Rocky Mountain Internet, Inc.
EXHIBIT 10.10 TERMINATION AGREEMENT of joint venture between Rocky Mountain
Internet, Inc. and Zero Error Networks, Inc.
TERMINATION AGREEMENT
This Termination Agreement (this "Agreement") is entered into as of July 3,
1997 (the "Effective Date") by and between Rocky Mountain Internet, Inc., a
Colorado corporation ("RMI"), on the one hand, and Xxx Xxxxxxxxx, an individual,
and Zero Error Networks, Inc., a Colorado corporation ("ZEN") (collectively,
Xxx Xxxxxxxxx and ZEN will be referred to in this Agreement as "ZEN," and RMI
and ZEN will sometimes be referred to individually as a "Party" and collectively
as the "Parties").
RECITALS
A. RMI and Xxx Xxxxxxxxx entered into a Contract Agreement dated
January 25, 1995 (the "Contract Agreement") that provides for a joint venture
(the "Joint Venture") between RMI and Xxx Xxxxxxxxx for the provision of
Internet access and related services in a prescribed geographical area in
Central Colorado. Xxx Xxxxxxxxx has assigned his interest in the Joint
Venture to ZEN.
B. On April 5, 1997, Xxx Xxxxxxxxx, on behalf of himself and ZEN, sent
a written notice to RMI terminating the Contract Agreement and the Joint
Venture. Such termination was to be effective on July 5, 1997. In a letter
agreement between RMI and Xxx Xxxxxxxxx dated June 13, 1997 (the "Letter
Agreement"), the termination date of the Joint Venture was extended to July
15, 1997.
C. RMI and Xxxxxxxxx now desire to agree to the terms and conditions
relating to the termination of the Contract Agreement and the Joint Venture.
AGREEMENT
In consideration of the mutual promises of the parties set forth is this
Agreement and other good and valuable consideration, the Parties agree as
follows:
1. TERMINATION OF RELATIONSHIP. As of the later of the Pueblo Transfer
Date or the Other Operations Transfer Date (each as defined below in Section
2), RMI and ZEN agree to terminate their joint venture relationship under the
Contract Agreement and to terminate the Contract Agreement and the Joint
Venture, each pursuant to the terms of this Agreement. As of such date of
termination, RMI and ZEN will no longer be considered for any purpose as joint
venturers or partners or parties to any similar relationship. In all dealings
with each other after such date of termination, RMI and ZEN will be viewed as
independent contractors dealing with each other at arm's length.
Exhibit 10.10 Page 1
2. TREATMENT OF JOINT VENTURE OPERATIONS.
(a) (i) RMI will receive from the Joint Venture the right to
provide, and after the Pueblo Transfer Date (as defined in Section
2(a)(ii))will provide, all Internet services provided by the Joint Venture on
the Effective Date in Pueblo, Colorado (the "Pueblo Operations"). ZEN
relinquishes all right to provide such services, except that subject to
Section 5(d), ZEN may continue to provide dial-up services to THE PUEBLO
CHIEFTAIN.
(ii) As soon as practicable after the Effective Date, RMI will
lease office space in Pueblo, install in such office space all equipment
required to operate the Pueblo point-of-presence and transfer to RMI the
existing U.S. West Communications telephone access lines and telephone numbers
used by the customers of the Pueblo Operations on the Effective Date (the
"Pueblo Operations Customers"). The establishment of RMI's facilities and the
transfer of the telephone access lines and telephone numbers is anticipated to
occur no later than July 13, 1997, although such date could occur later (the
"Pueblo Transfer Date"). Up to and including the Pueblo Transfer Date, RMI
and ZEN will share revenues from and be liable for expenses attributable to
the Pueblo Operations as provided in the Contract Agreement; provided that
revenues attributable to conduct of the Pueblo Operations on or before the
Pueblo Transfer Date received by RMI or ZEN after September 3, 1997 will be
the sole property of RMI, and ZEN will have no right or claim to such
revenues. After the Pueblo Transfer Date, RMI will be entitled to all of the
revenues from, and bear sole responsibility for the expenses of, the Pueblo
Operations and ZEN will have no entitlement to such revenues nor bear any
liability for such expenses. RMI will indemnify and hold ZEN harmless from
all losses, expenses and claims (including reasonable expenses of attorneys
and other advisors) arising from the conduct of the Pueblo Operations by RMI
after the Pueblo Transfer Date and liabilities and claims described in Section
8 attributable to the conduct of Pueblo Operations on or before the Pueblo
Transfer Date.
