EXHIBIT 10.5
TELEPHONE SERVICE TO RESELLER AGREEMENT
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FOR NEW YORK
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METROPOLITAN FIBER SYSTEMS OF NEW YORK, INC., a Delaware
corporation (herein called "WorldCom"), and RCN TELECOM SERVICES OF NEW YORK,
INC., a New York corporation (herein called "Reseller"), hereby agree as
follows:
1. Parties. Each of WorldCom and Reseller are herein
sometimes called a "Party." The term "affiliate" shall have the same meaning
as is ascribed to that term in the Securities Exchange Act of 1934.
2. Service Area. The "Service Area" is herein defined as the
Borough of Manhattan, New York, New York.
3. Reseller's Business. Reseller is engaged in the business
(herein called the "Reseller's Business") of providing local and long distance
telephone service to Reseller's customers (herein called "Subscribers") in the
Service Area.
4. Telephone Service. "Telephone Service" is hereby defined as
the providing by WorldCom of:
(a) local switched voice and data services via DS-1 which
services include WorldCom dialtone with basic line features
and operator services, and
(b) such other telecommunications services as WorldCom and
Reseller may agree upon from time to time.
5. Provision of Telephone Service. In consideration of Reseller's
paying to WorldCom the WorldCom Wholesale Price (as hereafter defined)
thereof, and for other consideration received, WorldCom hereby agrees to
provide Telephone Service to Reseller during the Term (as hereafter
defined) pursuant to the terms and conditions of this Agreement. In
addition, subject to BellCore approval and other relevant industry Number
Plan Administration guidelines and technical capabilities, upon the request
of Reseller made within one year from the date of execution hereof,
WorldCom will cooperate with Reseller in the transfer to Reseller of the
following two NXX Codes in New York: 212-217 and 212-655. In addition,
subject to availability and the agreement of the Parties as to the
consideration therefor, Reseller will be allowed to lease DS-1 facilities
from WorldCom or resold LEC facilities.
6. Term. The "Term" is hereby defined as being the period
which commences on the date of this Agreement and which ends on January 1,
2000, unless earlier terminated pursuant to the terms of this Agreement.
7. Early Termination. Notwithstanding any other provision hereof,
either Party may, by written notice to the other Party, terminate the Term,
the providing of Telephone Service and/or this Agreement, in whole or in
part, without incurring any liability to anyone if:
(a) by final order of a court or other governmental authority of
competent jurisdiction, either WorldCom is prohibited from
providing Telephone Service hereunder or Reseller is
prohibited from reselling Telephone Service to its
Subscribers; or
(b) a change in control (that is a change in the ownership
of at least 50% of the voting or equity interests of
Reseller) occurs, directly or indirectly, in a single
transaction or in a series of transactions, or if
substantially all of the assets of Reseller are transferred
to anyone not currently an affiliate of Reseller; provided,
WorldCom agrees that the current planned corporate
restructuring of C-TEC Corporation, the parent company of
Reseller, whereby C-TEC Corporation will be separated into
three separate public companies (with separate lines of
business consisting of the telephone and engineering
business, the integrated services and NY/NJ/PA cable
business and the Michigan cable business (herein called the
"RCN Reorganization") shall not constitute a change in
control of Reseller; or
(c) the Dark Fiber IRU Agreement entered into between the
Parties contemporaneously herewith terminates according to
its terms; or
(d) the aggregate number of subscribers for dialtone lines in
the Service Area and in Boston, Massachusetts (which is the
subject of a Telephone Service to Reseller Agreement between
the Parties) shall fall below 250; or
(e) WorldCom and Reseller effect the transfer of the two NXX
Codes described in paragraph 5 above; or
(f) Reseller determines that the taxes or franchise fees, if
any, reimbursable by Reseller to WorldCom hereunder exceeded
Reseller's original estimation thereof; provided, nothing
contained herein shall relieve Reseller for all such
reimbursements due or accrued hereunder through the date of
such termination.
WorldCom agrees to provide notice to Reseller of any claim made, or the
institution of any action or proceeding, to prohibit WorldCom from
providing Telephone Service hereunder and to reasonably cooperate with
Reseller (at Reseller's cost and expense) in contesting such claim, action
or proceeding.
