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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q/A
(AMENDMENT NO. 1)
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-20803
------------------------
IXC COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)
------------------------
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DELAWARE 75-2644120
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5000 PLAZA ON THE LAKE, SUITE 200,
AUSTIN, TEXAS 78746
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (512) 328-1112
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock, $.01 par value, outstanding (the only
class of common stock of the Company outstanding) was 30,898,841 on July 31,
1997.
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This Amendment No. 1 to the Quarterly Report on Form 10-Q is being filed to
add certain exhibits and to amend Item 6 (Exhibits and Reports on Form 8-K)
contained in Part II of the Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, that was filed with the Securities and Exchange Commission on
August 6, 1997 ("Form 10-Q").
IXC Communications, Inc. hereby amends its Form 10-Q by adding Exhibits
10.19 and 10.20 to the exhibits contained under Item 6, contained in Part II of
the Form 10-Q for the quarter ended June 30, 1997, as set forth below:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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3.1 + Restated Certificate of Incorporation of IXC Communications, Inc., as amended
3.2 Bylaws of IXC Communications, Inc., as amended (incorporated by reference to
Exhibit 3.2 of IXC Communications, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 (the "10-Q")).
4.1 Specimen certificate representing shares of Common Stock of IXC Communications,
Inc. (incorporated by reference to Exhibit 4.1 of IXC Communications, Inc.
Registration Statement on Form S-1 filed with the Commission on May 20, 1996, as
amended (File No. 333-4061) (the "S-1")).
4.2 Indenture dated as of October 5, 1995 by and among IXC Communications, Inc., on
its behalf and as successor-in-interest to I-Link Holdings, Inc. and IXC Carrier
Group, Inc., each of IXC Carrier, Inc., on its behalf and as
successor-in-interest to I-Link, Inc., CTI Investments, Inc., Texas Microwave,
Inc. and WTM Microwave, Inc., Atlantic States Microwave Transmission Company,
Central States Microwave Transmission Company, Telcom Engineering, Inc., on its
behalf and as successor-in-interest to SWTT Company and Microwave Network, Inc.,
Tower Communication Systems Corp., West Texas Microwave Company, Western States
Microwave Transmission Company, Rio Grande Transmission, Inc., IXC Long Distance,
Inc., Link Net International, Inc. (collectively, the "Guarantors") and IBJ
Schroder Bank & Trust Company, as Trustee, with respect to the 12 1/2% Series A
and Series B Senior Notes due 2005 (incorporated by reference to Exhibit 4.1 of
IXC Communications, Inc.'s and each of the Guarantor's Registration Statement on
Form S-4 filed with the Commission on April 1, 1996, as amended (File No.
333-2936) (the "S-4")).
4.3 Purchase Agreement dated October 5, 1995 by and among IXC Communications, Inc.,
and the Purchasers named therein (incorporated by reference to Exhibit 4.2 of the
S-4).
4.4 A/B Exchange Registration Rights Agreement dated as of October 5, 1995 by and
among IXC Communications, Inc., the Guarantors and the Purchasers named therein
(incorporated by reference to Exhibit 4.3 of the S-4).
4.5 Escrow Account and Disbursement Agreement dated as of October 5, 1995 by and
among IXC Communications, Inc., IBJ Schroder Bank & Trust Company, as Escrow
Holder, and IBJ Schroder Bank & Trust Company, as Collateral Agent (incorporated
by reference to Exhibit 4.4 of the S-4).
4.6 Escrow Account Security Agreement dated as of October 5, 1995 by and between IXC
Communications, Inc. and IBJ Schroder Bank & Trust Company (incorporated by
reference to Exhibit 4.5 of the S-4).
4.7 Form of 12 1/2% Series A Senior Notes due 2005 (incorporated by reference to
Exhibit 4.6 of the S-4).
4.8 Form of 12 1/2% Series B Senior Notes due 2005 and Subsidiary Guarantee
(incorporated by reference to Exhibit 4.8 of the S-1).
4.9 Amendment No. 1 to Indenture and Subsidiary Guarantee dated as of June 4, 1996 by
and among IXC Communications, Inc., the Guarantors and the Trustee (incorporated
by reference to Exhibit 4.11 of the S-1).
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1
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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4.10 Stock Exchange Agreement dated as of June 10, 1996 by and between IXC
Communications, Inc., and Trustees of General Electric Pension Trust ("GEPT")
(incorporated by reference to Exhibit 4.12 of the S-1).
4.11 Registration Rights Agreement dated as of June 10, 1996 by and among IXC
Communications, Inc., GEPT and certain stockholders of IXC Communications, Inc.
(incorporated by reference to Exhibit 4.13 of the S-1).
4.12 Purchase Agreement dated as of March 25, 1997 by and among IXC Communications,
Inc., Credit Suisse First Boston Corporation ("CS First Boston") and Dillon Read
& Co. Inc. ("Dillon Read") incorporated by reference to Exhibit 4.12 of the
10-Q).
4.13 Registration Rights Agreement dated as of March 25, 1997 by and among IXC
Communications, Inc., CS First Boston and Dillon Read (incorporated by reference
to Exhibit 4.13 of the 10-Q).
4.14 Amendment to Registration Rights Agreement dated as of March 25, 1995 between IXC
Communications, Inc. and GEPT (incorporated by reference to Exhibit 4.14 of the
10-Q).
4.15 + Registration Rights Agreement dated as of July 8, 1997 among IXC Communications,
Inc. and each of William G. Rodi, Gordon Hutchins, Jr. and William F. Linsmeier.
4.16 + Registration Rights Agreement dated as of July 8, 1997 among IXC Communications,
Inc. and each of William G. Rodi, Gordon Hutchins, Jr. and William F. Linsmeier.
10.1 Office Lease dated June 21, 1989 with USAA Real Estate Company, as amended
(incorporated by reference to Exhibit 10.1 of the S-4).
10.2 Equipment Lease dated as of December 1, 1994 by and between DSC Finance
Corporation and Switched Services Communications, L.L.C.; Assignment Agreement
dated as of December 1, 1994 by and between Switched Services Communications,
L.L.C. and DSC Finance Corporation; and Guaranty dated December 1, 1994 made in
favor of DSC Finance Corporation by IXC Communications, Inc. (incorporated by
reference to Exhibit 10.2 of the S-4).
10.3 Amended and Restated 1994 Stock Plan of IXC Communications, Inc., as amended.
10.4 Form of Non-Qualified Stock Option Agreement under the 1994 Stock Plan of IXC
Communications, Inc. (incorporated by reference to Exhibit 10.4 of the S-4).
10.5 Form of IXC Communications, Inc. Restricted Stock Agreement (incorporated by
reference to Exhibit 10.5 of the S-4).
10.6 Form of IXC Communications, Inc. Restricted Stock Agreement (incorporated by
reference to Exhibit 10.6 of the S-4).
10.7 Amended and Restated Development Agreement by and between Intertech Management
Group, Inc. and IXC Long Distance, Inc. (incorporated by reference to Exhibit
10.7 of the S-4).
10.8 Second Amended and Restated Service Agreement dated as of January 1, 1996 by and
between Switched Services Communications, L.L.C. and Excel Telecommunications,
Inc. (incorporated by reference to Exhibit 10.8 of the S-4).
10.9 Equipment Purchase Agreement dated as of January 16, 1996 by and between Siecor
Corporation and IXC Carrier, Inc. (incorporated by reference to Exhibit 10.9 of
the S-4).
10.10 1996 Stock Plan of IXC Communications, Inc., as amended.
10.11 IRU Agreement dated as of November 1995 between WorldCom, Inc. and IXC Carrier,
Inc. (incorporated by reference to Exhibit 10.11 of the S-4).
10.12 Outside Directors' Phantom Stock Plan of IXC Communications, Inc., as amended.
10.13 Business Consultant and Management Agreement dated as of January 3, 1995 by and
between IXC Communications, Inc. and Culp Communications Associates (incorporated
by reference to Exhibit 10.13 of the S-1).
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2
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NUMBER DESCRIPTION
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10.14 Employment Agreement dated December 28, 1995 by and between IXC Communications,
Inc. and James F. Guthrie (incorporated by reference to Exhibit 10.14 of the
S-1).
10.15 Employment Agreement dated August 28, 1995, by and between IXC Communications,
Inc. and David J. Thomas (incorporated by reference to Exhibit 10.15 of the S-1).
10.16 Special Stock Plan of IXC Communications, Inc.
10.17 + Lease dated as of June 4, 1997 between IXC Communications, Inc. and Carramerica
Realty, L.P.
10.18 + Loan and Security Agreement dated as of July 18, 1997 among IXC Communications,
Inc., IXC Carrier, Inc. and NTFC Capital Corporation
10.19 * IRU and Stock Purchase Agreement dated as of July 22, 1997 between IXC Internet
Services, Inc. and PSINet Inc.
10.20 * Joint Marketing and Services Agreement dated on July 22, 1997 between IXC
Internet Services, Inc. and PSINet Inc.
11.1 + Statement of Computation of Earnings per Share.
27.1 + Financial Data Schedule.
</TABLE>
- ---------------
+ Previously filed.
* Filed herewith.
(B) REPORTS ON FORM 8-K.
(1) Form 8-K dated April 1, 1997 and filed with the Commission on April 3, 1997
with respect to the Company's notice of offering of unregistered securities
pursuant to Rule 135c(d) of the Securities Act of 1933, as amended, with
respect to the sale of Convertible Preferred Stock, which occurred on April
1, 1997.
3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 to the report to be signed on
its behalf by the undersigned thereunto duly authorized.
IXC Communications, Inc.,
a Delaware corporation
August 8, 1997 By: /s/ JAMES F. GUTHRIE
------------------------------------
James F. Guthrie
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
4
<PAGE> 1
EXHIBIT 10.19
IRU AND STOCK PURCHASE AGREEMENT
BETWEEN
IXC INTERNET SERVICES, INC.
AND
PSINET INC.
Dated as of July 22, 1997
<PAGE> 2
IRU AND STOCK PURCHASE AGREEMENT
between
IXC Internet Services, Inc.
and
PSINet Inc.
Dated as of July 22, 1997
TABLE OF CONTENTS
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SECTION 1. RIGHTS GRANTED TO PSINET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Fiber IRU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 IRU Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Additional Rights After the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. USE OF BANDWIDTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Permitted Doubling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Additional Mileage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Additional Routes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Term of IRU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Reincorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Adjustments Relating to Stock Splits and Other Events . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Issuance of Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. ORDERING BANDWIDTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Type of Bandwidth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Ordering Bandwidth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Bandwidth Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Existing Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Bandwidth Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5. OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Multiplexing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Reconfiguration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Term of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7. PAYMENT, CPI AND DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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7.2 Late Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 CPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Default/Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 8. SYSTEM MAINTENANCE AND POPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.1 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.2 Repair or Replacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.4 POPs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.5 Other Party's Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.1 Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Notice of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.3 Defense Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 10. ADMINISTRATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.3 Form of Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.4 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 12. LIMITATION OF LIABILITY; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.2 Release; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 13. REPRESENTATIONS AND WARRANTIES OF PSINET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.3 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.5 PSINet Filings; No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.6 Effect of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.9 No Other Agreements To Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.10 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 14. REPRESENTATIONS AND WARRANTIES OF IXC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.3 Effect of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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14.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.6 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14.7 Disclosure; No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.8 IRUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.9 Available System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.10 Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 15. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.1 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.3 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.4 Board Seat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.5 Restriction on Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.6 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15.7 Transfer Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.8 Standstill Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 16. CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.1 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.2 Reincorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.3 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.4 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.5 Fairness Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.6 Consent of Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.7 Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.8 Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16.10 Preferred Stock Purchase Plan Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 17. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.1 Deliveries by PSINet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.2 Deliveries by IXC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.3 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 18. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 19. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.2 Amendments, Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.3 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19.6 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
19.7 Severability; Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
19.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
19.9 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.10 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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<TABLE>
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19.11 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.12 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.14 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19.15 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19.16 Laws and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
19.17 Facsimile Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<PAGE> 6
IRU AND STOCK PURCHASE AGREEMENT
IRU AND STOCK PURCHASE AGREEMENT made as of this 22nd day of
July, 1997 by and between PSINet Inc., a New York corporation ("PSINet"), and
IXC Internet Services, Inc., a Delaware corporation ("IXC").
WHEREAS, IXC and its Affiliates have constructed or are
planning to construct a fiber optic telecommunications system. Pursuant to a
Contribution Agreement to be dated prior to the Closing Date between IXC
Carrier, Inc. ("Carrier") and IXC, IXC will acquire a non-cancellable,
indefeasible right of use ("IRU") in two fibers and in certain capacity in that
system (such IRU, the "Base IRU") from Carrier (the "Contribution Agreement").
WHEREAS, IXC and PSINet have entered into a Joint Marketing
and Services Agreement dated as of the date hereof (the "Internet Services
Agreement"), pursuant to which IXC will acquire from PSINet, and PSINet will
deliver to IXC, Internet services.
WHEREAS, IXC is willing to grant PSINet a noncancellable
indefeasible right of use in two fibers on the IXC fiber optic
telecommunications system to the extent necessary to secure certain capacity
thereon, and a noncancellable indefeasible right of use in such capacity on
such fibers, and PSINet is willing to exchange therefor shares of its common
stock on the terms and subject to the conditions set forth below.
WHEREAS, as a condition to the effectiveness of this
Agreement, among other things, PSINet will use reasonable efforts to
reincorporate in the State of Delaware, subject to obtaining all required
shareholder consents, by merging into a Delaware corporation to be formed as a
wholly-owned subsidiary of PSINet which will be named the same name as PSINet
upon consummation of such merger ("Newco"; prior to the Closing Date,
references in this Agreement to "PSINet" shall be deemed to refer to PSINet, a
New York corporation, and on and after the Closing Date, references herein to
PSINet shall be deemed to refer to Newco).
NOW, THEREFORE, in consideration of the mutual promises set
forth below, and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
SECTION 1. RIGHTS GRANTED TO PSINet
1.1 Fiber IRU. At the Closing, IXC, as the owner of the
Base IRU, shall grant to PSINet a noncancellable IRU in two fibers in the
portion of the Available System completed at the Closing (the "IXC Fibers") to
the extent necessary to carry one OC-48 (the "PSINet Fiber IRU"). At or prior
to the Closing, IXC shall specify the fibers in the applicable routes in which
such IRU is granted. Except as set forth in the Collocation Agreement and
Section 7.4(b) below, at no time shall PSINet be entitled to have physical
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access to the IXC Fibers. IXC agrees that it has no right to use the portion
of the IXC Fibers comprising the PSINet Fiber IRU during the Term (as defined).
1.2 IRU Capacity. At the Closing, IXC shall grant to
PSINet a noncancellable IRU in the IRU Capacity. As used herein, the "IRU
Capacity" shall mean the use of capacity as permitted by this Agreement on that
portion of the IXC fiber optic telecommunications system as described in
Exhibit A hereto (such portion of such system, together with additional
portions made Available by IXC to PSINet after the date hereof, is referred to
as the "Available System"). The total amount of the IRU Capacity will be
10,000 OC-48 Equivalent Miles. Notwithstanding anything in this Agreement to
the contrary, IXC will have no obligation under this Agreement or otherwise to
extend the Available System except as set forth in Exhibit A, into new
geographic areas or to complete a total 10,000 Route Miles on the Available
System. IXC agrees that it has no right to use the IRU Capacity during the
Term.
1.3 Security Interest. At the Closing, IXC shall grant,
assign and transfer to PSINet a continuing, first priority, perfected and
exclusive security interest in and to all of IXC' right, title and interest in
and to the following, whether now existing or hereafter coming into existence
(collectively, the "Collateral"): (a) a portion of the Base IRU in the IXC
Fibers granted to IXC by Carrier, such portion (the "Long-Term Indivisible
IRU") being an IRU in the IXC Fibers for the purpose of the transmission of
OC-48 capacity pursuant to IXC' grant of the PSINet Fiber IRU to PSINet, which
security interest shall secure IXC' obligation to provide the PSINet Fiber IRU
pursuant to Section 1.1; (b) a portion (separate from the Long-Term Indivisible
IRU) of the Base IRU in the IXC Fibers granted to IXC by Carrier, such portion
(the "Short-Term Indivisible IRU") being an IRU in the IXC Fibers which
supports OC-48 capacity and (c) the Access Right (as defined). The Short-Term
Indivisible IRU shall be a right of use of fiber only and shall not include any
rights in electronics or optronics. The security interest in the Short-Term
Indivisible IRU shall secure IXC' obligations to provide the PSINet Fiber IRU
over 10,000 OC-48 Equivalent Miles. At the Closing, IXC and PSINet shall enter
into a security agreement in substantially the form attached hereto as Exhibit
B (the "Security Agreement") and such UCC statements and other instruments
reasonably necessary to grant, perfect and maintain the security interests
contemplated by this Agreement.
1.4 Additional Rights After the Closing. After the
Closing, in the event IXC completes additional portions of the Available
System, (a) IXC hereby grants, without further action on its part, rights to
PSINet so that each of the PSINet Fiber IRU and the Base IRU in the IXC Fibers
is extended to cover such completed portions of the Available System (but only
up to a total of 10,000 Route Miles) effective immediately upon completion of
each portion, and (b) IXC hereby grants, without further action on its part,
and will execute the necessary documents to evidence such grant of, additional
security interests so that PSINet has a continuing, first priority, perfected
and exclusive security interest in (i) the Long- Term Indivisible IRU (with
such defined phrase being extended to cover such completed portions of the
Available System) and the products and proceeds thereof, and (ii) the
Short-Term Indivisible IRU (with such defined phrase being extended to cover
such completed portion of the Available System) and the products and proceeds
thereof, and the Long-Term Indivisible IRU and the Short-Term Indivisible IRU,
as so extended, will thereupon become part of the
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<PAGE> 8
Collateral. Notwithstanding the foregoing, however, commencing in respect of
any completed portion of the Available System, after the date on which such
completed portion of the Available System shall have been completed, the length
of the Short-Term Indivisible IRU shall not exceed the excess, if any, of
10,000 Route Miles over the number of completed Route Miles on the Available
System Accepted by PSINet. To the extent completion of additional portions of
the Available System requires shortening the length of the Short-Term
Indivisible IRU (which is subject to the security interest pursuant to the
preceding sentence) by a certain number of Route Miles (the "Reduction Miles"),
the Short-Term Indivisible IRU shall be deemed to be shortened 30 days after
the date on which such completed portion of the Available System shall have
been completed, by changing its definition to exclude a number of Route Miles
equal to the number of Reduction Miles. The specific Route Miles excluded
shall be determined by excluding that number of Route Miles of the Available
System most recently completed beginning with the eastern most portion along
the applicable route, all as set forth in a written notice from IXC to PSINet
pursuant to the Security Agreement. The security interest in the Short-Term
Indefeasible IRU shall terminate upon the first to occur of the following: (i)
IXC's making Available and PSINet's Acceptance of all of the IRU Capacity, and
granting an IRU therein, to PSINet on the terms and subject to the conditions
of this Agreement, and (ii) the written consent of the parties.
1.5 Quiet Enjoyment. IXC covenants that, at the Closing,
it will have the full right and authority to grant to PSINet the PSINet Fiber
IRU and capacity IRUs hereunder. IXC shall assure that Carrier has obtained or
will obtain all Rights-of-Way necessary for the installation and use of the IXC
Fibers comprising the PSINet Fiber IRU and the fibers underlying the capacity
IRUs granted hereunder, and cause such Rights-of-Way to remain in effect or be
adequately replaced during the Term. IXC shall be responsible for, and timely
pay, any and all (i) taxes and franchises, license and permit fees
(collectively, "Taxes") imposed because of the physical location of the IXC
Fibers and the fibers underlying the IRU Capacity and (ii) Rights-of-Way
payments on the IXC Fibers and the fibers underlying the IRU Capacity. Failure
to pay such taxes or payments shall authorize, but not obligate, PSINet to make
such payments, and IXC will immediately reimburse PSINet for any amounts paid.
PSINet will reimburse IXC for (or at IXC's option, pay directly to the proper
authority) any Taxes based on the revenues or capacity usage of PSINet. IXC
and PSINet will each notify the other party of the assertion of any Taxes which
could reasonably be the responsibility of the other party and, as reasonably
requested by the other party, will cooperate with each other to contest any
such Taxes with the proper authorities.
SECTION 2. USE OF BANDWIDTH
2.1 Permitted Doubling. IXC shall make Available, but
not be obligated to make Available more than, a single OC-48 Equivalent on any
part of the Available System, provided, however, that to the extent the length
of the Available System is less than 10,000 Route Miles, IXC will make
Available to PSINet, at PSINet's option, up to two OC-48 Equivalents on a
portion of the Available System selected by PSINet that is equal in length to
the Shortfall Mileage. For example, if the length of the Available System is
8,000 route miles, PSINet would be allowed to have up to two OC-48 Equivalents
on up to 2,000 miles and no more than one OC-48 Equivalent on the then
remaining 6,000 miles. In the event
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<PAGE> 9
IXC completes portions of the Available System and, as a consequence the
Shortfall Mileage is reduced, IXC, upon six months' notice to PSINet, shall
have the right to require PSINet to reconfigure Bandwidth so that the length of
the portion of the Available System where PSINet has capacity in excess of one
OC-48 does not exceed the then current Shortfall Mileage. After IXC'
completion of 10,000 miles of the Available System, PSINet will be limited to a
maximum of one OC-48 Equivalent on any particular portion of the Available
System.
2.2 Additional Mileage. Subject to the overall IRU
Capacity limitation set forth herein, PSINet, at its option, may order
Bandwidth on portions of the Available System in excess of 10,000 Route Miles
(the "Excess Miles") provided that: (a) the aggregate Route Mileage covered by
Bandwidth Units, regardless of the level or type of Bandwidth which is then
being provided by IXC to PSINet thereon, does not exceed 15,000 Route Miles;
(b) pursuant to the Collocation Agreement in the form attached hereto as
Exhibit C, PSINet will pay the market rate for cabinet space used in connection
with the Excess Miles; and (c) PSINet will pay IXC' fees for add/drop,
multiplexing and reconfiguration on the Excess Miles, as set forth herein. To
the extent PSINet orders Bandwidth on Excess Miles, the parties will in good
faith attempt to negotiate and effect adjustments in PSINet's rights in the
PSINet Fiber IRU and in the security interest in the Long-Term Indefeasible
IRU, with such rights to be expanded to cover such Bandwidth in the Excess
Miles and to be reduced so as not to cover PSINet's usage of Bandwidth to the
extent less than an OC-48 on any portion of the original 10,000 Route Miles of
the Available System.
2.3 Additional Routes. Notwithstanding anything herein
to the contrary, in the event IXC or any of its Affiliates adds or acquires an
additional route to its system in the United States during the Reconfiguration
Period, (a) the route will be deemed to be a part of the Available System if:
(i) IXC or any of its Affiliates has at least 18 fibers in such route, net of
the number of fibers in which IXC or any of its Affiliates shall have granted
IRU's to nonaffiliated third parties pursuant to cost-saving or joint build
arrangements in connection with the construction of such route (the "Net Fiber
Number"), or (ii) IXC gives notice to PSINet that IXC has elected to include
such route as a part of the Available System even though the Net Fiber Number
in the route is less than 18; and (b)(i) if the Net Fiber Number in the route
is less than 18 but more than 11, IXC shall not be obligated to provide more
than two OC-12's to PSINet on the route; (ii) if the Net Fiber Number in the
route is less than 12 but greater than 3, IXC will not be obligated to provide
PSINet with more than one OC-3 (or at IXC's option, three DS-3's) to PSINet on
the route, which OC-3 or DS-3s are subject to availability (that is, IXC may,
at its option, not deliver such OC-3 or DS-3s if needed for IXC's business or
if the applicable fibers have not been lit); and (iii) if the Net Fiber Number
in the route is 3 or less, then IXC will not be obligated to provide PSINet
with any capacity on the route. In the event IXC provides PSINet with an OC-3
pursuant to subsection b(ii) of the preceding sentence, no multiplexing charge
will apply to such OC-3.
2.4 Term of IRU. The term of each Bandwidth Unit of the
IRU Capacity will end on the earlier of: (a) 20 years from the Original Service
Activation Date of the Bandwidth Unit, or (b) 24 years from the Closing Date;
provided, however, that the term of each Bandwidth Unit will be extended by (i)
the length of time, if any, that such Bandwidth Unit commences after the fourth
anniversary of the Closing Date, but only to the extent such delay is
attributable to the completion of the applicable portion of the Available
System
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<PAGE> 10
occurring after such date, and (ii) the length of time performance by IXC is
excused pursuant to Section 11, below, in the event such performance shall have
been so excused for any period of at least 12 consecutive months.
SECTION 3. CONSIDERATION
3.1 Reincorporation. Prior to the Closing Date, PSINet
will use reasonable efforts to reincorporate in the State of Delaware by
merging into Newco, subject to PSINet obtaining all required shareholder and
third-party approvals and consents therefor.
3.2 Issuance of Shares. In consideration of the
execution and delivery of this Agreement, the grant of the IRUs hereunder by
IXC to PSINet and IXC's other obligations to PSINet hereunder, subject to
Section 3.3 below, PSINet (as merged into Newco) agrees to issue and deliver to
IXC at the Closing, 10,155,536 shares of Common Stock of Newco, par value
$.0001 per share (such shares, as adjusted for post-issuance stock splits,
stock dividends, recapitalization or similar events, the "IXC Initial Common
Shares"), and at the Additional Shares Determination Date (as defined) or no
later than 30 days after the Additional Shares Acceleration Date (as defined),
certain additional shares of Newco Common Stock (such shares, as adjusted for
post-issuance stock splits, stock dividends, recapitalization or similar
events, the "Additional Shares" and, collectively with the IXC Initial Common
Shares, the "IXC Shares") and/or cash, other securities or property, if any, as
may be issued and delivered as set forth in Section 3.5. The IXC Shares shall
be issued and delivered by PSINet to IXC, together with corresponding rights
under PSINet's preferred stock purchase rights plan, as amended, modified or
supplemented (the "preferred stock purchase rights plan") as those held by
other holders of Common Stock (subject to the terms of such plan), free and
clear of any and all claims, liens, pledges, options, charges, security
interests, restrictions, encumbrances or other rights of third parties other
than (a) the rights created in favor of PSINet pursuant to this Agreement, and
(b) restrictions on transferability generally imposed on securities under
federal or state securities laws.
3.3 Adjustments Relating to Stock Splits and Other
Events. It is the intent of the parties that the number of the IXC Initial
Common Shares to be issued by Newco to IXC hereunder shall, at the Closing
Date, be equal to 19.99999% of the outstanding shares of Common Stock of Newco,
as determined in the manner set forth on Exhibit D hereto. If after the date
hereof and before the Closing Date, the number of outstanding shares of Newco
Common Stock (as determined in the same manner set forth on Exhibit D hereto)
shall have changed or if such shares shall have been changed into or exchanged
for a different number or kind of shares or other securities through any
issuance, reorganization, recapitalization, reclassification, merger,
consolidation, share exchange or similar transaction, then a proportionate
adjustment in the number and an appropriate adjustment in the kind of
securities issuable hereunder shall be made.
3.4 Certificates. At the Closing, PSINet agrees to
deliver to IXC certificates issued in IXC's name for all of the IXC Initial
Common Shares.
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3.5 Issuance of Additional Shares.
(a) Subject to Section 15.7(c) and the last
sentence of this Section 3.5(a), on the earlier of (i) the first anniversary of
the date on which the Total Bandwidth has been Accepted and/or Deemed Accepted
by PSINet or (ii) the fourth anniversary of the Closing, (such earlier date,
the "Additional Shares Determination Date"), IXC shall be entitled to receive
such number of Additional Shares, based on the Common Stock Price determined as
of the Additional Shares Determination Date, or, at the sole discretion of
PSINet, such amount of cash, or any combination of Additional Shares and cash,
as shall have an Aggregate Fair Market Value equal to the Additional Shares
Value as of the Additional Shares Determination Date; provided, however, that
PSINet shall be entitled, at its sole option, to accelerate IXC's right to
receive Additional Shares and/or cash pursuant to this Section 3.5(a) at any
time after the Closing Date to a date prior to the Additional Shares
Determination Date pursuant to a notice to such effect given by PSINet to IXC
in accordance with the terms of Section 19.5 of this Agreement (the "Additional
Shares Acceleration Date") by delivering to IXC not later than 30 days after
the Additional Shares Acceleration Date, such number of Additional Shares,
based on the Common Stock Price determined as of the Additional Shares
Acceleration Date, or, at the sole discretion of PSINet, such amount of cash,
or any combination of Additional Shares and cash, as shall have an Aggregate
Fair Market Value equal to the Additional Shares Value as of the Additional
Shares Acceleration Date. Notwithstanding the foregoing, (i) the right of IXC
to receive any Additional Shares and/or cash pursuant to this Section 3.5 shall
terminate and be of no further force or effect on such date as the calculation
of the IXC Common Shares Value would result in a value equal to or greater than
$240,000,000 and (ii) the obligations of IXC under this Agreement shall not be
altered, diminished, modified or impaired by any delivery or payment of
Additional Shares and/or cash pursuant to this Section 3.5.
(b) If at any time or from time to time prior to
the Additional Shares Determination Date, there shall occur a Merger or Other
Reorganization Event, then, as a part of and as a condition to the
effectiveness of such Merger or Other Reorganization Event, lawful and adequate
provision shall be made so that IXC shall thereafter be entitled to receive
pursuant to Section 3.5(a) in lieu of any Additional Shares IXC may be entitled
to receive under Section 3.5(a), the number of shares of Successor Stock or
other securities or property, if any, of PSINet or of the successor Person
resulting from such Merger or Other Reorganization Event to which a holder of
such number of shares of Common Stock as is equal to the number of Additional
Shares that would otherwise be deliverable pursuant to Section 3.5(a) would
have been entitled to receive in connection with such Merger or Other
Reorganization Event. In any such case, appropriate provisions shall be made
with respect to the rights of IXC under this Section 3.5 in connection with the
Merger or Other Reorganization Event to the end that the provisions of this
Section 3.5 shall thereafter be applicable, as nearly as may be, with respect
to any shares of Successor Stock, securities or property that may be
deliverable thereafter upon the Additional Shares Determination Date or the
Additional Shares Acceleration Date, as applicable.
3.6 Tax Reporting. The parties acknowledge that PSINet's
issuance of IXC Shares under this Agreement will be a taxable payment for
income tax purposes and not part of a tax-free acquisition for income tax
purposes and not part of a tax-free reorganization, tax-
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<PAGE> 12
free incorporation or other tax-free transaction for income tax purposes, and
that PSINet's tax acquisition cost and IXC's gross receipts for federal income
tax purposes with respect to PSINet's payments under this Agreement will be
equal to the value of the IXC Shares upon issuance, together with the cash or
other payments, if any, under Section 3.5. The parties shall report such
issuance of IXC Shares and such cash or other payments, if any, consistent with
the prior sentence in connection with the determination of their income,
franchise or other taxes measured by net income.
SECTION 4. ORDERING BANDWIDTH
4.1 Type of Bandwidth. Subject to the terms and
conditions of this Agreement, PSINet may order Bandwidth in increments from
OC-12 to OC-48 along any portion of the Available System. PSINet may order
DS-3's or OC-3's on the Available System or DS-3's on Barter Capacity (in
either case, subject to the capacity limitations set forth herein), but shall
be obligated to pay the multiplexing fees set forth herein (except on the
Barter Capacity). IXC will use good faith efforts to provision DS-3's on the
Barter Capacity subject to availability and subject to IXC's use for its own
network requirements. Furthermore, IXC will cause IXC Carrier to provide
off-net capacity such as DS-1's and greater, pursuant to the Digital Service
Agreement dated as of December 23, 1994, as amended, between IXC Carrier and
PSINet, as the exhibits thereto shall be revised by IXC Carrier from time to
time, on the same payment terms and subject to the same material conditions by
which IXC acquires such capacity (including the cost thereof, including,
without limitation, third party cross-connect fees, if any) plus an
administrative fee (payable once per circuit) in the amount of * per
circuit. PSINet, at its option and subject to availability, may order other
associated services as and at such rates as set forth on Exhibit E hereto. The
rates for such associated services are subject to change by IXC upon 30 days'
notice.
4.2 Ordering Bandwidth. If ordered by PSINet, IXC will
make Available to PSINet at least 10,000 OC-12 Equivalent Miles in each
Six-Month Period. To order Bandwidth on the Available System, PSINet shall
submit a completed, dated and signed Bandwidth Order to IXC. IXC will then
accept or reject the Bandwidth Order within 45 days following the date of the
Bandwidth Order by returning the countersigned Bandwidth Order to PSINet or
setting forth the reason for the rejection on the returned Bandwidth Order. In
accepting a Bandwidth Order, IXC may change the Requested Delivery Date as
reasonably necessary to ensure timely delivery. PSINet shall specify a
Requested Delivery Date in each Bandwidth Order. The sole reasons for
rejection of a Bandwidth Order (other than for Barter Capacity, which is
subject to the conditions set forth above) are (i) the Bandwidth Order pertains
to a portion of the Available System that has not yet been completed, (ii) IXC
shall have provided PSINet with 10,000 OC-12 Equivalent Miles during the
applicable Six-Month Period, (iii) IXC shall have provided PSINet with 10,000
OC-48 Equivalent Miles in the aggregate, or (iv) PSINet shall have been
determined to be in default of a Material Provision pursuant to arbitration
proceedings conducted under Section 19.14(b) and such default remains uncured.
In the event PSINet orders less than 10,000 OC-12 Equivalent Miles over the
Available System during any Six-Month Period, IXC, at its option, can require
that PSINet order Primary Additional Bandwidth (as defined), as Available, so
that up to a total of 10,000 OC-12 Equivalent Miles are ordered during the
Six-Month Period. "Primary Additional
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
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Bandwidth" shall mean the Bandwidth, if any, Available to PSINet on a Major
Route (as defined), which, together with the Bandwidth, if any, already being
used on the route by PSINet, adds up to one OC-48 Equivalent. *
shall mean any route between two metropolitan statistical areas with
populations of at least * . On or before the date 41 months after the Closing,
IXC shall give notice to PSINet of which portions of the Available System will
be Available by the date four years after the Closing and PSINet shall order, on
or before the date 42 months after the Closing, and IXC shall make Available,
Bandwidth so that, at the fourth anniversary of the Closing, PSINet's total
capacity (as measured in OC-48 Equivalent Miles) in use hereunder will be at
least equal to the smaller of: (i) twice the total length of the Available
System at that date or (ii) 10,000.
4.3 Bandwidth Delivery. IXC will use commercially
reasonable efforts to make the requested Bandwidth Available to PSINet by the
Requested Delivery Date. Within five business days of the date on which
Bandwidth is made Available to PSINet, PSINet shall test it in accordance with
the standards set forth in Exhibit F hereto. * IXC will notify PSINet as
quickly as reasonably practicable upon learning of any circumstances that will
cause a delay in delivery of capacity beyond the Requested Delivery Date. In
the event of a late delivery, IXC will use commercially reasonable efforts to
assist PSINet in obtaining temporary replacement capacity.
4.4 Existing Arrangements. As soon as practicable after
the Closing Date, but in no event later than 30 days thereafter, IXC shall, and
shall cause its Affiliates to, deliver any On-net or Barter Capacity bandwidth
leased by PSINet from IXC or any Affiliate immediately prior to Closing,
collocation in the POP's and related cross-connects (but only those
cross-connects within the Available System) and interconnect facilities with
IXC existing at the Closing, to be transferred to and covered by this
Agreement. Bandwidth on order at the Closing Date will also be covered by this
Agreement, including, without limitation this Section 4.4. Furthermore, with
respect to off-net bandwidth leased or on order prior to the Closing, IXC will
use commercially reasonable best efforts to provide such bandwidth On-net if
and when the Available System covers the applicable routes of such off-net
bandwidth. This transfer will be without penalty and without credit for prior
payments, so that all payments for such bandwidth and facilities for the period
commencing on the Closing Date will cease as of such transfer, provided,
however, that maintenance fees as set forth in Section 8.3 will apply to such
bandwidth. Multiplexing charges as set forth herein will not apply to any
bandwidth so transferred unless and until PSINet reconfigures such bandwidth
concurrently with such transfer or, with respect to a particular route, PSINet
orders OC-12 capacity on such route.
8
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 14
4.5 Bandwidth Forecasts. Attached as Exhibit G hereto is
PSINet's good faith, non-binding three-year forecast of the anticipated amount
of Bandwidth that will be required by PSINet under this Agreement, which good
faith, non- binding forecast shall be updated by PSINet quarterly and delivered
to IXC by no later than the 20th day following the end of each calendar
quarter.
4.6 Initial Order. Effective upon the Closing, IXC
accepts the Bandwidth Orders attached hereto as Exhibit G-1 as PSINet's initial
Bandwidth Orders for the Requested Delivery dates specified therein.
SECTION 5. OTHER SERVICES
5.1 Multiplexing. In the event PSINet requires capacity
in units other than OC-48 or OC-12 (for example, an OC-3 or DS-3) it will pay
IXC's fees for multiplexing as set forth in Exhibit H hereto (except as set
forth in the last sentence of Section 2.3). PSINet will also pay IXC's fees
for multiplexing for Barter Capacity DS-3's. IXC may change its fees for
multiplexing at any time in its sole and absolute discretion; provided,
however, that such changed fees will only be effective against PSINet on the
tenth business day after PSINet's receipt of written notice from IXC of such
changed fees.
5.2 Reconfiguration. During the first four years of this
Agreement (or until one year after the Delivery Completion Date, whichever
comes first), PSINet can Reconfigure Bandwidth. PSINet will pay IXC's fee for
reconfiguration as set forth on Exhibit I hereto, which shall include a fee for
reconfiguring from OC-12 to OC-48 or for moving an OC-48. IXC may change its
fees for reconfiguration at any time in its sole and absolute discretion;
provided, however, that such changed fees will only be effective against PSINet
on the tenth business day after PSINet's receipt of written notice from IXC of
such changed fees. In the event of a reconfiguration that leaves OC-12
equipment (for which PSINet has previously paid a multiplexing or
reconfiguration charge) which is not being utilized, IXC will either (i)
utilize the equipment elsewhere for PSINet's capacity (without charging a
multiplexing fee for such OC-12), (ii) deliver the OC-12 equipment to PSINet,
or (iii) purchase the equipment from PSINet at a mutually agreeable price.
SECTION 6. TERM OF AGREEMENT
6.1 Term of the Agreement. This Agreement shall commence
on the Closing Date and shall automatically terminate upon the termination of
the last-to-expire term of the Bandwidth delivered hereunder (the "Term").
SECTION 7. PAYMENT, CPI AND DEFAULT
7.1 Payment. PSINet agrees to pay IXC in advance, as
billed by IXC, each month during the Term, all fees and other charges payable
hereunder for such month, for maintenance, off-net capacity, multiplexing and
add/drops. PSINet agrees to pay IXC in
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<PAGE> 15
arrears, as billed by IXC, each month all fees and other charges payable
hereunder for such months for other services, including for reconfiguration.
7.2 Late Payment. IXC invoices for amounts payable
hereunder shall be due within 30 days of the date of invoice. If a dispute
arises as to any portion of an invoice, PSINet shall pay the undisputed amount
of such invoice when due and shall notify IXC in writing of the disputed amount
no later than 30 days from the date of invoice. The IXC Authorized
Representative and the PSINet Authorized Representative will first attempt in
good faith to promptly resolve the dispute. If the matter has not been
resolved by the IXC Authorized Representative and the PSINet Authorized
Representative within 14 days after PSINet' notice, or if either party will not
agree to meet within such 14-day period, the matter will be referred to the
Chief Executive Officer of IXC and the Chief Executive Officer of PSINet, who
will attempt in good faith to promptly resolve the dispute. If the dispute has
not been resolved by the Chief Executive Officer of IXC and the Chief Executive
Officer of PSINet within an additional 14-day period, or if either party will
not agree to meet within such 14-day period, then the dispute shall be
submitted to arbitration pursuant to Section 19.14. In any such arbitration,
the prevailing party shall be awarded such party's costs and expenses incurred
in bringing such action.
In the event that any payment remains unpaid after its due
date, such payment shall be subject to an interest charge equal to the lesser
of one and one-half percent of the unpaid balance per month or the maximum rate
allowed under applicable state law and, if a payment shall not have been paid
in full within five business days of the applicable due date when no bona fide
dispute exists, IXC may, without any liability to PSINet, at its option,
suspend the provision of maintenance and other services hereunder until such
payment is made in full. Notwithstanding anything herein to the contrary, in
no event shall IXC have the right to terminate, modify or otherwise affect its
grant to PSINet of, or PSINet's right, title and interest in, the IRU Capacity
and the PSINet Fiber IRU.
7.3 CPI. In addition to any other adjustment permitted
or contemplated herein, IXC has the right to make adjustments to the fees and
charges hereunder on each anniversary of the expiration of the Closing Date
(the "Adjustment Date") by multiplying the applicable fee or charge for the
immediately preceding twelve (12) month period (the "Prior Period") by a factor
equal to one (1) plus or minus the decimal equivalent of the total percentage
change, if any, in the U.S. Department of Labor Price Index for Urban
Consumers, All Items, 1982-84 = 100 for the period from three (3) months prior
to the commencement of such Prior Period to three (3) months prior to the
Adjustment Date. IXC shall deliver to PSINet prior to each Adjustment Date
notice of the adjustment in the applicable fee or charge, setting forth the
calculation of such adjustment.
7.4 Default/Termination.
(a) A party may deliver to the other party a
written "Notice of Default" for: (i) failing to make any payment owed
hereunder, when no bona fide dispute exists (a "Monetary Default"); or (ii) the
breaching by either party or its agents, assigns or affiliates of any Material
Provision; or (iii) the filing or initiating of proceedings by or against a
party seeking liquidation, reorganization or other such relief under any
federal or state
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<PAGE> 16
bankruptcy or insolvency law (a "Bankruptcy Proceeding"). Such Notice of
Default must prominently contain the following sentences in capital letters:
"THIS IS A FORMAL NOTICE OF A BREACH OF CONTRACT. FAILURE TO CURE SUCH BREACH
WILL HAVE SIGNIFICANT LEGAL CONSEQUENCES." A party that has received a Notice
of Default shall have five (5) business days to cure a Monetary Default, thirty
(30) days to cure the alleged breach of any other Material Provision (other
than Section 15.8(a) or the Standstill Agreement, which shall be required to be
cured upon demand by PSINet, provided, however, that IXC Communications, Inc.
and/or IXC shall have five (5) business days to cure a nonintentional breach of
clause (vi) of Section 15.8(a) or clause (vi) of Section 2 of the Standstill
Agreement) and, if the defaulting party shall have commenced actions in good
faith to cure such defaults which are not susceptible of being cured during
such 30-day period, such period shall be extended (but not in excess of 90
additional days) while such party continues such actions to cure, and shall be
given ninety (90) days to remove, have dismissed or stay any involuntary
Bankruptcy Proceeding (each such cure period, a "Cure Period"). If such party
fails to cure the breach within the applicable Cure Period or, in the case of
Section 15.8(a) (other than clause (vi) thereof) or the Standstill Agreement
(other than clause (vi) of Section 2 thereof), upon demand by PSINet, as long
as such default shall be continuing, the non-defaulting party shall have the
right to either (a) suspend its performance or payment obligations under this
Agreement and/or any of the Transaction Documents (other than obligations under
Section 15.8(a) and the Standstill Agreement), (b) seek an order of specific
performance or, in the case of a breach of Section 15.8(a) or the Standstill
Agreement, specific performance, injunctive relief or other equitable remedy,
and/or (c) seek the award of compensatory damages. Notwithstanding anything
herein to the contrary, in no event, shall IXC have the right to terminate,
modify or otherwise affect its grant to PSINet of, or PSINet's right, title and
interest in, the IRU Capacity and the PSINet Fiber IRU, provided, however,
that, during the continuance of any breach (as determined by an arbitration
pursuant to Section 19.14) by PSINet of a Material Provision, IXC shall have
the rights set forth in the preceding sentence with respect to matters other
than those affecting PSINet's right, title or interest in the IRU capacity or
the PSINet Fiber IRU; such IXC rights to include, without limitation, the right
to disconnect PSINet's access, and to suspend performance of its obligations
hereunder to allow PSINet access, to IXC's POPs, the IXC Fibers, electronics,
and optronics (whether by way of direct connection, interconnection, or other
means), and the right to suspend maintenance. In the event IXC does not allow
PSINet access to IXC's POPs as set forth in the preceding sentence, IXC will
allow PSINet, upon reasonable notice, to remove PSINet's equipment and any
equipment leased to PSINet or provided by a third party to PSINet from the
POPs.
(b) In the event of, and during the continuance
of, a breach by IXC of any Material Provision (subject to the last sentence of
this section), so long as PSINet shall not have been determined pursuant to
arbitration proceedings conducted under Section 19.14(b) to be in breach of a
Material Provision hereunder which remains continuing, PSINet shall be entitled
to engage an Approved Subcontractor to access the Maintainable Equipment (as
defined) in IXC's POPs as reasonably necessary to assure its continued
uninterrupted use of the PSINet Fiber IRU and the IRU in the IRU Capacity
granted to PSINet hereunder. Such access shall be subject to applicable
rights-of-way and lessor rights; provided, however, that in the event PSINet
exercises its rights pursuant to this Section 7.4(b), IXC shall use reasonable
efforts to obtain any necessary third party consents to such access.
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<PAGE> 17
Such access is referred to as the "Access Right." PSINet shall use its best
efforts to assure that no damage is caused to IXC's equipment, fibers or
systems in connection with such maintenance and access. IXC shall use its
commercially reasonable best efforts to assure that the applicable
rights-of-way and lessors' rights are maintained and exercised at all times in
a manner consistent with PSINet's ability pursuant to this Section 7.4(b) to
access all relevant premises to install and/or maintain equipment associated
with or to be associated with the PSINet Fiber IRU or the IRU in the IRU
Capacity granted to PSINet hereunder. Notwithstanding the foregoing, however,
PSINet shall have no rights under this Section 7.4(b) by reason of an IXC
Bankruptcy Proceeding if IXC is not also at such time in breach of a Material
Provision.
SECTION 8. SYSTEM MAINTENANCE AND POPs
8.1 Maintenance. IXC shall provide all maintenance and
repair functions on the Available System as well as on the optical and
electronic equipment owned or leased by IXC used to provide the Bandwidth. IXC
agrees it will provide all maintenance and repair functions in the same manner
and with at least the same degree of care and timeliness utilized by IXC or IXC
Communications with respect to other portions of their telecommunications
systems, but at no time shall such maintenance and repair functions be
conducted in a manner which does not equal or exceed that which is normal and
customary in the telecommunications industry.
8.2 Repair or Replacement. In the event that all or any
part of the Available System or optical or electronic equipment owned by IXC
requires replacement during the term of this Agreement, such replacement shall
be on a timely basis, and at the expense of IXC. This replacement will be
scheduled at IXC's reasonable discretion upon adequate notice to PSINet or at
PSINet's reasonable request.
8.3 Consideration. In consideration of IXC's maintenance
obligations hereunder, PSINet shall pay IXC a monthly fee of * per OC-12
Equivalent Mile per month (on lower capacity, * per DS-3 Mile per month)
for each OC-12 (or its equivalent) provided by IXC to PSINet hereunder.
8.4 POPs. PSINet may only interconnect to IXC Fibers to
utilize the IRU Capacity at IXC's POPs. IXC shall provide PSINet with the
applicable Bandwidth only between IXC's POPs and IXC shall provide POP space to
PSINet (including, without limitation, cabinet space for equipment), all as set
forth in the Collocation Agreement. PSINet's right to occupy any POP will
expire upon the earlier of: (i) 20 years after the first date of occupancy in
such POP or (ii) the termination of the last Bandwidth Unit which terminates in
such POP. PSINet shall pay for all costs associated with connecting its system
and POPs to IXC's POPs. IXC will allow PSINet light-to-light and
copper-to-copper connections within IXC's POPs so that PSINet, at its own
expense, can make interconnections to its own POPs. Notwithstanding the
foregoing, if necessary, and where applicable, IXC shall use commercially
reasonable efforts to provide PSINet, at PSINet's expense, access to existing
building entrance facilities, if available, to access and exit IXC POPs.
PSINet will pay IXC time and material agreed upon on a case by case basis for:
(a) equipment
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
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<PAGE> 18
installation and tech-assists and (b) for build-outs for power, cabling and
HVAC for PSINet's needs in excess of * cabinet spaces in the applicable POP.
Interconnect facilities to interconnect to other parties within IXC's POPs
shall be installed and maintained under the terms and conditions that are
specified in the Collocation Agreement.
8.5 Other Party's Equipment. IXC shall be required to
exercise reasonable care with respect to any equipment located in any of IXC's
POPs or any portion or component thereof. IXC shall promptly notify PSINet of
any matters pertaining to damage or impending damage, or loss of any portion of
the Available System that are known to it, which may adversely affect PSINet's
use of the PSINet IRU or the IRU Capacity.
SECTION 9. INDEMNIFICATION.
9.1 Indemnification Obligations. IXC and PSINet
(hereinafter where either has undertaken the action or inaction to be
indemnified against shall be known as the "Indemnifying Party") agree to assume
all liability for and indemnify, defend and hold harmless the other party or
any third party claiming through the other party, from and against all
liability, loss, cost, damage, expense or cause of action, of whatsoever
character, or injury or death of any person and damage to or destruction of any
property, including, without limitation, third parties and all related
expenses, including, but not limited to, reasonable attorneys' fees,
investigators' fees and litigation expenses and costs of enforcing this Section
9 arising out of or relating to, in whole or in part, any of the following:
(i) claims for libel, slander, infringement of copyright
or unauthorized use of a trade secret, trade name or
service mark that results from the transmission of
material over the Available System by the
Indemnifying Party, authorized representatives of the
Indemnifying Party or other persons not associated
with, or related to, either IXC or PSINet; or
(ii) claims of any person not a party to this Agreement
arising out of the negligent or willful act or
omission of the Indemnifying Party or its agents,
servants, employees, contractors or representatives
(other than IXC, if PSINet is the Indemnifying Party,
or PSINet, if IXC is the Indemnifying Party); or
(iii) claims for patent infringement arising out of the use
of the Available System by the Indemnifying Party or
any person authorized by the Indemnifying Party or
resulting from the acts of the Indemnifying Party or
the Indemnifying Party's representatives in combining
the Available System with the facilities of the
Indemnifying Party or others, or using the Available
System either alone or in connection with that of the
Indemnifying Party or others; or
(iv) claims, except as otherwise set forth herein, for the
material breach of or failure to comply, in any
material respect, with any term or condition of this
Agreement by the Indemnifying Party or its officers,
employees or invitees; or
13
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 19
(v) claims resulting from patent or trade secret
infringement or infringement or unauthorized use of
trade secrets or trade name by the Indemnifying Party
in connection with this Agreement;
PROVIDED, HOWEVER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER (OR TO ANY THIRD PARTY CLAIMING THROUGH SUCH OTHER PARTY) FOR
CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, AND THE FOREGOING
INDEMNITIES SHALL NOT APPLY WITH RESPECT TO SUCH DAMAGES.
9.2 Notice of Indemnification. Upon receipt by the
Indemnifying Party of a notice from the other party with respect to any claim
of a third party against the other party, the Indemnifying Party shall, within
30 days of the mailing of the other party's notice setting forth such request
for indemnification, either (i) agree in writing to assume the defense of such
third party claim, or (ii) provide the other party with written notice setting
forth the basis for such objection in reasonable detail. In the event the
Indemnifying Party fails to respond to the other party's written request within
such 30 day period, the other party's right to indemnification, as set forth in
the other party's notice, shall be deemed agreed to by the Indemnifying Party.
In the event the Indemnifying Party timely objects to the other party's request
for indemnification, the dispute shall be settled in accordance with the
procedures set forth in Section 7.2, above.
9.3 Defense Obligations. In the event it is determined
that the Indemnifying Party is required to indemnify the other party, the
Indemnifying Party shall assume the defense of such claim with counsel
reasonably satisfactory to the other party, and the other party shall cooperate
to the extent reasonably requested by the Indemnifying Party in defense or
prosecution thereof. If the Indemnifying Party has agreed to indemnify the
other party and has assumed the defense of any such third party claim, the
other party shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the other
party, and the Indemnifying Party shall have the right to settle any claim for
which indemnification has been sought and is available hereunder; provided,
however, that, to the extent that such settlement requires the other party to
take, or prohibits the other party from taking, any action or purports to
obligate the other party, then the Indemnifying Party shall not settle such
claim without the prior written consent of the other party, which shall not be
unreasonably withheld, delayed or conditioned. If the Indemnifying Party does
not assume the defense of any third party claim for which it is obligated to
provide indemnification hereunder, the other party may assume control of the
defense of such claim through counsel of its choice at the Indemnifying Party's
expense and shall have control over the litigation and authority to resolve
such claim. If action is required to be taken with respect to any third party
claim prior to the determination of the Indemnifying Party's obligations
hereunder, the other party may assume control of the defense of such claim
through counsel of its choice until such time as the Indemnifying Party's
obligations hereunder are determined; provided, however, that the Indemnifying
Party shall not be liable hereunder for any settlement of such claim without
the Indemnifying Party's prior written consent unless and until it is
determined that the Indemnifying Party is obligated hereunder to provide
indemnification with respect thereto and refuses or fails to assume the defense
of such claim.
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SECTION 10. ADMINISTRATION OF AGREEMENT
10.1 Representatives. Within 30 days after the Closing
Date, IXC and PSINet shall each designate, by written notice to the other
party, a representative (each, an "Authorized Representative") who is
authorized to act on the respective party's behalf with respect to those
matters delegated to the Authorized Representative. Each party may designate
an alternate representative with full authority to act in the absence of the
Authorized Representative. Each party shall have the right to change its
Authorized Representative or alternative by written notice to the other party.
10.2 Responsibilities. The Authorized Representatives
shall provide liaison between the parties in order to provide effective
cooperation, exchange of information and consultation on a prompt and orderly
manner concerning the various matters which may arise, from time to time, in
connection with this Agreement. In addition, the Authorized Representatives
shall have the following responsibilities, among others:
1. Perform those functions and duties assigned
to them in this Agreement;
2. Review and attempt to resolve any disputes
between the parties arising under this Agreement. Should the Authorized
Representatives be unable to resolve a dispute, the matter shall be resolved in
accordance with the provisions of Section 19.14, below; and
3. Arrange for the development and completion of
procedures to implement the provisions of this Agreement.
10.3 Form of Actions. All actions, agreements,
resolutions, determinations or reports made by the Authorized Representatives
shall be in writing and shall become effective when signed by both Authorized
Representatives.
10.4 Fees and Expenses. Any and all fees and expenses
incurred by an Authorized Representative in connection with his or her duties
shall be paid by the party he or she represents.
SECTION 11. FORCE MAJEURE
Notwithstanding any provision in this Agreement to the
contrary, neither party shall be liable to the other for any failure of
performance under this Agreement (except with respect to payment or other
monetary obligations or as otherwise specifically set forth herein) due to
causes beyond the reasonable control of a party, including, by way of
illustration and not limitation, acts of God, flood, fire, explosion, storm,
acts of public enemies, insurrection, war, national emergency, riots, strikes,
labor disputes, disturbances, lockouts, labor or material shortages (not
resulting from the responsible party's failure to place reasonable orders
therefor), breakdown of or damage to plants or equipment or facilities (other
than arising out of the neglect or mishandling by such party), failure of a
supplier to supply necessary
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<PAGE> 21
materials or equipment or labor in a timely manner (including warranty
replacements), destruction of property, embargoes, boycotts, governmental
legislation or regulations, orders or acts of civil or military authorities,
governmental acts, or orders of courts or administrative agencies. Any party
excused from performance pursuant to this Section 11 shall use commercially
reasonable efforts to minimize the time during which such performance is
excused pursuant to this Section 11.
SECTION 12. LIMITATION OF LIABILITY; INDEMNIFICATION
12.1 Limitation of Liability. Except for direct damages
otherwise specifically provided for in this Agreement, in no event shall IXC or
PSINet be liable for any special, incidental, direct, indirect, punitive,
reliance or consequential damages, whether foreseeable or not, arising under
this Agreement or from any breach or partial breach of the provisions of this
Agreement or occasioned by any defect in the Bandwidth or other service
provided hereunder, delay in availability of the Bandwidth or any service
provided hereunder, failure of the Bandwidth or other service provided
hereunder, interruptions or outages of the Available System or any other cause
whatsoever or arising out of any act or omission by IXC or PSINet, as
applicable, its employees, servants and/or agents, including but not limited
to, damage or loss of property or equipment, loss of profits or revenue, cost
of capital, cost of replacement services, or claims of customers for service
interruptions or transmission problems.
12.2 Release; Indemnification. Each party (each party in
such capacity being referred to as the "Releasing Party") releases, assumes and
agrees to indemnify, defend, protect and save the other party harmless from and
against any claim, damage, loss, liability, cost and expense (including
reasonable attorneys' fees) in connection with any loss or damage to any
physical property or facilities of the Releasing Party or any injury to or
death of any person arising out of or resulting in any way from the negligence
or misconduct of the Releasing Party or its employees, servants, contractors
and/or agents.
