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Fiber Optic Conduit Agreement

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Exhibit 10.3


FIBER OPTIC CONDUIT AGREEMENT


BETWEEN


NORTH AMERICAN INFOTECH, LLC


("NAIT")


AND


THOROUGHBRED TECHNOLOGY AND TELECOMMUNICATIONS, INC.


("T-CUBED")


Dated August 15, 2000


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TABLE OF CONTENTS


ARTICLES --------


ARTICLE 1 DEFINITIONS.......................................................2


ARTICLE 2 TERM..............................................................3 Section 2.01. Term..........................................................3 Section 2.02. Relationship after Termination................................4


ARTICLE 3 DOCUMENTATION.....................................................4 Section 3.01. Fiber Optic Conduit Agreement.................................4 Section 3.02. Right-of-Way Entry Agreement..................................4 Section 3.03. Bill of Sale..................................................4 Section 3.04. Right-of-Way Sublease Agreement...............................4 Section 3.05. Fiber Use Agreement...........................................4 Section 3.06. Co-occupancy Agreement........................................4 Section 3.07. Additional Documentation......................................4 Section 3.08. Priority of Documents.........................................5


ARTICLE 4 PROJECT SCOPE.....................................................5 Section 4.01. Installation of Conduit System in Segments
and Subsegments...............................................5 Section 4.02. Conduit System Specifications.................................5 Section 4.03. Ownership of Conduit System and Ducts.........................5 Section 4.04. Regen Sites...................................................5


ARTICLE 5 COMPENSATION......................................................6 Section 5.01. Duct Purchase Price...........................................6 Section 5.02. Prepaid Rental................................................6 Section 5.03. IRU...........................................................6 Section 5.04. Adjustments...................................................6 Section 5.05. Assurances....................................................6


ARTICLE 6 PROSECUTION OF PROJECT WORK.......................................7 Section 6.01. Site Availability.............................................7 Section 6.02. Engineering and Design Services...............................7 Section 6.03. Conduit Construction..........................................8 Section 6.04. Changes.......................................................8 Section 6.05. Inspection, Testing and Acceptance............................8


ARTICLE 7 DELIVERY AND PURCHASE OF THE NAIT DUCTS...........................9 Section 7.01. Subsegment Closings...........................................9


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TABLE OF CONTENTS


Section 7.02. Segment Closings and Project Closing..........................9


ARTICLE 8 TAX MATTERS......................................................10 Section 8.01. Transfer Taxes...............................................10 Section 8.02. NAIT's Obligations...........................................10 Section 8.03. T-Cubed's Obligations........................................10 Section 8.04. Reimbursement of Taxes Paid on the Other's Behalf............10 Section 8.05. Cooperation..................................................10


ARTICLE 9 INDEMNIFICATION..................................................10 Section 9.01. General Obligation to Indemnify and Defend...................10 Section 9.02. Defense of Property Rights...................................11 Section 9.03. Notice and Defense of Claims.................................11 Section 9.04. Claims Against Other Parties.................................12 Section 9.05. Limitation on Claims.........................................12


ARTICLE 10 CONDEMNATION....................................................12 Section 10.01. Material Taking..............................................12 Section 10.02. Non-Material Taking..........................................13


ARTICLE 11 REPRESENTATIONS AND WARRANTIES..................................13


ARTICLE 12 DEFAULTS AND REMEDIES...........................................13 Section 12.01. Events of Default............................................13 Section 12.02. Termination Upon Failure to Cure.............................14


ARTICLE 13 ARBITRATION.....................................................14 Section 13.01. Commencement of Arbitration..................................14 Section 13.02. Appointment of Arbitrators...................................14 Section 13.03. Arbitration Proceeding.......................................14 Section 13.04. Arbitration Venue; Other.....................................15


ARTICLE 14 CONFIDENTIALITY.................................................15 Section 14.01. Treatment of Confidential Information........................15 Section 14.02. Compelled Disclosure of Confidential Information.............15


ARTICLE 15 NOTICES.........................................................15


ARTICLE 16 MISCELLANEOUS...................................................16 Section 16.01. Binding Effect of Agreement..................................16 Section 16.02. Cumulative Remedies..........................................16 Section 16.03. Failure to Pursue Remedies...................................16 Section 16.04. Governing Law................................................16


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TABLE OF CONTENTS


Section 16.05. Integration..................................................16 Section 16.06. Interpretation...............................................17 Section 16.07. Force Majeure................................................17 Section 16.08. Recordation..................................................17 Section 16.09. Severability.................................................17 Section 16.10. Survival of Obligations......................................17


ATTACHMENTS


I. BILL OF SALE II. RIGHT-OF-WAY III. FIBER USE AGREEMENT IV. CO-OCCUPANCY AGREEMENT


SCHEDULES


A-1 Memphis - Chattanooga Segment (Route Description)
A-2 Atlanta - Chattanooga Segment (Route Description)


B Conduit System Specifications


C-1 Duct Purchase Price And Pre-Paid Rent Schedule For
The Memphis - Chattanooga Segment
C-2 Duct Purchase Price And Pre-Paid Rent Schedule For
The Atlanta - Chattanooga Segment


EXHIBIT


A Reps and Warranties Disclosure Exhibit


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FIBER OPTIC CONDUIT AGREEMENT


THIS FIBER OPTIC CONDUIT AGREEMENT (this "Agreement"), dated as of August 15, 2000, by and between THOROUGHBRED TECHNOLOGY AND TELECOMMUNICATIONS, INC., a corporation organized and existing under the laws of the Commonwealth of Virginia, with an office at Three Commercial Place, Norfolk, Virginia 235109235 ("T-Cubed"), and NORTH AMERICAN INFOTECH, LLC, a limited liability company organized and existing under the laws of the State of Delaware, with an office at 751 County Road 989, Iuka, Mississippi 38852 ("NAIT").


RECITALS


WHEREAS, T-Cubed, pursuant to a telecommunications services agreement between T-Cubed, on the one hand, and Norfolk Southern Railway Company and Norfolk Southern Properties, Inc. (collectively "Railroad"), on the other, has an obligation to provide telecommunications services to support Railroad's railroad business;


WHEREAS, to assist T-Cubed in fulfilling its obligation, Railroad has accorded T-Cubed certain rights and privileges with respect to its property, including the right to lease, and sublease to others, Railroad's rights-of-way;


WHEREAS, Railroad needs telecommunications infrastructure, including optical fibers, to support its business on or about the rights-of-way covered by this Agreement, and T-Cubed does not have the present ability to install or operate such infrastructure on its own;


WHEREAS, NAIT expects to be engaged in various aspects of the telecommunications business, including the installation and operation of fiber optic communications systems, and NAIT wishes to purchase from T-Cubed and utilize in its telecommunications business certain components of such a system installed in the rights-of-way covered by this Agreement; and


WHEREAS, T-Cubed and NAIT have determined that it is technically and commercially feasible for the fiber optic facilities required by Railroad and T-Cubed, on the one hand, and NAIT, on the other hand, to co-occupy a system installed in the rights-of-way covered by this Agreement, and that each of Railroad, T-Cubed and NAIT will derive benefits from such co-occupancy;


NOW, THEREFORE, in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:


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ARTICLE 1
DEFINITIONS


In, and for the purposes of, this Agreement, certain terms shall have the meanings assigned to them as follows:


"Additional Documentation" shall have the meaning set forth in Section 3.06.


"Cable" means a fiber optic cable, the optical fibers contained therein and any protective casing, and associated splice connections, splice boxes and vaults to be installed as part of the Project. "Cable" does not include any electronics or optronics necessary to create telecommunications capacity on fibers in a Cable.


"Conduit" shall mean a structure containing one or more Ducts.


