvals), T-Mobile Collocator may terminate this Agreement as to T-Mobile Collocator’s leaseback or other use and occupancy of the T-Mobile Collocation Space at such Site upon giving Tower Operator written notice of its election to terminate at any time prior to completion of the Restoration.

 

 

  

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(e)       From and after any casualty as to any Site described in this Section 30 and during the period of Restoration at a Site, the T-Mobile Collocation Rent with respect to such Site shall abate until completion of the Restoration.

 

(f)        The Parties acknowledge and agree that this Section 30 is in lieu of and supersedes any statutory requirements under the laws of any State applicable to the matters set forth in this Section 30.

SECTION 31.     Condemnation.

(a)       If there occurs a Taking of all or a Substantial Portion of any Site, other than a Taking for temporary use, then either Tower Operator or T-Mobile Collocator shall have the right to terminate this Agreement as to such Site by providing written notice to other within 30 days of the occurrence of such Taking, whereupon the Term shall automatically expire as to such Site, as of the earlier of (i) the date upon which title to such Site, or any portion of such Site, is vested in the condemning authority, or (ii) the date upon which possession of such Site or portion of such Site is taken by the condemning authority, as if such date were the Site Expiration Date as to such Site, and each Party shall be entitled to prosecute, claim and retain the entire Award attributable to its respective interest in such Site under this Agreement.

 

(b)       If there occurs a Taking of less than a Substantial Portion of any Site, then this Agreement and all duties and obligations of Tower Operator under this Agreement in respect of such Site shall remain unmodified, unaffected and in full force and effect.  Tower Operator shall promptly proceed with the Restoration of the remaining portion of such Site (to the extent commercially feasible) to a condition substantially equivalent to its condition prior to the Taking.  Tower Operator shall be entitled to apply the Award received by Tower Operator to the Restoration of any Site from time to time as such work progresses; provided, however, that T-Mobile Collocator shall be entitled to prosecute and claim an amount of any Award reflecting its interest under this Agreement.  If the cost of the Restoration exceeds the Award recovered by Tower Operator, Tower Operator shall pay the excess cost.  If the Award exceeds the cost of the Restoration, the excess shall be paid to Tower Operator upon completion of the Restoration.

 

(c)       If there occurs a Taking of any portion of any Site for temporary use, then this Agreement shall remain in full force and effect as to such Site for the remainder of the Term as to such Site.  Notwithstanding anything to the contrary contained in this Agreement, during such time as Tower Operator will be out of possession of such Site, if an Assignable Site, or unable to operate such Site, if a Non-Assignable Site, by reason of such Taking, the failure to keep, observe, perform, satisfy and comply with those terms and conditions of this Agreement compliance with which are effectively impractical or impossible as a result of Tower Operator’s being out of possession of or unable to operate (as applicable) such Site shall not be a breach of or an event of default under this Agreement.  Each Party shall be entitled to prosecute, claim and retain the Award attributable to its respective interest in such Site under this Agreement for any such temporary Taking.

 

 

  

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(d)       If there occurs a Taking of all or any part of any T-Mobile Collocation Space at any Site for temporary use, then this Agreement shall remain in full force and effect as to such Site for the remainder of the then-current Term.  Notwithstanding anything to the contrary contained in this Agreement, during such time as T-Mobile Collocator shall be out of possession of such T-Mobile Collocation Space by reason of such Taking, the failure by T-Mobile Collocator to keep, observe, perform, satisfy, and comply with these terms and conditions of this Agreement compliance with which are effectively impractical or impossible as a result of T-Mobile Collocator’s being out of possession of such T-Mobile Collocation Space shall not be a breach of or an event of default under this Agreement, and T-Mobile Collocator shall not be liable for payment of the T-Mobile Collocation Rent during the period of the temporary Taking.

SECTION 32.     [Reserved].

SECTION 33.     CA/NV Purchase Option.  Tower Operator shall notify T-Mobile Collocator as to whether or not Tower Operator shall exercise any then applicable and existing purchase option under the CA/NV Master Lease with respect to any CA/NV Site no later than 180 days prior to the expiration of the Option Trigger Window (as defined in the CA/NV Master Lease) with respect to such CA/NV Site.  If such notice states that Tower Operator shall exercise such option, such notice shall state the date on which Tower Operator shall exercise such option.  If (i) such notice states that Tower Operator shall not exercise such option and (ii) Tower Operator has not otherwise secured the tenure of such CA/NV Site and shall forfeit such CA/NV Site if Tower Operator does not exercise such option, then:

(a)       Tower Operator shall take commercially reasonable efforts to assign Tower Operator’s rights to such purchase option (and the related obligations under the CA/NV Master Lease) to T-Mobile Collocator;

 

(b)       T-Mobile Collocator shall pay to SBC Tower Holdings LLC or its successor under the CA/NV Master Lease the purchase price with respect to such exercise of such option; and

 

(c)       Tower Operator shall have no further rights or obligations pursuant to this Agreement or otherwise with respect to the CA/NV Sites subject to such purchase option.

If the CA/NV Master Lease expires with respect to any CA/NV Site before this Agreement expires with respect to such CA/NV Site, including as a result of the failure to exercise any then applicable and existing purchase option for such CA/NV Site, then this Agreement shall terminate and have no further force and effect as to the T-Mobile Collocation Space within such CA/NV Site (except for any obligations accruing prior to or as of the expiration date for such Site that are then unperformed).

 

 

  

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Notwithstanding the foregoing, Tower Operator shall not be required to give the notice referred to in the first paragraph of this Section 33 and T-Mobile Collocator shall have no rights under this Section 33 (A) if T-Mobile Collocator is in default of its obligations under this Agreement as to the applicable CA/NV Site beyond applicable notice and cure periods provided herein, (B) if T-Mobile Collocator has given a Termination Notice relating to such CA/NV Site or (C) Tower Operator has otherwise secured the tenure of such CA/NV Site and shall not forfeit such CA/NV Site if Tower Operator does not exercise such option.

SECTION 34.     General Provisions.

(a)       Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

 

(b)       Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof) as to all matters, including matters of validity, construction, effect, performance and remedies; provided, however, that the enforcement of this Agreement with respect to a particular Site as to matters relating to real property and matters mandatorily governed by local Law, shall be governed by and construed in accordance with the laws of the state in which the Site in question is located.

 

(c)       Entire Agreement; Successors and Assignees. This Agreement (including, for the avoidance of doubt, the Exhibits), constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes all prior agreements, both written and oral, between the Parties with respect to the subject matter of this Agreement.  This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and permitted assignees.

 

(d)       Fees and Expenses.  Except as otherwise specifically set forth in this Agreement, whether the transactions contemplated by this Agreement are or are not consummated, all legal and other costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the Party incurring such costs and expenses.

 

 

  

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(e) Notices. All notices, requests, demands, waivers and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been delivered (i) the next Business Day when sent overnight by a nationally recognized overnight courier service, or (ii) upon delivery when personally delivered to the receiving Party. All such notices and communications shall be mailed, sent or delivered as set forth below or to such other person(s) or address(es) as the receiving Party may have designated by written notice to the other Party. In addition to the addressees below, all such notices related to a specific Site or Sites shall be sent concurrently herewith to the addresses set forth in the Site Lease Agreement applicable to such Sites.

 

 

  

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If to T-Mobile Collocator to:

 

T-Mobile USA, Inc.

12920 S.E. 38th Street

Bellevue, Washington 98006

Attention: Leasing Administration

 

and a copy of any notice given pursuant to Section 25 to:

 

T-Mobile USA, Inc.

12920 S.E. 38th Street

Bellevue, Washington 98006

Attention: Legal Department

 

with a copy to:

 

Jones Day

222 East 41st Street

New York, New York 10017

Attention: Robert A. Profusek

 

If to T-Mobile Parent to:

 

T-Mobile USA, Inc.

12920 S.E. 38th Street

Bellevue, Washington 98006

Attention: Leasing Administration

 

and a copy of any notice given pursuant to Section 25 to:

 

T-Mobile USA, Inc.

12920 S.E. 38th Street

Bellevue, Washington 98006

Attention: Legal Department

 

with a copy to:

 

Jones Day

222 East 41st Street

New York, New York 10017

Attention: Robert A. Profusek

 

If to Tower Operator, to:

 

 

  

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Crown Castle International Corp.

1220 Augusta Drive, Suite 500

Houston, Texas 77057

Attention: CFO (Jay Brown)

Attention: General Counsel (E. Blake Hawk)

 

and a copy of any notice given pursuant to Section 25 to:

 

Crown Castle International Corp.

1220 Augusta Drive, Suite 500

Houston, Texas 77057

Attention: Legal Department

 

(f)        Amendment; Modifications.  This Agreement may be amended, modified or supplemented only by written agreement of the Parties.

 

(g)       Time of the Essence. Time is of the essence in this Agreement, and whenever a date or time is set forth in this Agreement, the same has entered into and formed a part of the consideration for this Agreement.

 

(h)       Specific Performance. Each Party recognizes and agrees that in the event of any failure or refusal to perform the obligations required by this Agreement, remedies at Law would be inadequate and that, subject to the terms of this Agreement, in addition to such other remedies as may be available to it at Law or in equity, either party may seek injunctive relief and to enforce its rights by an action for specific performance to the fullest extent permitted by applicable Law.  Each Party hereby waives any requirement for security or the posting of any bond or other surety in connection with any temporary or permanent award of injunctive, mandatory or other equitable relief.  Subject to Section 34(j) of this Agreement, nothing contained in this Agreement shall be construed as prohibiting any Party from pursuing any other remedies available to it pursuant to the provisions of this Agreement or applicable Law for such breach or threatened breach, including the recovery of damages.

 

(i)        Jurisdiction and Consent to Service. Each of the Parties (i) agrees that any suit, action or proceeding arising out of or relating to this Agreement shall be brought solely in the state courts of the State of New York sitting in the County of New York or federal courts of the State of New York for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, (ii) consents to the exclusive jurisdiction of each such court in any suit, action or proceeding relating to or arising out of this Agreement, (iii) waives any objection that it may have to the laying of venue in any such suit, action or proceeding in any such court, and (iv) agrees that service of any court paper may be made in such manner as may be provided under applicable Laws or court rules governing service of process.

 

 

  

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(j)        WAIVER OF JURY TRIAL.  EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO A JURY TRIAL IN ANY COURT ACTION ARISING AMONG ANY OF THE PARTIES HEREUNDER, WHETHER UNDER OR RELATING TO THIS AGREEMENT, AND WHETHER MADE BY CLAIM, COUNTER CLAIM, THIRD PARTY CLAIM OR OTHERWISE.

 

(k)       Limitation of Liability.  Notwithstanding anything in this Agreement to the contrary, neither Party shall have any liability under this Agreement, for: (y) any punitive or exemplary damages, or (z) any special, consequential, incidental or indirect damages, including lost profits, lost data, lost revenues and loss of business opportunity, whether or not the other Party was aware or should have been aware of the possibility of these damages.  It is understood and agreed that T-Mobile Collocator or an Affiliate of T-Mobile Collocator will be entering into a particular Site Lease Agreement and that each such Affiliate executing the applicable Site Lease Agreement shall be liable with respect to such Site Lease Agreement (for the avoidance of doubt, Section 35 will remain unaffected and in full force and effect).  All communications and invoices relating to a Site Lease Agreement must be directed to the party signing that Site Lease Agreement.

 

(l)        Severability.   If any term or provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nonetheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

(m)      Conversion of MPL Sites. Notwithstanding anything to the contrary in this Agreement, all “Sites” with respect to which the “Tower Operator” under the Master Prepaid Lease exercises its “Purchase Option” under the Master Prepaid Lease shall automatically become subject to and Sites under and governed by this Agreement as of the applicable “Purchase Option Closing Date” specified in the Master Prepaid Lease. The Parties shall enter into appropriate documentation to evidence the same.

SECTION 35.     T-Mobile Parent Guarantee.

(a)       T-Mobile Parent unconditionally guarantees to the Tower Operator Indemnitees the full and timely payment of all obligations of T-Mobile Collocator under Section 4 of this Agreement and any corresponding obligations of T-Mobile Collocator or any Affiliate of T-Mobile Collocator under any Site Lease Agreement (collectively, the “T-Mobile Collocator Obligations”).  T-Mobile Parent agrees that if T-Mobile Collocator (all references to T-Mobile Collocator in this Section 35 shall be deemed to include any Affiliate of T-Mobile Collocator that is a party to any Site Lease Agreement) defaults at any time during the Term of this Agreement or the term of any Site Lease Agreement in the performance of any of the T-Mobile Collocator Obligations, T-Mobile Parent shall faithfully perform and fulfill all T-Mobile Collocator Obligations and shall pay to the applicable beneficiary all reasonable attorneys’ fees, court costs and other expenses, costs and disbursements incurred by the applicable beneficiary on account of any default by T-Mobile Collocator and on account of the enforcement of this guaranty.

 

 

  

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(b)       The foregoing guaranty obligation of T-Mobile Parent shall be enforceable by any Tower Operator Indemnitee in an action against T-Mobile Parent without the necessity of any suit, action or proceeding by the applicable beneficiary of any kind or nature whatsoever against T-Mobile Collocator, without the necessity of any notice to T-Mobile Parent of T-Mobile Collocator’s default or breach under this Agreement or any Site Lease Agreement, and without the necessity of any other notice or demand to T-Mobile Parent to which T-Mobile Parent might otherwise be entitled, all of which notices T-Mobile Parent hereby expressly waives. T-Mobile Parent hereby agrees that the validity of this guaranty and the obligations of T-Mobile Parent hereunder shall not be terminated, affected, diminished or impaired by reason of the assertion or the failure to assert by any Tower Operator Indemnitee against T-Mobile Collocator any of the rights or remedies reserved to such Tower Operator Indemnitee pursuant to the provisions of this Agreement, any Site Lease Agreement or any other remedy or right which such Tower Operator Indemnitee may have at law or in equity or otherwise.

 

(c)       T-Mobile Parent covenants and agrees that this guaranty is an absolute, unconditional, irrevocable and continuing guaranty. The liability of T-Mobile Parent hereunder shall not be affected, modified or diminished by reason of any assignment, renewal, modification, extension or termination of this Agreement or any Site Lease Agreement or any modification or waiver of or change in any of the covenants and terms of this Agreement or any Site Lease Agreement by agreement of a Tower Operator Indemnitee and T-Mobile Collocator, or by any unilateral action of either a Tower Operator Indemnitee or T-Mobile Collocator, or by an extension of time that may be granted by a Tower Operator Indemnitee to T-Mobile Collocator or any indulgence of any kind granted to T-Mobile Collocator, or any dealings or transactions occurring between a Tower Operator Indemnitee and T-Mobile Collocator, including any adjustment, compromise, settlement, accord and satisfaction or release, or any Bankruptcy, insolvency, reorganization or other arrangements affecting T-Mobile Collocator. T-Mobile Parent does hereby expressly waive any suretyship defenses it might otherwise have.

 

 

  

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(d)       All of the Tower Operator Indemnitees’ rights and remedies under this guaranty are intended to be distinct, separate and cumulative and no such right and remedy herein is intended to be to the exclusion of or a waiver of any other.  T-Mobile Parent hereby waives presentment demand for performance, notice of nonperformance, protest notice of protest, notice of dishonor and notice of acceptance. T-Mobile Parent further waives any right to require that an action be brought against T-Mobile Collocator or any other Person or to require that resort be had by a beneficiary to any security held by such beneficiary.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and sealed by their duly authorized representatives, all effective as of the day and year first written above.

	 	T-MOBILE COLLOCATOR:	 
	 	 	 
	 	[l] 	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name: 	 	 
	 	Title:	 	 

 

	 	T-MOBILE PARENT:	 
	 	 	 
	 	T-MOBILE USA, INC.	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 

 

	 	TOWER OPERATOR:	 
	 	 	 
	 	[l]	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 

 

	 	[l]	 
	 	 	 	 
	 	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 

 

 

 

 

64ex10-2.htm

 

CONFIDENTIAL TREATMENT REQUESTED. INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND MARKED WITH "[***]". AN UNREDACTED VERSION OF THE DOCUMENT HAS ALSO BEEN FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION AS REQUIRED BY RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

Exhibit 10.2

 

Commercial Agreement

This Commercial Agreement (this “Agreement”), dated as of the Effective Date, is between: Microsoft Corporation, a Washington corporation (“Microsoft”); Barnes and Noble, Inc., a Delaware corporation (“B&N”); and the company to be formed by B&N and described in the Investment Agreement as “NewCo,” and identified on the signature page of this Agreement (“NewCo”).

Background and Purpose

A.            The parties desire to jointly invest in and expand and enhance the e-book and related e-reading business currently conducted by B&N. In furtherance thereof, B&N is transferring its Nook® devices, online bookstore, e-content publishing and College businesses to NewCo, and Microsoft is making an investment in NewCo, as described in the Investment Agreement.

B.            In addition, the parties desire to enhance and expand NewCo’s business through, among other things, NewCo’s development and promotion of a global e-reading content experience with Microsoft’s Windows OS, Windows Phone and other products, as more particularly described in this Agreement.

Agreement

Section 1.             Definitions; Overview of Responsibilities; Related Agreements; Governance Processes; Effectiveness

1.1           Definitions.  The terms defined in Exhibit A and in the body of this Agreement will have their respective meanings when used in this Agreement with initial letters capitalized.

1.2           B&N Responsibilities.  B&N will:

(a)           subject to the receipt of any applicable third party consents, which B&N will use commercially reasonable efforts to obtain, transfer or cause its Subsidiaries to transfer to NewCo all of its rights, title and interests in the E-Reading Assets and Content;

(b)           if B&N is unable to obtain any required third party consent for the transfer of any Content offered in the B&N Store immediately prior to transfer to NewCo, use commercially reasonable efforts to implement arrangements to allow NewCo to make such Content available to customers of the NewCo Store; and

(c)           upon NewCo’s reasonable request and at NewCo’s expense, use good faith efforts to draw upon B&N’s existing relationships with publishers to assist NewCo in entering into agreements with such publishers to procure Reading Content for the NewCo Store; provided that this obligation shall terminate upon B&N ceasing to directly or indirectly own a majority of the equity interests of NewCo.

