hi Frank, i've been quietly reading the 900+ page Telergy prospectus and had planned to
post some of my findings/ questions on your thread later this week. While i'm not finished
with that project, i would like to bring one section to your attention because i think it is at least somewhat related to your recent Global Crossing Ltd questions. (i bolded part because it is, ugh, "interesting." )
Enjoy:
Page 77 of the Telergy Prospectus:
RELATIONSHIPS WITH GLOBAL CROSSING
INDEFEASIBLE RIGHTS-OF-USE. On September 9, 1999, Telergy Metro and US
Crossing, Inc., a wholly-owned subsidiary of Global Crossing, entered into an
agreement for Telergy Metro to provide US Crossing with an indefeasible
rights-of-use in 96 strands of dark fiber in up to 100 miles in our New York
City ring for a minimum of 20 years. The agreement provides that we must deliver
an indefeasible rights-of-use in our Manhattan ring on or before December 31,
2000 and deliver an indefeasible rights-of-use in our planned New York City ring
on or before December 31, 2002. In the event we fail to deliver the indefeasible
rights-of-use on or before these dates, we will be liable for liquidated damages
in the amount of $25,000 per day up to $2.5 million. In the event we fail to
deliver an indefeasible rights-of-use in our Manhattan ring on or before March
1, 2001, liquidated damages will not be the sole remedy available to US
Crossing. Telergy provided a guarantee of Telergy Metro's performance under this
agreement. We have also agreed to construct additional building entrances that
are within a certain distance from the New York City ring through available
ConEd rights-of-ways and service entrance pipes. US Crossing is required to pay
its pro rata share of all costs associated with constructing those building
entrances.
In exchange for the indefeasible rights-of-use, US Crossing has agreed to
pay annual maintenance fees and to provide various forms of operational support.
US Crossing will further explore its use of our facilities to:
- terminate traffic on our networks in markets not served by the New York
City ring;
- provide back-up redundancy to US Crossing in areas we serve; and
- terminate traffic in and throughout New York City which US Crossing can
not transmit because of capacity overload, disruption or otherwise.
US Crossing has also agreed to meet quarterly for the first year and bi-annually
thereafter to discuss these uses and to assist in our development of new
products and services, planning joint development and marketing of new products,
providing Telergy access to US Crossing training and to advise Telergy of any US
Crossing intellectual property that is available for licensing. US Crossing has
agreed to provide Telergy colocation space in Telergy's operating areas in the
United States where US Crossing has such space available. US Crossing has
further agreed to provide capacity and services on its global network if
available at discounts between 5% and 15% off of list prices that would
otherwise apply. US Crossing has also agreed to participate in the preliminary
design of a Long Island spur route and, subject to final agreement between the
parties, joint construction and installation of that spur route.
We have had conversations with representatives of Global Crossing regarding
our build-out in the Empire City Subway rights-of-way in Manhattan. In one of
those conversations, a representative of Global Crossing indicated that he
believed that they may be entitled to 81 additional fiber as part of their agreement with us.
We do not believe that our current contract requires us to deliver more fiber than
described above.
STOCK PURCHASE. On September 9, 1999, GC Dev, a subsidiary of Global
Crossing, purchased for approximately $40.0 million, 404,576 shares of our
Series A preferred stock and warrants to purchase up to 564,227 shares of our
Class A common stock. See "Description of Capital Stock -- Warrants" and
"Description of Capital Stock -- Series A Preferred Stock". We have also granted
GC Dev demand and piggyback registration rights. See "Description of Capital
Stock -- Registration Rights".
In connection with GC Dev's purchase of our Series A preferred stock and
warrants, we, Brian P. Kelly, Kevin J. Kelly and William M. Kelly, Jr. have
agreed with GC Dev as follows:
DESIGNATION TO OUR BOARD OF DIRECTORS. So long as Global Crossing
and
its affiliates own at least 5% of our fully diluted voting stock or
warrants, options or other convertible securities which are exercisable for
at least 5% of our fully diluted voting stock, Brian P. Kelly, Kevin J.
Kelly, William M. Kelly, Jr. and we will cause one person designated by GC
Dev to be elected to our board of directors. The designee must be an
officer or director of Global Crossing and will be subject to the consent
of Brian P. Kelly, Kevin J. Kelly and William M. Kelly, Jr. Until his
resignation on April 25, 2000, Thomas J. Casey, Vice Chairman and Director
of Global Crossing, served as the GC Dev designee to our board of
directors. Global Crossing has not designated a replacement director at
this time. |
