Exhibit 10.6
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omission.
AMENDED AND RESTATED
SPLITROCK FULL SERVICE AGREEMENT
BY AND BETWEEN
PRODIGY COMMUNICATIONS CORPORATION
AND
SPLITROCK SERVICES, INC.
DATED AS OF FEBRUARY 16, 2000
TABLE OF CONTENTS
-----------------
Page
----
PART 1 -- GENERAL................................................... 4
1.1 Definitions.............................................. 4
1.2 Agreement Structure...................................... 5
1.3 Electronic Communications................................ 6
1.4 Prices................................................... 6
1.5 Payment and Taxes........................................ 7
1.6 Patents and Copyrights................................... 7
1.7 Limitation of Liability.................................. 8
1.8 Your Additional Rights................................... 9
1.9 Changes to and Termination of Services................... 9
1.10 Geographic Scope......................................... 9
1.11 Governing Law............................................ 10
1.12 Notice................................................... 10
1.13 Term..................................................... 10
1.14 Financial Covenants...................................... 10
1.15 Headings................................................. 12
PART 2 -- RESPONSIBILITIES OF THE PARTIES........................... 12
2.1 Mutual Responsibilities.................................. 12
2.2 Our Other Responsibilities............................... 13
2.3 Your Other Responsibilities.............................. 13
PART 3 -- WARRANTIES................................................ 15
3.1 Warranty for Service..................................... 15
3.2 Items Not Covered by Warranty............................ 16
PART 4 -- EQUIPMENT PROVIDED BY SPLITROCK........................... 16
PART 5 -- CONFIDENTIALITY........................................... 16
PART 6 -- SPLITROCK SERVICES........................................ 18
6.1 Description............................................. 18
6.1.1 Dial Access Network................................ 18
6.1.2 ATM Backbone Network............................... 20
Page
----
6.1.3 Regional Servers............................... 21
6.1.4 Network Management and Proxy Servers........... 21
6.2 Service Level Objectives................................ 22
6.2.1 Site Dial Grade of Service (SDGS) Objective.... 22
6.2.2 Availability Objectives........................ 23
6.2.3 Transit Delay.................................. 25
6.3 Our Other Responsibilities.............................. 25
6.4 Your Other Responsibilities............................. 26
6.5 Charges................................................. 27
6.5.1 Monthly Usage Charges (SDGS) Objective......... 27
6.5.2 Other Monthly Charges.......................... 28
6.5.3 Payment Terms.................................. 28
6.5.4 Global Service Provider........................ 29
6.6 Forecasts............................................... 31
6.7 Changes and Default..................................... 32
6.7.1 Undesirable Conditions......................... 32
6.7.2 System Wide Failure............................ 33
6.7.3 Financial Related Defaults..................... 33
6.7.4 Default (other than for Sections 6.7.1,
6.7.2 or 6.7.3).............................. 34
6.8 Other Terms............................................. 35
6.9 Auditing Procedures..................................... 35
6.10 Primary Provider........................................ 35
6.11 Additional Services and Products........................ 36
6.12 Alternative Dispute Resolution.......................... 36
PART 7 -- MISCELLANEOUS........................................... 37
7.1 Publicity............................................... 37
7.2 Amendment............................................... 37
7.3 Counterparts............................................ 38
7.4 Entire Agreement........................................ 38
APPENDIX A-1....................................................... 39
AMENDED AND RESTATED
SPLITROCK FULL SERVICE AGREEMENT
PREAMBLE
THIS AMENDED AND RESTATED SPLITROCK FULL SERVICE AGREEMENT, dated as of
February 16, 2000 (the "Agreement") is made by and between Prodigy
Communications Corporation ("Prodigy") and Splitrock Services, Inc.
("Splitrock"), a Delaware corporation, and shall become effective as of
January 1, 2000.
WHEREAS, pursuant to that certain Full Service Agreement, dated June 24,
1997, and thereafter amended May 18, 1999, by and between Prodigy and Splitrock,
as amended, the "Full Service Agreement", Splitrock acts as the primary provider
of network services to Prodigy on the terms and conditions set forth therein;
WHEREAS, Prodigy and Splitrock desire to amend and restate the Full Service
Agreement as set forth herein;
References throughout this Agreement to "you" and "your" mean Prodigy; and
references to "we", "us" and "our" mean Splitrock and its assignees. References
throughout this Agreement to "party" or "parties" mean either Prodigy or
Splitrock, as the context requires and unless otherwise defined except that
"third party" means anyone other than a "party". Reference is made to that
certain Definitive Agreement, dated as of June 24, 1997, and that certain
Transition Services Agreement between the parties dated June 24, 1997
("Transition Services Agreement") and that certain Sublease Agreement dated as
of June 24, 1997 ("Sublease Agreement") each by and between Prodigy and
Splitrock.
AGREEMENT
The parties hereto agree that the following provisions of this Agreement shall
be effective at 12:0l am (New York time) July 1, 1997: Part 1, Part 2, Part 5,
and Sections 6.5, 6.10, 6.11 and 6.12 and all other rights and obligations of
the Company and Provider herein shall only become effective as of the end of the
Transition Period (as hereinafter defined).
-3-
PART 1 - GENERAL
-------------------------------------------------------------------------------
1.1 DEFINITIONS
-----------
"Equipment" is a machine, including its features, conversions, upgrades,
elements, or accessories, or any combination of them. The term "Equipment"
includes Splitrock Equipment and any non-Splitrock Equipment we provide to
you, but excludes Programs.
"Materials" are work products (such as programs, program listings,
programming tools, documentation, reports, and drawings) that we may
deliver to you during a project. The term "Materials" does not include
Programs.
"Product" is a Program or Equipment.
"Program" is the following, including features and any whole or partial
copies:
1. machine-readable instructions;
2. a collection of machine-readable data, such as a data base; and
3. related licensed materials, including documentation and listings,
in any form.
The term "Program" includes a Splitrock Program and any non-Splitrock
Program that we may provide to you. The term does not include
licensed internal code or Materials.
"Services" as used herein describes the network services (not to include
satellite) we will provide, as more particularly described in Section 6.1.
In addition, any new service you request or additional service you request,
not already contemplated by this Agreement, and that we agree to provide is
not the subject of this Agreement until the terms, conditions and prices of
such service shall be confirmed in Transaction Documents. In addition,
Services provided to you hereunder shall include reports, surveys and
analysis reasonably required to fulfill the purposes of this Agreement, and
shall not be subject to any additional charge.
"Subscriber" is any user authorized to access basic Prodigy Classic or
basic Prodigy Internet (as they currently exist), regardless of whether
such user actually uses your services in any month or regardless of whether
or not you receive payment from that user.
"Subscriber Count" shall mean the total number of Subscribers, subject to
the limitations in this definitional paragraph. For Prodigy Classic,
multiple User Identifications
-4-
associated with one Subscriber will count as one Subscriber in the
Subscriber Count. For Prodigy Internet, multiple User Identifications
associated with one Subscriber will count as one Subscriber in the
Subscriber Count, provided only one such User Identification per Subscriber
can access the Service at any one time. A Subscriber to both Prodigy
Classic and Prodigy Internet under the "Prodigy Combo Plan" will count as
one Subscriber in the Subscriber Count. Any Subscriber who is not capable
of accessing the Service shall not be counted in the Subscriber Count.
"System" is the Services and Products we provide together under this
Agreement that we identify to you as a System, which identification is in
writing.
"Transition Period" is the period from July 1, 1997 until the earlier of
(i) December 31, 1997 or (ii) on the effective date of a notice from
Provider stating that it intends to terminate the Transition Services
Agreement which effective date may only be the last day of a calendar
month.
"User Identification" is a code or codes which enable authorization or
access to programs, data or equipment through a Service.
1.2 AGREEMENT STRUCTURE
-------------------
Attachments
-----------
Some Services and Products have terms in addition to those we specify in
this Agreement. We will provide the additional terms in documents called
"Attachments," which are also part of this Agreement.
Transaction Documents
---------------------
For each business transaction, we will provide to you the appropriate
"Transaction Documents" before the transaction occurs that confirm the
details of the transaction, which Transaction Documents shall not be
effective against or in favor of either party, unless and until each party
agrees to each appropriate set of Transition Documents in writing.