(b) (i) ZEN will receive from the Joint Venture the right to
provide, and after the Other Operations Transfer Date (as defined in Section
2(b)(iii)) will provide all Internet services provided by the Joint Venture on
the Effective Date in Alamosa, Leadville and Hayden, Colorado (the "Other
Operations").
(ii) As of the Effective Date, ZEN will be considered the owner
of the telecommunications equipment (but not the telecommunications
facilities) that ZEN has purchased or leased and is using in connection with
the conduct of the Pueblo Operations and the telecommunications facilities and
equipment that ZEN has purchased or leased and is using in connection with the
conduct of the Other Operations, and to the extent RMI has legal title to such
facilities and equipment, RMI will transfer such legal title to ZEN upon ZEN's
request and at ZEN's expense. As of the Effective Date, RMI will be
considered the owner of all other telecommunications facilities and equipment
used in the conduct of the Pueblo Operations and the Other Operations and ZEN
agrees to take at RMI's expense all reasonable actions, if any, requested by
RMI to provide legal title to such facilities and equipment to RMI. Up to and
including the Other Operations Transfer Date (as defined in Section
2(b)(iii)), RMI and ZEN will share revenues from and be liable for expenses
attributable to the Other
Exhibit 10.10 Page 2
Operations as provided in the Contract Agreement; provided that revenues
attributable to the conduct of the Other Operations on or before the Other
Operations Transfer Date received by RMI or ZEN after September 3, 1997 will
be the sole property of ZEN, and RMI will have no right or claim to such
revenues. After the Other Operations Transfer Date, Zen will be entitled to
all the revenues from, and will bear sole responsibility for the expenses of,
the Other Operations, and RMI will have no entitlement to such revenues or
bear any liability for such expenses. ZEN will indemnify and hold RMI
harmless from all losses, expenses and other claims (including reasonable
expenses of attorneys and other advisors) arising from the conduct of the
Other Operations by ZEN after the Other Operations Transfer Date and
liabilities and claims described in Section 8 attributable to the conduct of
the Other Operations on or before the other Operations Transfer Date. Any
expenses or other obligations outstanding as of the Effective Date with
respect to the Other Operations will be payable by RMI and ZEN as set forth in
the Contract Agreement.
(iii) Unless directed otherwise in writing by ZEN, RMI will
continue to provide the services provided by RMI on the Effective Date with
respect to the Other Operations until July 31, 1997, or if extended by ZEN,
until August 31, 1997 (provided that any such extension after July 31, 1997
shall be for a period of not less, nor more, than 31 days)(the "Other
Operations Transfer Date"). After the Other Operations Transfer Date, RMI will
have no obligation or liability to ZEN or any other Person to provide any
services with respect to the Other Operations. After the Other Operations
Transfer Date, ZEN will have sole responsibility to provide all services with
respect to the Other Operations, and will indemnify and hold RMI harmless from
all losses, expenses and claims (including reasonable expenses of attorneys
and other advisers) arising from the failure by RMI to provide such services
after the Other Operations Transfer Date.
(iv) For a period of one year after the Effective Date, ending
on July 3, 1998, RMI will use its commercially reasonable best efforts to
provide the service of forwarding E-Mail for ZEN's customers of the Other
Operations. The customers that will be forwarding E-mail will be determined
by ZEN and a list of such affected customers will be given by ZEN to RMI. ZEN
will pay RMI a fee for this service of $5 per E-mail address per month. If
such fee is not paid when due, as provided by RMI's standard billing
procedures, RMI will cease to provide such service. Prior to July 3, 1998,
ZEN may upon 30 days prior written notice to RMI direct RMI to cease providing
such service. After July 3, 1998, RMI will cease to provide such E-mail
service unless RMI agrees to continue such E-mail service on such terms and
conditions as RMI and ZEN then agree.