1.3           NewCo Responsibilities. NewCo will:

(a)           if B&N is unable to obtain any required third party consent for the transfer of Content offered in the B&N Store immediately prior to transfer to NewCo, use commercially reasonable efforts to make such Content available to customers of the NewCo Store;

 

  

  

  

 

(b)           be solely responsible for acquiring and pricing all Content distributed in the NewCo Windows App and the NewCo Phone App and for paying all costs associated with providing that Content;

(c)           develop and distribute a NewCo Windows App that delivers a [***] experience on Windows OS pursuant to Section 2;

(d)           enable users of Microsoft Products and Services to interact with Content from the NewCo Store pursuant to Section 3;

(e)           use the Microsoft Commerce Platform and Microsoft ID System for commerce transactions in the NewCo Apps and Microsoft Products and Services with the NewCo Store pursuant to Section 4;

(f)           expand the geographies and catalog of the NewCo Store pursuant to Section 5;

(g)           develop and distribute the NewCo Phone App pursuant to Section 6; and

(h)           share with Microsoft the Net Revenue pursuant to Section 7.1;

provided that nothing in the foregoing clauses (c)-(h) shall expand or modify in any way the rights or obligations of any party under this Agreement.

1.4           Microsoft Responsibilities.  Microsoft will:

(a)           assist NewCo’s development and certification of the NewCo Windows App pursuant to Sections 2.1.3 and 2.2;

(b)           make available the Windows Store for distribution of the NewCo Windows App by NewCo pursuant to Section 2.5.1;

(c)           [***];

(d)           explore enabling users of Microsoft Products and Services to interact with Content from the NewCo Store as provided for in Section 3;

(e)           enable use of the Microsoft Commerce Platform and Microsoft ID System for commerce transactions in the NewCo Apps and the Microsoft Products and Services with the NewCo Store pursuant to Section 4;

(f)           assist NewCo in obtaining certification of the NewCo Phone App pursuant to Section 6.1.3; and

(g)           share Net Revenue with NewCo, make Advances to NewCo, and make operational cost payments to NewCo, in each case, as provided for in Section 7;

 

  

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provided that nothing in the foregoing clauses (a)-(g) shall expand or modify in any way the rights or obligations of any party under this Agreement.

1.5           NewCo is the E-Reading Business for B&N.  During the Term, B&N will not compete, will ensure that none of its Subsidiaries compete, will exercise such rights as it has to prevent Affiliates under its control from competing, and following becoming aware that an Affiliate that is not under NewCo’s control is doing so, will use its good faith efforts to encourage such Affiliate not to compete, with NewCo in the business of selling or making available Reading Content or similar e-reading content, e-reader software or e-reader devices.  For the avoidance of doubt, sales by B&N of Reading Content and NewCo e-reader devices pursuant to a referral arrangement with NewCo shall not constitute competition with NewCo.

1.6           Related Agreements.  Concurrently with the execution of this Agreement:

(a)           B&N and Microsoft are entering into the Investment Agreement;

(b)           B&N and Microsoft are entering into the Patent Agreement; and

(c)           B&N and Microsoft are entering into the NDA.

1.7           Governance Processes.  The parties will use the Governance Processes in Exhibit B for managing their relationship under this Agreement and will use it for escalation and resolution of issues and disputes that may arise during the performance of this Agreement before pursuing arbitration or litigation in court, except as provided in Section 3.3 of Exhibit B.

1.8           Effectiveness.  This Agreement will be effective only as of the date that all of the following conditions are met (“Effective Date”):

(a)   this Agreement has been signed by authorized representatives of each party;

(b)   the Closing and the NewCo Formation Transactions (as defined in the Investment Agreement) have occurred; and

(c)   the Dismissal has occurred.

Microsoft and B&N are signing this Agreement upon signature of the Investment Agreement. NewCo will sign this Agreement upon Closing.

Section 2.             Development and Distribution of NewCo Windows App

2.1           Development

2.1.1       NewCo Windows App.  NewCo will develop and obtain certification of the NewCo Windows App (including subsequent versions and updates) in accordance with this Agreement and the App Developer Agreement. NewCo will complete development, obtain certification and commercially release the first version of the NewCo Windows App for Windows 8 (both x86 and ARM) in the Windows Store with a target Launch Date of [***]. This first version of the NewCo Windows App will provide at least the following functionality: [***] and a Windows metro-style user interface. Subsequent versions will also include support for all Content types in the NewCo Store and all Consumption Experiences. The NewCo Windows App will be provided at no cost to end users.

 

  

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2.1.2       Updates.  NewCo will develop updates to the NewCo Windows App, including updates for new versions of Windows OS, beginning on the Launch Date and through the end of the Term. NewCo will distribute each updated or new version of the NewCo Windows App through the Windows Store after it has been certified pursuant to the App Developer Agreement.

2.1.3       Certification.  NewCo will submit each version of the NewCo Windows App to Microsoft for certification and distribution through the Windows Store. Each submission will be treated in accordance with the then-current App Developer Agreement. NewCo will make good faith efforts to address any issues raised during the certification process in a timely fashion, and Microsoft will use its good faith efforts to assist NewCo in completing the certification process as promptly as practicable, to ensure that the NewCo Windows App is available according to the agreed schedule. [***].­

2.2           Technical Assistance.  Microsoft will provide such assistance and support, and devote such Microsoft or Microsoft Affiliate employee resources, as may be reasonably requested by NewCo to enable NewCo to develop and launch the first NewCo Windows App in accordance with the specifications and timeline described in Section 2.1.1.

2.3           End User Support.  As between Microsoft and NewCo, NewCo will be responsible for providing, and will use commercially reasonable efforts to provide, end user support for the NewCo Windows App, the NewCo Store, and NewCo’s Content distribution services.

2.4           [***] Requirement

2.4.1      [***]

2.4.2      [***]

2.4.3      Windows Features and Functionality. NewCo will make good faith commercially reasonable efforts to enhance the NewCo Windows App to exploit features and functionality available through Windows and its extended Microsoft ecosystem.

2.5           Discovery and Distribution

2.5.1       Windows Store. Microsoft will make the Windows Store available for distribution of the NewCo Windows App by NewCo. From the Launch Date through the end of the Term, NewCo will distribute the NewCo Windows App (as certified) through the Windows Store pursuant to and in accordance with the App Developer Agreement and Windows Store Terms of Use at no cost to the customer. [***]

 

 

  

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2.5.2      [***]

2.5.3      [***]

 

2.6           Microsoft Reader.  If Microsoft creates a reader, Microsoft may include an interface to the NewCo Store in that reader and may surface in that reader all Content purchased by customers from the NewCo Store.

2.7           [***]

2.8           NewCo Study.  [***] For the avoidance of doubt, none of the other requirements of this Agreement (including the [***] requirements set forth in Sections 2.4 and 6.3 and the revenue share requirements set forth in Section 7) will apply to any NewCo Study Application.

Section 3.             Microsoft Products and Services

3.1           Enabling Microsoft Products and Services.  The parties will in good faith explore the scenarios described in this Section 3, subject to the Microsoft product and service strategy. Upon Microsoft’s request and reasonable advance notice (in any event, not less than 3 months’ advance notice), NewCo will use good faith efforts to enable Microsoft Products and Services to be used with the NewCo Store and distribution system in the following scenarios, the delivery and nature of which will be subject to the Microsoft product and service strategy:

(a)           [***]

(b)           [***]

(c)           [***]

 

(d)           [***]

(e)           [***]

(f)            [***]

(g)           [***]

(h)           [***]

3.2           NewCo Store APIs.  NewCo will provide reasonable advance notice to Microsoft of any substantive changes to the NewCo APIs, protocols and formats referenced in Sections 3.1(a), (b) and (c) above (“NewCo APIs”).

 

 

  

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3.3           Branding. Microsoft will not white-label (which for the avoidance of doubt includes rebranding or presenting as Microsoft’s) the NewCo Store or obscure NewCo’s branding or the fact the NewCo Store is the NewCo Store, including in Microsoft Products and Services.

Section 4.              Microsoft Commerce Platform, User IDs, and Consumption of Content

4.1           Microsoft Commerce Platform.  NewCo will, subject to Section 5 and compliance with applicable law, use the Microsoft Commerce Platform for commerce transactions as follows:

4.1.1       NewCo Windows App.  NewCo will use the Microsoft Commerce Platform as the primary and default mechanism to facilitate payment by end users for Reading Content in the NewCo Windows App, except that end users will be able to choose to use a different commerce mechanism in exceptional cases, as determined by NewCo in good faith, that include NewCo or B&N gift card use (which the Microsoft Commerce Platform cannot support), NewCo B2B purchase transactions and other transactions if the end user so requests. NewCo will ensure that the NewCo Windows App will provide for in-app purchasing, will not link out of the NewCo Windows App to complete purchases of Content and will have in all material respects the same or better purchase experience as purchasing in a browser on a Windows Device. Commerce transactions in the NewCo Windows App will be subject to the terms of the App Developer Agreement [***].

4.1.2       Browsers on a Windows Device. NewCo will make the Microsoft Commerce Platform an available option for processing payments by end users who have IDs in the Microsoft ID System for Reading Content purchased from the NewCo Store in a browser on a Windows Device.

4.1.3       Microsoft Products and Services. Purchases of Content using Microsoft Products and Services will use the Microsoft Commerce Platform.

4.1.4       NewCo Phone App. NewCo will use the WP Marketplace as the in-application commerce transaction platform, when available, for commerce transactions in the NewCo Phone App, including payments and fees associated with Content acquisition and subscriptions (if available). NewCo will ensure that the NewCo Phone App will provide for in-app purchasing and will not link out of the NewCo Phone App to complete purchases of Content. Commerce transactions in the NewCo Phone App will be subject to the terms of the Application Provider Agreement [***].

4.1.5       Payments to Publishers. NewCo may choose to either:

(i)          pay publishers outside the Microsoft Commerce Platform; or

   

(ii)        use the Microsoft Commerce Platform to facilitate payments to publishers that are associated with Reading Content acquisition, subscription, upgrades and collection of taxes for transactions in the NewCo Windows App and, at NewCo’s option, in a browser on a Windows Device, to the extent allowed by law where NewCo has complied with the requirements of the Microsoft Commerce Platforms Terms with respect to such payments to such publishers.

 

 

  

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If Microsoft does not have sufficient relationships with or information from such publishers, it will process all pay-outs with respect to Content acquisitions from such publishers to NewCo. Also, the Microsoft Commerce Platform will not be able to facilitate payments to publishers for end user purchases that are not processed by the Microsoft Commerce Platform, except, upon satisfaction of the conditions contemplated by the Microsoft Commerce Platform Terms, for payments to publishers for purchases by the Existing User Base that are not processed by the Microsoft Commerce Platform. “Existing User Base” means U.S. customers of NewCo as of the Effective Date.

 4.2          Microsoft ID System.  NewCo will use the Microsoft ID System as follows:

 

4.2.1       General.  NewCo will make good faith efforts to enable a user experience that will make the Microsoft ID System the primary and default mechanism by which users of Windows Devices log into the NewCo Store via the NewCo Apps.  NewCo will make good faith efforts to provide the Microsoft ID System as an option for such users to log into the NewCo Store via a browser on a Windows Device. (NewCo will use the Microsoft ID System for end user purchases of Content using Microsoft Products and Services and the NewCo Phone App as provided in Sections 3 and 6 respectively). NewCo will not require users of the NewCo Windows App or a browser on a Windows Device to use a NewCo identification. NewCo will enable use of the Microsoft ID System by end users on NewCo devices and software clients for other platforms to access Reading Content purchased by such end users, and any annotations thereto.

4.2.2       Microsoft Commerce Platform.  NewCo will use the Microsoft ID System for all end user purchases transacted in the Microsoft Commerce Platform.

4.2.3      Other IDs.  Nothing in this Agreement requires NewCo to restrict end users from creating or using NewCo identifications or prevents NewCo from requiring use of its identifications or submission of payment information outside the NewCo Windows App, browsers on a Windows Device, the NewCo Phone App, and Microsoft Products and Services.

4.2.4       Future Development.  NewCo and Microsoft will work jointly and in good faith to enable the following:

(a)        subject to applicable privacy laws and any limitations contained in the terms of publisher and digital content agreements, creating an associated NewCo account for users logging into the NewCo Store using an ID on the Microsoft ID System by providing the following Microsoft ID System information with respect to such users: email address, first and last name, physical address and any other Microsoft ID System information necessary in connection with engaging in the activities referred to below with respect to such users (each if available to Microsoft as part of its Microsoft ID System) solely for use in (i) fulfilling purchases or consumption by end users of Reading Content from the NewCo Store, (ii) making and reflecting disbursements to publishers for sales of their Reading Content in the NewCo Store, and (iii) providing customer support to end users or publishers in relation to such purchases or sales. Microsoft will provide such Microsoft ID System information in a manner consistent with Microsoft’s generally applicable policies, for third-party applications for Windows, related to end user notice and consent to sharing such Microsoft ID System information;

 

  

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(b)        subject to applicable privacy laws, an association between NewCo accounts used to log into the NewCo Store in accordance with this Section 4.2 through the NewCo Windows App and an ID on the Microsoft ID System; and

(c)         subject to applicable privacy laws, NewCo prompting users visiting the NewCo Store to provide additional personal information and consent to the use of such users’ information in accordance with the NewCo privacy policy (whether for completing end user purchases or other purposes), and NewCo may make providing such information a condition to the purchase of Content from the NewCo Store; provided, however, that NewCo will only ask for such information that it believes is reasonable to request.

 

For the avoidance of doubt, data collected by NewCo from end users will not be considered data provided or transferred by Microsoft to NewCo for purposes of this Agreement (including Section 4.2.4(c)).

4.3           Microsoft Support.  Microsoft will provide good faith support for NewCo’s activities described in Sections 4.1 and 4.2 through making the Microsoft Commerce Platform available in all material respects to NewCo on the baseline terms and conditions specified in Exhibit E (“Microsoft Commerce Platform Terms”). The parties will negotiate in good faith and enter into further agreement and details to expound and further detail the rights and obligations of the parties in a manner consistent with the Microsoft Commerce Platform Terms in the Microsoft Commerce Platform Agreement (the “Commerce Platform Agreement”) no later than June 1, 2012, which terms will be based upon standard terms required of merchants under applicable law and Network Rules and will be consistent with Exhibit E.  The Commerce Platform Agreement shall at a minimum reflect Exhibit E and otherwise shall not be inconsistent with the provisions of this Agreement.

Section 5.             Geo Expansion

5.1           Publishing Services Platform.  NewCo will use good faith efforts to make the Publishing Services Platform available in the Geos in which developers can submit applications to the Windows Store as of the Effective Date (currently[***]) in compliance with applicable laws (including applicable tax laws) in accordance with the following schedule:

 

 

  

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(a)           in [***] by [***];

(b)           [***], as selected by NewCo, of such Geos by [***];

(c)           a total of [***], as selected by NewCo, of such Geos by [***]; and

(d)           a total of [***], as selected by NewCo, of such Geos by [***].

The local languages in which the Publishing Services Platform is to be made available in each of such Geos is set forth in the attached Exhibit C.

The “Publish Condition” means making localized versions of the Publishing Services Platform available in [***] of the current [***] Geos in which developers can submit applications to the Windows Store as of the Effective Date.

5.2           Localization of NewCo Windows App.  NewCo will use good faith efforts to localize the NewCo Windows App into the Windows Core Languages (currently [***]) on the following schedule:

(a)           in [***], as selected by NewCo, of the current Windows Core Languages used in the Initial Commercial Geos by [***];

 

(b)           in a total of [***], as selected by NewCo, of the current Windows Core Languages by [***]; and

(c)           in a total of [***], as selected by NewCo, of the current Windows Core Languages by [***].

The “App Localization Condition” means making localized versions of the NewCo Windows App for [***] of the current [***] Windows Core Languages commercially available in the Windows Store.

5.3           Consumption of Content.  Microsoft will use good faith efforts to enable the Microsoft Commerce Platform to transact purchases of Reading Content (including remitting publisher sales revenue and collection of applicable taxes as provided in Section 4) in all Geos in which the Microsoft Commerce Platform is able to transact (currently [***]), subject to compliance with applicable laws. NewCo will use good faith efforts to enable the purchase and consumption of free and fee-based Reading Content in the Geos in which the Microsoft Commerce Platform is able to transact (currently [***]), subject to compliance with applicable laws and to NewCo being able to use the Microsoft Commerce Platform fully (for collecting payments, reconciling funds and remittance of taxes to relevant authorities), to transact in such Geos, on the following schedule:

 

 

  

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(a)   in [***] by [***];

(b)   [***], as selected by NewCo, of such Geos by [***];

(c)   a total of [***], as selected by NewCo, of such Geos by [***]; and

 

(d)   a total of [***], as selected by NewCo, of such Geos by [***].

The “Consumption Condition” means enabling purchase and consumption of fee-based Reading Content in at least [***] of the Priority Geos and at least [***] of the total Geos in which the Microsoft Commerce Platform is able to transact (currently [***]).

5.4           Commercial Content.  NewCo will use good faith efforts to enable the purchase and consumption of market-specific commercial Reading Content from the NewCo Store by entering into Material Commercial Content Agreements for each of the Priority Geos in accordance with the following schedule:

(a)           in [***] by [***];

(b)           any [***], as selected by NewCo, of the following [***] Geos by [***] (such [***], the “Initial Commercial Geos”); and

(c)           a total of [***], as selected by NewCo, of the Priority Geos by [***];

(d)           a total of [***], as selected by NewCo, of the Priority Geos by [***].

The “Core Geo Commercial Content Condition” means that NewCo has entered into Material Commercial Content Agreements for each of the Initial Commercial Geos, and the “Core Geo Trade Book Condition” means having Material Trade Book Agreements in the Initial Commercial Geos.

 

5.5           Free Content.  NewCo will use good faith efforts to make free Reading Content available in the NewCo Store in each Geo agreed on by NewCo and Microsoft.

5.6           General. Except as specified in this Section 5, the sequencing of the Geo expansion will be determined by NewCo, taking into account all relevant factors, including the expected degree of difficulty, complexity, costs, benefits, manpower needs and scope of legal and tax requirements relating thereto. NewCo will consult with Microsoft with respect to such sequencing. In any Geo in which there are multiple official or commonly used languages, NewCo will localize the NewCo Windows App and the Publishing Services Platform and provide Content in the languages specified in the schedule attached as Exhibit C.