SECTION 13. REPRESENTATIONS AND WARRANTIES OF PSINet
PSINet represents and warrants to IXC that, except as set
forth in the PSINet Disclosure Schedule set forth as Exhibit L hereto, as of
the date hereof and as of the Closing Date, except where a representation and
warranty is made as of a specified date, in which case it is made as of such
date:
13.1 Organization. On the date hereof PSINet is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York. On the Closing Date, PSINet, as merged into
Newco, will be a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. PSINet is qualified to do
business as a foreign corporation in each jurisdiction in which such
qualification is required except in those jurisdictions where the failure to be
so qualified would not have a Material Adverse Effect on PSINet and its
subsidiaries taken as a whole. PSINet has delivered to IXC true and correct
copies of its Certificate of Incorporation and
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<PAGE> 22
Bylaws and, prior to the Closing, will deliver true and correct copies of
Newco's Certificate of Incorporation (which does not include the documents
required to effect the Reincorporation) and Bylaws in substantially the form as
set forth as Exhibit J hereto (with such changes thereto as may be required in
order for such Certificate of Incorporation and Bylaws to comply with Delaware
General Corporation Law while providing the parties with substantially
equivalent economic benefits as provided therein).
13.2 Authorization. The execution, delivery and
performance of this Agreement and the Transaction Documents to which PSINet is
or will be a party has been or, on the Closing Date, will be, duly authorized
by all necessary corporate action on the part of PSINet. This Agreement and
the Transaction Documents to which PSINet is or will be a party are or, when
executed and delivered, will be valid and binding obligations of PSINet,
enforceable against PSINet in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency or other laws relating
to or affecting creditors' rights generally and the exercise of judicial
discretion in accordance with general equitable principles. Except as set
forth in Section 13.2 of the PSINet Disclosure Schedule, no material consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority is required of PSINet in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
13.3 Shares. Upon the issuance of the IXC Initial Common
Shares on the Closing Date in accordance with this Agreement, the IXC Initial
Common Shares will be duly authorized, validly issued, fully paid and
nonassessable. Upon the issuance, if any, of the Additional Shares, the
Additional Shares will be duly authorized, validly issued, fully paid and
nonassessable.
13.4 Capitalization. As of the date of this Agreement,
the authorized capital stock of PSINet consists of 100,000,000 shares of Common
Stock, $.01 par value per share, 29,000,000 shares of undesignated Preferred
Stock, $.01 par value per share, and 1,000,000 shares of Series A Junior
Participating Preferred Stock, $.01 par value per share, of which approximately
40,397,876 shares of Common Stock are issued and outstanding, 99,556 shares of
Common Stock are held as treasury shares and no shares of Preferred Stock are
issued or outstanding. Upon the Closing Date, after giving effect to the
Reincorporation, the authorized capital stock of Newco will be as set forth in
Section 13.4 of the PSINet Disclosure Schedule and each share of Common Stock
of PSINet issued and outstanding on the date hereof will have been exchanged
for one share of Common Stock of Newco. Except as set forth on the PSINet
Disclosure Schedule, as of the date of this Agreement, there is not outstanding
any subscription, option, warrant, call, right or other agreement or commitment
obligating PSINet to issue, sell, deliver or transfer (including any right of
conversion or exchange under any outstanding security or other instrument) any
shares of Common Stock or any other shares of capital stock of PSINet. PSINet
does not have outstanding any bonds, debentures, notes or other obligations,
under the terms of which the holders of which have the rights to vote with the
shareholders of PSINet.
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13.5 PSINet Filings; No Material Adverse Change. Neither
PSINet's Annual Report on Form 10-K for the year ended December 31, 1996 nor
any other of PSINet's periodic reports filed with the U.S. Securities and
Exchange Commission (the "Commission") pursuant to the 1934 Act on or after
March 31, 1997 (each, a "PSINet Filing"), taken as a whole, as of the date of
filing thereof, contained any untrue statement of material facts or omitted to
state any material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such
statements were made. PSINet used reasonable efforts, in good faith, to comply
in all material respects with the requirements of the Commission as to the
contents of such filings. Such PSINet Filings, when they were filed with the
Commission, conformed as to form in all material respects to the requirements
of the 1934 Act and the rules and regulations of the Commission thereunder.
Except as disclosed by PSINet in public announcements or otherwise set forth in
the PSINet Disclosure Schedule, there has been no material and adverse change
to the business, financial condition or results of operation of PSINet and its
subsidiaries taken as a whole since the date of the most recent PSINet Filing.
13.6 Effect of Transactions. Except as set forth in
Section 13.6 of the PSINet Disclosure Schedule, the execution, delivery and
performance by PSINet of this Agreement and the Transaction Documents to which
PSINet is a party and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in any default or require the
consent of any person or entity under the Articles or Certificate of
Incorporation, By-laws or any material agreement of PSINet, or result in the
creation of any lien, charge or encumbrance of any nature upon any of the
properties or assets of PSINet except pursuant to this Agreement. The
execution, delivery and performance of this Agreement by PSINet will not
violate, in any material respect, any judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency applicable to
PSINet or to which PSINet is a party.
13.7 Litigation. Except as disclosed in Section 13.7 of
the PSINet Disclosure Schedule, there is no litigation or governmental
proceeding or investigation pending or, to the knowledge of PSINet, threatened
against PSINet which (i) may call into question the validity or hinder the
enforceability or the performance of this Agreement, the Transaction Documents
to which PSINet is a party or the transactions contemplated hereby and thereby,
or (ii) could reasonably be expected to give rise to a Material Adverse Effect
on PSINet and its subsidiaries taken as a whole.
13.8 Brokers. Except for the fees of Merrill Lynch & Co.
in connection with any fairness or valuation opinions to be provided by it to
PSINet as contemplated by this Agreement, no broker, finder, agent or similar
intermediary has acted on behalf of PSINet in connection with this Agreement or
the transactions contemplated hereby, and there are no brokerage commissions,
finder's fees or similar fees or commissions payable by PSINet in connection
with this Agreement or the transactions contemplated hereby.
13.9 No Other Agreements To Sell. Except as set forth in
this Agreement or as disclosed in Section 13.9 of the PSINet Disclosure
Schedule, neither PSINet nor any of its subsidiaries has any commitment to (i)
sell, assign or transfer a material portion of the assets or capital stock of
PSINet or an Affiliate, (ii) to effect any merger, consolidation or other
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reorganization of PSINet or an Affiliate that could affect the transactions
contemplated by this Agreement, or (iii) to enter into any agreement with
respect to any of the foregoing.
13.10 Full Disclosure. No representation, warranty or
other statement of PSINet contained in this Agreement, or any other document or
certificate delivered at Closing or, to PSINet's knowledge, other written
statement furnished to IXC in connection with the transactions contemplated by
this Agreement (other than any interim financial statements of PSINet not filed
with the Securities and Exchange Commission) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein relating to this Agreement and the
transactions contemplated hereby or to the business or financial condition of
PSINet not materially misleading when taken as a whole in the light of the
circumstances under which they were made. There is no fact known to PSINet
which could reasonably be expected to have, in light of the circumstances in
which it is made, a Material Adverse Effect on PSINet and its subsidiaries,
taken as a whole, that has not been disclosed herein or in such other
documents, certificates and statements furnished to IXC for use in connection
with the transactions contemplated hereby. All interim financial statements
furnished by PSINet to IXC in connection with this Agreement were prepared in
good faith.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET
FORTH IN THIS SECTION 13, PSINET MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND PSINET EXPRESSLY
DISCLAIMS AND EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND.
SECTION 14. REPRESENTATIONS AND WARRANTIES OF IXC
IXC hereby represents and warrants to PSINet that, except as
set forth in the IXC Disclosure Schedule set forth as Exhibit M hereto, as of
the date hereof and as of the Closing Date, except where a representation and
warranty is made as of a specified date, in which case it is made as of such
date:
14.1 Organization. IXC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is qualified to do business as a foreign corporation in each jurisdiction
in which such qualification is required except in those jurisdictions where the
failure to be so qualified would not have a Material Adverse Effect on IXC and
its subsidiaries taken as a whole.
14.2 Authorization. The execution, delivery and
performance of this Agreement, the Transaction Documents to which IXC is or
will be a party and the Contribution Agreement have been duly authorized by all
necessary corporate action on the part of IXC and IXC Carrier, as applicable.
This Agreement, the Transaction Documents to which IXC is or will be a party,
and the Contribution Agreement are or, when executed and delivered, will be
valid and binding obligations of IXC and IXC Carrier, as applicable,
enforceable against IXC or IXC Carrier, as applicable, in accordance with their
terms, except
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as such enforceability may be limited by bankruptcy, insolvency or other laws
relating to or affecting creditors' rights generally and the exercise of
judicial discretion in accordance with general equitable principles. Except as
set forth in Section 14.2 of the IXC Disclosure Schedule, no consent, approval
or authorization of, or designation, declaration or filing with, any
governmental authority is required of IXC or IXC Carrier, as applicable, in
connection with the execution, delivery and performance of this Agreement, the
Transaction Documents to which IXC is or will be a party, and the Contribution
Agreement by IXC or IXC Carrier, as applicable, or the performance or
consummation of any other transaction contemplated hereby or thereby.
14.3 Effect of Transactions. Except as set forth in
Section 14.3 of the IXC Disclosure Schedule, the execution and delivery of this
Agreement, the Transaction Documents to which IXC is or will be a party, and
the Contribution Agreement by IXC and IXC Carrier, as applicable, and the
performance by IXC and IXC Carrier, as applicable, of the transactions
contemplated hereby and thereby will not conflict with or result in any default
or require the consent of any person or entity under the Certificate of
Incorporation, By-laws or any material agreement of IXC or IXC Carrier, as
applicable, or result in the creation of any lien, charge or encumbrance of any
nature upon any of the properties or assets of IXC except pursuant to this
Agreement. The execution and delivery of this Agreement, the Transaction
Documents to which IXC is or will be a party, and the Contribution Agreement by
IXC or IXC Carrier, as applicable, and the performance by IXC and IXC Carrier,
as applicable, of the transactions contemplated hereby and thereby will not
violate, in any material respect, any judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency applicable to
IXC or IXC Carrier, as applicable, is a party.
14.4 Litigation. Except as set forth in Section 14.4 of
the IXC Disclosure Schedule, there is no litigation or governmental proceeding
or investigation pending or, to the knowledge of IXC, threatened against IXC or
IXC Carrier which (i) may call into question the validity or hinder the
enforceability or performance of this Agreement, the Transaction Documents to
which IXC or IXC Carrier is a party or the transactions contemplated hereby or
thereby or (ii) could reasonably be expected to give rise to a Material Adverse
Effect on IXC and its subsidiaries taken as a whole or IXC Carrier.
14.5 Brokers. No broker, finder, agent or similar
intermediary has acted on behalf of IXC or any of its Affiliates in connection
with this Agreement or the transactions contemplated hereby and, there are no
brokerage commissions, finder's fees or similar fees or commissions payable by
IXC or any of its Affiliates in connection with this Agreement or the
transactions contemplated hereby.
14.6 Investment Representations.
(a) IXC (i) has received and reviewed this
Agreement, including all schedules and exhibits hereto and the PSINet
Disclosure Schedule, and has had the opportunity to review the PSINet Filings,
the Certificate of Incorporation, as amended, and By-laws of PSINet, PSINet's
preferred stock purchase rights plan and the proposed Certificate of
Incorporation and By-laws of Newco which are proposed to be in effect on the
Closing Date and (ii) has had the opportunity to ask questions of, and has
received answers from,
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PSINet concerning the transactions contemplated hereby and to obtain additional
information which PSINet possesses or could acquire without unreasonable effort
or expense.
(b) IXC is acquiring or will acquire, as the case
may be, the IXC Shares (collectively the "Acquired Shares") for its own
account, for investment, and not with a view to any resale or "distribution"
thereof within the meaning of the Securities Act. IXC was not formed or
organized for the purpose of acquiring the Acquired Shares.
(c) IXC understands that because the Acquired
Shares have not been and will not be at the time of issuance registered under
the Securities Act, it cannot dispose of any or all of the Acquired Shares
unless the Acquired Shares are subsequently registered under the Securities Act
or exemptions from such registration are available. IXC understands that each
certificate representing the Acquired Shares will bear the following legend or
one substantially similar thereto:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN IRU AND STOCK PURCHASE AGREEMENT, DATED AS OF JULY 22,
1997, A COPY OF WHICH IS AVAILABLE FOR INSPECTION, IN RELEVANT
PART, AT THE PRINCIPAL OFFICES OF THE ISSUER.
(d) IXC is sufficiently knowledgeable and
experienced in financial and business matters and in the making of investments
so as to be able to evaluate the risks and merits of its investment in PSINet
and the Acquired Shares and is able to bear the economic risk of loss of its
entire investment in the Acquired Shares. IXC is an "accredited investor" as
such term is defined in Rule 501 promulgated under the Securities Act.
(e) IXC has been advised that the Acquired Shares
have not been, will not be at the time of issuance and are not being registered
under the Securities Act or under the "blue sky" laws of any jurisdiction and
that PSINet in issuing the Acquired Shares is and will be relying upon, among
other things, the representations and warranties of IXC contained in this
Section 14.6.
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14.7 Disclosure; No Material Adverse Change. Neither
IXC's parent's Annual Report on Form 10-K for the year ended December 31, 1996
nor any of IXC's parent's periodic reports filed with the Commission pursuant
to the 1934 Act on or after March 31, 1997 (each, a "IXC Filing"), taken as a
whole, as of the date of filing thereof, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances
under which such statements were made. IXC's parent used reasonable efforts,
in good faith, to comply in all material respects with the requirements of the
Commission as to the contents of such filings. Such filings, when they were
filed with the Commission, conformed as to form in all material respects to the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder. IXC and IXC Carrier have sufficient net worth and capital
resources and expect to have sufficient cash flow from their businesses in
order for IXC to be able to perform its obligations under this Agreement, the
other Transaction Documents and the Contribution Agreement and for IXC Carrier
to be able to perform its obligations under the Contribution Agreement. Except
as disclosed by IXC in public announcements or otherwise set forth in the IXC
Disclosure Schedule, there has been no material and adverse change to the
business, financial condition or results of operation of IXC and its
subsidiaries taken as a whole since the date of the most recent IXC Filing.
14.8 IRUs: At the Closing and throughout the Term, IXC
will have good and valid title to the Base IRU free and clear of all liens and
encumbrances, and rights of third parties, except as created hereunder and
those created after the date hereof and to an indefeasible right to use related
facilities and equipment. In the case of the Long-Term Indivisible IRU and
Short-Term Indivisible IRU, IXC, at the Closing and throughout the Term, will
have, good and valid title free and clear of all liens and encumbrances, and
rights of third parties, except as created hereunder. Pursuant to the Security
Agreement, at Closing, IXC shall grant to PSINet a continuing, first priority
perfected and exclusive security interest in the Collateral.
14.9 Available System. IXC Carrier has completed the
fiber construction of, and has installed electronics (which may not include the
electronics to be used to furnish the IRU Capacity) on, the portions of the
Available System insofar as indicated on Exhibit A hereto. The Available
System will have sufficient fiber capacity to satisfy IXC's obligations
hereunder.
14.10 Stock Ownership. From the date hereof through and
including the Closing Date and simultaneously with the Closing, neither IXC
Communications, Inc. nor any of its controlled Affiliates nor any "group"
(within the meaning of Section 13(d)(3) of the 1934 Act) of which IXC
Communications, Inc. or any of its controlled Affiliates is a member nor, to
IXC's knowledge, any of its Associates, is or will directly or indirectly be
the "beneficial owner" (within the meaning of Rule 13d-3 under the 1934 Act) of
any Voting Securities of PSINet or the "Beneficial Owner" of any PSINet
securities within the meaning of PSINet's preferred stock purchase rights plan.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET
FORTH IN THIS SECTION 14, IXC MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND IXC EXPRESSLY
DISCLAIMS AND
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EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, IXC MAKES NO WARRANTY TO PSINET OR
ANY OTHER PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO THE
DESCRIPTION, QUALITY, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF ANY CABLE OR FIBERS OR ANY SERVICE OR BANDWIDTH PROVIDED
HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.
SECTION 15. COVENANTS
15.1 Hart-Scott-Rodino. As soon as possible after the
date hereof, each of PSINet and IXC shall cause its ultimate parent to prepare
and file all documents with the Federal Trade Commission and the United States
Department of Justice as is required to comply with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("Hart-Scott-Rodino Act") and thereafter
shall cause its ultimate parent to promptly furnish all materials thereafter
requested by any of the regulatory agencies having jurisdiction over such
filings.
15.2 Consents. Each of PSINet and IXC shall use its
reasonable best efforts to obtain at the earliest practicable date all consents
and approvals required to consummate the transactions contemplated by this
Agreement, including, without limitation, the consents and approvals referred
to in Sections 13.2, 13.6, 14.2 and 14.3 hereof; provided, however, that,
except for filing fees required in connection with the parties' obligations
under Section 15.1, above, neither PSINet nor IXC shall be obligated to pay any
consideration therefor to any third party from whom consent or approval is
requested.
15.3 Other Actions. Each of PSINet and IXC shall use its
reasonable best efforts to (i) take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.
15.4 Board Seat. So long as IXC owns 95% of all IXC
Common Shares issued to IXC hereunder, on the Closing Date, PSINet's Chairman
shall recommend that (i) PSINet's Board of Directors elect Ralph J. Swett to
PSINet's Board of Directors effective as of the Closing Date, for a term
expiring in 1998 or later and (ii) subject to the next sentence, such person be
nominated to stand for election with the other nominated Board members at the
1998 Annual Meeting of PSINet (or, later annual meeting associated with the
expiration of his term) for a term expiring no earlier than 2000 and for
reelection thereafter at the applicable Annual Meetings of PSINet. At such
time as IXC shall cease to own the requisite amount of IXC Common Shares, a
resignation letter will be executed by Ralph J. Swett immediately and he shall
immediately cease to serve as a member of PSINet's Board of Directors.
15.5 Restriction on Resale. PSINet shall not sell, swap,
lease or otherwise transfer (including, without limitation, by way of a pledge,
hypothecation or security interest)
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any Bandwidth obtained from IXC to any third party ("Transferee") except (i) to
an Affiliate, or (ii) in connection with the offering of Internet connectivity
services, as such services shall evolve and mature, or (iii) in connection with
a bona fide financing arrangement with an unaffiliated third party and any
foreclosure or similar sale in connection therewith; provided that in any such
case, the Transferee shall agree to be subject to the terms of this Section
15.5. PSINet and each Transferee shall not use the Bandwidth acquired from IXC
pursuant to this Agreement to provide any party (other than PSINet and its
controlled U.S. affiliates for purpose of the aggregation of the customer
traffic of PSINet and its controlled U.S. affiliates) any form of non-Internet
telecommunications transport at a rate greater than DS-3 (45mbps) without the
specific written approval of IXC. PSINet is specifically restricted from using
the Bandwidth to deliver any analog or digitized long- distance switched
telephone service or any substantially similar service, based on non-Internet
telephone switching technologies, and only on such technologies, or private
line service (such as DS-0, DS-1, DS-3, T-1, T-3, E-1, E-3, OC-3, OC- 12,
OC-48, or any OC-N private line service), to any third party. Any pledge,
hypothecation or security interest of or in the Bandwidth will be subject to
the terms and conditions of this Agreement, including, without limitation, this
section. PSINet will not compete during 1997 against IXC for * business, or
for such other business opportunities introduced to PSINet by IXC as may be
reduced to writing and acknowledged by PSINet, for services to be rendered in
1997 or thereafter, provided, however, that this sentence will not restrict
PSINet from providing services contracted for prior to the date hereof.
Notwithstanding the foregoing, the restrictions set forth in
this Section 15.5 will not apply to any Transferee which acquires any Bandwidth
in connection with a Bankruptcy Proceeding filed or initiated by or against
PSINet.
15.6 No Solicitation.
(a) From the date hereof until three years after the
Closing Date, neither IXC nor any of its Affiliates will, directly or
indirectly, either alone or in association with others in any part of the world
induce, request, encourage or assist any employee of PSINet or its Affiliates
to terminate his or her employment with PSINet, or to join with or become
employed by, render services to or otherwise be engaged by IXC or any of its
Affiliates in any direct or indirect capacity.
(b) From the date hereof until three years after the
Closing Date, neither PSINet nor any of its Affiliates will, directly or
indirectly, either alone or in association with others in any part of the world
induce, request, encourage or assist any employee of IXC or its Affiliates to
terminate his or her employment with IXC, or to join with or become employed
by, render services to or otherwise be engaged by PSINet or any of its
Affiliates in any direct or indirect capacity.
(c) If, at the time of enforcement of Section
15.6, a court shall hold that the duration, scope, geographic area or other
restrictions stated herein are unreasonable under circumstances then existing,
the parties agree that the maximum duration, scope, geographic area or other
restrictions deemed reasonable under such circumstances by such court shall be
substituted for the stated duration, scope, geographic area or other
restrictions.
24
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 30
15.7 Transfer Matters. (a) If IXC or any controlled
Affiliate of IXC that beneficially owns IXC Shares (collectively, the "Selling
Shareholder") shall desire to sell or otherwise dispose of any or all of the
IXC Shares beneficially owned by it (the "Offered Shares"), other than to IXC
Carrier, after IXC Carrier has agreed in writing to be bound by the terms of
this Section 15.7 and by Section 15.8, or pursuant to a pledge to an
unaffiliated third-party lender ("Lender") in connection with a bona fide
lending transaction or a foreclosure or similar sale in connection therewith
(each, a "Pledge Transaction"), such Selling Shareholder shall first give
written notice (the "Notice of Sale") to PSINet.
Upon the giving of any Notice of Sale, PSINet shall have a
non-assignable, one-time, first option to purchase all (but not less than all)
of the Offered Shares for cash at the Current Market Price at the date the
Notice of Sale is given, which option must be exercised by giving notice of
such exercise to the Selling Shareholder within 48 hours (excluding hours on
Saturdays, Sundays or national holidays) after the receipt by PSINet of the
Notice of Sale (the "Offer Acceptance Date"). Such notice of exercise shall
constitute PSINet's binding, non-cancelable agreement to purchase the Offered
Shares.
The closing of the purchase by PSINet of the Offered Shares
shall take place within 30 days after the Offer Acceptance Date. PSINet shall
designate the time and date of the closing which shall be held at the principal
office of PSINet or such other place as may be mutually agreed upon between
PSINet and the Selling Shareholder. At the closing, the Selling Shareholder
shall duly assign and deliver to PSINet certificates representing the Offered
Shares, with required transfer stamps attached, and PSINet shall pay the
Selling Shareholder the purchase price (plus one-half the cost of all transfer
stamps required) by wire transfer of same-day funds to an account designated by
the Selling Shareholder.
If the right given to PSINet in this section shall not have
been exercised as to the Offered Shares as set forth above, the Selling
Shareholder shall have the right, at any time within three months after the
expiration of such 48- hour period, to dispose of all of the Offered Shares.
If by the end of such three-month period, the Selling Shareholder has not sold
or otherwise disposed of all of the Offered Shares, the remaining Offered
Shares shall not be sold by the Selling Shareholder except after compliance
again with the provisions of this Section 15.7.
(b) Notwithstanding any provision of this
Agreement to the contrary, during the six month period preceding or following
the Additional Shares Determination Date and during the six month period
following the Additional Shares Acceleration Date, neither IXC, IXC
Communications, Inc. nor any controlled Affiliate of IXC Communications, Inc.
shall sell, transfer, convey or otherwise dispose of any Common Stock of PSINet
or any securities convertible into or exchangeable or exercisable for any
shares of Common Stock of PSINet (each, an "Untimely Transfer"). PSINet's sole
remedy with respect to an Untimely Transfer occurring during the six-month
period prior to the Additional Shares Determination Date, shall be to delay
payment to IXC and suspend PSINet's obligations to IXC under Section 3.5 as set
forth in Section 15.7(c). This Section 15.7(b) shall not apply to a Pledge
Transaction, so long as neither IXC nor any of its Affiliates do not
intentionally breach the terms of the applicable pledge or any related
financing agreement with the purpose of avoiding this Section 15.7(b).
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(c) Notwithstanding any provision of this
Agreement to the contrary, PSINet's obligations to pay or deliver any
Additional Shares and/or cash, other securities or property pursuant to Section
3.5 to IXC shall be suspended in the event of, and for so long as there shall
be continuing (i) a breach by IXC of a Material Provision, or a breach of
Section 15.8(a) or the Standstill Agreement claimed by PSINet to be material
and which PSINet actively seeks to resolve through the dispute resolution
procedures set forth in this Agreement or the Standstill Agreement, as
applicable, or (ii) a breach by IXC or any of its Affiliates of the provisions
of Section 15.7(a) or 15.7(b), until such breach has been cured (in the case of
a breach of Section 15.7(b), until such breach has been cured for a period of
at least fifty (50) consecutive trading days without an Untimely Transfer after
the transaction giving rise to such breach).
15.8 Standstill Agreement.
(a) IXC covenants and agrees that each of it and IXC
Communications, Inc. shall not and shall not permit any controlled Affiliate of
IXC Communications, Inc. and/or IXC to, without the prior approval of the Board
of Directors of PSINet or as otherwise provided in this Agreement, (i) in any
manner acquire, agree to acquire or make any proposal to acquire, directly or
indirectly, any securities or property of PSINet or any of its subsidiaries
(except pursuant to Section 3 of this Agreement or by way of stock dividends,
stock splits or other distributions by PSINet made available to holders of
Voting Securities generally, including without limitation pursuant to a PSINet
preferred stock purchase rights plan or pursuant to any similar plan or
distribution, or as permitted pursuant to clause (ii)(C) of this Section 15.8),
(ii) propose (by itself or by or through any of its directors, executive
officers, attorneys, investment bankers or other Person duly authorized to make
such a proposal) or induce any other Person to propose, directly or indirectly,
(A) any merger or business combination involving PSINet or any of its
subsidiaries, (B) the purchase or sale of any assets of PSINet or any of its
subsidiaries or (C) the purchase of any Voting Securities, by tender offer or
otherwise (except pursuant to the exercise of rights, warrants, options or
similar securities distributed by PSINet to holders of Voting Securities
generally, including without limitation pursuant to the exercise of rights
pursuant to PSINet's preferred stock purchase rights plan), (iii) directly or
indirectly solicit "proxies" or "consents" or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the 1934
Act), or seek to advise or influence any Person with respect to the voting of
any Voting Securities of PSINet or any of its subsidiaries, (iv) form, join or
in any way participate in a "group" (within the meaning of Section 13(d)(3) of
the 1934 Act) with respect to any Voting Securities of PSINet or any of its
subsidiaries, (v) deposit any Voting Securities in a voting trust or subject
any Voting Securities to any arrangement or agreement with respect to the
voting of Voting Securities, (vi) otherwise act, alone or in concert with
others, to seek to control or influence (except as a customer or supplier in
the ordinary course of business) the management, Board of Directors or policies
of PSINet (provided, however, that so long as he is a director of PSINet, this
clause (vi) shall not prohibit Ralph J. Swett from taking action and serving in
his capacity as a director of PSINet in a manner consistent with the proper
exercise of his fiduciary and other duties as a director of PSINet), (vii)
disclose any intention, plan or arrangement inconsistent with the foregoing or
(viii) advise, assist or encourage any other Person in connection with any of
the foregoing. Notwithstanding anything in this Section 15.8 to the contrary,
so long as there shall not have occurred an IXC Change of Control, IXC shall be
permitted to approach the Board of Directors of PSINet, directly or
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indirectly through its executive officers or its investment bankers for
purposes of obtaining a waiver of its liabilities, obligations and commitments
under clause (ii) of this Section 15.8(a). IXC agrees that the provisions of
this Section 15.8 shall be binding upon its successors and assigns (other than
resulting from a Pledge Transaction) and any permitted transferees of the IXC
Shares who are controlled Affiliates of IXC Communications, Inc.
(b) IXC shall be entitled to acquire such number
of shares of Common Stock of PSINet which, when added to the number of shares
of Common Stock beneficially owned (excluding any rights IXC has hereunder to
receive Additional Shares) by IXC, its Affiliates and their respective
successors and assigns, would not exceed one share less than 20% of the then
issued and outstanding shares of Common Stock of PSINet and such acquisition of
Common Stock of PSINet under this Section 15.8(b) shall not, in and of itself,
constitute a violation of Section 15.8(a).
(c) Upon the request of IXC at any time, or from
time to time, PSINet shall issue and sell to IXC up to 100 shares of Common
Stock at the then Current Market Price so long as such purchase does not cause
IXC's beneficial stock ownership to exceed 20% of the then issued and
outstanding shares of Common Stock of PSINet (it being understood that this
Agreement and any action taken in connection herewith shall not constitute a
waiver under any provision of PSINet's preferred stock purchase rights plan).
Such issuance and sale of Common Stock under this Section 15.8(c) shall not, in
and of itself, constitute a violation of Section 15.8(a).
15.9 Registration Rights Agreement. PSINet and IXC shall
each execute and deliver to the other the Registration Rights Agreement
attached hereto as Exhibit N at the Closing.
15.10 Non-Interference. IXC shall respect and not disturb
PSINet's right to its use and quiet enjoyment of the Bandwidth and shall take
all reasonable precautions against (and shall not knowingly use its Available
System in a manner which could reasonably be expected to result in) any
interference by IXC with respect to such use and quiet enjoyment. IXC shall
have no right to use any of the Bandwidth during the Term. Neither IXC nor
PSINet shall knowingly use any electronics or technologies which could
reasonably be expected to subject risk of damage to the other party's fibers,
electronics or optronics. IXC shall use such care in performing its
obligations under this Agreement that equal or exceed that which is normal and
customary in the telecommunications industry.
15.11 Use of Marks. Except as provided herein or by
advance written consent of the other Party, each of IXC and PSINet agrees not
to (i) display or use, in advertising or otherwise, any of the other's Marks,
(ii) permit any Affiliate to display or use any of the other's Marks, or (iii)
give permission to display or use any of the other's Marks to any Third Party.
Any use by one Party of any of the other's Marks shall be subject to such other
Party's advance approval in writing, in its discretion, subject to compliance
with guidelines provided by it. Neither Party shall claim ownership or any
other rights in any of the other's Marks. Upon termination or expiration of
this Agreement, any and all rights or privileges granted by IXC or PSINet to
use any Marks shall immediately expire and each Party shall immediately
discontinue the use of such Marks. Nothing herein shall preclude
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either Party from making factual references to the other in government filings,
disclosure documents and other public statements, except as otherwise set forth
in the IRU Agreement.
SECTION 16. CONDITIONS PRECEDENT TO CLOSING
Each party shall not be obligated to proceed with the Closing,
unless and until the following conditions shall have been fulfilled or waived
by the applicable party:
16.1 Approvals. Unless waived by each party, each of
PSINet and IXC shall have obtained all consents and approvals by (a)
governmental authorities that are necessary for the consummation of the
transactions contemplated hereby (including, without limitation, expiration or
termination of all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act, and the effectiveness of any registration
statement under the Securities Act of 1933 required prior to the Closing in
connection with the reincorporation of PSINet in the State of Delaware; and (b)
any other Person necessary for the consummation of the transactions
contemplated by this Agreement. Each party shall work with the other to
acquire any permits or licenses required to be obtained by the other party;
provided, however, except as may be required pursuant to Section 15.1, above,
neither party shall be required to make any payment or assume any liability in
connection therewith.
16.2 Reincorporation. PSINet shall have reincorporated
in the State of Delaware by merging into Newco pursuant to documents
satisfactory to IXC and PSINet.
16.3 Shareholder Approval. Unless waived by each party,
PSINet shall have obtained all approvals of its shareholders which are required
in connection with the execution, delivery and performance of this Agreement,
including, without limitation, approval of the reincorporation of PSINet in the
State of Delaware and the issuance of the IXC Shares to IXC as provided in this
Agreement.
16.4 Appraisal Rights. Unless waived by PSINet, the
reincorporation of PSINet in the State of Delaware shall not give rise to the
exercise of statutory appraisal rights involving an aggregate amount greater
than $2,000,000.
16.5 Fairness Opinions.
(a) Unless waived by PSINet, there shall have
been delivered to PSINet an opinion of independent investment bankers selected
by PSINet, in form and substance satisfactory to PSINet, (i) as to the fairness
to PSINet and its stockholders from a financial point of view of the issuance
of the IXC Shares and the consummation of the transactions contemplated by, and
in connection with, this Agreement and (ii) as to the value of the IRUs being
granted by IXC to PSINet and the securities being issued or issuable by PSINet
to IXC pursuant to this Agreement.
(b) Unless waived by IXC, there shall have been
delivered to IXC an opinion of independent investment bankers selected by IXC,
in form and substance satisfactory to IXC, as to the fairness to IXC from a
financial point of view of the transactions contemplated by, and in connection
with, this Agreement.
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16.6 Consent of Bondholders. Unless waived by IXC, IXC
shall have obtained, upon terms acceptable to IXC, all approvals of its
bondholders which are required in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated by, and in
connection with, this Agreement.
16.7 Contribution Agreement. The Contribution
Agreement, in form and substance satisfactory to PSINet and IXC, shall have
been executed and delivered by each of Carrier and IXC.
16.8 Material Adverse Effect. Unless waived by each
party, no Material Adverse Effect shall have occurred with respect to either
party, Carrier or IXC Communications Inc. from the date hereof through the
Closing.
16.9 Acquisition of PSINet. Unless waived by IXC, prior
to the Closing, no Person shall have acquired or agreed to acquire more than
50% of the outstanding common stock of PSINet.
16.10 Preferred Stock Purchase Plan Amendment. Unless
waived by each party, PSINet shall have entered into an amendment to its
preferred stock purchase rights plan on or before August 1, 1997, satisfactory
to IXC and PSINet, providing, among other things, for purposes: (i) of the
definitions of "Acquiring Person", "Beneficial Owner" and "Beneficial
Ownership"; and (ii) of the definitions of "Associate" and Affiliate" of an
Acquiring Person:
(i) no Person shall be deemed to be an "Affiliate" or
"Associate" (as such terms are used in the preferred stock purchase rights
plan) of IXC, IXC Communications, Inc. or any controlled Affiliate of IXC or
IXC Communications, Inc. (collectively, the "IXC Parties") except for other IXC
Parties and no IXC Party will be deemed to be an "Affiliate" or "Associate" of
any Person except for other IXC Parties; and
(ii) no Person (except for other IXC Parties) shall be
deemed to be the Beneficial Owner (as such term is used in the preferred stock
purchase rights plan) of shares of Common Stock owned by any IXC Party and no
IXC Party shall be deemed to be the Beneficial Owner of shares of Common Stock
owned by any Person (other than other IXC Parties);
unless, in any such case, any IXC Party and such Person: (A) are members of a
"group" within the meaning of Rule 13d-5 under the 1934 Act for or in
furtherance of the purpose of (x) acquiring, holding, voting or disposing of
securities of PSINet, (y) seeking to control the management, Board of Directors
or policies of PSINet, or (z) effecting or seeking to effect any action,
transaction, change or matter referred to in any one or more of clauses (a)
through (j) of Item 4 of Securities and Exchange Commission Schedule 13D as in
effect on May 8, 1996, or (B) otherwise are, or shall be deemed to be, acting
in concert for or in furtherance of any such purpose.
Furthermore, such amendment shall provide that such amended
provisions of the preferred stock purchase rights plan cannot be further
amended without the written consent of IXC, in a way that materially adversely
affects any IXC Party (it being agreed that PSINet and its Board of Directors
generally have the right to amend, modify or waive provisions of
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<PAGE> 35
the preferred stock purchase rights plan insofar as they may relate to the
approval of transactions with and other matters involving parties other than
IXC regardless of whether such transaction or matter could result in a change
of ownership or control of PSINet or its businesses or operations or any of its
controlled Affiliates, the composition of the Board of Directors of PSINet or
similar fundamental corporate change or change of relative ownership of Common
Stock).
As promptly as practicable upon fulfillment or waiver of the
conditions set forth in this Section 16, PSINet and IXC agree to execute a
certificate certifying that such conditions have been satisfied or waived and
that the Closing Date has occurred.
SECTION 17. THE CLOSING. On the terms and subject to the satisfaction of
the conditions contained in this Agreement, the closing of the grant of the
PSINet Fiber IRU and the IRU in the IRU Capacity and the sale and purchase of
the IXC Shares hereunder (the "Closing") shall take place at the offices of
PSINet or such other place, time and date as may be mutually agreed to by the
parties as soon as possible after the conditions of Section 16 have been
fulfilled.
17.1 Deliveries by PSINet. At the Closing, PSINet shall
deliver the following:
(a) The certificates representing the IXC Initial
Common Shares;
(b) A legal opinion of Nixon, Hargrave, Devans &
Doyle LLP, counsel to PSINet, as may be reasonably requested by IXC and
mutually agreed to by the parties;
(c) An Officer's Certificate as may be reasonably
requested by IXC and mutually agreed to by the parties; and
(d) The executed Registration Rights Agreement
contemplated by Section 15.9, above.
17.2 Deliveries by IXC. At the Closing, IXC shall
deliver the following:
(a) An Officer's Certificate as may be reasonably
requested by PSINet and mutually agreed to by the parties;
(b) The executed Registration Rights Agreement
contemplated by Section 15.9, above;
(c) A legal opinion of Riordan & McKinzie,
counsel to IXC, as may reasonably requested by PSINet and mutually agreed to by
the parties;
(d) The Security Agreement and such UCC
statements and other instruments as may be deemed reasonably necessary by
PSINet to effect the grant of security interests pursuant to Section 1; and
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(e) Such other instruments, documents and
certificates as are reasonably requested by PSINet to effect the grant of the
indefeasible rights of use hereunder.
17.3 Survival of Representations and Warranties.
Regardless of any investigation at any time made by or on behalf of any party,
or of any information any party may have in respect thereof, all
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing
for a period of two years from the Closing; provided, however, that each party
hereby represents and warrants to the other party that it has no actual
knowledge as of the date hereof or as of the Closing of any breach of any
representation or warranty by such other party (as contrasted with knowledge
solely of a fact which may give rise to any such breach).
SECTION 18. TERMINATION
18.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by the written agreement of PSINet and IXC;
or
(b) by PSINet or IXC if the conditions set forth
in Section 16 of this Agreement, through no fault of the terminating party,
have not been satisfied on or prior to November 25, 1997 (as such date may be
extended by mutual agreement of the parties); or
(c) by PSINet or IXC if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any governmental authority preventing or prohibiting
consummation of the transactions contemplated by this Agreement shall have
become final and nonappealable.
18.2 Effect of Termination. Upon termination of this
Agreement pursuant to Section 18.1, above, this Agreement shall thereafter
become void and have no effect, and neither party hereto shall have any
liability to the other party in respect thereof, except that nothing herein
shall relieve either party from liability for any material breach of this
Agreement, including a breach covering the failure to use reasonable efforts to
satisfy the conditions set forth in Section 16; provided, however, neither
party shall have any liability arising out of any termination by reason of the
failure of the conditions set forth in Section 16 to have been satisfied.
SECTION 19. GENERAL PROVISIONS
19.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Accepted": means that PSINet has tested Bandwidth and found
it to satisfy the specifications contained in Exhibit F hereto and thereafter,
accepted it in accordance with Exhibit F hereto.
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"Access Right": as defined in Section 7.4(b).
"Additional Shares Value": means, as of the applicable date of
calculation, an amount equal to the difference, if greater than zero, between
(A) $240,000,000 and (B) the IXC Common Shares Value determined as of the
applicable date of calculation.
"Affiliate": of a Person means any Person which directly or
indirectly controls, is under common control with, or is controlled by, such
Person, where "control" means the power and ability to direct the management
and policies of the controlled Person through the ownership of voting shares of
the controlled Person or by contract or otherwise. Notwithstanding the
foregoing, Trustees of General Electric Pension Trust and Grumman Hill
Investments, L.P. and Grumman Hill Associates, Inc. shall not be deemed to
"control" or be "under common control" with, or to be Affiliates of IXC and
PSINet shall not be deemed to be "controlled by" or "under common control with"
IXC.
"Aggregate Fair Market Value": with respect to a combination
of cash and Additional Shares as of a date of determination, means the sum of
(i) such cash and (ii) the product of the Common Stock Price as of such date
and the number of such Additional Shares.
"Approved Subcontractor": shall mean (i) any person so
approved by IXC (which approval shall not be unreasonably withheld, conditioned
or delayed), (ii) the relevant equipment manufacturer or (iii) any authorized
service agent of the relevant equipment manufacturer.
"Associates" shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended, but shall
exclude Trustees of General Electric Pension Trust, Grumman Hill Investments,
L.P. and Grumman Hill Associates, Inc.
"Authorized Representative": as defined in Section 10.1 of
this Agreement.
"Available": of a Bandwidth Unit, means that IXC has tested
the Bandwidth Unit in accordance with Exhibit F hereto, the Bandwidth Unit
performed in accordance with the specifications set forth thereon, and the
Bandwidth Unit is thereafter made available for use by PSINet in accordance
with such specifications.
"Available System": as defined in Section 1.2 of this
Agreement.
"Bandwidth": one or more Bandwidth Units.
"Bandwidth Unit": a particular DS-3, OC-3, OC-12 or OC-48.
"Bankruptcy Proceeding": as defined in Section 7.4(a) of this
Agreement.
"Barter Capacity": DS-3 capacity IXC has received from other
carriers through barter or swap arrangements.
"Carrier": as defined in the recitals to this Agreement.
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"Closing": as defined in Section 17 of this Agreement.
"Closing Date": the date of the Closing.
"Collateral": as defined in Section 1.3 of this Agreement.
"Collocation Agreement": the agreement in the form attached
hereto as Exhibit C which is to be executed and delivered by IXC and PSINet at
the Closing.
"Commission": as defined in Section 13.5 of this Agreement.
"Common Stock": Common Stock, par value $.01 per share, of
PSINet or par value $.0001 per share of Newco, as applicable.
"Common Stock Price": means (i) the average closing market
price per share of the Common Stock or, if applicable, the Successor Stock, as
reported by The Nasdaq Stock Market or the principal securities exchange on
which the Common Stock or, if applicable, the Successor Stock, shall then be
listed over the 20 trading day period immediately preceding the applicable date
of calculation, weighted by the average trading volume of the Common Stock or,
if applicable, the Successor Stock, as reported by The Nasdaq Stock Market or
the principal securities exchange on which the Common Stock or, if applicable,
the Successor Stock, shall then be listed on each day of such 20 trading day
period, or (ii) if the Common Stock, or, if applicable, the Successor Stock, is
not as of the applicable date of calculation listed on The Nasdaq Stock Market
or any securities exchange, the price per share of the Common Stock or, if
applicable, the Successor Stock, on the applicable date of calculation as
determined by mutual agreement of PSINet and IXC or, in the case of the
Successor Stock, by mutual agreement of the issuer of such Successor Stock and
IXC.
"complete": with respect to a fiber route, means the fiber,
optronics and electronics in the route have been installed and tested and are
ready for commercial use ("completed" and "completion" have correlative
meanings.)
"Cure Period": as defined in Section 7.4(a) of this Agreement.
"Current Market Price": as of a date means the closing price
as publicly reported on the Nasdaq Stock Market (or, if not available on such
market, on the principal trading market) of the Common Shares of PSINet as of
4:00 p.m. Eastern Time on such date.
"Deemed Accepted": means Bandwidth on the Available System
made Available to PSINet which meets the specifications for acceptance thereof
by PSINet set forth in Exhibit F to this Agreement and which has not been
Accepted by PSINet after the receipt by PSINet of a notice, given by IXC to
PSINet in accordance with the terms of Section 19.5 of this Agreement, that IXC
has made such Bandwidth so Available.
"Delivery Completion Date": the date by which IXC has
delivered to PSINet and PSINet has Accepted 10,000 OC- 48 Equivalent Miles of
Bandwidth.
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"DS-3": means a circuit meeting the specifications set forth
in AT&T Technical Reference Pub. 54014 Addendum 1, November 1992 and Bellcore
TB-NWT-608499, Issue 5, December 1993.
"DS-3 Equivalent Mile": means one-forty eighth of an OC-48
Equivalent Mile.
"Excess Miles": as defined in Section 2.2 of this Agreement.
"Hart-Scott-Rodino Act": as defined in Section 15.1 of this
Agreement.
"Indemnifying Party": as defined in Section 9 of this
Agreement.
"Internet": The global network of interconnected commercial,
educational and governmental computer networks that utilize a protocol that
allow computers with different architectures and operating system software to
communicate thereon, as the same may evolve and mature.
"Internet Services Agreement": as defined in the recitals to
this Agreement.
"IRU Capacity": as defined in Section 1.2 of this Agreement.
"IXC Bankruptcy Proceeding": a Bankruptcy Proceeding filed or
initiated by or against IXC.
"IXC Change of Control": (i) the shareholders of IXC approve
an agreement for the sale of all or substantially all of the assets of IXC; or
(ii) the shareholders of IXC approve a merger or consolidation of IXC with any
other corporation, other than (A) a merger for consideration which would result
in the voting securities of IXC outstanding immediately prior thereto
continuing to represent more than 80% of the combined voting power of the
voting securities of IXC, or such surviving entity, outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation effected
to implement a recapitalization of IXC (or similar transaction) in which no
"person" (as defined below) acquires more than 20% of the combined voting power
of IXC's then-outstanding securities; or (iii) any "person," as such term is
used in Sections 13(d) and 14(d) of the 1934 Act (other than (A) IXC or (B) the
shareholders of IXC, or any corporation owned by the shareholders of IXC, in
substantially the same proportions as their ownership of stock of IXC) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of securities of IXC representing more of than 50% of
the combined voting power of IXC's then outstanding securities.
"IXC Common Shares": means such number of shares of Common
Stock (as adjusted for any stock splits, stock dividends, recapitalizations or
similar events after the Closing Date) issued and sold by PSINet to IXC on the
Closing Date pursuant to this Agreement.
"IXC Common Shares Value": means the aggregate fair market
value of the IXC Common Shares determined as of the applicable date of
calculation, based on the Common Stock Price as of such date, including, if
applicable, for purposes of such
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calculation, in the event a Merger or Other Reorganization Event shall have
occurred on or prior to such date in connection with which there shall have
been issued or delivered to the holders of the Common Stock, in addition to or
in lieu of any Successor Stock, other securities or property, the fair market
value as of the applicable date of calculation of such other securities or
property received by IXC and/or any of its Affiliates and Associates in
consideration for the IXC Common Shares then owned by them (such fair market
value to be initially determined by the board of directors, general partners or
board members, as applicable of the successor Person resulting from such Merger
or Other Reorganization Event). In the event IXC disagrees with such
determination of fair market value, such fair market value shall be determined
by arbitration pursuant to Section 19.14.
"IXC Initial Common Shares": as defined in Section 3.2 of this
Agreement.
"IXC Fibers": as defined in Section 1.1 of this Agreement.
"IXC Filing": as defined in Section 14.7 of this Agreement.
"Long-Term Indefeasible IRU": as defined in Section 1.3 of
this Agreement.
"Maintainable Equipment" shall mean the electrical, electronic
and optronic equipment which is utilized in delivering the PSINet Fiber IRU and
the IRU in the IRU Capacity to PSINet (a) including regeneration, op/amp, and
fiber terminating equipment, and multiplexing equipment but (b) excluding fiber
in any fiber optic cable.
"Material Adverse Effect": a material adverse effect on the
condition, financial or otherwise, or operating results of a Person and its
subsidiaries taken as whole.
"Material Provision": any provision of this Agreement or of
any of the Transaction Documents (including, without limitation, payment
provisions but excluding, in and of itself, any Bankruptcy Proceeding) the
breach of which by one party is determined by an arbitration pursuant to
Section 19.14 to constitute a material adverse effect on the use and enjoyment
by the other party of the benefits of such agreement.
"Marks": shall mean trade names, logos, trademarks, trade
devices, trade dress, service marks, symbols, abbreviations or registered
marks, or contractions or simulations thereof, or any other indicia or origin.
"Merger or Other Reorganization Event": means a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares) or a merger or consolidation of PSINet
with or into another Person or the sale of all or substantially all of PSINet's
properties and assets to any other Person.
"Monetary Default": as defined in Section 7.4 (a) of this
Agreement.
"Newco": as defined in the recitals to this Agreement.
"1934 Act": means the U.S. Securities Exchange of 1934, as
amended, and the rules and regulations thereunder.
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"Notice of Default": as defined in Section 7.4(a) of this
Agreement.
"Notice of Sale": as defined in Section 15.7 of this
Agreement.
"OC-3": means OC-3 SONET optical transmission capacity
meeting the applicable specifications set forth in Exhibit F hereto.
"OC-12": means OC-12 SONET optical transmission capacity
meeting the applicable specifications set forth in Exhibit F hereto.
"OC-12 Equivalent Mile": one-quarter of an OC-48 Equivalent
Mile.
"OC-48": means OC-48 SONET optical transmission capacity
meeting the applicable specifications set forth in Exhibit F.
"OC-48 Equivalent": 1 OC-48, 4 OC-12s, 16 OC-3s or 48 DS-3s.
"OC-48 Equivalent Mile": 1 Route Mile of OC-48 capacity, 4
Route Miles of OC-12 capacity, 16 Route Miles of OC-3 capacity or 48 Route
Miles of DS-3 capacity.
"Offer Acceptance Date": as defined in Section 15.7 of this
Agreement.
"Offered Shares": as defined in Section 15.7 of this
Agreement.
"On-net": refers to any circuit which IXC is able to deliver
on the Available System as then completed.
"Original Services Activation Date": the Service Activation
Date of a Bandwidth Unit, or, in the event the Bandwidth Unit is the result of
the Reconfiguring of one or more other Bandwidth Units, the earliest Service
Activation Date of any such Bandwidth Units.
"Person": any individual, corporation, partnership, firm,
joint venture, association, limited liability company, trust, unincorporated
organization or other entity.
"POPs": those IXC locations listed in Exhibit K hereto (as
expanded by IXC from time to time.)
"PSINet Fiber IRU": as defined in Section 1.1 of this
Agreement.
"PSINet Filing": as defined in Section 13.5 of this Agreement.
"Reconfigure": to swap Bandwidth between two points for
lesser, equal or greater amount of Bandwidth between such points or elsewhere.
"Reduction Mile": as defined in Section 1.4 of this Agreement.
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"Requested Delivery Date": as to Bandwidth, the date requested
by PSINet that IXC make such Bandwidth Available, as set forth in the
applicable Bandwidth Order and as applicable as modified by IXC pursuant to
Section 4.2.
"Rights-of-Way": all rights, licenses, authorizations
(including, without limitation, any sate, local, tribal or federal
authorizations or permits (including, without limitation, environmental
permits)), rights-of-way, easements, landlord consents and other agreements now
existing or hereafter arising which are necessary for (i) the use of poles,
conduit, cable, wire or other physical plant facilities relating to or used in
connection with the PSINet Fiber IRU and the capacity IRU granted to PSINet
hereunder and (ii) the installation, use and quiet enjoyment of the PSINet
Fiber IRU and the capacity IRU granted to PSINet hereunder.
"Route Mile": one mile of the actual geographic length of the
fiber route.
"Securities Act": the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Selling Shareholder": as defined in Section 15.7 of this
Agreement.
"Service Activation Date": with respect to a Bandwidth Unit,
the date the Bandwidth Unit is first Accepted by PSINet.
"Shortfall Mileage": the amount of Route Miles by which the
length of the Available System is less than 10,000 miles.
"Short-Term Indefeasible IRU": as defined in Section 2.3 of
this Agreement.
"Six-Month Period": any six-month period starting October 1 or
April 1 of any year.
"Standstill Agreement": the Standstill Agreement of even date
hereof from IXC Communications, Inc. to PSINet.
"Successor Stock": means the capital stock or other equity
securities of any Person issuable to the holders of the Common Stock in
connection with any Merger or Other Reorganization Event.
"Term": as defined in Section 6.1 of this Agreement.
"Total Bandwidth": means 10,000 OC-48 Equivalent Miles of
Bandwidth on the Available System to be made Available to PSINet pursuant to
the terms of this Agreement.
"Transaction Documents": this Agreement, the Registration
Rights Agreement, the Security Agreement, the Standstill Agreement, the
Internet Services Agreement and each of the agreements, instruments and
documents executed and delivered by PSINet or IXC pursuant to this Agreement,
but not including the Newco Certificate of Incorporation and By-
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laws, the amendment to PSINet's preferred stock purchase rights plan or the
Contribution Agreement.
"Voting Securities" the Common Shares and any other
securities of PSINet as may from time to time be entitled to vote for the
election of directors of PSINet without regard to any event or occurrence.
19.2 Amendments, Waivers and Consents. For purposes of
this Agreement and the Transaction Documents, except as otherwise specifically
set forth herein or therein, no course of dealing between PSINet and IXC and no
delay on the part of either party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. No
covenant or other provision hereof or thereof may be waived or amended other
than by a written instrument signed by the party so waiving or amending such
covenant or other provision.
19.3 Section Headings. The table of contents and
section headings in this Agreement have been inserted for reference purposes
only and shall not be deemed to limit or otherwise affect the construction of
any provision thereof or hereof.
19.4 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed
and delivered shall be taken to be an original, but such counterparts shall
together constitute but one and the same document.
19.5 Notices. All notices, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when delivered personally, the next business day after delivered to a
nationally recognized overnight courier for next business day delivery, when
transmitted by facsimile or five (5) days after sent by registered or certified
mail, return receipt requested, to the parties (and to the Persons receiving
copies thereof) at the following addresses or facsimile numbers (or to such
other address or facsimile number as a party may have specified by notice given
to the other party pursuant to this provision):
If to IXC to:
IXC Internet Services, Inc.
5000 Plaza on the Lake, Suite 200
Austin, TX 78746
Attention: Chairman
Facsimile: (512) 328-0239
With copies to:
IXC Communications, Inc.
5000 Plaza on the Lake, Suite 200
Austin, IXC 78746
Attention: General Counsel
Facsimile: (512) 328-7902
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Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, California 92626
Attention: Michael P. Whalen
Facsimile: (714) 549-3244
If to PSINet to:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 20170
Attention: Chairman
Facsimile: (703) 904-1608
With a copy to:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 20170
Attention: General Counsel
Facsimile: (703) 904-9527
and to:
Nixon, Hargrave, Devans & Doyle LLP
437 Madison Avenue
New York, New York 10022
Attention: Richard F. Langan, Jr.
Facsimile: (212) 940-3111
19.6 Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either party
without the prior written consent of the other party hereto and any attempted
assignment without the required consent shall be void; provided, however, that
notwithstanding the foregoing, (i) as permitted by, and subject to the
provisions of, Section 15.5 hereof, PSINet shall have the right to sell, swap,
lease, assign or otherwise transfer all or a portion of its rights in any of
the IRU's to any person who agrees in writing with IXC to be bound by Section
15.5 and this Section 19.6, (ii) each party shall have the right to pledge,
assign or otherwise transfer this Agreement and its rights hereunder, in whole
or in part, as collateral security to any lender, and (iii) each party shall
have the right to assign or transfer this Agreement and its rights hereunder,
in whole or in part, to its parent or to any direct or indirect wholly-owned
subsidiary of that party or to any Person into which that party may be merged
or consolidated or which purchases all or substantially all of the assets of
that party; provided, however, that (a) such parent, subsidiary or Person
agrees to be bound by the terms
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<PAGE> 45
of this Agreement (including, without limitation, all provisions binding upon
the assigning or transferring party) and (b) any such assignment or transfer
shall not relieve that party from any liability or obligation under this
Agreement.
19.7 Severability; Specific Performance.
(a) Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
(b) Each of PSINet and IXC recognizes and affirms
that in the event of breach by it or any controlled Affiliate of any of the
provisions of Section 15.6, 15.7, or 15.8 money damages would be inadequate and
the other party would have no adequate remedy at law. Accordingly, each party
shall have the right, in addition to any other rights and remedies existing in
its favor, to enforce its rights and the other parties' obligations under
Section 15.6, 15.7 or 15.8 not only by an action or actions for damages, but
also by an action or actions for specific performance, injunction and/or other
equitable relief in order to enforce or prevent any violations (whether
anticipatory, continuing or future) of the provisions thereof (including, in
the case of Section 15.6, the extension of the 3-year period by a period equal
to (i) the length of the violation of Section 15.6 plus (ii) the length of any
court proceedings necessary to stop such violation). In the event of a breach
or violation by a party of any of the provisions of Section 15.6, the running
of the 3-year period (but not of the party's obligations under Section 15.6)
shall be tolled during the continuance of any actual breach or violation.
19.8 Expenses. Except as otherwise provided in this
Agreement, each party shall bear its own costs and expenses (including
attorney's fees), and all taxes imposed upon it under applicable law, in
connection with the negotiation, execution and performance of this Agreement
and each other agreement, document and instrument contemplated by this
Agreement and in connection with the consummation of the transactions
contemplated hereby and thereby and all obligations required to be performed by
each of them hereunder and thereunder.
