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EXHIBIT 10.17
[SPLITROCK LOGO]
ATM BACKBONE SERVICES AGREEMENT
This Agreement for ATM Backbone Services (the "Agreement") is made by SPLITROCK
SERVICES, INC., a Texas corporation with its principal offices at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ("SPLITROCK"), and
NETWORKTWO COMMUNICATIONS GROUP, a Delaware corporation with its principal
office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("NETWORKTWO").
SPLITROCK and NETWORKTWO agree that the following terms and conditions apply to
the provision and use, within the United States, of the ATM Backbone Services
referenced in any appendices attached to this Agreement and Service Orders
signed by NETWORKTWO and accepted in writing by SPLITROCK.
1. SERVICES: ATM Backbone Service ("ATM Service") shall be provided by
SPLITROCK. ATM Service configurations for each network node shall be
described on SPLITROCK's Service Orders in effect when the Service is
ordered. Charges for ATM Service shall be in accordance with Exhibits A and
B attached hereto and by relevant Service Orders.
2. MINIMUM MONTHLY COMMITMENT: Commencing as of the Commitment Commencement
Date set forth below and continuing through the Commitment Ending Date
below, NETWORKTWO agrees to maintain each month base rate charges for
domestic ATM Services (before the application of discounts) (collectively
the "Base Rate Charges") equal to at least the Minimum Monthly Commitment
set forth below:
Minimum Monthly Commitment: $ 0 for each month in calendar year 1998
$200,000 for each month in calendar year 1999
$300,000 for each month in calendar years 2000 and 2001
(Based on NETWORKTWO's actual monthly Base Rate Charges for Service before
the application of discount and/or factored credits as set forth in
Paragraph 7 below.)
NETWORKTWO will be excused from further Minimum Monthly Commitments when
its aggregate payments to SPLITROCK under this Agreement is equal to or
exceeds $11 million.
3. SERVICE TERM/COMMENCEMENT/COMMITMENT:
Commitment Period: Thirty (36) months
Commencement Date: For the purposes of this Agreement, the
"Commencement Date" will be next billing cycle following the date that
this Agreement has been fully executed by both parties, and all
required documentation has been properly executed and delivered to
SPLITROCK.
Commitment Commencement Date: The Commencement Date as defined above.
Commitment Ending Date: Thirty-six (36) months following the
Commitment Commencement Date.
4. BILLING AND PAYMENT: NETWORKTWO shall pay SPLITROCK all charges due under
this Agreement, without deduction or setoff. All payments shall be mailed
to SPLITROCK at the address stated on the ▇▇▇▇. Bills will be issued
monthly and are payable within twenty-five (25) days from the date shown on
the invoice. NETWORKTWO agrees to pay any taxes due on the Services,
however designated (excluding taxes on SPLITROCK's net income), unless
NETWORKTWO provides a valid tax exemption certificate. SPLITROCK agrees
that payments it receives under this Agreement are not subject to universal
service fund contribution requirements under current FCC rules and, so long
as those rules remain, SPLITROCK will not access universal service fund
charges under this Agreement. An initial deposit of $50,000 is required
thirty (30) days after the signing of this letter. By June 30, 1998, a
deposit equal to 50% of the average charges for the previous quarter must
be maintained.* Adjustment to the required deposit will be calculated
quarterly.
* SEE NOTE #1: Changes to required deposit.
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ATM BACKBONE SERVICES AGREEMENT
NOTE #1
25 April 1998
Changes to Required Deposit
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The requirement and level of deposit shall be based on NETWORKTWO's payment
history and ability to pay. SPLITROCK and NETWORKTWO will agree on a method of
determining the deposit percentage within 45 days of the signing of this
agreement.
If the deposit held by SPLITROCK should exceed the amount calculated for any
quarter the difference will be applied to the next invoice for service.
Termination of this agreement will result in the Release and Return of the
deposit held, to NETWORKTWO, less any fees owed to SPLITROCK.
AJD
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WRW
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5. TERMINATION: If NETWORKTWO fails to pay any outstanding charges within ten
(10) days after receipt of written notice from SPLITROCK of delinquency, or
if NETWORKTWO fails to perform or observe any other material term or
condition of this Agreement within thirty (30) days after receipt of
written notice from SPLITROCK of such failure, SPLITROCK may terminate this
Agreement. NETWORKTWO shall then be liable for all charges incurred as of
the date of termination and, if applicable, any Termination Charges
associated with termination prior to the Commitment Ending Date. The
Termination Charges will consist of the difference between the total
aggregate payments made by NETWORKTWO under this Agreement and $11 million.
NETWORKTWO will be excused from said Termination Charges when its aggregate
payments to SPLITROCK under this Agreement is equal to or exceeds $11
million. It is agreed that Splitrock's damages and or losses shall be
difficult or impossible to ascertain. The provision for a Termination
Charge is intended, therefore, to establish liquidated damages in the event
of a termination and is not intended as a penalty. If SPLITROCK fails to
perform any material term or condition of this Agreement within thirty (30)
days after receipt of written notice from NETWORKTWO of such failure,
NETWORKTWO may terminate this Agreement.
6. PROPRIETARY INFORMATION:
A. Confidential Information: The parties understand and agree that the
terms and conditions of this Agreement, all documents referenced
herein and invoices to NETWORKTWO for Service provided hereunder,
communications between the parties regarding this Agreement or the
Service to be provided hereunder (including price quotes to NETWORKTWO
for any Service proposed to be provided or actually provided
hereunder), as well as such information relevant to any other
agreement between the parties (collectively, "Confidential
Information"), are confidential as between NETWORKTWO and SPLITROCK.
B. Limited Disclosure: A party shall not disclose Confidential
Information unless subject to discovery or disclosure pursuant to
legal process, or to any party other than the directors, officers, and
employees of a party or a party's agents including their respective
brokers, lenders, insurance carriers or bona fide prospective
purchasers who have specifically agreed in writing to nondisclosure of
the terms and conditions hereof. Any disclosure hereof required by
legal process shall only be made after providing the non-disclosing
party with notice thereof in order to permit the non-disclosing party
to seek an appropriate protective order or exemption. Violation by a
party or its agents of the foregoing provisions shall entitle the
non-disclosing party, at its option, to obtain injunctive relief
without a showing of irreparable harm or injury and without bond.
C. Press Releases: The parties further agree that any press release,
advertisement or publication generated by a party regarding this
Agreement, the Service provided hereunder or in which a party desires
to mention the name of the other party or the other party's parent or
affiliated companies, will be submitted to the non-publishing party
for its written approval prior to publication.
D. Survival of Confidentiality: The provisions of this Section 6 will be
effective as of the date of this Agreement and remain in full force
and effect for a period which will be the longer of (i) one (1) year
following the date of this Agreement, or (ii) one (1) year from the
termination of all Service hereunder.
7. PRICING: Rates for ATM Services shall be as set forth in SPLITROCK's ATM
Price and Discount Structure attached hereto as Exhibit A. Discounts shall
be as described as set forth below and in the attached Exhibit A.
DISCOUNT SCHEDULE
1st through 12th month
Monthly Volume Discount
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All monthly volumes 45%
13th through 18th month
Month SPLITROCK "Factored" Credit + Actuals See attached Exhibit A.
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13th $500,000 + actual charges = volume
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14th $400,000 + actual charges = volume
15th $300,000 + actual charges = volume
16th $200,000 + actual charges = volume
17th $100,000 + actual charges = volume
18th $0 + actual charges = volume
(19th through 36th month) See attached Exhibit A
The term "factored credit", as used above for months 13 to 18, shall mean a
monthly declining sum that SPLITROCK factors in to the calculation for
determining the total monthly volume.
During the 18th month following the Commencement Date, SPLITROCK agrees, if
requested by NETWORKTWO, to cooperate in a good faith evaluation of average
industry price trends for the types of services provided under this Agreement
and, if such prices have fallen materially since the Commencement Date, to
negotiate in good faith for a corresponding adjustment in the prices and
discounts to be paid by NETWORKTWO for the remaining term of this Agreement. In
the event any such adjustments are agreed upon, the Minimum Monthly Commitment
of Paragraph 2, and the Termination Charges of Paragraph 5, will be revised
proportionately.
8. APPLICATION OF DISCOUNTS: Commencing as of the Commencement Date and
continuing through the Commitment Ending Date, SPLITROCK agrees to
aggregate monthly Base Rate Charges for ATM Services (collectively "Monthly
Volume") in determining NETWORKTWO's corresponding discount for ATM
Services.
9. WAIVER OF ATM INSTALLATION CHARGES: Commencing with the Commencement Date
and continuing through the Commencement Ending Date, SPLITROCK agrees to
waive installation charges ("Installation Waivers") set forth in Auxillary
Charges, attached hereto as Appendix B. In the event that NETWORKTWO
terminates this Agreement prior to the Commitment Ending Date, SPLITROCK may
debit NETWORKTWO's account in the amount as deletion and cancellation
charges shown on Exhibit B.
10. WARRANTY AND LIMITATION OF LIABILITY
A. UNDER THIS AGREEMENT, SPLITROCK PROVIDES SERVICES, NOT GOODS. SPLITROCK
WARRANTS THAT IT WILL PERFORM THESE SERVICES IN A WORKMANLIKE MANNER.
NO TARIFFED SERVICES ARE OR WILL BE PROVIDED UNDER THIS AGREEMENT.
SPLITROCK MAKES NO OTHER WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED,
UNDER THIS AGREEMENT, AND SPLITROCK EXPRESSLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
B. FOR PURPOSES OF THIS PARAGRAPH 10.B., SPLITROCK INCLUDES SPLITROCK AND
ANY AFFILIATED AND SUBSIDIARY COMPANIES OF SPLITROCK, AND THE DIRECTORS,
EMPLOYEES, OFFICERS, AGENTS, CONTRACTORS, SUBCONTRACTORS AND SUPPLIERS
OF ALL OF THEM.
(1) SPLITROCK'S LIABILITY TO NETWORKTWO ON ACCOUNT OF ANY ACTS OR
OMISSIONS RELATING TO THIS AGREEMENT SHALL BE LIMITED TO PROVEN
DIRECT DAMAGES IN AN AGGREGATE AMOUNT NOT TO EXCEED $20,000.00.
HOWEVER, NOTHING IN THIS SUBPARAGRAPH 10B(1) LIMITS SPLITROCK'S
LIABILITY FOR DIRECT DAMAGES TO REAL OR TANGIBLE PERSONAL PROPERTY,
OR FOR BODILY INJURY OR DEATH, PROXIMATELY CAUSED BY SPLITROCK'S
NEGLIGENCE.
(2) SPLITROCK SHALL NOT BE LIABLE FOR INDIRECT, INCIDENTAL,
CONSEQUENTIAL, RELIANCE SPECIAL DAMAGES, INCLUDING WITHOUT
LIMITATION DAMAGES FOR HARM TO BUSINESS, LOST PROFITS, LOST SAVINGS
OR LOST REVENUES, WHETHER OR NOT SPLITROCK HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
(3) THESE LIMITATIONS OF LIABILITY SHALL APPLY REGARDLESS OF THE FORM
OF ACTION, WHETHER IN CONTRACT, WARRANTY, STRICT LIABILITY OR TORT.
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INCLUDING WITHOUT LIMITATION NEGLIGENCE OF ANY KIND, WHETHER
ACTIVE OR PASSIVE, AND SHALL SURVIVE FAILURE OF AN EXCLUSIVE
REMEDY.
(4) SPLITROCK SHALL NOT BE LIABLE FOR (1) SERVICE IMPAIRMENTS
CAUSED BY ACTS WITHIN THE CONTROL OF NETWORKTWO, ITS
EMPLOYEES, AGENTS, SUBCONTRACTORS, SUPPLIERS OR LICENSEES OR
(2) INTEROPERABILITY OF SPECIFIC NETWORKTWO APPLICATIONS.