Section 6.             Development and Distribution of NewCo Phone App

6.1           Development

 

  

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6.1.1       NewCo Phone App.  NewCo will develop the NewCo Phone App. NewCo will use commercially reasonable efforts to complete development, obtain certification and make the NewCo Phone App commercially available in the WP Marketplace in accordance with this Agreement and the Application Provider Agreement within [***]. If NewCo determines that it is economically attractive to support the purchase and/or consumption of Reading Content, NewCo will use good faith efforts to complete development, obtain certification and make localized versions of the NewCo Phone App in the same languages as the NewCo Windows App commercially available in the WP Marketplace. The NewCo Phone App will be provided at no cost to Windows Phone end users.

6.1.2       Updates.  Following the Launch Date through the end of the Term, NewCo will be responsible for developing and releasing updates to the NewCo Phone App, including updates for successor versions of the initial version of the Windows Phone Software. Such updates will be distributed in accordance with the then-current Application Provider Agreement.

6.1.3      Certification.  NewCo will submit each version of the NewCo Phone App to Microsoft for certification and distribution through the WP Marketplace. Each submission will be treated in accordance with the Application Provider Agreement. NewCo will make good faith efforts to address any issues raised during certification in a timely fashion, and Microsoft will use its good faith efforts to assist NewCo in completing the certification process as promptly as practicable, to ensure that each version of the NewCo Phone App is available on the agreed schedule. [***].

6.2           Distribution.  NewCo hereby grants to Microsoft and its Affiliates a non-exclusive, non-transferable, worldwide license to make available the NewCo Phone App to phone manufacturers for distribution on Windows Phones. Such phone manufacturers will have the right to distribute the NewCo Phone App at any time after the NewCo Windows Phone App becomes commercially available in the WP Marketplace for use on Windows Phones. NewCo will provide to Microsoft such information, instructions and code as is reasonably necessary for Microsoft and its Affiliates to permit phone manufacturers to distribute the NewCo Phone App on Windows Phones and for end users to use the NewCo Windows App on such phones. As between Microsoft and NewCo, NewCo will be responsible for providing, and will use commercially reasonable efforts to provide, support to phone manufacturers for the NewCo Phone App.

 

6.3           [***] Requirement.  Beginning with the release of the first major update to the NewCo Phone App and continuing through the end of the Term, NewCo will use commercially reasonable efforts to deliver a [***] experience on the Windows Phone. This means that [***].

6.4           End User Support.  As between Microsoft and NewCo, NewCo will be responsible for providing, and will use commercially reasonable efforts to provide, end user support for the NewCo Phone App and its Content distribution services.

Section 7.              Financial Terms

7.1           Revenue Share.  Beginning on the Launch Date and through the end of the Term, NewCo and Microsoft will [***] Net Revenue.  [***].  The sharing described in this Section 7.1 is implemented in Section 7.2.

 

 

  

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7.2           Advances; Revenue Share Service Fees.

7.2.1      Quarterly Payments.  Microsoft will make advance payments to NewCo of up to $[***] as follows, subject to deferral as provided for in Sections 7.2.3 and 7.5 (each, an “Advance”):

(a)        $60,000,000 for the first Contract Year (“Year 1”), payable in equal quarterly installments at the beginning of each quarter of Year 1;

(b)        $60,000,000 for the second Contract Year (“Year 2”), payable in equal quarterly installments at the beginning of each quarter of Year 2;

 

(c)        $60,000,000 for the third Contract Year (“Year 3”), payable in equal quarterly installments at the beginning of each quarter of Year 3; and

 

(d)        for each of the [***] and [***] Contract Years, an amount equal to the lesser of (i) $[***] and (ii) an amount equal to [***]  the sum of (A) [***] of [***] Net Revenue and (B) [***] of [***] Net Revenue (such sum of (A) and (B), “NewCo’s Base Share”), in each case, for the prior Contract Year, which amount will be payable in equal quarterly installments at the beginning of each quarter of the applicable Contract Year.

7.2.2       Revenue Share Service Fees.  For each Contract Year, Microsoft will be entitled to receive from NewCo a Revenue Share Service Fee (as defined below), which shall be paid as follows:

(a)         Microsoft Commerce Platform.  Microsoft will remit to NewCo all Net Revenue from transactions using the Microsoft Commerce Platform during each Contract Year, less the amount of the Revenue Share Service Fee for such Contract Year that has not as of the date of such remittance been paid by NewCo to Microsoft by prior deductions from remittances under this Section 7.2.2(a) or by payments under Section 7.2.2(b).  Microsoft shall remit to NewCo all amounts described in clause (b) of the definition of Net Revenue that are payable by NewCo to third parties.

 

(b)        Non-Microsoft Commerce Platform.  NewCo will remit all Net Revenue to Microsoft on a quarterly basis during each Contract Year to the extent that the Revenue Share Service Fee payable by NewCo to Microsoft has not as of the date of such remittance been paid by NewCo to Microsoft by prior deductions from remittances under Section 7.2.2(a) or by payments under this Section 7.2.2(b).

(c)         No Carry Over.  Notwithstanding anything to the contrary in this Agreement, Microsoft shall not be entitled under this Section 7 to receive for any Contract Year any amount in excess of its Revenue Share Service Fee for such Contract Year.  If the Revenue Share Service Fee for a Contract Year is less than the amount of the Advances for such Contract Year, then such shortfall for the applicable Contract Year will be nonrefundable and ineligible for recoupment in following Contract Years.

 

 

  

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(d)        “Revenue Share Service Fee” means, for each Contract Year, an amount equal to:

(i)         (A)         [***] of [***] Net Revenue for such Contract Year, plus (B) [***] of [***] Net Revenue for such Contract Year, plus

(ii)         the lesser of:

     (A)        NewCo’s Base Share for such Contract Year, and

 

     (B)         the Advances received by NewCo for such Contract Year.

7.2.3       Deferral of Advances.  Microsoft may defer payment of [***] of the amount of any and/or all Advances that have not yet been required to have been made under Section 7.2.1 if:

 

                                (a)         the Core Geo Trade Book Condition is not satisfied before [***]; or

 

(b)         NewCo fails to (i) cure a material noncompliance with the [***] requirements for the NewCo Windows App set forth in Section 2.4 or (ii) address material defects or critical security vulnerabilities, in each of (i) or (ii), within four months after written notice from Microsoft, with such deferral in the case of this clause (b) to start upon the expiration of such notice period.

If NewCo has met the Core Geo Trade Book Condition but has otherwise not met the Core Geo Commercial Content Condition before [***], then [***] of any and/or all Advances that have not yet been required to have been made will be subject to deferral. Microsoft will pay the balance of any amounts deferred under this Section 7.2.3 when the failure giving rise to the deferral is cured.

7.3           Reporting and Reconciliation. Within 30 days after the Effective Date, NewCo and Microsoft will agree on a quarterly reporting mechanism to exchange information about the gross revenue portion of Net Revenue that each party transacts during the prior quarter, the information necessary to calculate Net Revenue for such period, as well as any remittances it made to the other during such period. Within 30 days after the Effective Date, NewCo and Microsoft will also agree on a quarterly true-up process to validate (a) the total Net Revenue for such period, (b) the cumulative Revenue Share Service Fee paid to Microsoft to date for the relevant Contract Year, and (c) any further remittances by NewCo to Microsoft needed to pay unpaid Revenue Share Service Fees payable for the relevant Contract Year in accordance with Section 7.2. NewCo and Microsoft will agree on a mechanism for submitting any such remittances required as a result of this true-up process. Any disputes related to Section 7.2.2 or this Section 7.3 (to the extent related thereto) will be resolved through Formal Escalation and, if that does not resolve the dispute, Expedited Arbitration.

 

 

  

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7.4           Quarterly Operational Cost Payments. Microsoft will pay to NewCo $25,000,000 each year for the first five years of the Term, for a total amount of up to $125,000,000, for purposes of assisting NewCo in acquiring local Reading Content and technology development in the performance of NewCo’s obligations under this Agreement. Microsoft will make such payments in quarterly installments of $6,250,000, with the first such installment becoming payable on the Effective Date, subject to deferral pursuant to Section 7.5.

7.5           Payment Deferral for Default in Royalty Obligations under Patent Agreement

7.5.1       Undisputed Patent Royalties.  If the obligor under the Patent Agreement (“Patent Obligor”) fails to pay any Patent Royalty when due under the Patent Agreement (i.e. within [***] days after Microsoft’s invoice in accordance with the Patent Agreement), then, unless such payment is the subject of a dispute under Section 7.5.2, Microsoft may defer payment of any and all amounts otherwise due or becoming due to NewCo under this Agreement during the period beginning upon the payment due date (i.e. [***] days after invoice) and will give NewCo or the Patent Obligor written notice of such default, and the Patent Obligor has an additional [***] days to cure such default before it becomes a NewCo Material Default, provided that the amount subject to deferral will not exceed the amount that the Patent Obligor has failed to pay under the Patent Agreement.

7.5.2       Disputed Patent Royalties.  If the Patent Obligor or Microsoft disputes any royalty obligation under the Patent Agreement, then the parties will promptly submit the dispute to Expedited Arbitration under the Patent Agreement. To the extent such royalty obligation is upheld in a final ruling in that Expedited Arbitration, then the Patent Obligor will have [***] days after such ruling to cure such default before it becomes a NewCo Material Default. Microsoft may defer any Microsoft payment obligations coming due during the period beginning on the date of a ruling in the Expedited Arbitration that the Patent Obligor has not met its royalty obligations in the Patent Agreement, provided that the amount subject to deferral will not exceed the amount that the Patent Obligor has failed to pay under the Patent Agreement.

7.6           Taxes

7.6.1       Responsibility for Own Taxes.  Each party and its respective Affiliates are responsible for all taxes (including net income, gross receipts, franchise and property taxes and taxes arising from transactions between such party and its customers) imposed on such party or its Affiliates under applicable laws and arising as a result of or in connection with this Agreement or the transactions contemplated by this Agreement.

 

7.6.2       Payments Exclusive of Taxes.  Except as set forth in Section 7.6.3 and Section 7.6.4, amounts payable under this Agreement by one party to the other party shall not be adjusted for any taxes, duties, levies, fees, excises or tariffs imposed on the payor or the recipient.

7.6.3      Transaction Taxes.  If any sales tax, VAT or other transaction taxes are required by law to be collected by the recipient with respect to any payment under this Agreement, the payor will remit such sales tax, VAT or other transaction taxes to the recipient; provided, that the recipient will furnish the payor with a valid invoice that meets the requirements imposed by the appropriate taxation authority.

 

 

  

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7.6.4       Withholding for Taxes on Payments.  If any taxes are required by law to be withheld by the payor with respect to any payment under this Agreement, the payor will deduct and withhold such taxes from the amount owed to the recipient of the payment and remit such withheld taxes to the appropriate taxing authority; provided, that the payor will furnish evidence of such remitted taxes to the recipient as is sufficient to enable the recipient to seek any refunds or credits available to it.

7.6.5       Cooperation to Minimize Taxes.  The parties will reasonably cooperate (and will require each of their Affiliates to cooperate) with one another (a) in the filing of any tax returns required to be filed with respect to any taxes collected under Section 7.6.3 or withheld under Section 7.6.4 or the contesting of any such tax, (b) to minimize or reduce any taxes collected under Section 7.6.3 or withheld under Section 7.6.4 and (c) in the event of an audit to make available to the other parties all information, records or documents relating to any audits or assessments attributable to or resulting from the taxes collected under Section 7.6.3 or withheld under Section 7.6.4 to the extent not protected by law or otherwise subject to privilege.

7.7           Records.  During the Term and for a period of at least seven years thereafter, each of the parties will keep and maintain, and will require each of its Affiliates to keep and maintain, complete and accurate books and records related to its compliance with all terms and conditions of this Agreement (collectively, “Audit Information”). Audit Information will be the Confidential Information of the party being audited (“Audited Party”).

7.8           Audit.  Upon not less than 30 days’ advance written notice from a party desiring to conduct an audit (“Auditing Party”) of another party’s Audit Information, the Audited Party will make such Audit Information available for audit by an independent certified public accounting firm (together with independent technical personnel if and as reasonably required for such accountant to perform the audit) designated by the Auditing Party and approved by the Audited Party, which approval will not be unreasonably withheld. Unless otherwise agreed by the Auditing Party and the Audited Party, any such audit will be conducted during regular business hours, at the Audited Party’s principal place of business, not more frequently than once in any period of 12 consecutive months and in a manner that does not unreasonably interfere with the Audited Party’s normal course of business. Notwithstanding the foregoing, the Auditing Party may conduct more than one audit within a 12 month period if, in the Auditing Party’s good faith judgment, the Auditing Party has a bona fide basis for any failure of the Audited Party to comply with its obligations under this Agreement. If any audit reveals an overpayment by the Audited Party, then the Audited Party will receive a credit, in the amount of such overpayment, that will be applied only against future amounts owing by the Audited Party under this Agreement. If any audit reveals an underpayment by the Audited Party, then the Audited Party will pay the amount of the underpayment within 45 days after the date of the auditor’s report. Further, if any audit reveals an underpayment of more than 5% of the total amount subject to the audit, then Audited Party will reimburse the Auditing Party within 30 days after the Auditing Party’s request, for all costs and expenses reasonably incurred by the Auditing Party to conduct the audit.

 

 

  

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7.9           Other Costs and Expenses. Except as otherwise expressly provided in this Section 7, each party will bear all costs it incurs in the performance of its obligations under this Agreement.

Section 8.             Data.

8.1           Rights to Use Data.  Each party has the right to use data in its systems related to its performance under this Agreement, except (a) to the extent prohibited by law or by the conditions under which the relevant Content was acquired, and (b) that Microsoft will not use, or transfer to a third party to use, data in the Microsoft Commerce Platform due to the reliance of a NewCo App and the NewCo Store on that system or transmitted via the NewCo APIs  (i.e. data that identifies an individual as a customer of the NewCo Store, identifies a publisher and the publication of its Content in the NewCo Store, and identifies a purchase transaction in the NewCo Store as associated with a customer or publisher) in a way that [***]. The foregoing exception (b) does not apply in the case of data related to publication to, purchase of or Consumption Experiences for Content in the NewCo Store by users of Microsoft Products and Services to the extent such data is used directly or indirectly consistent with the intent of the user; provided, however, that Microsoft will not create and present to customers functionality that enables [***].  [***] the previous sentence is not intended to permit Microsoft to use information relating to the purchase of Reading Content by a user, including the fact that Reading Content was purchased from NewCo by such user, to sell Reading Content.

8.2           Privacy and Data Protection Laws.   Each party will comply with privacy and data protection laws applicable to its performance of its obligations under this Agreement. If and to the extent a party believes its performance may not comply with such laws, the parties will engage in good faith efforts to discover and implement a mechanism to meet those obligations in accordance with such laws. NewCo shall not be required to transfer to or share with Microsoft, or permit Microsoft to use, NewCo customer or publisher data in a manner that violates the applicable NewCo or B&N privacy policies, and acknowledges that the transfers described in this Section 8.2 will not do so, as long as the consents described in Sections 8.2.2 and 8.2.3 are obtained.  Subject to the first sentence of this Section 8.2, NewCo will provide Microsoft with customer and publisher data in the following situations:

8.2.1       Microsoft Commerce Platform.  To the extent permitted by applicable law, NewCo will transfer customer data and publisher data to Microsoft necessary to effect the following types of transactions by end users through the Microsoft Commerce Platform:  (a) purchases of Content from the NewCo Store and (b) publishing of Reading Content to the NewCo Store (including making payments to the end user that published such Reading Content), provided that Microsoft shall only be permitted to use such customer and publisher data for the purpose of effecting such transactions and, if the relevant end user expressly consents in advance to use by Microsoft for such purpose, effecting other transactions requested by such end user using the Microsoft Commerce Platform.  NewCo will not modify its privacy policy to impair or prohibit such transfer or use, except as required by applicable law.  For the avoidance of doubt, data collected by Microsoft from end users will not be considered data provided or transferred by NewCo to Microsoft for purposes of this Agreement.

 

 

  

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8.2.2       NewCo APIs.  To the extent permitted by applicable law, NewCo will transfer customer data and publisher data to Microsoft through use of NewCo APIs by Microsoft Products and Services in accordance with Section 3.1 in order to enable purchases by end users of Content in the NewCo Store, Consumption Experiences for Content from the NewCo Store and users to publish Reading Content to the NewCo Store, provided that Microsoft obtains express advance user consent to NewCo providing such data for such purposes through user consent to the terms and conditions of use of the relevant Microsoft Products and Services which will utilize the NewCo APIs for those purposes and, [***]. Microsoft will ultimately elect how to obtain consents satisfying the requirements of this Section 8.2.2, but it is expected that Microsoft will obtain this consent by including it in the license terms or privacy policy applicable to the relevant version of the Microsoft Product and Service and, in any case, [***].

8.2.3       Microsoft Service Maintenance Toolkit.  NewCo will include in its privacy policy a provision substantially similar to the provision entitled “Sales, Mergers, and Acquisitions” in the B&N privacy policy dated January 10, 2012.  Within 10 days of the date the Microsoft Service Maintenance Toolkit or Deposit Materials, as applicable, are required (taking into account any applicable periods for delivery and, if applicable, the completion of any Expedited Arbitration) to be delivered to Microsoft in accordance with Sections 10.3, 10.4, 11.5 or 11.6, as applicable, NewCo will (a) notify end users of, and (b) to the extent it believes in good faith that notwithstanding the provision in its privacy policy above, it is required by applicable law to obtain user consent (taking into account such analysis or other information relevant to such subject that Microsoft provides to NewCo), will request end users to consent to, the transfer to, and use by, Microsoft of the Customer Data and Publisher Data included therein in accordance with Section 10.2 and will require such required end user consent as a condition to using the NewCo Store or a NewCo App at any time following the date on which Microsoft becomes entitled to receive the Microsoft Maintenance Toolkit or Deposit Materials, as applicable.  If requested by Microsoft, NewCo will also, within the 10-day period identified in the previous sentence, assist Microsoft in providing such notice and obtaining any required end user consent to such transfer and use by sending an email to end users with respect to which Customer Data or Publisher Data is included in the Microsoft Service Maintenance Toolkit or Deposit Materials, as applicable, informing them of the circumstances surrounding the transfer of such user’s data and offering them the opportunity to provide any such required consent.  NewCo will structure such consent request as an “opt-out” (i.e., end users are considered to have consented unless they object to the request within a period of not more than 30 days (as determined by NewCo), unless NewCo believes in good faith that a longer period is required to comply with applicable law (taking into account such analysis or other information relevant to such subject that Microsoft provides to NewCo) or commercial custom in the applicable jurisdiction) for all data and in all jurisdictions for which NewCo believes in good faith such structure complies with applicable law, taking into account such analysis or other information relevant to such subject that Microsoft provides to NewCo.

 

Section 9.             Confidentiality

 

  

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9.1           NDA.  The parties agree that the NDA will apply to any Confidential Information exchanged by the parties in connection with this Agreement.

9.2           Terms of Agreement.  The mere existence of this Agreement and the identification of the parties are not confidential. However, the specific terms and conditions of this Agreement (including the financial terms set forth in Section 7, the amount of any payments by any party to another party under this Agreement, and schedules for releases of products or services) are confidential and will not be disclosed by any party except: (a) as may be required by applicable law or stock exchange rules; (b) as may be required by judicial or governmental order or rule (provided that for both (a) and (b), the disclosing party either gives the other party reasonable notice to enable it to seek a protective order or uses reasonable measures to seek an appropriate protective order itself); (c) in confidence to a party’s accountants, tax advisors, auditors and/or attorneys for purposes of seeking professional services; and (d) by written consent of the disclosing party and only under terms of confidentiality. Further, the parties agree that this Agreement contains competitively sensitive information the public disclosure of which would be competitively harmful. B&N or NewCo, as the case may be, will notify Microsoft before filing this Agreement as an exhibit to any registration statement or periodic report filed with the SEC or other regulatory agency, and NewCo or B&N, as the case may be, will make a request for confidential treatment of such competitively sensitive information in connection with any such filing if such a request is consistent with applicable regulatory agency regulations and guidance. The request will seek a confidentiality term that is at least as long as the term of this Agreement. B&N or NewCo, as the case may be, will consult with Microsoft with respect to any such confidential treatment request.

9.3           Publicity.  The parties agree to the prompt publication of the joint press release agreed upon by the parties. Except as expressly permitted in the NDA, Section 9.2 or this Section 9.3, no party (or any of their Affiliates) may issue any press release or make any similar public announcement or public statement, regarding this Agreement without the prior written approval and consent of the other parties. Except as expressly permitted in the NDA, Section 9.2 or this Section 9.3, any and all press releases or similar public announcements or public statements relating to this Agreement will be approved in advance of the release, in writing, by B&N, NewCo and Microsoft and once released, a party may repeat information so released without further consent of the other parties. Additionally, in connection with joint press releases and communications, the parties’ respective public relations and communications staff will consult to develop (and update, when appropriate) standard messaging points that may be used to describe the parties’ relationships under this Agreement.

Section 10.           Intellectual Property

10.1        Defense Against Third Party Infringement Claims.  NewCo will use commercially reasonable efforts to defend the NewCo Apps against claims by any third party that any of the NewCo Apps infringes or misappropriates any Intellectual Property Right. Without limitation of the foregoing, NewCo will use such efforts to have any injunction or restraining order obtained by a third party which prohibits or restricts the distribution or use of any of the NewCo Apps dissolved or vacated, subject in each case to the right of NewCo to make modifications to the NewCo Apps to address such claims. Microsoft will provide such assistance in connection with NewCo’s defense of such claims as NewCo may reasonably request; provided, however, that NewCo pays or reimburses the reasonable and necessary out-of-pocket expenses of Microsoft as approved in advance by NewCo.

 

 

  

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10.2        Transition License. NewCo hereby grants to Microsoft and its Subsidiaries a non-exclusive, irrevocable, non-transferrable, royalty-free, worldwide license to:

(a)           use, produce, reproduce, modify, offer, display, license, distribute and otherwise make available the NewCo Apps (excluding trademarks) solely for the purpose of continuing to offer and provide them to end users in order to offer and provide them services equivalent to the services provided or required to be provided to them under the NewCo SLA;

(b)           use, produce, reproduce and modify the NewCo App Materials solely for the purpose of exercising the rights set forth in (a) above;

(c)           use, produce, reproduce, modify, offer, display, license, distribute and otherwise make available the website for the NewCo Store (excluding trademarks) solely for the purpose of offering and providing end users services equivalent to the services provided or required to be provided to them under the NewCo SLA;

(d)           use, reproduce and modify the NewCo Store Materials solely for the purpose of exercising the rights set forth in (c) above; and

(e)           use, produce and reproduce any Customer Data and Publisher Data as needed by Microsoft to provide a consistent level of services and experiences to customers in relation to the Content they have acquired or provided, all of which data will be subject to the provisions set forth in Section 8.

The license granted in this Section 10.2 is a present grant of license, effective in accordance with its terms immediately upon the Effective Date. However, Microsoft covenants that neither it nor any of its Subsidiaries will exercise any of the rights granted pursuant to the license granted in this Section 10.2 unless and until:

	
  

	
(i)

	
a Liquidation Event, and then only after receipt by Microsoft of the Microsoft Service Maintenance Toolkit or Deposit Materials;

 

 

  

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(ii)

	
a Bankruptcy Event, and then only (A) as to the NewCo App Materials and the NewCo Store Materials, during that portion of the Transition Period (if any) after receipt by Microsoft of the Microsoft Service Maintenance Toolkit or Deposit Materials, and (B) as to the Customer Data and Publisher Data, after receipt by Microsoft of such materials, all of which data will be subject to the provisions set forth in Section 8; or

 

	
  

	
(iii)

	
a Non-Renewal, a termination by Microsoft for a NewCo Material Default, or a termination by NewCo for a Microsoft Material Default, and then only (A) as to the NewCo App Materials and the NewCo Store Materials, during that portion of the Transition Period (if any) after receipt by Microsoft of the Microsoft Service Maintenance Toolkit or Deposit Materials, and (B) as to the Customer Data and Publisher Data, after receipt by Microsoft of such materials, all of which data will be subject to the provisions set forth in Section 8.

10.3        Liquidation Event Without Termination.  In the case of a Liquidation Event without termination of this Agreement, then, upon Microsoft’s request, NewCo will promptly provide the Microsoft Service Maintenance Toolkit to Microsoft for use in accordance with the license granted in Section 10.2.  If NewCo fails to provide the Microsoft Service Maintenance Toolkit within 7 days after Microsoft’s request, then, unless NewCo in good faith gives by written notice of a bona fide dispute about whether a Liquidation Event has occurred (in which case, the provisions of Section 11.6(e) will apply), upon Microsoft’s request, the Escrow Agent will forthwith release the Deposit Materials to Microsoft for use in accordance with the license granted in Section 10.2.

10.4        Bankruptcy Event Without Termination.  If in the case of a Bankruptcy Event without termination of this Agreement, NewCo fails to cure any material noncompliance with the NewCo SLA within 7 days after written notice from Microsoft, then Section 11.6(e) will apply to the release of the Deposit Materials to Microsoft for use in accordance with the license granted in Section 10.2. Upon delivery of the Deposit Materials to Microsoft pursuant to this Section 10.4, then NewCo’s obligation to provide the NewCo SLA will continue only until the earlier of (a) the last day of the Transition Period or (b) 12 months after the date of Microsoft’s taking possession of the Microsoft Service Maintenance Toolkit or Deposit Materials, as the case may be.

10.5        Licenses.  Except for the licenses granted in Sections 2.5.2, 6.2, and 10.2, no licenses are granted under this Agreement, whether by implication, estoppel, statute or otherwise. The parties hereby disclaim the grant of any and all express or implied licenses under this Agreement.

10.6        Reservation of Rights.  All rights not expressly granted under this Agreement or other written agreements between the parties are reserved. Except for the licenses granted under Sections 2.5.2, 6.2 and 10.2, NewCo and its Affiliates retain all right, title and interest in and to all Intellectual Property Rights of NewCo and its Affiliates. Microsoft and its Affiliates retain all right, title and interest in and to all Intellectual Property Rights of Microsoft and its Affiliates. Except as otherwise provided in Section 1.2(a), B&N and its Affiliates retain all right, title and interest in and to all Intellectual Property Rights of B&N and its Affiliates. Without limitation of the foregoing, each party reserves any and all Intellectual Property Rights to which it may be entitled under applicable law by virtue of its development of any software, invention or other technology under this Agreement.

 

 

  

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10.7        Excluded Licenses.  Each party will ensure that deliverables provided to the other party (including the NewCo Apps, NewCo APIs and any code exchanged pursuant to the scenarios in Section 3) will not be governed by licenses that purport to provide immunity under the other party’s intellectual property if used or distributed by the other party (e.g., deliverables provided by a party in whole or in part will not be governed by any version of the GPL, LGPL or similar license).

Section 11.           Term and Termination

11.1        Term.  The term of this Agreement will commence on the Effective Date and continue until the date that is five years after the earlier of December 31, 2012 or the Launch Date unless extended as provided for in Section 11.2 or terminated in accordance with Section 11.3 or 11.4 (“Term”).  No party may terminate this Agreement for convenience.  If prior to the Effective Date the Investment Agreement is terminated in accordance with its terms, this Agreement shall automatically be canceled in its entirety, shall never become effective, and shall thereupon become null and void.

11.2        Extension.  At least one year before the expiration of the Term, NewCo and Microsoft will meet to discuss whether they desire to extend the Term. If both parties desire to extend the Term, they will discuss in good faith the terms upon which each of the parties would be willing to extend the Term. If either NewCo or Microsoft determines at any point during the one year period before the expiration of the Term not to extend the Term, it will promptly notify the other parties. Unless extended upon mutual agreement of the parties, the Agreement will terminate upon the expiration of the Term. Termination of this Agreement will end the Term.

11.3        Termination by Microsoft.  In the case of a Liquidation Event or a Bankruptcy Event, Microsoft may terminate this Agreement by giving NewCo written notice of termination. In the case of a NewCo Material Default, Microsoft may terminate this Agreement by giving NewCo written notice of termination describing such NewCo Material Default in reasonable detail, provided that such termination will not be effective if such NewCo Material Default is caused by Microsoft failing to comply with its obligations under this Agreement.

11.4        Termination by NewCo.  In the case of a Microsoft Material Default, NewCo may terminate this Agreement by giving Microsoft written notice of termination describing such Microsoft Material Default in reasonable detail, provided that such termination will not be effective if such Microsoft Material Default is caused by NewCo failing to comply with its obligations under this Agreement.

11.5        Effect of Termination.  Upon termination or expiration of this Agreement, the following will apply:

11.5.1       Liquidation Event.  If Microsoft terminates this Agreement under Section 11.3 for a Liquidation Event, then, upon Microsoft’s request, NewCo will promptly provide Microsoft Service Maintenance Toolkit to Microsoft for use in accordance with the license granted in Section 10.2. If NewCo fails to provide the Microsoft Service Maintenance Toolkit within 7 days after Microsoft’s request, then, unless NewCo in good faith gives written notice of a bona fide dispute with respect to whether a Liquidation Event has occurred (in which case, the provisions of Section 11.6(e) will apply), upon Microsoft’s request, the Escrow Agent will release the Deposit Materials to Microsoft for its use in accordance with the license granted in Section 10.2.

 

  

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11.5.2       Bankruptcy Event.  If in the case of a Bankruptcy Event, NewCo materially fails to provide at least the level of service specified in the NewCo SLA within 7 days after written notice from Microsoft, then Section 11.6(e) will apply to the release of the Deposit Materials to Microsoft for use in accordance with the license granted in Section 10.2. Upon delivery of the Deposit Materials to Microsoft pursuant to this Section 11.5.2, then NewCo’s obligation to provide the NewCo SLA will continue only until the earlier of (a) the last day of the Transition Period or (b) 12 months after the date of Microsoft’s taking possession of the Microsoft Service Maintenance Toolkit or Deposit Materials, as the case may be.

 

11.5.3       NewCo Material Default, Microsoft Material Default or Non-Renewal.  If Microsoft terminates this Agreement under Section 11.3 for a NewCo Material Default, if NewCo terminates this Agreement under Section 11.4 for a Microsoft Material Default or if a Non-Renewal occurs then:

   (a)         upon NewCo’s request, Microsoft will continue to enable use of the Microsoft Commerce Platform, use of the Microsoft ID System, and other services as specified in the Microsoft SLA throughout the Transition Period;

   (b)         upon Microsoft’s request, NewCo will continue to provide the NewCo Store, the NewCo Apps, Content, and other services as specified in the NewCo SLA throughout the Transition Period; and

   (c)         if NewCo fails to cure any material noncompliance with the NewCo SLA within 7 days after written notice from Microsoft, then Microsoft may institute an Expedited Arbitration seeking to require NewCo to provide the Microsoft Service Maintenance Toolkit for use in accordance with the license in Section 10.2, and Section 11.6(e) will apply to the release of the Deposit Materials to Microsoft for use in accordance with the license in Section 10.2.

 

 

  

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Upon delivery of the Microsoft Service Maintenance Toolkit or Deposit Materials to Microsoft pursuant to clause (c) of this Section 11.5.3, then NewCo’s obligation to provide the NewCo SLA will continue only until the earlier of (i) the last day of the Transition Period or (ii) 12 months after the date of Microsoft’s taking possession of the Microsoft Service Maintenance Toolkit or Deposit Materials, as the case may be.

11.6        Escrow Agreement.  Within 60 days after the Effective Date, NewCo, B&N and Microsoft will enter into an escrow agreement (“Escrow Agreement”) with an independent escrow agent (“Escrow Agent”) designated by Microsoft and approved by NewCo, which approval will not be unreasonably withheld. The parties agree that [***] shall be the Escrow Agent unless and until a successor or alternative thereto is appointed with the written consent of each of NewCo and Microsoft. The Escrow Agreement will provide for the following:

(a)           within 30 days after execution of the Escrow Agreement, NewCo will deposit with the Escrow Agent versions of the Deposit Materials as of the most current date reasonably practicable prior to the date of such deposit;

(b)           quarterly throughout the Term, NewCo will deposit with the Escrow Agent copies of NewCo’s own backup copies of the Source Code, data files containing the Customer Data and Publisher Data, and the other items referred to in the definition of Deposit Materials as of the most current date reasonably practicable prior to the date of such deposit, which copies may contain Source Code and data beyond those referred to in the definition of Deposit Materials;

(c)           each deposit of Deposit Materials will be subject to verification (which includes examination of the Deposit Materials but does not include examination of records of NewCo), at Microsoft’s option, by the Escrow Agent or an independent third party designated by Microsoft and approved by NewCo (such approval not to be unreasonably withheld) who will only be authorized to disclose to Microsoft whether the Deposit Materials are deposited in accordance with this Agreement;

 

(d)           following commencement of an Expedited Arbitration in which release of the Deposit Materials is sought, following a Liquidation Event or as of the latest date reasonably practicable prior to a release in accordance with Section 11.6(e)(i), NewCo will promptly undertake to update and then filter Source Code and data included in backup copies of such items deposited with the Escrow Agent to eliminate or redact items that are not referred to in the definition of Deposit Materials;

(e)           the Escrow Agent will release the Deposit Materials to Microsoft only if and when (i) Microsoft and NewCo each direct the Escrow Agent in writing to release them based on satisfaction of the conditions for release, (ii) the release is ordered, or the conditions for release are determined to exist, in an Expedited Arbitration, or (iii) the conditions for release specified in Section 10.3 have been satisfied;

(f)           NewCo will continue to have the opportunity to cure, at any time up to a finding of material breach of the NewCo SLA in an Expedited Arbitration the asserted material breach of the NewCo SLA and, in the event of such cure (as agreed by the parties or so determined in the Expedited Arbitration), the Escrow Agent will not release the Deposit Materials to Microsoft and Microsoft and its Subsidiaries will not exercise their rights under the license granted under Section 10.2;

 

 

  

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(g)           the Deposit Materials will be subject to the license set forth in Section 10.2;

(h)           Microsoft and NewCo will share equally the costs of the escrow; and

(i)           terms otherwise consistent with Sections 10.2, 10.3, 10.4, 10.5 and this Section 11.6.

11.7           Survival. Only Sections 1.1 (and all other definitions), 2.5.2 (as to distribution rights for NewCo Windows Apps released before the effective date of expiration or termination), 2.6, 3.3, 6.2 (as to distribution rights for NewCo Phone Apps released before the effective date of expiration or termination), 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.9, 8, 9, 10.1, 10.2, 10.5, 10.6, 10.7, 11.5, 11.6, 11.7, 12, 13 and 14; Exhibit A; and Exhibit B Section 4 of this Agreement will survive any expiration or termination of this Agreement; provided that the restrictions in clause (b) in Section 8.1 (and associated limitations thereto in Section 8.1) will survive until the date that is two years after the earlier of (i) the last day of the Transition Period or (ii) the day that NewCo materially and permanently stops providing the level of service specified in the NewCo SLA; provided, further, that Section 1.7 shall survive (i) insofar as it relates to Sections 1-3 of Exhibit B until the last day of the Transition Period and (ii) insofar as it relates to Section 4 of Exhibit B indefinitely. In addition, the reporting and true-up mechanism agreed to pursuant to Section 7.3 will survive any termination or expiration to allow for final reconciliation and reporting of amounts accrued or owing under this Agreement. However, any expiration or termination of this Agreement will be without prejudice to any right or remedy of any party arising out of any breach of this Agreement, including recovery of any amounts owing under this Agreement.

 

Section 12.           Representations and Warranties

12.1        By Microsoft.  Microsoft represents and warrants to NewCo and B&N that (a) it has the right, power and authority to enter into and perform its obligations under this Agreement, and (b) its representative whose signature is affixed to this Agreement has full capacity and authority to bind it to the terms of this Agreement.

12.2        By B&N and NewCo.  NewCo and B&N jointly and severally represent and warrant to Microsoft that (a) each of NewCo and B&N has the right, power and authority to enter into and perform its obligations under this Agreement, and (b) each of its representatives whose signature is affixed to this Agreement has full capacity and authority to bind it to the terms of this Agreement.

12.3        Disclaimer.  EXCEPT AS EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT OR A RELATED AGREEMENT, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY PROVIDES ALL SOFTWARE, DEVICES, TECHNOLOGY, SERVICES, CONTENT, DATA, INFORMATION AND OTHER MATERIALS UNDER THIS AGREEMENT “AS IS” AND WITH ALL FAULTS AND WITHOUT ANY WARRANTIES, REPRESENTATIONS AND CONDITIONS OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTIES OF OR RELATED TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, ACCURACY OR COMPLETENESS OF RESPONSES, RESULTS, AND LACK OF NEGLIGENCE.

 

 

  

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Section 13.           Limitations of Liability

13.1        Disclaimer of Consequential Damages.  EXCEPT FOR ANY CLAIMS ARISING FROM BREACH OF SECTION 8, NEITHER NEWCO, B&N NOR MICROSOFT NOR ANY OF THEIR RESPECTIVE AFFILIATES WILL BE LIABLE FOR ANY LOSS OF PROFIT, BUSINESS OR GOODWILL, OR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL COSTS, DAMAGES OR EXPENSES WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS AGREEMENT OR THE BREACH THEREOF, REGARDLESS OF THE LEGAL THEORY UPON WHICH ANY CLAIM FOR SUCH DAMAGES IS BASED, EVEN IN THE EVENT OF FAULT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, BREACH OF CONTRACT OR BREACH OF WARRANTY OF ANY PARTY. THE FOREGOING EXCLUSION WILL APPLY EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE AND EVEN IF ANY AVAILABLE REMEDY FAILS ITS ESSENTIAL PURPOSE.

13.2        Limitations on Amounts of Liability. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS TO AMOUNTS PAYABLE BY EACH PARTY TO THE OTHER PURSUANT TO SECTION 7, THE TOTAL AGGREGATE LIABILITY OF EACH PARTY AND ITS AFFILIATES, INDIVIDUALLY AND COLLECTIVELY, TO THE OTHER PARTIES AND THEIR AFFILIATES, INDIVIDUALLY AND COLLECTIVELY, FOR ALL CLAIMS UNDER THIS AGREEMENT WILL BE LIMITED IN AMOUNT TO $[***].

13.3        Excused Performance.  No party will be liable, or considered to be in breach or default under this Agreement, on account of any delay, failure in performance, interruption of service, loss or damage resulting directly or indirectly from any Force Majeure; provided, that the party suffering the Force Majeure: (a) gives the other parties prompt written notice of the Force Majeure, the anticipated duration and consequences of the Force Majeure, and the action being taken to overcome, avoid and mitigate the consequences; and (b) takes commercially reasonable steps to overcome, avoid and mitigate the consequences.

 

13.4.       Material Breach of SLAs.  Notwithstanding any other provision of this Agreement to the contrary, but subject to the limitations set forth in Sections 13.1 and 13.2, in the event of a material breach of either the NewCo SLA or the Microsoft SLA, then, in addition to any other remedies specified herein, the parties agree that:

(a)           the non-breaching party will be entitled to seek damages or other remedies available in law or equity for such material breach; and

(b)           in the event of a material breach or a finding of a likelihood of success on a party’s claim of a material breach where a party is seeking preliminary injunctive relief, it would be appropriate for a court or arbitrator to issue an order (both preliminary and permanent), applicable on a worldwide basis, requiring the cure of such material breach and full performance of the NewCo SLA and/or the Microsoft SLA, as the case may be, because, inter alia, the parties agree that (i) it is highly likely that the non-breaching party will suffer irreparable harm from such material breach unless such material breach is immediately cured, (ii) the risk of irreparable harm to the non-breaching party from such material breach outweighs the potential harm to the breaching party of immediately requiring that it cure such material breach, and (iii) such immediate injunctive relief is in the public interest and particularly in the interest of affected customers.

 

 

  

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Section 14.           General

14.1        365(n).  All licenses and rights granted to Microsoft and its Affiliates under or pursuant to this Agreement are, and will otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. Microsoft and its Affiliates, as licensee of such rights under this Agreement, will retain and may fully exercise all its rights and elections under the U.S. Bankruptcy Code. In the event of the commencement of a bankruptcy proceeding by or against NewCo under the U.S. Bankruptcy Code, Microsoft and its Affiliates will be entitled to complete access to (or a compete duplicate of, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in Microsoft’s possession, will be promptly delivered to Microsoft.

14.2        Non-Exclusive; Independent Development.  Except as provided in Section 1.5, the rights and obligations of the parties under this Agreement are non-exclusive. Except as set forth in Section 1.5, nothing in this Agreement restricts a party’s right (a) to acquire, license, develop for itself, or have others develop for it, software, content or technology performing the same or similar functions as the software, content or technology owned or furnished by another party (“competing technology”), so long as it did so without violating this Agreement, or (b) to market, distribute or otherwise exploit such competing technology. Without limiting the foregoing, Microsoft and its Affiliates may develop alternate digital content consumption and authoring experiences on its own or with other companies and also has the unrestricted ability to work with other content and application providers, including to enable digital content experiences to end users. For clarity, nothing in this Section 14.2 changes the obligations or restrictions in Section 8.

 

14.3        Independent Parties.  The parties are independent contractors. This Agreement does not create, and should not be interpreted or construed as creating, any agency, partnership, joint venture, franchise, or employment relationship between the parties. No party has the authority to make any statements, representations or commitments of any kind or to take any action binding on another party.

14.4        Notices.  Except as otherwise agreed in writing by the parties, any notices given under this Agreement will be delivered either by messenger or overnight delivery service, or sent by facsimile with a confirmation sent via certified or registered mail, postage prepaid and return receipt requested, addressed to the intended recipient as set forth below or as otherwise specified by notice given in accordance with this Section 14.4. Notices will be deemed to have been given on the day when received by the party to whom the notice is given:

 

 

  

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To Microsoft:

 

	To NewCo:
	Microsoft Corporation	[NewCo] LLC
	One Microsoft Way	c/o Barnes & Noble, Inc.
	Redmond, Washington 98052-6399 	122 Fifth Avenue 
	 	New York, NY 10011
	Attn: 	Peter Klein 	 	 
	 	Chief Financial Officer	Attn: 	Eugene V. DeFelice 
	 	 	 	Vice President, General Counsel & Secretary
	 	 	 
	Facsimile No.:  (425) 706-7329	Facsimile No.:  (212) 463-5683
	 	 
	With a Copy to:	With a Copy to:
	 	 
	Simpson Thacher & Bartlett LLP	
Cravath, Swaine & Moore LLP

	425 Lexington Avenue 	
Worldwide Plaza 

	New York, NY 10017	825 Eighth Avenue 
	 	New York, NY 10019 
	Attn:      Alan M. Klein, Esq.	 
	 	Attn:	Scott A. Barshay, Esq. 
	 	 	 	Andrew R. Thompson, Esq.
	 	 
	Facsimile No.:  (212) 455-2502	Facsimile No.:  (212) 474-3700

 

 

  

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To B&N:

 

	 
	Barnes & Noble, Inc.	 
	122 Fifth Avenue	 
	New York, NY 10011	 
	 	 	 
	Attn:	Eugene V. DeFelice	 
	 	Vice President, General Counsel & Secretary	 
	 	 
	Facsimile No.:  (212) 463-5683	 
	 	 
	With a Copy to:	 
	 	 
	Cravath, Swaine & Moore LLP	 
	Worldwide Plaza	 
	825 Eighth Avenue	 
	New York, NY 10019	 
	 	 	 
	Attn:	Scott A. Barshay, Esq.	 
	 	Andrew R. Thompson, Esq.	 
	 	 
	Facsimile No.:  (212) 474-3700	 

 

14.5        Dispute Resolution; Jurisdiction; and Governing Law.  This Agreement and all disputes arising out of or related to this Agreement will be governed by the laws of the State of New York, without reference to conflict of laws principles. Any and all claims, lawsuits or disputes of any kind between the parties arising out of or relating to this Agreement will be resolved in federal or state courts in the State of New York within the Southern District of New York. Each party hereby waives any challenge to the jurisdiction or venue of such courts over such claims, lawsuits or disputes. The rest of this Section notwithstanding, if and when applicable, each party will use (a) the Formal Escalation set forth in Exhibit B before commencing any lawsuit against another party relating to this Agreement, except as otherwise set forth in Section 3.3 of Exhibit B, and (b) will use the Expedited Arbitration process only where expressly so provided herein or in Exhibit B. Nothing will limit the right of a party, however, to seek a temporary restraining order or other provisional remedy to preserve the status quo or to prevent irreparable harm. In the event that discovery or any other materials in connection with any Expedited Arbitration are subject to seal or confidentiality or protective order, each party will be entitled to designate up to two in-house attorneys who will be entitled to have access to such materials, subject to reasonable confidentiality provisions to prevent disclosure to party employees not entitled to such access, which confidentiality provisions will be enforceable against such in-house attorneys in such proceedings, including by sanctions for violation thereof; provided, however, such access would not extend to source code. The inclusion of the foregoing provision relating to access to confidential information by in-house counsel in the context of Expedited Arbitration but not in the context of any other claim, lawsuit or dispute of any kind arising out of or related to this Agreement shall not result in or be relied on as supporting any implication that similar access to confidential information by designated in-house counsel would or would not be appropriate in connection with any such other claim, lawsuit or dispute.

 

 

  

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14.6        Attorneys’ Fees. If a party employs attorneys to enforce any rights arising out of or relating to this Agreement, the prevailing party will be entitled to recover its reasonable attorneys’ fees, costs and other expenses, including the costs and fees incurred on appeal or in a bankruptcy or similar action.

14.7        Assignment. Neither NewCo nor B&N may assign this Agreement, or any rights or obligations hereunder, except with Microsoft’s express written consent or to an Affiliate in connection with an Initial Public Offering (as defined in the NewCo LLC Agreement) of NewCo or an Issuer or a “Qualified Distribution” in the NewCo LLC Agreement. Any attempted assignment in violation of this section will be void. Subject to the foregoing restriction on assignments by NewCo and B&N, this Agreement will be binding on, inure to the benefit of, and be enforceable by the parties and their respective successors and assigns.

 

14.8        Waivers. A party’s delay or failure to exercise any right or remedy will not result in a waiver of that or any other right or remedy. Failure by a party to enforce any provision of this Agreement will not be deemed a waiver of future enforcement of that provision.

14.9        Invalid Provisions. If any term of this Agreement or the application thereof is found by a court of competent jurisdiction to be in whole or in part invalid or unenforceable, then (a) the invalidity or unenforceability will not affect other terms or applications of this Agreement, (b) the remainder of this Agreement will continue in effect so long as the Agreement still expresses the intent of the parties, and (c) the parties will engage in good faith efforts to discover and implement a means of effectuating the intent of the parties in accordance with applicable laws.

14.10      Construction. As used in this Agreement, (i) the words “include” and “including” and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation,” (ii) unless the context otherwise requires, the word “or” shall be deemed to be an inclusive “or” and shall have the meaning equivalent to “and/or.”

14.11      Order of Precedence. In the event of any direct conflict between any terms and conditions of this Agreement and any terms and conditions of any Exhibit or other document referenced in this Agreement, the terms and conditions of this Agreement will prevail over those of any such Exhibit or other document, but solely to the extent of such conflict. [***] Further, the requirements of this Agreement are in addition to the requirements of any other document or agreement referenced in this Agreement, and such other documents and agreements will not be construed to abrogate, diminish or amend in any way any of the requirements of this Agreement (for example, if an action is permitted by such other document or agreement and either required or prohibited by this Agreement, then such action will be required or prohibited as set forth in this Agreement).

14.12      No Third Party Beneficiaries. This Agreement is for the benefit of the parties and their Affiliates only, and will be enforceable by the parties and their Affiliates only. No action may be commenced or prosecuted against a party by any third party claiming as a third-party beneficiary of this Agreement.

14.13      Counterparts and Facsimile. This Agreement may be executed on facsimile copies or in counterparts, each counterpart of which will be deemed an original and all of which together will constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. Notwithstanding the foregoing, if requested by a party, the other parties will deliver original executed copies of this Agreement to such requesting party as soon as practicable following execution thereof.

 

 

  

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14.14      Entire Agreement. This Agreement, together with the Related Agreements, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications regarding such subject matter, whether written or oral, including any prior letters of intent or term sheets, including the Settlement Discussion Agreement dated July 12, 2011. This Agreement may not be modified except by a written agreement dated subsequent to the date of this Agreement and signed by an authorized representative of the party against whom such modification is sought to be enforced.

 

14.15      Compliance with Laws. Each party will comply with applicable laws in its performance under this Agreement, including NewCo complying with the Digital Millennium Copyright Act (DMCA) safe harbor notice and takedown requirements. To the extent a party believes that performing an obligation under this Agreement may not comply with applicable laws, it will notify the other party, and the parties will engage in good faith efforts to discover and implement a mechanism to meet such obligation in accordance with applicable laws.

[Signature Page Follows]

 

  

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This Commercial Agreement is entered into by the parties as of the date first written above.

 

 

	
Barnes & Noble, Inc.

 

	
Signature:  /s/ Eugene V. DeFelice

 

	
Name:   Eugene V. DeFelice

 

	
Title: Vice President, General Counsel & Secretary

 

 

 

 

 

 

[Signature Page to the Commercial Agreement]

 

  

  

  

 

	
Microsoft Corporation

 

	
Signature: /s/ Steven A. Ballmer

 

	
Name: Steven A. Ballmer

 

	
Title: Chief Executive Officer

 

 

 

 

 

 

 

 

[Signature Page to the Commercial Agreement]

 

  

  

  

 

Exhibit A

Definitions

“Advance” has the meaning set forth in Section 7.2.1.

“Affiliate” means any legal entity that controls, is controlled by, or is under common control with a party, whether directly or indirectly (e.g., through successive tiers of control). For purposes of the foregoing and Section 1.5, an entity controls another entity if it beneficially owns more than 50% of the equity or voting interests of such entity or if it has the right to direct the management of the entity. An entity is an Affiliate for only so long as such control exists. However, notwithstanding the foregoing, for purposes of this Agreement, neither NewCo nor any entity that is directly or indirectly controlled by NewCo will be considered an “Affiliate” of B&N; and neither B&N nor any entity that directly or indirectly controls, is controlled by, or is under common control with B&N and that is not controlled by NewCo will be considered to be an “Affiliate” of NewCo for purposes of this Agreement.

“App Developer Agreement” means the applicable version of Microsoft’s then-current Windows Store Application Developer Agreement, the current pre-release version of which is currently located at http://msdn.microsoft.com/en-us/library/windows/apps/hh694058.aspx.

“App Localization Condition” has the meaning set forth in Section 5.2.

“Application Provider Agreement” means the applicable version of Microsoft’s then-current Windows Phone Marketplace Application Provider Agreement, the current version of which is currently located at http://create.msdn.com/downloads/?id=638?.

“Bankruptcy Event” means that NewCo:

(a)           suffers or permits the appointment of a trustee or receiver for all or a substantial portion of its assets, unless such appointment is vacated or dismissed within 60 days from the date of such appointment;

(b)           files a petition as a debtor under any provision of the U.S. Bankruptcy Code or any state or other law relating to insolvency;

(c)           has any such petition filed against it, unless such petition and all related proceedings are dismissed within 90 days of such filing;

(d)           is judged insolvent or bankrupt; or

(e)           makes a general assignment for the benefit of creditors, formally admits in writing its inability to pay its debts when due, or ceases generally to pay its debts when due.

“B&N Store” means the online bookstore for Content offered by B&N prior to transfer to NewCo at www.bn.com.

“Closing” has the meaning in the Investment Agreement.

 

 

  

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“Confidential Information” has the meaning in the NDA, as supplemented by Section 9.2.

“Consumption Condition” has the meaning set forth in Section 5.3.

“Consumption Experiences” means an end user experience that includes at least the capability to render, read, highlight, bookmark, designate “last page read” and annotate Content.

“Content” means Reading Content and other digital content.

“Contract Year” means a period of one year commencing on the Launch Date or an anniversary of the Launch Date, as applicable.

“Core Geo Commercial Content Condition” has the meaning set forth in Section 5.4.

“Core Geo Trade Book Condition” has the meaning set forth in Section 5.4.

“Critical Geos” means [***].

“Customer Data” means, as of a date, the following data, in each case to the extent such data exists and is in NewCo’s possession as of such date, for end users who have accessed the NewCo Store through a NewCo App or Microsoft Product or Service that uses NewCo APIs as contemplated by Section 3:  (a) purchase data (including data about the Content in the NewCo Store accessed by such end users such as ISBN, title and author); and (b) reading data (e.g., how much of a given Content item has been read, annotations to that Content, word look up and reviews), which data shall be provided in zip file or CSV format.

“Deposit Materials” means the NewCo App Materials, NewCo Store Materials, Customer Data and Publisher Data deposited with the Escrow Agent under Section 11.6 or the Escrow Agreement; provided, that any other Source Code or data included in backup copies of Source Code and data files deposited with the Escrow Agent and eliminated or redacted by NewCo as contemplated in Section 11.6(d) shall not be Deposit Materials.

“Dismissal” has the meaning set forth in Section 3.5 of the Patent Agreement.

“Effective Date” has the meaning set forth in Section 1.8.

“E-Reading Assets” means the assets of the following business as conducted by B&N prior to Closing: the Digital Business as defined in the Investment Agreement, which includes the Nook device business and the online bookstore business comprising the provision of Reading Content included in the B&N Store.

“Escrow Agreement” has the meaning set forth in Section 11.6.

“Existing Microsoft Products and Services” means any Microsoft Product or Service that has been commercially released or of which a beta has been released and which provides the relevant functionality as of (a) the date the NewCo SLA came into effect or (b) in the event of a Bankruptcy Event, the date the conditions for a Bankruptcy Event are met.

 

 

  

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“Expedited Arbitration” means: (a) for disputes about royalty payments under the Patent Agreement, the Royalty Arbitration Processes set forth in Exhibit C of the Patent Agreement; and (b) for other disputes under this Agreement for which Expedited Arbitration is required, the arbitration process set forth in Section 4 of Exhibit B of this Agreement.

“Escrow Agent” has the meaning set forth in Section 11.6.

“[***] Net Revenue” has the meaning set forth in Section 7.1.

“Force Majeure” means any: act of God; act or omission of any governmental, regulatory, civil or military authority; embargo or blockade; civil disturbance; war, invasion or other hostilities (whether war is declared or not); terrorism or terrorist threats; fire, flood, earthquake, severe storms, explosion or casualty; employee strike or other labor disturbance; or interruption or shortage of electric, gas or other utility service.

