Exhibit 99.5
MASTER CHANNEL AGREEMENT BETWEEN
MCI WORLDCOM NETWORK SERVICES, INC.
AND
DIGEX, INC.
This Master Channel Agreement ("Agreement") between Digex, Incorporated
("Digex", which includes Digex Affiliates), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and MCI WORLDCOM Network Services, Inc. ("WorldCom", which
includes WorldCom Affiliates), ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, is made effective this 1st day of January, 2001 ("Effective Date").
WorldCom and Digex are sometimes collectively referred to as "the Parties" or
individually as a "Party".
WHEREAS, Digex and WorldCom have entered into a Memorandum of Agreement,
with an effective date of October 18, 2000 ("MOA"), pursuant to which Digex acts
as a subcontractor to WorldCom for the provision of Managed Hosting Services to
WorldCom customers; and
WHEREAS, Digex and WorldCom desire to establish a more comprehensive,
definitive agreement documenting the terms of their prime
contractor/subcontractor relationship ("Prime/Sub Model") and the terms of an
additional distribution relationship whereby WorldCom will rebrand the Digex
Managed Hosting Services, and distribute those services as WorldCom Managed
Hosting Services in a manner consistent with such rebranding ("Rebranded
Model"), or other branding as the Parties may mutually agree;
NOW THEREFORE, the Parties hereby agree as follows:
1. Definitions: The following capitalized terms that appear in this Agreement
are defined as follows:
1.1 Affiliates: Any business entity directly or indirectly Controlling,
Controlled by, or under common Control with a Party to this Agreement.
For purposes of this Agreement, "Control" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of
the management policies of a Party or other entity, whether through
the ownership of voting securities, by contract or otherwise. For
purposes of this definition, the meaning of Control shall include, but
not be limited to, the direct or indirect beneficial ownership of
voting securities or other voting interest representing at least fifty
percent (50%) of the outstanding voting power, securities or equity of
a Party or other entity.
1.2 Confidential Information: See Paragraph 8, "Confidentiality and
Nondisclosure".
1.3 Customer: companies buying Managed Hosting Services from WorldCom.
80
1.4 Customer Proposal: Document prepared by WorldCom, either in response
to customer RFPs or as part of ongoing sales efforts, for the purpose
of offering and entering into an agreement for the purpose of
distributing Managed Hosting Services to a Customer.
1.5 "Digex Acceptable Use Policy" or "AUP" means Digex's policies and
procedures governing the use of its Managed Hosting Services as set
forth in Attachment E. Digex may not change its AUP as it applies to
WorldCom without WorldCom's agreement, which agreement shall not be
unreasonably withheld. The Parties agree that in the event Digex
desires to make modifications to this AUP as it applies to WorldCom or
its Customers, Digex will provide WorldCom with no less than 30 days
notice. WorldCom shall provide Digex with its acceptance or rejection
of any proposed AUP changes within 30 days of receipt of the request
from Digex. If WorldCom objects to any such changes, any disagreement
shall be referred to executive escalation pursuant to the procedures
set forth in Paragraph 14.
1.6 Digex Product/Service Catalog: A document prepared by Digex attached
as part of Attachment A and to be subsequently posted on a web site
accessible only by Digex, WorldCom and WorldCom's Affiliates, that
identifies the Managed Hosting Services that Digex will provide to
WorldCom and its Affiliates for distribution to Customers in
accordance with this Agreement. The Digex Product/Service Catalog will
contain descriptions of individual Managed Hosting Service Components
and their applicable retail price rates, as well as descriptions of
Managed Hosting Service Bundles and their applicable retail price
rates.
1.7 "Digex Intellectual Property": shall mean any and all now known or
hereafter known tangible and intangible trademarks, trade names,
servicemarks, domain names, logos, patents, copyrights and other such
rights, owned, controlled or licensed by Digex, including (i) rights
associated with works of authorship throughout the world, including,
without limitation, all copyrights (including copyrights accruing by
virtue of bilateral or international copyright treaties and
conventions), regardless of their medium of fixation or means of
expression; (ii) trandemarks, trade names, trade dress, logos, and
similar rights; (iii) rights to inventions discoveries, designs and
technologies, including all improvements and all know-how related
thereto; (iv) trade secret rights; and (v) all other intellectual
property and industrial property rights in any jurisdiction in the
world not otherwise included in the foregoing.
1.8 Managed Hosting Agreement: Agreement between WorldCom and its Customer
pursuant to which WorldCom distributes Managed Hosting Services to the
Customer
1.9 Managed Hosting Services: The implementation and operation of internet
connectivity, data center, computers, data storage devices, security
devices, and associated operating management to provide full
operational support for customer ap-
81
plications on an outsourced basis, including but not limited to any
and all Standard Managed Hosting Service Components, the Standard
Managed Hosting Service Bundles, or Custom/Complex Managed Hosting
Service Solutions.
1.10 RFP: Customer request for proposal.
1.11. WorldCom Intellectual Property: shall mean any and all now known or
hereafter known tangible and intangible trademarks, trade names,
servicemarks, domain names, logos, patents, copyrights and other such
rights, owned, controlled or licensed by WorldCom, including (i)
rights associated with works of authorship throughout the world,
including, without limitation, all copyrights (including copyrights
accruing by virtue of bilateral or international copyright treaties
and conventions), regardless of their medium of fixation or means of
expression; (ii) trademarks, trade names, trade dress, logos, and
similar rights; (iii) rights to inventions discoveries, designs and
technologies, including all improvements and all know-how related
thereto; (iv) trade secret rights; and (v) all other intellectual
property and industrial property rights in any jurisdiction in the
world not otherwise included in the foregoing.