8. Tariffs. To the extent that Telephone Service may be provided
by WorldCom pursuant to any existing applicable WorldCom-filed federal or
state tariffs, all of the terms of this Agreement shall be subordinate and
subject thereto, and to the extent that a conflict exists between such
tariffs and this Agreement, such tariffs shall control.
9. WorldCom Wholesale Price. In consideration of WorldCom's
provision of Telephone Service hereunder, Reseller hereby agrees to pay to
WorldCom, monthly, and within 30 days after invoice, the WorldCom Wholesale
Price therefor as determined and invoiced by WorldCom. The "WorldCom
Wholesale Price" is WorldCom's wholesale price for Telephone Service as
determined from time-to-time by WorldCom in its discretion, taking into
consideration prevailing market conditions, available WorldCom facilities,
other considerations paid to WorldCom and other factors fairly deemed relevant
by WorldCom. The current WorldCom Wholesale Price is set forth on Exhibit 9.
WorldCom shall advise Reseller in writing periodically the current WorldCom
Wholesale Price for Telephone Service and any changes thereto.
10. Limitations. WorldCom's obligation to provide Telephone
Service to Reseller hereunder is subject to:
(a) the availability and capacity of relevant WorldCom
facilities; and to
(b) the absence of any final order or direction from any
regulatory authority in relation to this Agreement or the
provision of Telephone Service hereunder:
(i) to the effect that WorldCom cannot so provide or
continue to provide Telephone Service to Reseller
hereunder, or
(ii) which adversely and materially affects any material
interests of WorldCom or its affiliates whether or not
related to this Agreement;
accordingly, WorldCom shall be relieved from WorldCom's obligation to
provide such Telephone Service as and to the extent affected thereby.
WorldCom agrees to provide notice to Reseller of any claim made, or the
institution of any action or proceeding, to prevent the provision of
Telephone Services to Reseller hereunder and to reasonably cooperate with
Reseller (at Reseller's cost and expense) in contesting such claim, action
or proceeding.
11. Reseller Undertakings. During the Term, and with respect to
the Telephone Service to be provided hereunder:
(a) Reseller shall be solely responsible for, and WorldCom
shall have no liability or responsibility for or respecting, the following:
(i) directory listings with all relevant incumbent
local exchange companies,
(ii) E-911 data exchange,
(iii) all other appropriate arrangements with all
relevant incumbent local exchange companies,
(iv) E-911 data integrity,
(v) all customer (Subscriber) services,
(vi) all end-user (Subscriber) ▇▇▇▇▇▇▇▇ and collections,
(vii) all tariff filings with appropriate state and federal
authorities, and
(viii) compliance with all of WorldCom's network interface
procedures;
(b) Reseller shall comply with WorldCom's Equal Access and
Presubscription Procedures as promulgated from time to time
by WorldCom, a copy of the current version of which has been
heretofore provided to Reseller;
(c) Reseller shall semi-annually in advance provide to
WorldCom forecasts (by month) of the Telephone Service which
Reseller expects WorldCom to provide including minutes of
use and peak-hour busy periods;
(d) Reseller shall from time to time, but no less frequently
than semi-annually, provide to WorldCom Reseller's
Subscribers' end user network data elements and such other
data as WorldCom may reasonably require so as to enable
WorldCom to synchronize WorldCom's relevant database with
the relevant database of Reseller;
(e) Reseller shall, in good faith and to the extent reasonable
and necessary, in the course of the conduct of the
Reseller's Business or in performing under or with respect
to this Agreement, undertake or suffer no action which would
adversely and materially affect the material rights or
interests of WorldCom or its affiliates; without limiting
the generality of the foregoing, Reseller will not sell,
resell or otherwise distribute any Telephone Service to any
Relevant Competitor for any purpose or use whatsoever (a
"Relevant Competitor" is any entity which provides Telephone
Service to end users or other Resellers);
(f) Reseller shall collect from its Subscribers and remit to
relevant taxing authorities, as and when required by law,
all taxes arising out of or in any way respecting this
Agreement or the Telephone Service; and
(g) Reseller shall reimburse WorldCom for any taxes or franchise
fees assessed in relation to this Agreement or the Telephone
Service that has been paid by WorldCom (excluding income
taxes).
