Exhibit 10.20
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
BASED ON A REQUEST FOR CONFIDENTIAL TREATMENT
OMITTED PORTIONS HAVE BEEN SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION
MEDIA GATEWAY SERVICES AGREEMENT III
This Media Gateway Services Agreement (the "Agreement") between KMC
Telecom VI Inc., a Delaware corporation whose address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (collectively, "KMC") and Qwest Communications
Corporation, a Delaware corporation whose address is 700 Qwest Tower, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Qwest"), is effective as of June
30, 2000 (the "Effective Date").
WHEREAS, Qwest desires to purchase KMC's MGS Services on an MGS
Circuit basis (as defined below) and KMC desires to provide the MGS Services to
Qwest, pursuant to the rates, terms, and conditions of this Agreement; and
WHEREAS, KMC and Qwest wish to set forth the terms and conditions
under which Qwest is willing to purchase and KMC is willing to provide MGS
Services to Qwest.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and other terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
Definitions: The following capitalized terms shall have the meanings
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specified as follows:
"MGS Circuit" means a DS0-level circuit individually ordered by Qwest
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and provided by KMC to allow data or voice dial-up users, through SS7 trunks, to
connect to the Qwest IP network via KMC's Media Gateway servers (each, an "MGS
Server").
"MGS Services" means the provision, operation and maintenance of MGS
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Servers, operated by KMC on a dedicated basis for Qwest (including the
maintenance of hardware, equipment, environmental control, network connections,
and line provisioning) that provide connectivity between the Qwest data network
access connection ("DNAC") at the KMC POP and the public switched telephone
network ("PSTN") for Qwest's end users, through individually-ordered MGS
Circuits using KMC's own connection to the public switched telephone network.
For each MGS Circuit ordered by Qwest, MGS Services will be provided.
"POP" means the point of presence operated by one party at which data
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(and other telecommunications) traffic is exchanged.
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1. Incorporation of Recitals. The foregoing recitals are hereby
incorporated in this Agreement and made a part hereof to the same extent as if
herein set forth in full.
2. MGS Services. KMC will provide the MGS Services to Qwest and Qwest's
end users according to the Service Levels defined and specified in
Schedule 2 to this Agreement. KMC shall provide the MGS Services for
the term set forth in Section 7.a. below. Qwest, at its sole cost,
shall establish and manage (i) a designated DNAC to KMC's network at
each location that KMC provides the MGS Services and (ii) an access
link between the DNAC and Qwest's POP. KMC will be responsible for
the physical installation of the DNAC at the KMC POP and the testing
and activation of MGS Circuits. KMC shall be responsible for all
operation, maintenance, installation, and network line connections for
the MGS Services, subject to Qwest's obligations as set forth below.
Notwithstanding the foregoing, Qwest shall have the ability to
conduct remote monitoring, software configuration and billing
functions for its end user customers using Qwest software and network
management equipment related to the MGS Services, including software
programming related to the MGS Servers as necessary. Qwest shall
conduct remote monitoring of the MGS Servers, provide traffic and
utilization information to KMC on a regular basis and notify KMC of
the need to make onsite corrections of errors or defects, which KMC
shall do promptly in accordance with the Service Levels set forth in
Schedule 2. In order to assist Qwest in ordering MGS Services and
otherwise fulfilling its obligations under this Section, KMC will,
upon Qwest's request, provide Qwest with all necessary information in
KMC's possession and assistance relating to the establishment and
maintenance of DNACs and the MGS Circuits, including but not limited
to providing software specifications, documentation, network
provisioning information, network routing maps and traffic and
performance reports as it relates to the KMC network. All such
information and materials provided by KMC will be the confidential
information of KMC. The parties may enter into additional mutually-
acceptable agreements in separate writings or as written amendments
hereto, under which KMC will provide technical testing and activation
of the network connections on the Qwest side of the network
demarcation (including testing of the Qwest-operated remote software,
network management tools and software configuration).
3. Rates.
a. Qwest shall pay KMC for MGS Services according to the prices for
MGS Circuits as set forth in Schedule 1 to this Agreement (the
"MGS Circuit Rates"). Charges for the MGS Circuits will be as
follows: (a) on [text deleted] Qwest shall commence payment on a
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monthly basis for the [text deleted] of (x) [text deleted] of all
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MGS Circuits deemed installed (as described below) or (y) the
[text deleted] of MGS Circuits in service plus all out of pocket
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and third party costs incurred by KMC and payable by Qwest
pursuant to Appendix A to Schedule 1 for [text deleted] of all
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MGS Circuits deemed installed ("Out of Pocket Costs"); (b) on
[text deleted] Qwest shall commence monthly payments for the
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[text deleted] of (x) [text deleted] of all MGS Circuits deemed
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installed or (y) the [text deleted] of MGS Circuits in service
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plus [text deleted] of all Out of Pocket Costs not previously
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paid by Qwest; (c) on [text deleted] Qwest shall commence monthly
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payments for the [text deleted] of (x) [text deleted] of all MGS
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Circuits deemed installed or (y) the [text deleted] of MGS
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circuits in service plus [text deleted] of all Out of Pocket
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Costs not previously paid by Qwest, and (d) on [text deleted]
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Qwest shall commence payment for all MGS Circuits deemed
installed.
b. An MGS Circuit will be deemed installed as of the earlier of (a)
the day that is the later of (i) the date when KMC notifies Qwest
that it has installed the MGS Circuit or (ii) 60 days after the
date when KMC orders the corresponding [text deleted] from the
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incumbent local exchange carrier ("ILEC"); or (b) [text deleted]
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days after the Effective Date (or, in the case of an additional
MGS Circuit ordered pursuant to Section 6 hereof, [text deleted]
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days after the acceptance of the Service Order by KMC). Qwest
will be charged the MGS Circuit Rates pro rated for any partial
first month.
c. Payments for the MGS Services/MGS Circuits shall be due and
payable within [text deleted] days after receipt of KMC's
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invoice, except to the extent Qwest in good faith disputes any
portion of the charges; provided that Qwest may not withhold
payment of amounts in dispute to the extent such amounts exceed
[text deleted] of the invoice amount; provided further that such
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[text deleted] limit shall not apply to disputes arising from
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KMC's failure to correctly apply credits (including MGS Circuit
Delay Credits) or from KMC invoicing for MGS Circuits prior to
the date they are deemed installed, as set forth above. In the
event of such a dispute, Qwest shall pay the undisputed portion
of the charges on the invoice (as well as amounts in dispute to
the extent they are subject to, and exceed, the [text deleted]
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limit set forth above) and the parties shall cooperate to resolve
the dispute as provided in this Agreement. The parties shall use
reasonable efforts to resolve such dispute within [text deleted]
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days. If the dispute is resolved in favor of Qwest and Qwest has
withheld the disputed amount, no interest credits or penalties
will apply. If the dispute is resolved in favor of Qwest and
Qwest has paid the disputed amount, Qwest will be credited with
interest on such amount by KMC at the lesser of the rate of one
and one-half percent (1 1/2%) per month or the maximum rate
permitted by law, from the date KMC received payment up to and
including the date of refund. If the dispute is resolved in
favor of KMC and Qwest has paid the disputed amount on or before
the payment due date, no interest credit or penalties will apply.