2. Responsibilities of the Parties
2.1 Prime/Sub MOA: The Parties agree that with respect to the pricing,
branding and processes applicable to Customers sold or being pursued
by WorldCom under the terms of the Parties' Prime/Sub MOA, the terms
of the Prime/Sub MOA shall continue in full force and effect. Except
for these areas of continued applicability to previously sold or
pursued Customer opportunities, the MOA shall be superceded by the
terms of this Agreement.
2.2 Channel Agreement Rebranded Model
2.2.1 Products: Digex will provide WorldCom with Managed Hosting
Services for resale by WorldCom to its customers. Managed Hosting
Service Products and Services available for resale by WorldCom
pursuant to this Agreement will be set forth in the Digex Product
Service Catalog. Managed Hosting Services offered by Digex to
WorldCom under the Rebranded Model will include the following:
2.2.1.1 Standard Managed Hosting Service Bundles: Digex will
provide WorldCom with the standard Managed Hosting Service
Bundles set forth in Attachment A, Section I and described
in the Digex Product/Service Catalog.
2.2.1.1.1 The Parties may modify, supplement, expand or
eliminate the number or features of the standard
Managed Hosting Service Bundles from time to time by
mutual agreement. Digex shall provide WorldCom with no
less
82
than 30 days written notice prior to implementing any such
changes.
2.2.1.1.2 WorldCom may sell all Managed Hosting Service
Bundles to its customers without pre-sale approval from
Digex.
2.2.1.2 Digex Managed Hosting Service Components: Digex will
provide WorldCom with a menu of standard Managed Hosting
Service hardware, software, networking, configuration,
monitoring, service and support component options as set
forth in the Digex Product/Service Catalog. WorldCom may
purchase these components from Digex on an individual or
combined basis.
2.2.1.2.1 Digex and WorldCom will mutually agree upon
"preconfigured custom hosting solutions" using
variations of the Managed Hosting Service Components.
These preconfigured custom hosting solutions will be
available for sale by WorldCom.
2.2.1.2.2 The Parties may modify, supplement, expand or
eliminate the number or features of the standard Digex
Managed Hosting Service Components from time to time by
mutual agreement. Digex shall provide WorldCom with no
less than 30 days written notice prior to implementing
any such changes.
2.2.1.3 Custom/Complex Managed Hosting Solutions: Digex will
prepare for WorldCom, and WorldCom will have the right to
resell, "Custom/Complex" Managed Hosting Services to
Customers who require products and services that differ from
the standard Managed Hosting Service Bundles set forth in
this Agreement. The Parties contemplate the need to provide
unique, customer-specific Custom/Complex Managed Hosting
Service Solutions, with unique features, pricing, and
service levels. WorldCom will utilize the Digex "SWAT Team"
to design, review and approve Custom/Complex Managed Hosting
Services prior to submitting orders for those services to
Digex.
2.2.1.3.1 Digex shall support Custom/Complex Managed Hosting
Service solutions pursuant to procedures to be mutually
agreed upon by the Parties.
2.2.2 Distribution: WorldCom-branded Managed Hosting Services under the
Resale Model will be branded and marketed under the WorldCom brand
83
and will be offered and sold through WorldCom sales representatives.
Except as otherwise determined by WorldCom, neither Digex personnel
nor Digex branding will be visible to the Customer in connection with
WorldCom's marketing and sales efforts directed toward that Customer.
2.2.2.1 WorldCom sales representatives can directly sell standard
Managed Hosting Service Bundles and Managed Hosting Service
Components without prior involvement or approval from Digex's
SWAT Team.
2.2.2.2 The Parties acknowledge the initial need for WorldCom to
obtain Digex's engagement and the approval of the Digex SWAT Team
for all Custom/Complex Managed Hosting Services. However, the
Parties contemplate that WorldCom sales personnel and sales
support will be permitted to offer and sell Custom/Complex
Managed Hosting Services without prior involvement or approval
from Digex's SWAT Team as soon as training of WorldCom personnel
is completed and the process infrastructure is defined. The
Parties will mutually agree upon a procedure by which WorldCom
personnel will obtain necessary training and implement processes
to achieve this goal. The Parties will use reasonable best
efforts to support this activity in all relevant markets,
including using reasonable best efforts to complete all necessary
training and process readiness no later than 90 days following
WorldCom's product entrance in a country.
2.2.2.3 The Parties also contemplate the possibility that they will
desire to pursue customer opportunities on a joint, teaming
basis. Any Teaming Model activity shall proceed under terms to be
mutually determined by the Parties on a case by case basis.
2.3.3 WorldCom Responsibilities Under the Rebranded Model:
2.3.3.1 WorldCom will prepare and submit Customer Proposals to its
customers either in response to a customer RFP, or as part of
WorldCom's ongoing customer sales efforts. WorldCom will retain
ultimate responsibility for preparation and submission of
Customer Proposals and shall have sole discretion to determine
the content of any Customer Proposal. WorldCom will determine and
control the manner in which all discussions, negotiations and
communication with the Customer will be conducted. WorldCom will
negotiate and execute a WorldCom Managed Hosting Agreement and/or
other agreements and associated documentation with the Customer.
84
2.3.3.2 WorldCom will work with the Digex "SWAT Team" to design,
review and approve Custom/Complex Managed Hosting Services prior
to submitting orders for those services to Digex.
2.3.3.3 WorldCom will be responsible for handling Customer billing,
Customer contract issues, and inquiries relating to the
Digex/WorldCom relationship. In the event a WorldCom Customer
contacts Digex for billing related issues, Customer contract
matters or general Digex/WorldCom relationship issues associated
with Managed Hosting Services distributed under the Rebranded
Model, the Parties will develop and implement processes to
transfer these contacts to WorldCom Customer support. Digex will
provide commercially reasonable support to assist WorldCom in
resolving Customer disputes relating to Managed Hosting Services.