Conflicting Terms
-----------------
If there is a conflict among the terms in the various documents, those of
an Attachment prevail over those of this Agreement. The terms of a
Transaction Document prevail over those of both the Attachments and this
Agreement.
Your Order
----------
-5-
You may order a Service or Product in writing, including a request written
on paper and delivered to us and a request sent via facsimile to us.
Our Acceptance of Your Order
----------------------------
A Service or Product becomes subject to this Agreement when we accept your
order by sending you a Transaction Document which accepts expressly and
precisely the terms of the order.
Your Acceptance of Additional Terms
-----------------------------------
You accept the additional terms in an Attachment or Transaction Document by
signing it.
1.3 ELECTRONIC COMMUNICATIONS
-------------------------
You and we may communicate with the other by electronic means for
information purposes only, such as through electronic or Prodigy Mail. Any
electronic communication must be followed by written confirmation or
telecopied in order to be binding on either party. Documents which include
handwritten signatures may be transmitted by telecopier, and shall be
deemed binding without the need for original signatures. Nevertheless,
original signature copies are preferred.
1.4 PRICES
------
The following are the bases on which we may require the amount payable for
a Service or Product to be paid, with an example of each:
1. one-time (Service installation charges);
2. recurring (a periodic charge for Services);
3. a combination of both (an initial charge and a monthly license charge
for a Program); or
4. usage (network traffic charges).
We will specify the amount and basis for the particular Service or Product.
If additional Products or Services are added, the prices will be set forth
in a Transaction Document. Except as herein provided specifically, no
additional charges shall be imposed or incurred for Services which we are
obligated to provide under this Agreement.
-6-
1.5 PAYMENT AND TAXES
-----------------
You shall pay:
1. usage and recurring charges according to Section 6.5.
2. all other charges when or after you incur them.
Amounts due are payable as we specify in the invoice which invoice shall be
consistent with the conflict hierarchy set forth in Section 1.2,
Conflicting Terms, or, with respect to dial up network services, as
provided in Section 6.5. You agree to pay accordingly. You agree to pay
any tax on the Services we provide to you. You are responsible for
personal property taxes for each Product that you purchase and each Program
that you license from the date we ship it to you or otherwise make it
available to you. "Taxes" as used in this Agreement shall not include any
FCC charges or other charges payable to any government organization other
than a taxing authority, all of which we shall pay.
1.6 PATENTS AND COPYRIGHTS
----------------------
For purposes of this Section only, the term "Product" includes Materials
alone or in combination with Products we provide to you as a System.
If a third party claims that a Product we provide to you infringes that
party's patent or copyright, we will defend you against that claim at our
expense and pay all costs, damages, and attorney's fees that a court
finally awards, provided that you:
1. promptly notify us in writing of the claim; and
2. allow us to control, and cooperate with us in, the defense and any
related settlement negotiations. At your option and at your cost, you
may retain counsel to advise you as you work with us.
If such a claim is made or appears likely to be made, we will take
reasonable steps, and you agree to permit us to do so, to enable you to
continue to use the Product, or to modify it, or replace it with one that
is at least functionally equivalent. If we determine that none of these
alternatives is reasonably available, you agree to return the Product to us
on our written request and we may terminate the affected Service at no
further charge to you, in which case we will refund to you the unused
prorata portion of any advance payments for the Service and/or the Product.
YOU AGREE THAT YOUR RIGHTS, AS PROVIDED BY THIS SECTION 1.6, REGARDING ANY
CLAIM OF INFRINGEMENT ARE LIMITED AND THE REMEDIES IN THIS SECTION WILL BE
YOUR SOLE AND EXCLUSIVE REMEDY FOR ANY SUCH CLAIM.
-7-
Notice of Infringement
----------------------
All notices of patent or copyright infringement permitted or required by
this Agreement will be in writing and will take effect upon receipt.
Claims for Which We are Not Responsible
---------------------------------------
We have no obligation regarding any claim to the extent it is based on any
of the following:
1. your modification of a Product, or a Program's use with equipment and
programs other than the Equipment and Programs with which the Program
is designed to operate:
2. the combination, operation, or use of a Product with any product,
data, or apparatus that we did not provide unless we had written
notice and acknowledged in writing receipt of notice that the intended
use of the Product was for a use with a product, data, or apparatus we
did not provide; or
3. infringement by a non-Splitrock Product alone, as opposed to its
combination with Products we provide to you as a System.
1.7 LIMITATION OF LIABILITY
-----------------------
Circumstances may arise where, because of a default on our part or other
liability, you are entitled to recover damages from us. In each such
instance, regardless of the basis on which such party is entitled to claim
damages, we are liable only for:
1. payments referred to in our patent and copyright terms described
above;
2. bodily injury (including death), and damage to real property and
tangible personal property; and
3. the amount of any other actual loss or damage, in excess of $100,000
or the charges (if recurring or usage, 12 months' charges apply) for
the Service or Product that is the subject of the claim.
This limit also applies to any of our subcontractors, agents and
Program developers. It is the maximum for which we, our
subcontractors, agents and program developers are collectively
responsible.
-8-
Items for Which Neither Party is Liable
---------------------------------------
Under no circumstances are either party or its subcontractors, agents or
Program developers liable for any of the following:
1. third-party claims against the other party for losses or damages
(other than those under the first two items listed in 1.7 above)
except for willful acts or acts of gross negligence;
2. loss of, or damage to, records or data except for any actual loss or
damage willfully and intentionally caused by the other party or caused
by gross negligence, subject to the limitation contained in Section
1.7(3) above; or
3. economic consequential damages (including lost profits or savings) or
incidental damages, even if either party is informed of their
possibility.
EACH PARTY AGREES THAT ITS RIGHTS ARE LIMITED BY THIS SECTION 1.7, THAT THE
LIMITATIONS PROVIDED HEREIN ARE FAIR AND EQUITABLE, AND EACH PARTY HEREBY
WAIVES ANY RIGHT OR REMEDY IT MAY HAVE FOR THE RECOVERY OF ANY OTHER
DAMAGES.
1.8 YOUR ADDITIONAL RIGHTS
----------------------
You may have additional rights under certain laws (such as consumer laws)
which do not allow the exclusion of implied warranties, or the exclusion or
limitation of certain damages. If these laws apply, our exclusions or
limitations may not apply to you.
1.9 CHANGES TO AND TERMINATION OF SERVICES
--------------------------------------
If a third party claims that a Product we provide as part of a Service
infringes a patent or copyright, we reserve the right to first substitute a
different Product, or alternatively to terminate the Service effective
immediately.
1.10 GEOGRAPHIC SCOPE
----------------
All of your rights, all our obligations, and all licenses are valid only in
the United States, including Hawaii and Alaska.
-9-
1.11 GOVERNING LAW
-------------
This Agreement shall be governed by and interpreted under the laws of, any
action shall be brought in the state or federal courts located in, and any
arbitration proceeding shall be located in, the domicile of the party who
is an initial defendant or the party upon whom an initial demand for
arbitration is served.
1.12 NOTICE
------
All notices permitted or required by this Agreement will be sent to the
following address and will take effect upon receipt:
Prodigy Communications Corporation
00 X. Xxxxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: President
Splitrock Services, Inc.
0000 Xxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: President
1.13 TERM
----
The initial term of this Agreement shall be for a period of 54 months
("Initial Term") commencing on July 1, 1997 and continuing through December
31, 2001; provided, however, that the term of this Agreement shall be
automatically extended for one year on December 31, 2001 and on each
December 31 thereafter unless either party shall have given written notice
to the other at least one year prior thereto that the term of this
Agreement shall not be so extended.
1.14 FINANCIAL COVENANTS
-------------------
From the date hereof until June 30, 1999, we covenant and agree that we
will:
1. Financial and Other Information
(a) Annual Financial Reports. Furnish you not later than 90 days after
the close of each 1997 and 1998 calendar year a balance sheet as of
December 31, 1997 and December 31, 1998, statements of operations and
statements of cash flows for the period from inception through each
applicable period, and such other comments and financial details as are
usually included in similar financial statements. Such financial
statements
-10-
shall be prepared in accordance with generally accepted accounting
principles and shall be audited by independent certified public accountants
of recognized standing selected by us and shall contain unqualified
opinions as to the fairness of the statements therein contained, shall be
unqualified in all other respects, and shall not contain any explanatory
language which makes reference to uncertainties such as: (i) going concern,
(ii) litigation or (iii) any other potential liabilities or impairment of
our assets.
