Exhibit 10.6
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
EXECUTION COPY
MEDIA GATEWAY SERVICES AGREEMENT IV
This Media Gateway Services Agreement (the "Agreement") between KMC
Telecom VIII LLC, a Delaware limited liability company whose address is ▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (collectively, "KMC") and Qwest
Communications Corporation, a Delaware corporation whose address is 700 Qwest
Tower, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("QCC") and Qwest
Communications International, Inc., a Delaware corporation whose address is 700
Qwest Tower, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("QCI") ("QCC" and
"QCI" being collectively referred to as "Qwest"), is effective as of March 31,
2001 (the "Effective Date").
WHEREAS, Qwest desires to purchase KMC's Upgraded MGS Services for MGS
Circuits ordered under the MGS Agreements (both as defined below) and KMC
desires to provide the Upgraded 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 Upgraded 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
specified as follows:
"MGS AGREEMENTS" mean that certain Media Gateway Service Agreement, dated
August 31, 1999 among KMC Telecom Inc., KMC Telecom II Inc, KMC Telecom III
Inc., KMC Telecom of Virginia, Inc. and QCC, that certain Amended and Restated
Media Gateway Services Agreement II, dated as of March 31, 2000, among KMC
Telecom V, Inc., QCC and QCI, as amended and that certain Media Gateway Services
Agreement dated as of June 30, 2000 among KMC Telecom VI, Inc, QCC and QCI, as
amended.
"MGS CIRCUIT" means a DS0-level circuit individually ordered by Qwest and
provided by an affiliate of KMC pursuant to the MGS Agreements to (i) allow data
or voice dial-up users, through local trunks providing two-way traffic
capability, to connect to the Qwest IP network via Media Gateway servers owned
by affiliates of KMC (each, an "MGS Server") and (ii) permit Qwest and/or its
end users to originate single-stage calls from and terminate calls to the PSTN.
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KMC shall cause its affiliates to provide local trunks providing two-way traffic
capability for use with the Upgraded MGS Services provided hereunder.
"UPGRADED MGS SERVICES" means the enabling of the MGS Servers to provide,
and the continued operation and maintenance of MGS Servers to provide
voice-over-IP services through such MGS Servers as more fully described in
Section 6 hereof (including the maintenance of hardware, equipment,
environmental control, network connections, and line provisioning) to provide
such voice 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 the MGS Circuits using KMC affiliate's own
connections to the public switched telephone network.
"POP" means the point of presence operated by one party at which data (and
other telecommunications) traffic is exchanged.
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. UPGRADED MGS SERVICES. KMC will provide the Upgraded 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 Upgraded MGS
Services for the term set forth in Section 7.a. below. Qwest , at it sole
cost, shall continue to establish and manage (i) a designated DNAC to KMC's
affiliates network at each location that KMC provides the Upgraded MGS
Services and (ii) an access link between the DNAC and Qwest's POP. KMC
shall cause its affiliates to continue to be responsible for the physical
installation of the DNAC at KMC's affiliates POP and the testing and
activation of two-way MGS Circuits. KMC shall be responsible for all
operation, maintenance, installation, and network line connections for the
Upgraded 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 Upgraded 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 Upgraded 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 the Upgraded MGS Services, 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 networks of KMC and its affiliates. To the
extent not available to KMC internally Qwest shall provide to KMC
sufficient information concerning the traffic actually sent on the MGS
Circuits, in a manner and detail consistent with industry standards, in
order for KMC to properly calculate any charges which may be due to or from
ILECs, IXCs or other connecting carriers. All such information and
materials provided by KMC or Qwest will be confidential. The parties
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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 Upgraded MGS Services according to the prices
set forth in Schedule 1 to this Agreement (the "Rates"). Payment for
the Upgraded MGS Services shall commence on a monthly basis for all
Upgraded MGS Services deemed installed (as described below).
b. An Upgraded MGS Service will be deemed installed as of the earlier of
(a) the date when KMC notifies Qwest that the Upgraded MGS Service is
installed and Qwest, in its reasonable judgment, verifies such
installation or, in all events (b) [text deleted] days after the
Effective Date (or, in the case of an additional Upgraded MGS Service
ordered pursuant to Section 6 hereof, [text deleted] days after the
acceptance of the Service Order (as defined below) by KMC). Qwest will
be charged the Rates pro rated for any partial first month.
c. Payments for the Upgraded MGS Services shall be due and payable within
[text deleted] days after receipt of KMC's 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 [text deleted] limit shall not apply to
disputes arising from KMC's failure to correctly apply credits
(including Delay Credits) or from KMC invoicing for Upgraded MGS
Services 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]
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]. 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 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.