"Conduit System" shall mean any system of telecommunications Conduit, including pull boxes, handholes, manholes, markers and other related facilities, which is to be established in the Segments, and which, except for the NAIT Ducts, will be owned by T-Cubed. Conduit System does not include any Equipment Shelter or any Regen Site.


"Conduit System Specifications" means the maps, drawings, plans and specifications for the construction and installation of the Conduit System and related facilities for the Segments, showing, by way of example and not of limitation: (i) the proposed location of all Fiber Optic Facilities, including the Conduit System, and their respective distance from the nearest railroad track; (ii) the number and size of Conduit(s) and Ducts to be installed; and (iii) the total mileage for the Segments. The Conduit System Specifications are set forth in Schedule B hereto.


"Duct" shall mean a single enclosed pipe, raceway or inner-duct suitable for the installation of Cables and shall include pull boxes, handholes, manholes, markers and other related facilities.


"Equipment Shelter" means any structure utilized to house regeneration, amplification, electronic, optronic or other equipment to be used in connection with the establishment and operation of telecommunications capacity on the Conduit System.


"Fiber Optic" or "Optical Fiber" shall mean a strand of optical waveguide permitting the transmission of communications signals.


"Fiber Optic Facilities" means a fiber optic telecommunications transmission system and certain appurtenant equipment and structures.


"Indefeasible Right To Use" or "IRU" shall mean a long-term right to use Optical Fibers and associated equipment, and shall include all indicia of ownership in such Optical Fibers, including unrestricted rights of use, with the exception of legal title to the physical Optical Fibers.


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"NAIT Ducts" means the two (2) continuous, vacant, proofed Ducts in the Conduit System that NAIT has agreed to purchase from T-Cubed under the terms and conditions of this Agreement.


"NAIT Facilities" means the NAIT Ducts, any Cables in the NAIT Ducts and any associated equipment installed for and owned by NAIT.


"Project" means the totality of the undertakings of the parties under this Agreement.


"Regen Site" means the site of an optical signal device, which regenerates, amplifies or extends optical signals through optical fiber, together with any associated equipment, facilities, and power source, and the Equipment Shelter in which it is housed.


"SCADA" means Supervisory Control and Data Acquisition.


"Segments" means the Railroad right-of-way segments specified in Section 4.01.


"Subsegment" means a portion of a Segment in which T-Cubed has completed installation of the Conduit System.


"Third-party Section" shall have the meaning assigned in Section 6.01.


ARTICLE 2
TERM


Section 2.01. Term. The term of this Agreement shall commence on the date first written above and shall terminate (unless terminated earlier under Sections 9.02, 10.01 or 12.02):


(a) upon the mutual written agreement of T-Cubed and NAIT; or


(b) at such time as:


(i) with respect to each Subsegment, (A) the
Conduit System has been completed in such Subsegment, and (B)
the parties have conducted a "Subsegment Closing" under
Section 7.01 transferring ownership of the NAIT Ducts in such
Subsegment;


(ii) with respect to each Segment, (A) the
Conduit System has been completed in such Segment, and (B)
the parties have conducted a "Segment Closing under Section
7.02 transferring ownership of the NAIT Ducts in the Segment;
and


(iii) with respect to the Project and this
Agreement, (A) all of the Subsegment and Segment Closings
have been completed, and (B) the parties have conducted the
"Project Closing" under Section 7.02 with respect to the
Project.


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Section 2.02. Relationship after Termination. After the termination of this Agreement in accordance with the foregoing Section 2.01, the relationship between the parties shall be governed by the terms of the Right-of-Way Sublease Agreement, Fiber Use Agreement, Co-occupancy Agreement and any Additional Documentation as the parties may enter into in furtherance of the Project.


ARTICLE 3
DOCUMENTATION


Section 3.01. Fiber Optic Conduit Agreement. The parties intend for this Agreement to provide a framework for T-Cubed's delivery, and NAIT's purchase, of the NAIT Ducts.