(b) Quarterly Financial Statements. Furnish you not later than 45 days
after the close of each calendar quarter through June 30, 1999, beginning
with the quarter commencing July 1, 1997, financial statements containing
our balance sheet as of the end of such period and statements of operations
and cash flows up to the end of such period. These statements shall be
prepared on a basis consistent with our normal accounting practices and the
accuracy of the statements shall be certified as true by our chief
executive or financial officer.
(c) Payables. Furnish you not later than 45 days after the close of
each calendar quarter through June 30, 1999, beginning with the quarter
commencing July 1, 1997, a total of amounts which are due and payable and
have not been paid by their contractual due date, and a list of each
creditor to which payments over $25,000 are due.
(d) Taxes. Pay promptly and within the time that they can be paid
without interest or penalty, all taxes, assessments and similar imposts and
charges of every kind and nature lawfully levied, assessed or imposed upon
us, except to the extent being contested in good faith and furnish you
evidence of such payment on a quarterly basis within 45 days after the
close of each calendar quarter through June 30, 1999.
(e) Liens and Litigation. Through June 30, 1999, furnish you within
ten days of receipt of notice of any lien or lawsuit which is threatened or
pending against us and which involves a claim in excess of $100,000.
(f) Projections. Thirty days after we have received your forecasts
referenced in Section 6.6 hereof for each applicable quarter, we will
provide you with plans and projections for income, expenses, capital
receipt and expenditure, for the immediately succeeding fifteen (15) month
period. Included with the statements to be provided quarterly pursuant to
Section 1.14 (a)-(e) hereof, we shall also provide you with evidence of our
results as compared to past projections, which shall also be certified as
true by our chief executive or financial officer.
2. Insurance. Maintain valid and effective insurance policies that cover
our properties and risks of the business in such types and amounts as are
consistent with customary practices and standards of companies engaged in
businesses and operations similar to ours and furnish you not later than 45
days after the close of each calendar quarter through June 30, 1999,
beginning with the quarter commencing July 1, 1997, certificates evidencing
such insurance. After you receive such certificate, you may
-11-
request that we obtain additional coverage, consistent with reasonable
business practices, which we shall obtain,.
3. [INTENTIONALLY DELETED]
4. Continuing Annual and Quarterly Reporting. The financial reporting
requirements of subsection 1.(a) and (b) hereof shall continue after June
30, 1999 if, at that time, our cash plus past due accounts receivable from
you less past due accounts payable less debt other than capital leases is
an amount less than $5,000,000.
1.15 HEADINGS The headings contained herein are inserted for convenience of
--------
reference only and are not intended to be part of or to affect the meaning
or interpretation of this Agreement.
PART 2 - RESPONSIBILITIES OF THE PARTIES
-------------------------------------------------------------------------------
2.1 MUTUAL RESPONSIBILITIES
-----------------------
You and we agree that under this Agreement:
1. neither party grants the other the right to use its trademarks, trade
names, or other designation in any promotion or publication;
2. all information exchanged by both parties is nonconfidential unless
such information is conspicuously marked as confidential. Part 5 of
this Agreement describes confidentiality and our responsibilities for
handling data and information you transmit using the Services;
3. each party grants the other only the licenses specified. No other
licenses (including licenses under patents) are granted;
4. each party will promptly notify the other if it becomes aware of any
unsafe conditions or hazardous materials to which the other's
personnel would be exposed at any of its facilities;
5. NEITHER PARTY WILL BRING A LEGAL ACTION MORE THAN TWO YEARS AFTER THE
CAUSE OF ACTION AROSE UNLESS SUCH CLAIM IS AS A RESULT OF A THIRD
PARTY CLAIM, IN WHICH EVENT THE TWO YEAR PROVISION SHALL NOT APPLY;
and
-12-
6. neither party is responsible for failure to fulfill its obligations
(other than payment obligations) due to causes beyond its reasonable
control, including without limitation, acts of God, war, riots,
blockades, insurrections, labor disputes, lockouts, earthquakes,
fires, storms, lightning, power failures, floods, natural disasters,
accidents, new or changed governmental regulations or laws, or other
similar events beyond the reasonable control of the party relying on
this provision of the Agreement ("Force Majeure").
2.2 OUR OTHER RESPONSIBILITIES
--------------------------
We will:
1. comply with all applicable laws regulations or conventions including
those related to data privacy, international communications, and
exportation of technical or personal data. You are responsible for
obtaining all necessary governmental regulatory or statutory approvals
for the offering of your services;
2. not assign, or otherwise transfer, this Agreement, or our rights or
obligations under it, or delegate our rights or your obligations,
other than to an affiliate, without your prior written consent which
consent will not be unreasonably withheld, provided, however, that we
will be able, without your consent, to assign any rights and delegate
any duties contained in this Agreement to any entity into which we may
be merged or consolidate or which purchases all or substantially all
of our assets.
3. obtain install and maintain suitable equipment as necessary to provide
the Services to you;
4. fulfill all regular activity and performance reporting and analysis,
including service disruption analysis, periodic audits, and attend and
participate actively in monthly status meetings which shall be held no
less frequently than monthly between the parties; and
5. be responsible for data, programs or other material that we provide
for use with the Service.
-13-
2.3 YOUR OTHER RESPONSIBILITIES
---------------------------
You agree:
1. not to resell any Service, without our prior written consent, and any
attempt to do so is void. We expressly consent to your selling other
versions of your service at the retail level, but you may not
wholesale or resell our Service.
2. not to assign, or otherwise transfer, this Agreement or your rights
under it, or delegate your rights without our prior written consent,
which consent will not be unreasonably withheld, provided however,
that you will be able, without our consent, to assign this Agreement
or to assign any rights or delegate any duties contained in this
Agreement to Prodigy Communications Limited Partnership (an operating
limited partnership of Prodigy Communication Corporation and SBC
Communications, Inc.) an affiliate of yours.
3. to allow us to install mandatory engineering changes (such as those
required for safety) on Equipment.
4. that you are responsible for the results obtained from the use of the
Services and Products.
5. to provide us with sufficient, and safe access to your facilities for
us to fulfill our obligations during reasonable hours and under such
conditions as you may reasonably impose.
6. to control and be responsible for issuance of User Identifications and
their distribution to Subscribers.
7. to comply with all applicable laws, regulations or conventions
including those related to data privacy, international communications,
and exportation of technical or personal data. You are responsible
for obtaining all necessary governmental, regulatory, or statutory
approvals for your use of the Services.
8. to provide us terminal access to your network management system so
that we can determine the operating status of each modem and
component.
9. to be responsible for data, programs, or other material that you
provide for use with a Service.
10. that we have no liability to those whom you authorize to access a
Service.
-14-
11. that we are not responsible for any data, or text, including the
content, and including its accuracy, which is received, routed or sent
as a result of the Services we provide hereunder.
12. that we are free to enter into any agreements with third parties that
are similar or dissimilar to this Agreement without your consent or
approval.
13. to take reasonably necessary actions to reduce network demand,
including without limitation, ensuring that all timed-out features are
fully effective and operating, performing routine and aggressive
audits of network services to eliminate "fraud", and encouraging
Subscribers to read and compose e-mail offline.
14. to terminate all Services related to Prodigy Classic no later than
December 31, 1998. Upon the termination of all such Services, any and
all provisions contained herein relating specifically to Prodigy
Classic, including but not limited to the definition of a Prodigy
Classic Subscriber and the operation and maintenance of Prodigy
Classic related equipment, shall terminate.
PART 3 - WARRANTIES
--------------------------------------------------------------------------------
3.1 WARRANTY FOR SERVICES
---------------------
For each Service, we warrant that we will perform it:
1. in a workmanlike manner consistent with industry standards,
2. according to its current description contained in this Agreement, an
Attachment, or a Transaction Document, and
3. in a manner so that the Service and the network shall be compatible
with your equipment.
OTHER THAN AS EXPRESSLY PROVIDED HEREIN, WE DISCLAIM ALL WARRANTIES,
INCLUDING THE IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NON-INFRINGEMENT.
-15-
3.2 ITEMS NOT COVERED BY WARRANTY
-----------------------------
We do not warrant uninterrupted or error-free operation of a Service or
Product.