3. REIMBURSEMENT OF RMI EXPENSES. ZEN will reimburse RMI at a rate of
$75 per man hour for time spent by RMI personnel in establishing RMI's Pueblo
point-of-presence and in assisting ZEN in the transfer to ZEN of the
facilities and equipment relating to the Other Operations. RMI will provide
ZEN with written invoices documenting the time spent by RMI personnel that is
reimbursable under this Section 3 and ZEN will reimburse RMI in cash within 30
days of the receipt of such invoices.
Exhibit 10.10 Page 3
4. NOTICE TO CUSTOMERS. Prior to the later of the Pueblo Transfer Date
and the Other Operations Transfer Date, RMI and ZEN will cooperate with each
other in sending written notices to all Joint Venture customers as of the
Effective Date that describes how customer accounts will be serviced after the
Effective Date. Neither RMI nor ZEN will send any such notice to any Joint
Venture customer without the other Party's approval of the contents of such
notice; provided that the failure of a Party to respond to a proposed notice
within five days of the receipt from the other Party of such proposed notice
will be deemed to be the approval by such Party of the proposed notice.
Notices sent by RMI and ZEN under this Section 4 need not be identical in form
or content. This Section 4 will cease to apply as of, and not survive, (a)
the Pueblo Transfer Date with respect to notices sent to Pueblo Operations
Customers and (b) the Other Operations Transfer Date with respect to notices
sent to Other Operations Customers.
5. NON-COMPETE AND CONFIDENTIALITY.
(a) Subject to the other provisions of this Section 5, for a period
of one year following the Effective Date, expiring on July 3, 1998, RMI will
not directly solicit the business of Persons who are customers of the Other
Operations on the Effective Date ("Other Operations Customers") or otherwise
actively interfere with ZEN's business relationship with the Other Operations
Customers.
(b) Subject to the other provisions of this Section 5, for a period
of one year following the Effective Date, expiring on July 3, 1998, ZEN will
not directly solicit the business of Pueblo Operations Customers or otherwise
actively interfere with RMI's business relationship with the Pueblo Operations
Customers.
(c) Section 5(a) and Section 5(b) will not prevent (i) RMI or ZEN
from providing services to Other Operations Customers or Pueblo Operations
Customers, as the case may be, if there is no violation of the
non-solicitation and non-interference requirements of such subsections, or
from providing services anywhere within or without the State of Colorado to
any Person other than an Other Operations Customer or a Pueblo Operations
Customer, or (ii) RMI or ZEN, as the case may be, from conducting general
advertising campaigns or other business solicitations of general application
within or without the State of Colorado and specifically within the
geographical areas served by the Pueblo Operations and the Other Operations.
Without limiting the foregoing, the Parties agree and acknowledge that they
each are permitted to compete with each other within the geographical area
served by the Pueblo Operations and the Other Operations, provided that such
competition does not violate Section 5(a) and Section 5(b).
(d) ZEN agrees that for a period of three years following the
Effective Date, expiring on July 3, 2000, ZEN will not provide THE PUEBLO
CHIEFTAIN with services of any kind that facilitate Web services, including
services relating to Web hosting, Web production, server collocation,
dedicated access connections, server consultation and software support.
(e) RMI and ZEN each agree that, for a period of five years from
the Effective Date, expiring on July 3, 2002, it will not recruit or contact
each
Exhibit 10.10 Page 4
other's employees to solicit the employment of such employees.
(f) RMI and ZEN each agree that it will not make any disparaging or
critical remarks to any person about the other or their past business
relationships, including their relationship in the Joint Venture. RMI and ZEN
each will treat the subject matter of this Agreement as confidential and will
not disclose any matter relating to this Agreement to any Person without the
other Party's prior written consent, unless such disclosure is required by any
subpoena, court order, threat of legal duress or any other legal requirement,
in which case the disclosing Party will promptly notify the other Party of
such disclosure.
(g) RMI and ZEN each acknowledge that the scope of the restrictions
set forth in this Section 5 on its activities is reasonable in all respects,
including the duration and geographic scope and with respect to the nature of
the activities so restricted. If, however, any of the provisions of the
foregoing Section 5 are determined by a court to be unconscionable or
unreasonable in their application, the court will interpret and apply those
provisions so as to permit their application to the maximum extent permitted
by law.
