EXHIBIT 10.19
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
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 12:01am (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 1 - General
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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 Comic" 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 nor 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
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.
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.
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.
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.
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
1.13 Term
The initial term of this Agreement shall be for a period of 48 months
("Initial Terms") 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 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 dare, 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 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
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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
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.
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.
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 off-line.
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
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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.
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 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
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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
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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
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 than 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.
Part 6 - SplitRock Services
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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. 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:
. 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.
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 TI, 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 bandwidth 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 LDR2OO 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
bandwidth 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
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 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.
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.
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 resting.
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)
------------------------------------------------------------------------------
(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 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
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
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 delivery 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 [**] per hour
January 1, 1998 though December 31, 1998 [**] per hour
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
All subsequent years [**] per hour
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 [**] 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) [**] 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;
$3,500,000 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)
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
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
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 us or 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.
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
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.
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.
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 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.
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 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 or 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.
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 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.
PRODIGY SERVICES CORPORATION SPLITROCK SERVICES, INC.
By: /s/ Xxxx X. XxXxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------- -----------------------
Name: XXXX X. XXXXXX Name: XXXXXXX X. XXXXXX
Title: PRESIDENT Title: PRESIDENT