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d. The Rates are payable by Qwest without regard to any taxes, including
sales taxes if applicable, FCC charges, or costs imposed pursuant to
any rule, regulation or law (including "net reciprocal compensation,"
which is calculated after deducting all monies received by KMC for
reciprocal compensation) imposed with respect to the Upgraded MGS
Services, which taxes, charges (including net reciprocal compensation)
or other costs, (other than taxes based on KMC's net income) shall be
born solely by Qwest. No adjustment shall be made to the Rates on
account of taxes or other items imposed on Qwest in connection with
the Upgraded MGS Services.
e. In the event of a Delay (as defined below) and payment for such
Upgraded MGS Service would otherwise be due in accordance with Section
3 a., KMC shall provide to Qwest for each affected Upgraded MGS
Service a Delay Credit equal to the product of (A) [text deleted] of
the [text deleted] for the affected Upgraded MGS Circuit times (B) the
[text deleted] of such Delay. Notwithstanding the provisions of
Section 10(a), acceptance of the credit by Qwest pursuant hereto shall
constitute Qwest's sole remedy for a Delay.
f. A "Delay" shall be deemed to occur if, (x) after the date upon which
an Upgraded MGS Service 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 Upgraded MGS Service and within [text
deleted] days after such notice KMC has not completed existing testing
and circuit hand-off procedures (and other such procedures as mutually
agreed by the parties) with respect to such Upgraded MGS Service,
including, without limitation the verification of full voice
connectivity through the DNAC to Qwest's IP network; provided,
however, that notwithstanding the testing and connectivity
requirements set forth in this sentence, a Delay shall not have
occurred, and monthly charges for the Upgraded MGS Service 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 3.a, (y)
disputes arising from KMC's failure to correctly apply credits as
described in Section 3.c or (z) KMC invoicing for Upgraded MGS
Services 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 14, Qwest's
obligations to make all payments payable by it under this Agreement
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 Upgraded MGS Services for at least
[text deleted] (the "Services Commitment") on or before July 1, 2001 (the
"Commitment
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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 Upgraded 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 Rates for the Upgraded MGS Services within the Services
Commitment, as well as additional Upgraded MGS Services that may be ordered
pursuant hereto.
5. IMPLEMENTATION SCHEDULE AND GROWTH FORECAST. Upgraded MGS Services
sufficient to satisfy the Services Commitment shall be installed for the
MGS Circuits described by Qwest in the Implementation Schedule set forth
hereto as Schedule 3 which schedule may be amended from time to time by
Qwest pursuant to on one or more Service Orders. If a Service Order is
received after the date hereof KMC will have [text deleted] days from the
date of receipt of any such Service Order to install the necessary
equipment and software to deliver the Upgraded MGS Services to the changed
location. 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 Upgraded MGS Services
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 Upgraded MGS Services 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 Upgraded MGS Services in
addition to those in the Implementation Schedule after receipt from Qwest
of a Service Order in a form mutually agreed by the parties (a "Service
Order") for such Upgraded MGS Services; provided, however, that any Service
Order for additional Upgraded MGS Services 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 Upgraded MGS Services
pursuant thereto may be conditioned on the agreement of both parties to a
separate agreement governing such Upgraded MGS Services. Such Service Order
for additional Upgraded MGS Services shall specify a requested installation
date that is at [text deleted] 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 [text deleted]. In filling Service Orders pursuant to the
Implementation Schedule and any other Service Orders received hereunder,
KMC shall use modems and/or 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 Upgraded MGS Services will be
initially provided using [text deleted] equipment (as agreed to by Qwest)
or other equipment mutually agreed upon by the parties ("Qwest Required
Equipment") which (i) enables Qwest to exchange either data (e.g. V.90 and
V.92, if available), voice (e.g. commercial variants of G.711, G.723 or
G.729) or fax (e.g. T.37) traffic with end user customers (i.e. the dial-up
users) of the Upgraded MGS Services, (ii) which are
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capable of converting the TDM voice path to an RTP stream encapsulating
commercial variants of G.711, G.723 or G.729 CODECs and (iii) which are
interoperable with industry standards with regard to MGCP. In the event due
to the failure of any Qwest Required Equipment any Upgraded MGS Service
cannot meet the foregoing specifications, provided that KMC is taking all
commercially reasonable efforts to have such Qwest Required Equipment
repaired or replaced as promptly as possible, Qwest shall continue to pay
for the Upgraded MGS Services in accordance with the terms hereof. The
[text deleted] and [text deleted] hardware shall be co-located, at no cost
to KMC, at Qwest's cyber center to be designated by Qwest, upon notice to
KMC. Qwest may specify other models or vendors of equipment to be used in
the Upgraded 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 for Upgraded MGS Services shall be governed by this
Agreement.