PSINet shall pay all sales, use and excise taxes related to
the Bandwidth and services provided by IXC under this Agreement and any other
taxes related to the Bandwidth and services under this Agreement which are by
the terms of the relevant statute or ordinance imposed upon PSINet; provided
that, where permitted, PSINet may provide sale or resale exemption certificates
to IXC. In no event shall PSINet be obligated to pay income taxes levied upon
IXC's income or any real or personal property taxes assessed against IXC or
IXC's property, including any gross receipts taxes assessed in lieu of income
or property taxes, provided that, if the terms of the relevant statute or
ordinance imposes such gross receipts tax upon PSINet, then PSINet shall be
liable for such tax. PSINet shall pay IXC said gross receipts taxes when they
become due provided that the taxes are invoiced and included
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as a separate line item on the same invoice that is subject to such tax. IXC
shall pay any such tax not invoiced to PSINet at the time such tax is incurred.
19.9 Integration. This Agreement, including the
exhibits, documents and instruments referred to herein constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement between the parties dated as of May
14, 1997.
19.10 Schedules. The disclosure of information in the
PSINet Disclosure Schedule, the IXC Disclosure Schedule, in any other Schedule
or any Exhibit hereto shall be deemed to be disclosure in each other Schedule
hereto. The inclusion of any information in the PSINet Disclosure Schedule,
the IXC Disclosure Schedule, or any Schedule hereto shall not be deemed to be
an admission by PSINet or IXC that such information is material or outside the
ordinary course of business.
19.11 Public Announcements. Neither party shall publish
or use any advertising, sales, promotions, or other publicity materials that
use the other party's name, logo, trademarks or service marks without the prior
written approval of the other party. Each party shall have the right to
review, comment upon and approve any publicity materials, press releases or
other public statements by the other that refer to, or that describe any aspect
of, this Agreement made prior to, or within 90 days after, the Closing;
provided, however, that with respect to IXC's consent solicitation and to
disclosure documents required under the 1934 Act, subject to the last sentence
of this Section 19.11, each party shall only have the right to prior review and
to comment upon the other party's documents. Each party agrees that it will
not issue any such publicity materials, press releases or public statements
without the prior written approval of the other party. Nothing in this
Agreement establishes a license for either party to use any of the other
party's brands, marks, or logos without the prior written approval of the other
party. The provisions of this section shall survive termination of this
Agreement for a period of two years, except for the last sentence hereof which
shall survive for the Term. IXC and PSINet shall cooperate to request
confidential treatment as may be mutually agreed by them with respect to
certain terms of this Agreement, the Transaction Documents and transactions
contemplated hereby and thereby in any filing with the Commission, any other
governmental authority or any securities exchange or stock market.
19.12 Interpretation. The parties acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; (ii) the
rule of construction to the effect that any ambiguities are resolved against
the drafting party shall not be employed in the interpretation of this
Agreement; and (iii) the terms and provisions of this Agreement shall be
construed fairly as to both parties hereto, regardless of which party was
generally responsible for the preparation of this Agreement or any provision
hereof.
19.13 Governing Law. This Agreement shall be deemed to
be a contract made under, and shall be construed in accordance with, the laws
of the State of Delaware without reference to its principles of conflicts of
law.
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<PAGE> 47
19.14 Dispute Resolution.
(a) If any controversy or claim arises out of or
relates to this Agreement or with respect to an alleged breach of the terms
hereof, subject to Section 19.7, above, PSINet and IXC shall seek to resolve
the matter amicably through discussions between themselves. The parties shall
attempt to resolve all controversies, claims or breaches at the operational
level, and in the event a resolution cannot be reached, such controversy, claim
or breach will be referred progressively to higher levels within each party, to
their respective chairpersons. If the parties fail to resolve such
controversy, claim or breach within thirty (30) days by amicable arrangement
and compromise, either party may seek arbitration as set forth below but only
within four years of the occurrence of the events giving rise to, or the
accrual of, such controversy, claim or breach.
(b) Except as provided in Section 19.7, above,
any controversy or claim arising out of or in relating to this Agreement, or a
breach of this Agreement, shall be finally settled by binding arbitration in
Chicago, Illinois in accordance with the J.A.M.S./ENDISPUTE Arbitration Rules
and Procedures ("Endispute Rules"), as amended by this Agreement. If possible,
the parties shall appoint by mutual agreement, as the arbitrator, an attorney
experienced in telecommunications, securities law and transactional matters.
If such agreement cannot be reached, the arbitrator shall be such type of
attorney and shall be chosen under the Endispute Rules. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the parties unless the arbitration award provides otherwise or
except as provided in Section 7.2. Each party shall bear the cost of preparing
and presenting its case. The parties agree that this provision and the
arbitrator's authority to grant relief shall be subject to the United States
Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this
Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The parties agree that the arbitrator shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrator have the
authority to make any award that provides for punitive or exemplary damages.
The arbitrator's decision shall follow the plain meaning of relevant documents,
and shall be final and binding. The award may be confirmed and enforced in any
court of competent jurisdiction. All post-award proceedings shall be governed
by the USAA.
19.15 Relationship of the Parties. This Agreement and
the Transaction Documents shall not be deemed to cause either party hereto to
be deemed the agent or partner of the other party and neither party shall have
the right to bind the other. This Agreement shall not be interpreted to impose
any limitation or restriction on IXC's ability to enter the Internet business
or to acquire Internet-related companies or to enter into agreements with other
Internet companies.
19.16 Laws and Licenses. This Agreement is subject to
all applicable federal, state and local laws, regulations, rulings and orders
of governmental agencies, including, but not limited to, the Communications Act
of 1934 as amended by the Telecommunications Act of 1996, and the rules and
regulations of the FCC.
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19.17 Facsimile Delivery. This Agreement may be
delivered by facsimile transmission of an executed counterpart signature page
hereof, and after attachment of such transmitted signature page to a copy of
this Agreement, such copy shall have the same effect and evidentiary value as
copies delivered with original signatures. Any party delivering this Agreement
by facsimile transmission shall deliver to the other party, as soon as
practicable after such delivery, an original executed counterpart signature
page of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
IXC Internet Services, Inc.
By: /s/ RALPH J. SWETT
-----------------------------------
Name: Ralph J. Swett
Title: Chairman, President and CEO
PSINet Inc.
By: /s/ WILLIAM L. SCHRADER
----------------------------------
Name: William L. Schrader
Title: Chairman, President and CEO
<PAGE> 49
PSINet
Exhibit List
Exhibit A Available System
Exhibit B Security Agreement
Exhibit C Collocation and Interconnection Agreement
Exhibit D Newco Common Stock Percentage Determination
Exhibit E Associated Services
Exhibit F OC-N Specifications and Testing Standards
Exhibit G PSINet's Bandwidth Forecast
Exhibit G-1 Initial Order
Exhibit H Multiplexing Fees
Exhibit I Reconfiguration Fees
Exhibit J Newco Certificate of Incorporation
Exhibit K POP Space
Exhibit L PSINet Disclosure Schedule
Exhibit M IXC Disclosure Schedule
Exhibit N Registration Rights Agreement
<PAGE> 50
EXHIBIT A
Available System
[MAP]
<PAGE> 51
EXHIBIT B
<PAGE> 52
EXHIBIT B
TO
IRU AND STOCK PURCHASE AGREEMENT
SECURITY AGREEMENT AND ASSIGNMENT
THIS SECURITY AGREEMENT AND ASSIGNMENT, dated as of __________, 1997, is
made by and between IXC Internet Services, Inc. a Delaware corporation
(hereinafter, together with its successors and assigns, "IXC"), and PSINet Inc.,
a New York corporation (hereinafter, together with its successors and assigns,
"PSINet" or the "Secured Party"). All capitalized terms used but not otherwise
defined herein shall have the meanings set forth in that certain IRU and Stock
Purchase Agreement entered into as of July 22, 1997 (as amended, supplemented or
modified, the "Purchase Agreement").
PRELIMINARY STATEMENTS:
A. IXC and PSINet are parties to the Purchase Agreement pursuant to
which, among other things, PSINet has acquired the PSINet Fiber IRU and the IRU
Capacity from IXC and IXC has acquired from PSINet 19.99999% of the total
outstanding shares of Common Stock of PSINet.
B. Pursuant to the Purchase Agreement, IXC has agreed to execute and
deliver this Security Agreement and to grant to PSINet a security interest in
the Collateral (as hereinafter defined) as security for IXC's obligation to
provide the PSINet Fiber IRU and IRU in the IRU Capacity.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
A G R E E M E N T
1. Defined Terms. As used in this Security Agreement the following terms
have the following meanings, unless the context otherwise requires:
"Collateral" has the meaning assigned to it in Section 2 of this
Security Agreement.
"Default" means a default under the Purchase Agreement that remains
uncured following the expiration of any applicable cure period and that
materially and adversely affects the use and enjoyment of the PSINet
Fiber IRU or the IRU in the IRU Capacity by PSINet.
<PAGE> 53
"GAAP" means generally accepted accounting principles in the United
States of America from time to time in effect as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements
and pronouncements of the Financial Accounting Standards Board, or in
such other statements by any successor entity as may be in general use
by significant segments of the accounting profession that are applicable
to the circumstances as of the date of determination.
"hereby," "herein," "hereof," "hereunder" and words of similar import
refer to this Security Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word
appears.
"Lien" means any mortgage, pledge, charge, security interest or other
encumbrance.
"Permitted Liens" means (i) any Liens for taxes not yet delinquent or
Liens for taxes being contested in good faith and by appropriate
proceedings promptly instituted and diligently concluded, and (ii)
materialmen's and mechanic's Liens and other similar Liens arising in
the ordinary course of business, which are being contested in good faith
by appropriate proceedings or are paid within 60 days from the creation
thereof, and which do not impair the use and enjoyment by PSINet of the
PSINet Fiber IRU and/or the IRU in the IRU Capacity.
"Proceeds" means "proceeds," as such term is defined in section
9-306(1) of the UCC and, in any event, shall include, without
limitation, (i) any and all payments (in any form whatsoever) made or
due and payable to IXC from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or
any part of the Collateral by any governmental body, authority, bureau
or agency (or any person acting under color of governmental authority),
and (ii) any and all other amounts from time to time paid or payable to
IXC under or in connection with any of the Collateral, excluding from
such other amounts, amounts paid to IXC by PSINet.
"Secured Obligations" means IXC's obligation to provide the PSINet
Fiber IRU and the IRU in the IRU Capacity pursuant to the Purchase
Agreement.
"Security Agreement" means this Security Agreement and Assignment, as
the same may from time to time be amended or supplemented.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Delaware; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority or exercise of remedies of either
Secured Party's security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the
State of Delaware, the term "UCC" means the Uniform Commercial Code, as
in effect in such other
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jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection, priority or exercise of remedies and for
purposes of definitions related to such provisions.
2. Grant of Security Interest; Collateral Assignment.
2.1 Collateral. (a) As collateral security for the prompt and
complete performance when due of the Secured Obligations, IXC hereby grants to
the Secured Party a continuing security interest in, all IXC' right, title and
interest in, to and under the following, whether now owned or hereafter acquired
and wherever located (all of which, together with the Collateral as further
defined in this Section 2.1(a) and in Section 2.1(b), being hereinafter
collectively called the "Collateral"):
(i) the Long-Term Indivisible IRU;
(ii) the Short-Term Indivisible IRU;
(iii) the Access Right; and
(iv) to the extent not otherwise included, all Proceeds
of the foregoing.
As set forth in Section 1.4 of the Purchase Agreement, the PSINet Fiber
IRU and the Base IRU in the IXC Fibers shall be extended to cover additional
completed portions of the Available System effective immediately upon completion
without any further action on the part of IXC and the Long-Term Indivisible IRU
and the Short-Term Indivisible IRU shall include such completed portions of the
Available System. IXC hereby grants, without further action on its part, and
will execute the necessary documents to evidence such grant of a continuing
security interest in (i) the Long-Term Indivisible IRU (with such defined phrase
being extended to cover such completed portions of the Available System) and the
products and proceeds thereof, (ii) the Short- Term Indivisible IRU, and (iii)
the Access Right (with each such defined phrase being extended to cover such
completed portion of the Available System) and the products and proceeds
thereof, and the Long-Term Indivisible IRU, the Short-Term Indivisible IRU, and
the Access Right, as so extended, will thereupon become part of the Collateral.
Notwithstanding the foregoing, however, commencing in respect of any completed
portion of the Available System, after the date on which such completed portion
of the Available System shall have been completed, the length of the Short-Term
Indivisible IRU shall not exceed the excess, if any, of 10,000 Route Miles over
the number of completed Route Miles on the Available System Accepted by the
Secured Party. To the extent completion of additional portions of the Available
System requires shortening the length of the Short-Term Indivisible IRU (which
is subject to the security interest pursuant to the preceding sentence) by a
certain number of Route Miles (the "Reduction Miles"), the Short-Term
Indivisible IRU shall be deemed to be shortened 30 days after the date on which
such completed portion of the Available System shall have been completed by
changing its definition to exclude a number of Route Miles equal to the number
of Reduction Miles. The specific Route Miles excluded shall be determined by
excluding that number of Route Miles of the Available System
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most recently completed beginning with the eastern most portion along the
applicable route, all as set forth in a written notice from IXC to the Secured
Party.
(b) IXC does hereby assign, transfer and set over unto Secured Party, as
collateral security for the prompt and complete performance of the Secured
Obligations, all of IXC's rights and interests in and to the Contribution
Agreement to the extent necessary to deliver and provide PSINet with the IRU in
the IRU Capacity and the PSINet Fiber IRU (such necessary rights and interests
in and to the Contribution Agreement being referred to as the "PSINet Rights"),
including without limitation: (i) the right to receive, use and accept the
PSINet Rights, (ii) all claims for damages in respect of the PSINet Rights
arising as a result of any default under the Contribution Agreement, (iii) any
and all rights of IXC to compel performance of the terms of the Contribution
Agreement relating to the PSINet Rights, and (iv) all rights, benefits and
claims under all warranty and indemnity provisions, if any, contained in the
Contribution Agreement relating to the PSINet Rights. Notwithstanding the
foregoing, so long as no Default shall have occurred and be continuing, Secured
Party authorizes IXC, without affecting the terms of this Agreement, to exercise
in its own name the PSINet Rights under the Contribution Agreement. The defined
term "Collateral" under this Agreement shall include the PSINet Rights.
2.2 Non-Disturbance and Restrictions. The Secured Party and each
transferee of any Collateral pursuant to this Agreement shall not disturb the
exercise of the rights of any third party or IXC to use fibers, appurtenances or
equipment in the Available System so long as the exercise of such rights does
not interfere with the exercise by PSINet of its rights to use the PSINet Fiber
IRU, the IRU in the IRU Capacity or to enjoy the benefits thereof. The rights of
PSINet and each such transferee hereunder are subject to the obligation to
comply with Section 8, Section 15.5 and the other obligations of PSINet under
the Purchase Agreement.
3. Representations and Warranties. IXC hereby represents and warrants
that:
3.1 Ownership, Liens. Except for the security interest granted to the
Secured Party pursuant to this Security Agreement, IXC is the owner of each item
of the Collateral, having good title thereto, free and clear of any and all
Liens other than Permitted Liens.
3.2 Business Locations. IXC' principal place of business and the
place where its records concerning the Collateral are kept are at the locations
listed in Schedule I hereto, and IXC will not change such principal place of
business or remove such records without at least thirty (30) days prior written
notice to each Secured Party and providing to Secured Party such documents and
taking such action as is necessary to ensure PSINet has a first priority
perfected security interest in the Collateral.
3.3 Trade Names. Neither IXC nor any of its predecessors in interest
has, at any time within the five-year period ending on the date hereof,
conducted any business under any name other than "IXC Internet Services, Inc."
except as set forth on Schedule IV hereto.
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3.4 Identification Number. The Federal Employer Identification Number
of IXC is _________.
4. Covenants. IXC covenants and agrees with the Secured Party that from
and after the date of this Security Agreement and until the Secured Obligations
are fully satisfied:
4.1 Compliance with Laws. IXC will comply, in all material respects,
with all acts, rules, regulations, orders, decrees and directions of any
governmental authority, applicable to the Collateral or any part thereof;
provided, however, that IXC may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not in the sole opinion of the
Secured Party adversely affect the Secured Party's right or the priority of its
security interest in the Collateral; and provided further, that nothing
contained herein shall be deemed to prohibit IXC from contesting any Lien
arising by operation of law where IXC is contesting in good faith and by
appropriate proceedings the obligations which gave rise to such Lien, provided
that such contest does not involve the material danger of the sale, forfeiture
or loss, or material restriction of, use or enjoyment of any of the Collateral.
4.2 Payment of Obligations. IXC will pay promptly when due, all
taxes, assessments, franchises, fees and governmental charges or levies imposed
upon or payable in respect of the Collateral or in respect of its income or
profits therefrom, as well as all claims and demands of any kind (including
claims for labor, materials and supplies), except that no such charge need be
paid if (i) the validity thereof is being contested in good faith in an
appropriate manner, and (ii) such contest does not involve any material danger
of the sale, forfeiture or loss, or material restriction of, use or enjoyment of
any of the Collateral or any interest therein.
4.3 Limitations on Liens on Collateral; Lien Waivers. IXC will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien, claim or right, in
or to the Collateral, other than Permitted Liens, and will defend the right,
title and interest of the Secured Party in and to any of IXC's rights to the
Collateral and in and to the Proceeds and products thereof against the claims
and demands of all persons whomsoever.
4.4 Continuous Perfection. IXC will not change its name, identity or
corporate structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the meaning
of section 9-402(7) of the UCC (or any other then applicable provision of the
UCC) unless IXC shall have given each Secured Party at least thirty (30) days'
prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by each Secured Party to amend such financing statement or
continuation statement so that it is not seriously misleading.
4.5 Further Identification of Collateral. IXC will furnish to the
Secured Party from time to time statements and schedules further identifying and
describing the Collateral and
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such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail.
4.6 Notices. IXC will advise each Secured Party promptly, in
reasonable detail, (i) within 30 days of IXC gaining knowledge of any lien,
security interest, encumbrance or claim, other than Permitted Liens for taxes
not yet due and payable, made or asserted against any of the Collateral, (ii) of
any material change in the composition of the Collateral, and (iii) of the
occurrence of any other event which would have a material effect on the security
interests created hereunder.
4.7 Contribution Agreement. (a) IXC agrees that, so long as this
Agreement is in effect, it will not, without the prior written consent of
Secured Party, do any of the following if such act would have a material adverse
effect on the Collateral; (i) amend, modify or permit to be amended or modified
the Contribution Agreement, (ii) waive or permit to be waived any material
provisions of the Contribution Agreement, or (iii) exercise any right to
terminate or cancel any material provision of the Contribution Agreement or
consent or agree to, or suffer or permit, the termination thereof whether or not
on account of any default therein specified.
(b) It is expressly agreed that anything herein to the contrary
notwithstanding, IXC shall remain liable under the Contribution Agreement to
perform all of its obligations thereunder and Secured Party shall have no
obligation or liability under the Contribution Agreement by reason of, or
arising out of, this Security Agreement nor shall the Secured Party be required
or obligated in any manner to perform or fulfill any obligations of IXC under or
pursuant to any of the Contribution Agreement, or to make any payment or to make
any inquiry, as to the nature or sufficiency of any payment received by it, or
to present or file any claim or to take any other action to collect or enforce
the payment of any amounts which may have been assigned to it or to which it may
be entitled hereunder at any time or times.
5. Remedies, Rights Upon Default. If any Default shall occur and be
continuing, the Secured Party may exercise (in addition to all other rights and
remedies granted to it in this Security Agreement) after thirty (30) days notice
to IXC (and the notice specified below of time and place of public or private
sale), may forthwith collect, receive, appropriate and realize upon the
Collateral or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or sell and deliver said Collateral (or contract
to do so), as the case may be, or any part thereof, in one or more parcels at
public sale or sales, at any exchange broker's board or at the Secured Party's
offices or elsewhere at such prices as it may deem best (subject to Section 2.2
and the last sentence of this Section 5), for cash or on credit or for future
delivery without assumption of any credit risk. The Secured Party shall have the
right upon any such public sale or sales to purchase the whole or any part of
said Collateral so sold. The Secured Party shall pay over the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses incurred therein or incidental
to the care, safekeeping or otherwise of any or all of the Collateral or in any
way relating to the rights of the Secured Party hereunder, for application on an
equal basis to the payment in whole or in part of
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the Secured Obligations, and only after such net proceeds need the Secured Party
account for the surplus, if any, to IXC. IXC agrees that neither Secured Party
needs to give more than thirty (30) days' notice (which notification shall be
deemed given when mailed, postage prepaid, addressed to IXC at its address
provided pursuant to this Security Agreement) of the time and place of any
public sale may take place and that such notice is reasonable notification of
such matters. The Secured Party's exercise of the foregoing rights and remedies
is subject to the provisions of Section 2.2 and any transferee (including the
Secured Party) of any of the Collateral must agree to be bound by such
provisions.
6. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
IXC for liquidation or reorganization, should IXC become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of IXC's assets, and shall continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
7. Notices. Unless otherwise provided herein, all notices and
communications concerning this Security Agreement shall be addressed to the
other party as follows:
If to IXC: IXC Internet Services, Inc.
Attn: Chief Financial Officer
5000 Plaza on the Lake
Suite 200
Austin, TX 78746
Facsimile No.: (512) 328-0239
- 7 -
<PAGE> 59
with copies to: IXC Communications, Inc.
Attention: General Counsel
5000 Plaza on the Lake
Suite 200
Austin, TX 78746
Facsimile No.: (512) 328-7902
Michael P. Whalen, Esq.
Riordan & McKinzie
695 Town Center Drive
Suite 1500
Costa Mesa, CA 92626
Facsimile No.: (714) 549-3244
If to PSINet: PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 20170
Attention: Chairman
Facsimile: (703) 904-1608
With a copy to:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 20170
Attention: General Counsel
Facsimile: (703) 904-9527
and to: Nixon, Hargrave, Devans & Doyle LLP
437 Madison Avenue
New York, New York 10022
Attention: Richard F. Langan, Jr.
Facsimile: (212) 940-3111
Unless otherwise provided herein, notices shall be sent by registered or
certified U.S. Mail, postage prepaid, or by commercial overnight deliver
service, or by facsimile, and shall be deemed served or delivered to the address
or its office on the date of receipt acknowledgement or, if postal claim notices
are given, on the date of this return marked "unclaimed," provided, however,
that upon receipt of a returned notice marked "unclaimed," the sending party
shall make a reasonable effort to contact and notify the other party by
facsimile.
8. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
- 8 -
<PAGE> 60
prohibition or unenforceability in any jurisdiction shall not invalidate or
render enforceable such provision in any other jurisdiction.
9. No Waiver; Cumulative Remedies. The Secured Party shall by any act,
delay, omission or otherwise be deemed to have waived any of its or their rights
or remedies hereunder and no waiver shall be valid unless in writing, signed by
the Secured Party, and then only to the extent therein set forth. A waiver by
the Secured Party of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Secured Party would
otherwise have had on any future occasion. No failure to exercise nor any delay
in exercising on the part of the Secured Party any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Security Agreement may
be waived, altered, modified or amended except by an instrument in writing, duly
executed by the party against which enforcement of such waiver, alteration,
modification or amendment is sought.
10. Successors and Assigns; Governing Law. This Security Agreement and
all obligations of IXC hereunder shall be binding upon the successors and
assigns of IXC, and shall, together with the rights, obligations and remedies of
the Secured Party hereunder inure to the benefit of and be binding upon the
successors and assigns of the Secured Party. This Security Agreement shall be
governed by, and be construed and interpreted in accordance with, the laws of
the State of Delaware.
11. Termination.
11.1 Short Term Indivisible IRU. Subject to Section 6 hereof, the
Secured Party's security interest in the Short Term Indivisible IRU shall
terminate upon the Secured Party's Acceptance of 10,000 Route Miles along the
Available System.
11.2 Agreement. Subject to Section 6 hereof, upon expiration of the
Purchase Agreement and the payment or performance of the Secured Obligations,
this Security Agreement shall terminate and PSINet will, at the request and
expense of IXC, execute and deliver to IXC a proper instrument or instruments
evidencing such termination.
12. Dispute Resolution. Any controversy or claim between or among the
Secured Party, IXC or IXC Carrier, Inc. arising out of or relating to this
Agreement or with respect to an alleged breach of the terms hereof shall be
resolved in accordance with the provisions of Section 19.14 of the Purchase
Agreement; provided that the foregoing shall not be applicable with respect to
any matters which arise in connection with any Bankruptcy Proceeding involving
IXC or IXC Carrier, Inc., as debtor.
- 9 -
<PAGE> 61
13. Counterparts. This Security Agreement may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
agreement.
14. No Conflict. Nothing contained in this Security Agreement shall be
deemed to alter, modify, affect or limit any of Secured Party's rights under the
Purchase Agreement.
IN WITNESS WHEREOF, IXC and PSINet have each caused this Security
Agreement to be executed by a duly authorized officer as of the date first set
forth above.
IXC Internet Services, Inc.
By:
------------------------------------
Name:
Title:
PSINet Inc.
By:
------------------------------------
Name:
Title:
- 10 -
<PAGE> 62
ACKNOWLEDGEMENT AND CONSENT
The undersigned, IXC Carrier, Inc. ("Carrier"), hereby acknowledges and
consents to the foregoing Security Agreement and Assignment and agrees not to
interfere with the rights or quiet enjoyment of the Secured Party under the
Purchase Agreement in accordance with its terms, except that IXC will have the
rights under Section 7.4(a) of the Purchase Agreement with respect to a
continuing breach (as determined by an arbitration) by Secured Party of a
Material Provision and in such event Carrier shall not be obligated to perform
any obligation which IXC is allowed pursuant to Section 7.4(a) to withhold or
suspend. Carrier hereby consents to the collateral assignment by IXC to the
Secured Party of the PSINet Rights under the Contribution Agreement as provided
in the Security Agreement and Assignment and recognizes the Secured Party as the
permitted assignee with respect to the PSINet Rights and agrees to allow the
Secured Party to exercise and obtain the benefit of such PSINet Rights. Carrier
hereby agrees to be bound by the provisions of Section 4.7 of the Security
Agreement and Assignment to the same extent as IXC and as if Carrier were a
party thereto. If Carrier gives any notices of the occurrence of a default or
event of default under the Contribution Agreement to IXC, Carrier shall
simultaneously give such notice to the Secured Party. Secured Party shall be
entitled to exercise the rights granted to IXC with respect to the PSINet Rights
and to obtain the benefits of the PSINet Rights under the Contribution Agreement
without being required or obligated to cure any default or event of default on
the part of IXC or to perform or fulfill any obligations of or make any payments
which were required to be made by IXC [except that at such time as Secured Party
exercises the PSINet Rights under the Contribution Agreement, Secured Party
shall be bound by the provisions of Sections _____ thereof].* Notwithstanding
the foregoing, upon and after the exercise by Secured Party of the PSINet Rights
under the Contribution Agreement, the Secured Party will have the same rights
and opportunity to cure the default or event of default as are given to IXC
under the Contribution Agreement. In no event shall Secured Party's obligations
with respect to the PSINet Rights under the Contribution Agreement exceed,
duplicate or be in addition to any obligation of Secured Party under the
Purchase Agreement. Carrier agrees that, with respect to the PSINet Rights, upon
a default or event of default on the part of IXC under the Contribution
Agreement, the Contribution Agreement will continue in full force and effect
between Carrier and the Secured Party in respect of the PSINet Rights to the
same extent as if Secured Party were a party thereto, subject to the fifth and
seventh sentences of this paragraph.
In the event of a Default under the foregoing Security Agreement and
Assignment, notwithstanding Section 5 thereof, Secured Party shall not be
entitled to foreclose, collect, receive, appropriate, sell, lease, assign, give
option or options to purchase, or sell or deliver, or contract to do any of the
foregoing or otherwise realize upon the PSINet Rights under the Contribution
Agreement (except that Secured Party may deal with its IRU capacity and shall
have the rights to the PSINet Rights and use thereof as provided and permitted
under the Purchase
- ---------------
* Such sections are subject to approval by Secured Party and shall not include
any payment obligations.
- 11 -
<PAGE> 63
Agreement with respect to the PSINet Fiber IRU and/or the IRU in the IRU
Capacity, including without limitation Section 15.5 of the Purchase Agreement).
Nothing contained herein shall (i) be deemed to modify, affect or limit any of
Secured Party's rights under the Purchase Agreement or (ii) prevent Secured
Party from taking any action necessary to preserve, protect, perfect or continue
its security interest in the PSINet Rights or (iii) prevent Secured Party from
using or obtaining the benefits of the PSINet Rights.
Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings ascribed thereto in the foregoing Security
Agreement and Assignment.
IXC Carrier, Inc.
By:
-------------------------------
Name:
Title:
The foregoing Acknowledgment and Consent is acknowledged and agreed to
by the undersigned.
PSINet Inc.
By:
-------------------------------
Name:
Title:
IXC Internet Services, Inc. hereby acknowledges receipt of notice of,
consents to and agrees to be bound by the terms and provisions of the foregoing
Acknowledgment and Consent as they relate to the relative rights of PSINet Inc.
and IXC Carrier, Inc.
IXC Internet Services, Inc.
By:
---------------------------------
Name:
Title:
- 12 -
<PAGE> 64
EXHIBIT C
[COLLOCATION AND INTERCONNECTION AGREEMENT]
<PAGE> 65
EXHIBIT C
TO
IRU AND STOCK PURCHASE AGREEMENT
COLLOCATION AND INTERCONNECTION AGREEMENT
This Collocation and Interconnection Agreement (this "Agreement") is
entered into as of the _________ day of _______________, 199_, by and between
IXC Internet Services, Inc., a Delaware corporation ("IXC"), and PSINet Inc., a
New York corporation ("PSINet"). All capitalized terms used but not otherwise
defined herein shall have the meanings set forth in that certain IRU and Stock
Purchase Agreement entered into as of July 22, 1997 by and between IXC and
PSINet (as amended, supplemented or modified, the "Purchase Agreement"). In the
event of any conflict between the terms of this Agreement and those of the
Purchase Agreement, the terms of the Purchase Agreement shall control.
BACKGROUND AND PURPOSE
This Agreement is made with reference to the following facts:
A. IXC and PSINet have entered into the Purchase Agreement pursuant to
which, among other things, PSINet has acquired from IXC the PSINet Fiber IRU,
the IRU Capacity and the option to order Bandwidth on the Available System and
IXC has acquired from PSINet shares of PSINet's common stock.
B. In connection with the Purchase Agreement, PSINet may wish to
collocate its telecommunications equipment ("Equipment") at IXC's premises or
points-of-presence ("POPs") and, or may wish to interconnect its Equipment to
IXC's or third party's equipment. This Agreement sets forth the terms and
conditions on which PSINet may collocate and, or interconnect its Equipment on
IXC's premises.
TERMS OF AGREEMENT
Accordingly, in consideration of the foregoing and of the mutual
covenants contained herein and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. IXC Premises. IXC's premises available for the collocation of
PSINet's Equipment or interconnection of PSINet's facilities are listed on
Exhibit K to the Purchase Agreement as it may be expanded from time to time (the
"IXC Premises" or "IXC POPs").
<PAGE> 66
2. Collocation Rights.
2.1 Collocation. IXC hereby grants to PSINet the right to locate,
install, maintain and operate Equipment at the IXC Premises for the duration of
the term of the Purchase Agreement. No use of the IXC Premises required or
permitted under this Agreement shall create or vest in PSINet any easements or
other ownership or property rights of any nature in IXC's real or personal
property or the IXC Premises.
2.2 Basic Services. In consideration of the maintenance fee that
PSINet is required to pay IXC under the section entitled System Maintenance and
POPs - Consideration set forth in the Purchase Agreement, IXC shall supply HVAC
(Heating, Ventilation and Air Conditioning) for standard components, non-UPS AC
power and space for PSINet Equipment at the IXC POPs as follows:
<TABLE>
<CAPTION>
Sites # of Spaces* Power Per Space
----- ------------ ---------------
<S> <C> <C> <C>
As listed on Exhibit K * *
</TABLE>
* A space adequate to contain a cabinet (measuring 2 feet (width) x 3 feet
(depth) x 70 inches (height)). PSINet shall supply its own cabinets. If PSINet
has more, or desires more, than six Spaces in the IXC POPs, PSINet shall be
required to pay for those Spaces at IXC's standard rates.
2.3 Interface. Interface points for PSINet's IRU Capacity
provided by IXC under the Purchase Agreement shall be at fiber patch panels
("Connect Panels") located in the IXC Premises. The Connect Panel located in the
IXC Premises shall be the demarcation to establish PSINet's operational and
maintenance responsibilities. Subject to the space limitations set forth in this
Agreement, PSINet shall provide, install and maintain at its expense the
electronic equipment at the IXC Premises it desires. PSINet will pay IXC time
and materials agreed upon on a case by case basis for equipment installation,
tech-assists and build-outs for power, cabling and HVAC.
2.4 Additional Services. In the event PSINet desires installation
services (including, but not limited to cross connect facilities needed to
access local exchange carriers' or competitive access providers' entrance
facilities), DC power, or additional space, AC power or HVAC (collectively
referred to as the "Services") at any of the IXC Premises, it shall make a
written request for such Services to IXC. Within fifteen (15) business days
after receiving such written request, IXC shall provide PSINet with the
availability of the Services and IXC's standard rates for the Services. In the
event upgrades or expansions to the IXC Premises or its facilities are necessary
to accommodate PSINet's request, IXC may include the entire cost of such
upgrades or expansions in the cost to PSINet. In the event IXC provides the
Services to PSINet by replacing its existing equipment at PSINet's expense, IXC
shall give the old, replaced equipment to PSINet. In the event PSINet chooses to
receive additional Services at the IXC Premises, PSINet shall pay any and all
(initial and continuing) costs reasonably determined by
- 2 -
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 67
IXC to be necessary to provide Services to PSINet. If IXC makes available and
PSINet utilizes more than 20 amps of AC power per Space during any particular
month during the term of this Agreement, PSINet shall pay IXC its standard rate
for each additional amp. IXC shall provide PSINet with an invoice setting forth
the costs for additional Services within sixty (60) days of the later of: (a)
IXC receiving its invoices for such Services from subcontractors and vendors or
(b) delivering the Services to PSINet. PSINet shall pay IXC the amounts due
within thirty (30) days of receipt of an invoice from IXC.
2.5 Back-up Power. In the event that PSINet desires back-up power
at the IXC POPs, PSINet shall submit its back-up power requirements to IXC. IXC
shall within thirty days of receipt of PSINet's request provide PSINet with a
quote as to IXC's costs for providing such back-up power; provided however, that
IXC shall only be obligated to provide such quote and the back-up power if IXC,
in its sole discretion, determines that providing such back-up power is feasible
considering available space, environmental factors, required consents from third
parties and other relevant factors. In the event IXC does provide back-up power
to PSINet: (a) IXC shall provide PSINet with invoices setting forth the costs
for such back-up power within sixty (60) days of the later of: (i) IXC receiving
its invoices from subcontractors and vendors for installing and providing such
back-up power or (ii) delivering the back-up power to PSINet; and (b) IXC will
have no liability whatsoever to PSINet with regard to any delay, failure or
defect in such back-up power and Section 18 shall apply to such power. IXC's
initial and ongoing costs for providing such back-up power to PSINet may be
included in IXC's invoices to PSINet. PSINet shall pay IXC the amounts due
within thirty (30) days of receipt of an invoice from IXC.
2.6 Delivery and Installation. PSINet shall, at its own expense,
deliver, install and maintain its collocated Equipment in a safe condition and
meeting or exceeding the standards set forth in Section 7.2. At no additional
charge, IXC shall provide to PSINet Spaces that are reasonably proximate to each
other in light of the type of Equipment that PSINet is installing; provided,
however, that if PSINet or its Equipment requires a specific geometric
arrangement, and IXC determines that in order to accommodate PSINet or its
Equipment, rearrangement of the existing facilities at the IXC Premises is
required, PSINet agrees to reimburse IXC for any such make-ready costs. IXC will
advise PSINet in writing of any estimated make-ready charges (including
investigation, design and engineering fees) for such rearrangement work and
PSINet shall make payment to IXC within thirty (30) days from its receipt of
IXC's invoice therefor.
3. Interconnection with PSINet POPs.
3.1 Construction and Installation. In the event PSINet desires to
connect any of its POPs to any IXC POP, PSINet may construct, install, operate
and maintain a connection facility (the "POP-to-POP Interconnect Facility")
between the PSINet premises and the IXC Premises so long as PSINet meets or
exceeds the standards set forth in Section 7.2. PSINet shall provide at its
expense all necessary rights-of-way, permits, equipment and IXC-approved
materials to construct and install each POP-to-POP Interconnect Facility,
including, but not limited to, cables and conduit and any labor charges
associated therewith. If necessary, and where applicable, IXC shall use
commercially reasonable efforts to provide PSINet, at PSINet's
- 3 -
<PAGE> 68
expense, access to existing building entrance facilities, if available, to
access and exit IXC POPs. The demarcation point for PSINet shall be in the IXC
POPs at the Connect Panel or the DSX panel, as appropriate.
3.2 Ownership. PSINet shall retain ownership of any portion of
the POP-to- POP Interconnect Facility that is located on the IXC Premises during
the term of this Agreement; provided, however, that title to any part of the
POP-to-POP Interconnect Facility within the IXC Premises shall be transferred to
IXC upon expiration or termination of this Agreement.
3.3 Maintenance and Changes. PSINet shall be responsible for
maintenance and repair of the POP-to-POP Interconnect Facility on PSINet's side
of the point of demarcation. Any improvement, modification, addition to,
relocation, or removal of, the POP-to-POP Interconnect Facility by PSINet at the
IXC Premises is subject to prior review and written approval by IXC Transmission
Engineering Department and the cost of such improvement, modification, addition
to, relocation, or removal of, the POP-to-POP Interconnect Facility will be the
sole responsibility of PSINet. IXC's approval will not be unreasonably withheld
and in the event IXC fails to respond to PSINet's written request within thirty
(30) days of receiving PSINet's request for such changes, IXC's shall be deemed
to have approved PSINet's request.
4. Interconnection to Third Parties. Interconnect facilities to
interconnect PSINet's equipment to other parties within IXC's POPs shall be
installed and maintained subject to available space at the IXC POPs and under
the following terms and conditions:
(a) *
Should subsequent interconnections become necessary after
initial installation, up to the aggregate bandwidth capacity of
the circuits PSINet has ordered at the POP, realignment of the
interconnections shall be subject to the preceding and to the
reconfiguration charges as indicated in Exhibit E. All such
interconnections shall be subject to the provisions of Section
15.5 of the Purchase Agreement.
(b) PSINet shall reimburse IXC for the capital cost to establish a
point of demarcation for Additional Interconnects that PSINet
requests IXC to provide. This demarcation shall be in the IXC
equipment room and shall be either the IXC standard DSX
termination or fiber distribution frame as is applicable for the
interconnects required.
- 4 -
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 69
(c) IXC shall charge PSINet a one time charge and a monthly
recurring charge for each Additional Interconnect in the IXC
POP. These charges shall be an amount equal to the then standard
ancillary pricing for such service set forth on Exhibit E to the
Purchase Agreement. Nothing in this Agreement shall prevent or
in any way limit IXC's ability to charge third parties for
interconnection.
(d) In the event IXC chooses to cross-connect with an Additional
Interconnect party for which PSINet has paid a charge to IXC
under Section 4(b), IXC shall at IXC's option: (i) refund to
PSINet such charge or (ii) shall pay PSINet a monthly
cross-connect fee negotiated by the parties at such time.
(e) IXC's maintenance responsibility shall be limited to the
demarcation point and the associated cross connect at that
point.
(f) PSINet shall not use any interconnect facility to allow third
parties collocated in any POP to interconnect with each other at
that POP.
5. Notice to Interconnect or Collocate. No later than forty-five (45)
days prior to PSINet's planned installation of its Equipment or POP-to-POP
Interconnect Facilities at any IXC Premises, PSINet shall provide to IXC notice
of its desire to interconnect/locate in a particular IXC Premise, a copy of
PSINet's construction design drawings and installation schedule for IXC's review
and approval (collectively referred to hereon as the "Interconnect/Collocation
Notice"). The Interconnect/Collocation Notice shall (at a minimum) include: (a)
PSINet's installation date(s); (b) any excess cable storage requirements; (c)
identification of all POP-to- POP Interconnect Facilities and Equipment to be
installed; (d) a diagram of the desired location of the POP-to-POP Interconnect
Facilities and Equipment; (e) the space, power, environmental and other
requirements for the POP-to-POP Interconnect Facilities and Equipment; (f) the
estimated commencement and termination dates for the
interconnection/collocation; (g) all other information reasonably required by
IXC. PSINet's Equipment shall be placed and maintained in accordance with IXC's
requirements and specifications. Within two weeks of receiving the
Interconnection/Collocation Notice, IXC shall respond to PSINet's
Interconnection/Collocation Notice with its acceptance or objections.
6. Required Authorizations. PSINet shall obtain, at its sole cost and
expense, from any appropriate public and/or private authority, any required
permission, authorization, permit, license or easement (collectively, the
"Authorizations") to bring fiber to the IXC Premises and, or needed to
construct, install, operate and maintain the POP-to-POP Interconnect Facility
and to use the property over which the POP-to-POP Interconnect Facility will be
operated and maintained. PSINet represents and warrants that such Authorizations
shall be in effect for the entire Term of this Agreement. IXC shall cooperate
with PSINet in its efforts to obtain such authorizations.
- 5 -
<PAGE> 70
7. Use of Equipment and POP-to-POP Interconnect Facilities.
7.1 No Interference. PSINet shall not use its fibers, Equipment
or POP-to- POP Interconnect Facilities, and IXC shall not use its fiber,
equipment or interconnect facilities in any way which interferes with the other
party's use of its fibers or equipment or in any manner which violates any of
the terms or conditions of this Agreement or the Purchase Agreement. PSINet
shall not install any electrical or other equipment that overloads any
electrical paneling, circuitry or wiring.
7.2 Standards. PSINet shall ensure that its equipment and any
POP-to-POP Interconnect Facilities (as defined) are installed to meet or exceed
any reasonable requirements of IXC, any requirements of IXC's building
management, and any applicable local, state and federal codes and public health
and safety laws and regulations (including fire regulations and the National
Electric Code). In the event IXC's building management or any local, state or
federal body determines the POP-to-POP Interconnect Facility is not in
compliance with the applicable laws and regulations, PSINet shall immediately
make any changes necessary such that the POP-to-POP Interconnect Facility no
longer conflicts with such law or regulations. PSINet further agrees to comply
with the requirements of IXC's or IXC's building management's insurance
underwriter(s).
7.3 Intervention. If any part of PSINet's fiber, POP-to-POP
Interconnect Facilities or Equipment is not placed and maintained in accordance
with the terms and conditions of this Agreement and PSINet fails to correct the
violation within thirty days from receipt of written notice thereof from IXC,
then IXC may, at its option, without further notice to PSINet, correct the
deficiency at PSINet's expense without liability for damages to the fiber,
POP-to-POP Interconnect Facilities or Equipment or for any interruption of
PSINet's services. As soon as practicable thereafter, IXC shall advise PSINet in
writing of the work performed or the action taken. PSINet shall reimburse IXC
for all expenses incurred by IXC associated with any work or action performed by
IXC pursuant hereto. PSINet shall remit payment to IXC within thirty days from
its receipt of IXC's invoice therefor.
7.4 Threat to Persons or Property. In the event, and in IXC's
sole determination, if PSINet's fiber, POP-to-POP Interconnect Facilities or
Equipment poses an immediate threat to the safety of IXC employees or the
public, interferes with the performance of IXC's service obligations, or poses
and immediate threat to the physical integrity of IXC's facilities, IXC may
perform such work and/or take such action that it deems necessary without notice
to PSINet and without subjecting itself to any liability for damage to the
fiber, POP-to- POP Interconnect Facilities or the Equipment or for any
interruption of PSINet's services. As soon as practicable thereafter, IXC shall
advise PSINet in writing of the work performed or the action taken. PSINet shall
reimburse IXC for all expenses incurred by IXC associated with any work or
action performed by IXC pursuant hereto. PSINet shall remit payment to IXC
within thirty days from its receipt of IXC's invoice therefor.
- 6 -
<PAGE> 71
8. Access to IXC Premises.
8.1 Notice. Except as specifically set forth in the Purchase
Agreement, the terms in this Section 8 shall govern PSINet's access to the IXC
Premises. In the event PSINet's Equipment or POP-to-POP Interconnect Facilities
are located in the IXC Premises Customer Interface Facility ("CIF"), PSINet may
perform routine preventative maintenance or emergency maintenance and repairs on
its Equipment or POP-to-POP Interconnect Facilities during normal business hours
(7 am - 6 pm local time) without advance notice to IXC. In the event PSINet
desires to: (a) perform routine preventative maintenance or emergency
maintenance and repairs during non-business hours; (b) perform any procedures
other than routine preventative maintenance (such as installation, removal or
relocation of its Equipment or POP-to-POP Interconnect Facilities); (c) perform
any function outside of the CIF or (d) access (on PSINet's side of the
demarcation point) the fibers leading from the IXC electronics which provide the
IRU Capacity, PSINet may do so if: (x) it provides reasonable advance notice to
IXC; and (y) a IXC employee or representative is present on the IXC Premises at
the time. Notice provided as follows shall be deemed "reasonable advance notice"
for the purposes of this section: (i) twenty-four (24) hours for routine
preventative maintenance during non-business hours or outside the CIF; (ii) two
(2) hours for repairs of network malfunction causing loss of service or degraded
conditions (during non-business hours or outside the CIF), provided that such
period shall be reasonably tolled to permit IXC to dispatch personnel to an
un-manned IXC Premise upon receipt of a request for access thereto; (iii) two
(2) weeks notice for removing POP-to-POP Interconnect Facilities and, or
Equipment (regardless of location or time) and (iv) forty-five (45) days (as set
forth in Section 5) for installing Equipment or POP-to-POP Interconnect
Facilities (regardless or location or time). The presence of a IXC employee or
representative shall not relieve PSINet of its responsibility to conduct all of
its work operations in the IXC Premises in a safe and workmanlike manner. Under
no circumstances shall PSINet have access to any fibers on the IXC side of the
demarcation point.
8.2 Security. PSINet shall abide by IXC's reasonable security
requirements. When deemed appropriate by IXC, PSINet employees or
representatives shall be issued passes or visitor identification cards which
must be presented upon request before entry to the IXC Premises and surrendered
upon demand or upon termination of this Agreement. Such passes or other
identification shall be issued only to persons meeting any reasonable security
criteria applicable at the IXC Premise for such purpose. Notwithstanding any
other provision of this Agreement, IXC shall, without threat of liability, have
the right to immediately terminate the right of access of any PSINet personnel
or representative should it determine in its sole discretion for any lawful
reason that such termination is in its best interest. IXC shall promptly notify
PSINet of any such termination, and PSINet shall have a reasonable opportunity
to demonstrate that the terminated rights of access should be reinstated. Any
termination of access shall remain in effect pending such demonstration and
IXC's final determination as to the advisability of such reinstatement.
9. Relocation. PSINet shall, at its own expense, relocate its fiber,
POP-to-POP Interconnect Facilities and Equipment upon IXC's written request and
in the reasonable (under
- 7 -
<PAGE> 72
the circumstances) time frame required by IXC. Such relocations could be within
the IXC POP or in the event the entire IXC POP is relocated. In any such event,
IXC shall provide the following services at no cost to PSINet: (i) site
make-ready; (ii) the intra-site cabling functionally equivalent to that which
existed in the prior IXC POP; (iii) relocation of IXC's IRU circuits and
equipment used by PSINet; and (iv) re-establishing competitive access provider
and local exchange carrier interconnects common to both IXC and PSINet.
10. No Restrictions. Except as specifically set forth in the Purchase
Agreement, nothing contained in this Agreement shall be construed as a
limitation, restriction or prohibition against IXC with respect to any agreement
or arrangement which IXC has heretofore entered into, or may in the future enter
into, with others not parties to this Agreement regarding the IXC Premises.
IXC's right to maintain and operate its facilities in such a manner as will best
enable it to fulfill its own service requirements is in no manner limited by
this Agreement.
11. Inspections. IXC reserves the right to make periodic inspections of
any part of the fiber, POP-to-POP Interconnect Facilities and Equipment located
within or physically attached to the IXC Premises; provided that PSINet shall
have the right to have one or more of its employees or representatives present
during the time of any such inspection. IXC shall give PSINet advance notice of
such inspections, except in those instances where, in the sole judgement of IXC,
safety considerations justify the need for such an inspection without the delay
of providing notice. The making of periodic inspections or the failure to do so
shall not operate to impose upon IXC any liability of any kind whatsoever nor
relieve PSINet of any responsibility, obligation, or liability assumed under
this Agreement.
12. Emergencies. In the event of an emergency:
(a) IXC's work shall take precedence over any and all operations
of PSINet in the IXC Premises and IXC may rearrange PSINet's
Equipment or POP-to-POP Interconnect Facilities.
(b) IXC shall use reasonable efforts to provide PSINet with
advance notice of any such work.
(c) IXC shall use reasonable care given the circumstances when
handling PSINet Equipment.
13. Liens and Encumbrances. PSINet shall not have the power, authority
or right to create and shall not permit any lien or encumbrance, including,
without limitation, tax liens, mechanics' liens, or other liens or encumbrances
with respect to work performed, in connection with the installation, repair,
maintenance or operation of its Equipment, POP-to-POP Interconnect Facilities or
other property installed within the IXC Premises.
14. Term. This Agreement shall become effective as of its execution by
both parties and shall continue in effect until such time as it is terminated on
the earlier of (a) the expiration
- 8 -
<PAGE> 73
or termination of the Purchase Agreement or (b) such time as it is terminated as
provided herein or by operation of law.
15. Subordination. PSINet agrees that its rights under this Agreement
shall be totally subordinate to any mortgages, loans, deeds of trust or any
other borrowing upon the real or personal property which may be incurred by IXC.
PSINet shall sign any such reasonable documents as are necessary to satisfy any
lender, private or institutional, to reflect said subordination.
16. Release; Indemnification. Each party (each party in such capacity
being referred to as the "Releasing Party") releases, assumes and agrees to
indemnify, defend, protect and save the other party harmless from and against
any claim, damage, loss, liability, cost and expense (including reasonable
attorneys' fees) in connection with any loss or damage to any physical property
or facilities of the Releasing Party or any injury to or death of any person
arising out of or resulting in any way from the negligence or misconduct of the
Releasing Party or its employees, servants, contractors and/or agents.
17. Limitation of Liability.
17.1 Equipment and Facilities. IXC, its employees or
subcontractors shall not be liable for any damages to PSINet's fiber, POP-to-POP
Interconnect Facilities and Equipment collocated on the IXC Premises, except to
the extent that such damages are caused by the gross negligence or intentional
acts of IXC, its agents or employees; provided that the maximum liability of IXC
for any damage to PSINet's fiber, POP-to-POP Interconnect Facilities and
Equipment shall not exceed the replacement value of the fiber, POP-to-POP
Interconnect Facilities and Equipment, or in the event that the fiber,
POP-to-POP Interconnect Facilities and the Equipment is repairable, the costs to
restore the fiber, POP-to-POP Interconnect Facilities and the Equipment to its
original condition. IXC shall not be liable for any damages of whatever nature,
including, but not limited to actual or consequential damages, arising from any
interruption or failure in the supply of utilities to the IXC Premises.
17.2 No Consequential Damages. Except as specifically provided
for in the Purchase Agreement, in no event shall IXC or PSINet be liable for any
special, incidental, direct, indirect, punitive, reliance or consequential
damages, whether foreseeable or not, arising under this Agreement or from any
breach or partial breach of the provisions of this Agreement or occasioned by
any defect in the Bandwidth or other service provided hereunder, delay in
availability of the Bandwidth or any service provided hereunder, failure of the
Bandwidth or other service provided hereunder, interruptions or outages of the
Available System or any other cause whatsoever or arising out of any act or
omission by IXC or PSINet, as applicable, its employees, servants and/or agents,
including but not limited to, damage or loss of property or equipment, loss of
profits or revenue, cost of capital, cost of replacement services, or claims of
customers for service interruptions or transmission problems.
- 9 -
<PAGE> 74
18. Disclaimer of Warranty. IXC MAKES NO WARRANTY TO PSINet OR ANY OTHER
PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED, OR STATUTORY, AS TO THE DESCRIPTION,
QUALITY, MERCHANTABILITY, COMPLETENESS OR FITNESS FOR ANY PARTICULAR PURPOSE OF
ANY PREMISES, FACILITIES, SERVICES, EQUIPMENT, POWER, CABLE OR FIBERS PROVIDED
HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED. NO OTHER WARRANTIES ARE EXPRESSED
OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
19. Default/Termination.
19.1 Default. A party may deliver to the other party a written
"Notice of Default" for: (i) failing to make any payment owed hereunder, when no
bona fide dispute exists (a "Monetary Default"); or (ii) the breaching by either
party or its agents, assigns or affiliates of any Material Provision; or (iii)
the filing or initiating of proceedings by or against a party seeking
liquidation, reorganization or other such relief under any federal or state
bankruptcy or insolvency law (a "Bankruptcy Proceeding"). Such Notice of Default
must prominently contain the following sentences in capital letters: "THIS IS A
FORMAL NOTICE OF A BREACH OF CONTRACT. FAILURE TO CURE SUCH BREACH WILL HAVE
SIGNIFICANT LEGAL CONSEQUENCES." A party that has received a Notice of Default
shall have five (5) business days to cure a Monetary Default, thirty (30) days
to cure the alleged breach of any Material Provision (and, if the defaulting
party shall have commenced actions in good faith to cure such defaults which are
not susceptible of being cured during such 30-day period, such period shall be
extended (but not in excess of 90 additional days) while such party continues
such actions to cure), and shall be given ninety (90) days to remove, have
dismissed or stay any involuntary Bankruptcy Proceeding (each such period, a
"Cure Period"). If such party fails to cure the breach within the Cure Period,
as long as such default shall be continuing, the non-defaulting party shall have
the right to either (a) suspend its performance or payment obligations under
this Agreement, (b) seek an order of specific performance, and/or (c) seek the
award of compensatory damages.
19.2 Removal Upon Termination. Upon termination of this Agreement
for any reason other than a material default by IXC, PSINet shall remove, at its
sole expense, its fiber, POP-to-POP Interconnect Facilities and Equipment within
ten (10) days following such termination. In the event PSINet fails to remove
its fiber, POP-to-POP Interconnect Facilities and Equipment within such ten (10)
day period, the fiber, POP-to-POP Interconnect Facilities and Equipment shall be
deemed abandoned and IXC, at its sole discretion and without liability, may
remove the fiber, POP-to-POP Interconnect Facilities and Equipment and be
reimbursed by PSINet for all costs associated with such removal. PSINet shall
make payment to IXC for any such costs within thirty days of its receipt of an
invoice containing such costs. In the event this Agreement terminates due to a
material default by IXC, either PSINet or IXC may remove the PSINet Equipment or
POP-to-POP Interconnect Facilities at its own expense upon fifteen (15) working
days written notice to the other party.
- 10 -
<PAGE> 75
20. Insurance. PSINet shall, at its expense, obtain and keep in full
force and effect at all times for the duration of this Agreement, with a carrier
or carriers satisfactory to IXC, insurance policies of the following kinds and
in the following amounts:
(a) Worker's Compensation Insurance in accordance with all applicable
laws;
(b) Employer's liability insurance with limits for employer's
liability of $500,000 per accident;
(c) Comprehensive bodily injury and property damage liability
insurance, including automobile insurance and contractual liability insurance,
in at least the following amounts:
<TABLE>
<S> <C>
Bodily injury to any one person $ 1,000,000
Bodily injury aggregate per occurrence $ 1,000,000
Property damage in any one accident $ 500,000
Property damage aggregate per occurrence $ 1,000,000
</TABLE>
Upon request of IXC, PSINet shall furnish IXC certificates of such insurance
and/or copies of the applicable policies, and each policy shall provide that no
change or cancellation shall become effective except upon twenty (20) days prior
written notice to IXC of such change or cancellation. In the event of any change
or cancellation not acceptable to IXC, IXC may demand that PSINet obtain
replacement coverage. If PSINet fails to obtain replacement coverage within
twenty (20) days after such demand by IXC, IXC may obtain replacement coverage
and invoice all premiums therefore to PSINet. PSINet shall make payment to IXC
for any amount of such invoices within thirty days of its receipt thereof.
21. Assignment. Except as provided below, this Agreement may not be
assigned in whole or in part without the prior written consent of IXC. PSINet
may assign this Agreement in whole, but not in part and only in connection with
a permitted assignment of all of PSINet's rights and obligations under the
Purchase Agreement to an entity that is both a permitted assignee under the
section entitled Binding Effect; Assignment in the Purchase Agreement and a
permitted transferee under the section entitled Restrictions on Resale in the
Purchase Agreement; provided, however, that any such assignment or transfer
shall be subject to IXC's rights under this Agreement and an assignee or
transferee shall continue to perform PSINet's obligations to IXC under the terms
and conditions of this Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
22. Notices. All notices, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally, the next business day after delivered to a nationally recognized
overnight courier for next business day delivery, when transmitted by facsimile
or five (5) days after sent by registered or certified mail, return receipt
requested, to the parties (and to the Persons receiving copies thereof) at the
- 11 -
<PAGE> 76
following addresses or facsimile numbers (or to such other address or facsimile
number as a party may have specified by notice given to the other party pursuant
to this provision):
If to IXC to:
IXC Internet Services, Inc.
5000 Plaza on the Lake, Suite 200
Austin, Texas 78746
Attention: Chief Financial Officer
Facsimile: (512) 328-0239
With copies to:
IXC Communications, Inc.
5000 Plaza on the Lake, Suite 200
Austin, Texas 78746
Attention: General Counsel
Facsimile: (512) 328-7902
Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, California 92626
Attention: Michael P. Whalen
Facsimile: (714) 549-3244
If to PSINet to:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 20170
Attention: Chairman
Facsimile: (703) 904-1608
With copies to:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 20170
Attention: General Counsel
Facsimile: (703) 904-9527
- 12 -
<PAGE> 77
Nixon, Hargrave, Devans & Doyle LLP
437 Madison Avenue
New York, New York 10022
Attention: Richard F. Langan, Jr.
Facsimile: (212) 940-3111
23. General Provisions.
23.1 Laws and Licenses. This Agreement is subject to all
applicable federal, state and local laws, regulations, rulings and orders of
governmental agencies, including, but not limited to, the Communications Act of
1934 as amended by the Telecommunications Act of 1996, and the rules and
regulations of the FCC. IXC and PSINet agree that, except as otherwise provided
herein, the statute of limitations set forth in the Communications Act of 1934,
47 U.S.C. section 415, as amended, shall govern all actions arising out of this
Agreement, including arbitrations.
23.2 Confidentiality. This Agreement shall be governed by the
terms of the Confidentiality Agreement entered into between the parties and
dated as of May 14, 1997.
23.3 Amendments, Waivers and Consents. For purposes of this
Agreement and the Transaction Documents, except as otherwise specifically set
forth herein or therein, no course of dealing between PSINet and IXC and no
delay on the part of either party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. No
covenant or other provision hereof or thereof may be waived or amended other
than by a written instrument signed by the party so waiving or amending such
covenant or other provision.
23.4 Section Headings. The table of contents and section headings
in this Agreement have been inserted for reference purposes only and shall not
be deemed to limit or otherwise affect the construction of any provision thereof
or hereof.
23.5 Governing Law. This Agreement shall be deemed to be a
contract made under, and shall be construed in accordance with, the laws of the
State of Delaware without reference to its principles of conflicts of law.
23.6 Dispute Resolution. Any controversies, claims or disputes
arising out of or relating to this Agreement shall be resolved in the manner set
forth in the section entitled Dispute Resolution in the Purchase Agreement.
23.7 Severability. In the event that any one or more of the
clauses, covenants or provisions contained in this Agreement should be held to
be unenforceable under any Federal, State or City law, statute, code,
administrative or regulatory rule, such invalidity or unenforceability shall not
affect the remainder of this Agreement, which shall remain in full force and
effect.
- 13 -
<PAGE> 78
23.8 Interpretation. This Agreement shall be interpreted in a
manner so as to be consistent with the Purchase Agreement and under the same
rules of construction and interpretation set forth in the Purchase Agreement.
23.9 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which when so executed and delivered
shall be taken to be an original, but such counterparts shall together
constitute but one and the same document.
23.10 Facsimile Delivery. This Agreement may be delivered by
facsimile transmission of an executed counterpart signature page hereof, and
after attachment of such transmitted signature page to a copy of this Agreement,
such copy shall have the same effect and evidentiary value as copies delivered
with original signatures. Any party delivering this Agreement by facsimile
transmission shall deliver to the other party, as soon as practicable after such
delivery, an original executed counterpart signature page of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
IXC Internet Services, Inc.
By:
---------------------------------
Name:
Title:
PSINet Inc.
By:
---------------------------------
Name:
Title:
- 14 -
<PAGE> 79
EXHIBIT D
NEWCO COMMON STOCK
PERCENTAGE DETERMINATION
<PAGE> 80
Exhibit D to the IRU
and Stock Purchase Agreement
Newco Common Stock Percentage Determination
The exact number of IXC Initial Common Shares to be issued and
delivered by PSINet to IXC at the Closing shall be equal to 19.99999% of the
total number of issued and outstanding shares of Common Stock of PSINet as of
the Closing Date (after giving effect to the issuance of the IXC Initial Common
Shares pursuant to the Agreement), including, for this purpose, shares of Common
Stock of PSINet issuable upon exercise of all warrants issued and outstanding as
of the Closing Date, but without giving effect to any shares of Common Stock
issuable (i) upon exercise of any options issued to current and former
employees, officers, directors and consultants of PSINet and its subsidiaries
which are outstanding as of the Closing Date, and/or (ii) pursuant to such
rights, if any, that Chatterjee (as defined in Section 13.9 of the PSINet
Disclosure Schedule) and/or its designee may have as of the Closing Date under
the Joint Venture Agreement (as defined in Section 13.9 of the PSINet Disclosure
Schedule) (see Section 13.9 of the PSINet Disclosure Schedule); *
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 81
EXHIBIT E
ASSOCIATED SERVICES
<PAGE> 82
EXHIBIT E
TO
IRU AND STOCK PURCHASE AGREEMENT
Associated Services
Ancillary Pricing Schedule for On-Net Service
<TABLE>
<CAPTION>
Non-Recurring Charges DS-1 DS-3 OC-3 OC-12
- --------------------------------------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New Order Installation (On-Net) $ * $ * *
New Order Installation (Off-Net) * * * *
DS-1 Ramp-Up per DS-O $ * * * *
Order Change (less than 5 business days) $ * $ * $ * $ *
Order Cancellation (less than 5 business days) $ * $ * $ * $ *
ASR (new or disconnect) (Special Access Only) $ * $ * $ * $ *
ASR Supplement $ * $ * $ * $ *
Order Expedite $ * $ * $ * $ *
Reconfiguration ---------- Same as Install ----------
</TABLE>
<TABLE>
<CAPTION>
Monthly Recurring Charges DS-1 DS-3 OC-3 OC-12
- --------------------------------------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Minimum circuit charge (IXC portion) $ * $ *
Cross-connect charge $ * $ * $ * $ *
Other Interexchange Carrier to Lessor local
access or bypass facility (Lessor long haul
not involved)
Local bypass charge $ * $ * $ * $ *
Lessor POP to Lessor POP in same city,
with no Lessor long haul attached at either
Lessor POP
</TABLE>
*Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 83
<TABLE>
<CAPTION>
Miscellaneous Recurring Non-Recurring
- ----------------------------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
M13 1 yr Term * *
2+ yr Term * *
3+ yr Term * *
Echo Canceller (per circuit end) * *
Second End Loop (Ex: for ADPCM) * *
Demand Maintenance *
Rack Space *
Shelf Space * *
DC Power *
CIF AC/DC Power *
All other services *
</TABLE>
- --------------------
(1) All of the above charges are subject to change with a 30-day notice.
(2) Services not described above will be considered special handling and
charges will be assessed on an individual basis.
*Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
- 2 -
<PAGE> 84
DSO Ancillary Pricing
<TABLE>
<CAPTION>
DSO Ancillary Pricing
--------------------
<S> <C> <C>
New Order Installation $ *
Order Cancellation Prior to Turn up $ *
Order Expedite $ *
Reconfiguration (City pairs the same) $ *
DCS Charge (Switching Only) $ *
DSO DCS Port Charge (Bell access at DCS) $ *
DSI DCS Port $ *
Minimum Charge per DS-0 $ *
</TABLE>
- --------------------
(1) All of the above charges are subject to change with a 30-day notice.
(2) Services not described above will be considered special handling and
charges will be assessed on an individual basis.
*Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
- 3 -
<PAGE> 85
IXC Policy Overview, Collocation Rack Space Cost
In reference to Rack Space Non Recurring Installation Charges (One time buildout
charges)
The cost for buildout of rack space is $* per rack space. This cost includes the
following:
- - Rack 19', 23' or 26' Racks. Cabinets will be addressed on a case by case
basis.
- - Termination of DC power to rack mounted fuse panels and AC power to a
dual outlet box. Note: AC power is NOT uninterruptable, generators are
available at most sites but UPS's are not. Check with IXC representative
for site specific power capabilities.
- - Termination of up to 6 DS-3 signal cable pairs (coax) or 56 DS-1
circuits (ABAM) to DSX panels. Additional terminations will be charged
at the rate of $* per DS3, and $* per 28 DS1s or a fraction thereof.
Fiber termination is not included in this price and will be reviewed on
a case by case basis.
- - Termination of two POTS lines for remote access to hardware will be
allowed, where LEC entrance facilities are available. Customer will be
responsible for ordering and billing of such service and providing
termination in customer racks.
- - Only IXC approved materials will be installed, IXC Engineering contact
can provide details.
- - IXC will sign off on the install verifying quality and test results.
- - Customer installation equipment must meet all applicable National
Electric Code requirements and any other applicable safety/building code
requirements.
For crossconnect and monthly recurring charges, please refer to the Ancillary
Pricing Schedule as part of the customer Digital Service Agreement.
IXC installation standards are available, and any questions, with regards to
installs, should be addressed with the site technician, prior to installation.
Standard CIF time lines will be maintained for rack installations, contact the
IXC CIF Specialist to review these time frames once site CIF space availability
have been confirmed.
*Confidential material has been omitted and filed separately
with the Securities and Exchange Commission.
- 4 -
<PAGE> 86
EXHIBIT F
OC-N SPECIFICATIONS AND TESTING STANDARDS
<PAGE> 87
EXHIBIT F
TO
IRU AND STOCK PURCHASE AGREEMENT
OC-N Specifications and Testing Standards
OC-3: The ANSI SONET (Synchronous Optical Network) transmission
standard for high capacity optical telecommunications whose line rate is 155.52
Mbps. One OC-3 is comprised of 3 STS-1 Synchronous Transport Signal, Level 1
signals which, at 51.84 Mbps, is the lowest level SONET signal. The STS-1 is
defined at the electrical level prior to optical conversion. These SONET
standards and elements are further defined in the "Bellcore Synchronous Optical
Network (SONET) Transport Systems: Common Generic Criteria GR-253-CORE, Issue 2,
December, 1995."
OC-12: The ANSI SONET (Synchronous Optical Network) transmission
standard for high capacity optical telecommunications whose line rate is 622.08
Mbps. One OC-12 is comprised of 12 STS-1 Synchronous Transport Signal, Level 1
signals which, at 51.84 Mbps, is the lowest level SONET signal. The STS-1 is
defined at the electrical level prior to optical conversion. These SONET
standards and elements are further defined in the "Bellcore Synchronous Optical
Network (SONET) Transport Systems: Common Generic Criteria GR-253-CORE, Issue 2,
December, 1995."
OC-48: The ANSI SONET (Synchronous Optical Network) transmission
standard for high capacity optical telecommunications whose line rate is 2488.32
Mbps. One OC-48 is comprised of 48 STS-1 Synchronous Transport Signal, Level 1
signals which, at 51.84 Mbps, is the lowest level SONET signal. The STS-1 is
defined at the electrical level prior to optical conversion. These SONET
standards and elements are further defined in the "Bellcore Synchronous Optical
Network (SONET) Transport Systems: Common Generic Criteria GR-253-CORE, Issue 2,
December, 1995."
The optical interface/demarcation for the SONET OC-3, OC-12, and
OC-48 tributary signals will occur at the Texas optical interconnect panel. The
optical connector standardized for use at Texas locations is the Ultra Polished
FC/PC connector with a return loss greater than 45 dB. All optical signals at
this demarcation must equal or exceed the applicable Bellcore specifications,
referenced above.
Testing Standards
Texas will test and turn-up the OC-3, OC-12, and/or OC-48
circuits to the applicable demarcation point per this Agreement. The tests will
be performed per the applicable manufacturer's test specifications as it applies
to the specific type of traffic hand- off. The system will also be tested for a
long-term stability test running end-to-end for a period of 24 hours; Bit Error
Rate (BER) performance shall be no greater than 10-(1)(1).
Five (5) days prior to testing, Texas will notify Virginia
verbally and in writing of Texas' intent to complete testing of the applicable
circuit activation: Virginia will have the right but not the obligation to
witness the activation testing. Copies of test results
<PAGE> 88
will be provided to Virginia upon completion of the activation tests. If
Virginia is not present at time of testing, a copy of the test results will be
forwarded to same.
After Texas delivers circuits to PSINet, PSINet shall test same
in accordance with the following criteria, and accept installation segments of
IRU Capacity only after it meets the following:
- Optical signal strength and other characteristics are within
industry standards at each termination point as measured with appropriate test
equipment.
- Backup path verified by testing fault switching hardware
applicable to the circuit being provided (test of 1:1 redundancy on the
optronics).
- Packet data passed with payload contents of 4500 bytes of all
zeros for twelve hours registering frame/code violations or other bit errors at
a rate not to exceed 10-(1)(1).
- Packet data passed with payload contents of 4500 bytes of
pseudo- random data patterns for twelve hours registering frame/code violations
or other bit errors at a rate not to exceed 10-(1)(1).
- Live production data passed for twelve hours registering
frame/code violation or other bit errors at a rate not to exceed 10-(1)(1).
- Each segment, regardless of capacity meets the applicable
Bellcore specification, and equipment manufacturer's specification to the
applicable demarcation point per this Agreement.
Virginia shall, within 5 business days of delivery either accept
or reject the IRU Capacity for each segment delivered. As soon as Virginia
discovers a problem in testing, Virginia shall notify Texas. If rejected,
Virginia shall specify, in good faith, the defect or failure in each segment
rejected within the applicable 5-business day period. In the event Virginia
rejects, Texas shall promptly, and at no cost to Virginia, commence to remedy
the defect or failure and, following such remedy, deliver the capacity to
Virginia. Virginia, shall provisionally be deemed to have accepted the IRU
Capacity for the applicable segment at the Final Delivery Date (as defined). The
"Final Delivery Date" shall mean the first date that Texas delivered the
relevant segment of the IRU Capacity to Virginia which was followed by either
acceptance by Virginia or a failure by Virginia to reject the IRU Capacity on
such segment within the required time.
The foregoing procedures shall apply again and successively
thereafter until the defects and/or failures have been remedied, and Virginia
accepts the applicable segment. The date when Virginia accepts the applicable
segments shall be the Acceptance Date.
-2-
<PAGE> 89
EXHIBIT G
PSINET'S BANDWIDTH
FORECAST
Non-Binding Three-Year Forecast of Bandwidth Requirements
PSINet will order approximately an OC-12 along a route traversing the Available
continental US every six months during the Term. The actual route will depend
upon availability of Bandwidth on the Available System. Every six months during
the Term, PSINet will attempt to add an OC-12 among all needed routes, perhaps
with breaks in the route at different POPs each time, until each route has four
OC-12's. A likely schedule, again depending upon availability of Bandwidth on
the Available System, is as follows:
Six Month Interval OC-12 miles ordered
------------------ -------------------
1 5,000+
2 6,000
3 8,000
4 10,000
5 10,000
6 10,000
During the first interval, PSINet also anticipates ordering a system-wide DS-3,
which is likely to amount to the equivalent of approximately 700 OC-12 route
miles.
<PAGE> 90
EXHIBIT G-1
TO
IRU AND STOCK PURCHASE AGREEMENT
INITIAL ORDER FOR BANDWIDTH
PSINet's initial order for Bandwidth consists of one OC-12 per segment along
each of the following routes, each such segment requested to be delivered by IXC
as of the respective dates provided below:
Group 1
- -------
*
Group 2
- -------
*
These orders are for express routes with no intermediate drops. The delivery
date for each route will be as set forth below:
Group 1 The later of January 1, 1998, or six (6) months after
Closing or 60 days after completion of the applicable
route.
Group 2 The later of June 1, 1998, or 60 days after completion of
the applicable route.
* PSINet acknowledges that IXC does not currently plan to complete this route by
July 1, 1998.
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 91
EXHIBIT H
MULTIPLEXING FEES
<PAGE> 92
EXHIBIT H
TO
IRU AND STOCK PURCHASE AGREEMENT
MULTIPLEXING FEES
Cost Per On-net NEW Circuit Non-recurring Installation/Provisioning Costs
including Channelization equipment*
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
City A / City Z DS3 OC3 Tier A OC3 Tier B OC12 Tier A OC12 Tier B OC48
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DS3 * x x x x x
- ---------------------------------------------------------------------------------------------------------------
OC3 Tier A x * * x x x
- ---------------------------------------------------------------------------------------------------------------
OC3 Tier B x * * x x x
- ---------------------------------------------------------------------------------------------------------------
OC12 Tier A x x x * * x
- ---------------------------------------------------------------------------------------------------------------
OC12 Tier B x x x * * x
- ---------------------------------------------------------------------------------------------------------------
OC48 x x x x x *
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Time and Materials Rates to be determined and applied for new interconnection
cabling/infrastructure required between PSINet and IXC demarcation. Rates/Costs
do not include any rates/costs of drops.
** Applies to second channel overbuild on a spur or moving an OC-48.
*** OC-12 charges do not apply to initial installs
Tier A Cities: WASHDC, PHLAPA, NYCMNY, HDSNOH, CHCGIL, KSCYMO, JPLNMO, DLLSTX,
HSTNTX, PHNXAZ, LSANCA, ATLNGA, and as modified by IXC in future fiber builds.
Tier B Cities: All On-net cities listed on the Available System other than Tier
A cities.
*Confidential material has been omitted and filed separately
with the Securities and Exchange Commission.
<PAGE> 93
EXHIBIT I
TO
IRU AND STOCK PURCHASE AGREEMENT
RECONFIGURATION FEES
(See Exhibits E and H)
<PAGE> 94
EXHIBIT J
NEWCO CERTIFICATE OF INCORPORATION
<PAGE> 95
EXHIBIT K
POPSPACE
<PAGE> 96
EXHIBIT K
TO
IRU AND STOCK PURCHASE AGREEMENT
POP Space
"POP" shall mean any of IXC's junction or terminal locations
located on the fiber route that constitutes the completed portion of the
Available System, as selected by written notice from PSINet to IXC, provided
that (i) there shall be no more than * POP's so selected; (ii) a selection,
once made, cannot be changed, provided that if IXC moves a POP, the new
location will be considered the same as the old one for purposes of this clause
(ii); and (iii) in no event will PSINet have the right to select as POPs both a
terminal and a junction in or near the same metropolitan statistical area.
Notwithstanding the foregoing, PSINet and IXC may agree (separately from the
Collocation Agreement) that PSINet may rent cabinet space in other IXC
locations and PSINet shall be permitted to use its IRU fiber and IRU capacity
between IXC terminals and junctions on the Available System in or near the same
metropolitan statistical area.
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 97
EXHIBIT L
PSINET DISCLOSURE
SCHEDULE
<PAGE> 98
Exhibit L to the
IRU and Stock Purchase
Agreement
----------------------
PSINet Disclosure Schedule
<TABLE>
<C> <S>
13.2 Material Governmental Authority Consents
13.4 Capitalization
13.5 Material Adverse Change
13.6 Other Consents
13.7 Litigation
13.9 Other Agreements
</TABLE>
The following information constitutes the PSINet Disclosure Schedule to
that certain IRU and Stock Purchase Agreement dated as of July 21, 1997 between
PSINet Inc. and IXC Internet Services, Inc. (the "Agreement"). Capitalized terms
used in this PSINet Disclosure Schedule which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement. All
references herein to Sections are to Sections of the Agreement unless otherwise
noted. The representations and warranties in Section 13 of the Agreement are
made and given subject to the disclosures in this PSINet Disclosure Schedule and
the exceptions set forth herein. This PSINet Disclosure Schedule is incorporated
into the Agreement by reference and made a part thereof. This PSINet Disclosure
Schedule incorporates by reference all applicable information contained in the
PSINet Filings with the Securities and Exchange Commission. Disclosure of
information in any Section of the PSINet Disclosure Schedule, shall be deemed to
be disclosure in each other Section of the PSINet Disclosure Schedule.
Disclosure of any information in the PSINet Disclosure Schedule, whether or not
in response to a requirement contained in the Agreement to schedule material
matters or matters outside the ordinary course of business, shall not be deemed
to be an admission by PSINet that such information is material or outside the
ordinary course of business nor is it or shall it be deemed to be a
representation that such information must be set forth on this PSINet Disclosure
Schedule or otherwise in the Agreement. Nothing in this PSINet Disclosure
schedule shall constitute an admission of any liability or obligation of PSINet
or its affiliates to any third party nor an admission against PSINet or its
Affiliates' interests.
<PAGE> 99
Section 13.2
Material Governmental Authority Consents
----------------------------------------
1. Filing of a Form D (if elected by PSINet), Form 8-A, Form 8-B, Forms
8- K, Forms S-8, Proxy Statement, registration statement(s) under the Securities
Act, request for confidential treatment and any related documents with the
Commission.
2. Such filings with the Commission as may be required under the
Registration Rights Agreement contemplated by Section 15.9.
3. Such consents, approvals, authorizations, designations, declarations
or filings as may be required under state securities laws in connection with the
issuance of any Acquired Shares or under federal or state law in connection with
the Registration Rights Agreement contemplated by Section 15.9 of the Agreement
or in connection with any transfer of Acquired Shares.
4. Filing with National Association of Securities Dealers, Inc. of one
or more listing applications and of documents filed with the Commission.
5. Such consents, approvals, authorizations, designations, declarations
or filings as may be required under state corporation and tax laws in connection
with the Reincorporation.
6. Such filings and notifications as may be required under the
Hart-Scott-Rodino Act.
7. Such filings as may be required with the U.S. Patent and Trademark
Office and of copyright amendments in connection with the Reincorporation.
8. Such filings of UCC financing statements and other documents and
instruments as may be required in connection with the Reincorporation.
<PAGE> 100
Section 13.4
Capitalization
--------------
1. Upon the Closing Date, after giving effect to the Reincorporation
and assuming that PSINet does not designate any other series of Preferred Stock
prior to completion of the Closing, the authorized capital stock of PSINet will
consist of 200,000,000 shares of Common Stock, $.0001 par value per share,
29,000,000 shares of undesignated Preferred Stock, $.01 par value per share, and
1,000,000 shares of Series A Junior Participating Preferred Stock, $.01 par
value per share.
2. As of the date of this Agreement, there are no outstanding
subscriptions, options, warrants, call, rights or other agreements or
commitments to issue, sell, deliver or transfer any shares of Common Stock or
other shares of capital stock of PSINet except options to purchase
[7,557,065.49] shares of Common Stock (subject to adjustment as provided
therein) and warrants to purchase 224,274 shares of Common Stock (subject to
adjustment as provided therein).
3. See item 2 under Section 13.9 of the PSINet Disclosure Schedule.
<PAGE> 101
Section 13.5
Material Adverse Change
-----------------------
1. Such changes as may have resulted from general economic or political
matters affecting the industries and markets in which PSINet's business operates
and/or the U.S. economy.
2. See item 1 under Section 13.9 of the PSINet Disclosure Schedule.
<PAGE> 102
Section 13.6
Other Consents
1. Such consent as may be required by PSINet's bank lender, Fleet Bank
of Massachusetts, N.A. ("Fleet").
2. PSINet has a loan facility with Fleet pursuant to which it has
granted Fleet a lien on substantially all of its assets. Such lien would attach
to the IRUs and other rights and property conveyed to PSINet pursuant to the
Agreement.
<PAGE> 103
Section 13.7
Litigation
----------
1. See item 1 under Section 13.9 of the PSINet Disclosure Schedule.
2. After the execution of the Joint Venture Agreement referred to in
Section 13.9 of the Disclosure Schedule, Institutional Trading Corporation
("ITC") commenced an action alleging that PSINet owed it an investment banking
finders fee or similar compensation in the amount of $1.5 million in connection
with the transactions contemplated by the Joint Venture Agreement and other
contractual claims. ITC has since withdrawn such action without prejudice. In
the event PSINet completes a transaction with Chatterjee (as defined in Section
13.9 of the PSINet Disclosure Schedule), PSINet believes it is likely that ITC
will commence a new action alleging similar claims with respect to such
transaction.
<PAGE> 104
Section 13.9
Other Agreements
----------------
1. In September 1996, PSINet entered into a Joint Venture Agreement,
dated as of September 19, 1996 (the "Joint Venture Agreement") with Chatterjee
Management Company (doing business as The Chatterjee Group) ("Chatterjee")
pursuant to which PSINet and an investment group led by Chatterjee would
establish a joint venture for the purpose of building an Internet network across
Europe and providing Internet-related services in Europe and such investment
group would invest up to * in the joint venture. A copy of the
original Joint Venture Agreement with Chatterjee has been filed with the
Commission (portions of which are subject to a confidential treatment request
and a complete copy thereof is available for review by IXC). Under certain
circumstances, Chatterjee or its designee would have the right to require PSINet
to issue to Chatterjee or such designee such number of shares of PSINet Common
Stock as shall equal (i) the amount of investments made by Chatterjee or such
designee (none has been made to date) divided by (ii) $11.625, provided,
however, that this right is was not to be exercisable prior to October 1,1997
and under certain other circumstances. No monies have been invested by
Chatterjee or the investment group pursuant to the Joint Venture Agreement nor
were any other actions undertaken to implement it. For several months, PSINet
and Chatterjee have discussed a substantive change to the structure discussed in
the Joint Venture Agreement which, if entered into, would have resulted in a
* direct investment in PSINet by Chatterjee *
By letter dated July 14, 1997, a copy of which has previously been
furnished to IXC, Chatterjee made certain statements concerning the negotiations
between Chatterjee and PSINet, including, without limitation, (i) Chatterjee's
conclusion that PSINet does not intend to proceed with the Joint Venture
Agreement or the substantive change to the structure discussed in the Joint
Venture Agreement(which Chatterjee claims had been agreed upon by PSINet) and
(ii) Chatterjee's statement that it will proceed based upon that conclusion.
PSINet has not yet responded to that letter. In the event PSINet and Chatterjee
do not complete this transaction (and PSINet presently believes it is likely
that the parties will not reach such an agreement), the Joint Venture Agreement
may be abandoned or Chatterjee may seek to commence arbitration or other
adversarial proceedings against PSINet under the Joint
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 105
Venture Agreement and related documents (seeking, among other things, to enforce
the Joint Venture Agreement) or otherwise.
2. PSINet has issued options and warrants as described in Section 13.4
of the PSINet Disclosure Schedule and has stock option and similar plans, as
described in the PSINet Filings, pursuant to which PSINet may issue additional
options and share underlying such options.
<PAGE> 106
EXHIBIT M
TO
IRU AND STOCK PURCHASE AGREEMENT
IXC Internet Services, Inc. ("IXC")
Disclosure Schedule
to the
IRU and Stock Purchase Agreement
dated as of July 22, 1997 by and between
PSINet and IXC
(the "Purchase Agreement")
The representations and warranties in Section 14 of the Purchase
Agreement are made and given subject to the disclosures in this Disclosure
Schedule and the exceptions set forth herein. Unless otherwise defined herein,
the capitalized terms used herein shall have the meanings assigned to such terms
in the Purchase Agreement. Section references herein correspond to section
references in the Purchase Agreement. This Disclosure Schedule incorporates by
reference all applicable information contained in the IXC Communications, Inc.
filings with the Securities and Exchange Commission. The inclusion of any
information on this Disclosure Schedule is not, and shall not be deemed to be, a
representation that such information must be set forth on this Disclosure
Schedule or otherwise in the Purchase Agreement. Nothing in this Disclosure
Schedule shall constitute an admission of any liability or obligation of IXC, or
its affiliates to any third party nor an admission against IXC's or its
affiliates interests.
SECTION 14.2
Governmental Authorizations
A filing by IXC's ultimate parent to the Federal Trade Commission and the United
States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
SECTION 14.3
Required Consents
Indenture dated as of October 5, 1995 by and among IXC Communications, Inc., the
Guarantors (as defined therein) and IBJ Schroder Bank & Trust Company, as
Trustee with respect to the 12 1/2% Senior Notes due 2005.
<PAGE> 107
SECTION 14.4
Pending Litigation
1. TEL CENTRAL COMMUNICATIONS, INC. VS IXC LONG DISTANCE, INC.
U.S. District Court, Western District of Missouri (Central Division) Civil
Action No. 97-4095-CV-C
On April 4, 1997, Tel-Central Communications, Inc.
("Tel-Central") filed a complaint against IXC-LD, one of IXC Communications,
Inc.'s subsidiaries, in the United States District Court in the Western District
of Missouri after IXC Communications, Inc. terminated service to Tel-Central for
failure to pay for services. Tel-Central's complaint makes various state and
federal law claims and seeks damages of over $100 million and asks for punitive
damages of $100 million. On May 23, 1997, Tel Central filed a voluntary Chapter
11 petition in bankruptcy. On May 30, 1997, IXC-LD filed a motion to dismiss the
complaint. The case is currently stayed as a result of the bankruptcy
proceedings.
2. TRUMAN BREED, ET AL., VS. IXC ADVANTAGE LONG DISTANCE, INC., IXC
LONG DISTANCE, INC., IXC COMMUNICATIONS, INC., ET AL. In the District Court of
Travis County, IXC, Cause No. 9705729
This action, filed May 27, 1997, was brought by a group of
investors in IXC Advantage Long Distance, Inc. ("IXC Advantage") who allege that
IXC Advantage and/or its Chief Executive Officer diverted funds from IXC
Advantage to form a new company named Free Plus Calling, Inc. A subsidiary of
IXC Communications, Inc. had invested in IXC Advantage, owned a 25% interest in
IXC Advantage, and one of such subsidiary's officers served on the board of
directors of IXC Advantage from its formation in mid-1994 until Mach of 1996.
The plaintiffs allege that as a result of the board seat, the defendants either
knew or should have known of the diversion of funds and hence became liable for
the conduct. The defendants currently have an extension of time to answer the
complaint.
3. DARRYL THOMPSON ET AL., VS. MORGAN COUNTY COMMISSIONERS, ET
AL., INCLUDING IXC LONG DISTANCE, INC. State of Indiana, Morgan Superior Court
No. 55DO2-9701-CP-6
This action, filed on February 5, 1997, alleges the illegal
construction of fiber across plaintiffs' property. This portion of IXC Carrier,
Inc.'s network consists of an indefeasible right to use ("IRU") fibers from
WorldCom ("WorldCom, Inc."). IXC Carrier, Inc. acquired the IRU from WorldCom
pursuant to an IRU Agreement with WorldCom (the "IRU Agreement"). WorldCom has
accepted defendant's tender of defense and indemnity in this action pursuant to
the IRU Agreement.
4. IXC LONG DISTANCE, INC. VS. BUILDING FUTURES IN COMMUNICATIONS,
INC.
<PAGE> 108
This arbitration action was filed by IXC-LD on February 10, 1997
seeking $256,393 for past due services, plus additional amounts for accelerated
take-or-pay commitments under the terminated Telecommunications Services
Agreement between the parties dated April 19, 1996. Building Futures in
Communication, Inc. ("BFIC") had been terminated on IXC-LD's network on December
13, 1997 for non-payment. BFIC has counterclaims against IXC-LD for up to $1
million in actual damages plus punitive damages. Discovery is underway and no
arbitration date has yet been set.
5. IXC LONG DISTANCE, INC. VS. PRIME TELECOM, INC.
This arbitration action was filed by IXC-LD on January 14, 1997
seeking $134,187 for past due services, plus additional amounts for accelerated
take-or-pay commitments, under the terminated Telecommunications Services
Agreement between the parties dated May 25, 1995. Prime Telecom, Inc.'s services
had been terminated on IXC-LD's network on December 13, 1997 for non-payment.
Discovery is underway and no arbitration date has been set.
SECTION 14.7
Material Adverse Change
The facts or circumstances set forth in the IXC Communications, Inc.'s News
Release dated July 3, 1997 may cause a Material Adverse Change in IXC.
<PAGE> 109
EXHIBIT N
REGISTRATION RIGHTS AGREEMENT
<PAGE> 110
Exhibit N
EXHIBIT N
TO
IRU AND STOCK PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made as of the
day of July, 1997 by and between , PSINet Inc., a New York corporation (the
"Company"), and IXC Internet Services, Inc. , a Delaware corporation ("IXC").
WITNESSETH:
WHEREAS, the Company and IXC have entered into an IRU and Stock
Purchase Agreement dated as of July 21, 1997 (the "IRU Agreement"), pursuant to
which the Company, will issue shares of Common Stock.
WHEREAS, it is a condition precedent to the consummation of the
transactions under the IRU Agreement that this Agreement be entered into.
WHEREAS, the Company has previously granted registration rights to
certain other holders of the Company's securities pursuant to the Amended and
Restated Registration Rights Agreement, the 2/8/95 Registration Rights
Agreement, the 6/16/95 Registration Rights Agreement, the 7/11/95 Registration
Rights Agreement and the 9/19/96 Registration Rights Agreement.
WHEREAS, it is the intention of the parties to this Agreement that the
registration rights granted hereunder shall rank ratably with the registration
rights under the Amended and Restated Registration Rights Agreement, the 2/8/95
Registration Rights Agreement, the 6/16/95 Registration Rights Agreement, the
7/11/95 Registration Rights Agreement and the 9/19/96 Registration Rights
Agreement and with registration rights to be granted under other agreements as
more fully provided in Section 2.6 hereof.
WHEREAS, certain defined terms are set forth in Article I hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in consideration of the mutual
covenants contained herein and for other good and available consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
<PAGE> 111
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
indicated below:
"Amended and Restated Registration Rights Agreement" shall mean the
Amended and Restated Registration Rights Agreement dated as of January 17, 1995
among the Company and the other parties thereto, as the same has been and
hereafter may be amended from time to time to add additional parties signatory
thereto.
"Closing" shall mean the closing of the transactions contemplated under
the IRU Agreement as more specifically defined therein.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value per share,
of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Registration Rights" shall have the meaning set forth in
Section 2.7 hereof.
"Other Registration Rights" shall have the meaning set forth in Section
2.7 hereof.
"Person" shall mean any individual, corporation, partnership, firm,
joint venture, association, limited liability company, trust, unincorporated
organization, or other entity.
"primary offering" shall have the meaning set forth in Section 2.1
hereof.
"Registrable Securities" shall have the meaning set forth in Section
2.4 hereof.
"secondary offering" shall have the meaning set forth in Section 2.1
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
-2-
<PAGE> 112
"2/8/95 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of February 8, 1995 among the Company and the other
parties thereto, as the same may be amended from time to time and, to the
extent, if any, the same shall be in effect on the date hereof and remain in
effect from time to time hereafter.
"6/16/95 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of June 16, 1995 among the Company and the other
parties thereto, as the same may be amended from time to time and, to the
extent, if any, the same shall be in effect on the date hereof and remain in
effect from time to time hereafter.
"7/11/95 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of July 11, 1995 among the Company and the other
parties thereto, as the same may be amended from time to time and, to the
extent, if any, the same shall be in effect on the date hereof and remain in
effect from time to time hereafter.
"9/19/96 Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of September 19, 1996 between the Company and The
Chatterjee Management Company, as the same may be amended from time to time and,
to the extent, if any, the same shall be in effect on the date hereof and remain
in effect from time to time hereafter.
-3-
<PAGE> 113
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 OPTIONAL REGISTRATIONS
If at any time or times after the date hereof (so long as IXC shall own
Registrable Securities which are not eligible for sale by IXC under Rule 144(k)
of the Securities Act), the Company shall determine to register any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
shares of the Common Stock under the Securities Act (whether in connection with
a public offering of securities by the Company (a "primary offering"), a public
offering of securities by shareholders (a "secondary offering"), or both, but
not in connection with a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable), the Company will promptly
give written notice thereof to IXC. In connection with any such registration, if
within 30 days after receipt of such notice IXC requests the inclusion of some
or all of the Registrable Securities in such registration, the Company, subject
to Section 2.7 hereof, will use its reasonable best efforts to effect the
registration under the Securities Act of all such Registrable Securities;
provided, that such registration is in connection with an underwritten public
offering; and provided, further, that, if the underwriter determines that the
registration of securities in excess of any amount to be registered by the
Company would adversely affect such offering then the Company may (subject to
the allocation priority set forth below) exclude from such registration and
underwriting some or all of the Registrable Securities which would otherwise be
underwritten pursuant to the notice described herein. The Company shall advise
IXC promptly after such determination by the underwriter, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: the securities to be
sold by the Company shall be included in such registration and underwriting,
and, subject to Section 2.7 hereof, the number of additional shares that may be
included in the registration and underwriting shall be allocated among IXC and
all holders of other securities having registration rights granted by the
Company requesting that such other securities be included in such registration
and underwriting in proportion, as nearly as practicable, to their respective
holdings of Registrable Securities and such other securities. All expenses of
the registration and offering shall be borne by the Company, except that IXC and
all holders of other securities having registration rights granted by the
Company shall bear underwriting and selling discounts and commissions
attributable to their Registrable Securities or such other securities, as the
case may be, being registered, transfer taxes on shares being sold by IXC or the
other holders, as the case may be, and all fees and expenses of counsel for IXC
and such holders, as the case may be. Without in any way limiting the types of
registrations to which this Section 2.1 shall apply, in the event that the
Company shall effect a "shelf registration" under Rule 415 of the Securities Act
or any other similar rule or regulation, the Company shall take all
-4-
<PAGE> 114
necessary action, including, without limitation, the filing of post-effective
amendments, to permit IXC to include its shares in such registration in
accordance with the terms of this Section 2.1.
SECTION 2.2 REQUIRED REGISTRATIONS
At any time or times after the date hereof (so long as IXC shall own
Registrable Securities which are not eligible for sale by IXC under Rule 144(k)
of the Securities Act), IXC may notify the Company in writing that it (i)
intends to offer or cause to be offered for public sale all or any portion of
its Registrable Securities (such requests shall be in writing and shall state
the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by IXC) and (ii) request that the
Company cause such Registrable Securities to be registered under the Securities
Act; provided, however, that IXC may make only three requests for registration
under this Section 2.2. Upon receipt of such notification, subject to Section
2.7 hereof, the Company will notify all of the Persons who would be entitled to
notice of a proposed registration under Existing Registration Rights or Other
Registration Rights of its receipt of such notification. Upon the written
request of any such Person delivered to the Company within 30 days after receipt
from the Company of such notification, the Company will use its reasonable best
efforts to cause such Registrable Securities as may be requested by IXC or such
securities as may be requested by any such Person to be registered under the
Securities Act within 125 days of the notification by IXC, in accordance with
the terms of this Section 2.2; provided, however, that unless such registration
becomes effective and remains in effect for 60 days, such registration shall not
be counted as one of the three requests for registration that may be made by IXC
under this Section 2.2. IXC shall have the right to select the investment
banker(s) and manager(s) (which shall be of national standing and reputation) to
administer any underwritten public offering under this Section 2.2, subject to
the execution and delivery by such investment banker(s) to the Company of a
confidentiality agreement in form and substance satisfactory to the Company. If
requested in writing by the Company, IXC and the other Persons participating in
a registration under this Section 2.2 shall negotiate in good faith with any
underwriters retained in connection with the underwriting of such registration.
In the case of the registration of Registrable Securities in connection with an
underwritten public offering under this Section 2.2, if the underwriter
determines that the registration of securities in excess of an amount determined
by such underwriter would adversely affect such offering, then the Company may
(subject to the allocation priority set forth below) exclude from such
registration and underwriting some or all of the Registrable Securities and
other securities which would otherwise be underwritten pursuant to this Section
2.2. The Company shall advise IXC and the other Persons who requested to
participate in such registration promptly after such determination by the
underwriter, and the number of securities that are entitled to be included in
the registration and underwriting shall be
-5-
<PAGE> 115
allocated in the following manner: subject to Section 2.7 hereof, the number of
securities that may be included in the registration and underwriting shall be
allocated among IXC and such other Persons requesting that Registrable
Securities or other securities be included in such registration and underwriting
in proportion, as nearly as practicable, to their respective holdings of
Registrable Securities and other securities; provided, however, that if the
number of Registrable Securities pursuant to such registration shall be reduced
to a number which is less than 80% of the number of Registrable Securities as to
which IXC requested registration pursuant to this Section 2.2, then such
registration shall not be counted as one of the three requests for registration
that may be made by IXC under this Section 2.2. All expenses of such
registration and offering and the reasonable fees and expenses of one
independent counsel for IXC and the other Persons who requested to participate
in such registration shall be borne by the Company; provided, however, that (i)
the Company shall have no liability for such expenses if such registration does
not become effective due solely to the action or failure to act of IXC and (ii)
IXC and other Persons who requested to participate in such registration shall
bear underwriting and selling discounts and commissions attributable to their
Registrable Securities or other securities being registered and transfer taxes
on shares being sold by them. The Company may postpone the filing of any
registration statement required hereunder for a reasonable period of time, not
to exceed 90 days during any 12 month period of time, if the Company has been
advised by legal counsel that such filing would require the disclosure of a
material transaction or other matter and the Company determines reasonably and
in good faith that such disclosure would have a material adverse effect on the
Company. Notwithstanding anything in this Section 2.2 to the contrary, the
Company shall not be required to effect a registration under this Section 2.2
more than 135 days following the end of the Company's fiscal year, if such
registration shall require the preparation of audited financial statements for
any interim period not otherwise prepared by the Company. If a demand
registration is requested during such period, subject to the second preceding
sentence, the Company will commence such registration promptly following the end
of the next fiscal year. The Company will enter into customary agreements
(including underwriting agreements) reasonably acceptable to the Company to
facilitate the demand registrations provided for above.
-6-
<PAGE> 116
SECTION 2.3 FORM S-3 SHELF REGISTRATION
IXC shall have the right to request and have effected up to one
registration every six months of Registrable Securities on Form S-3 or any
successor form or, if Form S-3 or any successor form is not available, any
appropriate form under the Act (the "Shelf Registration Statement") for an
offering to be made on a continuous basis covering all the Registrable
Securities (the "Shelf Registration") (such request shall be in writing and
shall state the number of shares of Registrable Securities to be disposed of and
the intended method of disposition of such shares by IXC) provided that the
Registrable Securities for which such registration is requested are not eligible
for sale by IXC under Rule 144(k) of the Securities Act. Subject to the
provisions of applicable law, the Company will use its reasonable best efforts
to (i) file the Shelf Registration Statement to effect the registration of all
shares of Registrable Securities within 30 days of such request and (ii) cause
the Shelf Registration Statement to become effective under the Act on or prior
to the date 45days from the date of filing and (iii) keep the Shelf Registration
Statement continuously effective for 60 days from the date the Registration
Statement becomes effective under the Act. All expenses in connection with a
registration requested pursuant to this Section 2.3 shall be borne by the
Company; provided, however, that (i) the Company shall have no liability for
such expenses if such registration does not become effective due solely to the
action or failure to act of IXC and (ii) IXC shall bear underwriting and selling
discounts and commissions, if any, attributable to its Registrable Securities
being registered, transfer taxes on shares being sold by it and all fees and
expenses of its counsel. The Company may postpone the filing of any registration
statement required hereunder for a reasonable period of time, not to exceed 90
days, if the Company has been advised by legal counsel that such filing would
require the disclosure of a material transaction or other factor which would not
otherwise be required to be disclosed at such time and the Company determines
reasonably and in good faith that such disclosure would have a material adverse
effect on the Company with respect to the registration of the Registrable
Securities. The shelf-registration statement may also include securities held or
to be held by other holders of the Company's securities.
SECTION 2.4 REGISTRABLE SECURITIES
For purposes of this Agreement, the term "Registrable Securities" shall
mean the Common Stock issued or issuable under the IRU Agreement and any Common
Stock issued or issuable with respect thereto by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization.
SECTION 2.5 FURTHER OBLIGATIONS OF THE COMPANY
Whenever the Company is required under this Article II to register any
Registrable Securities, it agrees that it shall also do the following:
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(a) Use its reasonable best efforts to diligently prepare and
file with the Commission a registration statement and such amendments and
supplements to said registration statement and the prospectus used in connection
therewith as may be necessary to keep said registration statement effective
(but, in the case of a registration under this Agreement, for no more than 60
days after the initial effective date of the registration statement) and to
comply with the provisions of the Securities Act with respect to the sale of
securities covered by said registration statement for the period necessary to
complete the proposed public offering; provided, however, the Company may
suspend the effectiveness of any registration statement filed hereunder for a
reasonable period of time, not to exceed 90 days, if the Company has been
advised by legal counsel that maintaining such effectiveness would require the
disclosure of a material transaction or other matter and the Company determines
reasonably and in good faith that such disclosure would have a material adverse
effect on the Company; provided, further, that in the event of any such
suspension of effectiveness, the 60 day period of effectiveness required above
shall be deemed tolled for the number of days the effectiveness of such
registration statement was suspended and, if any securities covered by such
registration statement remain unsold, the Company shall thereafter take all
necessary actions, including, without limitation, the filing of post-effective
amendments, to cause such registration statement to become effective for the
remainder of such 60 day period;
(b) Furnish to IXC such copies of each preliminary and final
prospectus and such other documents as IXC may reasonably request to facilitate
the public offering of its Registrable Securities;
(c) Use its reasonable best efforts to register or qualify
the securities covered by said registration statement at the Company's expense
under the securities or "blue-sky" laws of such jurisdiction as IXC may
reasonably request, provided that the Company shall not be required to register
or qualify the securities in any jurisdictions which require it to qualify to do
business or subject itself to taxation or general service of process therein;
(d) Immediately notify IXC, at any time when a prospectus
relating to its Registrable Securities is required to be delivered under the
Securities Act, of any stop order issued or threatened by the Commission or of
the happening of any event as a result of which such prospectus contains an
untrue statement of a material fact or omits any material fact necessary to make
the statements therein not misleading, and, at the request of IXC, prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(e) Cause all such Registrable Securities to be listed on
NASDAQ or included in each securities exchange or quotation system on which
similar securities issued by the Company are then listed;
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(f) Otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and make generally
available to its security holders, in each case as soon as practicable, but not
later than 30 days after the close of the period covered thereby, an earnings
statement of the Company which will satisfy the provisions of Section 11(a) of
the Securities Act; and
(g) Choose the underwriters (except as otherwise provided in
Section 2.2 hereof), auditors, Company legal counsel and financial printer to be
engaged by the Company in any such registration.
SECTION 2.6 NO TRANSFER OF REGISTRATION RIGHTS
The registration rights of IXC under this Agreement may not be
transferred or assigned except to IXC Communications, Inc. or a controlled
affiliate of IXC Communications, Inc.; provided that such transferee shall have
entered into an agreement substantially the same as that set forth in Section
15.8 of the IRU Agreement.
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SECTION 2.7 PRIOR AND OTHER REGISTRATION RIGHTS AGREEMENTS
Notwithstanding any provision hereof to the contrary, the provisions of
this Article II: (i) shall rank ratably with the registration rights granted
under the Amended and Restated Registration Rights Agreement (the "Amended
Registration Rights") and, to the extent the provisions of this Article II
conflict or are inconsistent with any such Amended Registration Rights, such
conflict or inconsistency shall be resolved in a manner which, to the greatest
extent reasonably feasible, affords IXC and the holders of such Amended
Registration Rights, the ratable benefits of this Article II and such Amended
Registration Rights; (ii) shall rank ratably with the registration rights
granted under the 2/8/95 Registration Rights Agreement (the "2/8/95 Registration
Rights") and, to the extent the provisions of this Article II conflict or are
inconsistent with any such 2/8/95 Registration Rights, such conflict or
inconsistency shall be resolved in a manner which, to the greatest extent
reasonably feasible, affords IXC and the holders of the 2/8/95 Registration
Rights, the ratable benefits of this Article II and such 2/8/95 Registration
Rights; (iii) shall rank ratably with the registration rights granted under the
6/16/95 Registration Rights Agreement (the "6/16/95 Registration Rights") and,
to the extent the provisions of this Article II conflict or are inconsistent
with any such 6/16/95 Registration Rights, such conflict or inconsistency shall
be resolved in a manner which, to the greatest extent reasonably feasible,
affords IXC and the holders of the 6/16/95 Registration Rights, the ratable
benefits of this Article II and such 6/16/95 Registration Rights; (iv) shall
rank ratably with the registration rights granted under the 7/11/95 Registration
Rights Agreement (the "7/11/95 Registration Rights") and, to the extent the
provisions of this Article II conflict or are inconsistent with any such 7/11/95
Registration Rights, such conflict or inconsistency shall be resolved in a
manner which, to the greatest extent reasonably feasible, affords IXC and the
holders of the 7/11/95 Registration Rights, the ratable benefits of this Article
II and such 7/11/95 Registration Rights; (v) shall rank ratably with the
registration rights granted under the 9/19/96 Registration Rights Agreement (the
"9/19/96 Registration Rights") and, to the extent the provisions of this Article
II conflict or are inconsistent with any such 9/19/96 Registration Rights, such
conflict or inconsistency shall be resolved in a manner which, to the greatest
extent reasonably feasible, affords IXC and the holders of the 9/19/96
Registration Rights, the ratable benefits of this Article II and such 9/19/96
Registration Rights; and (vi) shall rank ratably with the registration rights to
be granted under any other agreement in connection with the original issuance of
any other capital stock of the Company (the "Other Registration Rights") and, to
the extent the provisions of this Article II shall conflict with any such Other
Registration Rights, such conflict shall be resolved in a manner which, to the
greatest extent reasonably feasible, affords IXC and the holders of such Other
Registration Rights, the ratable benefits of the provisions of this Article II
and such Other Registration Rights.
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ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
SECTION 3.1 INDEMNIFICATION
Incident to any registration statement referred to in this Agreement,
and subject to applicable law, the Company will indemnify and hold harmless each
underwriter, IXC (including its directors, officers, employees and agents), and
each person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, expenses and liabilities, joint or several (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based on (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
(including any related preliminary or definitive prospectus, or any amendment or
supplement to such registration statement or prospectus), (ii) any omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or "blue
sky" laws or any rule or regulation thereunder in connection with such
registration; provided, however, that the Company will not be liable to the
extent that such loss, claim, damage, expense or liability (x) arises from and
is based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information furnished in
writing to the Company by or on behalf of such underwriter, IXC or controlling
person expressly for use in such registration statement or (y) provided that the
Company has theretofore timely prepared all necessary prospectus supplements or
amendments and provided them to IXC or its representative, arises from the
failure of IXC or any underwriter to comply with such prospectus delivery
requirements as are applicable to it. With respect to losses, claims, damages,
expenses and liabilities arising out of or based upon such untrue statement or
omission or alleged untrue statement or omission in the information furnished in
writing to the Company by or on behalf of IXC expressly for use in such
registration statement or such failure to comply with such prospectus delivery
requirements, IXC will indemnify and hold harmless each underwriter, the Company
(including its directors, officers, employees and agents), and each person who
controls any of them within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, expenses and liabilities, joint or several, to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise to the
same extent provided in the immediately preceding sentence. In no event,
however, shall the liability of IXC for indemnification under this Section 3.1
exceed the
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proceeds received by it from its sale of Registrable Securities under such
registration statement.
SECTION 3.2 CONTRIBUTION
If the indemnification provided for in Section 3.1 above for any reason
is held by a court of competent jurisdiction to be unavailable to an indemnified
party in respect of any losses, claims, damages, expenses or liabilities
referred to therein, then each indemnifying party under this Article III, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, expenses or liabilities in such proportion as is appropriate to
reflect the relative benefits received by the Company, IXC and the underwriters
from the offering of the Registrable Securities as well as the relative fault of
the Company, IXC and the underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, IXC and the underwriters shall be
deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) received by the Company and IXC and the
underwriting discount received by the underwriters, in each case as set forth in
the table on the cover page of the applicable prospectus, bear to the aggregate
public offering price of the Registrable Securities. The relative fault of the
Company, IXC and the underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, IXC or the underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and IXC agree that it would not
be just and equitable if contribution pursuant to this Section 3.2 were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. In no event, however, shall IXC be required to contribute
any amount under this Section 3.2 in excess of the proceeds received by it from
its sale of Registrable Securities under such registration statement. No person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
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SECTION 3.3 EXPENSES, ETC.
(a) The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in this
Article III shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. The
indemnification and contribution provided for in this Article III will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified parties or any officer, director, employee, agent or controlling
person of the indemnified parties.
(b) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with any registration statement referred to
in this Agreement are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
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ARTICLE IV
RULE 144
SECTION 4.1 RULE 144 REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to: (i) at all
times make and keep public information available as those terms are understood
and defined in Rule 144 under the Securities Act (and any successor rule to Rule
144); (ii) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and (iii) furnish to IXC as promptly as possible upon its request a written
statement by the Company confirming its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy
of the most recent annual or quarterly report of the Company, and any other
reports and documents so filed as IXC may reasonably request in availing itself
of any rule or regulation of the Commission allowing it to sell any such
securities without registration.
SECTION 4.2 USE OF RULE 144
IXC shall endeavor to sell its Registrable Securities whenever possible
in transactions pursuant to Rule 144 under the Securities Act (and any successor
rule to Rule 144) rather than pursuant to registrations effected under this
Agreement so long as such sales may be effected in compliance with the
requirements of Rule 144 (or any successor rule to Rule 144).
ARTICLE V
GENERAL
SECTION 5.1 GRANTING OF RIGHTS AGREEMENTS
The Company shall not grant any registration rights in respect of any
shares of capital stock of the Company or other securities of the Company if
such rights would be superior to the registration rights granted to IXC under
this Agreement; provided, however, that IXC hereby consents and agrees that the
Company may grant in other agreements to other holders of securities of the
Company registration rights which rank ratably with the registration rights
granted hereunder to IXC.
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SECTION 5.2 AMENDMENTS, WAIVERS AND CONSENTS
For purposes of this Agreement and all agreements, documents and
instruments executed pursuant hereto, except as otherwise specifically set forth
herein or therein, no course of dealing between the Company and IXC and no delay
on the part of any party hereto in exercising any rights hereunder or thereunder
shall operate as a waiver of the rights hereof or thereof. No covenant or other
provision hereof or thereof may be waived or amended other than by a written
instrument signed by the party so waiving or amending such covenant or other
provision. Any waiver or amendment affected in accordance with this Section 5.2
shall be binding upon IXC and the Company at the time such waiver or amendment
is effected.
SECTION 5.3 SURVIVAL OF COVENANTS; ASSIGNABILITY OF RIGHTS
All covenants and agreements of the Company or IXC made herein shall
survive until fully discharged; provided, however, that notwithstanding any
provision of this Agreement to the contrary, in no event shall IXC be entitled
to any registration rights hereunder to the extent that it could sell pursuant
to Rule 144(k) under the Securities Act Registrable Securities which it desires
to register under the Securities Act pursuant to Sections 2.1, 2.2 or 2.3 hereof
or at any time after one year following the date at which the IRU Agreement is
no longer in effect. This Agreement may not be assigned by IXC except as set
forth in Section 2.6. All covenants and agreements of the Company herein shall
bind the Company's successors and assigns, whether so expressed or not, and,
except as otherwise provided in this Agreement, all such covenants and
agreements shall inure to the benefit of IXC's successors and assigns.
SECTION 5.4 GOVERNING LAW
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without reference to its
principles of conflicts of law.
SECTION 5.5 HEADINGS
The headings used in this Agreement have been inserted for reference
purposes only and shall not control or affect in any manner the meaning or
interpretation of any provision of this Agreement.
SECTION 5.6 PRONOUNS
All pronouns and any variation thereof, shall be deemed to refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
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SECTION 5.7 NOTICES AND DEMANDS
Any notice or demand which, by any provision of this Agreement or any
agreement, document or instrument executed pursuant hereto or thereto, except as
otherwise provided therein, is required or provided to be given shall be deemed
to have been sufficiently given or served and received for all purposes when
delivered or 5 days after being sent by certified or registered mail, postage
and charges prepaid, return receipt requested, or by express delivery providing
receipt of delivery, to the following addresses: if to the Company, at 510
Huntmar Park Drive, Herndon, Virginia 20170, or at such other address designated
by the Company to IXC in writing; if to IXC, at its mailing address maintained
on the books and records of the Company, or at such other address designated by
IXC to the Company in writing.
SECTION 5.8 SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the remaining provisions of
this Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted. All provisions of this
Agreement shall be enforced to the full extent permitted by law.
SECTION 5.9 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes and cancels all other
prior agreements, understandings, negotiations and discussions, whether written
or oral, relating to the subject matter hereof.
SECTION 5.10 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and all of which together shall be
deemed one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PSINET INC.
By:
Name:
Title:
Accepted and Agreed as of the
date first above written.
IXC INTERNET SERVICES, INC.
By:
Name:
Title:
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EXHIBIT 10.20
JOINT MARKETING AND SERVICES AGREEMENT
This JOINT MARKETING AND SERVICES AGREEMENT (this "Agreement") is made
and entered into as of the 22nd day of July 1997 (the "Effective Date"), by and
between IXC Internet Services, Inc., a Delaware corporation ("IXC"), and PSINet
Inc., a New York corporation ("PSINet").
WHEREAS, IXC and PSINet have entered into an IRU and Stock Purchase
Agreement of even date herewith (the "IRU Agreement"), pursuant to which IXC
will provide to PSINet the right to use certain fibers and capacity on IXC's
fiber optic telecommunications system and PSINet will exchange therefor shares
of its stock;
WHEREAS, PSINet is in the business of providing, on a dial and
dedicated basis to wholesale and end user customers, Internet connectivity and
related services;
WHEREAS, IXC desires to create and market various service offerings to
customers incorporating or consisting entirely of an Internet services
component; and
WHEREAS, PSINet is willing to provide such Internet services, and IXC
is willing to purchase such Internet services, on the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of this Agreement, the Parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, certain terms have been defined below
and elsewhere in this Agreement (including the attached Schedules) to encompass
meanings that may differ from, or be in addition to, the normal connotation of
the defined word. Unless the context clearly indicates otherwise, any term
defined or used in the singular shall include the plural. A defined word
intended to convey its special meaning is capitalized when used.
"Affiliate" has the meaning set forth in Section 19.1 of the IRU
Agreement.
"Agreement" has the meaning set forth in the preamble.
*
"Claim" means any pending or threatened claim, action, proceeding or
suit by any Third Party.
"Confidential Information" has the meaning set forth in Section 10.1.
"Cure Period" has the meaning set forth in Section 9.2.1.
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 2
"Damages" means any loss, debt, liability, damage, obligation, claim,
demand, judgment or settlement of any nature or kind, known or unknown,
liquidated or unliquidated, including without limitation all reasonable costs
and expenses incurred (legal, accounting or otherwise).
"Documentation" shall mean Reseller Documentation and End User
Documentation.
"Effective Date" has the meaning set forth in the preamble.
"End User Documentation" shall mean all documentation provided by
PSINet for use by end users of its services in connection with the use and
operation of the materials describing such services, as such documentation may
be amended, modified or supplemented from time to time.
"Indemnifying Party" has the meaning set forth in Section 13.1.
"Infrastructure" has the meaning set forth in Section 6.1.
"Intellectual Property Rights" shall mean all intangible property
rights protectible by law throughout the world including all copyrights
(including, without limitation, the exclusive right to reproduce, distribute
copies of, display and perform the copyrighted work and to prepare derivative
works), copyright registrations and applications, trademark rights (including
trade dress), trademark registrations and applications, service mark rights,
service mark registrations and applications, patent rights (including the right
to apply therefor), patent applications therefor (including the right to claim
priority under applicable international conventions) and all patents issuing
thereon, and inventions, whether or not patentable, together with all utility
and design, know-how, specifications, trade names, mask-work rights, trade
secrets, moral right, author's rights, algorithms, rights in packaging,
goodwill and other intangible property rights, as may exist now and/or
hereafter come into existence, and all renewals and extensions thereof,
regardless of whether any of such rights arise under the laws of the United
States or of any other state, country or jurisdiction.
"Internet" has the meaning set forth in Section 19.1 of the IRU
Agreement.
"IRU Agreement" has the meaning set forth in the recitals of this
Agreement.
"IXC" has the meaning set forth in the preamble.
"IXC Customer" means any purchaser of a service offering that includes
Services provided by PSINet under this Agreement. As used in this Agreement,
an "IXC Customer" shall include (i) any party with which IXC enters into an
agreement relating to the sale of services that include Services, (ii) any
party that purchases Services for which billing is provided by IXC, (iii) any
party that purchases Value-Added Services from IXC pursuant to Section 5.1.1,
and (iv) any purchaser of services that include Services from an IXC Reseller.
In cases where IXC uses Services provided by PSINet under this Agreement for
its own internal purposes, IXC shall be deemed an "IXC Customer" for purposes
of this Agreement.
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<PAGE> 4
"IXC Customer Information" shall mean all information relating to each
IXC Customer collected in connection with the provision of Services to such IXC
Customer, including without limitation the name, address, usage, features and
services purchased, locations served, payment history and all other information
identifiable to a particular customer.
"IXC Documents" has the meaning set forth in Section 5.1.4.
"IXC Internet Services" means those Services offered by IXC to IXC
Customers.
"IXC Resellers" has the meaning set forth in Section 5.1.1.
"IXC Sales Support Group" has the meaning set forth in Section 3.2.
"Managed Connectivity Services" or "MCS" has the meaning set forth in
Section 2.1.1.
"Marks" shall mean trade names, logos, trademarks, trade devices,
trade dress, service marks, symbols, abbreviations or registered marks, or
contractions or simulations thereof, or any other indicia or origin.
"Material Provision" shall mean any provision of this Agreement
(including, without limitation, payment provisions) the breach of which by one
Party is determined by an arbitration pursuant to Section 15.18 to constitute a
material adverse effect on the use and enjoyment by the other Party of the
benefits of this Agreement.
"Multiple End-User Restrictions" has the meaning set forth in Section
5.1.2.
"Opportunity Consulting Services" or "OCS" has the meaning set forth
in Section 2.1.3.
"Party" means IXC, individually, or PSINet, individually.
"Parties" means IXC and PSINet, collectively.
"Person" has the meaning set forth in Section 19.1 of the IRU
Agreement.
"PSINet" has the meaning set forth in the preamble.
"PSINet Documents" has the meaning set forth in Section 7.4.
"PSINet Marks" shall mean the PSINet Primary Marks, the PSINet VAS
Marks, such other Marks as are used by PSINet to promote, advertise and market
the Services, and such other Marks as the Parties shall agree upon in writing.
"PSINet Point of Presence" shall mean one of the points of presence
representing a point of interconnection on the PSINet network. The initial
PSINet Points of Presence are listed in Schedule 6.2 to this Agreement, and
PSINet shall promptly update such schedule during the Term
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on reasonable notice to IXC. At any time during the term of this Agreement,
PSINet Points of Presence could be collocated with points of presence on the
IXC network pursuant to Section 6.1.
"PSINet Primary Marks" shall mean the Marks "PSINet" and "PSINet" and
logo types thereof all as the same may be changed from time to time.
"PSINet VAS Marks" shall mean such Marks as are used by PSINet to
promote, advertise and market Value Added Services.
"Releasing Party" has the meaning set forth in Section 12.2.
"Reseller Documentation" shall mean all documentation made available
by PSINet for use by any reseller or distributor of services of the type
comprising the Services to describe the methods and procedures used by PSINet
in the provisioning and support of users of services of the type comprising any
of the Services provided under this Agreement, as such documentation may be
amended, modified or supplemented from time to time.
"Sales Support Services" has the meaning set forth in Section 3.1.
"Services" means Managed Connectivity Services, Value Added Services
and Opportunity Consulting Services.
"Term" has the meaning set forth in Section 9.1.
"Third Party" means an entity other than a Party or any Affiliate of a
Party.
"Transaction Documents" has the meaning set forth in Section 19.1 of
the IRU Agreement.
"Value Added Services" or "VAS" has the meaning set forth in Section
2.1.2.
2. SERVICE DESCRIPTION(S).
2.1 Initial Description of Services Provided by PSINet. From and
after the Effective Date, on the terms and subject to the conditions set forth
in this Agreement, PSINet shall provide to IXC, and IXC shall have the right to
purchase from PSINet, the following services:
2.1.1 Managed Connectivity Services ("MCS"), which consist
of the provision of dial-up and dedicated access to the Internet via the PSINet
network to customers and all related products and services now or hereafter
offered or provided by PSINet that deliver or facilitate such access. The
initial Managed Connectivity Services shall comply with the applicable
descriptions set forth on Schedule 2.2, for PSINet's Intranet, LAN-on-Demand,
InterMAN, InterFrame, Wholesale Dial and InterRamp services, including, without
limitation, the functional, technical and performance requirements set forth in
such Schedule. From time to time, the Parties may agree on such modifications
to the functional, technical and performance
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requirements for MCS as are necessary to address requirements of IXC Customers.
At such times as PSINet provides enhanced versions of MCS, PSINet shall make
such enhanced versions of MCS available to IXC, and the Parties may agree, for
purposes of this Agreement, upon the functional, technical and performance
requirements for such services, which requirements shall, at a minimum, ensure
that such services comply with the applicable minimum requirements in Section
2.2.
2.1.2 Value Added Services ("VAS"), consisting of the
following services and products now or hereafter offered by PSINet or a
controlled United States Affiliate: (i) InternetPaper, (ii) Internet Security
Services, (iii) PSIWeb, (iv) any other services or products developed jointly
by the Parties, and (v) any other services or products now or hereafter
marketed or offered by PSINet as a generally available service or product
offering other than MCS which are not subject to exclusive marketing
relationships with Third Parties. The initial Value Added Services shall
comply with the applicable descriptions set forth on Schedule 2.2. From time
to time, the Parties may agree on such modifications to the functional,
technical and performance requirements for VAS as are necessary to address
requirements of IXC Customers. At such times as PSINet provides enhanced
versions of VAS, PSINet shall make such enhanced versions of VAS available to
IXC, and the Parties may agree, for purposes of this Agreement, upon the
functional, technical and performance requirements for such services, which
requirements shall, at a minimum, ensure that such services comply with the
applicable minimum requirements in Section 2.2.
2.1.3 Opportunity Consulting Services ("OCS"), will consist
of pre-sales technical support and post-sales development and/or implementation
support to address specific IXC-identified market opportunities. At such times
as the situation warrants, the Parties may agree, for purposes of this
Agreement, upon the functional, technical and performance requirements for such
services, which requirements shall, at a minimum, ensure that such services
comply with the applicable minimum requirements in Section 2.2. Certain joint
teaming efforts of the Parties shall be conducted in accordance with Schedule
2.1.3 hereto.
2.1.4 IXC shall have the right and option to have any other
PSINet services included under this Agreement on terms and conditions
reasonably consistent herewith. In addition, upon such time that PSINet
discontinues a service generally among its customers, PSINet may remove such
service from this Agreement, but only after providing IXC with at least 30
days' prior written notice of its intention to do so. If PSINet so removes a
service, PSINet will continue to honor all existing IXC and IXC Reseller
service agreements with end customers by continuing to make such service
available to IXC Customers through the shorter of (i) the end of the term of
their respective service agreements, and (ii) the end of the two-year period
commencing on the expiration of PSINet's 30-day notice period.
2.1.5 Notwithstanding anything to the contrary contained
herein, PSINet reserves the right to modify, alter, improve or change any and
all of the PSINet services comprising the Services covered by this Agreement,
and this Agreement will cover the sales of Services as they may be modified,
altered, improved or changed by PSINet from time to time. Subject to Section
2.1.4, in all cases where such modification, alteration or change will reduce
the functionality of
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<PAGE> 7
any PSINet service component comprising the IXC Internet Services, PSINet will
not effect such modifications, alterations or changes without IXC's specific
written approval. Such approval will not be unreasonably withheld, delayed or
conditioned.
2.2 Minimum Requirements. The MCS, VAS and OCS provided by PSINet
under this Agreement, as described in Schedule 2.2, shall at all times meet the
following minimum requirements:
2.2.1 The MCS, Internet Security Services and PSIWeb
services provided by PSINet under this Agreement shall be offered and provided
with features and a level of quality that, on average and taken as a whole,
equal or exceed that provided by other leading providers of Internet services
offering comparable services in a substantial portion of the geographic area in
which Services are available pursuant to this Agreement. The Parties agree to
work together on a broader range of service offerings as needed to address
market demand. For purposes of this Agreement, Services shall be deemed to be
available to IXC in any geographic area in which PSINet provides services to
customers or, subject to the last sentence of Section 2.7, in which PSINet has
an Affiliate, strategic partner or other cooperating provider providing
services in such area of the type made available to IXC under this Agreement.
2.2.2 The MCS and VAS provided by PSINet under this
Agreement shall be offered and provided with features and an overall level of
quality that equals or exceeds that which PSINet offers or provides any other
customer.
2.2.3 The MCS and VAS provided by PSINet under this
Agreement shall comply with all Documentation relating to the MCS and VAS
offered or provided by PSINet as of the Effective Date and as updated from time
to time provided that no such update may operate to have a material adverse
impact on (i) any MCS or VAS (including without limitation the level or quality
of service provided to IXC Customers), taken as a whole, without the prior
written consent of IXC (which shall not be unreasonably withheld, delayed or
conditioned), except to the extent necessary to deal with network emergencies
and other circumstances beyond the control of PSINet, in which case PSINet
shall consult with IXC concerning such change as soon as reasonably
practicable, or (ii) any other Services without providing IXC with advance
written notice of such changes as soon as reasonably practicable.
2.2.4 PSINet shall not make any changes (i) to any MCS or
VAS that may reasonably be expected to have a material adverse impact on such
Service (including without limitation the level or quality of service provided
to IXC Customers), taken as a whole, without the prior written consent of IXC,
except to the extent necessary to deal with network emergencies and other
circumstances beyond the control of PSINet, in which case PSINet shall consult
with IXC concerning such change as soon as reasonably practicable, or (ii) to
any OCS Services provided IXC without providing IXC with advance written notice
of such changes as soon as reasonably practicable.
2.2.5 The OCS provided to IXC by PSINet shall be performed
by PSINet employees or its subcontractors as deemed by PSINet to be best
qualified and available to
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<PAGE> 8
perform the task at hand as identified by IXC. Under no circumstances may
PSINet change subcontract relationships in effect at the time of proposal
submission without IXC's specific written approval. Such approval shall not be
unreasonably withheld, delayed or conditioned. PSINet officers supervising the
performance of the services will be empowered to commit the resources of PSINet
to the extent and scope of such officer's authority.
2.2.6 In the event that Services, as defined herein, or
portions of Services, are provided to IXC by PSINet via a contractual
relationship with a Third Party, PSINet is obligated to maintain such a
relationship to the extent practicable. Should such relationship require that
IXC enter into a similar agreement with the Third Party, PSINet shall use
commercially reasonable efforts to assist IXC in establishing the relationship
and securing rates and levels of service of at least those provided to PSINet
by the Third Party.
2.3 Documentation. PSINet represents that (i) Schedule 2.3
contains a true and complete list of all Documentation relating to the MCS and
VAS offered or provided by PSINet as of the Effective Date, and (ii) true and
complete copies of all such Documentation have been provided to IXC prior to
the Effective Date. In the event PSINet amends, modifies or supplements any
such Documentation, or creates new Documentation in connection with enhanced
versions of MCS or additional VAS added pursuant to Section 1.1, PSINet shall
as soon as practicable provide IXC with written notice of any such amendments,
modifications, supplements or new Documentation, including copies of the
foregoing.
2.4 License to Documentation and Other Intellectual Property
Rights.
2.4.1 PSINet grants IXC and IXC Resellers a limited,
non-exclusive, royalty-free, license, in the geographic area in which Services
are available to IXC pursuant to this Agreement, throughout the Term, to (i)
copy, but not modify sales literature and product descriptions (Schedule 2.3
list) in any form, (ii) integrate the Documentation, or any part thereof, into
IXC's catalogs, price lists, brochures and related sales materials, and (iii)
demonstrate, market, distribute and solicit orders for the Services and
warrants that it has such right to grant. The grant of the foregoing license
shall not entitle or in any way be construed to entitle IXC to (a) use PSINet
Marks in connection with IXC's sales, advertisements and promotion of the
Services, except in materials provided (or approved by PSINet prior to IXC's
use thereof) by PSINet; (b) distribute any Services outside the United States
of America in violation of any United States export restrictions; (c)
distribute any Services outside of the geographic areas in which Services are
then available to IXC pursuant to this Agreement; (d) sublicense any of its
rights under this Agreement, except as expressly permitted by this Agreement;
or (e) make any agreement or incur any liability for or on behalf of PSINet
except as expressly contemplated by this Agreement.
2.4.2 Except for the limited license specifically granted
to IXC in this Agreement, PSINet shall at all times retain full and exclusive
right, title and ownership interest in and to the Services, the PSINet network,
all PSINet Marks and any and all other Intellectual Property Rights or trade
secret rights related thereto. IXC shall notify PSINet of any action by any
Third Party known or suspected by IXC to constitute an infringement of PSINet's
proprietary rights. IXC shall honor all reasonable requests by PSINet, other
than engaging as a party in litigation, to
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<PAGE> 9
perfect and protect, at PSINet's expense, any rights of PSINet in the Services,
the PSINet network or such Intellectual Property Rights or trade secret rights.
2.4.3 PSINet represents that no further licenses to
Intellectual Property Rights are needed by IXC to market, offer, provision or
use the IXC Internet Services as contemplated by this Agreement, in the
geographic area in which Services are available to IXC pursuant to this
Agreement.
2.5 PSINet Liability for Affiliate Obligations. To the extent
that PSINet's performance of its obligations hereunder causes PSINet to assign
or delegate all or part of its liabilities, obligations and commitments
hereunder to any of its Affiliates, PSINet covenants and agrees that it shall
use its reasonable efforts to cause any such Affiliate to perform such
liabilities, obligations and commitments in accordance with the terms and
provisions hereof. In the event of such an assignment or delegation, PSINet
shall remain liable for all of its liabilities, obligations and commitments
hereunder.
2.6 Forecasts. The Parties agree to coordinate in estimating the
level and location of demand and traffic for Services during the term of this
Agreement. In that connection, no later than the 15th day of the first month
of each calendar quarter during the term of this Agreement, IXC will provide
PSINet with its projected requirements for each Service, indicating amounts,
types and location during each of the following four calendar months. In the
event that there should be a material change in IXC's proposed requirements as
set forth in the most recent forecast, IXC, as promptly as practicable, shall
update such forecast in order to reflect such change. These forecasts shall be
used for the planning convenience of PSINet and shall not be binding upon IXC,
but PSINet intends to use the forecasts to estimate needed staffing, network
provisioning and product levels for its performance of the terms of this
Agreement and shall only be responsible for using commercially reasonable
efforts to satisfy demand to the extent it materially exceeds such forecasts.
IXC shall provide its initial projected requirements for Services within 15
business days after the Effective Date. All forecasts provided under this
Section 2.6 shall be treated as Confidential Information of IXC pursuant to
Section 10.
2.7 Geographic Scope. It is the intent of the Parties that IXC be
permitted to provide the IXC Internet Services to the IXC Customers, on the
terms and subject to the conditions of this Agreement, in all of the geographic
areas in which PSINet is now, or at anytime during the Term is then, providing
services to its customers. Notwithstanding the foregoing, IXC acknowledges and
understands that PSINet is not now capable of independently providing certain
services in certain geographic areas outside of the continental United States
of America. To the extent that IXC desires to provide IXC Internet Services to
IXC Customers situated in such geographic areas and PSINet has an Affiliate,
strategic partner or cooperating provider offering services therein, IXC may
request that PSINet obtain a quote from such Affiliate, strategic partner or
cooperating provider for such IXC Internet Services. Within five business days
after such request, PSINet shall contact the appropriate Affiliate, strategic
partner or cooperating provider for purposes of obtaining such quote. The
provision of services under this Section 2.7 by such Affiliate, strategic
partner or cooperating partner to PSINet shall be the subject of negotiation
and, if reached by such parties, agreement. *
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* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 10
* Notwithstanding anything in this Agreement to the contrary, PSINet shall
not be obligated to provide Services to an IXC Customer or Third Party in those
geographic areas in which PSINet is not offering services unless (i) it has an
Affiliate, strategic partner or cooperating provider in a particular geographic
area, and (ii) such Affiliate, strategic partner or cooperating provider agrees
to provide such services on terms and conditions to Texas' satisfaction.
2.8 Services Provided by IXC. PSINet shall be presented with the
opportunity to execute IXC's standard reseller agreement for IXC service, on
the terms and subject to the conditions set forth in such agreement.
*
4. CUSTOMER SUPPORT SERVICES.
4.1 PSINet will provide customer support through its customer
support group or through a Third Party (as determined by PSINet in its sole
discretion) for the Services (other than InterRamp Remote Access services) sold
to IXC Customers as contemplated by this Agreement; provided that PSINet will
not be responsible for providing customer support to any IXC Customer
purchasing Services under a private label which exceeds the level of support
which PSINet is obligated to provide to its customers pursuant to PSINet's
service agreements for the applicable Services, as such agreements may be
amended from time to time. PSINet also may
- 9 -
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 11
assist IXC with making arrangements for the provision of customer support with
respect to the InterRamp Remote Access services to be sold to IXC Customers
pursuant to this Agreement. IXC acknowledges, however, that IXC is solely
responsible for the provision of such customer support and PSINet shall have no
liability with respect thereto.
4.2 Notwithstanding the foregoing, IXC shall be responsible for
all pricing and service plans, billing and collections with respect to IXC
Customers.
5. IXC RIGHTS AND RESPONSIBILITIES.
5.1 IXC Use and Sales of Services.
5.1.1 IXC may use the Services made available to it
pursuant to this Agreement, on the terms and subject to the conditions hereof,
(i) for its own account, (ii) subject to Section 5.1.2, for resale to IXC
Customers, or (iii) subject to Section 5.1.2, for resale to Third Parties for
further resale or distribution (such Third Parties which, notwithstanding the
definition of "Third Parties" herein, include, without limitation, IXC
Customers (including those which are Affiliates of IXC) are referred to herein
as "IXC Resellers"), either alone or in combination with any other products and
services. Services offered by IXC that incorporate MCS and VAS made available
to it pursuant to this Agreement shall, at IXC's discretion, be branded
exclusively as IXC services or otherwise as IXC shall determine. IXC shall
specify the design of any user interface associated with any MCS or VAS,
consistent with the preceding sentence. IXC will have complete discretion to
determine the prices to be charged to IXC Customers for the Services provided
under this Agreement and IXC shall be solely responsible for establishing and
collecting customer charges for services it or its customers offer through the
PSINet network and for preparing and mailing invoices to IXC Customers. In
addition, IXC shall be responsible for payment of the total amounts invoiced it
by PSINet (except for any amounts disputed by IXC in good faith) regardless of
whether IXC is paid by its customers. Subject to the provisions of Section
5.4, IXC shall also have complete discretion to determine the other terms and
conditions on which IXC makes such Services available to IXC Customers;
provided that neither IXC nor its customers may offer warranties or
representations for the Services that would obligate or otherwise bind PSINet
beyond those stated in the applicable service agreements. Except as otherwise
provided in this Agreement, except as reasonably necessary for PSINet to assist
IXC during the introduction of IXC Internet Services under this Agreement, IXC
shall provide the primary interface to IXC Customers in connection with the
marketing, offering or provision of IXC services that incorporate the Services,
including (a) providing first tier support for non-MCS and non-VAS IXC services
and (b) handling communications to and business relations with IXC Customers
related to contractual agreements, handling invoicing and payment matters, and
handling inquiries and questions from IXC Customers about Services.
5.1.2 Subject to Section 2.7, IXC acknowledges and agrees
that it may not offer for sale or distribution to any IXC Customer or IXC
Reseller any Services until such Services are made generally available by
PSINet in the applicable geographic area. Without limiting the generality of
the foregoing, IXC acknowledges and agrees that no Service may be offered for
sale or distribution by IXC to any IXC Customer or IXC Reseller for multiple
end-user use in any
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<PAGE> 12
particular geographic area until such Service is made generally available by
PSINet for multiple end-user use in such geographic area (the "Multiple
End-User Restrictions"). IXC will use reasonable efforts to cause each IXC
Reseller to include a provision in its agreements with its customers that such
customer will not engage in any conduct that would violate any of the Multiple
End-User Restrictions.
5.1.3 Notwithstanding anything in Section 5.1.1 to the
contrary, the Parties agree that the determination of customer interfaces,
marketing, provisioning and delivery for jointly developed new product or
services offerings incorporating IXC services or Services as described herein
will be determined by mutual agreement.
5.1.4 Periodic Audit Rights. PSINet shall have the right,
upon reasonable notice and at a date and time mutually agreed upon by the
Parties, to enter the premises of IXC for the purpose of auditing any of IXC's
books of accounts, documents, records (in any media), papers and files (the
"IXC Documents") relating to its compliance with the provisions of this
Agreement. PSINet shall bear the expense of the audit unless the audit reveals
that (i) the amounts collected by PSINet from IXC hereunder are more than two
(2) percent less than that which should have been paid by IXC to PSINet, or
(ii) IXC has not complied with either or both of the first two sentences of
Section 5.1.2, in which case, the entire cost of the audit shall be borne by
IXC. Payment of any amounts found due and owing PSINet shall be made promptly
by IXC upon demand by PSINet.
5.2 Use of Marks. Except as provided herein or by advance written
consent of the other Party, each of IXC and PSINet agrees not to (i) display or
use, in advertising or otherwise, any of the other's Marks, (ii) permit any
Affiliate to display or use any of the other's Marks, or (iii) give permission
to display or use any of the other's Marks to any Third Party. Any use by one
Party of any of the other's Marks shall be subject to such other Party's
advance approval in writing, in its discretion, subject to compliance with
guidelines provided by it. Neither Party shall claim ownership or any other
rights in any of the other's Marks. Upon termination or expiration of this
Agreement, any and all rights or privileges granted by IXC or PSINet to use any
Marks shall immediately expire and each Party shall immediately discontinue the
use of such Marks. Nothing herein shall preclude either Party from making
factual references to the other in government filings, disclosure documents and
other public statements, except as otherwise set forth in the IRU Agreement.
5.3 Introductory Marketing Campaign. IXC shall have complete
discretion regarding its marketing of the Services provided that neither IXC
nor its customers may offer warranties or representations for the Services that
would obligate or otherwise bind PSINet beyond those stated in the applicable
service agreements or to make any other warranties, promises or representations
with respect to the Services or the PSINet network. In connection with such
marketing activities, IXC shall prominently mention PSINet's role in the
provision of such services in an introductory press release, the content of
which shall be mutually agreed to by the Parties in accordance with Section
19.11 of the IRU Agreement.
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<PAGE> 13
5.4 Provisions Applicable to End Users.
5.4.1 IXC's Use of Services. IXC's use of Services in
IXC's capacity as end user of Services for its own account shall be governed by
Schedule 5.4.1 and the terms and conditions of this Agreement generally.
5.4.2 Agreements with IXC Customers Other than IXC. IXC's
agreements with IXC Customers (other than IXC) to provision Services shall
comply with Schedule 5.4.2.
6. INFRASTRUCTURE.
6.1 Use of IXC Equipment and Facilities. Except as otherwise
agreed to by the Parties, in providing the Services to IXC under this
Agreement, PSINet may, in its sole discretion, purchase infrastructure,
equipment, facilities and services necessary for the transmission of data
(collectively, "Infrastructure") from IXC provided (i) PSINet is not restricted
from purchasing such Infrastructure from IXC under contractual obligations
binding on PSINet at the time the purchase decision is being considered, (ii)
such Infrastructure meets PSINet's reasonable functional, technical and
performance requirements, and (iii) IXC offers such Infrastructure to PSINet at
a price and on terms and conditions that, on average or taken as a whole, are
competitive as compared to those offered to PSINet in good faith by other
leading providers of infrastructure, equipment, facilities and services similar
to the Infrastructure at the time IXC makes its offer.
6.2 Provisioning of Customers. In connection with the provision
of MCS hereunder, it is the intention of the Parties that IXC shall assume
responsibility for providing, at IXC's expense or the expense of the IXC
Customer, connectivity between the IXC Customer's premises and any PSINet Point
of Presence listed in Schedule 6.2 (as such schedule may be modified or
supplemented from time to time) that is selected by IXC, subject to Section
6.3. PSINet shall assume responsibility for providing and conditioning
Customer premises equipment, consistent with Section 2 herein. Notwithstanding
the foregoing, the Parties acknowledge that the articulation of procedures to
accomplish coordinated provisioning of Services involving a dedicated access
component by the Parties may not be in place for a period after the Effective
Date. During this period, PSINet shall assume this responsibility and shall be
paid at the rates as indicated in Schedule 7.1. IXC shall notify PSINet of its
readiness to transition this responsibility.
6.3 Interconnection with PSINet Facilities. IXC and PSINet shall
coordinate with respect to (i) the definition of the interfaces between the IXC
network and the PSINet network at the PSINet Points of Presence, (ii) the
management of traffic routed by PSINet from the premises of IXC Customers to
PSINet Points of Presence, and (iii) access by PSINet to the IXC network for
the purposes of providing Services under this Agreement. PSINet shall be
responsible for the day-to-day management of the PSINet network relating to the
provision of Services, including monitoring and taking actions necessary to
remedy problems with, or disruption of, the Services, establishment and
maintenance of routing tables and routing policies
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<PAGE> 14
at Points of Presence, and establishment and maintenance of peering points with
the global Internet.
6.4 Customer Transfers. At any time, IXC shall have the right to
migrate IXC Customers to such services as provided by IXC or on IXC's behalf by
a Third Party. PSINet shall provide all reasonable cooperation in support, to
the extent practicable, of a seamless, minimally disruptive migration of such
IXC Customers in connection with such services (including without limitation
all IXC Customer Information and, to the extent practicable, any necessary
transfer of customer addresses).
6.5 Interfaces. The Parties shall develop methods, procedures and
associated interfaces for cooperating on a "seamless" basis in all areas
relating to the marketing and provision of the Services, including without
limitation order processing, customer care, network monitoring and maintenance,
and problem escalation and resolution; provided, however, that PSINet shall in
no event be obligated to provide services or support of any kind to IXC or IXC
Customers which exceeds that which it is required to provide to its own
customers pursuant to PSINet's service agreements for the applicable comparable
services, as such agreements may be amended from time to time. The Parties
shall use commercially reasonable efforts to agree on an initial plan to
accomplish the foregoing, including appropriate training of each other's
employees, by no later than 30 days after the Effective Date. At any time
during the Term, PSINet will cooperate in good faith with IXC in connection
with inquiries concerning potential problems affecting any aspect of the
provision of Services.
7. PRICING AND PAYMENT.
7.1 *
7.2 Independent End-Customer Pricing. Each of the Parties will
have complete discretion regarding the prices that it charges to its customers
for its services.
7.3 *
7.3.5 Promotional Pricing. In addition to the *
specified under this Section 7, the parties shall also agree from time to time
on promotional and other pricing as may be appropriate to take maximum
advantage of market opportunities.
7.3.6 Dispute Resolution. Any dispute relating to the *
or any adjustments thereof, applicable under this Section 7.1 shall be resolved
pursuant to Section 15.18 of this Agreement.
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
<PAGE> 15
*
*
- 14 -
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
<PAGE> 16
7.5 Invoicing and Payment. During the Term, PSINet shall invoice
IXC for Services delivered to each IXC Customer. Such invoices shall be
delivered by PSINet to IXC in both paper and electronic form with content and
formats as agreed to by the Parties. IXC shall pay PSINet for the Services
according to the schedule set forth in Schedule 7.1. IXC agrees to pay PSINet,
in advance, as invoiced by PSINet, each month during the term, all fees and
other charges with respect to MCS and VAS, and in arrears for OCS, payable
under this Agreement for such month. All such fees for MCS and VAS for the
initial month of service for any IXC Customer shall be prorated for the portion
of the month beginning on the date on which the IXC Customer service commences
and ending on the last calendar day of such initial month and the amount
invoiced by PSINet, with respect to each such IXC Customer shall include such
prorated fees and the fees and charges payable for the following full month.
7.6 Credits/Adjustments. All IXC Customers shall be granted
service disruption credits and adjustments, quality of service commitment
credits and adjustments, and the like as may be established by PSINet with
respect to PSINet customers, and as modified from time to time, by PSINet, at
its sole discretion. In the event that IXC, as promptly as practicable,
notifies PSINet after learning of the failure of PSINet to deliver any of the
Services to any IXC Customer, IXC will be entitled to a credit representing any
reasonable adjustment requested by IXC and approved in advance by PSINet as a
result of such failure to meet customer service expectations.
7.7 Late Payment. PSINet invoices for amounts payable under this
Agreement shall be due within 30 days of the date of invoice. If a dispute
arises as to any portion of an invoice, IXC shall pay the undisputed amount of
such invoice when due and shall notify PSINet in writing of the disputed amount
no later than 30 days from the date of invoice.
7.8 Payment Dispute Resolution. In the event of payment dispute,
the PSINet Authorized Representative and the IXC Authorized Representative (as
such capitalized terms are defined in the IRU Agreement) will first attempt in
good faith to promptly resolve the dispute. If the dispute has not been
resolved by the Authorized Representatives within 14 days after IXC's notice,
or if either Party will not agree to meet within such 14-day period, the matter
will be referred to the Chief Executive Officer of PSINet and the Chief
Executive Officer of IXC who will in good faith attempt to resolve the dispute.
If the dispute remains unresolved within an additional 14-day period, the
dispute shall be submitted to arbitration as per the IRU Agreement.
In the event that any amount remains unpaid after its due date, such
amount shall be subject to an interest charge equal to the lesser of one and
one-half percent of the unpaid balance per month or the maximum rate allowed
under applicable state law and, if such amount shall not have been paid in full
within five business days of the applicable due date when no bona fide dispute
exists, PSINet may, without any liability to IXC, at its option, suspend the
provision of services under this Agreement until such amount is paid in full.
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<PAGE> 17
8. NO RESTRICTIONS.
Notwithstanding any other provision of this Agreement, except as
provided in Section 2.7, nothing in this Agreement shall limit or in any way
affect (i) the performance of any Party's obligations under a binding agreement
in effect as of the Effective Date (and each Party shall disclose to the other
such agreements that, to such Party's knowledge, are in effect as of such date
to the extent possible consistent with any obligations of confidentiality owing
to Third Parties), (ii) PSINet's right to provide Internet services for its own
account directly to any end user or wholesale customer (subject to section 10)
or otherwise to engage in services involving packet, frame relay, asynchronous
transfer mode or other Internet services, (iii) IXC's right to build, operate
and maintain its own global network, and (iv) either Party's right in any way
to market, offer or provide any products and services that are not, generally,
marketed principally as Internet services.
9. TERM AND TERMINATION.
9.1 Term. The term of this Agreement shall commence on the
Effective Date and shall end on the earlier of (i) the termination of the IRU
Agreement, and (ii) such earlier date as of which this Agreement expires or is
terminated pursuant to Section 9.2.
9.2 Termination.
9.2.1 A Party may deliver to the other Party a written
"Notice of Default" in the event that the other Party has breached any Material
Provision hereunder. Such Notice of Default must prominently contain the
following sentences in capital letters: "THIS IS A FORMAL NOTICE OF A BREACH
OF CONTRACT. FAILURE TO CURE SUCH BREACH WILL HAVE SIGNIFICANT LEGAL
CONSEQUENCES." A Party that has received a Notice of Default shall have thirty
(30) days to cure the alleged breach (and, if the defaulting Party shall have
commenced actions in good faith to cure such defaults which are not susceptible
of being cured during such 30-day period, such period shall be extended (but
not in excess of 90 additional days) while such Party continues such actions to
cure (the "Cure Period"). If such Party fails to cure the breach within the
Cure Period, as long as such default shall be continuing, the non-defaulting
Party shall have the right to either (i) suspend its performance or payment
obligations under this Agreement and/or any of the Transaction Documents (other
than obligations under Section 15.8(a) of the IRU Agreement and the Standstill
Agreement (as defined in the IRU Agreement)), (ii) seek an order of specific
performance, and/or (iii) seek the award of compensatory damages.
9.2.2 PSINet shall terminate, or use commercially
reasonable efforts to terminate, the access rights of any IXC Customer as soon
as is reasonably practicable upon written notice from IXC or any IXC Customer
to do so or upon mutually agreed upon electronic process with receipt
confirmed, but shall have no liability in connection therewith.
9.2.3 PSINet shall have the right to terminate any IXC
Customer on written notice to IXC (or sooner, if required by law, provided,
however that PSINet should thereafter
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<PAGE> 18
provide written notice to IXC) in the event of any use or alleged use by such
IXC Customer of the Services or the PSINet network which is in violation of any
law, regulation or treaty, any of the Multiple End-User Restrictions, PSINet's
Net Abuse Policy (available at PSINet's web site at 'http:\\www.psi.net'), any
community standard or accepted Internet policy or which results in the receipt
by PSINet of any formal or informal complaint.
10. CONFIDENTIAL INFORMATION.
10.1 Nondisclosure. If either Party acquires Confidential
Information of the other, such receiving Party shall maintain the
confidentiality of the disclosing Party's Confidential Information, shall use
such Confidential Information only for the purposes for which it is furnished
and shall not reproduce or copy it in whole or in part except for use as
authorized in this Agreement. Without limiting the generality of the
foregoing, neither Party shall use the Confidential Information of the other
Party to solicit the other Party's customers or to otherwise compete unfairly
with the other Party. Confidential Information shall mean all information of
the disclosing Party which it treats as confidential or proprietary including,
without limitation, all of the following: (i) information concerning customers
and the contractual terms under which services are being provided to such
customer by a Party; and (ii) all customer lists and other information
regarding the customers of a Party. Confidential Information shall not include
information which is or hereafter becomes generally available to others without
restriction or which is obtained by the receiving Party without violating the
disclosing Party's rights under this Article 10 or any other obligation of
confidentiality. The terms and conditions of this Agreement shall constitute
Confidential Information. PSINet and IXC shall cooperate to request
confidential treatment as may be mutually agreed by them with respect to
certain terms of this Agreement and the transactions contemplated hereby in any
filing with the Securities and Exchange Commission, any other government
authority or any securities exchange or stock market.
10.2 Duration. With respect to all Confidential Information, the
Parties' rights and obligations under this Article shall remain in full force
and effect following the termination of this Agreement.
10.3 Ownership. All materials and records which constitute
Confidential Information, other than service orders and copies of this
Agreement, shall be and remain the property of, and belong exclusively to, the
disclosing Party, and the receiving Party agrees either to surrender possession
of and turn over or to destroy and certify to the other Party the destruction
of all such Confidential Information which it may possess or control upon
request of the disclosing Party or upon the termination of this Agreement.
10.4 Injunctive Relief. The Parties acknowledge and agree that, in
the event of a breach or threatened breach by any Party of any provision of
this Article, the other Party will have no adequate remedy in money or damages
and, accordingly, shall be entitled to an injunction against such breach.
However, no specification in this Section of a specific legal or equitable
remedy shall be construed as a waiver or prohibition against any other legal or
equitable remedies in the event of a breach of this Section of this Agreement.
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<PAGE> 19
10.5 Legal Obligation to Disclose. Each Party shall be released
from its obligations under this Section 10 with respect to information which
such Party is required to disclose to others pursuant to obligations imposed by
law, rule or regulation or securities exchange or stock market rule; provided,
however, that prior to any such required disclosure, such Party shall, to the
extent practicable, provide written notice and consult with the other Party.
11. REPRESENTATIONS AND WARRANTIES.
11.1 By PSINet. PSINet represents and warrants to IXC that (i) it
is a corporation duly organized, validly existing and in good standing in the
State of New York; (ii) it has full corporate power and authority to own and
operate the Services and the PSINet network and to carry on its business as
presently conducted; (iii) it has, or has licensed, sufficient right, title and
interest in and to the Services, the PSINet Marks (within the United States)
and the PSINet network; (iv) it has all requisite authority to execute and
deliver this Agreement and to carry out the transactions contemplated hereby;
(v) this Agreement is a valid and binding obligation of PSINet, enforceable
against PSINet in accordance with its terms except as such enforceability may
be limited by laws relating to creditors' rights generally and the exercise of
judicial discretion in accordance with general equitable principles; and (vi)
the licenses granted and obligations owed to IXC hereunder do not conflict with
the rights granted or obligations owed by PSINet to any Third Party.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET
FORTH IN THIS SECTION 11.1, PSINET MAKES NO REPRESENTATIONS OR WARRANTIES OF
ANY KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND PSINET
EXPRESSLY DISCLAIMS AND EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES OF
ANY KIND. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PSINET MAKES NO
WARRANTY TO IXC OR ANY OTHER PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED OR
STATUTORY, AS TO THE DESCRIPTION, QUALITY, COMPLETENESS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OF ANY INTERNET SERVICE OR ANY OTHER SERVICE
PROVIDED HEREUNDER OR DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.
11.2 By IXC. IXC represents and warrants to PSINet that (i) it is
a corporation duly organized, validly existing and in good standing in the
State of Delaware; (ii) it has full corporate power and authority to carry on
its business as presently conducted; (iii) it has sufficient right, title and
interest in and to the IXC Marks, (iv) it has all requisite authority to
execute and deliver this Agreement and to carry out the transactions
contemplated hereby; (v) this Agreement is a valid and binding obligation of
IXC, enforceable against IXC in accordance with its terms except as such
enforceability may be limited by laws relating to creditors' rights generally
and the exercise of judicial discretion in accordance with general equitable
principles and (vi) the obligations owed to PSINet hereunder do not conflict
with the rights granted or obligations owed by IXC to any Third Party.
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<PAGE> 20
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY SET
FORTH IN THIS SECTION 11.2, IXC MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, AND IXC EXPRESSLY
DISCLAIMS AND EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND.
12. LIMITATION OF LIABILITY.
12.1 Limitation of Liability. Except for direct damages otherwise
specifically provided for in this Agreement, in no event shall IXC or PSINet be
liable for any special, incidental, direct, indirect, punitive, reliance or
consequential damages, whether foreseeable or not, arising under this Agreement
or from any breach or partial breach of the provisions of this Agreement or
occasioned by any defect in the Services or other service provided hereunder,
delay in availability of the Services or any service provided hereunder,
failure of the Services or other service provided hereunder, interruptions or
outages of the PSINet network or any other cause whatsoever or arising out of
any act or omission by IXC or PSINet, as applicable, its employees, servants
and/or agents, including but not limited to, damage or loss of data, property
or equipment, loss of profits or revenue, cost of capital, cost of replacement
services, or claims of customers for service interruptions or transmission
problems.
12.2 Release; Indemnification. Each Party (each Party in such
capacity being referred to as the "Releasing Party") releases, assumes and
agrees to indemnify, defend, protect and save the other Party harmless from and
against any claim, damage, loss, liability, cost and expense (including
reasonable attorneys' fees) in connection with any loss or damage to any
physical property or facilities of the Releasing Party or any injury to or
death of any Person arising out of or resulting in any way from the negligence
or misconduct of the Releasing Party or its employees, servants, contractors
and/or agents.
13. INDEMNIFICATION.
13.1 Indemnification Obligations. IXC and PSINet (hereinafter
where either has undertaken the action or inaction to be indemnified against
shall be known as the "Indemnifying Party") agree to assume all liability for
and indemnify, defend and hold harmless the other Party or any third Party
claiming through the other Party, from and against all liability, loss, cost,
damage, expense or cause of action, of whatsoever character, or injury or death
of any Person and damage to or destruction of any property, including, without
limitation, third Parties and all related expenses, including, but not limited
to, reasonable attorneys' fees, investigators' fees and litigation expenses and
costs of enforcing this Section 13 arising out of or relating to, in whole or
in part, any of the following:
(i) claims for libel, slander, infringement of copyright
or unauthorized use of a trade secret, trade name or
service mark that results from the transmission of
material over the PSINet network by the Indemnifying
Party, authorized representatives of the Indemnifying
Party or other Persons not associated with, or
related to, either IXC or PSINet; or
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<PAGE> 21
(ii) claims of any Third Party arising out of the
negligent or willful act or omission of the
Indemnifying Party or its agents, servants,
employees, contractors or representatives (other than
IXC, if PSINet is the Indemnifying Party, or PSINet,
if IXC is the Indemnifying Party); or
(iii) claims for patent infringement arising out of the use
of the PSINet network by the Indemnifying Party or
any Person authorized by the Indemnifying Party or
resulting from the acts of the Indemnifying Party or
the Indemnifying Party's representatives in combining
the PSINet network with the facilities of the
Indemnifying Party or others, or using the PSINet
network either alone or in connection with that of
the Indemnifying Party or others; or
(iv) claims, except as otherwise set forth herein, for the
material breach of or failure to comply, in any
material respect, with any term or condition of this
Agreement by the Indemnifying Party or its officers,
employees or invitees; or
(v) claims resulting from patent or trade secret
infringement or infringement or unauthorized use of
trade secrets or trade name by the Indemnifying Party
in connection with this Agreement.
In addition, PSINet will defend, indemnify and hold IXC
harmless from and against any claim or threat of claim by an IXC Customer or an
IXC Reseller which is based on any warranty, promise or representation made by
IXC as part of a service agreement and for which PSINet is responsible in
accordance with the terms of this Agreement. Similarly, IXC will defend,
indemnify and hold PSINet harmless from and against any claim or threat of
claim which is based on any warranty, promise or representation made by IXC to
a Third Party for which PSINet is not responsible in accordance with the terms
of this Agreement.
PROVIDED, HOWEVER, NOTWITHSTANDING ANY PROVISION OF THIS
AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER (OR TO ANY THIRD PARTY CLAIMING THROUGH SUCH OTHER PARTY) FOR
CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, AND THE FOREGOING
INDEMNITIES SHALL NOT APPLY WITH RESPECT TO SUCH DAMAGES.
13.2 Notices and Defense. The Indemnifying Party shall provide the
other Party with notice of any such claim by a Third Party, and assure the
defense of such claim, on the terms and subject to Sections 9.2 and 9.3 of the
IRU Agreement.
14. NON-SOLICITATION.
a. From the date hereof until three years after the
Closing Date, neither IXC nor any of its Affiliates will, directly or
indirectly, either alone or in association with others in any part of the world
induce, request, encourage or assist any employee of PSINet or its Affiliates
to terminate his or her employment with PSINet, or to join with or become
employed by, render
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<PAGE> 22
services to or otherwise be engaged by IXC or any of its Affiliates in any
direct or indirect capacity.
b. From the date hereof until three years after the
Closing Date, neither PSINet nor any of its Affiliates will, directly or
indirectly, either alone or in association with others in any part of the world
induce, request, encourage or assist any employee of IXC or its Affiliates to
terminate his or her employment with IXC, or to join with or become employed
by, render services to or otherwise be engaged by PSINet or any of its
Affiliates in any direct or indirect capacity.
c. If, at the time of enforcement of Section 14, a court
shall hold that the duration, scope, geographic area or other restrictions
stated herein are unreasonable under circumstances then existing, the Parties
agree that the maximum duration, scope, geographic area or other restrictions
deemed reasonable under such circumstances by such court shall be substituted
for the stated duration, scope, geographic area or other restrictions.
15. MISCELLANEOUS.
15.1 Independent Contractors. The Parties are acting as
independent contractors and under no circumstances shall any of the employees
of one Party be deemed the employees of the other for any purpose. Except as
otherwise expressly provided in this Agreement, this Agreement does not
constitute either Party as the agent or legal representative of the other Party
and does not create a partnership or joint venture between the Parties. Except
as otherwise expressly provided in this Agreement, neither Party shall have any
authority to act for the other Party in any agency or other capacity, to make
commitments of any kind for the account of, or on behalf of, the other Party or
to contract for or bind the other Party in any manner whatsoever. This
Agreement confers no rights of any kind upon any Third Party.
15.2 Force Majeure. Notwithstanding any provision in this
Agreement to the contrary, neither Party shall be liable for failure to fulfill
its obligations hereunder (except with respect to payment or other monetary
obligation or as otherwise specifically set forth herein) if such failure is
due to causes beyond its reasonable control, including, without limitation,
actions or failures to act of the other Party or, acts of God, flood, fire,
storm, catastrophe, governmental prohibitions or regulations, viruses which did
not result from the acts or omissions of such Party, its employees or agents,
national emergencies, acts of public enemies, national emergency,
insurrections, riots or wars, breakdown of or damage to plants or equipment or
facilities (other than arising out of the neglect of or mishandling by such
Party), the relevant portion of the Internet is down due to a technology
failure (other than arising out of the neglect of or mishandling by such
Party), failure of a supplier to supply necessary materials or equipment in a
timely manner, destruction of property, embargoes, boycotts, governmental
legislation or regulations, orders or acts of civil or military authorities,
governmental acts or orders of courts or administrative agencies, or strikes,
lockouts, work stoppages or other labor difficulties. The time for any
performance required hereunder shall be extended by the delay incurred as a
result of such act of force majeure, and each Party shall act with diligence to
correct such force majeure.
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<PAGE> 23
15.3 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to a Party under this Agreement shall impair
any such right, power or remedy of such Party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of either Party of any breach or default
under this Agreement, or any waiver on the part of either Party of any
provisions or conditions of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to a
Party, shall be cumulative and not alternative.
15.4 Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and their respective
successors and permitted assigns. No Person or entity other than the Parties
hereto (and their respective successors and permitted assigns) is or shall be
entitled to bring any action to enforce any provision of this Agreement against
either of the Parties, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the Parties or their respective successors and assigns as permitted hereunder.
15.5 Additional Actions, Documents and Information. Each of the
Parties agrees that it will, at any time, prior to, at or after the date
hereof, take or cause to be taken such further actions, and execute, deliver
and file or cause to be executed, delivered and filed such further documents
and instruments and obtain such consents, as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Agreement.
15.6 Notices. (a) All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by certified or
registered mail (return receipt requested), express air courier, charges
prepaid, or facsimile addressed as follows:
To IXC: with a copy to:
IXC Internet Services, Inc. IXC Communications, Inc.
500 Plaza on the Lake, Suite 200 5000 Plaza on the Lake,
Austin, TX 78746-1050 Suite 200, Austin,
Attn: Chairman TX 78746
Facsimile: (512) 328-0239 Attention: General Counsel
Facsimile: (512) 328-7902
Riordan & McKinzie
695 Town Center Drive,
Suite 1500
Costa Mesa, California 92626
Attn: Michael P. Whalen
Facsimile: (714) 549-3244
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<PAGE> 24
To PSINet: with copy to:
PSINet Inc. PSINet Inc.
510 Huntmar Park Drive 510 Huntmar Park Drive
Herndon, Virginia 20170 Herndon, Virginia 20170
Facsimile: 703.397.5318 Facsimile: 703.904.9527
Attn: Vice President and Attn: General Counsel
General Manager,
Wholesale Group
or to such other address as either Party shall have furnished to the other in
writing.
(b) If a notice is given by either Party by
certified or registered mail, it will be deemed received by the other Party on
the fifth business day following the date on which it is deposited for mailing.
If a notice is given by either Party by air express courier, it will be deemed
received by the other Party on the next business day following the date on
which it is provided to the air express courier. If a notice is given by
facsimile, it will be deemed received by the other Party after confirmation of
receipt. Notwithstanding the foregoing, any payments made under this Agreement
shall be deemed received only when actually received.
15.7 Attorneys' Fees. If any arbitration is commenced between the
Parties regarding the performance of this Agreement, the prevailing Party shall
be entitled, in addition to such other relief as may be granted, to a
reasonable sum for its attorneys' fees in such proceeding and for the expenses
and costs of such proceeding as the arbitrator may determine.
15.8 Assignment. No assignment of this Agreement or of any rights
or obligations hereunder may be made by either Party without the prior written
consent of the other Party hereto and any attempted assignment without the
required consent shall be void; provided, however, that notwithstanding the
foregoing, (i) each Party shall have the right to pledge, assign or otherwise
transfer this Agreement and its rights hereunder, in whole or in part, as
collateral security to any lender, and (ii) each Party shall have the right to
assign or transfer this Agreement and its rights hereunder, in whole or in
part, to any direct or indirect wholly-owned subsidiary of that Party or to any
Person into which that Party may be merged or consolidated or which purchases
all or substantially all of the assets of that Party; provided, however, that
(a) such subsidiary or Person agrees to be bound by the terms of this Agreement
and (b) any such assignment or transfer shall not relieve that Party from any
liability or obligation under this Agreement.
15.9 No Third Party Beneficiaries. No provision to this Agreement
is intended, nor shall any be interpreted, to provide or create any Third Party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, shareholder, partner of any Party or any other Third Party; unless
specifically provided otherwise herein, and except as so provided, all
provisions hereof, shall be personal solely between the Parties to this
Agreement.
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<PAGE> 25
15.10 Export Controls. IXC agrees and acknowledges that any export
of the Services and the subsequent use thereof is subject to U.S. export
control laws and regulations. IXC shall not directly or indirectly transfer
the Services, or the documentation relating thereto, to any country or location
outside of the United States without obtaining the prior written consent of
PSINet.
15.11 Severability. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, such provision shall be construed so as
to render it enforceable and effective to the maximum extent possible in order
to effectuate the intention of this Agreement; and the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
15.12 Public Announcements. Each Party shall have the right to
review, comment upon and approve any publicity materials, press releases or
other public statements by the other that refer to, or that describe any aspect
of, this Agreement made prior to, or within 90 days after, the Effective Date;
provided, however, that with respect to disclosure documents required under the
Securities Exchange Act of 1934, as amended, subject to the last sentence of
this Section 15.12, each Party shall only have the right to prior review and to
comment upon the other Party's disclosure documents. Each Party agrees that it
will not issue any such publicity materials, press releases or public
statements without the prior written approval of the other Party. The
provisions of this section shall survive termination of this Agreement for a
period of two years, except for the last sentence hereof which shall survive as
may be mutually agreed by them for the Term.
15.13 Expenses. Each Party shall pay its own legal and other costs
incurred in connection with this Agreement and in the preparation for and
consummation of the transactions provided for herein.
15.14 Taxes. IXC shall be liable for and shall reimburse PSINet for
all taxes and related charges, however designated, resulting from the provision
of Services as contemplated hereby, including federal, state, provincial or
local sales, use or value-added taxes (VAT) and excise taxes, imposed in
connection with or arising from the provision of Services. In no event shall
IXC be obligated to pay income taxes levied upon PSINet's net income or any
real or personal property taxes assessed against PSINet or PSINet's property,
including any gross receipts taxes assessed in lieu of net income or property
taxes, provided that, if the terms of the relevant statute or ordinance imposes
such gross receipts tax upon IXC, then IXC shall be liable for such tax.
15.15 Survival of Obligations. The Parties' rights and obligations
that, by their nature, would continue beyond the termination, cancellation, or
expiration of this Agreement, shall survive such termination, cancellation or
termination.
15.16 Titles and Subtitles. The titles of the Articles and Sections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
15.17 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware without reference to its
principles of conflicts of laws.
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<PAGE> 26
15.18 Dispute Resolution. Any controversy or claim arising out of
or relating to this Agreement or with respect to an alleged breach of the terms
hereof, subject to Section 7.8, above, shall be resolved in accordance with the
provisions of Section 19.14 of the IRU Agreement.
15.19 Entire Agreement/Amendments. This Agreement and the
Reciprocal Confidentiality Agreement constitutes the full and entire
understanding and agreement between the Parties with regard to the subjects
hereof and supersedes all prior oral and written agreements, commitments and
understandings with respect to such matters. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the Parties hereto.
15.20 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each counterpart shall be deemed to be an
original, and all counterparts individually or together shall constitute one
and the same instrument.
15.21 Schedules. The information set forth in the following
Schedules to this Agreement is intended to supplement the information contained
in this Agreement. In the event of any conflict between the terms of this
Agreement and the information contained in the Schedules hereto, the terms of
this Agreement shall prevail and control.
BOTH Parties represent and warrant that the Person whose signature appears
below is duly authorized to enter into this Agreement on behalf of the Party.
IN WITNESS WHEREOF, THE PARTIES HAVE ENTERED INTO THIS AGREEMENT AS OF THE
EFFECTIVE DATE:
IXC Internet Services, Inc. PSINet Inc.
By: /s/ RALPH J. SWETT By: /s/ WILLIAM L. SCHRADER
------------------------------- --------------------------------
Name: RALPH J. SWETT Name: WILLIAM L. SCHRADER
----------------------------- ------------------------------
Title: Chairman, President and CEO Title: Chairman, President and CEO
---------------------------- ------------------------------
Date: 7/22/97 Date: 7/22/97
---------------------------- ------------------------------
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<PAGE> 27
SCHEDULE 2.1.3
MASTER TEAMING AGREEMENT
Definitions:
"Client" refers to a major domestic or worldwide corporation which
either issues a request for Proposal or would be receptive to an unsolicited
Proposal for procurement of products and/or services of the types provided by
the Parties.
"Project" refers to a certain procurement of services by and delivery
to Client.
"Proposal" refers to the documentation of the plan, approach,
methodology, deliverables, costs, etc. submitted to a Client.
"Team Leader" shall mean the Party submitting the proposal to Client
and fulfilling the leadership role in Project management.
"Team Member" shall mean the Party who is not the Team Leader.
All other capitalized terms used herein but which are not otherwise
defined shall have the meanings given to them in the Joint Marketing and
Services Agreement to which this Schedule 2.1.3 is attached (the "Marketing
Agreement").
ARTICLE I - INTRODUCTION AND SCOPE.
1.1 With respect to IXC, this Agreement applies only to the Internet
Services and Broadband Services divisions of IXC and to teaming
efforts regarding the products and services of such divisions. In
addition, this Agreement shall apply only to teaming efforts regarding
products and services to be sold and/or provided in the Territory,
except as stated below. The Parties acknowledge that Projects may be
performed outside the Territory either directly or indirectly through
local subsidiaries or subcontractors and may be under this Agreement
or under separate agreements of their respective local subsidiaries,
all as the Parties may agree from time-to- time. The Parties will
endeavor to ensure that the provisions of any such separate agreement,
to the extent reasonably possible, will be the same as those of this
Agreement. However, because of the various legal and business
requirements of such subsidiaries or imposed on such subsidiaries,
certain modifications of the provisions of this Agreement may be
required for its adoption for use in such instances.
1.2 This Agreement applies only to the preparation and submission of
Proposals and other related activities and performance of the Parties
in order to obtain a contract from the applicable Client. The
provision of products and/or services by a Party hereto as
Schedule 2.1.3
Page 1 of 13
<PAGE> 28
subcontractor to the other Party hereto as prime contractor will be
under a separate agreement, as stated in Section 2.3 of this
Agreement.
1.3 Either Party may request the other Party's participation in the
development of a Proposal. Such request will be in writing in the
form of a Statement of Intent To Develop A Proposal (the "Statement of
Intent") substantially in the form of Exhibit A hereto, signed by a
requesting Party. Such Statement of Intent may contain a brief
preliminary description of the products and services each Party would
provide, with the full description of the products and services to be
provided by a Party as subcontractor to the other Party as prime
contractor, and the applicable fees and charges, to be agreed upon and
completed at a later date and incorporated in a subcontract to be
negotiated and executed by the Parties with respect to the applicable
Project. The Party receiving such a request to participate will
respond in writing as to whether or not it will participate in the
Proposal and Project by the earlier of (i) ten (10) business days
after its receipt of the request, or (ii) thirty (30) days prior to
the due date of the Proposal. A Party's election to participate shall
be effected by executing and returning the Statement of Intent. An
election to decline the offer to participate shall be effected by
sending written notice of this decision to the offering Party. In the
event of an election to decline participation, the following
provisions of this Agreement will not apply to the applicable Proposal
and Project: Articles III, IV and V, and Section 2.3.
ARTICLE II - RELATIONSHIP OF THE PARTIES.
2.1 The Parties shall act as independent contractors in the performance of
this Agreement. Neither Party shall act as agent for or partner of
the other Party for any purpose whatsoever, and the employees of one
Party shall not be deemed the employees of the other Party.
2.2 Nothing in this Agreement shall be construed to grant either the Team
Leader or the Team Member the right to make commitments of any kind
for or on behalf of the other Party without the prior written consent
of the other Party.
2.3 It is understood and agreed that, in the event a contract is awarded
to the Team Leader by the Client, the Team Leader will be the prime
contractor. In such event, the Team Leader agrees, subject to the
Client's approval, promptly upon receipt of the contract award, to
negotiate in good faith a subcontract with the Team Member for
performance of its proposed portions of the Project. The Parties
agree to use reasonable efforts to negotiate and agree upon model form
subcontract agreements which shall be used as standard form
agreements, to the extent reasonably possible, between Team Leader and
Team Member for Team Member's provision of products and or services
with respect to Projects.
Schedule 2.1.3
Page 2 of 13
<PAGE> 29
ARTICLE III - PROPOSAL PREPARATION AND SUBMISSION TO CLIENT.
3.1 Each Party shall use reasonable commercial efforts to prepare its
portions of the Proposal for a Project and to obtain the award to the
applicable prime contractor hereunder of a contract for the Project.
3.2 The Team Member shall submit to the Team Leader all necessary
technical and business data and information concerning its proposed
portion of the Project, including pricing data, required for use in
preparation of the Proposal. The Team Member shall make available
appropriate and high-quality personnel to provide reasonable
assistance to the Team Leader in the preparation of the Proposal as
directed by the Team Leader.
3.3 The Team Leader shall prepare the Proposal, integrate the information
provided by the Team Member and submit the Proposal to the Client.
The Team Leader agrees to consult with the Team Member on all matters
concerning the portion of the Project to be performed by the Team
Member prior to submission of the Proposal to the Client.
3.4 The Team Leader shall identify the Team Member as a proposed
subcontractor and describe the Team Member's Project responsibilities
in the Proposal.
3.5 The Team Leader shall handle contract negotiations with the Client
and, subject to Client approval, the Team Member will have the
opportunity to be present at meetings with the Client related to its
proposed portion of the Project.
3.6 The Team Leader agrees to consult with and obtain the concurrence of
the Team Member prior to making any Proposal change relating to the
Team Member's proposed portion of the Project.
3.7 The Team Leader agrees to keep the Team Member advised of all changes
in the Client's requirements affecting the Team Member's proposed
portion of the Project and as to the probability of contract award to
the team.
3.8 The Team Leader shall use its best efforts to obtain the contract
award, including participation in oral presentations and preparation
of best and final offers, and the Team Member agrees to assist in such
efforts as the Team Leader may reasonably require.
3.9 All contacts with the Client with respect to the Project Proposal
shall be the responsibility of the Team Leader. Any contacts made by
the Team Member with the Client shall be only with the full knowledge,
prior concurrence and participation of the Team Leader.
ARTICLE IV - PROJECT SUBCONTRACT.
4.1 In the event of a contract award to the Team Leader, the Parties shall
immediately commence good faith negotiations of a subcontract
consistent with the terms of this
Schedule 2.1.3
Page 3 of 13
<PAGE> 30
Agreement, the applicable Proposal, and the applicable prime contract,
as may be appropriate, encompassing the Team Member's proposed portion
of the Project. The Team Leader agrees to use its best efforts to
secure approval of such subcontract by the Client in the event such
approval is necessary. Team Leader, with Team Member's agreement, may
authorize Team Member to begin work, at the direction of the Team
Leader, prior to execution of the subcontract, for the specific
Project, subject to the terms of the model form subcontract agreement
referred to in Section 2.3, above.
4.2 The specific work to be performed by the Team Member will be described
in the applicable subcontract and/or in orders issued thereunder by
Team Leader from time to time. Article V below describes generally
the products and services to be provided by the Parties with respect
to Projects.
4.3 The subcontract with the Team Member shall include, among other
appropriate provisions, those provisions for the prime contract
between the Team Leader and the Client which the prime contract
requires are to be flowed down to a subcontractor, provided that Team
Member either was aware of such flow-down requirement before
preparation of Team Member's portion of the Proposal or subsequently
agrees to such provisions. Team Member will advise Team Leader, prior
to submission of the Proposal, of any such flow-down provisions of the
proposed Client prime contract as to which Team Member takes
exception; any such provisions, of which Team Member was aware, to
which exception is not taken will be included in the subcontract.
ARTICLE V - GENERAL RESPONSIBILITIES FOR PRODUCTS AND SERVICES.
5.1 IXC generally will provide products and services of the following
types for Projects:
[TO FOLLOW]
5.2 "Corporation" generally will provide products and services of the
following types for Projects:
[TO FOLLOW]
ARTICLE VI - COST AND EXPENSES.
6.1 Each Party will bear all of its own costs and expenses relating to the
preparation of Proposals and to the performance of its other
obligations and activities under this Agreement. Neither Party will
charge the other Party for any services unless specifically agreed
otherwise in writing by the Parties.
Schedule 2.1.3
Page 4 of 13
<PAGE> 31
ARTICLE VII - PROPRIETARY INFORMATION.
7.1 Each Party anticipates that it may be necessary to provide access to
information of a confidential or proprietary nature (hereinafter
referred to as "Proprietary Information") to the other Party in the
performance of this Agreement. To the extent possible, Proprietary
Information shall be clearly identified or labeled as such by the
disclosing Party at the time of disclosure. Where concurrent
identification of such information is not feasible, the disclosing
Party shall provide such identification as promptly thereafter as
possible. However, whether or not so designated, each Party's client
lists, business plans, and the pricing of its products and services
will be deemed the confidential information of such Party.
7.2 Each Party agrees that it will hold such Proprietary Information
confidential in the same manner as it holds its own Proprietary
Information of like kind, but in any case, by the use of at least
reasonable care. Disclosures of Proprietary Information shall be
restricted to those individuals who are participating in preparation
of the Proposal and other work related to the Project. Each Party
shall return all such Proprietary Information of the other upon
termination of the Agreement and completion of all pending Projects.
7.3 Neither Party shall reproduce, disclose or use Proprietary Information
of the other except as follows:
(a) Proprietary Information furnished by the Team Leader may be used by
the Team Member in performing its obligations under this Agreement and
any resulting subcontract.
(b) Proprietary Information furnished by the Team Member may be used by
the Team Leader in performing its obligations under this Agreement,
including preparation of the Proposal for submission to the Client,
and in performance of a resulting subcontract between the Parties for
a Project.
(c) Proprietary Information furnished by either Party may be used in
accordance with written authorization received from the disclosing
Party.
7.4 The limitations on reproduction, disclosure, and use of Proprietary
Information shall not apply to, and neither Party shall be liable for,
reproduction, disclosure or use of Proprietary Information of the
other to the extent such information: (1) becomes known to the public
from a source other than the receiving Party; (2) was or becomes known
to the receiving Party from a Third Party having the right to disclose
it and having no obligation of confidentiality to the disclosing Party
with respect to the applicable information; (3) is furnished to others
by its owner without restriction on disclosure; (4) is independently
developed by personnel of the receiving Party who have not had access
to such information; or (5) is disclosed pursuant to governmental or
judicial requirement.
Schedule 2.1.3
Page 5 of 13
<PAGE> 32
7.5 Neither the signing of this Agreement nor the furnishing of any
Proprietary Information by either Party to the other shall be
construed as granting the other Party expressly, by implication, by
estoppel or otherwise, any license under any invention, patent,
trademark, copyright or other proprietary right now or hereafter owned
or controlled by the Party disclosing and furnishing same.
7.6 Each Party admits for all purposes that any violation or threatened
violation of this Article VII shall constitute an irreparable injury
to the disclosing Party for which monetary damages provide an
inadequate remedy, and agrees that, in addition to all other rights
provided by law to which the disclosing Party shall hereby be
entitled, it shall have the right to seek to have an injunction or
equivalent remedy issued against the receiving Party to prevent said
Party from violations or further violations of this Article VII.
7.7 The provisions of this Article VII shall survive termination of this
Agreement and any Proposal effort.
ARTICLE VIII - INTELLECTUAL PROPERTY RIGHTS.
8.1 All rights in and to inventions conceived and/or reduced to practice,
and in and to works of authorship created in the performance of this
Agreement (and any resulting subcontracts signed by the Parties for a
Project, except as the Parties agree otherwise in any such
subcontracts) shall be the sole and entire property of the originating
Party, including full ownership and title to related patents,
copyrights and other intellectual property. In the event of joint
inventions or joint works or authorship, the Parties shall engage in
good faith negotiations to establish respective ownership rights
therein. Failing agreement within thirty (30) days from initiation of
good faith negotiations by either Party, [the Parties shall be deemed
to have joint ownership, without right of account, of the intellectual
property rights embodied in such new inventions and/or works of
authorship.]
8.2 Notwithstanding the foregoing, with respect to any Proposal effort by
the Parties, it is understood and agreed that Team Member shall grant
a license or transfer rights to Team Leader and/or the Client in
inventions, works of authorship, data and information as required by
the terms of the applicable request for Proposal for a Project,
provided that Team Member was aware of such terms at the time Team
Member prepared its portion of the Proposal, and except to the extent
exceptions are taken to the applicable provisions of the request for
Proposal. Such license or transfer of rights shall not exceed the
requirements of the prime contract for such Project. Intellectual
property rights embodied in preexisting equipment or computer software
shall remain the sole property of its then owner, provided, however,
such owner hereby agrees to license such software for use by the
Client to the extent required by the prime contract.
Schedule 2.1.3
Page 6 of 13
<PAGE> 33
ARTICLE IX - NON-EXCLUSIVITY/EXCLUSIVITY OF RELATIONSHIP.
9.1 Except as stated below, the participation of the Parties in a Project
under this Agreement shall be on a non-exclusive basis, and each Party
shall retain complete freedom to work alone or with other Third
Parties in bidding or performing work on any such Project. However,
on a case-by-case basis, the Parties may agree, with respect to any
particular Project, to participate with each other on an exclusive
teaming basis, and, in the event of such an agreement to team
exclusively, it shall be under the following terms.
(a) [Neither Party may enter into or participate in a teaming agreement or
effort with another Third Party for the purpose of proposing to
provide products or services for a Project subject to this Agreement
of the types for which it is responsible under this Agreement.]
(b) [Neither Party may quote, offer to provide, provide, offer to sell, or
sell to the applicable Client or to any prime or subcontractor to the
applicable Client any products or services relating to the applicable
Project of the types for which it is responsible under this Agreement,
other than pursuant to a Proposal under this Agreement or a
subcontract between the Parties.]
(c) [With respect to IXC, the exclusive teaming obligations and
restrictions stated above shall apply only to its IXC Internet
Services division, and the other divisions and business units of IXC
Communications, Inc. are free of any such obligations and
restrictions.]
(d) Notwithstanding the foregoing, in the event that any other division of
IXC invites IXC Internet Services division to participate with it in
any Proposal for any Project or to provide any products or services
with respect to a Project, IXC Internet Services division may do so,
provided that such other division of IXC became aware of such Project
other than through a violation of the rights of "Corporation"
regarding protection of its Proprietary Information under this
Agreement. In the event the IXC Internet Services division
participates or provides any products or services as described above
in this Section 9.1(d), both Parties to this Agreement will be
relieved of and discharged from the exclusive teaming obligations and
restrictions stated above with respect to the applicable Proposal and
Project.
9.2 The Parties will be relieved of and discharged from the above
exclusive teaming obligations and restrictions to the extent that
either Party's participation in the applicable Project with any other
Third Party is pursuant to any agreement executed prior to its
agreement to team exclusively hereunder. Each Party will exert best
efforts to advise the other Party of any such previously existing
agreement as soon as possible. In the event that a Party participates
in a Project with a Third Party under the circumstances described
above in this Section 9.2 and that such Party is relieved of and
discharged from the said exclusive teaming obligations and
restrictions under this Section 9.2, the other Party may, at its
option, terminate the applicable Proposal under this Agreement and/or
participate in the Project itself, independently of the other Party,
or with any other Third Party, and
Schedule 2.1.3
Page 7 of 13
<PAGE> 34
will be deemed relieved of and discharged from the above-referenced
exclusive teaming obligations and restrictions.
9.3 The Parties will be relieved of and discharged from the above
exclusive teaming obligations and restrictions to the extent provided
under Section 15.4, below, regarding termination of a Proposal effort.
ARTICLE X - LIMITATION OF LIABILITY.
10.1 NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, SPECIAL, PUNITIVE,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING, BUT NOT
LIMITED TO, LOST PROFITS) INCURRED OR ARISING OUT OF THE PERFORMANCE
OF THIS AGREEMENT EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
ARTICLE XI - NON-SOLICITATION.
11.1 Neither Party shall actively solicit for employment any of each
other's personnel during the period of such employees' assignment to
or work on any Proposal and for the period of six (6) months following
termination of assignment of each such employee to the Proposal
effort. Publicizing available employment positions in newspapers or
other media of mass communication shall not be deemed active
solicitation for employment under this provision.
ARTICLE XII - FORCE MAJEURE.
12.1 Neither Party shall be liable for any failure to perform or for any
delay in performance of this Agreement where the failure or delay is
due to acts of God or public enemy, war, riot, embargo, fire,
explosion, sabotage, flood, accident, strikes, lockouts or other labor
disturbances or to enactment, promulgation or issuance of any laws,
regulations, orders or decrees of any competent governmental,
regulatory or judicial authority, or, without limiting the foregoing,
to any circumstances beyond such Party's reasonable control. During
such period of disability, each Party's obligations will be suspended
and commensurately extended until such time as performance is no
longer prevented or hindered, provided that if such period extends
for the shorter of (I) thirty (30) days, or (ii) a period of such
duration that either Party consequently reasonably determines that
affected Proposal efforts are jeopardized, either Party thereafter may
terminate this Agreement as it applies to any adversely affected
Proposal, if such right is exercised before the disability is remedied
and performance is resumed.
Schedule 2.1.3
Page 8 of 13
<PAGE> 35
ARTICLE XIII - PUBLIC ANNOUNCEMENT.
13.1 Any news release, public announcement, advertisement or publicity
released by either Party concerning this Agreement, any Proposal, or
any contract award related thereto, will be subject to the prior
review, comment and approval of the other Party, except that this
Agreement and its terms may be disclosed by either Party as required
by any law, regulation or court order. Any such publicity shall give
due credit to the contribution of each Party.
ARTICLE XIV - GOVERNING LAW.
14.1 This Agreement shall be construed in accordance with the local law of
the State of Texas.
ARTICLE XV - TERM AND TERMINATION OF AGREEMENT AND PROPOSAL EFFORTS.
15.1 This Agreement is effective upon execution by both Parties and will
continue in effect thereafter for an initial term of one (1) year.
Thereafter, the term of this Agreement will be deemed renewed
automatically, subject to termination as set forth below or as
other-wise provided in this Agreement.
15.2 Either Party may terminate this Agreement, for its convenience, with
or without cause, upon at least thirty (30) days advance written
notice to the other Party, effective as of the end of the initial term
or at any time thereafter. With respect to the performance of
obligations regarding any Proposal which would extend beyond the
termination of this Agreement, the provisions of this Agreement
applicable to such performance and the corresponding rights and
obligations of the Parties will be deemed to survive the termination
of this Agreement and continue in effect as required for the
completion of such performance.
15.3 With respect to a Proposal, the rights and obligations of the Parties
under this Agreement, except any obligations relating to the
protection of a Party's confidential information, shall terminate upon
the first to occur of any of the following events:
(a) cancellation of the applicable request for Proposal or modification of
the said request for Proposal resulting in the deletion of the
requirement of the Team Member's products or services or a substantial
portion thereof;
(b) elimination by the Client of the Team Leader from consideration as
prime contractor or award of the prime contract to a company other
than the Team Leader);
(c) award of a prime contract to the Team Leader which does not include
the Team Member's products or services or a substantial portion
thereof;
Schedule 2.1.3
Page 9 of 13
<PAGE> 36
(d) notification by the Client that the Team Member is unacceptable as a
subcontractor, or a direction by the Client to utilize a subcontractor
other than the Team Member, or a determination by either, the Client
or the Team Leader that the Team Member's offerings do not fully
comply with the mandatory requirements of the request for Proposal;
(e) notification of termination by either Party in the event the Parties
are unable to agree, negotiating in good faith, on the terms and
conditions of the SUBCONTRACT, within sixty (60) days (or such longer
period as the Parties may agree) from the award of a prime contract to
Team Leader.
(f) execution of the applicable subcontract between the Parties;
(g) filing by or against either Party of a petition or a resolution made
or passed by either Party for the bankruptcy, winding-up, liquidation
or dissolution of such Party, or the appointment of a receiver or
trustee in respect of such Party or of its assets, or the
acknowledgment by such Party of its inability to meet its debts as
they fall due, or a general assignment of the assets of such Party for
the benefit of its creditors;
(h) termination by either Party under Article XII of this Agreement;
(i) determination, made reasonably and in good faith, by Team Leader to
withdraw a Proposal for the reason that it has no reasonable prospect
of being awarded the prime contract, making continuation of the
Proposal effort uneconomical or impractical.
(j) notification of termination, effective thirty (30) days after such
notification, by a Party to the other Party as a result of a material
breach or default of this Agreement by the other Party which is not
cured, corrected or remedied by the expiration of such thirty-day
period;
15.4 In the event any Proposal effort is terminated under Sections 15.3(a)
through (i), above, both Parties will be deemed relieved of and
discharged from any exclusive teaming obligations and restrictions
under Article IX or any other exclusive teaming provision with respect
to the applicable terminated Proposal effort. In the event a Party
terminates any Proposal effort as a result of the other Party's breach
under Section 15.3(j), above, such terminating (non-breaching) Party
will be deemed relieved of and discharged from any exclusive teaming
obligations and restrictions as stated above in this Section 15.4.
Except as otherwise stated in this Section 15.4 or elsewhere in this
Agreement, the said exclusive teaming obligations and restrictions
will survive such termination.
ARTICLE XVI - CONDUCT OF THE PARTIES.
16.1 Neither Party, in the performance of this Agreement, shall take any
action that would be illegal under any applicable rule, regulation or
law. The Parties and their respective business associates shall avoid
any practices that are unlawful, improper or unethical and
Schedule 2.1.3
Page 10 of 13
<PAGE> 37
shall conduct themselves at all times in a manner that will avoid any
appearance of impropriety on the part of either Party in the event of
public disclosure.
ARTICLE XVII - SURVIVAL.
17.1 In addition to those provisions hereof expressly stated to survive
this Agreement, any provisions of this Agreement and the related
rights and obligations of the parties which, by their nature, should
survive termination of this Agreement, will so survive and continue in
effect as appropriate.
ARTICLE XVIII - GENERAL.
18.1 All notices, requests, consents and other communications hereunder
shall be deemed to have been duly given if delivered in accordance
with Section 15.6 of the Marketing Agreement.
18.2 Except as otherwise stated in this Agreement or the Marketing
Agreement, this Agreement may not be assigned or otherwise transferred
by either Party, in whole or in part, without the express prior
written consent of the other Party. No provision of this Agreement
may be waived except by a writing by the Party to be charged, nor may
this Agreement be amended except by a writing executed by an
authorized representative of each Party.
18.3 The foregoing represents the complete and exclusive statement of the
agreement between the Parties and supersedes any prior oral or written
agreements, Proposal, commitments, understandings, or communications
with respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives, with the intention of being
legally bound hereby.
[IXC INTERNET SERVICES] ("CORPORATION" NAME)
By: By:
----------------------- -------------------------------
(Signature) (Signature)
Name: Name:
--------------------- -----------------------------
Title: Title:
-------------------- ----------------------------
Date: Date:
--------------------- -----------------------------
Master Teaming Agreement
Between IXC INTERNET SERVICES and ______________ dated___________________.
Schedule 2.1.3
Page 11 of 13
<PAGE> 38
EXHIBIT A
FORM OF STATEMENT OF INTENT TO DEVELOP A PROPOSAL
Client:____________________________
________________________________________________________________________________
Team Leader:____________________________________________________________________
Team Member:____________________________________________________________________
Request For Proposal Title/number (if applicable)_______________________________
Proposal Due Date (if applicable)_______________________________________________
Development of Proposal. The parties agree to jointly develop a client
proposal under which each party would provide the respective products and
services generally and briefly described as follows:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Schedule 2.1.3
Page 12 of 13
<PAGE> 39
ACKNOWLEDGEMENT: This Statement of Intent To Develop A Proposal is issued
pursuant to the Master Teaming Agreement identified above. All of the terms
and conditions of the said Master Teaming Agreement are incorporated in and
made a part of this document as if expressly set forth herein.
IXC Internet Services ("Corporation" name)
By: By:
------------------------------- --------------------------
Name: Name:
---------------------------- ------------------------
Title: Title:
-------------------------- ------------------------
Schedule 2.1.3
Page 13 of 13
<PAGE> 40
SCHEDULE 2.2
PSI SERVICE COMMITMENTS
1. In providing Managed Connectivity Services under this Agreement, PSI
will, at a minimum, comply with the following performance
requirements:
(a) Service Availability. 24 x 7 (subject to scheduled downtime
for network maintenance during low traffic periods, upon not
less than one week notice, when possible, to IXC and affected
IXC Customers).
(b) Service Reliability. 99.5%, excluding network problems (i)
occurring between the customer's premise and the PSI
Points-of-Presence, and (ii) occurring beyond the point where
information exits the PSI backbone.
(c) Installations. Including acceptance and compliance with the
minimum performance capabilities, PSI will complete as soon as
practical but to occur no later than (i) 45 days after receipt
of order by PSI and (ii) three business days following IXC or
LEC provisioning of circuits pursuant to an assignment of
customer addresses by InterNIC (which assignment will be
requested promptly by PSI following receipt of order). In
cases in which new circuits do not need to be provisioned in
connection with a new installation, new customers may be given
a shorter committed date for completion of installations.
(d) Problem Responsiveness. The Parties will develop a mutually
agreeable interface to the PSI trouble ticket system and
appropriate problem escalation procedures to address the needs
of IXC and IXC Customers.
*
Schedule 2.2
Page 1 of 3
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 41
(a) Class B Allocation and Transfer. Immediately upon execution
of the Joint Marketing and Services Agreement to which this
Schedule is attached (the "Marketing Agreement"), PSI will
allocate a class B-sized block of address space, transfer all
existing IXC (the PSI customer) addresses to it, and grant IXC
all of PSI's right, title and interest in and to such class B
address block. PSI will assist IXC in obtaining a class B
from the InterNic (or other authority). At such time as such
class B is allocated, IXC will transfer all of IXC's right,
title and interest in and to such class B address block to
PSI.
(b) Infrastructure Engineering. PSI will, at all times, treat the
IXC class B as it would one of its own class B's for the
purposes of routing, peering, and network throughput
optimization.
3. Announcement. The services specified by IXC will be provided as a
feature or function of the new PSI product/price plan for the ISP
business market. Such plan is not completed. Upon completion, PSI
will provide Internet routing for IXC and IXC customer networks via a
separate AS number(s) assigned by appropriate Internet authorities.
PSI will assist IXC in obtaining the necessary AS number(s), ownership
of which is to be transferred and assigned to IXC. Notwithstanding
the foregoing, PSI will obtain and implement updates to its ISP
peering relationships and router configurations to allow full Internet
routing for the IXC AS number(s) and associated networks at such time
as PSI is able to do so.
4. Peering. PSI acknowledges that IXC reserves the right to establish
its own peering relationships with other ISPs. PSI will work jointly
with IXC to ensure appropriate routing for IXC between PSI and IXC
borders.
5. Hardware. PSI will make the equipment in Appendix 1 to this Schedule
2.2 available for resale by IXC unless PSI is prevented from doing so
by its contracts with the equipment suppliers. Should such supplier
agreements prevent such resale, PSI will assist IXC in acquiring its
own licenses to do so. The prices on Appendix 1 to this Schedule 2.2
may be changed to reflect the then PSI acquisition cost for such.
Prices charged to IXC by PSI shall, however, be subject to the most
favored pricing provisions of the Marketing Agreement.
6. Terms. PSI's obligations with respect to delivery of Services under
the Marketing Agreement to an IXC Customer is, for all Services,
subject to compliance by such IXC Customer, with the terms and
conditions set forth in PSI's standard service agreements relating to
the comparable services offered by PSI to PSI customers.
7. Cooperation. The Parties shall cooperate with each other to ensure
that the product service descriptions, whether contained in the
Documents, service agreements, world-wide
Schedule 2.2
Page 2 of 3
<PAGE> 42
web site pages or elsewhere, at all times fairly and accurately
describe the features and functions of the Services.
Schedule 2.2
Page 3 of 3
<PAGE> 43
APPENDIX 1 TO SCHEDULE 2.2
PSINET
INTRANET WAREHOUSE - HARDWARE LIST
<TABLE>
<CAPTION>
Product Number Description Prices
-------------- ----------- ------
<S> <C>
ROUTERS:
ascend-50 Ascend Pipeline 50 Router (with integrated NT1) . . . . . . . . . . . . . . . . . . . . .$ *
Compatible with LAN-ISDN
ascend-P130 Ascend Pipeline 130 Router (with integrated NT1 and T1 CSU/DSU) . . . . . . . . . . . . . *
Compatible with LAN-ISDN and interFrame 128K-T1 Services
cisco-2504 Cisco 2504 Router (TokenRing, v. 35, IP Only) . . . . . . . . . . . . . . . . . . . . . . *
Compatible with interFrame, InterPPP, and LAN-ISDN (18 Channel)
cisco-2514 Cisco 2514 Dual Ethernet Router . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Compatible with InterFrame and InterPPP Services
comp-sys-900i Compatible Systems MicroRouter 900i Single Ethernet Router . . . . . . . . . . . . . . . *
Compatible with LAN-DIAL, LAN-ISDN (18 Channel), InterPPP and InterFrame 56K Services
comp-sys-1220i Compatible Systems MicroRouter 1220i Dual Ethernet Router . . . . . . . . . . . . . . . . *
Compatible with LAN-DIAL, LAN-ISDN (18 Channel), InterPPP and InterFrame 56K-T1 Services
comp-sys-1220iV35 Compatible Systems MicroRouter 1220i Dual Ethernet Router (with v.35 cable) . . . . . . . *
Compatible with LAN-DIAL LAN-ISDN (18 Channel), InterPPP and InterFrame 56K bps-T1
Services
comp-sys-1270i Compatible Systems MicroRouter 1270i Dual Ethernet Router (with integrated T1 CSU/DSU) . *
Compatible with LAN-Dial, LAN-ISDN (18 Channel), and InterFrame 56K-T1 services
farallon-netop 640 Farallon Netopia 640 ISDN Router (with integrated NT1) . . . . . . . . . . . . . . . . . *
PC version for unlimited users. Compatible with LAN-ISDN Service
farallon-netop 440 Farallon Netopia 440 ISDN Router (with integrated NT1) . . . . . . . . . . . . . . . . . *
Macintosh version for unlimited users. Compatible with LAN-ISDN Service
livingston-irx 211 Livingston IRX-211 Firewall Router (with v.35 cable) . . . . . . . . . . . . . . . . . . *
Compatible with Interframe and InterPPP Services
proteon-globetrot 60 Proteon Globetrotter 60 (with v.35 cable) . . . . . . . . . . . . . . . . . . . . . . . . *
Compatible with Interframe Service
rockwell-nh-bri Rockwell NetHopper NH-BRI 616 (with integrated NT1) . . . . . . . . . . . . . . . . . . . *
Includes internal analog modem. Compatible with LAN-ISDN and LAN-DIAL Services.
</TABLE>
Appendix 1 to Schedule 2.2
Page 1 of 2
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
<PAGE> 44
<TABLE>
<CAPTION>
Product Number Description Prices
-------------- ----------- ------
<S> <C> <C>
MODEMS & CSU/DSUS: 0
astro-nx1 Astrocom NX1 T1 CSU/DSU (Including sub-rate T1) . . . . . . . . . . . . . . . . . . . . . *
Compatible with Interframe 128K-T1 Services
astro-2364 Astrocom 2364 56K CSU/DSU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Compatible with Interframe 56K and InterPPP Services
usr-sportPC US Robotics Sportster 33.6 Kbps Modem . . . . . . . . . . . . . . . . . . . . . . . . . . *
PC version compatible with InterRamp and LAN-DIAL Services
usr-sportMAC US Robotics Sportster 33.6 Kbps Modem . . . . . . . . . . . . . . . . . . . . . . . . . . *
Macintosh version compatible with InterRamp and LAN-DIAL Services
MISCELLANEOUS:
3com-ImpactPC 3Com Impact (with external TA/NT1) . . . . . . . . . . . . . . . . . . . . . . . . . . . *
PC version compatible with InnerRamp Service via ISDN
3com-ImpactMAC 3Com Impact (with external TA/NT1) . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Macintosh version compatible with InterRamp Service via ISDN
motorola-bitsurfPC Motorola Bitsurfer Pro (with external TA/NT1 and two analog ports) . . . . . . . . . . . *
PC version compatible with LAN-ISDN and InterRamp Service via ISDN.
motorola-bitsurMAC Motorola Bitsurfer PRO (with external TA/NT1 and two analog ports) . . . . . . . . . . . *
Macintosh version compatible with LAN-ISDN and InterRamp Service via ISDN.
nt-nt1 Northern TelecomTM Standalone NT1 Model A . . . . . . . . . . . . . . . . . . . . . . . . *
Includes 2 watt power supply. Compatible with InterRamp and LAN-ISDN Services.
Note: Continental U.S. Shipping:
Orders in Virginia must
includes a 4.5% sales tax. Hardware: There is a [*] shipping fee for all hardware purchased through PSINet.
Terms: Net 30 days.
</TABLE>
Appendix 1 to Schedule 2.2
Page 2 of 2
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
<PAGE> 45
Attachments to Schedule 2.2
Requirements
for
Managed Connectivity Services
and
Value-Added Services
<PAGE> 46
DEDICATED INTERNET ACCESS SERVICE
SERVICE REQUIREMENTS
VERSION 1.1
1. OVERVIEW
PSI's Dedicated Internet Access services provide full-time dedicated Internet
access via point-to-point 56K and T1 leased lines or SMDS metropolitan area
network T1 and T3 connections.
The PSI Dedicated Internet Access services include:
o PSINet InterFrame
o PSINet InterMAN
The PSI Dedicated Internet Access service specifications are included in
Schedule 2.3.
2. WHOLESALE SERVICE BRANDING
PSI is to deliver the Dedicated Internet Access service to IXC and IXC
Customers on a branded basis, such that the service is delivered to the end
customer as an IXC or IXC Reseller branded service. Service branding is to be
present in the following areas:
o Sales collateral
o Service manuals and other service-related material.
o All PSI contact with the end customer, such as during order
verification, service provisioning, and customer support
o Email addresses and web site domain names for customer
support, service status, service information.
o Service usage reports
Where additional investment and resources are required, PSI will state
estimated costs in advance for which IXC or the IXC Reseller is responsible.
3. DELIVERY PROCESSES
Documented delivery processes are to be developed by PSI. PSI will work to
integrate internal processes with IXC's service processes, specifically in the
areas of:
o Sales support
o Order processing
o Service provisioning
o Customer support
o Network operation procedures and escalation
o Trouble ticketing and tracking
o Billing
Attachments to Schedule 2.2
Page 2 of 41
<PAGE> 47
PSI must create and maintain delivery process documentation specific to the
items listed above.
4. SERVICE IMPLEMENTATION
IXC is responsible for:
o Submitting accurate and correct service order information to PSI
PSI is responsible for:
o Via IXC, ordering, installing, and configuring the customer's
communications circuit
o Internet service provisioning and configuration (IP addresses,
DNS, routing, etc.) for the customer's network
o Registration and assignment of IP address numbers
o Registration of the customer's domain name
o Implementation of routing information as required for the
customer's environment.
PSI's installation technicians are responsible for remotely assisting the
customer's technical liaison in the physical installation of the customer
premise equipment (CPE).
Service implementation details are described below.
4.1. SITE PLANNING AND PREPARATION COORDINATION
Site planning coordination will be provided by PSI to the customer's designated
point of contact. This helps customers to prepare for installation of the
Dedicated Internet Access service. Customers need to provide space and power
for the CPE equipment, an attachment to the customer's internal network, and at
least one computer with TCP/IP support.
4.2. COMMUNICATIONS CIRCUIT ORDERING
PSI is responsible for ordering (from IXC, on behalf of the customer) and
maintaining the communications circuit necessary for delivery of service. IXC
will either provide the circuit itself or order one from another
telecommunications vendor and at IXC's cost.
4.2.1. INSIDE WIRING
PSI arranges for IXC to terminate the circuit in proximity to the planned
location of the premises equipment. Any cost associated with extending the
circuit to this location (inside wiring) is passed on to the customer.
4.3. CUSTOMER PREMISE EQUIPMENT
The customer premises equipment package consists of a TCP/IP router with
appropriate LAN and WAN interfaces, a CSU/DSU corresponding to the connection
type, and associated cables.
4.3.1. SUPPORTED CUSTOMER PREMISE EQUIPMENT
Attachments to Schedule 2.2
Page 3 of 41
<PAGE> 48
PSI will only support CPE that has been tested by PSI and certified for
compatibility with PSI services. PSI will maintain a current WWW list of
certified and supported CPE.
4.3.2. CUSTOMER PREMISE EQUIPMENT PROVISIONING
Managed services (e.g., InterMAN, InterFrame with RouteWaller) require that
the CPE be owned and operated by PSI. When the customer prefers to own and
operate their own equipment, CPE may be purchased through PSI. When purchased
through PSI, the package of service equipment utilized by each customer is to
be pre-assembled by PSI and subjected to a hardware quality acceptance test by
PSI before delivery to the customer site. Equipment not purchased through PSI
is subject to verification of suitability by PSI. PSI will consider
non-certified routers on a case-by-case basis.
Customers providing their own premises equipment must maintain the premises
equipment to current hardware and software revision levels for compatibility
with the PSI service.
4.4. CUSTOMER PREMISE EQUIPMENT STAGING AND CONFIGURATION
To ease installation, equipment is to be either pre-configured by PSI before
delivery to the IXC customer site or PSI assists in remotely configuring after
it is connected to the network.
For customer premise equipment supplied by PSI, PSI is responsible for
pre-configuring the customer premise equipment with its initial configuration
information prior to shipping to the IXC customer site.
When the IXC customer supplies the premise equipment, PSI is responsible for
providing to the customer initial configuration information for the customer
premise equipment sufficient to enable IP connectivity to the customer's
network.
4.5. CUSTOMER PREMISE EQUIPMENT INSTALLATION
PSI's installation technicians are responsible for remotely assisting the IXC
customer's technical liaison in the installation of the premises equipment.
The customer's technical liaison performs the physical installation of the
premises equipment. On-site CPE installation by a PSI field technician or
agent is to be provided by PSI on an optional basis (InterFrame) unless
otherwise specified in the service specification (InterMAN). Please see
attached price sheet.
4.6. IPADDRESS ALLOCATION
*
Attachments to Schedule 2.2
Page 4 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 49
*
4.7. IP ROUTING SERVICE
4.7.1. IP ROUTING FOR IXC CUSTOMERS
PSI must perform any IP routing configuration changes to its network routers
necessary to enable Internet routing for IP traffic destined to or received
from the IXC customer's network.
*
4.8. DOMAIN NAME SERVICE (DNS)
PSI is to provide IXC Dedicated Internet Access customers with primary and/or
secondary domain name service as necessary for successful presence on the
Internet.
Attachments to Schedule 2.2
Page 5 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 50
4.8.1. DOMAIN NAME REGISTRATION
On behalf of IXC customers, PSI is to perform registration of the customers'
domains with the InterNIC and/or its successors. PSI is to submit domain name
registrations to the InterNIC using registration and billing information
provided to PSI by IXC or the IXC Reseller as part of the customer order.
InterNIC or its successor(s) will invoice the IXC customer directly for the
domain name registered.
For existing customer domains, PSI is responsible for assisting IXC customers
with the transfer of existing domain name service to the PSI nameservers, using
processes designed to minimize any discontinuity of Domain Name Service for the
customer's domains.
4.8.2. DOMAIN NAME SERVICE OPERATION
DNS service provided to IXC customers by PSI must be maintained on multiple
nameservers which are physically diverse and connected to the PSI backbone at
different points.
IXC customers may elect to run and administer their own primary and/or
secondary nameservers. For customers running their own primary nameserver, PSI
is to offer secondary nameservice for the customer's domains on at least two
PSI nameservers.
Nameservice for one domain per customer connection is part of the basic
service. Nameservice for additional domains is available as an option. Please
see attached fee schedule.
4.8.3. DNS UPDATES
For IXC customer domains for which PSI provides primary nameservice, PSI must
perform updates to the customer domain zone information as reasonably requested
by the customer. Zone update procedures are to be documented by PSI and
provided to IXC. PSI is to provide a web interface as soon as possible that
allows IXC customers to make changes to their domain information interactively.
Turnaround time for updated IXC customer DNS information to be available on the
Internet via Internet accessible PSI nameservers must be no more than 24 hours.
4.9. ACCEPTANCE TESTING
PSI is to conduct ping test to the customer's site to ensure that the customer
premise router can successfully communicate over the IXC Dedicated Internet
Access service and service billing by PSI to IXC may be initiated. Additional
tests will be performed thereafter to verify the proper operation of the
on-site equipment package, the local access facility, and the PSI Internet
infrastructure, including IP routing, DNS, Usenet news, and other services.
4.10. ACCEPTANCE CRITERIA.
PSI implementation of service for IXC Dedicated Internet Access service
customers is considered complete when the following criteria have been met:
Attachments to Schedule 2.2
Page 6 of 41
<PAGE> 51
4.10.1. A circuit has been installed and configured to give the customer the
amount of bandwidth contracted for between the customer location and the PSI
Point-of-Presence (POP). If a Frame Relay connection, PVCs have been
configured with appropriate CIR and burst values as contracted for by the
customer.
4.10.2. The Dedicated Internet Access router and associated premises
equipment is installed at the customer site, and IP connectivity between the
customer network and the Internet (including routing outside PSI networks)
exists.
PSI must verify IP connectivity through a test which:
o sends repeated pings through the Internet to the customer site
and verifies that the pings were received.
o in cases when the premises equipment configuration supports it,
PSI must verify IP routing through a trace route test.
4.10.3. IP addresses have been allocated from IXC's address space to the
customer for use on their network.
4.10.4. Any necessary routing changes have been made in PSI's network
routers so that routes to the customers IP networks and addresses are announced
to the Internet.
4.10.5. For customers with their own domain, the domain is registered with
the InterNIC and any PSI-supplied primary and secondary DNS servers are
operational for it.
4.10.6. Any initial customer requested packet-filtering option has been
installed in the customer premise Dedicated Internet Access router.
4.10.7. The customer has been informed that the Internet service is
available for implementation of Internet application such as, Telnet, FTP,
E-Mail or WWW, and has acknowledged that they plan to configure these
applications within the installation phase or that they do not intend to at
this time. Billing will commence upon a successful ping test and not acceptance
of working Internet application.
4.10.8. The customer has been informed of the operational status of the
customer's Internet connection and been provided with documentation of (i) the
Internet service configuration, and (ii) the acceptance test results.
4.10.9. IXC has been informed of the operational status of the customer's
Internet connection and been provided with documentation of (i) the Internet
service configuration, and (ii) the acceptance test results.
4.10.10. The IXC customer has been given an information package designed for
new Dedicated Internet Access customers.
Attachments to Schedule 2.2
Page 7 of 41
<PAGE> 52
5. SERVICE OPTIONS
5.1. USENET NEWS SERVICE
IXC offers NNTP news feeds and/or NNRP news server access to its Dedicated
Access Internet Service customers. PSI is responsible for working with the IXC
customer to determine whether the size of the customer's Internet access line
is sufficient to meet the customer's network news requirements. PSI is to
provide the IXC customer with Usenet News access via an NNTP news feed from
PSI's news servers to the customer's news server, or alternately by allowing
the IXC customer to directly access PSI's news server with client software
using the NNRP protocol.
Please see fee schedule for pricing.
5.1.1. NNTP NEWS FEED
As a prerequisite to receiving a Usenet News Feed, the IXC customer must
install a news server. PSI is responsible for assisting the IXC customer in
determining the news feed parameters.
Once the server is in place and the service is established, PSI is to maintain
the news feeds for all IXC customers receiving NNTP news feeds.
PSI's news servers are to accept news postings from the customer's news server
and propagate these postings on to other Usenet news servers on the Internet.
IXC customers may request changes to the list of news groups fed from PSI's
news servers, during normal business hours and at a frequency averaging up to
one change request per week. PSI is responsible for implementing the required
changes on the PSI news servers within 24 hours.
Please see fee schedule for pricing.
5.1.2. NNRP NEWS ACCESS
The IXC Dedicated Access Internet Service customer may chose not to run a news
server on their network and instead request NNRP access to PSI's news servers
as a client. PSI must provide NNRP access to the IXC Dedicated Access Internet
Service customer for up to 25 newsreader clients. PSI's news servers are to
accept Usenet news postings from the customer's NNRP clients and propagate
these postings on to other Usenet news servers on the Internet.
Please see fee schedule for pricing.
5.2. NETWORK USAGE STATISTICS REPORTING
PSI is responsible for providing Network Usage Statistics Reporting to IXC
Dedicated Internet Access service customers. Network Usage Statistics Reports
are to be traffic summary reports that allow customers to track access line
utilization and peak activity periods.
Attachments to Schedule 2.2
Page 8 of 41
<PAGE> 53
The usage report must be produced on a regular basis (daily, weekly, and
monthly) and is to be provided to the customer and to IXC via email and the
Web.
The usage information is to be collected from the customer premises and other
network equipment using SNMP and other measurement tools.
Please see fee schedule for pricing.
5.3. EMERGENCY BACKUP SERVICE
In the event of a failure in connectivity between the customer's location and
the PSI Point-of-Presence (POP) due to POP equipment failure or failure of the
circuit connecting the customer location to the PSI POP, PSI must provide to
the customer a PSI dial-up packet access point within four hours after
disruption of service (except as provided in Section 15.2 of the Marketing
Agreement). This service option must be requested and set up in advance of an
event.
6. NETWORK OPERATIONS SUPPORT
PSI's is responsible for network operations support for network services
provided to IXC Dedicated Internet Access service as described in this section.
6.1. PSI INFRASTRUCTURE OPERATIONS SUPPORT
PSI must monitor the PSI network 24 hours a day, 365 days a year. PSI is to
provide proactive operations support and troubleshooting of all network and
service infrastructure components providing service to IXC customers, including
IXC-provided circuits (such as circuits from the PSI POP to the customer
premise).
PSI will use SNMP and other software tools to monitor the network. This
software must be supplemented with additional tools to monitor non- SNMP
equipment, domain name servers, NNTP news servers and feeds, and other network
services.
All network services (routing, DNS, email servers, Usenet news, NTP, security,
etc.) must be monitored for availability and performance. The monitoring
software must report the status of the network to a display which is monitored
throughout the day.
Service outages are to be automatically detected. Troubleshooting procedures
and customer notification will occur within * of an outage.
IXC and PSI will work jointly on resolution procedures.
6.1.1 NETWORK REPORTS
PSI is to provide IXC with network status logs on a regular basis to provide
IXC with the ability to evaluate staff responsiveness and network availability.
All changes in the PSI network status must be logged.
Attachments to Schedule 2.2
Page 9 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 54
PSI is to provide IXC with regular reports on the status of the PSI network.
Report information is to be defined by IXC, and will include but not be limited
to:
*
6.2 CUSTOMER CONNECTIVITY SUPPORT
PSI must monitor IXC customers' connectivity to ensure continuous Internet
connectivity is provided to the customer network. IXC Dedicated Internet
Access customer connectivity outages must be detected by PSI and acted upon by
PSI within * .
PSI must follow up on loss of connectivity using documented trouble resolution
procedures as jointly developed by IXC and PSI.
6.3 COMMUNICATIONS LINK MAINTENANCE
PSI is responsible for monitoring and maintaining the communications link
between the Customer and PSI. This includes problem diagnosis and any
necessary vendor interaction for dispatch and repair. PSI's staff is to
escalate communications circuit problems using documented trouble resolution
procedures as jointly developed by IXC and PSI.
6.4 CUSTOMER PREMISES EQUIPMENT MAINTENANCE FOR INTERMAN
If the customer has contracted for customer premise Internet router and CSU/DSU
maintenance, PSI is responsible for maintaining the customer premise equipment.
PSI must diagnose failures, usually with the assistance of the technical
liaison designated by the customer at the site, and shall determine whether
equipment replacement is required.
6.4.1 ON-SITE CPE REPAIR / REPLACEMENT FOR INTERMAN
PSI is responsible for performing the actual equipment replacement with
telephone assistance (as necessary).
Response time for performing customer premise equipment replacement must meet
the schedule described within the PSI customer maintenance contract.
7. TECHNICAL SERVICES AND CUSTOMER SUPPORT
IXC is to provide first level customer support for all IXC Dedicated Access
Internet customers.
Attachments to Schedule 2.2
Page 10 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 55
7.1 STANDARD SERVICE CUSTOMER SUPPORT HELPLINE
PSI must staff an IXC Customer Support helpline with trained and qualified PSI
customer support representatives from 8am-8pm EST/EDT Monday through Friday.
Customer support staff must be trained in supporting Dedicated Internet Access
service customers. Additionally, an outage support hotline (Netwatch) shall be
staffed 24 hours per day, 7 days per week, 365 days per year for network access
emergency reporting to IXC and its customers.
7.1.1 CUSTOMER SUPPORT HELPLINE RESPONSE TIME
Calls to the PSI-provided IXC customer support hotline must be answered within
* rings., 8am-8pm EST/EDT Monday through Friday. For similar response
times off-hours, optional support may be available (at additional cost).
7.2 CUSTOMER SUPPORT EMAIL MAILBOX See section 7.4.
7.3 FAULT ISOLATION AND PROBLEM RESOLUTION
PSI is to perform fault isolation for problems related to the PSI provided
service. Fault isolation may involve coordination among network operators and
technicians, staff at the affected site, telecommunications carriers, and other
vendors. Depending on the specific technologies used, the process may involve
testing equipment, reconfiguring routers, or diagnosing communications link
problems. PSI is responsible for diagnosing service problems and tracking
repair progress. PSI is to use documented trouble resolution procedures as
jointly developed and agreed upon by PSI and IXC.
7.4 TROUBLE TICKETING SYSTEM
PSI must use a Trouble Ticketing System to track problems from initial report
through satisfactory resolution. As PSI staff works to resolve problems, the
current status must be maintained in the Trouble Ticketing System.
7.4.1 IXC CUSTOMER ACCESS TO TROUBLE TICKETING SYSTEM
IXC customers will be provided access by PSI to any trouble tickets related to
their service, as soon as the technology is available to PSI. If additional
programming is required to deliver this functionality, it will be costed out
and provided to IXC in advance. The trouble ticketing system should provide
designated customer contacts with automatic access to the trouble tickets via
web interfaces.
PSI Backbone status information should also be made available to IXC Customer
contacts requesting same via the same interfaces.
7.4.2 IXC RESELLER ACCESS TO TROUBLE TICKETING SYSTEM
IXC resellers will be provided access by PSI to any trouble tickets related to
the service, as soon as the technology is available to PSI. If additional
programming is required to deliver this functionality, it will be costed out
and provided to IXC in advance. The trouble ticketing system should provide
designated IXC Reseller contacts with automatic access to the trouble tickets
via web interfaces.
Attachments to Schedule 2.2
Page 11 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 56
PSI Backbone status information should also be made available to IXC Reseller
contacts requesting same via the same interfaces.
7.4.3 IXC ACCESS TO TROUBLE TICKETING SYSTEM
IXC will be provided access by PSI to any trouble tickets related to the
service provided to IXC, IXC Resellers and their end customers, as soon as the
technology is available to PSI. If additional programming is required to
deliver this functionality, it will be costed out and provided to IXC in
advance. The trouble ticketing system should provide designated IXC contacts
with automatic access to the trouble tickets via web interfaces.
PSI Backbone status information should also be made available to IXC Reseller
contacts requesting same via the same interfaces.
PSI is to work with IXC to integrate trouble ticketing systems and processes as
much as reasonably possible.
7.5 PROBLEM NOTIFICATION
7.5.1 IXC CUSTOMER PROBLEM NOTIFICATION
The PSI operations staff must inform the technical contact of IXC Dedicated
Internet Access service customers of any outages affecting their service. The
operations staff must also keep Dedicated Internet Access customers informed of
any widespread outages on connecting networks.
7.5.2 IXC RESELLER PROBLEM NOTIFICATION
The PSI operations staff must inform the technical contact of IXC Resellers of
any outages affecting service to their end customers. The operations staff
must also keep IXC Resellers informed of any widespread outages on connecting
networks.
7.5.3 IXC PROBLEM NOTIFICATION
The PSI operations staff must inform the IXC technical contacts of any outages
affecting service to IXC, IXC Resellers, or IXC end customers. The operations
staff must also keep IXC informed of any widespread outages on connecting
networks.
7.6 SOFTWARE AND CONFIGURATION SUPPORT FOR INTERMAN
PSI is responsible for coordinating software updates and configuration changes
on the customer premise router and CSU/DSU equipment of IXC customers as
required to provide Internet service. Notice of software changes is to be made
to the customer technical contacts, and every effort must be made to perform
maintenance during off-hours.
7.7 ESCALATION PROCEDURES
Attachments to Schedule 2.2
Page 12 of 41
<PAGE> 57
Documented customer support processes are to be developed jointly by PSI and
IXC. Specific process documentation is required for the following:
o customer support procedures
o trouble escalation procedures
o trouble ticketing, tracking, and resolution
PSI must provide information to the IXC customer describing customer support,
problem resolution, and trouble escalation procedures, customer contact
information, and trouble reporting methods.
8. SECURITY PROCEDURES
The following services provide security procedures: RouteWaller (InterFrame),
SecureEnterprise (InterFrame and InterMAN), and PSI IntraNet.
Additionally, PSI's Net Abuse policy shall apply to all IXC customers.
Attachments to Schedule 2.2
Page 13 of 41
<PAGE> 58
SWITCHED LAN INTERNET ACCESS SERVICE
SERVICE REQUIREMENTS
VERSION 1.1
1. OVERVIEW
PSI's Switched LAN Internet Access services provide on-demand switched
connectivity to the Internet via an analog modem (9.6 - 33.6 Kbps) or an ISDN
NT1 (64 - 128 Kbps) and a customer premise router. Connectivity is provided to
the customer's LAN rather than a single system, via the customer premise
router. Connections are established between the customer premise and an PSI
Point-of-Presence (POP) using the Point-to-Point Protocol (PPP).
The PSI Switched LAN Internet Access services include:
o PSINet LAN-On-Demand (LAN-Dial and LAN-ISDN)
The PSI Switched LAN Internet Access service specification is included in
Schedule 2.3.
2. WHOLESALE SERVICE BRANDING
PSI is to deliver the Switched LAN Internet Access service to IXC and IXC
Customers on a branded basis, such that the service is delivered to the end
customer as an IXC or IXC Reseller branded service. Service branding is to be
present in the following areas:
o Sales collateral
o Service manuals and other service-related material.
o All PSI contact with the end customer, such as during order
verification, service provisioning, and customer support
o Email addresses and web site domain names for customer support,
service status, service information.
o Service usage reports
Where additional investment and resources are required, PSI will state
estimated costs in advance for which IXC or the IXC reseller is responsible.
3. DELIVERY PROCESSES
Documented delivery processes are to be developed by PSI. PSI must work to
integrate internal processes with IXC's service processes, specifically in the
areas of:
o sales support
o order processing
o service provisioning
o customer support
o network operation procedures and escalation
o trouble ticketing and tracking
Attachments to Schedule 2.2
Page 14 of 41
<PAGE> 59
o billing
PSI must create and maintain delivery process documentation specific to the
items listed above.
4. SERVICE IMPLEMENTATION
PSI is responsible for providing and maintaining dial-up Points-of-Presence
(POPs) with analog modem and ISDN access capability that allow local switched
access from the customer location. PSI will provide modem ports via dial-up
access numbers for IXC Switched LAN Internet Access Service customers.
IXC is responsible for:
o Submitting accurate and correct service order information to PSI
PSI is responsible for:
o Internet service provisioning and configuration ( * , DNS,
routing, etc.) for the customer's network
*
o Registration of the customer's domain name
o Implementation of routing information as required for the
customer's environment.
PSI is responsible for remotely assisting the customer's technical liaison in
the physical installation of the customer premise equipment (CPE).
Implementation support details are described below.
4.1. SITE PLANNING AND PREPARATION COORDINATION
Site planning coordination must be provided by PSI to the customer's designated
point of contact. This helps customers to prepare for installation of the
Switched LAN Internet Access service. Customers need to provide space and
power for the CPE equipment, an attachment to the customer's internal network,
and at least one computer with TCP/IP support.
4.2. COMMUNICATIONS CIRCUIT ORDERING
The customer is responsible for ordering and having installed an analog phone
line or an ISDN line to support the service at its sole cost.
The customer should arrange for the circuit to terminate in proximity to the
planned location of the premises equipment. Any cost associated with extending
the circuit to the planned location of the premises equipment (inside wiring)
is the responsibility of customer.
Attachments to Schedule 2.2
Page 15 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 60
4.3. CUSTOMER PREMISE EQUIPMENT
The customer premise equipment package consists of a TCP/IP router with
appropriate LAN and WAN interfaces, an analog modem or ISDN NT1 device, and
associated cables.
4.3.1. SUPPORTED CUSTOMER PREMISE EQUIPMENT
PSI will only support CPE that has been tested by PSI and certified for
compatibility with PSI services. PSI will maintain a current WWW list of
certified and supported CPE.
4.3.2. CUSTOMER PREMISE EQUIPMENT PROVISIONING
The customer premise equipment may be purchased through PSI. When purchased
through PSI, the package of service equipment utilized by each customer is to
be pre-assembled by PSI and subjected to a hardware quality acceptance test by
PSI before delivery to the customer site. Equipment not purchased through PSI
is subject to verification of suitability by PSI.
Customers providing their own premises equipment must maintain the premises
equipment to current hardware and software revision levels for compatibility
with the PSI service.
4.4. EQUIPMENT STAGING AND CONFIGURATION
For customer premise equipment supplied by PSI, PSI is responsible for
pre-configuring the customer premise equipment with its initial configuration
information prior to shipping to the IXC customer site.
When the IXC customer supplies the premise equipment, PSI is responsible for
providing to the customer initial configuration information for the customer
premise equipment sufficient to enable IP connectivity to the customer's
network.
4.5. CUSTOMER PREMISE EQUIPMENT INSTALLATION - NOT APPLICABLE
4.6. CUSTOMER PREMISE EQUIPMENT
PSI is responsible for remotely assisting the IXC customer's technical liaison
in the installation of the premises equipment. The customer's technical
liaison performs the physical installation of the premises equipment.
*
Attachments to Schedule 2.2
Page 16 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 61
PSI is responsible for maintaining a record of all IP address allocations for
each IXC customer. PSI is to provide this information to IXC on a regular
basis.
4.8. IP ROUTING SERVICE
PSI must perform any IP routing configuration changes to its network routers
necessary to enable Internet routing for IP traffic destined to or received
from the IXC customer's network.
4.8.1. Routing Service for Multiple Connected Networks
BGP routing is not available to IXC Switched LAN Internet Access customers.
4.9. DOMAIN NAME SERVICE (DNS)
PSI is to provide IXC Switched LAN Internet Access customers with primary
and/or secondary domain name service as necessary for successful presence on
the Internet.
4.9.1. DOMAIN NAME REGISTRATION
On behalf of IXC customers, PSI is to perform registration of the customers'
domains with the InterNIC and/or its successors. PSI is to submit domain name
registrations to the InterNIC using registration and billing information
provided to PSI by IXC or the IXC Reseller as part of the customer order.
For existing customer domains, PSI is responsible for assisting IXC customers
with the transfer of existing domain name service to the PSI nameservers, using
processes designed to minimize any discontinuity of Domain Name Service for the
customer's domains. InterNIC or its successor(s) will invoice the IXC customer
directly for the domain name registered.
For IXC customer domains for which PSI is to operate the primary nameserver,
PSI is to register with the InterNIC only the secondary nameservers. This is
to ensure that DNS lookups are not affected during rebooting of the primary
nameserver.
4.9.2. DOMAIN NAME SERVICE OPERATION.
DNS service provided to IXC customers by PSI must be maintained on multiple
nameservers which are physically diverse and connected to the PSI backbone at
different points.
IXC customers may elect to run and administer their own primary and/or
secondary nameservers. For customers running their own primary nameserver, PSI
is to offer secondary nameservice for the customer's domains on at least two
PSI nameservers. Nameservice for one domain per customer connection is part of
the basic service. Nameservice for additional domains is available as an
option. Please see attached fee schedule.
4.9.3. DNS UPDATES
For IXC customer domains for which PSI provides primary nameservice, PSI must
perform updates to the customer domain zone information as reasonably requested
by the customer. Zone update procedures
Attachments to Schedule 2.2
Page 17 of 41
<PAGE> 62
are to be documented by PSI and provided to IXC. PSI is to provide a web
interface as soon as possible that allows IXC customers to make changes to
their domain information interactively.
Turnaround time for updated IXC customer DNS information to be available on the
Internet via Internet accessible PSI nameservers must be no more than 24 hours.
4.10. ACCEPTANCE TESTING
PSI is to conduct tests to the customer's site to ensure that the customer
premise router can successfully communicate over the IXC Switched LAN Internet
Access service. Service billing will commence seven business days after account
creation by PSI. Additional tests will be performed thereafter to verify the
proper operation of the on-site equipment package, the local access facility,
and the PSI Internet infrastructure, including IP routing, DNS, Usenet news,
and other services.
4.11. ACCEPTANCE CRITERIA
PSI implementation of service for IXC Switched LAN Internet Access service
customers is considered complete when the following criteria have been met:
4.11.1. A dial-in port matching the customer's contract port type and speed
is available to the customer at the local IXC Point-of-Presence (POP).
4.11.2. The customer is able to successfully establish a PPP connection
4.11.3. The Switched LAN Internet Access router and associated premises
equipment is installed at the customer site, and IP connectivity between the
customer network and the Internet (including routing outside PSI networks)
exists. PSI must verify IP connectivity through a test which:
(a) sends repeated pings through the Internet to the customer site and
verifies that the pings were received.
(b) in cases when the premises equipment configuration supports it, PSI
must verify IP routing through a traceroute test.
*
(d) Any necessary routing changes have been made in PSI's network
routers so that routes to the customers IP networks and addresses are announced
to the Internet.
(e) For customers with their own domain, the domain is registered with
the InterNIC and any PSI-supplied primary and secondary DNS servers are
operational for it.
(f) Any initial customer requested packet-filtering has been installed
in the customer premise Switched LAN Internet Access router.
Attachments to Schedule 2.2
Page 18 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 63
(g) The customer has been informed that the Internet service is
available from implementation of Internet application such as, Telnet, FTP,
E-Mail or WWW, and has acknowledged that they plan to configure these
applications within the installation phase or that they do not intend to at
this time. Billing will commence upon a successful ping test and not acceptance
of working Internet application.
(h) The customer has been informed of the operational status of the
customer's Internet connection and been provided with documentation of (i) the
Internet service configuration, and (ii) the acceptance test results.
(i) IXC has been informed of the operational status of the customer's
Internet connection and been provided with documentation of (i) the Internet
service configuration, and (ii) the acceptance test results.
(j) The IXC customer has been given an information package designed for
new Switched LAN Internet Access customers.
5. SERVICE OPTIONS
5.1. USENET NEWS SERVICE
5.2. USENET NEWS
IXC offers NNRP news server access to its Switched LAN Internet Access Service
customers. PSI is responsible for working with the IXC customer to determine
whether the size of the customer's Internet access line is sufficient to meet
the customer's network news requirements. PSI is to provide the IXC customer
with Usenet News access by allowing the IXC customer to directly access PSI's
news server with client software using the NNRP protocol.
Please see fee schedule for pricing.
5.2.1. NNTP News Feed
NNTP news feeds are not available to Switched LAN Internet Access service
customers.
5.2.2. NNRP News Access
NNRP access is be provided by PSI to IXC's Switched LAN Internet Access service
customers. PSI must provide NNRP access to the IXC Dedicated Access Internet
Service customer for up to 25 newsreader clients. PSI's news servers are to
accept Usenet news postings from the customer's NNRP clients and propagate
these postings on to other Usenet news servers on the Internet
Please see fee schedule for pricing.
5.2 NETWORK USAGE STATISTICS REPORTING
PSI is responsible for providing Network Usage Statistics Reporting to IXC
Switched LAN Internet Access service customers. Network Usage Statistics
Reports are to be traffic summary reports that allow customers to track access
line utilization and peak activity periods.
Attachments to Schedule 2.2
Page 19 of 41
<PAGE> 64
The usage report must be produced on a regular basis (daily, weekly, and
monthly) and is to be provided to the customer and to IXC via email and the
Web.
The usage information is to be collected from the customer premises and other
network equipment using SNMP and other measurement tools.
Please see fee schedule for pricing.
5.3. EMERGENCY BACKUP SERVICE
In the event of a failure in connectivity between the customer's location and
the PSI Point-of-Presence (POP) due to POP equipment failure ) then the
customer may use a different dialup POP.
6. NETWORK OPERATIONS SUPPORT
PSI is responsible for network operations support for network services provided
to IXC Switched LAN Internet Access service as described in this section.
6.1. PSI INFRASTRUCTURE OPERATIONS SUPPORT
PSI must monitor the PSI network 24 hours a day, 365 days a year. PSI is to
provide proactive operations support and troubleshooting of all network and
service infrastructure components providing service to IXC customers, including
IXC-provided circuits (such as circuits from the PSI POP to the customer
premise).
PSI is to use SNMP and other software to monitor the network. This software
must be supplemented with additional tools to monitor non-SNMP equipment,
domain name servers, NNTP news servers and feeds, and other network services.
All network services (routing, DNS, email servers, Usenet news, NTP, security,
etc.) must be monitored for availability and performance. The monitoring
software must report the status of the network to a display which is monitored
throughout the day.
Service outages are to be automatically detected within * and acted
upon using trouble resolution procedures agreed upon by PSI and IXC.
6.1.1. Network Reports
PSI is to provide IXC with network status logs on a regular basis to provide
IXC with the ability to evaluate staff responsiveness and network availability.
All changes in the PSI network status must be logged.
PSI is to provide IXC with regular reports on the status of the PSI network.
Report information is to be defined by IXC, and will include but not be limited
to:
*
Attachments to Schedule 2.2
Page 20 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 65
*
Please see example attached.
6.2. CUSTOMER CONNECTIVITY SUPPORT
PSI must monitor PSI's connectivity to ensure continuous Internet connectivity
is available to the customer network. Outages affecting IXC Switched LAN
Internet Access customer connectivity outages must be detected by PSI and acted
upon by PSI within * .
PSI staff must follow up on loss of connectivity using documented trouble
resolution procedures as jointly developed by IXC and PSI.
6.3. COMMUNICATIONS LINK MAINTENANCE
PSI is responsible for monitoring the backbone and POP equipment. This
includes problem diagnosis and any necessary vendor interaction for dispatch
and repair. PSI's staff is to escalate communications circuit problems using
documented trouble resolution procedures as jointly developed by IXC and PSI.
7. TECHNICAL SERVICES AND CUSTOMER SUPPORT
IXC is to provide first level customer support for all IXC Switched LAN
Internet Access customers.
7.1. 24-HOUR CUSTOMER SUPPORT HELPLINE
PSI must staff an IXC Customer Support helpline with trained and qualified PSI
customer support representatives from 8am-8pm EST/EDT Monday through Friday.
Customer support staff must be trained in supporting Dedicated Internet Access
service customers. Additionally, an outage support hotline (Netwatch) shall be
staffed 24 hours per day, 7 days per week, 365 days per year for network access
emergency reporting to IXC and its customers.
7.1.1. CUSTOMER SUPPORT HELPLINE RESPONSE TIME
Calls to the PSI-provided IXC customer support hotline must be answered within
* rings., 8am-8pm EST/EDT Monday through Friday. For similar response
times off-hours, optional support may be available (at additional cost).
7.2. CUSTOMER SUPPORT EMAIL MAILBOX
See section 7.4.
7.3. FAULT ISOLATION AND PROBLEM RESOLUTION
Attachments to Schedule 2.2
Page 21 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 66
PSI is to perform fault isolation for problems related to the PSI provided
service. Fault isolation may involve coordination among network operators and
technicians, staff at the affected site, telecommunications carriers, and other
vendors. Depending on the specific technologies used, the process may involve
testing equipment, reconfiguring routers, or diagnosing communications link
problems. The PSI operations staff is responsible for diagnosing service
problems and tracking repair progress. PSI is to use documented trouble
resolution procedures as jointly developed and agreed upon by PSI and IXC.
7.4. TROUBLE TICKETING SYSTEM
PSI must use a Trouble Ticketing System to track problems from initial report
through satisfactory resolution. As PSI staff works to resolve problems, the
current status must be maintained in the Trouble Ticketing System.
7.4.1. IXC Customer Access to Trouble Ticketing System
IXC customers must be provided access by PSI to any trouble tickets related to
their service, as soon as the technology is available to PSI. If additional
programming is required to deliver this functionality, it will be costed out
and provided to IXC in advance. The trouble ticketing system should provide
designated customer contacts with automatic access to the trouble tickets via
web interfaces.
PSI Backbone status information must also be made available to IXC customer
contacts requesting same via the same interfaces.
7.4.2. IXC Reseller Access to Trouble Ticketing System
IXC resellers must be provided access by PSI to any trouble tickets related to
the service provide to their end customers, as soon as the technology is
available to PSI. If additional programming is required to deliver this
functionality, it will be costed out and provided to IXC in advance.. The
trouble ticketing system should provide designated IXC Reseller contacts with
automatic access to the trouble tickets via web interfaces.
PSI Backbone status information must also be made available to IXC Reseller
contacts requesting same via the same interfaces.
7.4.3. IXC Access to Trouble Ticketing System
IXC must be provided access by PSI to any trouble tickets related to the
service provide to IXC, IXC Resellers and their end customers, as soon as the
technology is available to PSI. If additional programming is required to
deliver this functionality, it will be costed out and provided to IXC in
advance. The trouble ticketing system should provide designated IXC contacts
with automatic access to the trouble tickets via web interfaces.
PSI Backbone status information must also be made available to IXC Reseller
contacts requesting same via the same interfaces.
PSI is to work with IXC to integrate trouble ticketing systems and processes as
much as reasonably possible.
Attachments to Schedule 2.2
Page 22 of 41
<PAGE> 67
7.5. PROBLEM NOTIFICATION
7.5.1. IXC Customer Problem Notification
PSI must inform the technical contact of IXC Switched LAN Internet Access
service customers of any outages affecting their service. The operations staff
must also keep Switched LAN Internet Access customers informed of any
widespread outages on connecting networks.
7.5.2. IXC Reseller Problem Notification
The PSI operations staff must inform the technical contact of IXC Resellers of
any outages affecting service to their end customers. The operations staff
must also keep IXC Resellers informed of any widespread outages on connecting
networks.
7.5.3. IXC Problem Notification
The PSI operations staff must inform the IXC technical contacts of any outages
affecting service to IXC, IXC Resellers, or IXC end customers. The operations
staff must also keep IXC informed of any widespread outages on connecting
networks.
7.6. SOFTWARE AND CONFIGURATION SUPPORT
PSI is responsible for coordinating software updates and configuration changes
on the customer premise router and CSU/DSU equipment of IXC customers as
required to provide Internet service. Notice of software changes is to be made
to the customer technical contacts, and every effort must be made to perform
maintenance during off-hours.
7.7. ESCALATION PROCEDURES
Documented customer support processes are to be developed by PSI. Specific
process documentation is required for the following:
o customer support procedures
o trouble escalation procedures
o trouble ticketing, tracking, and resolution
PSI must provide information to the IXC customer describing customer support,
problem resolution, and trouble escalation procedures, customer contact
information, and trouble reporting methods.
8. SECURITY PROCEDURES
The following services provide security procedures: RouteWaller (InterFrame),
SecureEnterprise (InterFrame and InterMAN), and PSI IntraNet.
Additionally, PSI's Net Abuse policy shall apply to all IXC customers.
Attachments to Schedule 2.2
Page 23 of 41
<PAGE> 68
MANAGED INTRANET WAN SERVICE
SERVICE REQUIREMENTS
VERSION 1.1
1. OVERVIEW
PSI's Managed Intranet WAN services provide private IP networking with mediated
Internet access for a single organizations with multiple site. Private
internal IP traffic is logically isolated from the public Internet through
integration of Frame Relay PVCs and managed private routing. Exchange traffic
between the customer's private intranet and the public Internet is mediated
through a centrally specified security policy which is implemented globally at
all intranet sites. External traffic never intermingles with internal traffic.
The service is a fully managed turnkey solution that includes all necessary CPE
required to deliver the service.
The PSI Managed Intranet services include:
o PSI IntraNet
The PSI Managed Intranet service specification is included in Schedule 2.2.
2. Wholesale Service Branding
PSI is to deliver the Managed Intranet WAN service to IXC and IXC Customers on
a branded basis, such that the service is delivered to the end customer as an
IXC or IXC Reseller branded service. Service branding is to be present in the
following areas:
o Sales collateral
o Service manuals and other service-related material
o All PSI contact with the end customer, such as during order
verification, service provisioning, and customer support
o Email addresses and web site domain names for customer support,
service status, service information
o Service usage reports
Where additional investment and resources are required, PSI will state
estimated costs in advance for which IXC or the IXC Reseller is responsible.
3. Delivery Processes
Documented delivery processes are to be developed by PSI. PSI will work to
integrate internal processes with IXC's service processes, specifically in the
areas of:
o Sales support
o Order processing
o Service provisioning
o Customer support
Attachments to Schedule 2.2
Page 24 of 41
<PAGE> 69
o Network operation procedures and escalation
o Trouble ticketing and tracking
o Billing
PSI must create and maintain delivery process documentation specific to the
items listed above.
4. Service Implementation
PSI's Managed Intranet WAN Service is to provide to IXC and IXC resellers:
o Full service provisioning, through IXC, of all communications
circuits and hardware, including ordering, installation, and
configuration
o Provisioning and maintenance of customer premise equipment -
CSU/DSUs and IP routers
o Internet service provisioning and configuration ( *
where appropriate, DNS, routing, etc) for the customer's
network
o Registration of customer's domain name
o Configuration and management of the Intranet WAN CPE routers
o 24 x 7 proactive network monitoring, fault isolation, and
management
o Single point of contact for trouble reporting and problem
resolution
o Security policy planning and management services for Internet
access control
PSI's installation technicians are responsible for remotely assisting the
customer's technical liaison in the physical installation of the customer
premise equipment (CPE).
Service implementation details are described below.
4.1. SITE PLANNING AND PREPARATION COORDINATION
Site planning coordination is to be provided by PSI to the customer's
designated point of contact. This helps customers to prepare for installation
of the Intranet WAN service. Customers need to provide space and power for the
CPE equipment, an attachment to the customer's internal network, and at least
one computer with TCP/IP support.
4.2. COMMUNICATIONS CIRCUIT ORDERING
PSI is responsible for ordering (from IXC, on behalf of the customer) and
maintaining the communications circuits necessary for delivery of service. IXC
will either provide the circuits itself or order them from another
telecommunications vendor at IXC's expense.
4.2.1 Inside Wiring
PSI will coordinate with the customer on inside wiring. The customer should
arrange for the circuit to terminate in proximity to the planned location of
the premises equipment. Any cost associated with extending the circuit to the
planned location of the premises equipment (inside wiring) is the
responsibility of customer.
4.3. 24 X 7 PROACTIVE NETWORK MONITORING, FAULT ISOLATION, AND MANAGEMENT
Attachments to Schedule 2.2
Page 25 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 70
PSI is to provide 24 x 7 monitoring of the Intranet WAN service. Any detected
faults are acted upon immediately, isolated to their cause, and proactively
managed through resolution.
4.4. SINGLE POINT OF CONTACT
PSI is to provide the IXC customer with a single point of contact for trouble
reporting and resolution for any problems related to the Intranet WAN service.
PSI is responsible for interacting with all communications circuit and hardware
equipment vendors as needed to maintain the Intranet WAN.
4.5. NETWORK USAGE STATISTICS REPORTING
PSI is responsible for producing Network Usage Statistics Reports as part of
the Managed Intranet WAN service. Reports are to include a traffic summary
that allows customers to track WAN line utilization and peak activity periods.
The usage report is to be produced on a regular basis (daily, weekly, and
monthly) and is to be provided to the customer via email and/or the Web. The
usage information is to be collected from the customer premises equipment using
SNMP tools, among other methods.
4.6. CUSTOMER PREMISE EQUIPMENT
The customer premises equipment package consists of a TCP/IP router with
appropriate LAN and WAN interfaces, a CSU/DSU corresponding to the connection
type, and associated cables.
PSI provides all necessary CPE required for the Managed Intranet WAN service.
4.6.1. Customer Premise Equipment Staging and Configuration
PSI is responsible for pre-configuring the CPE before delivery to the customer
sites and remotely configuring the CPE after it is connected to the network.
PSI remotely assists the customer's technical liaison in the installation of
the premises equipment at each Intranet WAN site. The customer's technical
liaison performs the physical installation of the premises equipment. On-site
CPE installation by an PSI field technician or agent is to be made available by
PSI to the IXC Customer on an optional basis.
4.6.2. CPE Router Management
As a part of the Managed Intranet WAN service, PSI is responsible for managing
the CPE routers at each site on the Intranet WAN on an ongoing basis.
Management is to include:
o Router software upgrades
o Router access control list changes as requested by IXC or
the IXC customer
o Router configuration changes as new sites are added to the
Intranet WAN
o 24 x 7 monitoring of the Intranet WAN for inter-site
connectivity
o 24 x 7 monitoring of the Intranet WAN routers for correct
operation
o 24 x 7 monitoring of Intranet WAN line utilization
o Generation of usage statistics reports on a daily, weekly, and
monthly basis
4.7. ACCEPTANCE TESTING
Attachments to Schedule 2.2
Page 26 of 41
<PAGE> 71
PSI is to conduct ping test to the customer's site to ensure that the customer
premise router can successfully communicate over the IXC Managed Intranet WAN
service and service billing by PSI to IXC may be initiated. Additional tests
will be performed thereafter to verify the proper operation of the on-site
equipment package, the local access facility, and the PSI infrastructure.
4.8. ACCEPTANCE CRITERIA
PSI implementation of service for IXC Managed Intranet WAN service customers is
considered complete when the following criteria have been met:
4.8.1 Circuits and PVCs have been installed at each site and configured to
give the customer the amount of bandwidth contracted for between the customer
location and the PSI Point-of-Presence (POP).
4.8.2 The Managed Intranet WAN router and associated premises equipment is
installed at the customer site, and IP connectivity exists between the customer
networks at each site and the Internet (including routing outside PSI
networks). PSI must verify IP connectivity through a test which:
(i) sends repeated pings through the Internet to the customer site
and verifies that the pings were received.
(ii) in cases when the premises equipment configuration supports
it, PSI must verify IP routing through a traceroute test.
*
(iv) Any necessary routing changes have been made in PSI's network
routers so that routes to the customers IP networks and addresses are announced
to the Internet.
(v) For customers with their own domain, the domain is registered
with the InterNIC and any PSI-supplied primary and secondary DNS servers are
operational for it.
(vi) Any initial customer requested packet-filtering option has
been installed in the customer premise Managed Intranet WAN router.
(vii) The customer has been informed that the Internet service is
available from implementation of Internet application such as, Telnet, FTP,
E-Mail or WWW, and has acknowledged that they plan to configure these
applications within the installation phase or that they do not intend to at this
time. Billing will commence upon a successful ping test and not acceptance of
working Internet application.
(viii) The customer has been informed of the operational status of
the customer's Intranet WAN connection and been provided with documentation of
(i) the Intranet WAN service configuration, and (ii) the acceptance test
results.
(ix) IXC has been informed of the operational status of the
customer's Intranet WAN connection and been provided with documentation of (i)
the Intranet WAN service configuration, and (ii) the acceptance test results.
Attachments to Schedule 2.2
Page 27 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 72
(x) The IXC customer has been given an information package
designed for new Managed Intranet WAN customers.
5. SERVICE OPTIONS
There are currently no service options available with the Managed Intranet WAN
service.
6. NETWORK OPERATIONS SUPPORT
PSI is responsible for network operations support for network services provided
to IXC Managed Intranet WAN service as described in this section.
6.1. PSI INFRASTRUCTURE OPERATIONS SUPPORT
PSI must monitor the PSI network 24 hours a day, 365 days a year. PSI is to
provide proactive operations support and troubleshooting of all network and
service infrastructure components providing service to IXC customers, including
IXC-provided circuits (such as circuits from the PSI POP to the customer
premise).
PSI will use SNMP and other software tools to monitor the network. This
software must be supplemented with additional tools to monitor non- SNMP
equipment, domain name servers, NNTP news servers and feeds, and other network
services.
All network services (routing, DNS, email servers, NTP, security, etc.) must be
monitored for availability and performance. The monitoring software must
report the status of the network to a display which is monitored throughout the
day.
Service outages are to be automatically detected. Troubleshooting procedures
and customer notification will occur within * of an outage.
IXC and PSI will work jointly on resolution procedures.
6.1.1. Network Reports.
PSI is to provide IXC with network status logs on a regular basis to provide
IXC with the ability to evaluate staff responsiveness and network availability.
All changes in the PSI network status must be logged.
PSI is to provide IXC with regular reports on the status of the PSI network.
Report information is to be defined by IXC, and will include but not be limited
to:
*
Attachments to Schedule 2.2
Page 28 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 73
*
Please see example attached.
6.2. CUSTOMER CONNECTIVITY SUPPORT
PSI must monitor IXC Intranet WAN customers' connectivity to ensure continuous
IP connectivity among the Intranet WAN sites. IXC customer's Intranet WAN
connectivity outages must be detected by PSI and acted upon by PSI within * .
PSI must follow up on loss of connectivity using documented trouble resolution
procedures as jointly developed by IXC and PSI.
6.3. COMMUNICATIONS LINK MAINTENANCE
PSI is responsible for monitoring and maintaining the communications link
between the customer and PSI. This includes problem diagnosis and any
necessary vendor interaction for dispatch and repair. PSI's staff is to
escalate communications circuit problems using documented trouble resolution
procedures as jointly developed by IXC and PSI.
6.4. CUSTOMER PREMISES EQUIPMENT MAINTENANCE FOR INTERMAN
If the customer has contracted for customer premise Internet router and CSU/DSU
maintenance, PSI is responsible for maintaining the customer premise equipment.
PSI must diagnose failures, usually with the assistance of the technical
liaison designated by the customer at the site, and shall determine whether
equipment replacement is required.
6.4.1. On-site CPE Repair / Replacement for InterMAN
PSI is responsible for performing the actual equipment replacement with
telephone assistance (as necessary).
Response time for performing customer premise equipment replacement must meet
the schedule described within the PSI customer maintenance contract.
7. TECHNICAL SERVICES AND CUSTOMER SUPPORT
IXC is to provide first level customer support for all IXC Managed Intranet WAN
customers.
7.1. STANDARD SERVICE CUSTOMER SUPPORT HELPLINE
PSI must staff an IXC Customer Support line with trained and qualified PSI
customer support representatives from 8am-8pm EST/EDT Monday through Friday.
Customer support staff must be trained in supporting Managed Intranet WAN
service customers. Additionally, an outage support hotline (Netwatch) shall be
staffed 24 hours per day, 7 days per week, 365 days per year for network access
emergency reporting to IXC and its customers.
Attachments to Schedule 2.2
Page 29 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 74
7.1.1. Customer Support Helpline Response Time
Calls to the PSI-provided IXC customer support hotline must be answered within
seven rings., 8am-8pm EST/EDT Monday through Friday. For similar response
times off-hours, optional support may be available (at additional cost).
7.2. CUSTOMER SUPPORT EMAIL MAILBOX
See section 7.4
7.3. FAULT ISOLATION AND PROBLEM RESOLUTION
PSI is to perform fault isolation for problems related to the PSI provided
service. Fault isolation may involve coordination among network operators and
technicians, staff at the affected site, telecommunications carriers, and other
vendors. Depending on the specific technologies used, the process may involve
testing equipment, reconfiguring routers, or diagnosing communications link
problems. PSI is responsible for diagnosing service problems and tracking
repair progress. PSI is to use documented trouble resolution procedures as
jointly developed and agreed upon by PSI and IXC.
7.4. TROUBLE TICKETING SYSTEM
PSI must use a Trouble Ticketing System to track problems from initial report
through satisfactory resolution. As PSI works to resolve problems, the current
status must be maintained in the Trouble Ticketing System.
7.4.1. IXC Customer Access to Trouble Ticketing System
IXC customers will be provided access by PSI to any trouble tickets related to
their service, as soon as the technology is available to PSI. If additional
programming is required to deliver this functionality, it will be costed out
and provided to IXC in advance. The trouble ticketing system should provide
designated customer contacts with automatic access to the trouble tickets via
web interfaces
PSI Backbone status information should also be made available to customer
contacts requesting same via the same interfaces.
7.4.2. IXC Reseller Access to Trouble Ticketing System
IXC resellers will be provided access by PSI to any trouble tickets related to
the service, as soon as the technology is available to PSI. If additional
programming is required to deliver this functionality, it will be costed out
and provided to IXC in advance. The trouble ticketing system should provide
designated IXC Reseller contacts with automatic access to the trouble tickets
via web interfaces.
PSI Backbone status information should also be made available to IXC Reseller
contacts requesting same via the same interfaces.
Attachments to Schedule 2.2
Page 30 of 41
<PAGE> 75
7.4.3. IXC Access to Trouble Ticketing System
IXC will be provided access by PSI to any trouble tickets related to the
service provided to IXC, IXC Resellers and their end customers, as soon as the
technology is available to PSI. If additional programming is required to
deliver this functionality, it will be costed out and provided to IXC in
advance. The trouble ticketing system should provide designated IXC contacts
with automatic access to the trouble tickets via web interfaces
PSI Backbone status information should also be made available to IXC Reseller
contacts requesting same via the same interfaces
PSI is to work with IXC to integrate trouble ticketing systems and processes as
much as reasonably possible
7.5. Problem Notification.
7.5.1. IXC Customer Problem Notification. PSI must inform
the technical contact of IXC Managed Intranet WAN service customers of any
outages affecting their service. The operations staff must also keep Managed
Intranet WAN customers informed of any widespread outages on connecting
networks
7.5.2. IXC Reseller Problem Notification. PSI must inform
the technical contact of IXC Resellers of any outages affecting service to
their end customers. The operations staff must also keep IXC Resellers
informed of any widespread outages on connecting networks
7.5.3. IXC Problem Notification. PSI must inform the IXC
technical contacts of any outages affecting service to IXC, IXC Resellers, or
IXC end customers. The operations staff must also keep IXC informed of any
widespread outages on connecting networks
7.6. Software and Configuration Support for InterMAN. PSI is responsible
for coordinating software updates and configuration changes on the customer
premise router and CSU/DSU equipment of IXC customers as required to provide
Internet service. Notice of software changes is to be made to the customer
technical contacts, and every effort must be made to perform maintenance during
off-hours
7.7 Escalation Procedures. Documented customer support processes are to
be developed jointly by PSI and IXC. Specific process documentation is
required for the following:
o customer support procedures
o trouble escalation procedures
o trouble ticketing, tracking, and resolution
PSI must provide information to the IXC customer describing customer support,
problem resolution, and trouble escalation procedures, customer contact
information, and trouble reporting methods.
Attachments to Schedule 2.2
Page 31 of 41
<PAGE> 76
8. Security Procedures
PSI's security procedures include a default Interim Security Policy for new
intranet sites, security policy planning before the sites are integrated into
an intranet, verification of identity of the customer technical contact before
requests for changes are accepted, and sign-off by the customer technical
contact of implementation plans before changes are implemented
Additionally, PSI's Net Abuse policy shall apply to all IXC customers.
Attachments to Schedule 2.2
Page 32 of 41
<PAGE> 77
INTERNET REMOTE ACCESS SERVICE
SERVICE REQUIREMENTS
VERSION 1.1
1. Overview
The PSI Internet Remote Access service provides on-demand switched connectivity
to the Internet for corporate user groups of telecommuters and mobile workers
via analog modems (9.6 - 33.6 Kbps) or ISDN NT1s (64 - 128 Kbps), and
centralized account management by the customer technical administrator through
a web-based Account Management System. Connectivity is provided for client
access for single systems. Connections are established between the users and a
PSI Point-of-Presence (POP) using the Point-to-Point Protocol (PPP).
The PSI Internet Remote Access services include:
o InterRamp Remote Access for Business
The PSI Remote Access service specification is included in Schedule 2.3.
Additional service requirements to be decided.
Attachments to Schedule 2.2
Page 33 of 41
<PAGE> 78
MANAGED INTERNET SECURITY SERVICES
SERVICE REQUIREMENTS
VERSION 1.1
1. OVERVIEW
PSI's Managed Internet Security services provide security policy planning and
implementation for Internet access control and remote user authentication
services. Security services are provided to the customer as a value-added
option to a PSI Dedicated Internet Access service, and include all necessary
CPE required to deliver the service.
The PSI Managed Internet Security services include:
o RouteWaller (for InterFrame)
o SecureEnterprise (for InterFrame and InterMAN)
The PSI Managed Internet Security service specifications are included in
Schedule 2.3.
Additional service requirements to be decided.
Attachments to Schedule 2.2
Page 34 of 41
<PAGE> 79
INTERNET FAX SERVICE
SERVICE REQUIREMENTS
VERSION 1.1
1. OVERVIEW
PSI's Internet Fax service provides global hardcopy delivery of documents
through the Internet to any fax machine in the world. Traffic is routed from
the fax client on the customer user desktop to a server where the best price
can be attained for the final dial-out connection.
The PSI Internet Fax services include:
o PSInet InternetPaper
The PSI Internet Fax service specification is included in Schedule 2.3.
Additional service requirements to be decided.
Attachments to Schedule 2.2
Page 35 of 41
<PAGE> 80
WHOLESALE DIAL-UP INTERNET ACCESS
SERVICE REQUIREMENTS
VERSION 1.0
1. OVERVIEW
PSI's Wholesale Dial-up Internet Access services provide, on a wholesale basis,
on-demand switched connectivity to the Internet via an analog modem (9.6 - 33.6
Kbps) or an ISDN NT1 (64 - 128 Kbps).
The PSI Wholesale Dial-up Internet Access services include:
o PSINet Consumer Wholesale
The PSInet Consumer Wholesale service descriptions are included in Schedule
2.3.
2. WHOLESALE SERVICE BRANDING
PSI is to deliver the Dial-up Internet Access service on a branded basis, such
that the service is delivered to the end customer as an IXC / IXC reseller
branded service. Service branding is to be present in the following areas:
o Sales collateral
o End user software diskettes
o User manuals and other service-related material.
o All PSI contact with the end customer, such as during order
verification, service provisioning, and customer support
o Email addresses and web site domain names for customer support,
service status, service information.
o Domain names used for end user account, as reflected in user
email addresses and user web page location identifiers.
o Service usage reports
PSI will provide service branding pricing under separate cover.
3. DELIVERY PROCESSES
Documented delivery processes are to be developed by PSI and are subject to
approval by IXC. PSI will work to integrate internal processes with IXC's
service processes, specifically in the areas of:
o order processing
o service provisioning
o customer support
o network operation procedures and escalation
o trouble ticketing and tracking
o billing
Attachments to Schedule 2.2
Page 36 of 41
<PAGE> 81
PSI must create and maintain delivery process documentation specific to the
items listed above.
PSI has created the processes above and have incorporated them into the
Consumer Wholesale Users Guide, previously supplied to IXC.
4. SERVICE IMPLEMENTATION
PSI is to provide IXC with a dial-up Internet access product. RADIUS
authentication shall be performed by PSI. PSI provides modem ports, traffic
propagation, authentication and second level support. Customer support,
software fulfillment and billing may be outsourced.
Implementation details are described below.
4.1. DIAL-UP POP INFRASTRUCTURE
PSI is responsible for installing and maintaining the network infrastructure
for providing analog and ISDN dial-up Internet access at multiple dial-up
Points-of-Presence (dial-up POPs) across the U.S. as well as 800 number
Internet access.
4.1.1. Port Availability
PSI is responsible for maintaining an adequate number of modem and ISDN ports
for the dial-up service at each dial-up POP, based on the ratio of user
accounts to modem ports (user:modem ratio). User:Port ratios are to be
maintained at no more than approximately * at each PSI dial- up POP. PSI is
to monitor the user:port ratios of user accounts to available modem ports at
each dial-up POP. PSI will use best efforts to ensure the network is
maintained at a level which meet reasonable commercial standards and shall
maintain its network in good condition and repair. User:Port ratios are to be
calculated for each separate dial-up POP, with analog and ISDN ratios
calculated separately.
PSI will provide IXC with real-time, 24hr/day access to its POPs for IXC's
analysis and debugging.
4.2. RADIUS AUTHENTICATION
PSI is to install and maintain distributed RADIUS authentication servers to be
used for verifying user authentication. PSI's distributed RADIUS servers must
be configured to communicate with a central RADIUS server that contains the IXC
customer's authorized user database.
4.3. OPTIONAL END USER SOFTWARE
PSI is to provide, for a fee, IXC or IXC Reseller branded, pre-configured
Internet access software on appropriate media (3.5" floppy or CD- ROM), and
appropriate operating system (Windows 3.1, Win 95, NT, MacOS).
4.3.1. Internet Connectivity Software Suite
The end user dial-up access software is to include:
Attachments to Schedule 2.2
Page 37 of 41
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 82
o An IP connectivity software suite of
o Dial-up communications
o TCP/IP stack
o PPP software
o Netscape or Internet Explorer web browser
o E-mail reader
o News reader
o Service Initiation Screens
4.3.2. Software Customizing and Branding
The Internet access software media is to be available as private-label, branded
software. Branding is to include the following:
o Custom diskette packaging that reflects the IXC Customer
dial-up service brand
o Customized Service Initiation and Welcome screen
o Custom screen logo
o Custom initial default home page for the web browser included
with the software.
o Custom user manuals that reflects the IXC Customer dial-up
service brand.
4.3.3. Software Fulfillment
PSI is to arrange for the Internet access software to be delivered to the end
user upon receiving an account activation order for a new customer of the IXC
Reseller. The software shipment can be contracted by PSI to a fulfillment
house company that specializes in software diskette distribution. PSI is
responsible for the end user receiving the software no more than ten days
following the account activation order being received by PSI. PSI will provide
a fee schedule to IXC based on IXC sales projections given to the fulfillment
house by PSI.
4.4. OPTIONAL END USER HELP DESK
First tier end user help desk support is to be coordinated by PSI, or an agreed
upon subcontractor, for a fee. Help desk support is to include
o help regarding the installation and use of supported desktop
connectivity software, including web browser and email
o trouble reporting regarding use of the wholesale dial-up
service
o general use of the dial-up service
Dial-up customer support is provided on a branded basis, with PSI customer
support representatives answering the phone in the name of the IXC Reseller.
Fees for this service are directly proportional with the amount of users the
IXC Reseller has using the network and are priced out separately for each
participating IXC Reseller. Call answering is to be customized in accordance
with the IXC Reseller's policies and procedures and may add additional cost to
each IXC Reseller.
4.5. OPTIONAL EMAIL SERVICES
Attachments to Schedule 2.2
Page 38 of 41
<PAGE> 83
End user email services are to be offered by PSI, or its subcontractor, for an
added fee. Wholesale dial-up user mailboxes are to be hosted by PSI on a
managed, industry standard SMTP/POP3 e-mail server. Each user is to be
provided with their own email address and storage for up to 5 MB or 35 days of
unread mail, whichever is less. The mailserver is to be configured using a
domain name specific to the IXC Customer's branded dial-up service, which is
the domain name that is to appear in the end-users' email addresses.
PSI, or its subcontractor, is to host and manage the mail service with the same
robustness and operational care as is considered best practice within the
industry. PSI, or its subcontractor, is responsible for providing to IXC and
the IXC Reseller Web-based email administration tools for managing the email
service.
4.6 OPTIONAL USENET NEWS SERVICES
End user Usenet News services are offered by PSI to IXC Wholesale Dial-up
customers. An additional fee may apply.
4.7 ACCOUNT USAGE CALL RECORDS
PSI, or its subcontractor, is responsible for reporting detailed account call
record information to the IXC on a regular basis (daily, weekly, monthly).
Separate call record information must be provided to IXC for each IXC reseller
customer, as well as total aggregate call record information. Call records are
to be provided via electronic files as well as via a secure Web server
accessible to the IXC. PSI will provide a fee schedule based on these
criteria.
Attachments to Schedule 2.2
Page 39 of 41
<PAGE> 84
SCHEDULE 2.3
DOCUMENTATION
1. Service Descriptions - As per the Attachments to Schedule 2.2
2. Standard Contract - PSI Standard Customer Agreement and all Addenda
3.
*
Other Marketing Materials/Collateral
Schedule 2.3
Page 1 of 1
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 85
SCHEDULE 3.1
SALES SUPPORT
*
Schedule 3.1
Page 1 of 1
* Confidential material has been omitted and filed separately with the
Securities and Exchange Commission
<PAGE> 86
SCHEDULE 5.4.1
PROVISION GOVERNING IXC USE OF SERVICES
The following provisions shall apply to IXC's use of Services in IXC's capacity
as an end user of Services for its own account (provided that such provisions
shall be modified automatically to the extent PSI waives such provisions, or
imposes less restrictive provisions, on its customers under its standard terms
and conditions and normal business practices (including where exceptions are
routinely granted to customers), or for any other reseller or distributor of
services of the type comprising the Services):
(A) IXC shall be solely responsible for the content of any transmissions
over the Internet by IXC and any person or Third Party utilizing
IXC's facilities with IXC's consent. IXC agrees that it and any
such person or Third Party utilizing IXC's facilities shall not
knowingly disrupt other network users, network services or network
equipment. Disruptions include, but are not limited to,
distribution of unsolicited advertising or chain letters,
propagation of computer worms and viruses, and using the network to
make unauthorized entry to any other machine accessible via the
network.
(B) Except as expressly set forth in or contemplated by the Joint
Marketing and Services Agreement to which this Schedule is attached
(the "Marketing Agreement"), PSI DISCLAIMS ALL EXPRESS AND IMPLIED
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE. PSI shall not be liable for any damages that
IXC may suffer arising out of use, or inability to use, the Services
or products provided hereunder unless such damage is caused by a
negligent, reckless or intentional act of PSI. PSI shall not be
liable for unauthorized access by Third Parties to IXC's
transmission facilities or premise equipment or for unauthorized
access to or alteration, theft, loss or destruction of IXC's data
files, programs, procedures or information through accident,
fraudulent means or devices or any other method provided that the
foregoing shall not relieve PSI from responsibility for any of the
foregoing to the extent it results from PSI's actions (or inactions)
while responsible for security and system administration within the
IXC network. Except as expressly set forth in or contemplated by
the Marketing Agreement, in any instance involving performance or
nonperformance by PSI with respect to Services or products provided
hereunder, (a) the price paid for Services which were not provided,
or (b) in the case of products, the products shall be repaired or
replaced by the manufacturer, subject to applicable warranty.
Except as expressly set forth in or contemplated by the Marketing
Agreement, in the case of refund for lost Services, credit will be
issued only for periods of lost Service greater than twenty-four
(24) hours.
(C) IXC agrees to comply with U.S. law with regard to the transmission
of technical data which is exported from the United States using the
Services.
(D) The following additional provisions shall apply to the following
types of Services (as indicated): Dedicated Internet Access Service
(PSINet InterFrame), Dedicated Internet Access Service (PSINet
InterMAN), Switched LAN Internet Access Service, Managed Intranet
WAN Service, Internet Remote Access Service, Managed Internet
Security Services, PSINet InternetPaper Service and PSINet Consumer
Wholesale Service:
Schedule 5.4.1
Page 1 of 19
<PAGE> 87
DEDICATED INTERNET ACCESS SERVICE
CUSTOMER CONTRACT PROVISIONS
PSINET INTERFRAME
PSINET NETWORK USAGE.
A. COMPLIANCE WITH LAW AND POLICY. Customer has read and agrees to comply
with PSINet's Net-Abuse Policy ("Policy") as currently set forth on PSINet's
Web site (http://www.psi.net) and as the Policy may be modified by PSINet in
its sole discretion from time to time. Any content, material, message or
data made available or transmitted through the Service, wherever it is sent
from, viewed, received, or retrieved, that is in violation of (i) any local,
state, federal or international law, regulation or treaty; (ii) the Policy;
or (iii) any community standard or accepted Internet policy is prohibited.
Any such violation may be deemed a material breach of this Agreement and
PSINet may, in its sole discretion, disable or terminate the Service with
written notice to Customer, but without any cure period.
B. CUSTOMER-ONLY TRAFFIC. The right to use the Service is strictly limited to
Customer only and does not extend to any other person, corporation or entity
except for wholly-owned affiliates of Customer and those members of
Customer's staff and consultants in the course of performing work for
Customer.
C. THIRD-PARTY TRAFFIC. Customer may host world-wide web sites on behalf of
third parties. In addition, Customer may feed USENET News to a third party,
but may not send any posting from that third party, including, but not
limited to, electronic mail, back to PSINet's wide-area network system (the
"Network") or the Internet through the Service. Any other third party
traffic, including packet access and electronic mail, whether sent or
received through Customer's facilities by or on behalf of a third party
through the Service, is expressly prohibited.
CUSTOMER NETWORK SECURITY. PSINet provides no user access security with
respect to any of Customer's facilities or facilities of others. Customer
shall be responsible for user/access security as well as access to its network
or to the Network. PSINet will assist in network security breach detection or
identification, but shall not be liable for any inability, failure or mistake
in doing so.
SERVICE ASSURANCE. If Customer notifies PSINet immediately upon its failure to
access the Network through Customer's standard means or the backup mechanisms
provided with the Service, and PSINet determines in its reasonable commercial
judgment that the Network is therefore unavailable to Customer ("Unavailable"),
one of the following will apply:
1. If PSINet determines that the Network is Unavailable for one (1) or more
consecutive hours during any calendar month, PSINet, upon Customer's request,
will credit Customer's monthly invoice the pro-rated charges for one (1)
day's Service fee; or
2. If PSINet determines that the Network is Unavailable for an aggregate of
four (4) or more hours during any calendar month, PSINet, upon Customer's
request, will credit Customer's monthly invoice the pro-rated charges for one
(1) week's Service fee.
These two options are not cumulative. For purposes of this section, scheduled
maintenance will not be considered to be Unavailability. PSINet shall not be
responsible for any toll charges incurred by Customer's use of any telephone
company ("Telco") or other telecommunications services as a result of this
section. THE FOREGOING TWO OPTIONS STATE PSINET'S SOLE OBLIGATION, AND
CUSTOMER'S SOLE REMEDY, FOR NETWORK UNAVAILABILITY.
SPECIAL TERMS FOR THE "ON-SITE SERVICE" OPTION.
"ON-SITE SERVICE" OPTION SPECIFICS.
(1) EQUIPMENT ACCESS AND CONNECTION. The Equipment shall be installed and
maintained by PSINet or its subcontractors as PSINet shall designate in
writing. Customer shall provide 24 hour per day, 7 days per week access to
the Equipment (with appropriate escort if required by Customer) by
PSINet-designated individuals. If Customer cannot provide this access, any
Service Assurance remedy provided above is suspended during such time.
Customer shall not allow its personnel or others on its premises to tamper
with the Equipment. PSINet will verbally authorize on an event-by-event
basis individuals at Customer's location to open Equipment cabinets for
Schedule 5.4.1
Page 2 of 19
<PAGE> 88
appropriate routine and emergency reasons. Customer shall retain the right
to disconnect the Equipment from its LAN at any time. PSINet reserves the
right to shut down the Equipment at Customer's location in accordance with
PSINet's emergency operating procedures with notification to Customer.
Relocation of the Equipment may only be performed by PSINet or its
subcontractors at Customer's expense. PSINet is not responsible for Service
disruptions caused by Customer's Equipment relocation requirements.
(2) SECURITY FILTERING SUB-OPTION. If initialed on Customer's Order Form,
PSINet shall provide the Security Filtering Sub-Option along with the
On-Site Service Option. PSINet shall provide packet filtering based on
network number and protocol for non-Customer networks, and on an individual
host basis for Customer host computers.
(a) Customer will delegate two security contacts, a primary and a
secondary. Contact names, phone numbers, fax numbers, and electronic mail
addresses must be provided to PSINet on the Order Form. PSINet will take
direction ONLY from these contacts.
(b) Customer security contacts must participate in an initial phone
consultation with PSINet's Security Coordinator.
(c) Customer requests must be made by electronic mail or fax to the
designated PSINet address to facilitate an audit trail.
(d) PSINet Network Operations can be instructed by other Customer
contacts to disable non-PSINet access (for instance, MAE-East and CIX
access).
LIMITED WARRANTIES.
A. SERVICE. PSINET WARRANTS THAT THE SERVICE WILL OPERATE SUBSTANTIALLY IN
CONFORMANCE WITH THE SPECIFICATIONS. PSINET MAKES NO OTHER WARRANTIES OF ANY
KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS OF THE SERVICE FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY THIRD PARTY RIGHTS. CUSTOMER
IS RESPONSIBLE FOR ASSESSING ITS OWN COMPUTER AND TRANSMISSION NETWORK NEEDS,
AND THE RESULTS TO BE OBTAINED THEREFROM. USE OF ANY INFORMATION OBTAINED
THROUGH THE SERVICE IS AT CUSTOMER'S RISK. PSINET SPECIFICALLY DENIES ANY
RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH
THE SERVICE.
B. EQUIPMENT. PSINET REPRESENTS AND WARRANTS THAT DURING THE TERM OF THIS
AGREEMENT IT WILL MAKE REASONABLE EFFORTS TO ENSURE THE EQUIPMENT OPERATES
SUBSTANTIALLY IN CONFORMANCE WITH THE SPECIFICATIONS. ANY UNAUTHORIZED
CHANGES TO OR INAPPROPRIATE USAGE OF THE EQUIPMENT, HOWEVER, WILL VOID THE
FOREGOING WARRANTY. PSINET DOES NOT WARRANT THAT THE EQUIPMENT WILL BE
ENTIRELY FREE FROM DEFECTS OR THAT ITS OPERATION WILL BE ERROR FREE.
FURTHERMORE, CUSTOMER ACKNOWLEDGES THAT PSINET HAS MADE NO OTHER
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO
THE CONDITION OR PERFORMANCE OF THE EQUIPMENT, OR ITS MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
C. GENERAL. EACH PARTY ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THIS
AGREEMENT AND AGREES TO BE BOUND BY ITS TERMS. EACH PARTY FURTHER WARRANTS
THAT IT HAS FULL CORPORATE POWER AND AUTHORITY TO ENTER INTO AND DELIVER THIS
AGREEMENT AND TO PERFORM ITS OBLIGATIONS HEREUNDER, AND THAT THE PERSON WHOSE
SIGNATURE APPEARS BELOW IS DULY AUTHORIZED TO ENTER INTO THIS AGREEMENT ON
BEHALF OF THAT PARTY.
LIMITATION OF LIABILITY. EXCEPT FOR CUSTOMER'S PAYMENT OBLIGATIONS HEREUNDER,
NEITHER PARTY SHALL BE LIABLE FOR DIRECT DAMAGES GREATER THAN THE SUM TOTAL OF
PAYMENTS MADE BY CUSTOMER TO PSINET DURING THE SIX (6) MONTHS IMMEDIATELY
PRECEDING THE EVENT FOR WHICH DAMAGES ARE CLAIMED. EXCEPT FOR THE FOREGOING,
PSINET SHALL HAVE NO LIABILITY TO CUSTOMER WITH RESPECT TO (I) ANY CLAIM, LOSS
OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER INCLUDING THE ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY OF PSINET FOR CLAIMS ARISING OUT OF OR IN
CONNECTION WITH THE SERVICE OR THE EQUIPMENT, WHETHER OR NOT KNOWN OR DISCLOSED
TO PSINET; (II) ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL LOSSES OR DAMAGES RESULTING FROM THE DELIVERY, INSTALLATION,
MAINTENANCE, OPERATION OR USE OF THE SERVICE OR THE EQUIPMENT; (III) ANY ACT OR
OMISSION OF ANY OTHER ENTITY FURNISHING EQUIPMENT, PRODUCTS OR SERVICES TO
CUSTOMER; (IV) ANY PERSONAL OR PROPERTY DAMAGES DUE TO THE LOSS OF STORED,
TRANSMITTED OR RECORDED DATA RESULTING FROM THE SERVICE OR THE EQUIPMENT, EVEN
IF PSINET HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; AND (V) ANY LOSS
OR DAMAGES DUE TO THE FAULT OR NEGLIGENCE OF CUSTOMER OR ITS EMPLOYEES, AGENTS
OR REPRESENTATIVES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
EXEMPLARY, PUNITIVE OR OTHER CONSEQUENTIAL DAMAGES WHETHER OR NOT FORESEEABLE,
INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR THE LOSS OF DATA, GOODWILL OR
PROFITS, ARISING OUT OF OR IN RELATION TO THIS AGREEMENT EVEN IF ADVISED
BEFOREHAND OF THE POSSIBILITY OF SUCH LIABILITY. THE PARTIES AGREE TO WORK IN
GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS
Schedule 5.4.1
Page 3 of 19
<PAGE> 89
AGREEMENT, BUT RECOGNIZE THAT THE SERVICE COULD NOT BE MADE AVAILABLE UNDER
THESE TERMS OR OTHER SIMILAR TERMS WITHOUT A SUBSTANTIAL INCREASE IN COST IF
PSINET WERE TO ASSUME A GREATER DEGREE OF LIABILITY TO CUSTOMER.
Schedule 5.4.1
Page 4 of 19
<PAGE> 90
DEDICATED INTERNET ACCESS SERVICE
CUSTOMER CONTRACT PROVISIONS
PSINET INTERMAN
PSINET NETWORK USAGE.
A. COMPLIANCE WITH LAW AND POLICY. Customer has read and agrees to comply
with PSINet's Net-Abuse Policy ("Policy") as currently set forth on PSINet's
Web site (http://www.psi.net) and as the Policy may be modified by PSINet in
its sole discretion from time to time. Any content, material, message or
data made available or transmitted through the Service, wherever it is sent
from, viewed, received, or retrieved, that is in violation of (i) any local,
state, federal or international law, regulation or treaty; (ii) the Policy;
or (iii) any community standard or accepted Internet policy is prohibited.
Any such violation may be deemed a material breach of this Agreement and
PSINet may, in its sole discretion, disable or terminate the Service with
written notice to Customer, but without any cure period.
B. CUSTOMER-ONLY TRAFFIC. The right to use the Service is strictly limited to
Customer only and does not extend to any other person, corporation or entity
except for wholly-owned affiliates of Customer and those members of
Customer's staff and consultants in the course of performing work for
Customer.
C. THIRD-PARTY TRAFFIC. Customer may host world-wide web sites on behalf of
third parties. In addition, Customer may feed USENET News to a third party,
but may not send any posting from that third party, including, but not
limited to, electronic mail, back to PSINet's wide-area network system (the
"Network") or the Internet through the Service. Any other third party
traffic, including packet access and electronic mail, whether sent or
received through Customer's facilities by or on behalf of a third party
through the Service, is expressly prohibited.
CUSTOMER NETWORK SECURITY. PSINet provides no user access security with
respect to any of Customer's facilities or facilities of others. Customer
shall be responsible for user/access security as well as access to its network
or to the Network. PSINet will assist in network security breach detection or
identification, but shall not be liable for any inability, failure or mistake
in doing so.
PSINET-PROVIDED EQUIPMENT.
(1) EQUIPMENT SPACE. Customer shall provide and maintain suitable Equipment
Space meeting or exceeding the requirements set forth in the
Specifications.
(2) EQUIPMENT. The Equipment Space will house Equipment owned by PSINet
required for the Service. PSINet shall retain all right, title, and
interest in the Equipment at all times. PSINet will provide Equipment in
order to facilitate the connection between Customer's network and the Telco
circuit leading to the Network. The particular make and model of Equipment
shall be selected for Customer by PSINet in its sole discretion. If PSINet
determines in its sole reasonable judgment that the Equipment is defective,
PSINet shall replace the defective Equipment at no cost to Customer. THE
FOREGOING STATES PSINET'S SOLE OBLIGATION, AND CUSTOMER'S SOLE REMEDY, FOR
ANY DEFECTIVE EQUIPMENT.
(3) EQUIPMENT ACCESS AND CONNECTION. The Equipment shall be installed and
maintained by PSINet, or its subcontractors as PSINet shall designate in
writing. Customer shall provide 24 hour per day, 7 days per week access to
the Equipment (with appropriate escort if required by Customer) by
PSINet-designated individuals. If Customer cannot provide this access, any
Service Assurance remedy provided below is suspended during such time.
Customer shall not allow its personnel or others on its premises to open
the Equipment cabinets. PSINet will verbally authorize on an event-by-event
basis individuals at Customer's location to open Equipment cabinets for
appropriate routine and emergency reasons. Customer shall retain the right
to disconnect the Equipment from its LAN at any time. PSINet reserves the
right to shut down the Equipment at Customer's location in accordance with
PSINet's emergency operating procedures with notification to Customer.
(4) EQUIPMENT RELOCATION. Relocation of the Equipment may only be
performed by PSINet or its subcontractors at Customer's expense. PSINet is
not responsible for Service disruptions caused by Customer's Equipment
relocation requirements.
(5) EQUIPMENT RETURN. Upon termination of the Service for any reason,
Customer agrees immediately to allow the return of the Equipment to PSINet.
PSINet retains all rights to recover possession of the Equipment from
Customer.
Schedule 5.4.1
Page 5 of 19
<PAGE> 91
SECURITY FILTERING OPTION. If initialed on Customer's Order Form, PSINet
shall provide the Security Filtering Option. PSINet shall provide packet
filtering based on network number and protocol for non-Customer networks, and
on an individual host basis for Customer host computers.
(1) Customer will delegate two security contacts, a primary and a
secondary. Contact names, phone numbers, fax numbers, and electronic mail
addresses must be provided to PSINet on the Order Form. PSINet will take
direction ONLY from these contacts.
(2) Customer security contact points must participate in an initial phone
consultation with PSINet's Security Coordinator.
(3) Customer requests must be made by electronic mail or fax to the
designated PSINet address to facilitate an audit trail.
(4) PSINet Network Operations can be instructed by other Customer contacts
to disable non-PSINet access (for instance, MAE-East and CIX access).
SERVICE ASSURANCE. If Customer notifies PSINet immediately upon its failure to
access the Network through Customer's standard means or the backup mechanisms
provided with the Service, and PSINet determines in its reasonable commercial
judgment that the Network is therefore unavailable to Customer ("Unavailable"),
one of the following will apply:
1. If PSINet determines that the Network is Unavailable for one (1) or more
consecutive hours during any calendar month, PSINet, upon Customer's request,
will credit Customer's monthly invoice the pro-rated charges for one (1)
day's Service fee; or
2. If PSINet determines that the Network is Unavailable for an aggregate of
four (4) or more hours during any calendar month, PSINet, upon Customer's
request, will credit Customer's monthly invoice the pro-rated charges for one
(1) week's Service fee.
These two options are not cumulative. For purposes of this section, scheduled
maintenance will not be considered to be Unavailability. PSINet shall not be
responsible for any toll charges incurred by Customer's use of any telephone
company ("Telco") or other telecommunications services as a result of this
section. THE FOREGOING TWO OPTIONS STATE PSINET'S SOLE OBLIGATION, AND
CUSTOMER'S SOLE REMEDY, FOR NETWORK UNAVAILABILITY.
LIMITED WARRANTIES.
A. SERVICE. PSINET WARRANTS THAT THE SERVICE WILL OPERATE SUBSTANTIALLY IN
CONFORMANCE WITH THE SPECIFICATIONS. PSINET MAKES NO OTHER WARRANTIES OF ANY
KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS OF THE SERVICE FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY THIRD PARTY RIGHTS. CUSTOMER
IS RESPONSIBLE FOR ASSESSING ITS OWN COMPUTER AND TRANSMISSION NETWORK NEEDS,
AND THE RESULTS TO BE OBTAINED THEREFROM. USE OF ANY INFORMATION OBTAINED
THROUGH THE SERVICE IS AT CUSTOMER'S RISK. PSINET SPECIFICALLY DENIES ANY
RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH
THE SERVICE.
B. EQUIPMENT. PSINET REPRESENTS AND WARRANTS THAT DURING THE TERM OF THIS
AGREEMENT IT WILL MAKE REASONABLE EFFORTS TO ENSURE THE EQUIPMENT OPERATES
SUBSTANTIALLY IN CONFORMANCE WITH THE SPECIFICATIONS. ANY UNAUTHORIZED
CHANGES TO OR INAPPROPRIATE USAGE OF THE EQUIPMENT, HOWEVER, WILL VOID THE
FOREGOING WARRANTY. PSINET DOES NOT WARRANT THAT THE EQUIPMENT WILL BE
ENTIRELY FREE FROM DEFECTS OR THAT ITS OPERATION WILL BE ERROR FREE.
FURTHERMORE, CUSTOMER ACKNOWLEDGES THAT PSINET HAS MADE NO OTHER
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO
THE CONDITION OR PERFORMANCE OF THE EQUIPMENT, OR ITS MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
C. GENERAL. EACH PARTY ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THIS
AGREEMENT AND AGREES TO BE BOUND BY ITS TERMS. EACH PARTY FURTHER WARRANTS
THAT IT HAS FULL CORPORATE POWER AND AUTHORITY TO ENTER INTO AND DELIVER THIS
AGREEMENT AND TO PERFORM ITS OBLIGATIONS HEREUNDER, AND THAT THE PERSON WHOSE
SIGNATURE APPEARS BELOW IS DULY AUTHORIZED TO ENTER INTO THIS AGREEMENT ON
BEHALF OF THAT PARTY.
LIMITATION OF LIABILITY. EXCEPT FOR CUSTOMER'S PAYMENT OBLIGATIONS HEREUNDER,
NEITHER PARTY SHALL BE LIABLE FOR DIRECT DAMAGES GREATER THAN THE SUM TOTAL OF
PAYMENTS MADE BY CUSTOMER TO PSINET DURING THE SIX (6) MONTHS IMMEDIATELY
PRECEDING THE EVENT FOR WHICH DAMAGES ARE CLAIMED. EXCEPT FOR THE FOREGOING,
PSINET SHALL HAVE NO LIABILITY TO CUSTOMER WITH RESPECT TO (I) ANY CLAIM, LOSS
OR DAMAGE OF ANY KIND OR NATURE
Schedule 5.4.1
Page 6 of 19
<PAGE> 92
WHATSOEVER INCLUDING THE ACTIVE OR PASSIVE NEGLIGENCE OR STRICT LIABILITY OF
PSINET FOR CLAIMS ARISING OUT OF OR IN CONNECTION WITH THE SERVICE OR THE
EQUIPMENT, WHETHER OR NOT KNOWN OR DISCLOSED TO PSINET; II) ANY DIRECT,
INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES
RESULTING FROM THE DELIVERY, INSTALLATION, MAINTENANCE, OPERATION OR USE OF THE
SERVICE OR THE EQUIPMENT; (III) ANY ACT OR OMISSION OF ANY OTHER ENTITY
FURNISHING EQUIPMENT, PRODUCTS OR SERVICES TO CUSTOMER; (IV) ANY PERSONAL OR
PROPERTY DAMAGES DUE TO THE LOSS OF STORED, TRANSMITTED OR RECORDED DATA
RESULTING FROM THE SERVICE OR THE EQUIPMENT, EVEN IF PSINET HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES; AND (V) ANY LOSS OR DAMAGES DUE TO THE FAULT
OR NEGLIGENCE OF CUSTOMER OR ITS EMPLOYEES, AGENTS OR REPRESENTATIVES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
EXEMPLARY, PUNITIVE OR OTHER CONSEQUENTIAL DAMAGES WHETHER OR NOT FORESEEABLE,
INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR THE LOSS OF DATA, GOODWILL OR
PROFITS, ARISING OUT OF OR IN RELATION TO THIS AGREEMENT EVEN IF ADVISED
BEFOREHAND OF THE POSSIBILITY OF SUCH LIABILITY. THE PARTIES AGREE TO WORK IN
GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS AGREEMENT, BUT RECOGNIZE THAT THE
SERVICE COULD NOT BE MADE AVAILABLE UNDER THESE TERMS OR OTHER SIMILAR TERMS
WITHOUT A SUBSTANTIAL INCREASE IN COST IF PSINET WERE TO ASSUME A GREATER
DEGREE OF LIABILITY TO CUSTOMER.
Schedule 5.4.1
Page 7 of 19
<PAGE> 93
SWITCHED LAN INTERNET ACCESS SERVICE
CUSTOMER CONTRACT PROVISIONS
PSINET NETWORK USAGE.
A. COMPLIANCE WITH LAW AND POLICY. Customer has read and agrees to comply
with PSINet's Net-Abuse Policy ("Policy") as currently set forth on PSINet's
Web site (http://www.psi.net) and as the Policy may be modified by PSINet in
its sole discretion from time to time. Any content, material, message or
data made available or transmitted through the Service, wherever it is sent
from, viewed, received, or retrieved, that is in violation of (i) any local,
state, federal or international law, regulation or treaty; (ii) the Policy;
or (iii) any community standard or accepted Internet policy is prohibited.
Any such violation may be deemed a material breach of this Agreement and
PSINet may, in its sole discretion, disable or terminate the Service with
written notice to Customer, but without any cure period.
B. CUSTOMER-ONLY TRAFFIC. The right to use the Service is strictly limited to
Customer only and does not extend to any other person, corporation or entity
except for wholly-owned affiliates of Customer and those members of
Customer's staff and consultants in the course of performing work for
Customer.
C. THIRD-PARTY TRAFFIC. Customer may host world-wide web sites on behalf of
third parties. In addition, Customer may feed USENET News to a third party,
but may not send any posting from that third party, including, but not
limited to, electronic mail, back to PSINet's wide-area network system (the
"Network") or the Internet through the Service. Any other third party
traffic, including packet access and electronic mail, whether sent or
received through Customer's facilities by or on behalf of a third party
through the Service, is expressly prohibited.
SERVICE USAGE. No more than one connection can be used at any time with a
Service as paid for by Customer and assigned by PSINet. If two individuals or
groups need to simultaneously access PSINet through separate phone lines, then
they would have to acquire two Services, and so on. Service use is defined as
a connection with a PSINet modem or access device using the public switched
telephone system (e.g. POTS lines or ISDN circuits). This single phone line
connection does allow for multiple individual user sessions.
CUSTOMER NETWORK SECURITY. PSINet provides no user access security with
respect to any of Customer's facilities or facilities of others. Customer
shall be responsible for user/access security as well as access to its network
or to the Network. PSINet will assist in network security breach detection or
identification, but shall not be liable for any inability, failure or mistake
in doing so.
SERVICE ASSURANCE. If Customer notifies PSINet immediately upon its failure to
access the Network through Customer's standard means, including multiple
alternative dialup POPs, provided with the Service, and PSINet determines in
its reasonable commercial judgment that the Network is therefore unavailable to
Customer ("Unavailable"), one of the following will apply:
1. If PSINet determines that the Network is Unavailable for one (1) or more
consecutive hours during any calendar month, PSINet, upon Customer's request,
will credit Customer's monthly invoice the pro-rated charges for one (1)
day's Service fee; or
2. If PSINet determines that the Network is Unavailable for an aggregate of
four (4) or more hours during any calendar month, PSINet, upon Customer's
request, will credit Customer's monthly invoice the pro-rated charges for one
(1) week's Service fee.
These two options are not cumulative. For purposes of this section, scheduled
maintenance will not be considered to be Unavailability. PSINet shall not be
responsible for any toll charges incurred by Customer's use of any telephone
company ("Telco") or other telecommunications services as a result of this
section. THE FOREGOING TWO OPTIONS STATE PSINET'S SOLE OBLIGATION, AND
CUSTOMER'S SOLE REMEDY, FOR NETWORK UNAVAILABILITY.
LIMITED WARRANTIES.
Schedule 5.4.1
Page 8 of 19
<PAGE> 94
A. SERVICE. PSINET WARRANTS THAT THE SERVICE WILL OPERATE SUBSTANTIALLY IN
CONFORMANCE WITH THIS AGREEMENT. PSINET MAKES NO OTHER WARRANTIES OF ANY
KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS OF THE SERVICE FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY THIRD PARTY RIGHTS. CUSTOMER
IS RESPONSIBLE FOR ASSESSING ITS OWN COMPUTER AND TRANSMISSION NETWORK NEEDS,
AND THE RESULTS TO BE OBTAINED THEREFROM. USE OF ANY INFORMATION OBTAINED
THROUGH THE SERVICE IS AT CUSTOMER'S RISK. PSINET SPECIFICALLY DENIES ANY
RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH
THE SERVICE.
B. EQUIPMENT. PSINET REPRESENTS AND WARRANTS THAT DURING THE TERM OF THIS
AGREEMENT IT WILL MAKE REASONABLE EFFORTS TO ENSURE THE EQUIPMENT OPERATES
SUBSTANTIALLY IN CONFORMANCE WITH THIS AGREEMENT. ANY UNAUTHORIZED CHANGES TO
OR INAPPROPRIATE USAGE OF THE EQUIPMENT, HOWEVER, WILL VOID THE FOREGOING
WARRANTY. PSINET DOES NOT WARRANT THAT THE EQUIPMENT WILL BE ENTIRELY FREE
FROM DEFECTS OR THAT ITS OPERATION WILL BE ERROR FREE. FURTHERMORE, CUSTOMER
ACKNOWLEDGES THAT PSINET HAS MADE NO OTHER REPRESENTATION OR WARRANTY OF ANY
KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION OR PERFORMANCE OF THE
EQUIPMENT, OR ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
C. GENERAL. EACH PARTY ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THIS
AGREEMENT AND AGREES TO BE BOUND BY ITS TERMS. EACH PARTY FURTHER WARRANTS
THAT IT HAS FULL CORPORATE POWER AND AUTHORITY TO ENTER INTO AND DELIVER THIS
AGREEMENT AND TO PERFORM ITS OBLIGATIONS HEREUNDER, AND THAT THE PERSON WHOSE
SIGNATURE APPEARS BELOW IS DULY AUTHORIZED TO ENTER INTO THIS AGREEMENT ON
BEHALF OF THAT PARTY.
LIMITATION OF LIABILITY. EXCEPT FOR CUSTOMER'S PAYMENT OBLIGATIONS HEREUNDER,
NEITHER PARTY SHALL BE LIABLE FOR DIRECT DAMAGES GREATER THAN THE SUM TOTAL OF
PAYMENTS MADE BY CUSTOMER TO PSINET DURING THE SIX (6) MONTHS IMMEDIATELY
PRECEDING THE EVENT FOR WHICH DAMAGES ARE CLAIMED. EXCEPT FOR THE FOREGOING,
PSINET SHALL HAVE NO LIABILITY TO CUSTOMER WITH RESPECT TO (I) ANY CLAIM, LOSS
OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER INCLUDING THE ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY OF PSINET FOR CLAIMS ARISING OUT OF OR IN
CONNECTION WITH THE SERVICE OR THE EQUIPMENT, WHETHER OR NOT KNOWN OR DISCLOSED
TO PSINET; (II) ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL LOSSES OR DAMAGES RESULTING FROM THE DELIVERY, INSTALLATION,
MAINTENANCE, OPERATION OR USE OF THE SERVICE OR THE EQUIPMENT; (III) ANY ACT OR
OMISSION OF ANY OTHER ENTITY FURNISHING EQUIPMENT, PRODUCTS OR SERVICES TO
CUSTOMER; (IV) ANY PERSONAL OR PROPERTY DAMAGES DUE TO THE LOSS OF STORED,
TRANSMITTED OR RECORDED DATA RESULTING FROM THE SERVICE OR THE EQUIPMENT, EVEN
IF PSINET HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; AND (V) ANY LOSS
OR DAMAGES DUE TO THE FAULT OR NEGLIGENCE OF CUSTOMER OR ITS EMPLOYEES, AGENTS
OR REPRESENTATIVES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
EXEMPLARY, PUNITIVE OR OTHER CONSEQUENTIAL DAMAGES WHETHER OR NOT FORESEEABLE,
INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR THE LOSS OF DATA, GOODWILL OR
PROFITS, ARISING OUT OF OR IN RELATION TO THIS AGREEMENT EVEN IF ADVISED
BEFOREHAND OF THE POSSIBILITY OF SUCH LIABILITY. THE PARTIES AGREE TO WORK IN
GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS AGREEMENT, BUT RECOGNIZE THAT THE
SERVICE COULD NOT BE MADE AVAILABLE UNDER THESE TERMS OR OTHER SIMILAR TERMS
WITHOUT A SUBSTANTIAL INCREASE IN COST IF PSINET WERE TO ASSUME A GREATER
DEGREE OF LIABILITY TO CUSTOMER.
Schedule 5.4.1
Page 9 of 19
<PAGE> 95
MANAGED INTRANET WAN SERVICE
CUSTOMER CONTRACT PROVISIONS
PSINET NETWORK USAGE.
A. COMPLIANCE WITH LAW AND POLICY. Customer has read and agrees to comply
with PSINet's Net-Abuse Policy ("Policy") as currently set forth on PSINet's
Web site (http://www.psi.net) and as the Policy may be modified by PSINet in
its sole discretion from time to time. Any content, material, message or
data made available or transmitted through the Service, wherever it is sent
from, viewed, received, or retrieved, that is in violation of (i) any local,
state, federal or international law, regulation or treaty; (ii) the Policy;
or (iii) any community standard or accepted Internet policy is prohibited.
Any such violation may be deemed a material breach of this Agreement and
PSINet may, in its sole discretion, disable or terminate the Service with
written notice to Customer, but without any cure period.
B. CUSTOMER-ONLY TRAFFIC. The right to use the Service is strictly limited to
Customer only and does not extend to any other person, corporation or entity
except for wholly-owned affiliates of Customer and those members of
Customer's staff and consultants in the course of performing work for
Customer.
C. THIRD-PARTY TRAFFIC. Customer may host world-wide web sites on behalf of
third parties. In addition, Customer may feed USENET News to a third party,
but may not send any posting from that third party, including, but not
limited to, electronic mail, back to PSINet's wide-area network system (the
"Network") or the Internet through the Service. Any other third party
traffic, including packet access and electronic mail, whether sent or
received through Customer's facilities by or on behalf of a third party
through the Service, is expressly prohibited.
CUSTOMER EQUIPMENT AND NETWORK. PSINet provides no user access security with
respect to any of Customer's facilities or facilities of others. PSINet will
assist in enforcing a customer-specified access policy as provided in the
Specifications subject to the limits of the implementing equipment and the
level of subscribed service. PSINet is not liable for any inability, failure or
mistake in implementing, enforcing, or monitoring the enforcement of the
specified policy.
PSINET-PROVIDED EQUIPMENT.
(1) EQUIPMENT SPACE. Customer shall provide and maintain suitable Equipment
Space meeting or exceeding the requirements set forth in the
Specifications.
(2) EQUIPMENT. The Equipment Space at each site specified by Customer
will house Equipment owned by PSINet required for the Service. PSINet
shall retain all right, title, and interest in the Equipment at all times.
PSINet will provide Equipment at each site to provide the connection
between Customer's network and the Telco circuit leading to the Network.
The particular make and model of Equipment shall be selected for Customer
by PSINet in its sole discretion. If PSINet determines in its sole
reasonable judgment that the Equipment is defective, PSINet shall replace
the defective Equipment at no cost to Customer. THE FOREGOING STATES
PSINET'S SOLE OBLIGATION, AND CUSTOMER'S SOLE REMEDY, FOR ANY DEFECTIVE
EQUIPMENT.
(3) EQUIPMENT ACCESS AND CONNECTION. The Equipment shall be maintained by
PSINet or its subcontractors. Customer shall not allow its personnel or
others on its premises to open the Equipment cabinets. PSINet will verbally
authorize on an event-by-event basis individuals at Customer's location to
open Equipment cabinets for appropriate routine and emergency reasons.
Customer shall retain the right to disconnect the Equipment from its LAN at
any time. PSINet reserves the right to shut down the Equipment at
Customer's location in accordance with PSINet's emergency operating
procedures with notification to Customer.
(4) EQUIPMENT RELOCATION. PSINet is not responsible for Service
disruptions caused by Customer's Equipment relocation requirements.
(5) EQUIPMENT RETURN. Upon termination of the Service for any reason,
Customer agrees immediately to allow the return of the Equipment to PSINet.
PSINet retains all rights to recover possession of the Equipment from
Customer.
Schedule 5.4.1
Page 10 of 19
<PAGE> 96
LIMITED WARRANTIES.
A. SERVICE. PSINET WARRANTS THAT THE SERVICE WILL OPERATE SUBSTANTIALLY IN
CONFORMANCE WITH THE SPECIFICATIONS. PSINET MAKES NO OTHER WARRANTIES OF ANY
KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS OF THE SERVICE FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY THIRD PARTY RIGHTS. CUSTOMER
IS RESPONSIBLE FOR ASSESSING ITS OWN COMPUTER AND TRANSMISSION NETWORK NEEDS,
AND THE RESULTS TO BE OBTAINED THEREFROM. USE OF ANY INFORMATION OBTAINED
THROUGH THE SERVICE IS AT CUSTOMER'S RISK. PSINET SPECIFICALLY DENIES ANY
RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH
THE SERVICE.
B. EQUIPMENT. PSINET REPRESENTS AND WARRANTS THAT DURING THE TERM OF THIS
AGREEMENT IT WILL MAKE REASONABLE EFFORTS TO ENSURE THE EQUIPMENT OPERATES
SUBSTANTIALLY IN CONFORMANCE WITH THE SPECIFICATIONS. ANY UNAUTHORIZED
CHANGES TO OR INAPPROPRIATE USAGE OF THE EQUIPMENT, HOWEVER, WILL VOID THE
FOREGOING WARRANTY. PSINET DOES NOT WARRANT THAT THE EQUIPMENT WILL BE
ENTIRELY FREE FROM DEFECTS OR THAT ITS OPERATION WILL BE ERROR FREE.
FURTHERMORE, CUSTOMER ACKNOWLEDGES THAT PSINET HAS MADE NO OTHER
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO
THE CONDITION OR PERFORMANCE OF THE EQUIPMENT, OR ITS MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
C. GENERAL. EACH PARTY ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THIS
AGREEMENT AND AGREES TO BE BOUND BY ITS TERMS. EACH PARTY FURTHER WARRANTS
THAT IT HAS FULL CORPORATE POWER AND AUTHORITY TO ENTER INTO AND DELIVER THIS
AGREEMENT AND TO PERFORM ITS OBLIGATIONS HEREUNDER, AND THAT THE PERSON WHOSE
SIGNATURE APPEARS BELOW IS DULY AUTHORIZED TO ENTER INTO THIS AGREEMENT ON
BEHALF OF THAT PARTY.
LIMITATION OF LIABILITY. EXCEPT FOR CUSTOMER'S PAYMENT OBLIGATIONS HEREUNDER,
NEITHER PARTY SHALL BE LIABLE FOR DIRECT DAMAGES GREATER THAN THE SUM TOTAL OF
PAYMENTS MADE BY CUSTOMER TO PSINET DURING THE SIX (6) MONTHS IMMEDIATELY
PRECEDING THE EVENT FOR WHICH DAMAGES ARE CLAIMED. EXCEPT FOR THE FOREGOING,
PSINET SHALL HAVE NO LIABILITY TO CUSTOMER WITH RESPECT TO (I) ANY CLAIM, LOSS
OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER INCLUDING THE ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY OF PSINET FOR CLAIMS ARISING OUT OF OR IN
CONNECTION WITH THE SERVICE OR THE EQUIPMENT, WHETHER OR NOT KNOWN OR DISCLOSED
TO PSINET; (II) ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR
CONSEQUENTIAL LOSSES OR DAMAGES RESULTING FROM THE DELIVERY, INSTALLATION,
MAINTENANCE, OPERATION OR USE OF THE SERVICE OR THE EQUIPMENT; (III) ANY ACT OR
OMISSION OF ANY OTHER ENTITY FURNISHING EQUIPMENT, PRODUCTS OR SERVICES TO
CUSTOMER; (IV) ANY PERSONAL OR PROPERTY DAMAGES DUE TO THE LOSS OF STORED,
TRANSMITTED OR RECORDED DATA RESULTING FROM THE SERVICE OR THE EQUIPMENT, EVEN
IF PSINET HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; AND (V) ANY LOSS
OR DAMAGES DUE TO THE FAULT OR NEGLIGENCE OF CUSTOMER OR ITS EMPLOYEES, AGENTS
OR REPRESENTATIVES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
EXEMPLARY, PUNITIVE OR OTHER CONSEQUENTIAL DAMAGES WHETHER OR NOT FORESEEABLE,
INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR THE LOSS OF DATA, GOODWILL OR
PROFITS, ARISING OUT OF OR IN RELATION TO THIS AGREEMENT EVEN IF ADVISED
BEFOREHAND OF THE POSSIBILITY OF SUCH LIABILITY. THE PARTIES AGREE TO WORK IN
GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS AGREEMENT, BUT RECOGNIZE THAT THE
SERVICE COULD NOT BE MADE AVAILABLE UNDER THESE TERMS OR OTHER SIMILAR TERMS
WITHOUT A SUBSTANTIAL INCREASE IN COST IF PSINET WERE TO ASSUME A GREATER
DEGREE OF LIABILITY TO CUSTOMER.
Schedule 5.4.1
Page 11 of 19
<PAGE> 97
INTERNET REMOTE ACCESS SERVICE
CUSTOMER CONTRACT PROVISIONS
PSINET NETWORK USAGE.
A. COMPLIANCE WITH LAW AND POLICY. Customer along with each End-User, has
read and agrees to comply with PSINet's Net-Abuse Policy ("Policy") as
currently set forth on PSINet's Web site (http://www.psi.net) and as the
Policy may be modified by PSINet in its sole discretion from time to time.
Any content, material, message or data made available or transmitted through
an Account wherever it is sent from, viewed, received, or retrieved, that is
in violation of (i) any local, state, federal or international law,
regulation or treaty; (ii) the Policy; or (iii) any community standard or
accepted Internet policy is prohibited. Any such violation may be deemed a
material breach of this Agreement and PSINet may, in its sole discretion,
disable or terminate an Account or the Service with written notice to
Customer, but without any cure period.
B. CUSTOMER-ONLY TRAFFIC. The right to use an Account is strictly limited to
Customer only and does not extend to any other person, corporation or entity
except for wholly-owned affiliates of Customer and those members of
Customer's staff and consultants in the course of performing work for
Customer.
C. THIRD-PARTY TRAFFIC. Customer's End-Users may feed USENET News to a
third party, but may not send any posting from that third party, including,
but not limited to, electronic mail, back to the Network or the Internet
through an Account. Any other third party traffic, including packet access
and electronic mail, whether sent or received through Customer's facilities
by or on behalf of a third party through the Service, is expressly
prohibited.
CUSTOMER NETWORK AND FACILITIES. Customer shall remain responsible for
user/access security as well as access to its network or to the Network.
PSINet provides no user access security with respect to any of Customer or its
End-Users' facilities or facilities of others. PSINet will assist in network
security breach detection or identification, but shall not be liable for any
inability, failure or mistake in doing so.
"FIRST-LINE" SERVICE SUPPORT.
Customer's MIS/Technical administrator or contact is solely responsible for
all first line customer support for End-Users. If End-Users require
additional support, only Customer's designated Help Desk or MIS/Technical
contact may request support directly from PSINet's Customer Support Group
(CSG).
10. NO WARRANTIES. NEITHER PSINET, ITS AFFILIATES, DIRECTORS, EMPLOYEES AND
SUBCONTRACTORS WARRANT ANY CONNECTION TO, TRANSMISSION OVER, NOR RESULTS OR
USE OF, ANY NETWORK CONNECTION OR FACILITIES PROVIDED (OR FAILED TO BE
PROVIDED) UNDER THIS AGREEMENT. CUSTOMER IS RESPONSIBLE FOR ASSESSING ITS OWN
COMPUTER AND TRANSMISSION NETWORK NEEDS, AND THE RESULTS TO BE OBTAINED
THEREFROM. USE OF ANY INFORMATION OBTAINED VIA AN ACCOUNT IS AT CUSTOMER AND
THEIR END-USER'S RISK. PSINET SPECIFICALLY DENIES ANY RESPONSIBILITY FOR THE
ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH THE ACCOUNTS. PSINET MAKES
NO WARRANTIES OF ANY KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY, INCLUDING,
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS OF THE
SERVICE FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY THIRD PARTY
RIGHTS.
PSINET MAKES NO WARRANTY WITH RESPECT TO ANY SOFTWARE OR HARDWARE USED OR
PROVIDED BY PSINET IN CONNECTION WITH AN ACCOUNT. ANY PATENT, TRADEMARK, TRADE
SECRET OR WARRANTY INFRINGEMENTS, WHETHER ACTUAL OR ALLEGED, ARE THE DIRECT
RESPONSIBILITY OF THE MANUFACTURER OF SAID HARDWARE OR SOFTWARE PRODUCT. PSINET
ASSUMES NO RESPONSIBILITY FOR ANY ACTIONS OR LIABILITIES ARISING FROM THE
POSSESSION OR USE OF THESE SOFTWARE OR HARDWARE PRODUCTS.
11. LIMITATION OF LIABILITY. EXCEPT FOR CUSTOMER'S PAYMENT OBLIGATIONS
HEREUNDER, NEITHER PARTY SHALL BE LIABLE FOR DIRECT DAMAGES GREATER THAN THE
SUM TOTAL OF PAYMENTS MADE BY CUSTOMER TO PSINET DURING THE SIX (6) MONTHS
IMMEDIATELY PRECEDING THE EVENT FOR WHICH DAMAGES ARE CLAIMED. EXCEPT FOR THE
FOREGOING AND WITHOUT LIMITING ITS GENERALITY, PSINET SHALL HAVE NO LIABILITY
TO CUSTOMER OR ANY THIRD PARTY WITH RESPECT TO (I) ANY CLAIM, LOSS OR DAMAGE OF
ANY KIND OR NATURE WHATSOEVER INCLUDING
Schedule 5.4.1
Page 12 of 19
<PAGE> 98
THE ACTIVE OR PASSIVE NEGLIGENCE OR STRICT LIABILITY OF PSINET FOR CLAIMS
ARISING OUT OF OR IN CONNECTION WITH THE INDIVIDUAL ACCOUNTS OR SERVICE OR
RELATED HARDWARE OR SOFTWARE WHETHER OR NOT KNOWN OR DISCLOSED TO PSINET; (II)
ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL LOSSES OR
DAMAGES RESULTING FROM THE DELIVERY, INSTALLATION, MAINTENANCE, OPERATION OR
USE OF THE INDIVIDUAL ACCOUNTS OR SERVICE OR RELATED HARDWARE OR SOFTWARE;
(III) ANY ACT OR OMISSION OF ANY OTHER ENTITY FURNISHING HARDWARE, SOFTWARE OR
SERVICES TO CUSTOMER; (IV) ANY PERSONAL OR PROPERTY DAMAGES DUE TO THE LOSS OF
STORED, TRANSMITTED OR RECORDED DATA RESULTING FROM ANY INDIVIDUAL ACCOUNT, THE
SERVICE OR RELATED HARDWARE OR SOFTWARE, EVEN IF PSINET HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES; AND (V) ANY LOSS OR DAMAGES DUE TO THE FAULT OR
NEGLIGENCE OF CUSTOMER OR ITS EMPLOYEES, AGENTS OR REPRESENTATIVES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
EXEMPLARY, PUNITIVE OR OTHER CONSEQUENTIAL DAMAGES WHETHER OR NOT FORESEEABLE,
INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR THE LOSS OF DATA, GOODWILL OR
PROFITS, ARISING OUT OF OR IN RELATION TO THIS AGREEMENT EVEN IF ADVISED
BEFOREHAND OF THE POSSIBILITY OF SUCH LIABILITY. THE PARTIES AGREE TO WORK IN
GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS AGREEMENT, BUT RECOGNIZE THAT THE
INDIVIDUAL ACCOUNTS AND SERVICE COULD NOT BE MADE AVAILABLE UNDER THESE TERMS
OR OTHER SIMILAR TERMS WITHOUT A SUBSTANTIAL INCREASE IN COST IF PSINET WERE TO
ASSUME A GREATER DEGREE OF LIABILITY TO CUSTOMER OR OTHER THIRD PARTIES.
Schedule 5.4.1
Page 13 of 19
<PAGE> 99
MANAGED INTERNET SECURITY SERVICES
CUSTOMER CONTRACT PROVISIONS
SECURITY SERVICES DEFINED. Customer desires certain additional
security services offered by PSS (the "Security Services") as
specified in the "RouteWalle(SM) Managed Perimeter Security Service
Specifications," and the "SecureEnterpriseTM Enterprise-Wide Managed
Security Service Specifications" which are collectively called the
"Specifications" and are incorporated herein by reference. The
Security Services are designed to provide certain access control
techniques or information to Customer regarding its computer or
computer network(s)' connection to the Network and the Internet. The
addition of the Security Services for Customer as contemplated in this
Agreement requires Customer to possess or acquire a Dedicated Internet
Access Service (InterFrame, for the RouteWaller Security Service, and
InterFrame or InterMAN, for the SecureEnterprise Security Service)
from PSINet Inc. which connects Customer's host computer or local area
network (LAN) to the PSINet wide-area network system (the "Network")
and the Internet.
3. SECURITY SERVICES POLICY CREATION AND IMPLEMENTATION.
A. LIMITED SCOPE. WHILE PSS WILL ENDEAVOR TO PROVIDE AND/OR INSTALL
EQUIPMENT OR CONSULTING AND IMPLEMENTATION EXPERTISE, AS APPLICABLE IN
CONJUNCTION WITH THE SELECTED SECURITY SERVICE, CUSTOMER ACKNOWLEDGES THAT IT
IS FAMILIAR WITH AND HAS HAD ADEQUATE OPPORTUNITY TO EVALUATE THE SECURITY
SERVICE SELECTED AND THAT PSS WILL ONLY ULTIMATELY ACT UPON THE POLICY AND
PROCEDURES ESTABLISHED AND COMMUNICATED IN WRITING BY CUSTOMER THROUGH ITS
AUTHORIZED REPRESENTATIVES (SPECIFICALLY, THE "SECURITY OFFICERS" IDENTIFIED
BY CUSTOMER IN THE SECURITY SERVICES ORDER FORM ("ORDER FORM") WHICH IS
INCORPORATED HEREIN BY REFERENCE). ANY AND ALL SUCH WRITTEN COMMUNICATIONS
SHALL BE APPENDED TO THIS AGREEMENT TO THE EXTENT AGREED UPON BY PSS.
B. PROCEDURE.
(1) Customer shall delegate two Security Officers, a primary and a
secondary. Security Officer names, phone numbers, fax numbers, and
electronic mail addresses must be provided to PSS on the order form. PSS
will take direction ONLY from these Security Officers for Security Service.
(2) Customer Security Officers must participate in an initial phone
consultation with PSS's Security Coordinator.
(3) Customer requests for security provisions shall be made by electronic
mail or fax to the designated PSS address to facilitate an audit trail.
(4) PSS Network Operations can be instructed by other Customer contacts to
disable non-PSS access (for instance, MAE-East, MAE-West or CIX access).
(5) The Security Service can only be facilitated using PSS provided
equipment at Customer's site and with Customer's employees.
(6) PSS will ship PSS-owned equipment only to Customer's Security Officers
for Customer either to install or have PSS personnel install.
4. PSS-OWNED EQUIPMENT:
A. PSS-OWNED EQUIPMENT USAGE GRANTS. PSS hereby grants Customer a
non-exclusive license to use the PSS-owned Equipment associated with the
selected Security Service, along with any related user documentation, subject
to the terms provided herein. Customer agrees and acknowledges that it has
no right, title or interest in or to any of the PSS-owned Equipment,
including, but not limited to, any related patents, trademarks, copyrights or
other proprietary rights, except as specifically set forth herein.
(1) CUSTOMER MAY
(a) make copies of the software portions of the PSS-owned Equipment for
backup and archival purposes only, provided that the software and all
proprietary notices remain intact.
(b) make copies of the PSS-owned Equipment's documentation, provided
that such documentation is copied in its entirety and all proprietary
notices remain intact.
(2) CUSTOMER MAY NOT
(a) rent, lend, sublicense or lease the PSS-owned Equipment to another
party.
(b) modify, disassemble, decompile or reverse engineer any portion of
the PSS-owned Equipment.
Schedule 5.4.1
Page 14 of 19
<PAGE> 100
B. PSS-OWNED EQUIPMENT SPACE. In order to allow for the Security Service,
Customer shall, during the term of this Agreement, provide and maintain
suitable Equipment Space. The Equipment Space will house the PSS-owned
Equipment required for the Security Service. Customer shall retain the right
to disconnect the PSS-owned Equipment from its LAN at any time; however such
action will suspend the Security Service and any associated warranties
provided by PSS.
C. RELOCATION OF PSS-OWNED EQUIPMENT. Should Customer deem it necessary to
have the PSS-owned Equipment relocated, Customer shall be responsible for
moving the PSS-owned Equipment under PSS supervision. PSS shall not be
responsible for any Security Service disruptions caused by the PSS-owned
Equipment's relocation.
D. USAGE OF PSS-OWNED EQUIPMENT. Should PSS provide PSS-owned Equipment to
Customer (as will be labeled by PSS) for its use as part of this Agreement,
title to the Equipment shall be and remain in PSS at all times, and Customer
shall have no interest therein except as expressly provided under this
Agreement. Customer assumes full responsibility for, and, in the event of
lost or damaged PSS-owned Equipment, shall pay the replacement cost plus 5%
to the nearest $10.00, plus any applicable shipping and handling charges.
Upon termination of this Agreement, Customer shall immediately return all
PSS-owned Equipment to PSS.
E. REPROGRAMMING/REPAIRING PSS-OWNED ACCESS CONTROL CARDS. In the event
Customer requires PSS to reprogram or repair an individual Access Control
Card owned by PSS and already in use by Customer, Customer shall be
responsible for all shipping fees to and from PSS and will incur a one-time
handling fee of $25.00 per PSS-owned Access Control Card.
7. CONFIDENTIAL INFORMATION.
A. ACKNOWLEDGMENT OF CONFIDENTIALITY. Each Party hereby acknowledges that it
may be exposed to confidential and proprietary information belonging to the
other party or relating to its affairs, including materials expressly
designated or marked as confidential. Confidential Information does not
include (i) information already known or independently developed by the
recipient; (ii) information in the public domain through no wrongful act of
the recipient, or (iii) information received by recipient from a third party
who was free to disclose it.
B. COVENANT NOT TO DISCLOSE. Each party hereby agrees that it shall not
use, commercialize or disclose the other party's Confidential Information to
any person or entity, except to its own employees or agents having a "need to
know" such information in connection with the performance of this Agreement,
and to such other recipients as the other party may approve in a signed,
written document. Neither party shall alter or remove from any software,
documentation or other Confidential Information of the other party (or any
third party) any proprietary, copyright, trademark or trade secret legend.
The parties' obligations of confidentiality under this Agreement shall
survive termination of this Agreement for any reason.
8. NON CIRCUMVENTION. During the term of this Agreement and for a period of
eighteen (18) months thereafter, Customer agrees not to hire, solicit, nor
attempt to solicit the services, of any employee or subcontractor of PSS, its
parent or affiliate companies, without PSS' prior written consent; provided,
however, that Customer is not prevented from employing such person who contacts
Customer on his or her own initiative and without any direct or indirect
solicitation by Customer. Violation of this provision shall, in addition to
other relief, entitle PSS or its parent company to assert liquidated damages
against Customer equal to one hundred fifty (150) percent of the solicited
person's annual compensation.
9. CUSTOMER EQUIPMENT AND NETWORK. PSS IS NOT RESPONSIBLE TO CUSTOMER FOR THE
COST OR EXPENSE OF ADMINISTRATIVE, TECHNICAL, EMERGENCY AND SUPPORT PERSONNEL
AT CUSTOMER'S LOCATION NECESSARY FOR DEALING WITH PSS OR FOR PROVIDING AND
MAINTAINING CUSTOMER'S OWN COMPUTER EQUIPMENT AND NETWORK OR INTERNET ACCESS.
CUSTOMER SHALL CONTINUE TO BE RESPONSIBLE FOR USER/ACCESS SECURITY AND NETWORK
ACCESS TO ITS COMPUTER OR COMPUTER NETWORK(S). PSS WILL ASSIST IN NETWORK
SECURITY BREACH DETECTION OR IDENTIFICATION IN ACCORDANCE WITH THE SECURITY
SERVICE SELECTED AND INDUSTRY STANDARDS, BUT DOES NOT GUARANTEE A SECURE
COMPUTER OR COMPUTER NETWORK(S) OR ASSUME RESPONSIBILITY FOR ANY INABILITY,
FAILURE OR MISTAKE BY PSS IN PROVIDING SUCH ASSISTANCE.
10. LIMITED PERFORMANCE WARRANTY ON PSS-OWNED EQUIPMENT. PSS REPRESENTS AND
WARRANTS THAT DURING THE TERM OF THIS AGREEMENT IT WILL MAKE REASONABLE EFFORTS
TO ENSURE THE PSS-OWNED EQUIPMENT
Schedule 5.4.1
Page 15 of 19
<PAGE> 101
USED IN CONNECTION WITH THE SECURITY SERVICE OPERATES SUBSTANTIALLY IN
CONFORMANCE WITH THE RELEVANT SPECIFICATIONS. ANY UNAUTHORIZED CHANGES TO OR
INAPPROPRIATE USAGE OF THE PSS-OWNED EQUIPMENT; HOWEVER, WILL VOID ANY
WARRANTY PROVIDED HEREUNDER.
PSS DOES NOT WARRANT THAT THE EQUIPMENT WILL BE ENTIRELY FREE FROM DEFECTS OR
THAT ITS OPERATION WILL BE ERROR FREE. FURTHERMORE, CUSTOMER ACKNOWLEDGES THAT
PSS HAS MADE NO OTHER REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, WITH RESPECT TO THE CONDITION OR PERFORMANCE OF THE EQUIPMENT, OR ITS
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS EXPRESSLY
PROVIDED ABOVE, PSS SHALL HAVE NO LIABILITY TO CUSTOMER WITH RESPECT TO (I) ANY
CLAIM, LOSS OR DAMAGE OF ANY KIND OR NATURE WHATSOEVER INCLUDING THE ACTIVE OR
PASSIVE NEGLIGENCE OR STRICT LIABILITY OF PSS FOR CLAIMS ARISING OUT OF OR IN
CONNECTION WITH THE EQUIPMENT, WHETHER OR NOT KNOWN OR DISCLOSED TO PSS; (II)
ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL LOSSES OR
DAMAGES RESULTING FROM THE DELIVERY, INSTALLATION, MAINTENANCE, OPERATION,
SERVICE OR USE OF THE EQUIPMENT EXCEPT AS SPECIFIED ABOVE; (III) ANY ACT OR
OMISSION OF ANY OTHER ENTITY FURNISHING EQUIPMENT, PRODUCTS OR SERVICES TO
CUSTOMER; (IV) ANY PERSONAL OR PROPERTY DAMAGES OR FOR LOSS OF STORED,
TRANSMITTED OR RECORDED DATA RESULTING FROM THE EQUIPMENT, EVEN IF PSS HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; AND (V) ANY LOSS OR DAMAGES DUE TO
THE FAULT OR NEGLIGENCE OF CUSTOMER OR ITS EMPLOYEES, AGENTS OR
REPRESENTATIVES.
EXCEPT AS EXPRESSLY SET FORTH ABOVE, PSS MAKE NO WARRANTIES WITH RESPECT TO:
A. NON-PSS-OWNED EQUIPMENT. WITH RESPECT TO EQUIPMENT NOT OWNED BY PSS, PSS
ASSIGNS TO CUSTOMER AND CUSTOMER MAY HAVE THE BENEFIT OF ANY MANUFACTURER'S
WARRANTIES AND THE EQUIPMENT'S SERVICE AGREEMENTS (THE PERFORMANCE AND
CHARACTER OF WHICH SHALL IN ALL CASES BE GOVERNED BY THE APPLICABLE THIRD
PARTY LICENSE AGREEMENTS) TO THE EXTENT AVAILABLE AND ASSIGNABLE BY PSS;
PROVIDED, HOWEVER, THAT CUSTOMER'S SOLE REMEDY FOR THE BREACH OF ANY SUCH
WARRANTY, INDEMNIFICATION OR SERVICE AGREEMENT SHALL BE ACTIONS OR CLAIMS
AGAINST THE MANUFACTURER, AND NOT AGAINST PSS, ITS PARENT COMPANY, THEIR
DIRECTORS, EMPLOYEES AND AGENTS, NOR SHALL ANY SUCH BREACH HAVE ANY EFFECT
WHATSOEVER ON THE RIGHTS AND OBLIGATIONS OF EITHER PARTY WITH RESPECT TO
THIS AGREEMENT.
B. SECURITY SERVICES. CUSTOMER IS RESPONSIBLE FOR ASSESSING ITS OWN
COMPUTER AND TRANSMISSION NETWORK NEEDS, AND THE RESULTS TO BE OBTAINED
THEREFROM. EXCEPT AS SPECIFICALLY PROVIDED IN THE SECTION ABOVE IN
CONNECTION WITH THE RELATED PSS-OWNED EQUIPMENT, PSS MAKES NO WARRANTIES OF
ANY KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY, WITH RESPECT TO THE
SECURITY SERVICES, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS OF THE SECURITY SERVICE FOR A PARTICULAR PURPOSE.
PSS MAKES NO WARRANTY TO ANY THIRD PARTY WHO MAY RELY UPON THE SECURITY OF
CUSTOMER'S COMPUTER OR COMPUTER NETWORK.
C. BREACHES IN SECURITY. CUSTOMER AGREES THAT IN NO EVENT SHALL PSS, ITS
PARENT COMPANY, THEIR AFFILIATES, DIRECTORS, EMPLOYEES AND AGENTS BE HELD
LIABLE FOR ANY SECURITY BREACH EXPERIENCED BY CUSTOMER, ITS USERS OR OTHERS
RELYING ON CUSTOMER'S COMPUTER OR COMPUTER NETWORK, WHETHER OR NOT RELATED
TO OR ARISING FROM THE SECURITY SERVICE, OR FOR ANY FAILURE OF THE SECURITY
SERVICE TO PERFORM IN ANY RESPECT.
11. LIMITATION OF REMEDIES AND LIABILITIES. CUSTOMER AND PSS ACKNOWLEDGE THAT
THE FOLLOWING PROVISIONS REFLECT A FAIR ALLOCATION OF RISK:
A. REMEDIES. CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES FOR PSS'S DEFAULT
HEREUNDER SHALL BE (I) TO OBTAIN THE REPAIR, REPLACEMENT OR CORRECTION OF THE
DEFECTIVE EQUIPMENT TO THE EXTENT WARRANTED ABOVE OR, IF PSS REASONABLY
DETERMINES THAT SUCH REMEDY IS NOT ECONOMICALLY OR TECHNICALLY FEASIBLE, (II)
TO OBTAIN AN EQUITABLE PARTIAL OR FULL REFUND OF AMOUNTS PAID WITH RESPECT TO
THE DEFECTIVE SECURITY SERVICE. CUSTOMER MAY TERMINATE THIS AGREEMENT AND
RECOVER AMOUNTS PAID HEREUNDER WITH RESPECT TO THE INFRINGING SECURITY
SERVICE, IN WHICH CASE, SUCH TERMINATION AND RECOVERY SHALL BE CUSTOMER'S
SOLE AND EXCLUSIVE REMEDY IN RESPECT THEREOF.
B. LIABILITIES. PSS SHALL NOT BE LIABLE FOR ANY AMOUNT EXCEEDING THE SUM OF
FEES PAID FOR THE SECURITY SERVICE AT ISSUE DURING THE TWELVE (12) MONTHS
PRECEDING SUCH CLAIM. IN NO EVENT SHALL EITHER PARTY BE LIABLE, WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY PUNITIVE,
SPECIAL, INDIRECT, INCIDENTAL OR OTHER CONSEQUENTIAL DAMAGES (INCLUDING LOST
SAVINGS, PROFIT OR
Schedule 5.4.1
Page 16 of 19
<PAGE> 102
BUSINESS INTERRUPTION, LOSS OR MISAPPROPRIATION OF DATA, OR LOSS OR
MISAPPROPRIATION OF CONFIDENTIAL OR PROPRIETARY INFORMATION, EVEN IF THE
PARTY IS ADVISED IN ADVANCE OF SUCH POSSIBILITY) OF THE OTHER PARTY OR ANY
THIRD PARTIES ARISING OUT OF OR IN RELATION TO THIS AGREEMENT. THE PARTIES
AGREE TO WORK IN GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS AGREEMENT, BUT
RECOGNIZE THAT THE SECURITY SERVICE TO BE PROVIDED BY PSS COULD NOT BE MADE
AVAILABLE UNDER THESE TERMS OR OTHER SIMILAR TERMS WITHOUT A SUBSTANTIAL
INCREASE IN COST IF PSS WERE TO ASSUME A GREATER DEGREE OF LIABILITY TO
CUSTOMER.
12. INSURANCE. Each party shall maintain adequate insurance protection
covering its respective activities hereunder, including coverage for statutory
worker's compensation, comprehensive general liability for bodily injury and
tangible property damage, as well as adequate coverage for vehicles, and for
losses attributable to fraudulent modification, damage or destruction of
electronic data.
13.. EXPORT CONTROLS. Customer agrees and acknowledges that any export of the
Equipment used for the Security Services is subject to U.S. export control
laws and regulations. Customer shall not directly or indirectly transfer the
Equipment, or the documentation relating thereto, to any country or location
outside of the United States without obtaining the prior written consent of
PSS.
FORCE MAJEURE. Neither party shall be responsible for, and will not be
considered in breach or default of this Agreement on account of, any failure to
perform or delay in performance of any obligations hereunder caused by acts of
God, flood, fire, storm, war, public enemy, labor disturbances, including
strikes and lockouts, Equipment malfunction, failure of the Equipment
manufacturer to deliver Equipment, governmental regulations or interferences or
any other event not within the reasonable control of the responsible party and
which that party is unable to overcome by the exercise of reasonable diligence,
provided that such party will use its best efforts to resume normal
performance.
Schedule 5.4.1
Page 17 of 19
<PAGE> 103
PSINET INTERNETPAPER SERVICE
CUSTOMER CONTRACT PROVISIONS
SERVICE SUPPORT. Only Customer's MIS/Technical contact, designated below, may
request technical support assistance for the Option directly from PSINet's
Customer Support Group (CSG).
NO WARRANTY. PSINET PROVIDES THE OPTION ON AN "AS IS" BASIS. PSINET MAKES NO
OTHER WARRANTIES OF ANY KIND, WHETHER EXPRESSED, IMPLIED OR STATUTORY,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS
OF THE OPTION FOR A PARTICULAR PURPOSE AND NON- INFRINGEMENT OF ANY THIRD PARTY
RIGHTS. CUSTOMER IS RESPONSIBLE FOR ASSESSING ITS OWN COMPUTER AND
TRANSMISSION NETWORK NEEDS, AND THE RESULTS TO BE OBTAINED THEREFROM. USE OF
ANY INFORMATION OBTAINED THROUGH THE OPTION IS AT CUSTOMER'S RISK. PSINET
SPECIFICALLY DENIES ANY RESPONSIBILITY FOR THE ACCURACY OR QUALITY OF
INFORMATION OBTAINED THROUGH THE OPTION.
LIMITATION OF LIABILITY. EXCEPT FOR CUSTOMER'S PAYMENT OBLIGATIONS HEREUNDER,
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL,
EXEMPLARY, PUNITIVE OR OTHER CONSEQUENTIAL DAMAGES WHETHER OR NOT FORESEEABLE,
INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR THE LOSS OF DATA, GOODWILL OR
PROFITS, ARISING OUT OF OR IN RELATION TO THIS ADDENDUM EVEN IF ADVISED
BEFOREHAND OF THE POSSIBILITY OF SUCH LIABILITY. THE PARTIES AGREE TO WORK IN
GOOD FAITH TO IMPLEMENT THE PURPOSES OF THIS ADDENDUM, BUT RECOGNIZE THAT THE
OPTION COULD NOT BE MADE AVAILABLE UNDER THESE TERMS OR OTHER SIMILAR TERMS
WITHOUT A SUBSTANTIAL INCREASE IN COST IF PSINET WERE TO ASSUME A GREATER
DEGREE OF LIABILITY TO CUSTOMER.
Schedule 5.4.1
Page 18 of 19
<PAGE> 104
PSINET CONSUMER WHOLESALE SERVICE
SUBSCRIBER CONTRACT PROVISIONS
TERMINATION OF ACCESS. Subscribers are required to comply with PSINet's
Net-Abuse Policy ("Policy") as currently set forth on PSINet's Web site
(HTTP://WWW.PSI.NET) and as the Policy may be modified by PSINet in its sole
discretion from time to time. Any content, material, message, or data made
available or transmitted through the Network, wherever it is sent from, viewed,
received, or retrieved, that is in violation of (i) any local, state, federal
or international law, regulation or treaty; (ii) the Policy; or (iii) any
community standard or accepted Internet policy is prohibited. In the event of
violation of the foregoing by any Subscriber, PSINet will advise Retailer
accordingly, and PSINet reserves the right, in its sole discretion, to
terminate such Subscriber's Access immediately with written notice to Retailer.
INDEMNIFICATION OF PSINET. SUBSCRIBER SHALL INDEMNIFY AND HOLD HARMLESS PSINET
AND PSINET'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND ADVISORS FROM AND
AGAINST ANY AND ALL CLAIMS OF OTHER PERSONS OR ENTITIES ARISING OUT OF ANY
MATERIAL, MESSAGE, DATA, INFORMATION OR OTHER CONTENT TRANSMITTED OR MADE
AVAILABLE BY SUBSCRIBER OR ARISING OUT OF OTHER ACTS OR OMISSIONS OF
SUBSCRIBER.
Schedule 5.4.1
Page 19 of 19
<PAGE> 105
SCHEDULE 5.4.2
PROVISIONS IN AGREEMENTS WITH IXC CUSTOMERS
Except as otherwise contemplated under Section 5.1 of the Joint Marketing and
Services Agreement to which this Schedule is attached (the "Marketing
Agreement"), IXC shall require that any IXC Customer to which Services are
provided enter into an agreement that provides, among other things, terms and
conditions reasonably consistent with the provisions of Schedule 5.4.1 to the
Marketing Agreement; provided, however, that with respect to any IXC Customer
for which IXC is not in privity of contract with, IXC shall use reasonable best
efforts to cause the IXC Reseller to require that such IXC Customer enter into
an agreement that provides, among other things, terms and conditions reasonably
consistent with the provisions of Schedule 5.4.1 to the Marketing Agreement.
The parties shall be permitted to make appropriate substitutions to reflect the
identity and uniqueness of the providing party so long as the contract
provisions set forth on Schedule 5.4.1 remain in substantially the form
attached thereto and do not impose any greater liability, obligation or
commitment on the part of PSI. Such agreement shall also provide that, except
to the extent caused by PSI's gross negligence, recklessness or willful
misconduct, (i) such IXC Customer shall defend, indemnify and hold harmless PSI
and its respective directors, officers, employees and agents from any claim
asserted by any IXC Customer or any Third Party to or arising out of use by the
IXC Customer or Third Party of the Services or products provided hereunder,
(ii) that PSI shall not be liable to IXC Customer for indirect, consequential,
incidental or special damages even if advised of the possibility in advance,
and (iii) that PSI's liability for damages to any IXC Customer for any cause
whatsoever, regardless of form of action, shall be limited to the greater of
(A) $25,000 for each site provisioned for Services under this Agreement or (B)
the amounts paid by such IXC Customer for Services during the twelve (12) month
period preceding the incident giving rise to the claim for damages. The
foregoing requirements may be waived or modified with the consent of PSI and
shall be modified automatically to the extent PSI waives such provisions, or
imposes less restrictive provisions, on its customers under its standard terms
and conditions and normal business practices (including where exceptions are
routinely granted to customers), or for any other reseller or distributor.
Each Party agrees to consider such modifications to the foregoing requirements
as are reasonably required in light of market conditions. In situations in
which PSI enters into an agreement directly with the IXC Customer for the
provision of the Services, as contemplated under Section 5.4.2 of the Marketing
Agreement, PSI agrees to include corresponding provisions in its agreements
with IXC Customers for the benefit of IXC.
Schedule 5.4.2
Page 1 of 1
<PAGE> 106
SCHEDULE 6.2
PSI POINTS OF PRESENCE
[CHART]
Schedule 6.2
Page 1 of 1
<PAGE> 107
SCHEDULE 7.1
PRICES FOR OPTIONAL SERVICES
The following are Optional Prices by Service, not including taxes and postage,
etc.:
<TABLE>
<CAPTION>
Wholesale Dial-up Internet Access $$$$
<S> <C> <C>
1. Fulfillment (mailer, labeling, inserts, etc.) *
2. Software, Netscape software *
</TABLE>
*
<TABLE>
<S> <C> <C>
3. Diskette Duplication *
4. CD Duplication *
5. Printing *
6. Customer Support for individuals *
7. Email services *
8. Usenet news *
</TABLE>
Dedicated Internet Access Service
<TABLE>
<S> <C> <C>
1. Welcome Letters (setup and print merged) *
2. Materials *
3. Printing *
4. Fulfillment (mailer, labeling, insert, etc.) *
5. Usenet news *
6. News Feeds *
7. RouteWaller Internet Security (w/5 free cards) *
plus a monthly charge *
8. Cold spare router *
</TABLE>
Schedule 7.1
Page 1 of 3
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
<PAGE> 108
<TABLE>
<S> <C> <C>
9. SecureEnterprise *
(w/5 free access control cards) *
Cold spare redundancy option *
10. Additional Access Cards & authentication service *
</TABLE>
Lan on Demand
<TABLE>
<S> <C> <C> <C>
1. Welcome Letters (setup and print merged) *
2. Materials *
3. Printing *
4. Fulfillment (mailer, labeling, insert, etc.) *
InterMan
1. Security Filtering *
</TABLE>
Web Business Services
<TABLE>
<S> <C> <C>
1. Web Start base site templates used *
</TABLE>
Field Services, available only in Iman Cities
<TABLE>
<S> <C> <C> <C>
1. On-site Field Service visits *
</TABLE>
DNS Services
<TABLE>
<S> <C> <C>
1. Additional Domain Name *
2. Additional 1 IP network number *
</TABLE>
Value Added Reseller
<TABLE>
<S> <C>
1. PSI Master VAR agreement commissions on Services *
(Not including any circuit charges or installation
fees)
Subject to an agreement on activity to be
performed by both Parties
</TABLE>
Network Monthly usage reports TBD
Off-hours Helpline Support (other than 8am to 8pm) TBD
Schedule 7.1
Page 2 of 3
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
<PAGE> 109
APPENDIX 1 TO
SCHEDULE 7.1
*
(Confidential and Proprietary to PSINet, Inc.)
<TABLE>
<CAPTION>
Retail Price IXC Cost Margin Margin
------------------- ------------------- ------------------- --------------------
NRC MRC NRC MRC NRC MRC NRC MRC
-------- ------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LAN-DIAL * * * * * * * *
LAN-ISDN * * * * * * * *
InterFrame 56 * * * * * * * *
InterFrame 128 * * * * * * * *
InterFrame 256 * * * * * * * *
InterFrame 512 * * * * * * * *
InterFrame T1 * * * * * * * *
InterMAN T1 * * * * * * * *
InterMAN 4M * * * * * * * *
InterMAN 10M * * * * * * * *
InterMAN 16M * * * * * * * *
InterMAN 25M * * * * * * * *
InterMAN T3 (SMDS) * * * * * * * *
InterMAN T3 (ATM) * * * * * * * *
PSIWebt T1 * * * * * * * *
PSIWebt 10M * * * * * * * *
PSIWebt T3 * * * * * * * *
InterRamp Remote Access* * * * * * * * *
</TABLE>
- --------------------
* Price is per unit
Schedule 7.1
Page 3 of 3
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission
