Exhibit 10.6
COLO.COM AND NEXTLINK DEFINITIVE AGREEMENT
This Definitive Agreement ("Agreement") is entered into this 23rd day of December 1999 (the "Effective Date") by and between NEXTLINK COMMUNICATIONS, Inc., a
Delaware corporation ("NEXTLINK"), and COLO.COM, a California corporation ("COLO"). NEXTLINK and COLO are referred to herein separately as "Party" and together as "Parties." The Effective Date of this Agreement is the same date as the closing date of the COLO Series C preferred stock offering between COLO and NEXTLINK.
For good and valuable consideration, COLO and NEXTLINK hereby agree as follows:
A. DEFINITIONS.
1. Carrier Termination Equipment Space: means a carrier termination
equipment bay for which NEXTLINK has an Option.
2. Colocation Space: means colocation space from 500 to 1,000 square feet
for which NEXTLINK has an Option.
3. Customary Services: means those services that COLO provides to its own
termination space or to the termination space of its carrier or
non-carrier customers, including power (electricity, N+1 UPS system
deployed in parallel redundant configuration, and generator backup to
100% of customer peak load), conditioning (data grade HVAC, constant
72 degree ambient air temperature, and constant 45% humidity), state
of the art fire suppression system, security and smart hands, and such
other services set forth on the attachment to this Agreement.
4. Neutral Central Office ("NCO"): means real property and improvements
that are used or planned to be used, as the context of the provision
requires, by COLO as a carrier-neutral central office for colocation
and for locating and interconnecting servers, routers, data
communications equipment, telecommunications equipment and other
equipment used by COLO and/or its customers.
5. Network: means the terrestrial telecommunications network of one of
the Parties, as the context of the provision requires or as
contemplated under this Agreement, including facilities leased or
acquired from other carriers.
6. Option: means the option NEXTLINK has under this Agreement to lease
each of the Telecommunication Equipment Spaces described in Section F.
7. Prioritized Option/Partners: means a partner that is strategic to COLO
and provides substantial economic, business and/or marketing benefit
to COLO.
8. Tower Rights: means a annually agreeable amount of wireless
communication tower space satisfactory for NEXTLINK's technical needs
for which NEXTLINK has an Option.
9. Space Agreement: means an agreement for Telecommunications Equipment
Space entered into between the Parties as provided in Section F below,
including the Colocation Space and Carrier Termination Equipment
Space Agreement (Exhibit A):
10. Telecommunications Equipment Space: means the space COLO shall provide
to NEXTLINK in COLO's NCOs as provided in Section F below.
B. TERM.
The term of this Agreement shall be 5 years commencing on the Effective Date. NEXTLINK shall have the right to renew this Agreement for 2 additional 5-year terms by giving COLO written notice at least 90 days before the then-current term expires. As used herein, the word "Term" shall mean the initial term and any renewal terms.
CONFIDENTIAL Page 1 of 12 December 23, 1999
2 C. NEXTLINK EQUITY INVESTMENT.
By means of a separate Series C Preferred Stock Purchase Agreement entered into concurrently herewith, NEXTLINK shall agree to invest $5,000,000 in COLO in a private placement of equity securities by purchasing approximately 500,000 shares of COLO's Series C Preferred Stock.
D. COLO'S NEUTRAL CENTRAL OFFICES.
1. COLO represents and warrants that, as of the date of this Agreement, it owns or is authorized to control the NCOs listed as "Current NCOs" on Attachment 1 and COLO plans to own or obtain authorization to control the NCOs listed as "Planned NCOs" on Attachment 1. COLO shall notify NEXTLINK promptly after COLO obtains additional NCOs, including a description of each new NCO. In addition, each quarter COLO shall provide an electronic copy of an updated Attachment 1 to NEXTLINK to the e-mail address listed in Section I.12 below.
2. COLO represents and warrants that it shall own or control at least 43 domestic and 13 international operational NCOs by December 31, 2001. In addition, COLO represents and warrants that it has sufficient Colocation Space and Carrier Termination Equipment Space in its Current NCOs to allow NEXTLINK to exercise its Options to such space (with the exception of Colocation Space in the 8619 Westwood, Vienna, VA NCO) and shall have sufficient Colocation Space and Carrier Termination Equipment Space available to NEXTLINK as contemplated under this Agreement at NCOs that become Current NCOs during the term of this Agreement. COLO further represents and warrants that it has not granted any priorities or options superior to NEXTLINK's priorities and Options under this Agreement.
3. COLO represents and warrants that as of the date it notifies NEXTLINK that an NCO is a Current NCO, COLO has good marketable fee simple title or has a valid, enforceable leasehold interest or a valid, enforceable license authorizing COLO to control the NCO and the property upon which the NCO is located to such an extent as permits COLO to perform fully its obligations under this Agreement.