We will specifically identify our Services and Products that have a
warranty, other than as described in this Part 3, and the terms of that
warranty.
Unless we specify otherwise, as set forth in this Agreement, including
Section 3.1, we provide Materials, non-Splitrock Services and non-Splitrock
Products on an "AS IS" basis without any warranty from us. However, non-
Splitrock manufacturers, suppliers, or publishers may provide their own
warranties to you.
PART 4 - EQUIPMENT PROVIDED BY SPLITROCK
--------------------------------------------------------------------------------
We may provide Equipment to be installed on your premises for the purpose
of providing a Service. The Equipment is and will remain our asset or that
of our lessor, and will not become a fixture or realty.
Certain Equipment may contain licensed internal code. We will identify
this Equipment to you.
No right, title, or interest in or to the Equipment, or licensed internal
code associated with it, or any related planning information, is conveyed
to you. However, we will use such Equipment to provide Services to you.
PART 5 - CONFIDENTIALITY
--------------------------------------------------------------------------------
We agree not to disclose your confidential information, including programs
and data transmitted using the Services and usage forecasts as described in
section 6.6, nor shall we disclose your customer's private information,
such as name, address, credit card or other information which may be
transmitted using the Service. However, we have no obligation of
confidentiality relating to your information which is not confidential or
which you do not conspicuously xxxx as confidential. We acknowledge that
all of your customer information, and information about your individual
customers is confidential. Information that is not confidential includes
information which is:
-16-
1. either currently publicly available or becomes publicly available in
the future without our breach of any obligation or responsibility
described in this Agreement;
2. rightfully received by either you or us from a third party, where the
information was received without any obligation of confidentiality
associated with it;
3. already in our possession without an obligation of confidentiality;
4. independently developed by us;
5. approved for disclosure by you; or
6. treated by you as nonconfidential.
We also have no liability for any disclosure of information that occurs as
the result of our delivery of your information, at your direction and to a
recipient you designate, when the delivery is made in the normal course of
Service provision (for example, to an incorrect delivery address provided
by you to us). We may disclose information to the extent required by law,
but will give you as much advance notice of such potential disclosure as
reasonably possible.
Handling of your information
----------------------------
We will handle your information marked confidential in a confidential
manner, and you will not permit our confidentially marked information to be
disclosed.
You are responsible to develop and maintain procedures (apart from the
Services) to protect your information.
We will allow you to audit our security procedures to ensure that they are
reasonable and customary, and will notify you of any material security
breach that affects the Services. You agree that any information regarding
our security systems will be our confidential information.
For the purposes of operation and maintenance, we may use, copy, store, and
distribute internally your information but only to the extent necessary for
such operation and maintenance. We shall have no such rights with respect
to your customer information, or with respect to information about your
customers. We agree not to reverse assemble or reverse compile your
information. We will use reasonable procedures, but we do not guarantee
that these procedures will prevent the loss of, alteration of, or improper
access
-17-
to, your information. You agree that access to your information will not
prohibit or prevent us from developing or marketing any Service or Product.
For transmission carried over interexchange carriers' and local exchange
carriers' facilities, we are not responsible for transmission errors, or
corruption or security of data.
PART 6 - SPLITROCK SERVICES
--------------------------------------------------------------------------------
6.1 DESCRIPTION
-----------
We will provide you network services consisting of the following
components:
. Dial access network as described in Section 6.1.1
. ATM backbone network as described in Section 6.1.2
. Regional Servers connectivity as described in 6.1.3
. Network Management and Proxy Servers as described in Section 6.1.4
6.1.1 Dial Access Network
-------------------
We will provide to you dial access for data transport for your Subscribers
as described in this Agreement as a "Service". We will provide this
Service to you in all locations in which, on the effective date of this
Agreement, such dial access service already exists. You agree to provide
to us a list of current dial access locations, which list shall be Appendix
"A" to this Agreement. Effective March 15, 2000 or at such time within 60
days thereof as may be agreed upon, the Service provided at dial access
locations identified on Appendix "A-1" will be discontinued.
We may substitute a new site for an existing location upon 30 days prior
notice of change, with 60 days simultaneous usage. You may request new
sites to exceed an 80% coverage, by population, for local dial access; but
we will not be obligated to provide dial access Service in any new dial
access location with usage in any month of less than 5,000 dial hours
unless we review the location for the new site and approve the creation of
a new site at such location, in our sole discretion. We can modify the
site coverage only with your permission, unless the modification is for a
substitution of existing coverage, in which case we do not need your
permission. Any new sites added by us for Services will be available to
you if you choose to use them.
-18-
The data traffic dial access Service shall include the receipt of inbound
data dial traffic from your Subscribers and the muting of such traffic to
another Subscriber, to a proxy server, to a regional server, to your data
center at Yorktown or to the selected Internet Network Access Points
("NAP"). We will not support initiating a call to another Subscriber's
telephone.
We shall, in our sole discretion, decide the number of dial ports we
provide to serve each site, as well as the method we use to provide Service
to each site provided the grades and standards of service as set forth in
this Agreement are met. Examples of methods we may use to provide this
Service include:
. a physical site presence with modem ports; or
. a virtual presence using call forwarding or a foreign exchange.
All new access equipment provided by us will have speed capacity with
respect to backbone access, and with respect to Subscriber access,
consistent with the service that can and will be provided from that site.
For example, we will not install equipment with a speed higher than the
existing line infrastructure can support, except we acknowledge that we
shall install 56K capable bps modems, although current FCC regulations
prohibit transmission at speeds in excess of 53K bps, and, other conditions
beyond our control may decrease the actual connection speed.
Specifically identified protocols to be supported include Serial Line
Internet protocol (SLIP), Prodigy Link Level Protocol (PLLP), and Point-to-
Point Protocol (PPP).
We shall be responsible for.
. inbound communication facilities (such as xxxx groups, measured
business lines or DID trunks);
. modem hardware including ports and chassis; and
. network equipment and communications facilities to transport traffic
from our dial site to other sites, to your data center at Yorktown
and the seven NAPS.
We shall transport the dial data traffic to you via TCP/IP over ATM. We
will not change the terms or conditions of a Service without your approval,
which you agree will not be unreasonably withheld.
-19-
6.1.2 ATM Backbone Network
--------------------
The Splitrock ATM backbone network will be operational on or before
December 31, 1997 and will be based on the Yurie LDR200/50 ATM switches or
similar ATM switches. This network is based on ATM switches, supporting
TCP/IP protocol for Prodigy Classic and Prodigy Internet services. Prodigy
Classic transmission which requires SNA will be encapsulated as TCP/IP.
Each dial access site will be upgraded with a LDR200, LDR50 or similar ATM
switch. A backbone transmission facility based on ATM protocol will
interconnect the dial access sites to Yorktown, New York. Since the Yurie
ATM switches use standard ATM protocol, the interconnections can be a
mixture of FT1, T1, T3 and OC-3 or publicly available switched ATM
services.
Effective July 1, 1997 but subject to the Transition Services Agreement, we
shall also provide, maintain and manage sufficient bandwith connections to
Yorktown, New York to support the Service Level Objectives in Section 6.2.
The transmission facilities may be DS-3, OC-3 or other appropriate
transmission services available at the time. The transmission facilities
will be terminated by a LDR200 and Centillion C100 combination or
equivalent provided by us at your Yorktown facility. The transmission
facilities will be diversely routed and fully separated and connect to you
via selected routers. The two Splitrock C100s will connect to existing
Prodigy 6611 or equivalent routers, which support the Prodigy internal LAN
at Yorktown.
The Equipment we provide at Yorktown will be installed on your premises
solely for our use in providing our Services. This Equipment is provided
under the terms specified in the Section "Equipment We Provide."
In addition, at locations selected by us agreed, we will provide
interconnection of the network to the Internet via DS3 to suitable NAPS.
This will provide bandwith between the NAP and Yorktown as well as between
the NAP and the dial up user. We will have the sole right to select the
choice of the NAP provider at each location. You will be responsible for
complying with all protocol requirements for layer 3 and above as set forth
by the NAP providers that we select.