If the dispute is resolved in favor of KMC and Qwest has withheld
the disputed amount, any payments
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withheld pending settlement of the disputed amount shall bear
interest at the lesser of the rate of one and one-half percent
(1 1/2%) per month or the maximum rate permitted by law, from the
payment due date up to and including the date of payment.
d. The MGS Circuit Rates are payable by Qwest without regard to any
taxes, including sales taxes if applicable, FCC charges, or other
third party costs imposed with respect to the MGS Circuits, which
taxes, charges and other costs, (other than taxes based on KMC's
net income) shall be born solely by Qwest. No adjustment shall be
made to the MGS Circuit Rates on account of taxes or other items
imposed on Qwest in connection with the MGS Circuits.
e. In the event of an MGS Circuit Delay (as defined below) and
payment for such MGS Circuit would otherwise be due in accordance
with Section 3 a., KMC shall provide to Qwest for each affected
MGS Circuit an MGS Circuit Delay Credit equal to the product of
(A) [text deleted] of the [text deleted] for the affected MGS
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Circuit times (B) the [text deleted] of [text deleted] of such
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MGS Circuit Delay. Notwithstanding the provisions of Section
10(a), acceptance of the credit by Qwest pursuant hereto shall
constitute Qwest's sole remedy for an MGS Circuit Delay.
f. An "MGS Circuit Delay" shall be deemed to occur if, (x) after the
date upon which an MGS Circuit is deemed installed as set forth
above, Qwest notifies KMC that it has an actual customer to whom
it desires to provide service using such MGS Circuit and within
[text deleted] days after such notice KMC has not completed
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existing testing and circuit hand-off procedures (and other such
procedures as mutually agreed by the parties) with respect to
such MGS Circuit, including the verification of full connectivity
through the DNAC to Qwest's IP network; provided, however, that
notwithstanding the testing and connectivity requirements set
forth in this sentence, an MGS Circuit Delay shall not have
occurred, and monthly charges for the MGS Circuit shall commence
or continue as prescribed in Section 3.a, if due to an act or
omission of Qwest in the provision of services or equipment
reasonably necessary for KMC to satisfy its testing and
connectivity obligations set forth herein, KMC is unable to
satisfy such obligations.
g. Qwest agrees that, except (i) as otherwise expressly provided in
Section 3.c with respect to (x) disputed amounts not exceeding
[text deleted] of the amount invoiced by KMC pursuant to Section
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3.a, (y) disputes arising from KMC's failure to correctly apply
credits as described in Section 3.c or (z) KMC invoicing for MGS
Circuits prior to the date they are deemed installed; (ii) during
the continuance of an Event of Default described in Section
10.a.i and (iii) as otherwise expressly provided in Section 9.b
or
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14, Qwest's obligations to make all payments payable by it under
this Agreement in accordance with the terms of this Agreement and
the Acknowledgement and Consent Agreement attached hereto as
Exhibit A are absolute and unconditional and that it will make
all payments payable by it hereunder regardless of set- off,
recoupment, abatement or other similar right, existing or future,
which Qwest may have against KMC.
4. Services Commitment. Qwest will purchase MGS Services in at least the
quantities set forth in the Implementation Schedule attached hereto as
Schedule 3 (the "Services Commitment") on or before November 1, 2000
(the "Commitment Date") unless this Agreement is terminated pursuant
to Section 7.b or pursuant to Sections 10, 14, or 16 before the
Commitment Date, in which case Qwest shall have no obligation with
respect to the Services Commitment (except for MGS Services actually
rendered and, if applicable, the early termination charge set forth in
Section 7.b). This Agreement includes the terms, conditions, Service
Level commitments, technology and MGS Circuit Rates for the MGS
Circuits/MGS Services within the Services Commitment, as well as
additional MGS Circuits/MGS Services that may be ordered pursuant
hereto.
5. Implementation Schedules and Growth Forecast.
MGS Circuits sufficient to satisfy the Services Commitment shall be
installed pursuant to the Implementation Schedule set forth in
Schedule 3 hereto. In the event KMC is unable to (except to the
extent such inability results from any acts or omissions of Qwest), or
the parties otherwise agree that KMC shall not install such MGS
Circuits before the Commitment Date, Qwest will nonetheless be deemed
to have satisfied the Services Commitment and no shortfall penalty
shall be owed by Qwest to KMC with respect to same. Qwest
acknowledges that KMC may not agree to defer the installation of MGS
Circuits without first obtaining the consent of a Financing Source (as
defined in Section 16(b)) and KMC has no obligation hereunder to
obtain such consent.
6. Equipment Configuration. KMC shall provide MGS Services other than
those in the Implementation Schedule after receipt of a Qwest service
order in a form mutually agreed by the parties (each a "Service
Order") for such MGS Services; provided, however, that any Service
Order shall not be binding until accepted by KMC and in the event KMC
in its discretion determines that filling such order would require
additional third party capital financing, such Service Order shall be
subject to obtaining such additional third party capital financing,
and the provision of MGS Services pursuant thereto may be conditioned
on the agreement of both parties to a separate agreement governing
such MGS Services. Such Service Order shall specify a requested
installation date that is at least 90 days after the date of such
Service Order. KMC shall notify Qwest within 2 business days after
receipt of a Service Order if such Service Order contains insufficient
information for KMC to meet the requested provisioning period. In
filling Service Orders,
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KMC shall use modems, MGS Servers and other network equipment
(according to a configuration of cabinets, fuse panels, racks,
routers, and other equipment necessary for a plug and play
configuration) that are specified by Qwest in each Service Order. The
MGS Service will initially be provided using Cisco or Nortel equipment
(as agreed to by Qwest) (together with equipment specified by Qwest
pursuant to the next to last sentence of this Section 6, the
"Qwest-Required Equipment") which enables Qwest to exchange either
data (e.g. V.90), voice (e.g. G.711) or fax (e.g. T.37) traffic with
end user customers (i.e. the dial-up users) of the MGS Services.