7. TERM, EARLY TERMINATION CHARGE.
a. This Agreement shall have an initial term commencing on the Effective
Date and ending forty-eight (48) months after July 1, 2001, unless
earlier terminated pursuant to Section 9.b.,10, 14, or 16. Each of the
Upgraded MGS Services in the Implementation Schedule shall have a term
that is forty-eight (48) months after July 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 Upgraded MGS Service 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-eight (48)
months thereafter (but in all events no later July 31, 2005), 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 Upgraded MGS
Services 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 Upgraded MGS Services until the
expiration of the term of each such Upgraded MGS Service. Following
expiration of the initial term of this Agreement, the term shall
automatically renew (provided that MGS Circuit is being supplied
pursuant to a MGS Agreement) for successive twelve month terms at the
rate specified in Appendix A to Schedule 1 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 Upgraded MGS Services for an
MGS Circuit, or this Agreement, [text deleted], then Qwest shall be
responsible for paying KMC an early termination charge equal to one
hundred percent (100%) of the Rates for the canceled Upgraded MGS
Service(s), multiplied by the number of full months remaining in the
term at the time of cancellation. Any termination of
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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
Upgraded 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 Upgraded 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:
i. it will provide, to Qwest and its end user customers, Upgraded
MGS Services that meet or exceed the Service Levels described in
Schedule 2. Should KMC, in any [text deleted] during any
consecutive [text deleted] period, (x) fail to provide the
Upgraded MGS Services at the Service Levels defined in Section 2
of Schedule 2 for [text deleted] of the MGS Circuits to which the
Upgraded MGS Services were applied in a particular Market Area;
or (y) fail to meet the Service Level set forth in Section 1.3 of
Schedule 2 for Qwest calls affecting, in the aggregate, more than
[text deleted] of the MGS Circuits to which the Upgraded MGS
Services were
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applied in a particular Market Area; or (z) fail to meet the
Service Level set forth in Section 1.2 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 Upgraded MGS Services 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 Upgraded MGS Services 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 Upgraded MGS Services in any three or more Market
Areas that contain in the aggregate [text deleted] or more of the
Upgraded MGS Services to 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;
ii. In the event an Upgraded MGS Service is inoperable or interrupted
continuously for a period of [text deleted] or incurs cumulative
outages of over [text deleted] in any [text deleted] period,
Qwest 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 Upgraded MGS Services for
every [text deleted] continuous interruption of the Upgraded MGS
Services up to total credits equal to [text deleted] for [text
deleted] of Upgraded MGS Services in each [text deleted] for each
Upgraded MGS Service; or (ii) the termination of the affected
Upgraded MGS Services, 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 Upgraded MGS Services under this
Section shall not serve to terminate any other Upgraded MGS
Services and any exercise of Qwest's rights under this
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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 Upgraded MGS Services
that have been ordered with respect to Services Commitments (i.e.
the number of Upgraded MGS Services that have been ordered will
not be reduced in determining whether Qwest has met the Services
Commitments if Upgraded MGS Services 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 Upgraded MGS Service(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 Upgraded 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 Upgraded MGS Services and will pass on the
benefits of such warranties to the full extent possible to Qwest
for the Upgraded 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 MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10. DEFAULT/TERMINATION. This Agreement and any Upgraded MGS Services can be
terminated only as provided in Sections 9.b.i, 9b.ii, 14, 16, and this
Section 10.
a. 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.
b. 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
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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.
c. The parties acknowledge that this Agreement may be subject to the
approval of public utility commissions of individual states or other
regulatory agencies wherein Upgraded MGS Services are provided. Either
party shall have the right to terminate the affected Upgraded MGS
Service without liability except for Upgraded MGS Services actually
rendered if, by a final, non-appealable order of a court of competent
jurisdiction, the Federal Communications Commission, or other local,
state or federal government authority, (i) KMC is prohibited from
furnishing the Upgraded 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
Upgraded 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
directly arising 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 March
31, 2001). 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
10
noninfringing, or, if neither of the foregoing alternatives is
reasonably available, remove the Equipment and refund Qwest the
portion of the price for the Upgraded MGS Services reasonably
attributable to such Equipment depreciated or amortized by an
equal annual amount over the lifetime of the Qwest-Required
Equipment.
ii. 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 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 Upgraded 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
Upgraded MGS Services under this Agreement and Qwest's use of the
Upgraded 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 Upgraded MGS Services
with services or equipment not provided by KMC or by or for Qwest
with KMC's express written approval.
11
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.
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 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 Upgraded MGS Services. Qwest will be responsible for
controlling end user access to the Upgraded MGS Services.
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 obligations to pay money) for any delay or failure to
perform due to causes beyond the
12
control and without the fault or negligence of the party claiming 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. Notwithstanding
the foregoing, in the event of a force majeure, KMC will restore the
Upgraded MGS Services for Qwest using substantially the same or better
efforts that it uses with respect to its other customers. If a force
majeure condition continues for a period greater than [text deleted],
either party may terminate only those Upgraded MGS Services which are the
subject of the force majeure condition without further penalty (except that
Qwest shall not have the right to terminate any Upgraded 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, [text deleted] 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 to maintain Qwest
customer records or other confidential information hereunder in
accordance with 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.
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.
13
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 the applicable Qwest entity as of the
Effective Date. The assignment or delegation of any 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]. 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
14
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 (including the terms and
conditions set forth in the consents previously executed by Qwest in
favor of affiliates of KMC) provided such consents contain
non-disturbance rights of Qwest, and are otherwise reasonably
acceptable to Qwest under the 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 or 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.
If to Qwest :
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President -- Internet and Multimedia Markets
Attn: General Counsel
15
If to KMC:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Chief Financial Officer
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.
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
16
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. This
Section 23 shall not limit a party's rights pursuant to Section 15 c
hereof.
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
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 Upgraded
17
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 Upgraded
MGS Services under the terms and conditions set forth in the
Agreement. Should such a 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.
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.
18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
KMC Telecom VIII LLC
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Title: VICE PRESIDENT, ASSISTANT TREASURER
------------------------------------
Qwest Communications Corporation
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
-----------
Title: SVP - QIS
-----------
Qwest Communications International Inc.
By: /S/ DRAKE S. TEMPEST
---------------------
Name: DRAKE S. TEMPEST
----------------
Title: EVP, GENERAL COUNSEL
--------------------
PERFORMANCE GUARANTEE
KMC Telecom Holdings, Inc. ("KMC Holdings") acknowledges that KMC VIII must
obtain the agreement of certain wholly owned subsidiaries, which are
affiliates of KMC VIII, in order for KMC VIII to provide the service
hereunder. KMC Holdings agrees to cause those subsidiaries to enter into such
agreements and provide such services to KMC VIII.
KMC Telecom Holdings, Inc.
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Title: VICE PRESIDENT, ASSISTANT TREASURER
------------------------------------
19
SCHEDULE 1
PRICES/RATES FOR UPGRADED MGS SERVICES
Set forth on Appendix A to this Schedule is a table stating the Rates
which will apply to the Upgraded MGS Services, subject to the following rules :
1. RATES. The rates for Upgraded MGS Services for the term of this Agreement
are set forth in Appendix A to this Schedule. The number of Upgraded MGS
Services for purposes of these prices shall include all Upgraded MGS
Services 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 Upgraded 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 Rates. Qwest acknowledges that KMC may not agree to
reduce the 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 Upgraded MGS Services
provided pursuant to the Implementation Schedule 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 Upgraded
MGS Service shall have an initial term commencing on the date it is
installed and ending 48 months after such date but in all events no later
than July 31, 2005. In the event an Upgrade MGS Service is being supplied
to an expiring MGS Circuit, Qwest shall have the right to transfer the
remaining term of the Upgraded MGS Service provided hereunder to another
MGS Circuit. The Rates set forth in this Schedule shall apply to each
Upgraded MGS Service during the initial term for such Upgraded MGS Service.
Ninety (90) days prior to the expiration of the initial term of this
Agreement the parties agree to enter into good faith negotiations with
regard to the terms and conditions for KMC to supply Qwest with Upgraded
MGS Services for an additional term with Rates consistent with Section 1.b
of Appendix A to this Schedule. If the parties fail to agree upon terms and
conditions pursuant to the preceding sentence Qwest shall nevertheless have
the right to renew this Agreement in accordance with Section 7.a hereof at
the Rate specified in Section 1.b of Appendix A to this Schedule.
5. At Qwest's option, Qwest may purchase any services offered by KMC in lieu
of the Upgraded MGS Services so long as the minimum monthly commitment
payment set forth in Section 1 of this Appendix A is made and KMC does not
incur any additional costs above those incurred by KMC to supply the
Upgraded MGS Services hereunder.
20
APPENDIX A TO SCHEDULE 1
1.a. Commencing July 1, 2001 and continuing until June 30, 2005, assuming a
minimum [text deleted] count equal to [text deleted] ports the monthly
charge shall be [text deleted] per [text deleted], but in all events no
less than [text deleted] per month. Notwithstanding any provision of this
Agreement to the contrary, the minimum monthly amount shall not be
increased if Qwest requests additional Upgraded MGS Services hereunder
provided that there are no additional capital costs incurred or to be
incurred by KMC to provide such service.
1.b. On and after July 1, 2005 the monthly charge shall be [text deleted] per
[text deleted] as may be agreed by the parties.
2. 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. Qwest shall be paid in cash [text deleted] of any payments or credits which
KMC receives from any provider of ingress or egress trunks for the MGS
Circuits used in connection with the provision of Upgraded MGS Services. To
the extent received from such provider, KMC shall pay Qwest within [text
deleted] days of the end of each calendar quarter during the Term. In the
event any amount received by KMC from a provider of ingress or egress is
required to be returned by KMC pursuant to a requirement of law or order of
any court or regulatory authority ("Forfeited Amount"), KMC shall have the
right to ▇▇▇▇ Qwest for [text deleted] of such Forfeited Amount, up to a
maximum of the total amount previously credited to Qwest under this
paragraph, and Qwest shall, within [text deleted] days, repay such amounts
to KMC.
21
Schedule 2
SERVICE LEVELS
1. SERVICE LEVELS. For purposes of this agreement, "Service Level" or "Service
Levels" means the level of service at which or above KMC (and for purposes
of this Schedule 2 only, KMC's affiliates, collectively referred to in this
Schedule 2 as "KMC") shall support, maintain and manage the [text deleted]
hardware or two-way traffic capability specifically provided by KMC to
provide the Upgraded MGS Services to Qwest and includes the following
elements (all of which shall be based on industry standard measurements)
provided KMC.
1.1. 24x7 (at the KMC Equipment Site) "remote hands" services;
1.2. P.01 grade of service measured on a calendar month basis, for the
portion of the KMC network, from and including the KMC switches (but
not including Qwest maintained software), to the DNAC, during peak
busy hours.
1.3. A time to repair of [text deleted] from the time Qwest's call to the
KMC help desk are answered, for each Upgraded MGS Service or any
hardware utilized to provide the Upgraded MGS Service.
1.4. 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
2. KMC will support and maintain the upgraded MGS service, [text deleted]
servers, associated PSTN connectivity and all associated hardware and
software interfaces. To allow a monthly average uptime that shall be no
less than [text deleted]. However, such uptime does not include the KMC
scheduled downtimes for maintenance. The scheduled downtime for maintenance
shall not exceed three (3) hours per week and is currently completed on an
as-needed basis
Monitoring/Reporting
Upon the Company's request, KMC will prepare a report that will track the
performance metrics stated in Section 1. This information will be emailed by the
fifth working day of the month following the reported month, to the Company
designated email address.
22
When a System Outage occurs, KMC will provide an outage report which includes,
at a minimum, the following information:
Company site affected (including without limitation each customized Company
platforms);
Time of System Outage;
Length of System Outage;
Reason for System
Outage (if known);
Long term remedy; and
Person notified
Escalation Procedures
In the event System Outage, KMC shall contact Company by email within thirty
(30) minutes of any such System Outage and may also contact Company by telephone
or other method. Company must provide emergency contact information.
The status information, if known by KMC, will include:
reason for the System Outage; and
estimated time for service restoration
If Company experiences a System Outage and has not been notified by KMC, Company
will contact the Trouble Management Center (TMC) staff at KMC by telephone at
▇▇▇-▇▇▇-▇▇▇▇ and email at ▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇.
KMC will periodically notify Company with an updated status of such System
Outage for the duration of the System Outage, in no event less frequently than
every sixty (60) minutes.
KMC will provide a post-incident summary of each System Outage that will
include:
cause of the problem;
method used to correct the problem; and
measures KMC will take to prevent similar occurrences in the future
KMC shall undertake efforts to resolve System Outages, respond to Company
inquiries and requests for modifications as set forth in the tables below:
23
NON-CONFORMITY IDENTIFICATION AND RESOLUTION PARAMETERS
---------------------------------------------------------------
Level Definition Client Obligations Acceptable
Resolution
---------------------------------------------------------------
1 Critical - KMC Verbal and Written/email
Service unavailable written/email acknowledgment,
or non-conformity notification of and
in KMC Service unavailability or modifications
causes consistent non-conformity as to the KMC
User system soon as possible Service as
response delays. after soon as
determination of possible,
the unavailability
or non-conformity
---------------------------------------------------------------
1 Serious - KMC Verbal and Written/email
Service written/email acknowledgment,
intermittently notification of and
unavailable or unavailability or modifications
non-conformity in non-conformity as to the KMC
KMC Service causes soon as possible Service as
intermittent after soon as
crashes that determination of possible
require User system the unavailability
to be rebooted. or non-conformity
---------------------------------------------------------------
2 Intermittent - Written/email Written/email
Non-conformity in notification of acknowledgment
KMC Service causes non-conformity and
intermittent bugs within 5 business modifications
which cause a days of to the KMC
material module or determination of Service to
features to not the non-conformity be released
work. within 10
business days
---------------------------------------------------------------
3 Annoying - Written/email Written/email
Non-conformity in notification of acknowledgment
KMC Service causes non-conformity and
bugs or annoyances within 10 business modifications
that do not cause days of to the KMC
operation determination of Service to
termination, but the non-conformity be released
reduce the within next
efficiency of the scheduled
KMC Service and/or release
may annoy the User.
---------------------------------------------------------------
24
NON-CONFORMITY IDENTIFICATION AND RESOLUTION PARAMETERS
---------------------------------------------------------------
Level Definition Client Obligations Acceptable
Resolution
---------------------------------------------------------------
4 Cosmetic or Next Written/email Written/email
Revision notification of acknowledgment
Non-conformity in non-conformity and
the KMC Service within next modifications
which can be standard report to the KMC
addressed with cycle Service to
changes or updates be released
in next update or within next
release of the KMC scheduled
Service. release
---------------------------------------------------------------
SUPPORT RESPONSE TIMETABLE
----------------------------------------------------------------
Severity Definition Client Obligations Acceptable
Resolution
----------------------------------------------------------------
1, 2 Quick Response - Verbal and Written/email
Users cannot written/email resolutions as
operate the KMC confirmation of soon as
Service without issue presented possible,
help within 24 hours
----------------------------------------------------------------
3 Medium Response - Written/email Written/email
Users can operate confirmation of explanation
KMC Service but issue presented within 5
are greatly within 5 business business days.
inconvenienced. days
Client may need
additional help to
answer a common
problem or issue.
----------------------------------------------------------------
4 Non-Critical Written/email Written/email
Response - Users confirmation of explanation
or Client would issue presented within 10
like to understand within 20 business days.
operation or gain business days
additional
information.
----------------------------------------------------------------
o Credits are addressed in previous MGS agreements.
25
Business Resumption
Company agrees to notify KMC no less than two (2) business days in advance of
any modifications and/or network configuration changes (especially with regards
to any changes in their Server IP addresses that host the KMC control) to
Company's system, as well as any upgrades or removal of devices that may impact
the production and network connectivity from Company's system through which the
Services are provided (if they are outside of the scheduled downtime maintenance
windows). If any such change will or could, in either party's opinion, result in
incompatibility between the parties' respective systems or interruptions in
delivery of the Services, then the parties shall work together to resolve any
such issue before Company makes such a change.