2.3.3.3.1 WorldCom shall provide Digex with unique toll free
telephone numbers to support Customer service calls from
WorldCom Managed Hosting Customers.
2.3.3.4 Except as provided in Paragraph 2.10, WorldCom shall have
responsibility for training its marketing and field sales
organizations relating to sales and marketing of the Managed
Hosting Services pursuant to this Agreement.
2.3.4. Digex Responsibilities Under the Rebranded Model
2.3.4.1 Digex will provide WorldCom with the Standard Managed Hosting
Service Components, the Standard Managed Hosting Service Bundles,
and the Custom/Complex Managed Hosting Solutions for resale by
WorldCom to its Customers.
2.3.4.2 Digex shall maintain the Digex Product/Service Catalog on a
website accessible only by Digex, WorldCom and WorldCom's
Affiliates. The Digex Product/Service Catalog shall contain a
listing of the current Standard Managed Hosting Service Bundles,
a comprehensive listing of all standard Managed Hosting Service
Components and their retail price rates, and a comprehensive
listing of all pre-configured custom hosting solution packages.
2.3.4.3 Digex will establish and maintain a "Digex SWAT Team" to
provide technical support and advice to WorldCom in connection
with this Agreement
85
2.3.4.3.1 The Digex SWAT Team will coordinate with WorldCom to
approve any modifications or additions to the Managed
Hosting Service Bundles.
2.3.4.3.2 The Digex SWAT Team will support WorldCom in preparing
and approving Custom/Complex Managed Hosting Service
solutions. The Digex SWAT Team shall be responsible for
working with WorldCom to prepare a design, price and
configuration of all Custom/Complex Managed Hosting Service
solutions.
2.3.4.3.3 The Digex SWAT team shall provide product and technical
support for WorldCom's preparation of Customer Proposals.
2.3.4.3.4 The Digex SWAT Team shall, for purposes of this
Agreement, be kept separate from, and firewalled from, the
Digex sales organization. Digex shall use its reasonable
best efforts to develop and implement processes within its
systems to prevent any Digex personnel who are not directly
involved in the support of WorldCom sales activity under
this Agreement from having access to WorldCom Confidential
Information or information related to WorldCom Customer
sales opportunities. Digex will not use any Confidential
Information supplied by WorldCom to directly or indirectly
pursue a competing RFP or other type of opportunity to
provide Managed Hosting Services to the customer. The Digex
SWAT Team will not share any Confidential Information
provided by WorldCom in connection with the opportunity with
other Digex sales personnel, except to the minimum extent
necessary to reasonably evaluate the opportunity. Digex may
only use such Confidential Information in connection with
supporting the opportunity on WorldCom's behalf.
2.3.4.3.5 The Digex SWAT Team shall respond to requests from
WorldCom for support in preparing Custom/Complex Managed
Hosting Service solutions for WorldCom's use in responding
to customer RFPs or other Customer sales opportunities. The
Parties shall mutually agree upon processes and timeframes
pursuant to which WorldCom shall request Custom/Complex
Managed Hosting Service solutions, and Digex shall develop,
price and ap-
86
prove WorldCom's use of those solutions in response to
Customer opportunities.
2.3.4.4 Digex will provide the primary Customer service support for
Managed Hosting Services provided to WorldCom Customers under the
Rebranded Model. Digex will provide WorldCom with Digex Select
Customer support as a standard option, along with the ability to
sell Advanced and Premier-level Customer service to WorldCom
Managed Hosting customers. Digex shall make any future Customer
service options made available for sale to Digex Customers also
available to WorldCom for resale to WorldCom Managed Hosting
Customers.
2.3.4.4.1 Digex Customer service personnel will identify
themselves as "WorldCom Customer Service" when
providing Customer service to WorldCom Customers
pursuant to the Rebranded Model. The Parties will
develop and implement processes that will enable the
Digex Customer service personnel to identify WorldCom
Customers that purchase Managed Hosting Services under
the Rebranded Model, including, but not limited to,
assigning unique toll free Customer service telephone
numbers that are provided solely to Customers that
purchase Managed Hosting Services under the Rebranded
Model.
2.3.4.4.2 In the event a Customer contacts WorldCom customer
support, or other WorldCom personnel, with customer
service or technical support issues associated with
Managed Hosting Services distributed under the Resale
Model, the Parties will develop and implement processes
to transfer these contacts to Digex customer support.
2.3.4.4.3 Digex shall provide WorldCom with interim, special
access to systems and databases utilized by Digex to
perform services on WorldCom's behalf under this
Agreement, including but not limited to order systems
and trouble ticket/maintenance systems.
2.3.4.4.3.1 This interim, special access shall be limited to
a specified number of WorldCom employees, not to exceed
11 employees, in the Managed Hosting Customer Care
Center and Business Compliance within the WorldCom E
Services Organization.
87
Sales personnel will be expressly excluded from access.
2.3.4.4.3.2 WorldCom agrees that the employees who have interim,
specialized access to the Digex system will use it solely
for the purposes of being able to support WorldCom Customers
and to audit Digex SLA compliance. Any further use of the
system shall require Digex's prior written approval.
2.3.4.4.3.3 The Parties agree that this limited systems access is
an interim solution that will remain in place until such
time that Digex can provide WorldCom with partitioned access
to the WorldCom Customer Information contained in the Digex
systems.
2.3.4.4.4 Digex will provide WorldCom with on-line, line item
detail regarding Customer configurations and charges,
including itemizations of all charges included in monthly
billing invoices sent to WorldCom.
2.3.4.5 Digex will provide WorldCom with Service Level Agreements for
Managed Hosting Service Bundles, Custom/Complex Managed Hosting
Service solutions, and Customer service for Managed Hosting
Service pursuant to this Agreement as set forth in Attachment B
or as otherwise mutually agreed upon by the Parties.