6. POINTS OF CONTACT. RMI designates Mr. Xxxxx Loud as its point of
contact for ZEN in connection with all matters arising under this Agreement.
ZEN designates Xxx Xxxxxxxxx as its point of contact for RMI in connection
with all arising under this Agreement.
7. NEWS SERVICE. Upon the request of ZEN, RMI will prepare a written
estimate of the terms and conditions under which it would provide an
electronic news service to customers of ZEN.
8. PREPAID JOINT VENTURE ACCOUNTS. RMI and ZEN acknowledge and agree
that all amounts received prior to the Effective Date by the Joint Venture,
including amounts received for prepaid services, have been or will be
disbursed to RMI and ZEN pursuant to the Contract Agreement. In the event
that a Pueblo Operations Customer demands a refund of any prepaid services,
such refund will be the sole obligation of RMI. If an Other Operations
Customer demands a refund of any prepaid services, such refund will be the
sole obligation of ZEN. The indemnification obligations of the Parties set
forth in Section 2 will apply to liabilities or claims arising from the demand
of any such refunds.
9. REMEDIES OF THE PARTIES. In the event of a breach by RMI or ZEN of
this Agreement, in addition to any other rights that the other Party may have
pursuant to this Agreement, such other Party will be entitled, if it so
elects, to institute and prosecute proceedings under Section 10(d) at law or
in equity to obtain damages with respect to such breach or to enforce the
specific performance of this Agreement by the breaching Party or to enjoin
that Party from engaging in any activity in violation hereof. RMI and ZEN
each agree that a suit at law may be an inadequate remedy with respect to a
breach by a Party of this Agreement, and that upon such breach by a Party, the
other Party will be entitled, in addition to any other lawful remedies
available under Section 10(d), to injunctive relief.
Exhibit 10.10 Page 5
10. MISCELLANEOUS PROVISIONS.
(a) The following rules of construction shall apply to this
Agreement:
(i) All section headings in this Agreement are for the
convenience of reference only and are not intended to qualify the meaning of
any Section.
(ii) Terms used with capital letters will have the meanings
specified. All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, include all other genders, the singular
shall include the plural, and vice-versa, as the context may require. The
word include (and any variation) is used in an illustrative sense rather than
a limiting sense. The word day means a calendar day.
(iii) The term "Person" means any individual, and any
partnership, corporation, limited liability company, trust or other legal
entity. The term "Affiliate" means, with respect to any Person, any other
Person Controlling, Controlled by or under common Control with such Person;
"Control" for such purpose means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
(b) This Agreement may be amended by the parties in writing only.
(c) Except as expressly provided otherwise in this Agreement, a
Party and its Affiliates may engage in, or possess an interest in, other
business ventures of every nature and description, independently or with
others; and the other Party will have no right by virtue of this Agreement in
and to such independent ventures or to the income or profits derived
therefrom. Without limiting the foregoing, except as provided in this
Agreement, each Party may enter into agreements with third parties for the
provision of Internet services within or without the State of Colorado on such
terms and conditions as either of them may decide, and no such agreement will
be considered by the other party to be a violation by a Party or its
Affiliates of any duty or obligation owed to the other Party under this
Agreement.
(d) RMI and ZEN agree that any controversy or claim between or
among them arising out of or relating to this Agreement or the breach thereof
by any of them, shall be resolved by binding arbitration in accordance with
and governed by arbitration proceedings conducted under the auspices of and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "Rules"). The matter shall be decided by one arbitrator who
shall be appointed in accordance with the Rules. Either party may initiate
arbitration proceedings as provided in the Rules. Once the arbitrator is
appointed, the arbitrator shall have the power to enter injunctive relief,
including the issuance of temporary orders and the granting of preliminary
relief pending the outcome of arbitration, without the necessity of posting a
bond or other security. Unless otherwise agreed by the parties to the
arbitration, discovery shall be limited to no more than three depositions per
party and each party's right to request relevant documents prior to the
initiation of the first deposition conducted by such party.