C. SPLITROCK acknowledges that, in the course of its performance
under this Agreement, it will obtain knowledge about the identity,
location, usage patterns and other characteristics of NETWORKTWO's
customers. SPLITROCK warrants that it will not use this
information to solicit, market or otherwise deal directly with
NETWORKTWO's Customers without the written authorization of
NETWORKTWO. The previsions of this Paragraph 10.C. will survive
for six months following termination or expiration of the term of
this Agreement.
11. GENERAL
A. If a dispute arises out of or relates to this Agreement, or its
breach, and if the dispute cannot be settled by good-faith
negotiations, the parties agree to submit the dispute to the
American Arbitration Association for non-binding mediation by a
sole mediator. Each party shall bear its own expenses associated
with the mediation, and an equal share of the compensation of the
mediator and administrative fees. The parties, their
representatives, other participants and the mediator shall hold the
existence, content and result of the mediation in confidence.
B. This Agreement shall be governed by and construed under the
laws of the State of Texas, except its choice of law rules.
C. Neither party shall publish or use any advertising, sales
promotions, press releases or other publicity which use the other
party's name, logo, trademarks or service marks without the prior
written approval of the other party.
D. Nothing in this Agreement shall create or vest in NETWORKTWO
any right, title, or interest in the Services, other than the right
to use the Services under the terms and conditions of this
Agreement.
E. If any portion of this Agreement is found to be invalid or
unenforceable, the remaining portions shall remain in effect and
the parties will begin negotiations for a replacement of the
invalid or unenforceable portion.
F. This Agreement may not be assigned by either party without the
prior written consent of the other. SPLITROCK may subcontract any
or all of the work to be performed by it under this Agreement, but
shall retain responsibility for the work that is subcontracted.
G. SPLITROCK's performance obligations under this Agreement shall
be solely to NETWORKTWO and not to any third party. Other than as
expressly set forth herein, this Agreement shall not be deemed to
provide third parties with any remedy, claim, right of action, or
other right.
H. SPLITROCK SHALL NOT HAVE ANY LIABILITY FOR DAMAGES OR DELAYS
DUE TO FIRE, EXPLOSION, LIGHTNING, POWER SURGES OR FAILURES,
STRIKES OR LABOR DISPUTES, WATER, ACTS OF GOD, THE ELEMENTS, WAR,
CIVIL DISTURBANCES, ACTS OF CIVIL OR MILITARY AUTHORITIES OR THE
PUBLIC ENEMY, INABILITY TO SECURE PRODUCTS OR TRANSPORTATION
FACILITIES, FUEL OR ENERGY SHORTAGES, ACTS OR OMISSIONS OF
COMMUNICATIONS CARRIERS OR SUPPLIERS, OR OTHER CAUSES BEYOND ITS
CONTROL WHETHER OR NOT SIMILAR TO THE FOREGOING.
I. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing
unless otherwise specified in this Agreement and shall be deemed to
have been duly made and received when personally served, or when
mailed by first class mail, postage prepaid, to the addresses
indicated on Page 1 of this Agreement. The parties may change the
addresses on ten (10) days' prior written notice.
THIS IS THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SERVICES
PROVIDED HEREUNDER AND IT SUPERSEDES ALL PRIOR AGREEMENTS, PROPOSALS,
REPRESENTATIONS, STATEMENTS, OR UNDERSTANDINGS, WHETHER WRITTEN OR ORAL.
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CONCERNING SUCH SERVICES. No change, modification, or waiver of any of the
terms of this Agreement shall be binding unless included in a written agreement
and signed by both parties.
NETWORKTWO COMMUNICATIONS GROUP SPLITROCK SERVICES, INC.
/s/ ▇▇▇▇▇▇ ▇. DEIMAGGI /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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(Authorized Signature) (Authorized Signature)
▇▇▇▇▇▇ ▇. DEIMAGGI ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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President & COO (Print Name and Title)
4/26/98 4/28/98
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(Date Signed) (Date Signed)
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