“Formal Escalation” has the meaning set forth in Section 3 of Exhibit B.

“Geo” means a country or other geographical area that NewCo and Microsoft listed as “Geos” in Exhibit C hereto and as otherwise mutually agreed in writing.

“Governance Process” means the process set forth in attached Exhibit B.

“ID” means an identification (currently known as a Windows Live ID) associated with a consumer in the Microsoft ID System.

“Initial Commercial Geos” has the meaning set forth in Section 5.4(a).

“Intellectual Property Rights” means any and all rights, whether registered or unregistered, existing from time to time under patent law, copyright law, moral rights law, trade secret law, trademark law, and any and all other similar proprietary rights, as well as any and all applications, renewals, extensions, divisionals, continuations, restorations and re-instatements thereof, now or hereafter in force and effect worldwide.

“Investment Agreement” means the Investment Agreement dated as of April 27, 2012 between B&N, Microsoft Investment Holdings, Inc. and Microsoft.

“law” means any applicable supranational, Federal, national, state, provincial or local statute, law (including common law), ordinance, rule or regulation of any governmental entity.

“Launch Date” means the date when the first version of the NewCo Windows App is made commercially available in the Windows Store in accordance with Section 2.1.1.

“Liquidation Event” means NewCo: (a) commences a liquidation of all or substantially all of its assets (other than through a Bankruptcy Event); (b) ceases to carry on all or substantially all of its digital device and content business; or (c) formally announces that it intends to liquidate all or substantially all of its assets or to wind down its business.

 

 

  

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“Material Commercial Content Agreements” means, for a given Geo, agreements with NewCo such that the NewCo Store includes at least [***].

“Material Trade Book Agreements” means, for a given Geo, agreements with NewCo such that the NewCo Store includes at least [***].

“Microsoft Commerce Platform” means a set of infrastructure, processes, and contractual relationships to enable the processing, management and handling of transactions by end-users as well as the billing, remittance and check-out services developed and offered by Microsoft as described in Section 4 and the Microsoft Commerce Platform Terms.

“Microsoft Commerce Platform Terms” has the meaning set forth in Section 4.3.

“Microsoft ID System” means Microsoft’s service (currently known as Windows Live ID) for consumers to sign into accounts, services and websites.

“Microsoft Material Default” means a failure by Microsoft to make any payment required under Section 7 when due, if (a) not cured or disputed by Microsoft within 45 days after written notice of such failure from NewCo or (b) the payment is disputed by Microsoft within 45 days after written notice of such failure from NewCo, but then only to the extent such payment obligation is upheld in a final ruling in an Expedited Arbitration and Microsoft subsequently fails to pay the upheld amount within 45 days after such ruling. For the avoidance of doubt, the expiration of this Agreement by its terms in accordance with Section 10.1 will not constitute a Microsoft Material Default.

“Microsoft Products and Services” means Microsoft products and services designed to interact with Content from the NewCo Store and annotations to Content. For the avoidance of doubt, Microsoft Products and Services do not include the Microsoft Commerce Platform or the NewCo Apps, regardless of whether they are distributed in connection with or as part of Microsoft Products and Services.

“Microsoft Service Maintenance Toolkit” means a copy that is complete and accurate (in all material respects as to (c) and (d)) of the following, in each case, as of the most current date reasonably practicable prior to the relevant date: (a) the NewCo App Materials; (b) the NewCo Store Materials; (c) the Customer Data; and (d) the Publisher Data.

“Microsoft SLA” means a commitment from Microsoft that it will, upon NewCo’s request and throughout the Transition Period:

(a)           continue enabling any then-existing level of use of the Microsoft Commerce Platform by NewCo and, subject to Microsoft’s strategy with respect to Microsoft Products and Services, any existing level of integration of the NewCo Store into Microsoft Products and Services, for purposes of end users (i) purchasing additional Reading Content in the NewCo Store and (ii) using the Publishing Services Platform to create accounts, upload Reading Content for purposes of distribution and sale of that Reading Content in the NewCo Store and receive payment from purchasers of that Reading Content; and

 

 

  

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(b)           continue enabling NewCo’s then-existing level of use of the Microsoft ID System with the NewCo Store and NewCo Apps.

During the Microsoft SLA period during the Term, such transactions will be subject to the revenue sharing provisions in Section 7. During the Microsoft SLA period after the Term, at NewCo’s election, either (i) the Microsoft SLA will be provided subject to the revenue sharing provisions in Section 7, or (ii) such transactions effected through the Microsoft Commerce Platform will be subject to the standard charge for the Microsoft Commerce Platform.

“NDA” means the Microsoft Corporation Non-Disclosure Agreement between Microsoft, NewCo, and B&N with an effective date of no later than the Effective Date.

“Net Revenue” means:

(a)           gross revenue from any sales, subscriptions or other acquisitions of Content purchased from NewCo and its Affiliates by customers using the NewCo Windows App, the NewCo Phone App or Microsoft Products and Services (which for the avoidance of doubt for purposes of this definition and Section 7 does not include browsers), irrespective of which party completes the transaction giving rise to such Net Revenue; less

(b)           the sum of (i) any licensing or other fees payable by NewCo or Microsoft for the specific acquisition of such Content (regardless of whether such fees are paid by the Microsoft Commerce Platform or by NewCo outside of the Microsoft Commerce Platform plus (ii) transaction fees including credit card fees (and other billing mechanism fees), chargebacks by credit card networks or financial institutions and foreign exchange transaction fees incurred by either NewCo, Microsoft or any Affiliate of NewCo or Microsoft for processing payments for such Content plus (iii) commissions and similar amounts (but not including any advertising or marketing expenses) payable to third parties in connection with sales or use by end users of such Content.

For the avoidance of doubt, gross revenue will be determined exclusive of any taxes and will not, for example, be (A) reduced by any withholding taxes withheld with respect to any amount payable to the billing party or any income taxes or other taxes imposed by law on the billing party arising in connection with any transaction entered into between the billing party and its customers or (B) increased by any sales tax, VAT or other transaction taxes that the billing party collects from its customers.

“NewCo APIs” has the meaning set forth in Section 3.2.

“NewCo Apps” means all versions of the NewCo Windows App and NewCo Phone App distributed by NewCo or its Affiliates, including updates thereto.

 

 

  

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“NewCo App Materials” means, as of a date, the Source Code and user interfaces (UIs) as of such date to all versions of the NewCo Windows App and NewCo Phone App (excluding trademarks) that have been made commercially available prior to such date, along with associated development and build tools, all in a format sufficient to enable a reasonably skilled programmer to utilize and read the NewCo App Materials.

“NewCo LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of NewCo entered into pursuant to the Investment Agreement.

“NewCo Material Default” means the occurrence of any of the following:

(a)           the Launch Date does not occur before [***], unless such failure is due to failure to obtain certification for distribution through the Windows Store due to Microsoft’s unreasonably withholding or delaying certification for the NewCo Windows App, in which event the [***] deadline will be extended by the period of Microsoft’s unreasonable withholding or delaying of such certification;

(b)           NewCo fails to satisfy the Core Geo Trade Book Condition before [***];

(c)           due to an action or failure to act by NewCo,

(i)          the NewCo Store is unavailable for purchasing or consuming (reading, annotating, etc.) Reading Content,

(ii)         the Publishing Services Platform is unavailable for publishing Reading Content, or

(iii)        the NewCo APIs are unavailable for publishing, purchasing, or consuming (reading, annotating, etc.) Reading Content where such unavailability materially negatively impacts the author or publisher’s publishing experience, the user’s purchasing experience, or the user’s consuming experience, respectively,

where such service or NewCo APIs, as applicable, had previously been commercially available, for an aggregate total number of hours representing [***], at any time following the Launch Date (but excluding unavailability due to Force Majeure) [***] on the condition that either:

 

 

 

  

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(A)        Microsoft is shipping [***] a beta or later release of Microsoft Products and Services that have the capability to publish to, purchase, or consume (including read or annotate) Reading Content from the NewCo Store using the NewCo APIs (where such tools are using the NewCo APIs that were unavailable); or

(B)        [***];

(d)           due to an action or failure to act by NewCo, the NewCo Windows App is unavailable in the Windows Store, for an aggregate total number of hours representing [***], at any time following the Launch Date (but excluding unavailability due to Force Majeure) [***]; or

(e)           Patent Obligor fails to pay any Patent Royalty when due (i.e. within [***] days after Microsoft’s invoice in accordance with the Patent Agreement) and

(i)          Patent Obligor has not cured or disputed (i.e., by giving Microsoft written notice thereof)  such default within [***] days after Microsoft provides NewCo or the Patent Obligor with written notice of such default; or

(ii)         Patent Obligor disputes such default by giving Microsoft written notice thereof within [***] days after Microsoft provides NewCo or the Patent Obligor written notice of such default, then only to the extent such default is upheld in a final ruling in Expedited Arbitration under the Patent Agreement and the Patent Obligor subsequently fails to pay the upheld amount within [***] days after such ruling; or

(iii)        in the event of a bankruptcy or similar proceeding involving Patent Obligor, the payment obligation is repudiated or otherwise voided by a court or some or all of the material rights and obligations of the parties are nullified for reasons other than as a result of non-performance by one of the parties.

In the case of any unavailability described in (c) or (d) above is due to an injunction or restraining order obtained by a third party on the basis of a claim of infringement of Intellectual Property Rights by the relevant NewCo software or service, then, (x) upon NewCo’s request, Microsoft will reasonably cooperate with NewCo in NewCo’s efforts to design around such claimed infringement, and (y) so long as NewCo is in good faith striving to have such order dissolved or vacated or to design around the claimed infringement, the effect of such unavailability will be to

  

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(A)          entitle Microsoft to defer any of its payment obligations or other obligations coming due during such unavailability, and

(B)          if such unavailability continues for a period of one year, such unavailability will constitute a NewCo Material Default.

If any event in (a) through (d) is caused by Microsoft failing to comply with its obligations under this Agreement, such event will not be deemed a NewCo Material Default. For the avoidance of doubt, the expiration of this Agreement by its terms in accordance with Section 10.1 will not constitute a NewCo Material Default.

“NewCo Phone App” means an application for Windows Phone that includes functionality and user experiences for both Consumption Experiences and acquisition of Reading Content (e.g., from the NewCo Store).

“NewCo SLA” means a commitment from NewCo that it will, upon request of Microsoft, allow Microsoft and its Subsidiaries to do the following throughout the Transition Period:

(a)           make all Reading Content purchased through the NewCo Store by an end user (together with associated data thereto including any annotations by such end user), where the end user has accessed any of such Reading Content using a Windows device, available for consumption (reading, annotating, etc.) by such end user through the NewCo Store through any of the Existing Microsoft Products and Services or any of the NewCo Apps;

(b)           if any of the Microsoft Products and Services integration scenarios described in Section 3 are enabled in any of the Existing Microsoft Products and Services, make Content in the NewCo Store published using any such Microsoft Products and Services available to the end user who published such Content (together with associated data thereto including any annotations by such end user); and

(c)           enable end users to (i) purchase and consume (reading, annotations, etc.) additional Reading Content in the NewCo Store and (ii) upload Reading Content for purposes of distribution and sale of that Reading Content in the NewCo Store and receipt of payment from purchasers of that Reading Content, in each of (i) and (ii) using the NewCo Apps and each of the Existing Microsoft Products and Services that access the NewCo Store and/or use any NewCo APIs. Such purchases during the Term will be subject to the revenue share described in Section 7. Such purchases after the Term will be subject to, at NewCo’s election, either (A) the revenue share described in Section 7 or (B) if effected through the Microsoft Commerce Platform, the standard charges for the Microsoft Commerce Platform.

 

 

  

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The NewCo SLA will be provided at no additional charge.

“NewCo Store” means the online bookstore through which NewCo offers customers the ability to purchase, consume (read, annotate, etc.) and/or publish Reading Content as a service for client devices and applications (and which, prior to transfer to NewCo, and other than those which have not been transferred due to any applicable third-party consents not having been received, was the B&N Store).

“NewCo Store Materials” means, as of a date, the Source Code and user interfaces (UIs) elements as of such date to all versions of the website for the NewCo Store (excluding trademarks) that have been made commercially available prior to such date, along with detailed information about the backend systems used by NewCo to operate the website, all in a format sufficient to enable a reasonably skilled programmer to utilize and read the NewCo Store Materials.

“NewCo Study Application” means the Nook Study application currently available at nookstudy.com and updates and successors thereto that provide similar functionality.

“NewCo Windows App” means a metro-style application for Windows OS that includes functionality and user experiences for both Consumption Experiences and acquisition of Reading Content (e.g., from the NewCo Store). For the avoidance of doubt, the NewCo Windows App is not a browser application for purposes of the revenue share set forth in Section 7.

“Non-Renewal” means the parties do not extend or renew the Term pursuant to Section 11.2.

“Patent Agreement” means the Confidential Settlement and Patent License Agreement, dated on or about the Effective Date, to which Microsoft and B&N are party.

“Patent Obligor” has the meaning set forth in Section 7.5.1.

“Patent Royalty” means any royalty payable to Microsoft under the Patent Agreement.

“Priority Geos” means [***].

[***]

[***]

“Publish Condition” has the meaning set forth in Section 5.1.

“Publisher Data” means, as of a date, data, to the extent such data exists and is in NewCo’s possession as of such date, about publishers for Content they provide for the NewCo Store (e.g. contact information for commercial publishers, publishers using the Publishing Services Platform, authors that publish to the NewCo Store through Microsoft Products and Services, association of Content with publishers, annotation of Content associated with such publishers, but excluding any data that is subject to limitation on transfers or sharing of such data in any agreements with publishers or digital content agreements), which data shall be provided in zip file or CSV format. NewCo will work in good faith with publishers and Microsoft to (a) obtain provisions in agreements entered into with publishers after the Effective Date to permit enabling such transfer or sharing, or (b) avoid provisions in such agreements entered into with publishers after the Effective Date which prohibit such transfers or sharing.

 

 

  

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“Publishing Services Platform” means NewCo’s web-based portal that allows an end user to create an account, upload Reading Content for purposes of distribution and sale of that Reading Content in the NewCo Store and receive payment from purchasers of that Reading Content.

“Reading Content” means electronic books, magazines, newspapers, periodicals, comic books, children’s books and other reading and reading-related content.

“Region” means one of the following sets of Geos: [***].

“Related Agreements” means the Investment Agreement, Patent Agreement, App Developer Agreement, Application Provider Agreement and NDA and any other agreements between or among NewCo, Microsoft, B&N and any of their respective Affiliates entered into in connection with the transactions contemplated herein or therein.

“[***] Net Revenue” has the meaning set forth in Section 7.1.

“Source Code” means computer software program instructions that are translated by a compiler, interpreter or assembler into object or binary code for execution on a computer, together with all developer comments and annotations relating to such program instructions, in either case, that are included therein.

“Subsidiary” means, with respect to any person, another person, an amount of the voting securities, other voting rights or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, more than 50% of the equity interests of which) is owned directly or indirectly by such first person. However, notwithstanding the foregoing, for purposes of this Agreement, neither NewCo nor any entity that is directly or indirectly controlled by NewCo will be considered a “Subsidiary” of B&N or any entity that directly or indirectly controls, is controlled by, or is under common control with B&N (other than NewCo and its Subsidiaries).

“Term” has the meaning set forth in Section 11.1.

“Transition Period” means a period of time beginning on (i) the date that Microsoft requests that NewCo provide the NewCo SLA pursuant to Section 11.5.3(b), or (ii) in the event of a Bankruptcy Event, the date the conditions for a Bankruptcy Event are met, and ending on the later of (a) 2 years later or (b) the end of the Term had this Agreement not been terminated early.

“Windows-Based PC” means a personal computer, desktop computer, laptop, tablet, or slate that runs the Windows OS.

 

 

  

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“Windows Core Languages” means [***].

“Windows Device” means a Windows-Based PC or a Windows Phone.

“Windows OEM Image” means [***].

“Windows OS” means the Windows 8 (both x86 and ARM) client operating system and any future releases, versions and successors, including any bug fixes, service packs, upgrades and updates.

“Windows Phone” means a mobile device running the Windows Phone Software.

“Windows Phone Software” means (a) the successor to Microsoft’s Windows Phone 7.5 operating system software for mobile phones that is currently code-named “Apollo,” and (b) any future versions and successors, including any bug fixes, service packs, upgrades and updates.

“Windows Store Terms of Use” means the applicable version of Microsoft’s then-current Windows Store terms of use, the current, pre-release version of which is currently located at http://windows.microsoft.com/en-us/windows/store-terms-of-use.

“Windows Store” means the Internet-based feature of Windows OS that provides a marketplace for the promotion and distribution of applications for use with Windows OS.

“WP Marketplace” means the platform (however named, consisting of a client application on Windows Phone, a web-based application (currently available at www.windowsphone.com), and an internet-based service) operated by Microsoft or its Affiliates through which applications, games, and related content may be acquired by end users for Windows Phones.

 

 

  

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Exhibit B

Governance Processes

1.           Governance Model

1.1           Executive Sponsor and Relationship Managers

	
  

	
1.1.1

	
Executive Sponsor Role. Within 30 days after the Effective Date, Microsoft, NewCo and B&N will each designate one senior executive (“Executive Sponsor”) who will have broad responsibility for promoting the success of the collaboration under this Agreement and authority to serve as an escalation point for any disagreements that may arise between Microsoft and one or both of the other parties under this Agreement.

	
  

	
1.1.2

	
Relationship Manager Role. Within 30 days after the Effective Date, Microsoft, NewCo and B&N will each designate one person who will be responsible for (a) providing guidance and support for the implementation of this Agreement, (b) coordinating and monitoring the overall performance of the party that they represent under this Agreement, and (c) managing the relationship between the companies as it pertains to the activities contemplated under this Agreement (each a “Relationship Manager”).

	
  

	
1.1.3

	
Meeting Frequency

	
  

	
(a)

	
The Executive Sponsors will meet in person or by telephone conference, as needed, but not less than once per quarter during the Term (unless mutually agreed otherwise), to discuss the status of the parties’ activities under this Agreement. In person meetings will default to alternate locations in New York and Redmond, unless mutually agreed otherwise.

	
  

	
(b)

	
The Relationship Managers will meet more frequently, as they deem appropriate, to coordinate the parties’ execution against the objectives of this Agreement.

	
1.2

	
Contract Management Office

	
  

	
1.2.1

	
Individual Subject Matter Leads. Within 30 days after the Effective Date, Microsoft’s, NewCo’s and B&N’s Relationship Managers will each establish a Contract Management Office (or similar organization) (“CMO”) with staff responsible for overseeing the progress related to the successful execution of the activities contemplated under this Agreement. Each of the Relationship Managers will assign staff on its CMO to support the functional areas under this Agreement (each person a “Functional Lead”).

	
  

	
1.2.2

	
Pairing and Meeting Frequency. The Relationship Managers will work to pair the Functional Leads by function, and the Functional Leads will meet regularly with each other to promote a successful implementation of the activities under this Agreement. The CMO teams from each company will also meet collectively on a regular basis as a Joint Operating Team for the collaborations under this Agreement to review progress across all areas.

 

 

  

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2.

	
Technical Roadmap and Review Process

	
  

	
2.1

	
Review Meetings.  Throughout the Term, weekly until the Launch Date and not less frequently than quarterly thereafter, the parties will meet to discuss:

(a)         requests by a party for product updates, enhancements, improvements and changes to the services or applications provided by another party under this Agreement;

(b)         progress against development and launch plans for applications and services (including the achievement of the Launch Date and any other release dates or any delays encountered or anticipated in the progress toward the Launch Date or any other release date);

(c)         implementation of the requirements in Section 2.4 and any exceptions thereto in Sections 2.4.1 and 2.4.2, including the [***] requirements for the NewCo Windows App, [***] and how NewCo can enhance the NewCo Windows App to exploit the features and functionality available through the Windows OS;

(d)        [***];

(e)         the Microsoft Products and Services integration scenarios described in Section 3;

(f)         the progress of the implementation of Geo expansion, including the progress and results of negotiations with specific publishers and Material Commercial Content Agreements and Material Trade Book Agreements generally, but without any obligation to disclose the specifics of any such Material Commercial Content Agreements or Material Trade Book Agreements, including the counterparty thereunder;

(g)         implementation of the requirements in Section 6.3; and

(h)        such other matters relating to the implementation and performance of services and applications under this Agreement as a party may desire to discuss.

The Relationship Managers and applicable Functional Leads will coordinate and facilitate such meetings, including appropriate other staff as needed.

	
  

	
2.2

	
Escalation.  If the parties are unable to reach agreement as to any matter submitted for discussion in the quarterly review meetings under Section 2.1 above, then a party may escalate the matter using Formal Escalation.

	
3.

	
Formal Escalation of Issues Pertaining to Services.  The parties will use the following process (“Formal Escalation”) for resolving disputes under this Agreement:

 

 

  

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3.1

	
Resolution by Relationship Managers. The parties’ Relationship Managers will negotiate to resolve all disputes in good faith. If the parties’ Relationship Managers do not resolve the dispute within 15 business days (or such longer period as agreed by the parties) after commencement of negotiations to resolve such dispute, then either party may escalate the dispute (such escalation, the “Formal Executive Escalation”) and a mutually agreed list of the unresolved disputes between the parties (such issues, the “Disputed Issues”) to the Executive Sponsors.

	
  

	
3.2

	
Resolution by Executive Sponsors. The parties’ Executive Sponsors will negotiate to resolve any escalated dispute in good faith.

	
  

	
3.3

	
Exclusions from Formal Escalation. Formal Escalation does not apply to or limit the right of a party (a) to seek a temporary restraining order or other provisional remedy to preserve the status quo or to prevent irreparable harm, (b) to exercise its termination rights under the Agreement, or (c) to submit a dispute about whether the conditions exist for the Escrow Agent to release the Deposit Materials to Microsoft (including whether NewCo has failed to cure any material noncompliance with the NewCo SLA).

	
4.

	
Expedited Arbitration of Certain Disputes

 

	                 	
4.1           

 

 

 

	
Arbitral Disputes. Any of the following disputes between Microsoft and NewCo (each, an “Arbitral Dispute”) may be submitted to arbitration under this Section 4: (a) any dispute relating to Section 7.2.2 or Section 7.3 (to the extent relating to Section 7.2.2); (b) any dispute regarding any failure or alleged failure by Microsoft to make any payment for purposes of determining any Microsoft Material Default based on any such failure; (c) any dispute about whether the conditions exist for the Escrow Agent to release the Deposit Materials to Microsoft or for NewCo to provide Microsoft Service Maintenance Toolkit to Microsoft (including whether NewCo has failed to cure any material noncompliance with the NewCo SLA); or (d) a dispute, submitted by NewCo pursuant to Sections 10.3 or 11.5.1, about whether a Liquidation Event has occurred. No other disputes between the parties may be submitted to arbitration under this Section 4, except as otherwise agreed.

 

	
  

	
4.2

	
Good Faith Negotiations. In the event of any Arbitral Dispute described under 4.1(a) or (b) above, a party may initiate this process by providing written notice to the other party. Within 20 calendar days of the date such notice is received by the other party, the parties will meet and discuss in good faith to resolve such dispute. If the dispute is not resolved in such meeting, each party will within 20 days deliver to the other party a detailed memorandum setting forth its positions and the contractual and factual analysis therefor. Within 20 calendar days following exchange of such memoranda, the parties will meet again in an attempt to resolve their disagreements. Thereafter, either party may serve a notice of arbitration. The provisions of this Section 4.2 do not apply to an Arbitral Dispute as described in Section 4.1(c).

 

 

  

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4.3

	
Submission to Arbitration. If the parties are unable to resolve any Arbitral Dispute pursuant to Section 4.2, or in the case of an Arbitral Dispute as described in Section 4.1(c), the parties agree to exclusively settle such dispute by binding arbitration administered by JAMS Inc. (“JAMS”) in accordance with the JAMS Comprehensive Arbitration Rules and Procedures (“JAMS Rules”) and the Expedited Procedures set out in Section 16.2 thereof, subject to the provisions of this Section 4.

	
  

	
4.4

	
Selection of Arbitrator. The arbitration will be held before 1 neutral arbitrator for such proceedings appointed in accordance with the JAMS Rules, or as otherwise agreed by the parties. The arbitrator will not be a current or former employee, agent, consultant or representative of any party or any of its Affiliates.

	
  

	
4.5

	
Proceedings.  Any arbitration hearing will be held in San Francisco, California. Discovery will be limited to that which is relevant to the dispute and material to the outcome as agreed upon by the parties or, failing such agreement, as determined by the arbitrator, and will be conducted pursuant to the Expedited Procedures set out in Rule 16.2 of the JAMS Rules, further provided that: (i) the parties will complete an informal exchange of all relevant non-privileged documents, information, and names of their own witnesses they intend to call within 14 calendar days after the service of a notice of arbitration; (ii) each party may conduct up to 3 discovery depositions; (iii) the arbitrator may require a party to provide information to assist in the identification of appropriate custodians for purposes of a search for responsive electronic documents; (iv) the results of any audit conducted under or related to this Agreement (including any audit under Section 7.8 and any internal audit conducted by or behalf of NewCo or Microsoft) will be admissible in such arbitration; (v) the parties to the arbitration will agree on shorter periods for discovery cut-offs and the commencement of the hearing; and (vi) in all respects, the parties to the arbitration will use good faith efforts to expedite a ruling on the dispute as quickly as possible. Each party will be entitled to designate up to two in-house attorneys who will be entitled to have access to confidential information produced by the opposing party in any such Expedited Arbitration, subject to reasonable confidentiality provisions to prevent disclosure to party employees not entitled to such access, which confidentiality provisions shall be enforceable against such in-house attorney; provided, however, such access would not extend to source code. All proceedings and submissions will be in English. The inclusion of the foregoing provision relating to access to confidential information by in-house counsel in the context of Expedited Arbitration but not in the context of any other claim, lawsuit or dispute of any kind arising out of or related to this Agreement shall not result in or be relied on as supporting any implication that similar access to confidential information by designated in-house counsel would or would not be appropriate in connection with any such other claim, lawsuit or dispute.

	
  

	
4.6

	
Decision.  Any arbitration decision will be final and binding on the parties, and will not be subject to any appeal or proceeding to vacate, except on the grounds set forth in the Federal Arbitration Act, 9 U.S.C. 1 et seq. The award rendered by the arbitrators may be entered into any court having jurisdiction, or application may be made to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Such court proceeding will disclose only the minimum amount of information concerning the arbitration as is required to obtain such acceptance or order.

 

 

  

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4.7

	
Costs.  The arbitrators’ fees and the administrative expenses of the arbitration will be paid equally by the parties, and each party will pay its own costs and expenses (including attorneys’ fees) in connection with the arbitration.

	
  

	
4.8

	
Confidentiality of Proceeding.  Except as required by law, no party or the arbitrator may disclose the existence, content or results of the arbitration. The dispute resolution set forth in this Section will supersede any other dispute resolution provisions in this Agreement with respect to Arbitral Disputes described in Section 4.1, except that before initiating dispute resolution under this Section 4, the parties will first comply with Formal Escalation (except as otherwise allowed under Section 3.3 of this Exhibit B).

 

  

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Exhibit C

Geo Expansion and Localization Schedule

1.     In accordance with Sections 5.1 and 5.6, Geos for Publishing Services Platform and corresponding languages with respect to localization of the Publishing Services Platform (including languages supported for Content submitted through the Publishing Services Platform):

	
Geos

	
Languages

	
[***]

	
[***]

2.     Subject to Section 5.2 and in accordance with Section 5.6, the languages with respect to localization of the NewCo Windows App:

	 [***]	
 

3.    The countries and regions treated as “Geos” for purposes of this Agreement shall initially include

	
[***]

	
[***]

  

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Exhibit D

[***]

  

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Exhibit E

Microsoft Commerce Platform Terms

The following Microsoft Commerce Platform Terms (“Commerce Terms”) shall serve as the terms and conditions governing NewCo’s use of the Microsoft Commerce Platform.  The parties will negotiate in good faith and enter into further agreement and details to expound and further detail the rights and obligations of the parties in a manner consistent with these Commerce Terms in the Microsoft Commerce Platform Agreement (the “Commerce Platform Agreement”) no later than June 1, 2012, which terms will be based upon standard terms required of merchants under applicable law and Network Rules and will be consistent with this Exhibit E. Such terms and conditions shall at a minimum reflect this Exhibit E and otherwise shall not be inconsistent with the provisions of the Agreement. These Commerce Terms will apply whenever NewCo uses the Microsoft Commerce Platform to process commerce transactions, including in-application payment processing, or make payment to Publishers (defined below) in accordance with the Agreement.  The Commerce Terms will be incorporated by reference into the Agreement.  Sections in the Commerce Terms will be designated with “CT” to distinguish Commerce Terms sections from sections of the Agreement.

Terms

	
1)

	
Additional Definitions.  In addition to the terms defined in Exhibit A of the Agreement and in the body of the Agreement, and for purposes of the Commerce Terms and the Agreement, the terms below will have the following meanings:

 

	
  

	
a)

	
“Affiliated Merchant” means an Affiliate of NewCo authorized to submit Transactions and Reconciliations through the Microsoft Commerce Platform.

 

	
  

	
b)

	
“Card” means any valid credit or signature debit card issued by a financial institution member of a Network and bearing such Network’s marks.

 

	
  

	
c)

	
“Card Transaction” means any payment or credit Transaction that is made by use of a Card or Card number.

 

	
  

	
d)

	
“Chargeback” means any circumstances where Card issuers, Card Networks or any financial institution either refuses to settle a Transaction or demands payment from Microsoft in respect of a disputed Transaction that has been settled or in respect of which remittance has been made to the Payout Entity.

 

	
  

	
e)

	
“Chargeback Fees” shall have the meaning set forth in Section CT8(b)(ii)(2)(a).

 

	
  

	
f)

	
“Network” means Visa or MasterCard or other Card Networks, like American Express or Discover.

 

 

  

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g)

	
“Network Rules” means the bylaws, rules, regulations and other requirements issued by the respective Networks from time to time, as applicable to a party.

 

	
  

	
h)

	
“Other Payment Method” means a payment method (other than Cards) specified by Microsoft, from time to time.

 

	
  

	
i)

	
“Payout Entity” means NewCo or an Affiliate of NewCo as designated by NewCo or Publisher as provided in Section CT 7, as applicable.

 

	
  

	
j)

	
“Publisher” means a person or entity that controls publishing rights with respect to specific Content provided for the NewCo Store.

 

	
  

	
k)

	
“Reconciliation” means a Chargeback, Refund, Representation, or Retro-Charge.

 

	
  

	
l)

	
“Refund” means a payment made to wholly or partially reverse a Transaction.

 

	
  

	
m)

	
“Representation” means a transaction to reverse a Chargeback by the re-execution of the original transaction, where the Chargeback is successfully challenged.

 

	
  

	
n)

	
“Retro-Charge” means a transaction initiated to reverse a Refund to which the end user was not entitled.

 

	
  

	
o)

	
“Segregated Accounts” has the meaning set forth in Section CT12(a).

 

	
  

	
p)

	
“Settlement Account” has the meaning set forth in Section CT12(b).

 

	
  

	
q)

	
“Transaction” means any payment by an end user, on a one-time or recurring basis for Content purchased by an end user from NewCo or Publishers, using either:

 

	
  

	
i)

	
a Card, a Card number or a Card account; or

 

	
  

	
ii)

	
any Other Payment Method.

 

	
  

	
r)

	
“Transaction Personal Data” means personal data which it is necessary to provide or to process in connection with Transactions and Reconciliations, including name, Card numbers, account numbers, PINs and billing addresses, in each case, solely to the extent such information is subject to Network Rules and applicable security and privacy standards related thereto.

 

	
2)

	
Microsoft Commerce Platform – Scope of Use.  NewCo will use the Microsoft Commerce Platform as and to the extent provided in the Agreement.

 

	
3)

	
Role and Appointment of Microsoft.  In order to use the Microsoft Commerce Platform, NewCo appoints Microsoft Corporation and its Affiliates (for purposes of these Commerce Terms, collectively “Microsoft”), provided that Microsoft Corporation will be jointly and severally liable for the performance of its Affiliates under these Commerce Terms, to act on behalf of NewCo as NewCo’s agent (or for purposes of the European Union or any other jurisdiction in which NewCo and Microsoft shall mutually agree, as NewCo’s commissionaire), as applicable, for the following purposes (as specified in the Agreement and these Commerce Terms):

 

 

  

51

  

	
  

	
a)

	
to process Transactions and Reconciliations,

	
  

	
b)

	
to receive and remit proceeds from the Transactions, and

	
  

	
c)

	
to discharge the end user tax obligation.

 

	
4)

	
Rights and Obligations of the Parties.  Microsoft and NewCo shall each have duties and obligations consistent and in compliance with the rights and obligations imposed on a merchant under (i) the Network Rules, (ii) applicable law, and (iii) applicable local tax regimes, with respect to the processing and handling of Transactions, Reconciliations and any other requirement imposed by the Network Rules on merchants.  The parties expressly acknowledge that Microsoft has no right or discretion to determine or set the price for the Content.

 

	
5)

	
Third Party Relationships. On an ongoing basis, the parties will review in detail and discuss in good faith any third party relationships with payment processors and financial institutions that may require NewCo or any of its Affiliated Merchants to enter into a contractual relationship with such parties as required by applicable law and Network Rules.  Microsoft and NewCo will work together in good faith to minimize such requirements and reasonably mitigate NewCo’s costs and expenses in establishing and managing such relationships.

 

	
6)

	
Payment Methods Available to NewCo.   Microsoft shall offer and make available to purchasers of NewCo Content the same payment methods and instruments available and offered on the Windows Store.  As Microsoft continues to expand the types of payment methods made available to customers on the Windows Store, it will provide NewCo with a reasonable advance notice of such expansion and the parties shall discuss in good faith any concerns or issues relating to the acceptance of such additional Card or Other Payment Method.

 

	
7)

	
Remittance to Payout Entities.

 

	
  

	
a)

	
Calculation.  Microsoft will calculate and remit to the Payout Entities any amounts owed to the Payout Entities under the Agreement and in accordance with CT12.  Microsoft is not responsible for delay, loss or misapplication of funds resulting from or related to incorrect or incomplete information that the Payout Entities provide to Microsoft or for failure of a bank to credit the Payout Entity’s accounts, provided that Microsoft has properly instructed such bank.  The Payout Entity must provide Microsoft with all financial, tax and banking information needed to make Transaction and Reconciliation payments.

 

 

  

52

  

	
  

	
b)

	
Remittance to Publishers; Microsoft Commerce Platform Transactions.  If NewCo elects, pursuant to Section 4.1.5 of the Agreement, to have Microsoft facilitate payment to Publishers that are associated with Content, it must (1) facilitate and ensure that Publishers acknowledge, in writing, the appointment of Microsoft as agent or commissionaire of such Publishers for the purposes of payment processing and tax calculation and withholding and (2) provide to Microsoft sufficient information relating to such Publishers to enable Microsoft to process payments and remit funds to such Publisher (which may be implemented through the terms of use) and appropriately calculate, apply and withhold applicable taxes.

 

	
  

	
c)

	
Remittance to Publishers; Non-Microsoft Commerce Platform Transactions.  The parties will agree to negotiate in good faith on the conditions under which NewCo can elect to have Microsoft facilitate payments to Publishers for purchases not processed through the Microsoft Commerce Platform by the Existing User Base.

 

	
  

	
d)

	
Currency Remittance and Exchange.  NewCo and Microsoft will agree in good faith on how currency remittance and exchange will be handled in various situations consistent with the following principles:  (i) the parties will seek to minimize to the extent commercially reasonable foreign currency conversion costs by minimizing foreign currency exchanges to the extent reasonably practicable; (ii) such costs will be deducted in determining Net Revenue in accordance with the definition thereof in the Agreement; and (iii) considerations relating to NewCo’s relationships with Publishers will be taken into account in determining how to handle currency remittance and exchanges.