Exhibit 10.10 Page 6
All arbitration hearings conducted hereunder, and all judicial proceedings to
enforce any of the provisions hereof, shall take place in Denver, Colorado.
Such hearings shall be at the time and place within said city as is selected
by the arbitrator. Notice shall be given and the hearing conducted in
accordance with, and the arbitrator shall have the powers described in, the
Rules. At the hearing any relevant evidence may be presented by either party,
and the formal rules of evidence applicable to judicial proceedings shall not
govern. Evidence may be admitted or excluded in the sole discretion of the
arbitrator. The costs and expenses of arbitration, including the fees of the
arbitrators, shall be borne by the losing party, or in such proportions among
the parties to the controversy, as the arbitrator shall determine according to
the Rules.
(e) NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED,
THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS OF THIS
AGREEMENT WILL BE INTERPRETED, CONSTRUED AND APPLIED UNDER THE INTERNAL LAWS
OF THE STATE OF COLORADO (AND NOT THE LAWS PERTAINING TO CONFLICTS OR CHOICE
OF LAW).
(f) This Agreement will be binding upon the parties, their heirs,
executors, personal representatives, successors and assigns, and, as to rights
granted hereunder to such Persons, to a Party's Affiliates and their
successors and assigns.
(g) This Agreement may be executed in several counterparts, each of
which shall be treated as an original for all purposes, and all so executed
shall constitute one agreement, binding on all of the Parties, notwithstanding
that all the Parties are not signatory to the same counterpart. Any such
counterpart will be admissible into evidence as an original against the Person
who executed it. The execution and delivery of this Agreement by facsimile
will be sufficient for all purposes and will be binding upon any Person who so
executes.
(h) No consent or waiver, express or implied, by any Party of any
breach or default by any other Party in the performance of its obligations
hereunder will be deemed to be a consent to or waiver of any further or other
breach or default by such other Party in the performance of the same or any
other obligations of such Party. Failure on the part of any Party to complain
of any act, or failure to act, of any other Party or to declare any other
Party in default, irrespective of how long such failure continues, will not
constitute a waiver by such Party of its rights hereunder.
(i) In the event any sentence, paragraph or other provision of this
Agreement is declared by a court of competent jurisdiction to be
unenforceable, invalid or void for any reason, such sentence, paragraph or
other provision will be deemed severed from the remainder of the Agreement,
and the balance of the Agreement will remain in effect.
(j) All notices, claims, requests, demands, and other
communications hereunder required to be in writing will be deemed to be duly
given if: (a) personally delivered (including delivery by Federal Express or
other national recognized overnight courier or (b) sent by telecopy as follows:
If to RMI, to: Rocky Mountain Internet, Inc.
Exhibit 10.10 Page 7
0000 Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
ATTENTION: Xx. Xxxxx X. Loud
With a copy to: Xxxxxx Xxxxx, Esq.
Xxxxxxx & Xxxxxx L.L.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If to ZEN, to: Zero Error Networks, Inc.
Attention: Xx. Xxx Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxxxxxx, Esq.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000
or to such other address or addresses as the Person to whom notice is to be
given may have previously furnished to the other in writing in the manner set
forth above. Notices will be deemed given and received at the time of such
personal delivery or telecopying.
(n) This Agreement contains the entire understanding among the
Parties relating to the subject matter hereof and supersedes all prior written
or oral agreements among them, including the Letter Agreement, respecting the
subject matter addressed in this Agreement, unless otherwise provided herein.
There are no representations, agreements, arrangements or understandings, oral
or written, among the Parties relating to the subject matter of this Agreement
other than as provided herein.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
WITNESS:
ROCKY MOUNTAIN INTERNET, INC.
By: /s/ Xxxxx X. Loud
----------------------------------
Title: Vice President
Date: July 9, 1997
ZERO ERROR NETWORKS, INC.
By: /s/ Xxx Xxxxxxxxx
----------------------------------
Title: Manager
Date: July 10, 1997
/s/ Xxx Xxxxxxxxx
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XXX XXXXXXXXX
Exhibit 10.10 Page 8
Exhibit 10.10 Page 9