E. CONNECTION OF NEXTLINK'S NETWORK TO COLO'S NCOs.
1. COLO shall grant to NEXTLINK a warrant to purchase up to 300,000 shares of COLO's Series C Preferred ("Warrant Shares"), as appropriately adjusted for any future stock splits, stock combinations or stock dividends or similar transactions affecting COLO's capital stock, in a separate Warrant Agreement entered into concurrently herewith (the "Warrant"). The Warrant shall be subject to the following terms:
a. The Warrant shall have a term of 5 years from the date the Warrant is issued;
b. For each NCO to which NEXTLINK initiates the process of interconnecting to its Network on or prior to March 15, 2000, up to a total of ten (10) NCOs, NEXTLINK shall have the right to exercise its purchase rights represented by the Warrant with respect to 30,000 Warrant Shares. NEXTLINK shall be deemed to have initiated the interconnection process for a NCO upon its delivery to COLO of a copy of the business case prepared by NEXTLINK's National Sales group for the applicable NEXTLINK local operating subsidiary with respect to the interconnection of the NCO in question. COLO agrees and acknowledges that each business case is subject to the approval of, and revision and modification by, the local operating subsidiary. NEXTLINK in good faith will exercise commercially reasonable efforts to complete the interconnection of its Network to each such NCO site within nine (9) months from the date that the interconnection process is deemed to be initiated pursuant to this paragraph.
c. The exercise price per share of COLO's Warrant Stock shall be Ten Dollars ($10.00); and
d. In lieu of exercising the Warrant for cash, NEXTLINK may, at its option, pay the exercise price on a next exercise or cashless basis.
CONFIDENTIAL Page 2 of 12 December 23, 1999
3
2. NEXTLINK in good faith will exercise commercially reasonable efforts to interconnect its Network to ten (10) NCO sites, within two (2) years from the date of this Agreement, in addition to the ten (10) NCOs to which it initiates the interconnection process, pursuant to paragraph 1 of this section. NEXTLINK may choose NCO sites that are listed on Attachment 1 or NCOs established subsequent to the date of this Agreement. COLO will regularly apprise NEXTLINK of newly leased NCO sites and the status of planned NCO sites. For each NCO that NEXTLINK designates for interconnection, the Parties shall mutually agree upon the demarcation point, and COLO shall provide NEXTLINK with reasonable access for NEXTLINK to bring its facilities into the NCO for interconnection and to repair, replace and maintain those facilities.
3. COLO shall use its reasonable efforts to acquire or obtain authorization to control any NCOs in locations selected by NEXTLINK under this Section E that are not Current NCOs as listed on Attachment 1. COLO shall notify NEXTLINK in writing when COLO has acquired or obtained authorization to control an NCO that NEXTLINK has selected, with copies of the documents evidencing such acquisition or authorization. When NEXTLINK receives notice from COLO that COLO has obtained or been authorized to control an NCO that NEXTLINK has requested for interconnection, NEXTLINK shall connect its network to that NCO within 9 months after the date it received such notice.
F. COLO'S PROVISION OF TELECOMMUNICATIONS EQUIPMENT SPACE
1. Options. In each of COLO's NCOs (except in the 8619 Westwood, Vienna, VA NCO as to Colocation Space only), NEXTLINK and its affiliates shall have an Option on the each of the following:
a. Colocation Space. NEXTLINK may, at its option, take down Colocation Space in increments of 100 square feet;
b. Carrier Termination Equipment Space. COLO shall provide, at its sole cost and expense, 4 adjacent, full-height equipment racks in each Carrier Termination Equipment Space; and
c. Wireless Communication Tower Space. COLO shall use its reasonable efforts to obtain Wireless Communication Tower Space for NEXTLINK's technical requirements at all NCOs, provided that NEXTLINK has given COLO reasonable advance notice of its wireless communication tower requirements (i.e., technical and space requirements) to COLO. NEXTLINK may, but shall not be obligated to, assist COLO in its efforts to obtain those roof rights.