Section 3.02. Right-of-Way Entry Agreement. The parties and Railroad have entered into a "Right-of-Way Entry Agreement" of even date herewith. That Right-of-Way-Entry Agreement replaces and supersedes any and all previous agreements between the parties with regard to NAIT's right of entry on, or other access to or use of, certain property of Railroad.


Section 3.03. Bill of Sale. The parties anticipate the delivery to NAIT by T-Cubed of one or more "Bill of Sale," which, individually or collectively, will convey to NAIT all right and title to the NAIT Ducts in the Segments. The form of said Bill of Sale is set forth as "Attachment I" hereto.


Section 3.04. Right-of-Way Sublease Agreement. The parties anticipate entering into one or more "Right-of-Way Sublease Agreement," in the form set forth in "Attachment II" hereto, which will set forth the terms and conditions pursuant to which NAIT will have the right to maintain the NAIT Ducts in the Segments for the Initial Term (as defined in the Right-of-Way Sublease Agreement). The parties intend that each Right-of-Way Sublease Agreement (i)constitutes a lease of tangible property for tax purposes and (ii) constitutes a "section 467 rental agreement" within the meaning of section 467 of the Code, and the regulations promulgated thereunder.


Section 3.05. Fiber Use Agreement. The parties anticipate entering into one or more "Fiber Use Agreement," in the form set forth in "Attachment III" hereto, which will set forth the terms and conditions pursuant to which T-Cubed will have an Indefeasible Right To Use one pair of dedicated Optical Fibers in a Cable installed in one of the NAIT Ducts.


Section 3.06. Co-occupancy Agreement. The parties anticipate entering into one or more "Co-occupancy Agreement," in the form set forth in "Attachment IV" hereto, which will set forth the terms and conditions pursuant to which T-Cubed and NAIT will access and maintain their respective facilities within the Conduit System.


Section 3.07. Additional Documentation. The parties anticipate that the fulfillment of the objectives of this Agreement may require the execution and delivery of instruments or documents not specified here ("Additional Documentation").


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Section 3.08. Priority of Documents. In the event of a conflict or inconsistency between this Agreement and the terms of any Right-of-Way Entry Agreement, Bill of Sale, Right-of-Way Sublease Agreement, Fiber Use Agreement, or Additional Documentation (individually an "Other Document" and two or more collectively "Other Documents"), the terms of the Other Document shall in all cases prevail when interpreting and applying the terms of the Other Document, but only with regard to the specific Other Document, and not with regard to Other Documents of the same nature, unless the Other Documents contain the same language, in the same context, as gave rise to the conflict or inconsistency with this Agreement.


ARTICLE 4
PROJECT SCOPE


Section 4.01. Installation of Conduit System in Segments and Subsegments. T-Cubed is installing a Conduit System, in which the NAIT Ducts will be included, in segments of Railroad's right-of-way which run between: (i) Memphis, Tennessee and Chattanooga, Tennessee, which segment is more fully described in Schedule A-1 (the "Memphis Chattanooga Segment"); and (ii) Atlanta, Georgia and Chattanooga, Tennessee, which segment is more fully described in Schedule A-2 (the Atlanta - Chattanooga Segment"). The parties acknowledge that it is in their mutual interests for T-Cubed to complete and deliver the NAIT Ducts in the Conduit System in Subsegments within the Segments in order to allow, prior to completion of the entire Project, (i) NAIT to commence installation of Cable and other Fiber Optic Facilities in the NAIT Ducts, and (ii) T-Cubed to receive incremental payments of the Duct purchase price and the prepaid rental for the Segments. The parties further acknowledge that the location and number of the Subsegments within the Segments, the length and continuity of each Subsegment, and the sequence in which the Subsegments are built out and the NAIT Ducts therein delivered to NAIT, will depend on Railroad-related use of the Segments f
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