-20-
6.1.3 Regional Servers
----------------
You may provide, maintain and manage regional servers at sites determined
by you which are to be geographically dispersed and co-located at our
network hub sites; such equipment is limited to that which may only be
installed in one standard 19" rack per site ("Regional Servers"). You
shall provide, maintain and manage diagnostic equipment, connection
equipment that you may use to connect to us and associated analog phone
lines which you may use to manage your Regional Servers. In addition, you
shall provide the electric power cables and the equipment connection cables
for the equipment you provide, including those cables, required to connect
your equipment to our network equipment. You also agree to comply with all
safety requirements at each site. Each Regional Server will be EtherNet
connected to our network. Neither we nor any other customer of ours shall
use your Regional Servers for any purpose except to support Prodigy Classic
and Prodigy Internet. We shall provide you with access to our sites for
purposes of maintaining, upgrading and servicing these Regional Servers at
no additional cost to you.
You are responsible for separately procuring from us the upstream
connection from the Regional Server. The upstream connection is defined as
the network facilities used to transport traffic from the Regional Server
to locations other than the source dial node (such as Yorktown or the
Internet). Cost for such services will be as provided in Section 6.5.2
section 2 of this Agreement
The Regional Servers will not be included in the service level objectives,
as provided in Section 6.2.
6.1.4 Network Management and Proxy Servers
------------------------------------
Network Management
------------------
We will maintain XXXX until we replace it with a new network management
system which encompasses all XXXX functions. You will make available to us
the mainframe computer resources necessary to run XXXX for the purpose of
managing the network at no cost to us. We will provide you read only
terminal access to XXXX and any other network management system used by us
so that you can determine the operational status of any modem or network
component.
Proxy Servers
-------------
We will assume your existing Unix servers and all hardware and software
maintenance costs as they directly relate to proxy functions. These
servers will be placed at our hub and peering sites. We will also provide
for a fee additional new Unix based servers at
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hub sites when needed and requested by you. Unix based servers will not be
supported at all POP sites.
We intend to use Windows NT based servers for the POP sites and for future
hub sites for the proxy server functions.
6.2 SERVICE LEVEL OBJECTIVES
------------------------
We will have four service level objectives for both Prodigy Internet and
Prodigy Classic:
1. Site Dial Grade of Service (SDGS) objective of P.01 during the peak or
busiest hours of the day (We will use your algorithms in effect as of
June 23, 1997 for purposes of measuring the SDGS and Grade of Service);
2. Site System Availability (SSA) objective of 99.5%;
3. Overall System Availability (OSA) objective of 99.5%; and
4. Transit Delay (TD) objective average of 100 milliseconds or less 95%
of the time and 150 milliseconds or less 99% of the time, however, TD
objective average for Alaska and Hawaii is 300 milliseconds. (We will
use your algorithms in effect as of June 23, 1997 for purposes of
measuring the TD and Grade of Service)
NOTE: A P.01 Grade of Service means that no more than 1% of calls are
denied access during the peak busy hour of the weekly measured period. A
P.03 Grade of Service means that no more than 3% of calls are denied access
during the peak busy hour of the weekly measured period.
We shall measure each of the objectives, other than SDGS, on a monthly
basis and shall provide you with a report of such measured objectives by
the 10th business day of the following month, unless otherwise agreed
between the parties.
6.2.1 Site Dial Grade of Service (SDGS) Objective
-------------------------------------------
We shall measure and report the weekly Site Dial Grade of Service for each
site. If the SDGS, measured weekly, falls below P.03 for a site in two
consecutive weeks, we shall have four additional weeks to improve the
performance. If, during this four week period, the measured SDGS is not
improved above P.03 with the intent to meet the P.01 objective, then we
shall provide you a credit of $1,500.00 for each four week period
thereafter for that site until such time as the measured SDGS is improved
above P.03.
-22-
Except for your right of termination as provided for in Section 6.7.1, this
is your sole remedy for our failure to meet the SDGS objective.
Grade of Service reductions which are caused by, related to or extended as
a result of your actions, or Force Majeure shall not be considered in the
estimation of the monthly SDGS.
Should you supply an invalid forecast (see Section "Forecasts"), then the
SDGS objective will not be applicable for that period.
6.2.2 Availability Objectives
-----------------------
The components of the availability objective calculations shall include the
components provided by us. The OSA rate and the SSA rate shall be
represented as a percentage of the time the components are actually
available, as compared to the scheduled time of availability.
The SSA shall be defined as the monthly availability of the Service
components for a single site including the modem and server components at
the site, and network connections from the site to Yorktown. We shall
measure and report the monthly site availability, and deliver such report
to you no later than the 10th business day after the month of testing.
We will measure and report site availability by sending a 56 byte message,
called a sample ping, to the modem chassis and to the servers from a
Splitrock network monitor in Yorktown on a periodic basis, but no less than
every 10 minutes. The ping sampling interval is subject to change over
time but in no event shall it be more than 30 minute intervals. If a
positive response is received to the ping, then the site is considered
available for that ping period. We will issue one retry (or effectively do
the retry using another function) if an initial negative response is
received. If a positive response is received on the retry then the site is
considered available for that ping period. If a negative response is
received from the initial ping and the retry, then the site is considered
unavailable for that ping period.
The SSA rate calculation shall be:
. the Total Scheduled Minutes of Availability for the site;
. minus the Total Unscheduled Outage Minutes for the site;
. divided by the Total Scheduled Minutes of Availability for the site.
(Total Scheduled Minutes of Availability)-(Total Unscheduled Outage Minutes)
----------------------------------------------------------------------------
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(Total Scheduled Minutes of Availability)
The Total Scheduled Minutes of Availability for a site is defined as
the total minutes in the measurement time period minus the total minutes of
outages which are not due to unscheduled outages during the measurement
time period.
Total Unscheduled Outage Minutes include outages due to
telecommunication facilities (carrier outages), loss of electrical power,
hardware, operations, software and design problems except for:
1. scheduled network maintenance and scheduled outages;
2. outages caused by, related to, or extended as a result of your
actions; and
3. outages due a Force Majeure event.
If the SSA rate for a specific site, measured monthly, falls below
98.5%, we shall take immediate and necessary action to improve the
performance. If the measured SSA rate for the site is not improved above
98.5% with the intent to meet the 99.5% objective within the next two
months, we shall provide you a credit of $1,500.00 for each month
thereafter for that site until such time as the measured SSA rate is
improved above 99.5%.
Except for your right of termination provided for in Section 6.7.1,
this is your sole remedy for our failure to meet the SSA objective.
The OSA objective is defined as the combined availability of the
Service components, including the modem and server components, and network
connections to Yorktown. The OSA rate shall be an average of all the SSA
rates. We shall measure and report the monthly OSA.
If the OSA rate, measured monthly, falls below 98.7%, we shall take
immediate and necessary action to improve the performance. If the measured
OSA rate is not improved above 98.7% with the intent to meet the 99.5%
objective within the next two months, we shall provide you a credit of
$25,000.00 for each month thereafter until such time as the measured OSA
rate is improved above 98.7%. Except for your right of termination
provided for in Section 6.7.1, this is your sole remedy for our failure to
meet the OSA objective.
We shall be allowed a system-wide weekly maintenance window. The
weekly maintenance window shall occur initially Sunday mornings from 3:15
to 4:45 Eastern time. This initial period may be changed upon your prior
written consent. Additionally, there shall be an allowance for scheduled
outages at each site for us to perform maintenance/upgrade work: allowing
each site two outages annually each up to three
-24-
hours in duration. We shall provide you with advance notice of sites
scheduled for upgrade/maintenance activity, and we shall use reasonable
efforts to schedule such upgrade/maintenance activity for a time other than
5 pm to midnight, local site time.
We shall review anticipated changes in the network maintenance window
with you. You and we shall cooperate to accommodate a necessary change in
the network maintenance window and the business impact on you.
We shall not be precluded from performing unscheduled maintenance as
we may deem necessary. In such instances we will use reasonable efforts to
notify you at least 48 hours in advance. For purposes of the SSA and OSA
rate calculations, these will be considered unscheduled outages.
6.2.3 Transit Delay
-------------
The TD is represented as the actual time for a 56 byte message, called
a sample ping, to travel round trip between two specific routers in the
network under normal prime time conditions.
Using the sample ping referred to in Section 6.2.2, we will measure
the TD on a periodic basis, but no less than every 10 minutes. The ping
sampling interval is subject to change over time but in no event shall
exceed 30 minutes. We will average all the samples in a given month to
determine the overall average TD, and will report that to you.