(h) Reseller shall not use (or knowingly permit the use of) the
Telephone Service provided hereunder for any unlawful
purpose.
12. WorldCom Undertakings. During the Term:
(a) WorldCom will at all times during the Term use its
reasonable efforts, in good faith, to provide the Telephone
Service hereunder; and
(b) the quality of service (of the Telephone Service)
provided by WorldCom hereunder shall be consistent with that
regularly provided by WorldCom to its end-users and
consistent with government regulations.
WORLDCOM MAKES NO OTHER UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES ABOUT
THE TELEPHONE SERVICE TO BE PROVIDED HEREUNDER, WHETHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
13. Service Problems. Reseller hereby agrees to promptly notify
WorldCom of any failure, cessation, interruption, delay or other problem in
the provision of Telephone Service which Reseller may become aware of relating
to the provision of Telephone Service hereunder (herein called "Service
Problems"). Such notification shall be made in such form, to such locations
and at such telephone numbers as WorldCom may designate in writing from time
to time, except that no such notification shall occur until and unless
Reseller shall have reasonably determined that such problems are not caused by
the action or omission of, or by any cause within the control of, Reseller or
its Subscribers. Notwithstanding any other provision of this Agreement, in
the event of the occurrence of Service Problems on account of WorldCom's
negligence, WorldCom shall forthwith as soon as practicable (after
notification thereof) undertake all reasonable good faith efforts to cure such
Service Problems in a timely manner, in accordance with industry standards,
and in conformity with its own policies and procedures. The obligation
provided for in the preceding sentence shall be WorldCom's sole and exclusive
obligation respecting or arising out of any Service Problem.
14. Force Majeure. Without limiting the generality of any other
provisions in this Agreement, WorldCom shall not be liable for any failure in
performance of any of its obligations under this Agreement when such failure
results from acts or events beyond WorldCom's reasonable control, including,
but not limited to, acts of or failures to act by Reseller, other contractors
or suppliers to Reseller or Subscribers, random acts of vandalism, acts of God,
acts of any civil or military authority, government regulations, war, terrorist
acts, riots, insurrections, explosions, fires, earthquakes, nuclear accidents,
floods or seismic action, other environmental disturbances, abnormal weather
conditions, power blackouts caused by acts of God, embargoes, strikes or other
labor-related disputes, or delays by WorldCom's subcontractors or suppliers.
15. WorldCom Representations. WorldCom hereby states, represents
and covenants to Reseller that WorldCom is a duly organized and validly
existing corporation under the laws of the State of Delaware, and WorldCom has
full right and authority to execute this Agreement and to perform all of
WorldCom's obligations hereunder.
16. Reseller Representations. Reseller hereby states, represents
and covenants to WorldCom as follows:
(a) Reseller is a duly organized and validly existing
corporation under the laws of the State of New York, and
Reseller has full right and authority to execute this
Agreement and to perform all of Reseller's obligations
hereunder;
(b) Reseller has obtained, or will promptly obtain at its own
expense, any licenses, approvals and/or regulatory
authorities that may be required by law in connection with
Reseller's use or receipt of Telephone Service hereunder or
as otherwise may be necessary in connection with this
Agreement; and
(c) Reseller hereby acknowledges that, except as specifically
set forth in this Agreement, WorldCom has not either hereby
or otherwise made any representation, warranty, covenant or
undertaking whatsoever to Reseller or anyone as to the
character, capacity or usefulness of the Telephone Service,
or as to whether Reseller must first obtain or maintain any
certificate or authority or obtain any other regulatory
approval, or file any tariff respecting the use of the
Telephone Service, or as to whether or not Reseller can
utilize the Telephone Service in the conduct of the
Reseller's Business, or as to whether WorldCom can provide
the Telephone Service to Reseller hereunder without prior
regulatory authority or approval.
17. Indemnification. Each Party (as "Indemnitor") shall indemnify,
defend and hold harmless the other Party and its affiliates (collectively as
"Indemnitee") from and against any and all claims, liabilities, judgments,
costs, damages, fines, assessments, penalties, expenses (including reasonable
attorney's fees) or causes of action which may relate to or result from:
(a) any breach of any provision in this Agreement by
Indemnitor, its employees or agents, or
(b) any misrepresentation, negligence or illegal act of
Indemnitor, its employees or agents, arising out of the
Indemnitor's performance or non-performance hereunder.