2.4 As requested by WorldCom, Digex shall provide assistance in preparing
WorldCom-branded sales and marketing materials. Certain materials
prepared by WorldCom with Digex assistance will be based upon, or
derivative of, Digex proprietary marketing material. WorldCom may use
derivative works based upon proprietary marketing material during the
Term of this Agreement. Any use of such proprietary material beyond
the Term shall be by mutual agreement. Non-proprietary derivative
material may be used by WorldCom after the termination of this
Agreement.
2.5 Service Ordering, Installation and Provisioning
2.5.1 The Parties shall mutually agree upon processes for ordering,
installing and provisioning Managed Hosting Services under this
Agreement.
2.5.2 Digex shall provide adequate staff to support WorldCom sales
under this Agreement, including but not limited to pricing, order
entry, technical de-
88
sign, site engineering, quality assurance, contract support,
billing, customer service and project management implementation.
Digex shall use its reasonable best efforts to ensure that Digex
personnel represent themselves as performing services on
WorldCom's behalf.
2.5.3 WorldCom has the right to direct Digex to discontinue or suspend
service to any of its Customers.
2.6 Digex may compete with WorldCom as to any customer RFP or other
opportunity for which WorldCom prepares a Customer Proposal under the
Rebranded Model; provided, however, that Digex will not share any
Confidential Information provided by WorldCom in connection with the
opportunity with any Digex sales personnel and will not use any such
Confidential Information to directly or indirectly compete with
WorldCom in any manner, including, but not limited to, use of the
information to pursue a competing RFP or other opportunity to provide
Managed Hosting Services to the Customer.
2.7 Digex shall provide WorldCom with ongoing assistance in the
development and enhancement of sales and marketing materials to
support WorldCom Managed Hosting Sales activities under this
Agreement.
2.7.1 The Parties acknowledge that Digex modifies and updates its
sales and marketing materials related to Managed Hosting Services
from time to time. Digex will provide WorldCom with notice of any
modifications or updates to those sales and marketing materials
no less than ten (10) days prior to the date on which the
modifications or updates are scheduled to be effective. WorldCom
may create WorldCom-branded sales and marketing materials
consistent with the terms of this Agreement.
2.8 The Parties understand and agree that, in the event of the expiration
or termination of this Agreement, any WorldCom Managed Hosting
Agreement, any SOW or any Customer Proposal, or at Customer or
WorldCom request, a Customer and/or WorldCom may desire to transfer
Customer provided content, information and data in Digex' possession
(whether or not Customer Confidential Information), including such
information and data stored in equipment on Digex' premises. Upon
WorldCom's request, Digex will cooperate with WorldCom and WorldCom's
Customer to transfer the Customer-provided content, information and
data to WorldCom and/or Customer or Customer's new product or service
provider.
2.9 Territory. Managed Hosting Services will be available for distribution
by WorldCom in the United States and in all International locations
served by Digex, including those locations currently in service, as
well as those served by future expansion. The Parties agree that
distribution will be available in the country markets identified in
the Parties' Master Facilities Agreement, Schedule 1.
89
2.9.1 The Parties agree to periodically discuss in good faith the
addition of new International locations to be served by Digex and
WorldCom under this Agreement. When Digex offers Managed Hosting
Services to its customers in a new International location, those
services will be available for WorldCom to distribute to its
Customers in those locations pursuant to this Agreement.
2.10 Training and Education. Digex will provide reasonable initial and
ongoing training to WorldCom and its Affiliates under terms to be
mutually agreed upon by the Parties.
2.11 Program Executive/Monthly Checkpoint Review.
2.11.1 The Parties shall each designate a Program Executive at the
Vice Presidential level or above to serve as the primary officers
responsible for addressing and resolving any issues arising under
this Agreement.
2.11.2 The Parties shall convene a Monthly Checkpoint Review to review
and evaluate all performance issues under this Agreement, as well
as to resolve any potential issues or disagreements prior to
resort to the Dispute Resolution provisions contained in
Paragraph 14. During the Monthly Checkpoint Review, the Parties
will review the potential need for modifications or additions to
Managed Hosting Service Product Bundles, changes in processes and
procedures necessary for performance under this Agreement, or any
other matter relevant to this Agreement. The Monthly Checkpoint
Review will be attended either in person or by telephone by the
Program Executives from each Party as well as other personnel
that each shall designate.
2.12 Reporting: Digex shall provide WorldCom with weekly, monthly and
annual reports in a manner and format to be mutually agreed upon by
the Parties.
2.13 Forecasts: WorldCom shall provide Digex with rolling monthly forecasts
of projected revenue from sales of Managed Hosting Services, and
forecasts of capacity needs by data center and product type.
3. Fees and Payment: Fees and Payment provisions under the Agreement shall be
set forth in Attachment C.
4. Exclusivity/Non-Solicitation
4.1 Except as otherwise provided in this Paragraph 4, this is a
non-exclusive Agreement. Nothing in this Agreement shall preclude either Party
from entering into similar arrangements with any other party, or obtaining
similar products, services and licenses from any other party.
90
4.2 Digex shall not use any WorldCom Confidential Information, or WorldCom
Customer Information, to solicit customers or prospects for Digex's
own products and services.
5. Limitation of Liability
5.1 Neither Party nor any of its Affiliates will be liable to the other
Party for indirect, consequential, special or punitive damages,
including without limitation lost business, profits or goodwill,
awarded under any theory of liability, including without limitation
breach of contract, tort or statute and arising from or related to
this Agreement or any WorldCom Managed Hosting Agreement; provided
however, that until such time as the WorldCom and Intermedia merger is
fully completed, the foregoing limitation shall not apply with respect
to claims by one Party that the other Party has engaged in intentional
misappropriation of the other Party's Intellectual Property, or has
intentionally breached the Confidentiality provisions of Paragraph 8
of this Agreement.
5.2. WorldCom's sole remedies for Digex's violation of any agreed upon SLAs
shall be set forth in those SLAs.
5.3 The Parties agree that WorldCom will establish limitation of liability
provisions in its WorldCom Managed Hosting Agreements that limit its
liability, and the liability of Digex as its subcontractor, to credits
based upon fees paid for services affected by an unscheduled outage or
other interruption in service. Nothing in this Agreement is intended
to make Digex directly responsible to WorldCom's Customers for
SLAcredits or for any other obligation or provision of the WorldCom
Managed Hosting Agreement.
5.4 The total liability of WorldCom and its Affiliates to Digex in
connection with this Agreement, for any single Customer-related claim
or cause of action, including but not limited to breach of contract,
statutory, negligence and other torts, will be limited to the lesser
of (A) direct damages proven by Digex in connection with that claim or
(B) the total amount paid to Digex by WorldCom under this Agreement,
during the calendar year in which the claim was raised, in connection
with the Customer agreement giving rise to the claim or cause of
action.
5.5 The total liability of Digex to WorldCom in connection with this
Agreement, for any single Customer-related claim or cause of action,
including but not limited to breach of contract, statutory, negligence
and other torts, will be limited to the lesser of (A) direct damages
proven by WorldCom in connection with that claim or (B) the amount
paid to Digex by WorldCom under this Agreement, during the calendar
year in which the claim was raised, in connection with the Customer
agreement giving rise to the claim or cause of action.
91
5.6. Notwithstanding any other provision in this Agreement, the liability
of the Parties and their Affiliates will not be limited for bodily
injury or death caused by such Party's or it's Affiliates' negligence
or willful misconduct, or loss or damage to real or tangible personal
property caused by such Party's or it's Affiliates negligence or
willful misconduct, or such Party's or it's Affiliates' obligation as
set forth in Paragraph 7 to indemnify the other Party for certain
third Party claims, including claims related to alleged violations of
intellectual property or proprietary rights.
6. Disclaimer of Warranties.
6.1 Except as set forth in any applicable SLAs, Digex expressly disclaims
any and all other warranties, written or oral, statutory or
contractual, express or implied, including without limitation, the
warranty of merchantability, infringement, completeness, quality or
fitness for a particular purpose or use relating to subject matter of
this Agreement.
7. Indemnification
7.1. WorldCom and Digex agree to defend, indemnify and hold each other
harmless from and against any third party claims, suits, damages and
expenses (including reasonable attorney's fees and allocable costs of
in-house counsel) asserted against or incurred by one Party arising
out of bodily injury, death, or damage to real or tangible personal
property caused by the negligent act or omission of the other Party.
7.2. The Parties agree to defend, indemnify and hold each other harmless
from and against any third party claims, suits, damages and expenses
(including reasonable attorney's fees and allocable costs of in-house
counsel) asserted against one Party or its Customers to the extent
such liabilities arise out of or relate to a claim that any content,
any content provided by a Party, any website content, website design,
website functionality, documentation, information, system, design,
software, hardware, services or products provided by the other Party
("Work") and used by the Parties or their Customers in connection with
the provision of Managed Hosting Services under this Agreement
infringes upon or violates any third party's trade secret, trademark,
copyright, patent or other intellectual property rights. For purposes
of this indemnity, WorldCom Customer-provided website content, website
design, website functionality, documentation, information, system,
design, software, hardware, services or products shall be deemed Work
provided by WorldCom. Notwithstanding anything to the contrary, this
Paragraph 7.2 does not create an obligation on Digex to indemnify
WorldCom's Customers directly, and does not create any third-party
rights under this Agreement for WorldCom's Customers.
92
7.3 A Party will have no indemnification responsibility to the other Party
to the extent any claim of infringement results from either (i) the
combination of any Work supplied by such Party under this Agreement
with any information, system, design, software, hardware, services,
products or material not supplied by such Party under this Agreement,
unless such combination was authorized or approved by the providing
Party in writing, and in any case where, but for such combination,
there would be no infringement, or (ii) any information,
documentation, system, design, software, hardware, services or
products not supplied, authorized or approved by such Party.
7.4 Paragraphs 7.2 and 7.3 set forth the sole and exclusive remedy of each
Party and the entire obligation and liability of such Party as to any
claim, threat, action, suit, or other proceeding alleging infringement
or misappropriation of third party Intellectual Property in connection
with this Agreement.
7.5 In the event WorldCom directs Digex to discontinue or suspend service
to any of its Customers pursuant to Paragraph 2.5.3, WorldCom shall
indemnify and hold Digex harmless against all Customer claims, suits,
damages, liabilities and expenses with respect to such
WorldCom-directed discontinuance or suspension.
7.6 The Parties agree that WorldCom will establish indemnification
obligations owed by the Customer in its Managed Hosting Customer
agreements that will require Customers to indemnify both WorldCom and
its subcontractors for violations of the AUP and for any third party
infringement claims relating to the Customer's content and website
design or functionality. The Parties further agree that WorldCom will
establish rights in its Customer agreements that permit WorldCom to
take appropriate enforcement actions-including but not limited to
blocking or termination of service-associated with the AUP. At the
reasonable request of Digex, WorldCom will undertake to enforce the
AUP and/or seek indemnification from the Customer for violations of
the AUP.
7.7 WorldCom agrees to defend, indemnify and hold harmless Digex and its
affiliates from and against any claims, suits, damages and expenses
(including reasonable attorneys' fees and allocable costs of in-house
counsel) arising out of or in connection with any claims brought by
WorldCom 's Customers and which claims arise from, or relate to,
promises, representations or obligations made by WorldCom to such
Customers that are inconsistent with the parameters established for
Managed Hosting Services.
8. Confidentiality and Nondisclosure
8.1 Each Party shall protect as confidential, and shall not disclose to
any third Party, any and all Confidential Information received from
the disclosing Party, or such Party's customers, or otherwise
discovered by the receiving Party during the term of this Agreement.
Confidential Information shall include, but not be limited to,
93
the pricing and terms of this Agreement, and all information relating
to the disclosing Party's or such Party's customers' technology,
research, development, business affairs, and marketing or sales plans
(collectively the "Confidential Information"). The Parties agree that
a Party's Intellectual Property shall be deemed to be that Party's
Confidential Information. The Parties shall use Confidential
Information only for the purposes set forth in this Agreement. The
foregoing restrictions on use and disclosure of Confidential
Information do not apply to information that: (i) is in the possession
of the receiving Party at the time of its disclosure and is not
otherwise subject to obligations of confidentiality; (ii) is, or
becomes publicly known, through no wrongful act or omission of the
receiving Party; (iii) is received without restriction from a third
party free to disclose it without obligation to the disclosing party;
(iv) is developed independently by the receiving Party without
reference to the Confidential Information, or (v) is required to be
disclosed by law, regulation, or court or governmental order. Each
Party acknowledges that breach of this provision by it would result in
irreparable harm to the other Party, for which money damages would be
an insufficient remedy, and therefore that the other Party shall be
entitled to seek injunctive relief to enforce the provisions of this
Section 8.
9. Intellectual Property Rights
9.1 Digex shall own all Intellectual Property developed by or for Digex
with respect to any and all of its Managed Hosting Services provided
to WorldCom under the terms of this Agreement. For the Term of this
Agreement, WorldCom and its Affiliates shall have a limited,
non-transferable, non-exclusive license to use, copy, distribute and
sublicense such Digex Intellectual Property solely for the purpose of
using and permitting its Customers to use the Digex Managed Hosting
Services under the terms of this Agreement. WorldCom shall not, and
shall not permit others to, modify or decompile any Digex Intellectual
Property, make derivative works thereof, or transfer, assign or
sublicense the Digex Intellectual Property to any third party, except
to the extent of the express license granted herein with respect to
the use of Managed Hosting Services by WorldCom and its Customers. On
or following any termination or expiration of this Agreement (and
following any period during which Digex provides transition assistance
to a Customer), (i) WorldCom shall immediately cease all use of the
Digex Intellectual Property; and (ii) WorldCom shall not retain any
copies thereof (in any media or format).
9.1.1 Upon termination of the Agreement (subject to Paragraph 10.6 of
the Agreement) or any Managed Web Hosting Agreement, all rights
to utilize Digex's Intellectual Property by WorldCom's Customers
shall cease.
9.2 Digex shall have no ownership interest in the Intellectual Property or
content provided to Digex by WorldCom or its Customers during the
performance of Digex's obligations under this Agreement. WorldCom
and/or its Customers shall own all Intellectual Property and content
provided to Digex by WorldCom or its Custom-
94
ers, and any Intellectual Property shared with Digex for the purpose
of performance of Digex's obligations under this Agreement can solely
be used for this express purpose.
9.3 WorldCom shall have no ownership interest in the Intellectual Property
or content provided to WorldCom by Digex during the performance of
Digex's obligations under this Agreement. Digex shall own all
Intellectual Property and content provided to WorldCom or its
Customers by Digex, and any Intellectual Property shared with WorldCom
or its Customers for the purpose of performance of WorldCom's
obligations under this Agreement can solely be used for this express
purpose.
9.4 WorldCom shall own all sales literature and sales materials created
solely by WorldCom to market and describe Managed Hosting Services
sold by WorldCom to its customers under the terms of this Agreement,
but excluding Digex Intellectual Property which has been licensed to
WorldCom pursuant to Paragraph 9.1 hereof. All Digex documentation
provided to WorldCom by Digex during the Term of this Agreement shall
remain the Intellectual Property of Digex.
9.5 WorldCom shall have the limited right to use those Digex marks
contained in the Managed Services and associated documentation to the
extent necessary or appropriate to identify Digex as a provider of
services under this Agreement.
9.6 If the Parties decide to create any jointly owned Intellectual
Property, such Intellectual Property shall be developed under a
separate written Agreement.
9.7 Except as expressly provided in this Paragraph 9, no other rights in
Intellectual Property are provided by Digex, WorldCom or any WorldCom
customer.
10. Term and Termination
10.1 This Agreement will be effective upon the Effective Date and will
continue until December 31, 2003 ("Initial Term"). Either Party shall
have the option to request twelve (12) month extensions of the Term
("Extended Term") that may be accepted or rejected by the other Party,
subject to the following:
10.1.1 Each request for an extension of the term must be in writing
and shall request an additional extension period of twelve (12)
months beginning on January 1. All requests for an extension must
be delivered by the requesting Party to the other Party no less
than twelve (12) months prior to the expiration of the Initial
Term, or subsequent Extended Term. The request shall be granted
and the Agreement deemed extended for an additional twelve (12)
months unless the other Party delivers to the requesting Party a
written rejection of the extension request within 30 days of
receiving the notice of request for an extension.
95
10.1.2 In the event neither Party requests an extension, or in the
event that one Party rejects the proposed extension, the
Agreement shall terminate at the end of the Initial Term or any
Extended Term; provided that the Parties' performance obligations
as set forth in Paragraph 10.5 of this Agreement shall continue.
10.2 Either Party may immediately terminate this Agreement for Cause.
"Cause" will mean the failure of the other Party to cure a breach of a
material obligation under this Agreement within thirty (30) days after
receipt of notice from the terminating Party. Such notice will
identify the material obligation under this Agreement at issue and the
basis for the terminating Party's belief that the non-terminating
Party is in breach and will state that, if the non-terminating Party
does not cure the breach within thirty (30) days, the terminating
Party will immediately terminate the Agreement for Cause.
10.3 WorldCom shall have the right to terminate this Agreement upon 30 days
written notice in the event of the following:
10.3.1 the proposed merger between WorldCom and Intermedia is not
fully approved and completed on or before December 31, 2001;
10.3.2 the transfer of a majority ownership or voting interest, or
other change in control, in Digex to an entity that WorldCom
considers a competitor of WorldCom in any respect;
10.3.3 Digex's insolvency, apparent inability to pay debts as they
become due, filing of bankruptcy or general assignment for the
benefit of creditors;
10.3.4 the Parties are unable to reach final agreement on the proposed
Digex/WorldCom Funding Agreement on or before the later of 30
days after the date on which WorldCom provides to Digex a
complete draft of the proposed Funding Agreement or March 31,
2001;
10.3.5 The proposed settlement envisioned by the Memorandum of
Understanding dated February 15, 2001 regarding the In re: Digex,
Inc. Shareholder Litigation, Consolidated Civil Action No. 18336
NC, pending in the Court of Chancery in the State of Delaware,
does not become final and non-appealable on or before December
31, 2001.
10.4 Digex shall have the right to terminate this Agreement upon 30 days
written notice in the event of the following:
10.4.1 the proposed merger between WorldCom and Intermedia is not
fully approved and completed on or before December 31, 2001;
96
10.4.2 WorldCom's insolvency, apparent inability to pay debts as they
become due, filing of bankruptcy or general assignment for the
benefit of creditors;
10.4.3 the Parties are unable to reach final agreement on the proposed
Digex/WorldCom Funding Agreement on or before the later of 30
days after the date on which WorldCom provides to Digex a
complete draft of the proposed Funding Agreement or March 31,
2001;
10.4.4 The proposed settlement envisioned by the Memorandum of
Understanding dated February 15, 2001 regarding the In re: Digex,
Inc. Shareholder Litigation, Consolidated Civil Action No. 18336
NC, pending in the Court of Chancery in the State of Delaware,
does not become final and non-appealable on or before December
31, 2001.
10.5 Notwithstanding any other provision in this Paragraph 10, at
WorldCom's option, the rights and responsibilities of the Parties
hereto under this Agreement will survive expiration or earlier
termination of this Agreement as to those Customers whose WorldCom
Managed Hosting Agreements remain in effect beyond the expiration or
earlier termination of this Agreement. Digex will continue to perform,
and WorldCom will continue to pay for performance of, obligations to
such Customers at the same SLA and customer service levels in effect
at that time until the expiration or earlier termination of those
Customers' WorldCom Managed Hosting Agreements. Customer Proposals
that have already been presented to customers at the time this
Agreement expires or is earlier terminated will be honored by the
Parties for a period of sixty (60) days from the date on which the
proposal was submitted to the Customer and, if the Customer accepts
the Customer Proposal or otherwise awards the opportunity to WorldCom,
the Parties will support the opportunity in accordance with this
Agreement.
10.6 Post-Termination Obligations
10.6.1 In the event of the expiration of this Agreement, or its
termination for reasons other than breach, then (a) the Parties
shall continue to perform their respective obligations hereunder
subject to the terms of this Agreement for a transition period
not to exceed twelve (12) months from the date of expiration or
termination of the Agreement; (b) effective on the date of
expiration or termination of this Agreement, the Monthly Fees
shall be adjusted to commercial rates without discount for new
Customers; (c) the Minimum Revenue Commitment shall cease to
apply effective the calendar year in which the Agreement expired
or was terminated; and (d) each Party shall bear its own costs
associated with any migration of Customers to an alternative
Managed Hosting Service Provider.
10.6.2 In the event this Agreement is terminated for cause by Digex in
accordance with Paragraph 10.2, or pursuant to Paragraph 10.4,
then (a) the
97
Parties shall continue to perform their respective obligations
hereunder subject to the terms of this Agreement for a transition
period not to exceed twelve (12) months from the date of
termination of the Agreement; (b) Digex shall provide the Managed
Hosting Services during such transition period only to provide
services to Customers under contract as of the date of the
Agreement's termination, including any upgrades or additional
services contemplated under the applicable contract, and (c)
effective on the date of termination of this Agreement the
pricing for Managed Hosting Services shall be adjusted to
commercial rates, and (d) WorldCom shall be responsible for the
costs, less labor, associated with transitioning Customers.
10.6.3 In the event this Agreement is terminated for cause by WorldCom
in accordance with Paragraph 10.2 or pursuant to Paragraph 10.3,
then, (a) the Parties shall continue to perform their respective
obligations hereunder subject to the terms of this Agreement for
a transition period not to exceed twelve (12) months from the
date of termination of the Agreement; (c) WorldCom shall continue
to receive the discounts for Managed Hosting Services set forth
in Attachment A, and (d) Digex shall be responsible for all
reasonable labor costs associated with transitioning Customers to
an alternative Managed Hosting Service provider.
11. Relationship of the Parties. This Agreement is not intended to constitute,
create, give effect or otherwise recognize a joint venture, partnership or
formal business organization of any kind, and the rights and obligations of
the Parties will be only those expressly set forth herein. WorldCom and
Digex will remain independent contractors, each responsible for its own
employees. Each Party is responsible for payment of compensation to its
personnel and will pay and report, for all personnel assigned to perform
any obligations under this Agreement, federal and state income tax
withholding, social security taxes, and employment insurance applicable to
such personnel as employees of that party. Nothing in this Agreement
precludes either Party from entering into a similar agreement with a third
party. This Agreement inures to the benefit of WorldCom and Digex only and,
except as may be expressly set forth in this Agreement, no third Party will
have any rights hereunder.
12. Publicity. Neither Party shall issue a press release, press statement or
other publicity relating to this Agreement or the other Party without prior
written approval of the other Party. The subject matter of this Agreement
may be made known to Customers in connection with the Parties' efforts
relating to preparing and submitting Customer Proposals to customers. No
name, logo, service ▇▇▇▇ or trademark of a Party may be used by the other
Party for any purpose without the prior written consent of such Party,
except as part of Customer Proposals.
98
13. Notices. All notices and requests in connection with this Agreement will be
given in writing and delivered by personal delivery, express courier or
certified or registered U.S. mail, return receipt requested, to the address
as listed below. Unless otherwise specified in this Agreement, the
effective date of any notice or request given in connection with this
Agreement will be the date on which the addressee receives it.
If to WorldCom: WorldCom
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President - E-Business Development
w/ copy to: WorldCom
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇. ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President- Business Transactions
Law and Public Policy
If to Digex: Digex
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Business Operations
w/ copy to: Digex
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
In addition, notices related to billing and invoices will also be given to the
following:
If to WorldCom: WorldCom
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Manager, E-Business Operations
If to Digex: Digex
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President and Controller
14. Disputes
14.1 The Parties will use commercially reasonable efforts to resolve any
disputes without resort to litigation, and agree to pursue the
following dispute resolution process to resolve any and all forms of
disputes:
99
14.1.1 All disputes will be identified in writing and sent to the
appropriate executive and legal contacts set forth in the notice
provisions.
14.1.2. If the dispute is not resolved within ten (10) days after
receipt, the dispute will be escalated to the VP level.
14.1.3. If the dispute is not resolved within ten (10) days after
secondary escalation, the dispute will be escalated to the
Presidential level.
14.1.4. If the dispute not resolved within ten (10) days after
Presidential escalation, either Party can initiate litigation.
14.1.5. Parties can extend dispute resolution periods by written
agreement.
14.1.6. If the dispute is not resolved within ten (10) days after
Presidential escalation, the dispute shall be submitted for
binding arbitration pursuant to the commercial rules and
procedures of the American Arbitration Association.
14.2 In the event that this Agreement requires the Parties to reach a
mutual agreement before undertaking any performance of any obligations
under this Agreement and the Parties are unable to agree, it will be
treated as a dispute subject to this Paragraph 14.
15. Governing Law and Venue. This Agreement will be subject to and governed by
the substantive laws of the State of New York, without regard to that
state's conflicts of law principles. The venue for resolution of any
dispute that is not resolved by the Parties in accordance with this
Agreement will be the state or federal court sitting in New York, New York.
16. Assignment. This Agreement, or any interest herein, will not be assigned,
in whole or in part, by either Party without the prior written consent of
the other Party, which will not be unreasonably withheld. Notwithstanding
the forgoing, WorldCom may assign this Agreement to an Affiliate.
17. No Third Party Beneficiaries. This Agreement inures to the benefit of Digex
and WorldCom only and no third party shall have any rights hereunder.
18. Force Majeure. Other than as expressly set forth in this Agreement, neither
Party shall be liable under this Agreement for delays, failures to perform,
damages, losses or destruction, or malfunction of any equipment, or any
consequence thereof, caused by, or due to any cause beyond its reasonable
control, including, but not limited to, fire, earthquake, flood, water, the
elements, acts of God, third party labor disputes, utility curtailments,
cable cuts, failure caused by telecommunications or other Internet
provider(s), power failures, explosions, civil disturbances, vandalism,
governmental actions, shortages of equipment or supplies, or any other
force or occurrence beyond its reasonable control.
100
20. Severability. Should any court of competent jurisdiction or arbitrator
determine that any provision of this Agreement is unenforceable or
prohibited by law, such provision will be deemed deleted and replaced by a
valid and enforceable provision which so far as possible achieves the same
objective as the severed provision, and the remaining provisions of the
Agreement shall continue in full force and effect.
21. Survival. Any provision of this Agreement which contemplates performance or
observance subsequent to any termination or expiration of this Agreement
shall survive any termination or expiration of this Agreement and continue
in full force and effect.
22. Changes In Law, New Rules or Actions. The Parties acknowledge that some
rights and obligations of the Parties under this Agreement may be affected
by future rules, regulations, guidelines, orders, treaties, or laws
promulgated, enacted, or entered into by federal and state legislatures, by
federal and state agencies, local or federal governments, and international
or other regulatory bodies (together "Rules or Actions"). In the event that
any such Rules or Actions adversely impact a Party's obligations under this
Agreement, either Party may, upon written notice to the other, require this
Agreement be renegotiated in good faith to reflect the effect of any such
Rules or Actions.
23. Headings. The section headings used herein are for reference and
convenience only and shall not enter into the interpretation hereof.
24. Counterparts. This Agreement may be executed in several counterparts, all
of which taken together shall constitute one single agreement between the
Parties hereto.
25. Binding Agreement. This Agreement shall inure to the benefit of and be
binding on the Parties and their respective heirs, executors,
administrators, legal representatives, successors, and permitted assigns.
101
26. Entire Agreement. This Agreement contains the entire arrangement between
WorldCom and Digex with respect to the distribution of Managed Hosting
Services. No representation, promise or condition in connection with the
Managed Hosting Services will be binding upon either Party unless expressly
stated herein. Except as provided herein, this Agreement supersedes any
prior understanding between WorldCom and Digex concerning the Managed
Hosting Services MOA. No modification or amendment of this Agreement will
be effective unless it is in writing and signed by the authorized
representatives of each Party.
IN WITNESS HEREOF, the Parties hereto have duly executed this Agreement as
of the date and year written above.
AGREED:
MCI WORLDCOM Network Services, Inc. Digex, Incorporated
By: By:
Name: Name:
---------------------------- --------------------------------
Title: Title:
--------------------------- -------------------------------
Date: Date:
---------------------------- --------------------------------
102