If we fail to meet the monthly TD objectives, you will notify us in
writing. If we continue to fail to meet the TD objectives for two months,
then we shall provide you a credit of $25,000.00 for each month thereafter
until such time as the measured TD meets the objectives. Except for your
right of termination provided for in Section 6.7.1, this is your sole
remedy for our failure to meet the TD objectives.
In an instance where the monthly forecast for 20% of the sites is
invalid, then the TD objective shall not be applicable for that period.
6.3 OUR OTHER RESPONSIBILITIES
--------------------------
We will:
1. provide you with a number for your operations group or customer
service group to contact our help desk support, which shall be
available 24 hours a day, 7 days a week, and staffed adequately to
handle all inquiries within 60 seconds of receipt;
-25-
2. provide you with standard monthly, or in the case of SDGS weekly,
reports that we produce that are related to the Services provided
under this Agreement, including reports describing the results of the
tests for each of SDGS, SSA, OSA and TD, and reports relative to
availability and traffic statistics within ten days of the end of the
immediately preceding month, which reports will show by site, the
total connect hours, time of peak busy hour per site, average peak
busy hour percentage and distribution of traffic by hour of day;
3. provide you with a monthly report detailing the status of network
upgrades and expansions within ten days of the end of the immediately
preceding month;
4. maintain the components, programs, equipment and materials we provide
under this Agreement; and
5. provide you with read only terminal access to our network management
system so you can verify operational status of all network modems and
components.
6.4 YOUR OTHER RESPONSIBILITIES
---------------------------
You agree:
1. to be responsible for supporting your Subscribers directly through
your help desk. Your operations group or customer service group will
contact our help desk in regard to any reported problems with the
Service being provided by us;
2. to be responsible for ensuring that your software can and will log-off
each Subscriber after no activity by each Subscriber for 30 minutes
("Time Out Function");
3. to be responsible for ensuring that for Prodigy Internet Services your
software will not allow multiple User Identifications associated with
any Prodigy Internet Subscriber to gain simultaneous access to the
Services ("Simultaneous Prohibition Function"); and
4. upon written request by us audit each of the Time Out Function and
Simultaneous Prohibition Function up to five audits per each 12 month
period. Within 15 days of receiving a written audit request you will
delivery a written audit report to us. If the audit shows
noncompliance with the Time Out Function or Simultaneous
-26-
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omission.
Prohibition Function, as the case may be, the Maximum Monthly Usage
Charge (as provided in Section 6.5.1) shall not be applicable to any
time period from the date of the last audit showing compliance until
the date you cure such noncompliance.
6.5 CHARGES
-------
6.5.1 Monthly Usage Charges
---------------------
With respect to usage, you agree to pay us for the Services based on the
total number of monthly connect hours of your Subscribers using the
Services times the applicable rate per hour in the following schedule (the
"Hourly Usage Charge"), subject to the Minimum Monthly Usage Charge (lower
limit) described below
Hourly Usage Charge Rate Schedule:
January 1, 2000 through December 31, 2001 [**] per hour
You will pay us the greater of the applicable Hourly Usage Charge or the
Minimum Monthly Usage Charge.
Minimum Monthly Usage Charge:
$4,000,000 per calendar month for the period from July 1, 1999 through June
30, 2000
$4,500,000 per calendar month for the period from July 1, 2000 through
December 31, 2001
In any month, if the Hourly Usage Charge is not equal to or greater than
the applicable Minimum Monthly Usage Charge, you agree to pay us the
applicable Minimum Monthly Usage Charge as set forth above.
For example (assumption: no other amounts were due)
Hourly Usage Charge:
[**] times Total Number of Hours
If in January 2000 your actual total connect hours were
15,000,000, the Hourly Usage Charge for July would be [**]
times 15,000,000 = [**]
Minimum Monthly Usage Charge:
-27-
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omission.
The Minimum Monthly Usage Charge you will be required to pay
for Subscriber connect services is set forth in the
paragraph above.
January 2000: $4,000,000.
For purposes of determining connect hours, the sequence of a call is as
follows: The dial port goes off hook, modem synchronization, protocol
management, call routed, Prodigy authentication, session live while user
performing tasks, user initiates end of session or the session otherwise
ends, eventually resulting in modem off-line and session termination
(carrier dropped). We will aggregate the total time of all calls, rounded
up by city to the nearest hour. The length of each individual call will be
calculated from the time the port goes off hook to session end (modem off-
line), rounded up to the nearest second.
6.5.2 Other Monthly Charges
---------------------
In addition to the charges provided in Section 6.5.1 above, you agree
to pay us each month for the following, which is dedicated for your
exclusive use and provided you approve of such use in writing:
1. for each NAP connection at a rate of [**] per month for each DS3
connection, at our choice of location, as are necessary for supporting
your Subscribers,
2. for all remote and proxy server connections at a rate of [**] per
month for each EtherNet connection at each remote and proxy server
location,
3. for servers which you require in addition to those installed as of the
date hereof, an amount for the acquisition, installation, operation
and maintenance of hardware and software for such server, at our total
cost plus 10% (including applicable sales tax).
4. If you ask usor no later than August 31, 1997 to assume or provide any
network related service obligations, not specifically disclosed in
this Agreement, including its Exhibit and Schedules ("Supplemental
Obligations"), we will assume such Supplemental Obligations in
consideration for payment to us of our total cost plus 10% (including
applicable sale tax); provided that, such cost plus 10% pricing shall
not, be applicable to any increase or variations in Supplemental
Obligations, and the parties shall mutually agree on pricing for any
such increase or variation.
6.5.3 Payment Terms
-------------
-28-
Except as provided in the Transition Services Agreement while it is in
effect, you agree to pay us the applicable Minimum Monthly Usage Charge
(plus any other fixed charges) by the end of the calendar month that we
provide the Service, whether or not you receive an invoice for such
charges, and to make payments to us by wire funds transfer or other
mutually agreed to electronic means to an account specified by us. For all
other charges, we shall make reasonable efforts to provide invoices on or
before the tenth day of the month following the monthly period being
invoiced and you agree to pay such invoices within 30 days of the invoice
date. If you do not make payments to us by their applicable due dates, you
agree to pay us a service charge equal to the lesser of 1.5% per month or
the maximum allowable rate under applicable law on each unpaid amount. You
agree to pay charges for all Service usage you or Subscribers incur by any
means, including providing a User Identification to access a Service. You
are responsible for charges and damages resulting from misuse of User
Identifications.
Applicable taxes, such as sales, use or excise taxes are not included
in the above charges, and you will be invoiced for taxes payable by you but
required by law to be collected by us, but taxes shall not include line
access or similar telecommunications based charges. We shall be
responsible for payment of sales, use, property and other taxes on
machines, software, or goods and services used or furnished by us for our
own use in providing the Services to you. All taxes incurred in connection
with our upgrading of the network to ATM switching, or any other upgrade,
whether mandatory or voluntary, shall be our sole responsibility.
You shall be responsible for sales, use, property and other taxes on
machines, software, or goods and services provided by you.
All pricing for dial access covers speeds up to 56K bps. All pricing
of higher speed Service is subject to negotiation and agreement between the
parties.
6.5.4 Global Service Provider
-----------------------
1. Sixty days after receiving a written request from Prodigy that it
provide separated billing to satisfy regulatory requirements
implicated by Prodigy's merger with or acquisition by a company that
owns Xxxx Operating Companies, Splitrock will begin showing separate
line items on the bills that it conveys to Prodigy. The first line
item will be for inter-LATA information services and any underlying
inter-LATA telecommunications that Splitrock may be providing. The
second line item will be for all other services rendered to Prodigy
by Splitrock.
2. Splitrock will determine what proportion of its services are
attributable to inter-LATA information services and any underlying
telecommunications, and will
-29-
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omission.
communicate to Prodigy the formula that Splitrock uses in making that
determination so that Prodigy can reflect that allocation on bills
that Prodigy renders to Prodigy's end user customers.
3. Prodigy may direct Splitrock to offer its inter-LATA information and
underlying telecommunications for resale by a third-party global
service provider, with the understanding that this third-party global
service provider will then xxxx Prodigy's end users for its global
service provision through Prodigy's billing mechanism. Under this
billing method, the bills that Splitrock renders to the third-party
global service provider will be payable by the global service provider
within three days, and Splitrock may require Prodigy to purchase such
accounts receivables at full face value within four days after
Splitrock renders such bills to the third-party global service
provider.