Without limiting the generality of the foregoing, Reseller shall further
indemnify, defend and hold WorldCom and its affiliates harmless from and
against any and all claims, liabilities, disputes costs, damages and
expenses (including reasonable attorney's fees) or causes of action
resulting from any claim of libel, fraud (including toll fraud), slander or
patent or trademark infringement arising from:
(c) the combination or use of Telephone Service with other
Reseller-provided services or facilities, or
(d) Reseller's marketing, advertising, sales or promotional
activities, or
(e) the conduct of Reseller's Business.
18. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE,
CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES ON
ACCOUNT OF LOSS OF REVENUE, PROFITS, CUSTOMERS, CLIENTS OR GOODWILL ARISING IN
ANY MANNER FROM OR UNDER THIS AGREEMENT OR THE PERFORMANCE OR NONPERFORMANCE
OF OBLIGATIONS HEREUNDER. THE LIABILITY OF WORLDCOM WITH RESPECT TO THE
NEGLIGENT PROVISION OF ANY TELEPHONE SERVICE UNDER THIS AGREEMENT SHALL BE
LIMITED TO A CREDIT TO BE APPLIED AGAINST FUTURE TELEPHONE SERVICE PROVIDED
HEREUNDER IN AN AMOUNT NOT TO EXCEED AN AMOUNT EQUAL TO THE CHARGES, INCLUDING
ANY PRORATED MONTHLY RECURRING CHARGES, FOR THE PERIOD DURING WHICH TELEPHONE
SERVICE WAS AFFECTED.
19. Default. A Party (as "Terminating Party") may terminate this
Agreement upon the failure of the other Party (as "Defaulting Party") to cure
any of the following within 30 days following delivery of written notice
thereof:
(a) the insolvency, corporate reorganization, arrangement
with creditors, receivership or dissolution of the
Defaulting Party; or
(b) the institution of bankruptcy proceedings by or against
the Defaulting Party; or
(c) the breach of any provision of this Agreement by the
Defaulting Party not otherwise referred to in the following
sentence.
Notwithstanding any other provision of this Agreement, in the event that
Reseller fails to timely and fully pay to WorldCom when due the WorldCom
Wholesale Price for Telephone Service in accordance with the provisions of
paragraph 9 of this Agreement, WorldCom may terminate this Agreement and
the providing of Telephone Service hereunder if, following a written notice
of default which refers specifically to this paragraph, Reseller shall fail
to pay, in full, all outstanding amounts due under this Agreement within
five business days after the delivery of said notice of default. Upon
termination of this Agreement under this paragraph, a Party may recover
from the other Party all monetary obligations owed by the other Party under
this Agreement at the time of termination.
20. Interest. Notwithstanding the right of either Party to cure a
default under this Agreement, in the event that a Party fails to pay when due
any monetary obligation under this Agreement, when due, interest shall accrue
on such obligation at a variable interest rate equal to 150% of the "Prime
Rate" (or the highest "Prime Rate", if more than one) as published in the
Money Rates Section of The Wall Street Journal (or, if no longer published,
any comparable substitute index selected by the party owed such payment) or,
if less, the maximum rate allowed by law.
21. Names and Marks. Neither Party shall be deemed to have
hereunder or otherwise acquired any right to use the name, service marks,
trademarks, patents or other intangible property of the other Party. Neither
Party shall take any action which would compromise the name, service marks,
copyrights, trademarks, patents or other intangible property of the other
Party.
22. No Offset. In no event shall a Party have any right of offset
or recoupment against its performance or its monetary obligations under this
Agreement on account of claims against the other Party.