2. Exercise of Options.
a. Available Space. COLO shall give NEXTLINK written notice for each NCO whenever COLO reaches 70% occupancy and/or receives a bona fide offer(s) for 70% of the colocation space in a given site. In that written notice, COLO shall request that NEXTLINK declare within 30 days from the date of the request whether it intends to exercise its right to up to 1000 square feet of Telecommunications Equipment Space. COLO also shall give NEXTLINK written notice for each NCO of the availability of any Tower Rights in that NCO and, subsequently, upon reaching 70% occupancy and/or the receipt of a bona fide offer(s) for 70% of the Tower Rights available at an NCO. If NEXTLINK fails to respond within the 30-day period, NEXTLINK shall be deemed to have waived the Option and COLO shall be free to offer the Equipment and Tower Space to other interested Parties. NEXTLINK's right to last available space under this Section F.2a shall expire three years after execution of this Agreement.
b. Last Available Space. COLO shall give NEXTLINK written notice for each NCO whenever COLO shall have received a written request from a carrier seeking to occupy the last Carrier Termination Space (POP Room) in such NCO. COLO shall request that NEXTLINK declare within 30 days from the date of the request whether it intends to exercise its rights to the last Carrier Termination Space. If NEXTLINK fails to respond within the 30-day period, NEXTLINK shall be deemed to have waived the Option and COLO shall be free to offer Carrier Termination space to other interested Parties. NEXTLINK's right to last available space under Section F.2.b shall run for the term of this Agreement.
c. Notice of Exercise of Option. NEXTLINK may exercise any Option by giving COLO written notice specifying the NCO and the type and size of the space, provided, however, that the size and configuration of any Tower Rights shall be mutually agreed to by the Parties.
CONFIDENTIAL Page 3 of 12 December 23, 1999
4
d. Space Agreements. For each space for which NEXTLINK exercises an Option, the Parties shall enter into the appropriate Space Agreement, as follows, within 10 days of the date NEXTLINK exercises its option. The Colocation Space Agreement and Carrier Termination Equipment Space Agreement is attached hereto as Exhibit A; and the Tower Rights Agreement is attached hereto as Exhibit B (each a "Space Agreement").
3. Customary Services. COLO shall provide all its Customary Services to Carrier Termination Equipment Space for which NEXTLINK exercises its Option, at no additional charge. Other Telecommunications Equipment Space will be provided with Customary Services at the rates provided in Attachment 2.
4. Payment for Telecommunications Equipment Space.
a. Rental Rate. The rental rate for the Telecommunications Equipment Space shall be the rates listed in Attachment 2; provided, however, that if COLO offers or gives a lower rate to a Prioritized Option/Partner, those lower rates shall apply to the Telecommunications Equipment Rate. Within 5 days after NEXTLINK exercises an Option, COLO shall provide NEXTLINK with a list of the rates it has given in the previous 12 months and the rates it is then-currently offering to its Prioritized Option/Partners. NEXTLINK shall have 10 days to notify COLO, either (i) affirming the rental rate (either the rate listed in Attachment 2 or the rate provided to other customers as stated by COLO) or (ii) disputing the rental rate proposed by COLO for the Telecommunications Equipment Space. If NEXTLINK disputes the rental rate provided by COLO, NEXTLINK shall pay the lowest rate proposed by COLO pending resolution of the dispute of COLO provides a better rate to itself or another customer during the terms of a Space Agreement between the Parties, NEXTLINK shall be entitled to that same rate as of the date that better rate is granted.
b. Obligations to Pay Rent. NEXTLINK's obligation to pay rent to COLO shall begin: (i) for Colocation Space, the date that is 45 days after the date that NEXTLINK exercises its option to the space, provided that the Parties have timely entered into a Colocation Space Agreement; (ii) for Carrier Termination Equipment Space and Wireless Communication Tower Space, the date that is 30 days after NEXTLINK exercises its option to the space, provided that the Parties have timely entered into the applicable Space Agreement.
c. Prepaid Carrier Termination Space. NEXTLINK hereby receives a credit entitling it to free rent for 40 Carrier Termination Equipment Spaces at NCOs selected by NEXTLINK. The rent credit for each space shall apply for 24 months from the date that NEXTLINK first occupies that space ("Rent Credit Period"). Within 25 days before the end of the Rent Credit Period, COLO shall provide NEXTLINK with a list of the rates it has given in the previous 12 months and the rates it is then-currently offering to its Prioritized Option/Partners for Carrier Termination Equipment Spaces. NEXTLINK shall notify COLO within 10 days whether NEXTLINK wishes to terminate a Carrier Termination Equipment Space Agreement after the Rent Credit Period, in which case the applicable Space Agreement shall terminate effective as of the end of the Rent Credit Period. If NEXTLINK does not terminate the Carrier Termination Equipment Space Agreement, Section F.4.a shall apply to finalize the rental rate.
G. RESELLER PRIVILEGES.
Upon mutual agreement of the Parties, NEXTLINK shall have the right to resell COLO's services under COLO's standard reseller agreement, and under the then-best reseller discounts and/or commissions offered or given by COLO to any of its other customers.
H. PREFERRED PROVIDER.
In the event that COLO decides to interconnect and internetwork its NCOs or to resell transport and carrier services, COLO will make NEXTLINK its preferred provider for the required transport if NEXTLINK satisfies COLO's technical and operational requirements and offers reasonable installation intervals and market pricing. NEXTLINK shall provide such transport arrangements to COLO pursuant to its then generally applicable terms and conditions for such services.