4. Alternatively, if Prodigy and Splitrock mutually agree, Splitrock
may xxxx Prodigy's end users for inter-LATA information services and
any underlying telecommunications, using Prodigy as a billing agent
who will direct-xxxx its end users for such services and remit the
amounts billed to Splitrock. When using this billing method, Splitrock
may in its sole discretion direct Prodigy to purchase at face value
all accounts receivables that will be owed to Splitrock by Prodigy's
customers at the end of each current monthly billing cycle. Splitrock
may require Prodigy to purchase such accounts receivables within three
days after Splitrock renders its xxxx to Prodigy for such services.
Prodigy may list Splitrock's inter-LATA charges as a separate line
item on a combined monthly xxxx that Prodigy sends to end user
customers, and may identify Splitrock as a global service provider
providing inter-LATA information services and underlying
telecommunications.
5. Splitrock will independently determine the price for its provision of
inter-LATA information services and underlying telecommunications;
however, the overall amounts that Prodigy pays Splitrock every month
will be the greater of the following two amounts:
a. [**] multiplied by the number of hours of Splitrock's service
used by all Prodigy end user subscribers or Prodigy personnel or
agents of Prodigy, or
b. Four million dollars ($4,000,000.00) for each month ending after
the execution date of this agreement through the month ending on
June 30, 2000, and four and one-half million dollars
($4,500,000.00) for each month thereafter through the month
ending on December 31, 2001.
-30-
Confidential materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omission.
5. The effects of these provisions are illustrated by the following
example:
18,695,652 Number of hours in hypothetical month
[**] Overall amount that Prodigy must pay to Splitrock [**] times
18,695,652.
[**] Amount ascribed by Splitrock to inter-LATA information services
and underlying telecommunications and billed as such to end
users, as a separate line item on bills rendered to end users by
Prodigy or a third-party global service provider (allocation may
vary in Splitrock's sole discretion)
[**] Amount collected by Prodigy or a third-party global service
provider from end users for inter-LATA information services and
underlying telecommunications (assumes that [**] of [**] is non-
collectible)
[**] Amount that Prodigy pays Splitrock for its accounts receivable
from end users or a third party global service provider (i.e.,
Prodigy absorbs cost of non-collectibles)
[**] Amount that Prodigy pays Splitrock for all services other than
inter-LATA informations services and underlying
telecommunications ([**] minus [**])
[**] Total amount that Prodigy pays Splitrock for this hypothetical
month's usage ([**] for inter-LATA information services and
underlying telecommunications plus [**] for other services)
6.6 FORECASTS
---------
At the beginning of each quarter, you shall supply us with a rolling 15-
month forecast consistent with your business model:
1. hours of traffic for each site for each month of the forecast,
2. time of peak busy hour for each site,
-31-
3. average peak busy hour percentage for each site for each month of the
forecast,
4. distribution of traffic by hour of day across all sites, and
5. average session length across all sites.
We shall use this information to perform capacity planning for the Services
provided under this Agreement.
For purposes of determining if a forecast is valid or invalid, the fourth,
fifth and sixth month of a forecast shall be recorded and saved and then
compared against the actual. The forecast for the specified month compared
against the actual is valid if the actual peak hours are no more than 15%
greater than the forecasted peak hours. If the actual peak hours are more
than 15% greater than the forecasted peak hours, then the forecast for the
month is invalid and the SDGS objective does not apply for that month. For
any month in which a forecast is invalid, we shall not be responsible for
SDGS or TD objectives for the subject forecast period.
6.7 CHANGES AND DEFAULT
-------------------
6.7.1 Undesirable Conditions
----------------------
If any of the following undesirable events occurs for two consecutive
months or four months out of a twelve-month period, you may terminate this
Agreement upon 45 days written notice to us ("Notice of Termination"):
SDGS below P.05 for 30% or more of the sites
SSA below 95% for 30% or more of the sites
OSA below 95%
TD above 250 millisecond monthly average, and 500 milliseconds monthly
average for Alaska and Hawaii.
For SDGS and SSA undesirable condition calculations, a site is deemed
to be meeting its service level objective during any period of time when
the corresponding service level objective is not applicable. For OSA and
TD, an undesirable condition shall not apply during any period of time when
the corresponding service level objective is not applicable.
If you desire to terminate this Agreement because of any of the
foregoing undesirable conditions, you must give us a Notice of Termination
within 30 days of receiving the monthly report that gives rise to your
right of termination. If you do not exercise your right of termination
within such 30 day period and in the next month the applicable undesirable
condition no longer exists, then you waive any right of termination for the
applicable time period and this Agreement shall remain in full force and
effect.
-00-
Xxxx Xxxxxxxxxxxx of Termination, we shall provide reasonable
transition assistance to you, for a period of up to six months, and no
termination adjustment charge or service level credits shall apply, nor
shall any Minimum Monthly Usage Charges apply after the effective date of
termination.
6.7.2 System Wide Failure
-------------------
If 50% of the point of presence sites are failing to provide access or
Services for forty eight consecutive hours, then you have the right to
enter our premises to operate our network assets and direct our employees,
as is necessary to cure such failure, and we shall reimburse you for any
reasonable expense you incur in doing so. We will cooperate with your
efforts in restoring service to the network. You shall also have the right
to terminate in accordance with the termination provisions within Section
6.7.1.
6.7.3 Financial Related Defaults
--------------------------
The occurrence of any of the following events shall constitute an Event of
Default (herein so called) hereunder:
1. If we shall fail to perform any of our obligations and covenants under
Section 1.14; or
2. If you, in good faith, after reviewing any document or report required
to be delivered under Section 1.14, believe that there has been a
material and adverse change in our business operations and conditions,
financial or otherwise, which in your reasonable opinion will have a
materially adverse effect upon the operations, business, property,
assets, financial condition or credit of us or you.
Remedies
--------
Upon the occurrence of an Event of Default in this Section 6.7.3, you shall
have the right, at your option, to initiate an alternative dispute
resolution by the procedures set forth in Section 6.12. If the dispute is
not resolved by mediation, the arbitrators will be instructed to determine
whether or not we, in their judgement, are capable of performing our
obligations under this Agreement. A decision shall be rendered within three
days of the conclusion of mediation or arbitration, as appropriate.
We will respond within three business days to any reasonable request for
information made by the arbitrators.
If the arbitrators' judgment is that we are not capable of performing our
obligations under this Agreement for the twelve month period after the
arbitrators render their decision, then you shall have the right, in your
sole discretion, to elect either (i) to terminate this
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Agreement, without penalty, and to be relieved of the Minimum Monthly Usage
Charges, or (ii) to enter our premises to operate our network assets and
direct our employees to the extent necessary to operate the network until
the end of the Initial Term of this Agreement, and we shall reimburse you
for any reasonable expenses you incur in doing so.
6.7.4 Default (other than for Sections 6.7.1, 6.7.2 or 6.7.3)
-------------------------------------------------------
This Section 6.7.4 applies to defaults, other than for the events
described in Sections 6.7.1, 6.7.2 and 6.7.3.
In the event that either party materially defaults in the performance
of any of its duties or obligations under this Agreement (other than your
failure to make timely payments due to us) and does not substantially cure
such default within 60 days after being given written notice specifying the
default, then the party not in default may, by giving written notice to the
defaulting party, terminate this Agreement (herein termination "for
cause").
In the event you do not make any payment of the Minimum Monthly Usage
Charge or Hourly Usage Charge due to us on the due date, then we may
terminate this Agreement 45 days after we give you written notice of such
default and provided that we did not receive good funds for such overdue
payment within the 45 day time period. In the event that you do not make
any other payment due to us within 30 days of your receipt of an invoice,
and such failure is not remedied within 60 days after we give you written
notice of nonpayment (the "Cure Period") then we may terminate this
Agreement upon the expiration of the Cure Period.
In the event that you are in default (for reasons other than failure
to make timely payments due to us) and we elect to terminate this
Agreement, then you may request an extension of this Agreement of up to six
months as a transition period, provided that we, in our discretion, agree
to provide such an extension.
In the event that you terminate this Agreement because we are in
material default for reasons other than as described in Section 6.7.1 then
we will provide reasonable transition assistance to you, for a period of up
to six months and no termination adjustment charges or service level
credits shall apply.
If you terminate this Agreement (except for cause), or if we terminate
this Agreement for cause, you shall pay us a termination adjustment charge
of $3,000,000 (in addition to the monthly charges through December 31, 2001
as provided in Section 6.5.1) if terminated during the Initial Term of the
Agreement. Payment is due and payable upon the date termination notice is
given and all other terms and conditions of this Agreement shall remain in
full force and effect until the end of the Initial Term, including without
limitation, section 6.5.1
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6.8 OTHER TERMS
-----------
You will not be allowed to test or repair our dial network, except as
provided in Section 6.7.2., and except to send your own sample pings
similar to that described in Section 6.2.3.
6.9 AUDITING PROCEDURES
-------------------
We shall maintain true and accurate accounting records, in accordance
with sound accounting practices, to support the dial connect charges
payable to us by you. We shall, upon 30 days' prior written request, during
normal business hours, but not more frequently than once each calendar
quarter, provide access to the connect hour accounting records associated
only with the provision of the Service for the immediately preceding one-
year period to an independent accounting firm chosen and compensated by you
for the purposes of auditing the accuracy of the calculation of the dial
connect charges. The accounting firm selected shall: be required to sign an
agreement with us protecting our confidential information, perform such
audit on our premises, and such other locations reasonably necessary to
conduct a proper audit, comply with our security procedures, and be
authorized by us to report only the results of such audit and provide us
with a copy of the report.
In the event that the audit shows you owe an amount to us, we will
invoice you for such amount within the next two monthly billing cycles.
In the event that the audit shows a credit due to you, we will process
such credit including the cost of the audit (but such costs shall not
exceed the credit), excluding travel and per diem charges, plus interest at
the prime rate on the entire amount until paid in full within the next two
monthly billing cycles, provided that we do not disagree with the audit
report. If we disagree with the audit report, we may select an independent
accounting firm, compensated by us, to perform an audit on the same
information provided to the firm selected by you. We shall provide you a
copy of the report commissioned by us. In the event that the audit reports
disagree on the credit due to you, the credit due to you will be determined
by averaging the results of the two audit reports.
6.10 PRIMARY PROVIDER
----------------
We shall be your Primary Provider of Services. You shall be free to
make agreements with third parties for Services, provided you shall not
seek or accept any bids for Services to replace our Services in their
totality.
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You shall negotiate with us in good faith for any new service which we
have the ability, capacity and interest to provide. You shall be free to
offer new, experimental and other access including without limitation,
ADSL, cable access, modified cable access including dial up, satellite
access, roaming (e.g. Aimquest), Web TV, access bundled with content of
other applications, agreements with regional xxxx operating companies or
long distance companies as marketing partners ("Other Business); provided
that, at least thirty days prior to your entering into any agreement or
arrangement for Other Business, you will use good faith efforts to deliver
to us on a confidential basis any business plan changes, projections, draft
agreements and other documents describing such Other Business, to the
extent available, and meet with us to discuss such Other Business.
You shall not offer Other Business that would result in a material
increase in our costs unless we both agree on the amount of increased
revenues which will bear a reasonable relationship to such increase in our
costs; provided that, if we cannot agree on the amount of such increased
revenues, we shall have no obligation to provide our Services required for
such Other Business.
6.11 ADDITIONAL SERVICES AND PRODUCTS
--------------------------------
You may request us to provide you services, products or enhancements
which are not the subject of this Agreement, which include services,
products or enhancements which we provide to other customers. If we
provide such services, products or enhancements, we agree that we will
offer you a price for such services or products which is no higher than the
price we charge any other party for the same services, products or
enhancements; provided, however, that you will not be entitled to receive
this price treatment with respect to any product, service or enhancement
which we have developed for another party, or which we consider to be
proprietary.
If you request us to develop a new product, service or enhancement for
your use and we agree to develop such product or service, then we will
charge you a price which will include a profit to us.
6.12 ALTERNATIVE DISPUTE RESOLUTION
------------------------------
In the event of a dispute between you and us arising out of or
relating to this Agreement, or the breach thereof, you and we shall submit
the dispute to nonbinding mediation and shall make a good-faith effort to
resolve the dispute through the mediation process. In the event the
dispute is not resolved through mediation within 30 days following written
notice by one party that it desires to enter into mediation, then such
dispute shall be resolved exclusively and finally by binding arbitration by
three arbitrators who will be appointed and will act as follows:
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The party requesting arbitration shall, simultaneously with such
request, appoint one arbitrator and shall notify the other of such
appointment together with such arbitrator's acceptance. Within 30 days
from the receipt of such notice, the other party shall appoint another
arbitrator and shall notify the requesting party of such appointment
together with the second arbitrators acceptance. The third arbitrator, who
shall act as chairman of the arbitration panel, shall be appointed by the
other two arbitrators within the following 30 days. In the event either
party fails to appoint an arbitrator or in the event no agreement is
reached between the two arbitrators as to the appointment of the chairman
of the arbitration panel in accordance with the foregoing provisions, such
arbitrator or arbitrators shall be appointed, upon application by the
interested party, by the American Arbitration Association (AAA).
The arbitrators shall apply the arbitration rules of the AAA.
The award of the arbitrators shall be final and shall not be subject
to any appeal or challenge whatsoever. The arbitrators will not be required
to file their award with any body or authority whatsoever. In the event
arbitration proceedings are initiated under this section, pending such
proceedings and until a final award is rendered pursuant thereto, any
subsequent controversy arising between the parties shall be exclusively
submitted for final decision by the arbitrators in the arbitration
proceedings already pending. The arbitrators shall be instructed by the
parties to include an award for reasonable attorneys' fees, arbitrators'
fees, expert witnesses, travel and other costs incurred.
If a dispute arises out of an alleged breach of this Agreement (other
than your failure to make timely payments due to us), then you and we agree
to continue to perform our respective obligations under this Agreement
until an agreement is reached through mediation or the arbitrators render a
decision, whichever is applicable.
PART 7 - MISCELLANEOUS
-------------------------------------------------------------------------------
7.1 PUBLICITY
---------
Each party will (i) consult with the other party before issuing any public
statement with respect to this Amendment and (ii) give the other party a
reasonable opportunity to review and comment upon any such proposed public
statement before it is released.
7.2 AMENDMENT
---------
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No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed
by Prodigy and Splitrock.
7.3 COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Second Amendment.
7.4 ENTIRE AGREEMENT
----------------
This Restated and Amended Agreement constitutes the entire agreement and
understanding between the parties except for that certain Indemnity
Agreement dated February 13, 2000, which is incorporated herein by
reference. Any amendments to this Agreement must be in writing and executed
by both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of the date
first written above.
PRODIGY COMMUNICATION SPLITROCK SERVICES, INC.
CORPORATION
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------- ------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: EVP General Counsel Title: President and Chief Executive
Officer
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XXXXXXXX X-0
XXXX XX OLD ATT Number
-------------------------------------------------------------
Ames IA 515.239.3902
-------------------------------------------------------------
Dubuque IA 319.557.5802
-------------------------------------------------------------
Sioux City IA 712.274.6202
-------------------------------------------------------------
Carbondale IL 000.000.0000
-------------------------------------------------------------
Champaign/Urbana IL 217.351.1302
-------------------------------------------------------------
Danville IL 217.431.9602
-------------------------------------------------------------
Decatur IL 217.421.1502
-------------------------------------------------------------
Freeport IL 815.266.7902
-------------------------------------------------------------
Normal/Bloomington IL 309.888.2402
-------------------------------------------------------------
Quincy IL 217.221.0602
-------------------------------------------------------------
Springfield IL 217.793.7182
-------------------------------------------------------------
Hibbing MN 218.262.7172
-------------------------------------------------------------
Mankato MN 507.386.4602
-------------------------------------------------------------
Butte MT 406.494.8612
-------------------------------------------------------------
Helena MT 406.443.8102
-------------------------------------------------------------
Missoula MT 406.542.6302
-------------------------------------------------------------
Harrisonburg VA 540.574.7002
-------------------------------------------------------------
Pullman WA 509.334.8202
-------------------------------------------------------------
Laramie WY 307.721.0502
-------------------------------------------------------------
(000)000-0000
-------------------------------------------------------------
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