Except with respect to MGS Circuits that must be ordered to satisfy
the Services Commitments, Qwest may specify other models or vendors of
equipment to be used in the MGS Services configuration, provided that
Qwest shall be responsible for and shall pay any increased costs to
KMC resulting from the use by KMC of other models and vendors of MGS
Servers at Qwest's request. Qwest may also request that software
upgrades be made; provided that Qwest shall be responsible for and
shall pay any increased costs to KMC resulting from such software
upgrades; provided further that absent such request and payment by
Qwest, KMC shall be under no obligation to upgrade any software. Each
Service Order is hereby incorporated by reference.
7. Term, Early Termination Charge.
a. This Agreement shall have an initial term commencing on the
Effective Date and ending forty-two (42) months after February 1,
2001, unless earlier terminated pursuant to Section 9.b.,10, 14,
or 16. Each of the MGS Circuits listed in the Implementation
Schedule shall have a term that is forty-two (42) months after
February 1, 2001, but shall continue at the option of Qwest for
an additional term to be specified in writing by Qwest no later
than 30 days prior to the expiration of the initial term. Each
additional MGS Circuit provided pursuant to Section 6 shall have
a term beginning on the date it is deemed installed as described
in Section 3 b. and ending forty-two (42) months thereafter,
unless earlier terminated pursuant to Section 9.b.i, 9.b.ii, 10,
14, or 16 or extended by Qwest in the manner described in the
immediately preceding sentence. In the event the term of one or
more such MGS Circuits extends beyond the expiration of the
initial term as set forth above, the terms and conditions of this
Agreement shall continue to apply to each such additional MGS
Circuit until the expiration of the term of each such MGS
Circuit. Following expiration of the initial term of this
Agreement, the term shall automatically renew for successive
twelve month terms unless either party notifies the other party
of its intent not to renew at least thirty (30) days prior to the
end of the initial term or renewal term, as the case may be.
b. In the event Qwest terminates or cancels MGS Services for an MGS
Circuit, or this Agreement, [text deleted] then Qwest shall be
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responsible for paying KMC an early termination charge equal to
one hundred percent
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(100%) of the MGS Circuit Rates for the canceled MGS Circuit(s),
multiplied by the number of full months remaining in the term at
the time of cancellation. Any termination of this Agreement as
described in the immediately preceding sentence shall not be
effective until the early termination charge due pursuant to the
immediately preceding sentence has been paid in full.
8. Insurance.
a. During the term of this Agreement, KMC shall maintain insurance
of the kinds and in the amounts specified below with insurers of
recognized responsibility, licensed to do business in the
State(s) where the MGS Services are being performed, and having
either: an A.M Best's rating of A8, a Standard & Poor's ("S&P's")
rating of AA, or a ▇▇▇▇▇'▇ rating of AaZ. If any MGS Services
provided for or to be performed under this Agreement are
subcontracted, KMC shall require the subcontractor(s) to maintain
and furnish it with insurance approved by Qwest.
b. In accordance with the above, KMC and any subcontractors shall
maintain the insurance coverage in accordance with that certain
Access Service Agreement between KMC and certain of its
affiliates and Qwest dated as of December 15, 1998, as such may
be amended from time to time pursuant to the terms thereof.
c. Should KMC at any time neglect or refuse or provide the insurance
required, or should such insurance be canceled or non-renewed,
Qwest shall have the right to purchase such insurance, and the
cost shall be billed to KMC. In addition, should KMC at any time
neglect or refuse to pay the necessary premium, Qwest shall have
the right to pay same and deduct the amount therefor from monies
due KMC.
d. KMC and all subcontractors shall comply with the terms of the
Occupational Safety and Health Administration (OSHA) and all
locations, jurisdictions' safety and health regulations during
the full term of this Agreement.
9. Representations and Warranties.
a. Each party represents and warrants to the other that it has the
power and authority to enter into this Agreement including each
Schedule, Attachment and Exhibit hereunder.
b. KMC represents, warrants and agrees that:
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i. it will provide, to Qwest and its end user customers, MGS
Services that meet or exceed the Service Levels described in
Schedule 2. Should KMC, in any [text deleted] during any
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consecutive [text deleted] period, (x) fail to provide the
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MGS Services at the Service Levels defined in item 1 (v) of
Schedule 2 for [text deleted] of the MGS Circuits in a
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particular Market Area; or (y) fail to meet the Service
Level set forth in item 1 (iii) of Schedule 2 for Qwest
calls affecting, in the aggregate, more than [text deleted]
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of the MGS Circuits in a particular Market Area; or (z) fail
to meet the Service Level set forth in item 1 (ii) of
Schedule 2 in a particular Market Area (unless, in any of
such events, such failure was substantially caused by a
force majeure event, Qwest-Required Equipment or an action
or omission of Qwest, its equipment or its agents or
employees), Qwest shall be entitled to terminate all MGS
Circuits in such Market Area without any liability to KMC
except for payment due for services provided up to the point
of termination, by providing written notice to KMC within
sixty (60) days after the occurrence of the events giving
rise to Qwest's right to terminate such Market Area;
provided that, within ten (10) business days after the end
of any calendar month in which such failure of MGS Circuits
to meet such standards has occurred, Qwest shall give KMC
written notice of such failure and provide to KMC all
information within Qwest's possession that is reasonably
calculated to assist KMC in taking steps to prevent the
recurrence of such failure. If, during the term of this
Agreement, Qwest shall become entitled to terminate all MGS
Circuits in any three or more Market Areas that contain in
the aggregate [text deleted] or more of the MGS Circuits to
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be provided hereunder, Qwest shall be entitled to terminate
this Agreement in its entirety by providing written notice
to KMC within sixty (60) days after the occurrence of the
events giving rise to Qwest's right to terminate this
Agreement, provided Qwest has provided KMC with reasonable
notice of KMC's failure to meet Service Levels under this
Agreement. Notwithstanding the provisions of Section 10.a,
termination of Market Areas and/or this Agreement for breach
of this Service Level warranty pursuant to this Section
9.b.i shall be Qwest's sole remedy for breach of this
Agreement for failure of KMC to meet Service Levels in
accordance with this Section 9.b.i, and such termination
shall be effective (without penalty) thirty (30) days after
KMC receives notice of the breach of this warranty and
intent to terminate from Qwest. For purposes of this
Section 9.b.i, a "Market Area" means the market being served
by a single aggregation point for MGS Servers;
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ii. In the event an MGS Circuit is interrupted continuously
for a period of [text deleted] or incurs cumulative outages
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of over [text deleted] in any [text deleted] period, Qwest
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shall be entitled, at its sole option, to either (but not
both) of the following: (i) a credit to Qwest's account for
the [text deleted] for [text deleted] of MGS Services for
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every [text deleted] continuous interruption of the MGS
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Services up to total credits equal to [text deleted] for
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[text deleted] of MGS Services in each [text deleted] for
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each MGS Circuit; or (ii) the termination of the affected
MGS Circuits, provided such interruption(s) was not
substantially caused by an event of force majeure, or an
action or omission of Qwest, its equipment or its agents or
employees. Termination of any particular MGS Circuits or
MGS Services under this Section shall not serve to terminate
any other MGS Circuits or MGS Services and any exercise of
Qwest's rights under this Section shall not (x) reduce or
otherwise affect Qwest's rights to termination of this
Agreement for Service Level failures under Section 9.b.i; or
(y) affect the number of MGS Circuits for which MGS Services
have been ordered with respect to Services Commitments (i.e.