23. Assignment. Neither Party may directly or indirectly (by
change of control, merger or otherwise), by operation of law or otherwise,
assign all or any portion of its rights under this Agreement without the other
Party's prior written consent, which consent may be given or withheld in the
sole discretion of such other party; provided:
(a) WorldCom may assign its rights under this Agreement
either to a successor in interest of WorldCom or to an
affiliate of WorldCom without such consent; upon such
assignment, WorldCom hereby agrees to cause such assignee to
contemporaneously therewith agree in writing to perform all
of WorldCom's obligations under this Agreement, whereupon
WorldCom shall be released from liability hereunder;
(b) Reseller may assign its rights under this Agreement to an
affiliate of Reseller without such consent; upon such
assignment, Reseller hereby agrees to cause such assignee to
contemporaneously therewith agree in writing to perform all
of Reseller's obligations under this Agreement, whereupon
Reseller shall be released from liability hereunder;
(c) WorldCom may contract with, or delegate to, anyone,
including an affiliate, performance of its obligations
hereunder, so long as WorldCom shall remain liable
therefore, and such contractor or delegatee is reasonably
qualified to effect such performance;
(d) WorldCom acknowledges that the RCN Reorganization shall not
constitute a prohibited assignment or change in control of
Reseller.
Subject to the foregoing, this Agreement shall be binding upon, and shall
inure to the benefit of, the Parties hereto and their permitted successors
and assigns.
24. No Partnership. The Parties acknowledge and agree that this
Agreement does not create a partnership between, a joint venture of, or an
agency relationship between, WorldCom and Reseller.
25. Notice. All notices required or permitted under the terms of
this Agreement shall be in writing and shall be delivered either personally or
by prepaid nationally-recognized commercial overnight delivery service which
maintains evidence of receipt (such as Federal Express), addressed as follows:
If to WorldCom: ▇▇▇▇ ▇▇▇▇, Esq.
WorldCom, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: MFS Communications Company, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Shared Services
If to Reseller: RCN Telecom Services of New York, Inc.
Attention: President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
General Counsel
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. Kensington, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Rich, May, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or at such other address as the entity to which notice is to be given may have
communicated to the other Party in writing in accordance herewith. Any such
notice shall be deemed to have been "delivered" when physically delivered if
delivered personally or on the second business day after dispatch if delivered
by commercial overnight delivery service (such as Federal Express). To the
extent that a notice may be delivered under, or is required to be delivered
under, any paragraph of this Agreement, such notice shall refer specifically to
such paragraph.
26. Publicity. Except as may be otherwise required by law or in
connection with any relevant regulatory proceeding, each Party shall obtain the
written consent of the other Party prior to releasing any public announcements,
press releases, sales brochures, advertising or other publicity materials which
may relate specifically to this Agreement, and prior to disclosing any of the
terms of this Agreement; however, any such consent shall not be unreasonably
withheld or unduly delayed.
27. Governing Law. This Agreement shall be governed by, and
interpreted pursuant to the laws of, the State of New York.
28. Modification. This Agreement may be amended, changed or
otherwise modified only by written document which is executed by both Reseller
and WorldCom, except as may be otherwise provided by the specific terms of
this Agreement.
29. Entire Agreement. This Agreement sets forth the entire
agreement of the Parties with respect to the subject matter hereof and this
Agreement supersedes and cancels all other agreements (whether written or
oral) between WorldCom and Reseller (or their respective predecessors in
interest) relating to Telephone Service within the Service Area. Without
limiting the foregoing, the interim WorldCom (then MFS)/RCN April 1996
Telecommunications Services Agreement is hereby specifically canceled and
terminated. (References in this Agreement to Exhibits shall be deemed to be
references to the exhibits attached hereto and hereby incorporated herein.)
30. Invalid Provisions. To the extent that any terms or
provisions of this Agreement shall be finally determined by a court of
competent jurisdiction to be invalid, such invalidity shall not affect,
release or modify any other terms or provisions hereof.
31. Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Party shall execute and deliver such
additional documents and instruments and perform such additional acts as may
be necessary or appropriate to effectuate and perform the provisions of this
Agreement and the transactions contemplated hereby and to otherwise further
and implement the intent and purposes of this Agreement.
32. Reference Date. This Agreement shall be dated, for reference
purposes, _______________, 1997.
METROPOLITAN FIBER SYSTEMS OF NEW YORK,
INC.
By:
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Title:
RCN TELECOM SERVICES OF
NEW YORK, INC.
By:
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Title: