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EXHIBIT 10.1
SPLITROCK FULL SERVICE AGREEMENT
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SPLITROCK FULL SERVICE AGREEMENT
PREAMBLE
This Agreement is entered into as of June 24, 1997 by and between
Prodigy Services Corporation, a Delaware corporation ("Prodigy"), and SPLITROCK
SERVICES, INC. ("SplitRock"), a Texas corporation (this "Agreement").
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 12:01 a.m. (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).
Part I - 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 my provide to you. The term does not
include licensed internal code or Materials.
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"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 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.
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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
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 changes);
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.
1.5 Payment and Taxes
You shall pay:
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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.
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.
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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.
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.
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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.
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
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: President
SplitRock
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: President
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1.13 Term
The initial term of this Agreement shall be for a period of 48 months
("Initial Term") commencing on July 1, 1997 and continuing through
June 30, 2001.
After the Initial Term, either party may terminate this Agreement
without cause by giving the other party not less than 12 months prior
written notice, otherwise this Agreement shall be considered as having
been automatically renewed for successive 12-month terms.
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 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 an 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.
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(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 request that we obtain additional coverage,
consistent with reasonable business practices, which we shall obtain.
3. Maintain Tangible Net Worth. Maintain a tangible net worth
of not less than $5,000,000, which excludes organizational costs and
intangible assets such as patents, trademarks, goodwill and going
concern value.
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
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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
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 obligation's 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. Any attempt to do so is void;
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.
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. Any attempt to do so is void.
3. to allow us to install mandatory engineering changes (such as
those required for safety) on Equipment.
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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.
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:
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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.
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:
1. either currently publicly available or becomes publicly
available in the future without
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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 insure 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 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.
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Part 6 - SplitRock Services
6.1 Description
We will provide you network services consisting of the following
components:
o Dial access network as described in Section 6.1.1
o ATM backbone network as described in Section 6.1.2
o Regional Servers connectivity as described in 6.1.3
o 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. 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.
The data traffic dial access Service shall include the receipt of
inbound data dial traffic from your Subscribers and the routing 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:
o a physical site presence with modem ports; or
o 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).
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We shall be responsible for:
o inbound communication facilities (such as xxxx groups,
measured business lines or DID trunks);
o modem hardware including ports and chassis; and
o 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 term or conditions of a Service without your
approval, which you agree will not be unreasonably withheld.
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.
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
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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 my 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 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);
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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. 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.
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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:
o the Total Scheduled Minutes of Availability for the
site;
o minus the Total Unscheduled Outage Minutes for the
site;
o divided by the Total Scheduled Minutes of
Availability for the site.
(Total Scheduled Minutes of Availability) - (Total Unscheduled Outage Minutes)
------------------------------------------------------------------------------
(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
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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 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;
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
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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 day 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 deliver a written
audit report to us. If the audit shows noncompliance with the Time Out Function
or Simultaneous 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 times the
applicable rate per hour in the following schedule (the "Hourly Usage Charge"),
subject to the Maximum Monthly Usage Charge (upper limit) and Minimum Monthly
Usage Charge (lower limit) described below:
Hourly Usage Charge Rate Schedule:
July 1, 1997 through December 31, 1997 [Confidential material
omitted and filed separately with the Commission]
January 1, 1998 through December 31, 1998 [Confidential
material omitted and filed separately with the Commission]
All subsequent years [Confidential material omitted and filed
separately with the Commission]
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Maximum Monthly Usage Charge: You agree to provide to us each month
the Subscriber Count for such month (by price plan) as of the last day of each
month, by the fifth day of the next month. We will use the Subscriber Count as
the basis for calculating the Maximum Monthly Usage Charge for such month. For
any month in which the average monthly connect hours per Subscriber (total
connect hours divided by the Subscriber Count) does not exceed 30 hours, the
Maximum Monthly Usage Charge you will pay is equal to [confidential material
omitted and filed separately with the Commission] times the Subscriber Count
for such month. If the average monthly connect hours per Subscriber in any
month exceeds 30 hours, then, in addition to the Maximum Monthly Usage Charge,
we shall invoice you, and you agree to pay us an additional amount equal to (a)
[confidential material omitted and filed separately with the Commission] per
hour times (b) the number of average hours (or any portion thereof) in excess
of 30 hours times (c) the Subscriber Count for such month. In the event that
the Maximum Monthly Usage Charge does not apply, as described in Section 6.4 or
in the previous sentence, you will pay us the greater of the applicable Hourly
Usage Charge or the Minimum Monthly Usage Charge for such time period of
noncompliance.
Minimum Monthly Usage Charge:
$3,000,000 per calendar month for the period from July 1, 1997 through
June 30, 1998;
$3,500,00 per calendar month for the period from July 1, 1998 through
June 30, 1999;
$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
June 30, 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: average monthly connect hours per Subscriber
is not in excess of 30 hours and no other amounts were due)
[confidential material omitted and filed separately with the Commission]
Minimum Monthly Usage Charge:
The Minimum Monthly Usage Charge you will be required to
pay for Subscriber connect services is set forth in the
paragraph above. July 1997: = $3,000,000.
For purposes of determining connect hours, the sequence of a call is as
follows: The dial port
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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 [confidential material
omitted and filed separately with the Commission] 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
[confidential material omitted and filed separately with the
Commission] 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 data 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
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.
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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.
6.6 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,
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
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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 levels, 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.
Upon Notification 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 judgment, 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.
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If the arbitrators' judgement 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 Agreement, without penalty,
and 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 or 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.
You may terminate this Agreement during the Initial Term without cause
by providing 12 months' prior written notice to us. If you terminate this
Agreement without cause, or if we terminate this Agreement for cause, you shall
pay us a termination adjustment charge as follows: $7,000,000 if terminated in
the first year of the Agreement; $5,000,000 if terminated in the second year of
the Agreement; and $3,000,000 if terminated in the third year 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 place.
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.
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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 an 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 or to any
substantial extent. In addition, you shall not seek to bundle our Services with
other features which will have the effect of diverting traffic away from our
network in an amount which causes our traffic from you not to follow generally
the overall amount of your dial up access service needs, measured quarterly.
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 of arrangement for Other Business, you will
deliver to us on a confidential basis any business plan changes, projections,
draft agreements and other documents describing such Other Business 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.
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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:
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 arbitrator's
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 of 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
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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.
PRODIGY SERVICES CORPORATION SPLITROCK SERVICES, INC.
By: /s/ XXXX X. DELALEY By: /s/ XXXXXXX X. XXXXXX
-------------------------- --------------------------
Name: Xxxx X. Delaley Name: Xxxxxxx X. Xxxxxx
Title: PRESIDENT Title: PRESIDENT
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