I. MISCELLANEOUS.
1. Confidentiality. Both Parties shall use reasonable and good faith efforts to maintain, except as required by law, the confidentiality of this Agreement (including all Attachments and Exhibits), the transactions proposed in this Agreement, and confidential information shared with each other under this Agreement. Any communications about the transactions contemplated herein other than to key management employees, shall be jointly coordinated between the Parties.
CONFIDENTIAL Page 4 of 12 December 23, 1999
5
2. Limitation of Liability. Neither Party shall be liable to the other Party, or to the other Party for any liability to a third party as provided in Section I.3, for any indirect, consequential, special, incidental, reliance, or punitive damages of any kind or nature whatsoever (including but not limited to any lost profits, lost revenues, lost savings, or harm to business) arising out of this Agreement, regardless of the foreseeability thereof.
3. Indemnification.
a. COLO shall indemnify, defend and hold harmless NEXTLINK and its subsidiaries, affiliates, employees, directors, officers, and agents from and against all claims, demands, actions, causes of actions, damages, liabilities, losses, and expenses (including reasonable attorney's fees) incurred as a result of (i) claims for libel, slander, infringement of copyright or unauthorized use of trademark, trade name or service mark arising out of the transactions contemplated herein; (ii) claims for patent infringement arising from combining or connection of facilities to NEXTLINK's Network; and (iii) claims for damage to property and/or personal injuries (including death) arising out of COLO's negligence or willful act or omission.
b. NEXTLINK shall indemnify, defend and hold harmless COLO and its subsidiaries, affiliates, employees, directors, officers, and agents from and against all claims, demands, actions, causes of actions, damages, liabilities, losses, and expenses (including reasonable attorney's fees) incurred as a result of (i) claims for libel, slander, infringement of copyright or unauthorized use of trademark, trade name or service mark arising out of the transactions contemplated herein; (ii) claims for patent infringement arising from combining or connection of facilities to COLO's Network; and (iii) claims for damage to property and/or personal injuries (including death) arising out of NEXTLINK's negligence or willful act or omission.
c. The warranties set forth in this Agreement constitute the only warranties with respect to this Agreement. SUCH WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE.
4. Organizational Representations and Warranties. NEXTLINK represents and warrants to COLO that it is an entity, duly organized, validly existing and in good standing under the laws of its origin, with all requisite power to enter into and perform its obligations under this Agreement in accordance with its terms. COLO represents and warrants that it is an entity, duly organized, validly existing and in good standing under the laws of its origin, with all requisite power to enter into and perform its obligations under this Agreement in accordance with its terms.
5. Assignment. This Agreement may not be assigned by either Party without the prior written consent of the other Party, which shall not be unreasonably withheld.
6. Amendment. This Agreement shall be amended only by written agreement signed by authorized representatives of both Parties.
7. Governing Law Venue. This Agreement shall be interpreted according to the laws of the state of Delaware, without regard to choice of law principles. Except as otherwise provided in Section I.9 below, venue shall be in the state of California.
8. Attorney Fees. In any claims under this Agreement, each side shall bear its own costs and attorneys fees.
9. Dispute Resolution. In the event of a monetary dispute between COLO and NEXTLINK concerning a principal amount in controversy of less than $50,000 (specifically excluding all nonmonetary claims or disputes) arising out of the Agreement, COLO and NEXTLINK shall attempt to resolve such dispute through negotiations for thirty (30) days. If
CONFIDENTIAL Page 5 of 12 December 23, 1999
6 event that any Party shall fail to so appoint an arbitrator, the arbitrator appointed by the other Party shall be the sole arbitrator. If two arbitrators shall be so appointed, such two arbitrators shall, within ten (10) additional days of the appointment of the last appointed arbitrator, select a third arbitrator with the same qualifications. If the two arbitrators are unable to agree concerning the third arbitrator, such matter shall be submitted to the presiding judge of a court of competent jurisdiction in the circuit, district, county (or other comparable geographic designation) in which the Building is located and the selection of the third arbitrator by such presiding judge shall be binding upon COLO and NEXTLINK. Within thirty (30) days of the selection of the third arbitrator (or, if applicable, the sole arbitrator) or within such longer, but reasonable period of time permitted by a majority of arbitrators (or the sole arbitrator, if applicable), each Party shall make a written submission to the arbitrator(s), including the Party's position concerning the dispute and proposed resolution thereof, and, within twenty (20) days of receipt of such submissions, the arbitrator(s) shall select the proposed resolution that is most appropriate, taking into account the terms and provisions of the Agreement, applicable law, and other relevant facts and circumstances. The decision of any two arbitrators (if three arbitrators shall ...