 

	
  

	
e)

	
Affiliated Merchants.  NewCo must provide Microsoft adequate written notice of NewCo’s intent to add any Affiliated Merchant.  Such Affiliated Merchant will be subject to the terms and conditions of the Agreement, and NewCo will be liable for all acts or omissions of the Affiliated Merchant in connection with the use of the Microsoft Commerce Platform.  The parties will develop in good faith mutually acceptable structures to allow payments of a portion of the Revenue Share Service Fee by Affiliated Merchants.

 

	
8)

	
Returns and Chargebacks; Offset.

 

	
  

	
a)

	
Chargeback Rights.  NewCo acknowledges that end users may have a Chargeback right under Network Rules (with respect to Card Transactions) or any applicable law, and (if applicable) Microsoft has the right to pass Chargebacks to NewCo on an actual-cost basis, provided that to the extent the charges that are the subject of a Chargeback have been included in the calculation of Net Revenue in accordance with the definition thereof in the Agreement such Chargeback will be deducted in determining Net Revenue in accordance with the definition thereof in the Agreement.  Chargebacks will be addressed in the reporting and reconciliation process contemplated by the Agreement.

 

	
  

	
b)

	
Excessive Chargebacks.

 

 

  

53

  

 

	
  

	
i)

	
Microsoft will promptly notify NewCo in writing if any Chargeback rates for the relevant Chargeback period exceed a Network’s threshold for the ratio of Chargebacks to processed Card Transactions or if Microsoft anticipates that Chargebacks for future Chargeback periods will exceed such threshold.  Microsoft and NewCo will cooperate in good faith with the goal of reducing the incidence of Chargebacks and avoiding Network Chargeback-related fees and fines.

	
  

	
ii)

	
If a financial institution or a Network notifies Microsoft or NewCo that there is an excessive amount of Chargebacks, as determined by the Network Rules, NewCo agrees:

	
  

	
(1)

	
to comply with all requirements that may apply as a result of such excessive Chargebacks, provided that all costs of such compliance shall be deducted in determining Net Revenue in accordance with the definition thereof in the Agreement; and

	
  

	
(2)

	
with respect to the excessive Chargebacks:

	
  

	
(a)

	
NewCo will pay Microsoft an amount equal to all fees and fines assessed against Microsoft, NewCo, or a financial institution (where applicable), relating to Card Transactions (“Chargeback Fees”); or

	
  

	
(b)

	
Microsoft shall deduct an amount equal to Chargeback Fees from and offset such amounts against any funds due to NewCo for Transactions,

provided that all such Chargeback Fees shall be deducted in determining Net Revenue in accordance with the definition thereof in the Agreement.

	
9)

	
General Obligations.

 

	
  

	
a)

	
NewCo may submit Transactions to Microsoft, but will not utilize the Microsoft Commerce Platform except as contemplated by the Agreement.

 

	
  

	
b)

	
Except as set forth in the Agreement and in these Commerce Terms, Microsoft reserves authority, on an ongoing basis, to determine how to operate and implement the Microsoft Commerce Platform generally.  Microsoft will not implement rules for the Microsoft Commerce Platform targeted to NewCo that are not of general application to the Microsoft Commerce Platform.

 

	
  

	
c)

	
Microsoft shall notify and consult with NewCo on an ongoing basis regarding potential and completed changes to the Microsoft Commerce Platform that could materially impact NewCo’s use of the Microsoft Commerce Platform.

 

	
  

	
d)

	
Each party acknowledges and agrees that (1) Microsoft is not a bank or other chartered depository institution, (2) funds held by Microsoft or its service providers (including any financial institutions) in connection with the processing of Transactions or Reconciliations are not deposits, and (3) such funds are not insured for the benefit of NewCo.

 

 

  

54

  

 

	
  

	
e)

	
Microsoft has no responsibility to NewCo to investigate the background or confirm the identity of end users, except to the extent required by applicable law, Network Rules (with respect to Card Transactions) or that Microsoft does so for its own transactions or otherwise under Microsoft’s own anti-fraud policies and procedures.

 

	
  

	
f)

	
Notwithstanding the provisions of the Agreement regarding Chargebacks, as between Microsoft and NewCo, NewCo is solely responsible for disputes with respect to the Content, unless such dispute is a result of an action or inaction by Microsoft.

 

	
  

	
g)

	
NewCo will disclose its return/cancellation policy in NewCo Store.  If NewCo allows returns, cancellations or price adjustments, NewCo will initiate a credit within the period of time specified in the relevant Network Rules.  Refunds will not exceed the total amount of the applicable Transaction.  NewCo will not accept any consideration in exchange for issuing a Refund.  NewCo will not give cash refunds unless required by applicable law.

 

	
  

	
h)

	
Each party agrees to notify the other party promptly in the event that the notifying party discovers or detects any fraud or suspicious activity involving any Transaction.

 

	
  

	
i)

	
The parties shall develop in good faith mutually acceptable reporting standards and mechanisms (including daily reconciliation files) with respect to Transactions and Reconciliations processed through the Microsoft Commerce Platform.

 

	
  

	
j)

	
The parties shall develop in good faith mutually acceptable procedures for NewCo to be involved in the resolution of Chargebacks and other related matters, such as network fees and fines.

 

	
10)

	
Merchant IDs.  Microsoft will establish and maintain dedicated merchant identification numbers (“MIDs”) for Card Transactions on behalf of NewCo.  The manner in which NewCo’s or the seller’s name appear on the customer’s receipt or Card statement is subject to NewCo’s review and approval.

 

	
11)

	
Interchange Fees.  Microsoft is authorized to deduct any applicable interchange fees and costs assessed against Microsoft by third parties from any sales proceeds generated from the Transactions which deductions shall be taken into account in determining Net Revenue in accordance with the definition thereof in the Agreement.  For purposes of Card Transactions, such compensation assumes that all applicable Card Transactions qualify under Network Rules for the lowest applicable interchange rates.  Non-qualifying Card Transactions may be subject to greater fees.

 

	
12)

	
Bank Accounts.

 

 

 

  

55

  

 

	
  

	
a)

	
Segregated Accounts.  Microsoft will establish and maintain one or more segregated bank accounts (“Segregated Accounts”) to hold funds settled and collected as a result of the Transactions, Representments, or Retro-Charges.

 

	
  

	
b)

	
Settlement Account.  The parties will establish in the Commerce Platform Agreement the mechanism, the conditions and the process by which a separate Settlement Account may be created, if necessary, during the course of the engagement in order for Payout Entities to receive settlement funds from Microsoft for the deposit and settlement of funds.   The Commerce Platform Agreement will be based on the following principles with respect to the Settlement Account:

 

	
  

	
(i)

	
NewCo authorizes Microsoft to initiate electronic credit entries to the Settlement Account in accordance with the Agreement.

 

	
  

	
(ii)

	
Microsoft will not be liable for any delays in the receipt of funds or errors in Settlement Account entries caused by NewCo or third parties.

 

	
  

	
(iii)

	
The proceeds paid to the Settlement Account will equal the amounts received by Microsoft in respect of Transactions, less all chargebacks and other Reconciliations, fees, fines, penalties, and other applicable charges paid to third parties by Microsoft in accordance with the Commerce Terms and the Agreement, Revenue Share Service Fees paid to Microsoft in accordance with the Agreement and all taxes to be remitted by Microsoft under these Commerce Terms.

 

	
  

	
(iv)

	
Such amounts will be paid by Microsoft into the Settlement Account in immediately available funds on the date of Microsoft’s receipt of such funds and shall give prompt electronic notice to NewCo of the initiation of any such transfer of funds, which shall include the amount and currency of the funds to be transferred.

 

	
  

	
(v)

	
If the proceeds payable to the Settlement Account do not represent sufficient funds, or the Settlement Account lacks sufficient funds to pay amounts due relating to Transactions, Microsoft may pursue one or more options including: (i) demanding and receiving from NewCo immediate payment; (ii) withholding settlement payments; and (iii) pursuing other remedies against NewCo at law or in equity.

 

	
13)

	
Fees/Fines.  All Network fees, fines, penalties and similar charges that are assessed against Microsoft or passed through to Microsoft by payment processors or financial institutions, and that are attributable to NewCo’s violation of the Agreement or Network Rules, or to excessive Chargebacks, will be payable by NewCo to Microsoft, in each case, on an actual-cost basis, and such fees or fines shall be deducted in determining Net Revenue in accordance with the definition thereof in the Agreement.

  

56

  

	
14)

	
Prohibited Transactions.  NewCo will use the Microsoft Commerce Platform only for the lawful, legitimate, bona fide sale of products and services.  Microsoft shall operate the Microsoft Commerce Platform in compliance with applicable law.

 

	
15)

	
Responsibility for Taxes for Purchases and Reconciliations Taxes.

 

	
  

	
a)

	
Remittance Countries.  Microsoft or its local affiliate will collect and, upon request by the Payout Entity, remit any applicable sales, use, goods and services, value added or similar taxes in the manner and in such countries in which Microsoft is permitted by applicable law to do so, the current list of such countries is provided as Attachment 1  (such countries, the “Remittance Countries”).  Microsoft will continue to use good faith and reasonable efforts to expand the list of Remittance countries as permissible by Law, as it deems appropriate and prudent, and it will not remove countries from such list unless required to do so by a government authority or by law.  The Payout Entity will provide any information Microsoft requires for or reasonably requests related to the collection and remittance of taxes in the Remittance Countries.  Provided that the Payout Entity timely complies with the preceding sentence, Microsoft will defend, indemnify and hold NewCo and its affiliates, vendors and agents harmless against any claims by any taxing authority in a Remittance Country based on any nonpayment or underpayment or any failure to properly report any sales, use, goods and services, value added or other similar tax.  This includes any associated penalties, additions to tax and interest.

 

	
  

	
b)

	
Non-Remittance Countries.  NewCo and, if applicable, Publishers are responsible for determining if they have an obligation to register, collect, and remit any taxes in any country other than the Remittance Countries (each, a “Non-Remittance Country”) in which Content is distributed pursuant to this Agreement.  The Payout Entity must tell Microsoft whether taxes must be collected and remitted in those countries and provide Microsoft information sufficient to calculate those taxes.  Those taxes must be added to the purchase price set for Content.  Microsoft will collect (or cause to be collected) but will not remit to the applicable taxing authority such taxes (as determined by the Payout Entity) from end users. Microsoft will remit (or cause to be remitted) such taxes to the Payout Entity as part of the pay-out process.  The Payout Entities are responsible for payment and reporting of such taxes to the appropriate taxing authorities. NewCo will defend, indemnify and hold Microsoft and its affiliates, vendors and agents harmless against any claims by any taxing authority in a Non-Remittance Country based on any nonpayment or underpayment or any failure to properly report any sales, use, goods and services, value added or other similar tax.  This includes any associated penalties, additions to tax and interest. If an end user in a Non-Remittance Country reverses the purchase or the Transaction is subject to chargeback, the total amount refunded to the end user, including any previously collected taxes remitted to the Payout Entity, and any withholding taxes applicable to the refund or chargeback, will be deducted from amounts owed to the respective Payout Entity.

 

	
  

	
c)

	
Set Off.  In the event that any price payable by any end user for any of the Content is subject to any (i) withholding or similar tax; or (ii) other tax or other government levy of any nature, with the exception of sales, use, goods and services, value added or other transaction taxes that Microsoft was requested to collect under Section 15(a) or told to collect under Section 15(b), the full amount of that tax or levy shall be solely against the Payout Entity’s account.

 

  

57

  

 

	
  

	
d)

	
Additional Information.  Certain tax authorities require Microsoft to disclose additional information to the Payout Entity with respect to sales tax.  Microsoft will provide additional information to the Payout Entities electronically relating to such disclosure.

 

	
  

	
e)

	
Reporting.  Microsoft will report to the Payout Entity all sales and tax collection information necessary for the filing of applicable sales, use, goods and services, value added or similar tax returns within a reasonable period of time as agreed by the parties.

 

	
16)

	
Technical Integration.  NewCo and Microsoft will cooperate in good faith to develop a technical integration plan to enable NewCo’s use of the Microsoft Commerce Platform, including any service level agreements associated with systems uptime, accessibility and connectivity.  Such technical integration plan will address the APIs that NewCo has access to in connection with its use of the Microsoft Commerce Platform.  

 

	
17)

	
Technical Support/Customer Service.  Microsoft and NewCo will develop in good faith mutually acceptable end user service and issue resolution mechanisms and consult regularly on the implementation of, and any proposed changes to, such mechanisms with the goal of providing a coordinated customer experience with respect to resolving any such issues relating to purchases through the Microsoft Commerce Platform.  These mechanisms will reflect the fact that Microsoft has responsibility for payment-related matters and that NewCo has responsibility for Content-related matters.

 

	
18)

	
Data Collection, Retention and Disclosure.  In addition to Section 8 of the Agreement, the following terms shall apply to transactional data collected by the Microsoft Commerce Platform:

 

	
  

	
a)

	
Transactional Personal Data.  Microsoft will only provide the Payout Entities with access to any Transactional Personal Data relating to purchases on the Microsoft Commerce Platform to the extent permitted by applicable law and Network Rules and privacy and security standards imposed on merchants under similar circumstances.  All data that Microsoft has or collects through the Microsoft Commerce Platform in connection with NewCo’s use of the Microsoft Commerce Platform as contemplated hereunder shall be subject to Section 8 of the Agreement.

 

	
  

	
b)

	
Security.  NewCo and Microsoft will provide and maintain reasonable security measures with respect to their services, facilities, systems and networks, which will be at least as rigorous as the security measures required by applicable law and Network Rules (with respect to Card Transactions) to prevent unauthorized access to and use of Transactional Personal Data.

 

 

  

58

  

 

	
  

	
c)

	
PCI Standards.  With respect to Card Transactions, each Party will comply with applicable Payment Card Institute security standards, including “PCI DSS” and “PCI Payment Application DSS,” which are required to be implemented under the Network Rules.

 

	
  

	
d)

	
Incident Response.  If Transaction information stored by Microsoft or NewCo is lost, stolen or otherwise compromised, the party whose system has been affected will (1) give written notice of such loss, theft or compromise to the other party promptly upon the notifying party having actual knowledge of the same, (2) take all steps required under applicable law, Network Rules, and Other Payment Methods rules, and (3) in consultation with the other party, promptly take commercially reasonable steps, at its sole expense, to remedy the situation and prevent its recurrence.

 

	
  

	
e)

	
Notice of Breach.  A party that is required by applicable law to provide notice of a system or data breach, must do so, and the other party will use commercially reasonable efforts to cooperate in connection with providing such notice, as well as additional notices as agreed upon by the parties.

 

	
19)

	
Proprietary Rights.  NewCo agrees not modify, adapt, translate, prepare derivative works from, decompile, reverse engineer, disassemble or otherwise attempt to derive source code from the Microsoft Commerce Platform.

 

 

  

59

  

 

ATTACHMENT 1

REMITTANCE COUNTRIES

All current members countries of the European Union

Canada

Liechtenstein

Norway

Switzerland

Taiwan

United States

 

 

  

60

  

 

 

ATTACHMENT 2

1           Distribution to End users in Canada.

1.1       GST/HST

(a)        If NewCo or any Publisher is a resident of Canada or are a non-resident of Canada that must register for goods and services tax/harmonized sales tax (“GST/HST”) purposes under the Excise Tax Act (Canada) (the “ETA”), NewCo or the Publisher must be registered for GST/HST or have submitted an application to register for GST/HST to the Canada Revenue Agency (the “CRA”) with an effective registration date no later than the date the Microsoft Commerce Platform commences the support of NewCo. NewCo or the Publishers must provide Microsoft with satisfactory evidence of the GST/HST registration (e.g., a copy of the CRA confirmation letter or print-out from the GST/HST Registry on the CRA website) at Microsoft’s request. NewCo or Publishers will notify Microsoft if they cease to be registered for GST/HST.

(b)        If NewCo or Publishers are registered for GST/HST purposes, NewCo and/or Publishers agree to elect, pursuant to subsection 177(1.1) of the ETA to have Microsoft collect, account for and remit GST/HST on sales of Content made to end users in Canada.  NewCo and Publishers must complete (including entering valid GST/HST registration number), sign and return to Microsoft Form GST506.

(c)        If NewCo or Publishers are not registered for GST/HST purposes, NewCo or Publishers:

 (i)          certify that NewCo or Publishers they are not registered for GST/HST purposes;

 (ii)         certify that NewCo or Publishers are not residents in Canada and do not carry on business in Canada for purposes of the ETA; and

 (iii)        acknowledge that Microsoft will charge, collect and remit GST/HST on sales of Content to end users in Canada.

 

1.2       Quebec Sales Tax.

 

Terms defined in an Act respecting the Quebec Sales Tax (the “QSTA”).

 

(a)         If NewCo or a Publisher is a resident of Quebec, NewCo or the Publisher must be registered for Quebec Sales Tax (“QST”) or have submitted an application to register for QST to the Ministere du Revenu du Quebec (the “MRQ”). NewCo or Publisher must give Microsoft satisfactory evidence of the QST registration (e.g., a copy of the MRQ confirmation letter or print-out from the QST Registry on the MRQ website) at Microsoft’s request. NewCo or Publishers will notify Microsoft if the party ceases to be registered for QST.

 

(b)        If NewCo or a Publisher is a resident of Quebec, NewCo or Publisher:

 

                     (i)          certifies that it is registered for QST;

 

 

  

61

  

 (ii)         agrees to elect, pursuant to section 41.0.1 of the QSTA to have Microsoft collect, account for and remit QST on purchases by end users in Quebec.  NewCo or Publishers must complete (including entering valid QST registration number), sign and return to Microsoft Form FP2506-V; and

 (iii)        acknowledges that Microsoft will not charge, collect or remit QST on sales of Content Applications to end users located outside Quebec.

 

(c)        If NewCo or Publishers are not residents in Quebec, NewCo (or in the case of a Publisher, NewCo shall use good faith effort to ensure that Publisher):

 

 (i)          certifies that it is not resident in Quebec;

 

 (ii)         certifies that it does not have a permanent establishment in Quebec; and

 

 (iii)        acknowledges that Microsoft will charge, collect and remit QST on sales to end users in Quebec.

 

2           Distribution to End Users in the U.S.

 

2.1        If a Publisher is not a resident of the United States for U.S. federal income tax purposes, Publisher must complete IRS Form W-8BEN and/or any other required tax forms.  Publisher must provide Microsoft a copy of the completed form(s), and any other information needed to comply with applicable tax laws and regulations.

 

 

 

 

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