the number of MGS Circuits for which MGS Services have been
ordered will not be reduced in determining whether Qwest has
met the Services Commitments if MGS Circuits are terminated
pursuant to this Section); provided that with the exception
of (x) and (y) above, notwithstanding the provisions of
Section 10(a), acceptance of a credit pursuant to (i) above
or termination of affected MGS Circuit(s) pursuant to (ii)
above shall be Qwest's sole remedy for the interruptions
described in this Section 9.b.ii;
iii. to the best of its knowledge, there are no pending or
threatened lawsuits, claims, disputes or actions (a)
alleging that the Equipment infringes or misappropriates any
third party's patent, copyright, trademark, trade secret,
proprietary or other intellectual property rights, or (b)
adversely affecting the Equipment, the MGS Services or KMC's
ability to undertake and perform its obligations under this
Agreement; and
iv. it has and will maintain manufacturer's warranties of the
kind typically used in the applicable industry for all
Equipment used to provide the MGS Services and will pass on
the benefits of such warranties to the full extent possible
to Qwest for the MGS Services.
c. THE EXPRESS WARRANTIES IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
THOSE OF
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MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10. Default/Termination. This Agreement and any MGS Services can be
terminated only as provided in Sections 9.b.i, 9b.ii, 14, 16, and this
Section 10.
a. i. Qwest may terminate this Agreement if any one of the
following occur (each, an "Event of Default"): (i) if KMC
becomes insolvent or admits in writing its inability to pay
debts as they mature, or makes an assignment for the benefit
of creditors and as a result thereof KMC fails to meet the
requirements of Section 9.b.i or 9.b.ii; (ii) if a petition
under any foreign, state or United States bankruptcy act,
receivership statute, or the like, as they now exist, or as
they may be amended, is filed by KMC and as a result thereof
KMC fails to meet the requirements of Section 9.b.i or
9.b.ii; or (iii) if such a petition is filed against KMC by
any third party and such application is not resolved
favorably to such other party within sixty (60) days and as
a result thereof KMC fails to meet the requirements of
Section 9.b.i or 9.b.ii.
ii. KMC may terminate this Agreement if any one of the following
occur (each, an "Event of Default"): (i) if Qwest fails to
pay any amount due to KMC within fifteen (15) business days
of demand of such overdue amount by KMC (or, in the case of
disputed amounts withheld by Qwest pursuant to Section 3.c,
within fifteen (15) business days after the dispute as to
such amounts is resolved in KMC's favor); (ii) if Qwest
becomes insolvent or admits in writing its inability to pay
debts as they mature, or makes an assignment for the benefit
of creditors and as a result thereof Qwest fails to timely
pay KMC in accordance with the terms of this agreement;
(iii) if a petition under any foreign, state or United
States bankruptcy act, receivership statute, or the like, as
they now exist, or as they may be amended, is filed by Qwest
and as a result thereof Qwest fails to timely pay KMC in
accordance with the terms of this agreement; or (iv) if such
a petition is filed against Qwest by any third party and
such application is not resolved favorably to such other
party within sixty (60) days and as a result thereof Qwest
fails to timely pay KMC in accordance with the terms of this
agreement.
b. The parties acknowledge that this Agreement may be subject
to the approval of public utility commissions of individual
states or other regulatory agencies wherein MGS Services are
provided. Either party shall have the right to terminate the
affected MGS Service without liability except for MGS
Services actually rendered if, by a final, non-appealable
order of a court of competent jurisdiction, the Federal
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Communications Commission, or other local, state or federal
government authority, (i) KMC is prohibited from furnishing the
MGS Services; or (ii) any material rate or term contained herein
is substantially changed in a manner that is materially adverse
to the terminating party.
11. Indemnification for Infringement.
a. The following indemnification provisions set forth the entire
obligation of KMC with respect to infringement of proprietary
rights arising directly from the Qwest-Required Equipment used to
provide MGS Services; provided, however, notwithstanding the
foregoing, that KMC shall have no indemnification or other
obligation to Qwest whatever with respect to infringement of
proprietary rights arising directly from the Qwest-Required
Equipment except to the extent, if any, that KMC possesses the
right to be indemnified by the vendor or manufacturer of the
Qwest-Required Equipment from time to time for infringement of
proprietary rights:
i. KMC or its suppliers will defend any claim, suit or
proceeding brought against Qwest insofar as it is based on a
claim that any Qwest-Required Equipment used hereunder
infringes a United States copyright or an existing United
States patent (issued as of August 31, 1999). Qwest shall
notify KMC promptly in writing of the claim and give KMC and
its suppliers full authority, information, and assistance
for the defense. If such claim has occurred, or in KMC's
opinion is likely to occur, Qwest agrees to permit KMC and
its suppliers, at KMC's option and expense, either to
procure for Qwest the right to continue using the Qwest-
Required Equipment or to replace or modify the same so that
it becomes noninfringing, or, if neither of the foregoing
alternatives is reasonably available, remove the Equipment
and refund Qwest the portion of the price for the MGS
Services reasonably attributable to such Equipment
depreciated or amortized by an equal annual amount over the
lifetime of the Qwest-Required Equipment as established by
Cisco or Nortel.
ii. KMC and its suppliers have no liability under this
Section 11 for any claim based upon the combination,
operation, or use of any Qwest-Required Equipment used
hereunder with equipment, devices, or software not supplied
by the vendor of such Qwest-Required Equipment. KMC and its
suppliers have no liability for any claim under this Section
11 based upon alteration or modification by Qwest or a third
party of any Qwest-Required Equipment supplied hereunder.
Further, KMC and its suppliers
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shall have no liability for any claim based upon compliance
with Qwest's designs, specifications, or instructions.
b. The following provisions relate to all Equipment other than
Qwest-Required Equipment and all combinations of Equipment:
i. KMC agrees to defend and/or handle at its own expense, and
to indemnify and hold Qwest harmless from and against any
and all liabilities, losses, costs, damages and expenses
(including reasonable attorneys' fees attributable to such
claim) associated with, any claim or action against Qwest by
any third party based upon any actual or alleged
infringement or violation of a United States patent, or any
trademark, copyright, or trade secret of a third party
enforceable in the United States related to KMC's provision
of the MGS Services ("Infringement Claim"), provided that
Qwest shall approve the terms of any settlement or
compromise unless KMC demonstrates its financial capacity to
satisfy the settlement or compromise.
ii. KMC shall have the sole right to conduct the defense of
any such claim or action and all negotiations for its
settlement or compromise. Qwest shall promptly notify KMC
of the subject claim and provide reasonable information in
connection with such claim.
iii. KMC warrants that it has the full power and authority to
deliver, convey and grant to Qwest the related license and
other rights granted under this Agreement; and that KMC's
provision of MGS Services under this Agreement and Qwest's
use of the MGS Services related to the Equipment will not
constitute a misappropriation of any trade secrets or
constitute a patent, copyright or trademark infringement.
iv. This indemnity shall not extend to any claim of infringement
resulting from Qwest's unauthorized modification of
equipment of KMC or the combination of the Equipment or MGS
Services with services or equipment not provided by KMC or
by or for Qwest with KMC's express written approval.
12. General Indemnification and Limitation of Liability.
a. Each party shall indemnify the other party from any third-party
claim or damages due to the injury or death of any individual, or
the loss or damage to real or personal property, resulting from
the willful or negligent acts, or omissions of the indemnifying
party, its agents or employees.
12
b. NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR TO ANY THIRD PARTY
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, EVEN IF THE
PARTIES HAVE KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES. THE
FOREGOING LIMITATION SHALL NOT APPLY IN THE EVENT OF: (i) A
CLAIM BROUGHT BY QWEST AGAINST KMC ARISING UNDER THE SECTION OF
THIS AGREEMENT ENTITLED INFRINGEMENT (SECTION 11); (ii) EITHER
PARTY'S BREACH OF THE CONFIDENTIALITY OBLIGATIONS OF SECTION 15
(CONFIDENTIAL INFORMATION); OR (iii) THE WILLFUL MISCONDUCT OF
EITHER PARTY, ITS AGENTS, ITS EMPLOYEES OR NOMINEES ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT.
c. IN NO EVENT SHALL A PARTY'S TOTAL LIABILITY TO THE OTHER UNDER
THIS AGREEMENT EXCEED $5,000,000 (OTHER THAN QWEST'S PAYMENT OF
THE MGS CIRCUIT RATES), EXCEPT WITH RESPECT TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY.
d. In the event any applicable law does not allow the limitation or
exclusion of liability as provided for in this Agreement, the
subject limitation or exclusion of liability shall be deemed
modified so as to limit or exclude the parties' liability for
damages hereunder to the greatest extent permitted by such law.
13. Internet Disclaimers and Limitations.
a. Neither party will be liable or responsible for the Internet or
any information contained thereon. Neither party will warrant,
and neither will assume any responsibility for any consequences
suffered by any person as a result of obtaining Internet access
including without limitation, damages arising from accessing
Internet content or from computer viruses.
b. KMC will have no responsibility for authentication of the end
users accessing the MGS Circuits. Qwest will be responsible for
controlling end user access to the MGS Circuits.
c. Qwest shall be responsible for billing its end users and all
records related to such billing or accounting.
14. Force Majeure. In no event shall either party be liable to the other
party (other than for obligation to pay money) for any delay or
failure to perform due to causes beyond the control and without the
fault or negligence of the party claiming
13
excusable delay, including but not limited to acts of God, fire,
explosion, vandalism, cable cut, storm, governmental action, wars,
strikes or other labor difficulties, supplier failures, breaches or
delays (for the avoidance of doubt, to include any failure, breach or
delay of Qwest as a supplier of KMC). Notwithstanding the foregoing,
in the event of a force majeure (other than a supplier failure as to
which Qwest is the supplier), KMC will use substantially the same or
better efforts that it uses with respect to its other customers to
restore the MGS Services for Qwest. If a force majeure condition
continues for a period greater than [text deleted], either party
may terminate only that MGS Service which is the subject of the force
majeure condition without further penalty (except that Qwest shall not
have the right to terminate any MGS Service pursuant to this Section
14 as a result of a force majeur condition caused by Qwest).
15. Confidential Information. Qwest and KMC agree that unless otherwise
specifically provided in the applicable Exhibit and/or Schedule, the
following confidentiality provisions shall apply.
a. All information (including the terms and conditions hereof)
marked as confidential and disclosed by either party to the
other, or which comes to the attention of either party or its
employees, officers, directors, agents, investors and potential
investors or advisors ("Representatives") during the course of
work pursuant to the terms of this Agreement and any other
information that a party receiving such information should know,
by its nature, is confidential, shall be confidential
information. Confidential information constitutes a valuable
asset of and is proprietary to the party disclosing or originally
possessing it. KMC acknowledges that Qwest keeps its customers'
records strictly confidential. KMC and its Representatives shall
keep strictly confidential any Qwest customer records, whether or
not they are marked as confidential. Neither party shall
willfully disclose confidential information or knowingly permit
its Representatives to disclose confidential information to any
person other than persons among its Representatives having a
specific need to know in performance of the work or to any
Financing Source as defined in Section 16 (b). Each party shall
take reasonable care to ensure fulfillment of this obligation,
including instructing its Representatives and/or Financing
Source(s) not to sell, lease, assign, transfer, use outside their
scope of employment or reveal any confidential information or
Qwest customer records without prior written consent of the other
party. KMC shall obtain the written agreement of its affiliates
and Representatives who will receive Qwest customer records or
other confidential information to conform to KMC's obligations
under this Section. KMC will not provide Qwest customer records
or other confidential information provided by Qwest to the
Financing Source(s) unless the Financing Source(s) provide
written agreement to keep such information confidential.
14
b. If a subpoena or other legal process in any way concerning
confidential information is served upon a party to which
confidential information has been disclosed ("Recipient"), the
Recipient shall notify the disclosing party ("Discloser")
promptly, and the Recipient shall cooperate with the Discloser,
at the latter's expense, in any lawful effort to contest the
validity of such subpoena or other legal process.
c. This Section will in no way limit either party's ability to
satisfy any governmentally required disclosure of its
relationship with the other party, or either party's ability to
satisfy any requests or demands generated in the course of audits
of either party or either party's parent or either party's
attorneys or auditors, provided such audits are conducted
pursuant to non-disclosure obligations.
d. The obligations of confidentiality in this Section shall not
apply to any information which a party has in its possession when
disclosed to it by the other party, information which a party
independently develops, information which is or becomes known to
the public other than by breach of this Agreement or information
rightfully received by a party from a third party without the
obligation of confidentiality.
e. Each party acknowledges and agrees that in the event of a breach
or threatened breach of the foregoing provisions, it will have no
adequate remedy in money or damages and accordingly shall be
entitled to injunctive relief; provided, however, that no
specification of any legal or equitable remedy shall be construed
as a waiver or prohibition against any other contractual, legal
or equitable remedy available to either party hereunder;
f. Upon completion, expiration or termination of this Agreement, or
at any other time upon request, each party shall return any and
all related confidential information of the other party and all
copies thereof (in whatever form and on whatever medium).
g. The terms of this section of the Agreement shall survive the
expiration or termination of this Agreement.
16. Assignment; Rights of Subsidiaries.
(a) Neither party may assign this Agreement without the prior written
consent of the other party, which consent shall not be unreasonably
withheld. If consent is not granted under this Section, the party
seeking consent may terminate the Agreement upon sixty (60) days
notice to the other party or challenge the refusal to consent as
unreasonable through appropriate legal action. It shall not be
unreasonable for KMC to withhold its consent if the assignee has a net
worth less than that of Qwest as of the Effective Date. The
assignment or delegation of any
15
of KMC's rights under this Agreement to any of the following shall be
considered reasonable reasons for which Qwest may withhold its consent
for such assignment: [text deleted], and/or [text deleted]. Any
-------------- --------------
prohibited assignment or delegation shall be null and void.
Notwithstanding the foregoing, either party may assign this Agreement
to any company or entity controlling, controlled by or under common
control with such party or its affiliates without the other party's
consent; provided that the assignee has a net worth equal to or
greater than that of Qwest or KMC, as may be applicable, as of the
Effective Date. In addition, either party may assign this Agreement
without the approval of the other party to any successor in interest
resulting from a merger, acquisition, reorganization or transfer of
all or substantially all of the assigning party's business with or to
a successor; provided that the assignee has a net worth equal to or
greater than that of Qwest or KMC, as may be applicable, as of the
Effective Date.
(b) Qwest acknowledges that in order for KMC to provide the services
set forth in this Agreement KMC will finance the capital costs of this
Agreement with third party financing sources. KMC shall have the
right to assign or collaterally assign this Agreement to a third party
or parties providing financing for the capital expenses required to be
undertaken by KMC in order to provide the services under this
Agreement ("Financing Source(s)"), and Qwest shall execute and deliver
consents to the assignment by KMC as are requested by the Financing
Sources and are customary and usual, provided such consents contain
non-disturbance rights of Qwest, and are otherwise reasonably
acceptable to Qwest under these circumstances.
17. Modification; Amendment; Waiver. No modification, changes, amendment
or supplement to this Agreement shall be binding upon the parties
unless made in writing and duly signed by both parties. The parties
acknowledge that KMC shall finance the capital costs of this Agreement
with Financing Sources. Accordingly, Qwest agrees to cooperate with
KMC to discuss and make such amendments or modifications to this
Agreement as may be reasonably necessary or appropriate to finance and
syndicate this Agreement to Financing Sources. At no time shall any
failure or delay by either party in enforcing any provisions,
exercising any option, or requiring performance of any provisions, be
construed to be a waiver, cancellation of same. No effective waiver
of any right hereunder shall be construed to be a waiver of any other
right.
18. Notices. All notices shall be in writing and either delivered
personally or mailed, first class mail and postage prepaid, or by
facsimile with electronically-generated confirmation of receipt that
is followed with a mailed copy. Notice shall be deemed communicated
on receipt in case of personal delivery and five (5) days after
mailing in the case of mailed notice (including the mailed copy of a
facsimile transmission). All such notices or other communications
shall be addressed as set forth below, but either party may change its
address by notice or other communication given in accordance with the
provisions of this paragraph.
16
If to Qwest:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President -- Internet and Multimedia Markets
Attn: General Counsel
If to KMC:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
19. Governing Law; Interpretation. In all respects this Agreement shall
be governed by the substantive laws of the State of New York without
regard to conflict of law principles.
20. Dispute Resolution.
a. It is the intent of KMC and Qwest that any disputes which may
arise between them or between the employees of each of them be
resolved as quickly as possible. Quick resolution may, in
certain circumstances, involve immediate decisions made by the
parties' representatives. When such resolution is not possible,
and depending upon the nature of the dispute, the parties hereto
agree to resolve such disputes in accordance with the provisions
of this paragraph; provided however, if they are unable to do so
within sixty (60) days commencing with the date of the notice set
forth in Section 20.b then either party may seek any and all
remedies available at law or equity.
b. Qwest and KMC shall each designate, by separate letter,
representatives as points of contact and decision-making for the
pre-acceptance phases of the Agreement. Any disputed issues
arising under this Agreement shall be initially referred to the
parties' designated representatives. The parties' designated
representatives shall render a mutually agreeable resolution of
the disputed issue, in writing, within three (3) business days of
such referral. Either party may modify the designated
representative upon written notice to the other party.
c. Any claims or disputes arising under the terms and provisions of
this Agreement, or any claims or disputes which the parties'
representatives are unable to resolve within the three (3) day
time period shall continue to be resolved between the parties'
representatives if mutually agreeable.
17
21. Attorney's Fees. If a legal action or arbitration proceeding is
commenced in connection with any dispute under this Agreement, the
prevailing party shall be entitled to reasonable counsel fees, costs
and necessary disbursements incurred in connection with the action or
proceeding, as determined by the court or arbitrators.
22. Inconsistencies. In the event of any inconsistency or conflict among
this Agreement, or any Schedule or Exhibit, the governing provisions
and interpretation necessary to resolve the inconsistency or conflict
shall be based on the following order: the specific Schedule or
Exhibit signed by the parties, followed next by the provisions of this
Agreement.
23. Publicity. Neither party shall use the other party's name or logo or
refer to such party directly or indirectly in any advertising, sales
presentation to any other person, news release, release to any
professional or trade publication or for any other purpose without
such party's prior written approval, provided that either party may
use the other party's name or logo, or both, in a list of such party's
customers, if such use does not imply endorsement. Either party shall
be allowed to issue press releases and public announcements regarding
this Agreement with the other party's prior written approval which
shall not be unreasonably withheld.
24. Miscellaneous.
a. If any of the provisions of this Agreement are held invalid, the
remaining provisions shall be unimpaired.
b. Headings are for reference only and shall not affect the meaning
of any of the provisions of this Agreement.
c. The parties, who have both been represented by legal counsel,
have jointly participated in negotiating and drafting this
Agreement, including its Schedules, Exhibits and any attachments.
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if jointly drafted
by the parties and no presumption, inference or burden of proof
shall arise favoring or disfavoring a party by virtue of
authorship of any or all of the Agreement's provisions.
d. The rights and remedies set forth in this Agreement are not
exclusive and are in addition to any other rights and remedies
available in law or in equity.
e. The terms and provisions contained in this Agreement that by
their sense and context are intended to survive shall survive the
completion of performance and termination of this Agreement,
including, without
18
limitation, the obligation of making all payments due hereunder
and to preserve the confidentiality of confidential information.
25. Relationship of the Parties. The parties are independent contractors.
Nothing in this Agreement or in the activities contemplated by the
parties pursuant to this Agreement shall be deemed to create an
agency, partnership, employment or joint venture relationship between
the parties. Each party shall be deemed to be acting solely on its
own behalf and, except as expressly stated, has no authority to pledge
the credit of, or incur obligations or perform any acts or make any
statements on behalf of, the other party. Neither party shall
represent to any person or permit any person to act upon the belief
that it has any such authority from the other party. Neither party's
officers or employees, agents or contractors shall be deemed officers,
employees, agents or contractors of the other party for any purpose.
26. Compliance with Laws.
a. The parties shall comply with all applicable federal, state and
local laws, regulations and ordinances as they relate to this
Agreement and the MGS Services, including, but not limited to,
the regulations of the United States Government, e.g., the
provisions of Executive Order 11246 (as amended) of the President
of the United States on Equal Employment Opportunity and the
rules and regulations issued pursuant thereto.
b. KMC warrants, represents, covenants and agrees that it will not
assign to perform any efforts under this Agreement any individual
who is an unauthorized alien under the Immigration Reform and
Control Act of 1986 or its implementing regulations. KMC shall
indemnify and hold harmless Qwest, its parent, subsidiaries and
affiliated companies from and against any and all liabilities,
damages, losses, claims or expenses (including attorneys' fees)
arising out of any breach by KMC of this section. In the event
any KMC personnel or contractor working under this Agreement, or
other individual(s) providing work to Qwest on behalf of KMC under
this Agreement, are discovered to be unauthorized aliens, KMC will
immediately remove such individuals from performing work and
replace such individuals with individuals who are not unauthorized
aliens. KMC shall indemnify and hold harmless Qwest, its parent,
subsidiaries and affiliated companies from and against any and all
liabilities, damages, losses, claims or expenses (including
attorneys' fees) arising out of any breach by KMC of this section.
c. Neither party shall cause the other party to violate any ruling,
order or determination by the Federal Communications Commission
("FCC") or any other governmental body relating to the provision
of the MGS Services under the terms and conditions set forth in
the Agreement. Should such a
19
ruling, order or determination become effective, the other party
shall indemnify, defend and hold the other party harmless against
any such event.
27. Successors. This Agreement shall inure to the benefit of and be
binding on the parties, and their heirs, successors, assigns and legal
representatives, but nothing contained in this section shall be
construed to permit an assignment or other transfer except as
specifically provided herein.
28. Entire Agreement. This Agreement is comprised of this Agreement and
any Schedule or Exhibits specified hereunder or which are added to
hereto by the parties; such Schedule or Exhibits are incorporated by
this reference and shall constitute a part of this Agreement as if
fully set forth herein. This Agreement constitutes the entire
agreement between the parties and supersedes all previous agreements,
promises, proposals, representations, understandings and negotiations,
whether written or oral, between the parties respecting the subject
matter hereof, except that this Agreement does not supersede the
Original MGS Agreement to the extent, and only to the extent, that the
terms and conditions of such Original MGS Agreement shall continue to
apply to the Services ordered under such Original MGS Agreement prior
to the Effective Date hereof.
29. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all such
counterparts together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
KMC Telecom VI Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name:
---------------------
Title:
--------------------
Qwest Communications Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
---------------------
Title: SVP-QIS
--------------------
20
Schedule 1
Prices/Rates for MGS Services
Set forth on Appendix A to this Schedule is a table stating the MGS Circuit
Rates which will apply to the MGS Services. The prices are based on the number
of MGS Circuits installed and in operation, subject to the following rules :
1. Rates. The rates for MGS Service for the term of this Agreement are set
-----
forth in Appendix A to this Schedule. The number of MGS Circuits for
purposes of these prices shall include all MGS Circuits deemed installed
pursuant to Section 3.b of the Agreement.
2. If new or upgraded equipment is requested by Qwest prior to the expiration
of the Agreement's term, Qwest will pay for such equipment.
3. The parties agree and acknowledge that expenses and market prices related
to the provision of the MGS Services may decrease in the future. Should
the market conditions change (including but not limited to the market
prices for similar services), the parties agree to discuss in good faith
reductions to the MGS Circuit Rates. Qwest acknowledges that KMC may not
agree to reduce the MGS Circuit Rates without first obtaining the consent
of a Financing Party and KMC has no obligation hereunder to obtain such
consent.
4. As set forth in Section 7 of the Agreement, the MGS Circuits provided
pursuant to the Implementation Schedule under this Agreement shall have an
initial term which is co-terminous with the initial term of the Agreement
(and shall terminate when this Agreement is terminated), and each
additional MGS Circuit shall have an initial term commencing on the date it
is installed and ending forty-two (42) months thereafter. The MGS Circuit
Rates set forth in this Schedule shall apply to each MGS Circuit during the
initial term for such MGS Circuit. Unless the Agreement has been earlier
terminated, substituted for another agreement where such agreement
specifically amends this Agreement, or is not renewed by the parties,
following the expiration of the initial term of the Agreement, the parties
agree to enter into good faith negotiations with regard to rates, terms and
conditions which will apply to MGS Circuits ordered under this Agreement
(not including any MGS Circuits which may be expressly ordered separately
under later agreements between the parties) after the expiration of the
initial term for each MGS Circuit, provided that the MGS Circuit Rates set
forth herein (as they exist as of that date) shall continue to apply during
such negotiations.
21
Appendix A to Schedule 1
1. Monthly charge of $[text deleted] per [text deleted].
-------------- --------------
2. Location Adjustment. Qwest acknowledges that, because of the
characteristics of the locations at which Qwest has ordered or may order
MGS Service hereunder, KMC may be required to incur higher than normal
[text deleted], [text deleted] or [text deleted] costs with respect to one
-------------- -------------- --------------
or more MGS Circuits provided hereunder. In the event that, following
review and consent by Qwest as described below, KMC incurs [text deleted],
--------------
[text deleted] or [text deleted] costs in excess of [text deleted] with
-------------- -------------- --------------
regard to one or more MGS Circuits, then as to each such Circuit, in
addition to the monthly charge set forth in paragraph 1, above, Qwest shall
pay a monthly surcharge equal to the amount by which the cost incurred by
KMC of [text deleted], [text deleted] or [text deleted] attributable to
-------------- -------------- --------------
such MGS Circuit exceeds [text deleted]. KMC shall notify Qwest in advance
--------------
of any location at which such surcharge will be applicable and Qwest will
either consent to such surcharge (such consent not to be unreasonably
withheld) or cooperate with KMC in identifying an alternative location at
which MGS Service will be provided, in which case such alternative location
shall be subject to the surcharge (if applicable). In the event KMC incurs
[text deleted], [text deleted] or [text deleted] costs of less than [text
-------------- -------------- -------------- -----
deleted] with regard to one or more MGS Circuits, then as to each such
--------
Circuit, KMC shall provide to Qwest a credit equal to the amount by which
the cost incurred by KMC for [text deleted], [text deleted] or [text
-------------- -------------- -----
deleted] attributable to such MGS Circuit is less than [text deleted].
-------- --------------
3. Maintenance Costs. KMC shall provide up to twenty-four (24) hours of on-
site maintenance (not including travel time) per location per calendar
month. In the event the hours of such on-site maintenance at any location
exceed twenty-four (24) in any calendar month, Qwest will reimburse KMC for
its reasonable costs of providing the hours of on-site maintenance in
excess of twenty-four (24). KMC will notify Qwest when it has attained
this twenty-four (24) hour threshold at a given location. To the extent
Qwest fails to remotely monitor the equipment or software at any site or
fails to notify KMC of any deficiency which Qwest remotely detects, KMC
shall bear no responsibility for a failure of the subject equipment or
software under this Agreement or otherwise to the extent that such failure
could have been prevented or resolved with notice from Qwest regarding such
deficiency as required hereunder.
4. Trunk Provisioning. If Qwest desires that KMC provision two-way trunks in
connection with one or more of the MGS Services, Qwest shall submit a
written request to KMC and KMC shall, within 15 days, provide Qwest with a
written estimate of all direct costs, charges and fees payable by KMC to
third parties in connection with the provisioning, maintenance and
operation of such two-way trunks (to the extent they exceed costs
associated with one-way trunks) and an estimated time frame in which KMC
will order the same. If Qwest accepts such estimates of charges and the
time frame for ordering, Qwest shall provide KMC with a written acceptance
and KMC shall order such two-way trunks
22
within such time-frame and thereafter Qwest shall be responsible for paying
for all direct costs, charges and fees payable by KMC in connection with
the provisioning, maintenance and operation of the two-way trunks to the
extent they exceed costs associated with one-way trunks.
23
Schedule 2
Service Levels
1. Service Level. For purposes of this Agreement, "Service Level" or
--------------
"Service Levels" means the level of service at or above which KMC shall provide
the MGS Services to Qwest and includes the following elements (all of which
shall be based on industry-standard measurements) provided by KMC:
(i) 24x7 (at the KMC POP) remote hands services;
(ii) P.01 grade of service measured on a calendar month basis, for the
portion of the KMC network, from and including KMC switches (but
not including Qwest-Required Equipment), to the DNAC, during peak
busy hours;
(iii) a time to repair of four (4) hours from the time Qwest's calls to
the KMC help desk are answered, for each port, MGS Circuit, or MGS
Server;
(iv) meeting or exceeding industry standards for onsite power and
environmental control and quality provided to devices; local
interconnection trunks, local loop access, and for out-of-band
access circuits to the devices under this Agreement; and
(v) an average uptime of 99.99% for the portion of the KMC network,
from and including KMC switches (but not including Qwest-Required
Equipment), to the DNAC, measured on a per-MGS Circuit basis.
2. Failure. KMC will be deemed to have failed to meet the Service Levels
-------
above if:
(i) at any time KMC fails to satisfy its obligations set forth in
subsections 1(i) and/or 1(iv) of this Schedule 2; and/or
(ii) in any two calendar months within any six (6) consecutive calendar
month period of the Agreement, ten percent (10%) of the MGS
Circuits provided under this Agreement fail to meet any of the
standards set forth in subsections 1(ii), 1(iii) and/or 1(v) of
this Schedule 2; provided that, within ten (10) business days after
the end of any calendar month in which such failure of MGS Circuits
to meet such standards has occurred, Qwest shall give KMC written
notice of such failure and provide to KMC all information within
Qwest's possession that is reasonably calculated to assist KMC in
taking steps to prevent the recurrence of such failure.
24