<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1999
REGISTRATION NO. 333-82637
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RHYTHMS NETCONNECTIONS INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4813 33-0747515
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
------------------------
6933 SOUTH REVERE PARKWAY
ENGLEWOOD, COLORADO 80112
(303) 476-4200
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------
CATHERINE HAPKA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RHYTHMS NETCONNECTIONS INC.
6933 SOUTH REVERE PARKWAY
ENGLEWOOD, COLORADO 80112
(303) 476-4200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
JOHN A. DENNISTON
KIRT SHULDBERG
BROBECK, PHLEGER & HARRISON LLP
550 WEST "C" STREET, SUITE 1300
SAN DIEGO, CALIFORNIA 92101
(619) 234-1966
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statament for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits indemnification
of the Registrant's officers and directors under certain conditions and subject
to certain limitations. Section 145 of the Delaware General Corporation Law also
provides that a corporation has the power to purchase and maintain insurance on
behalf of its officers and directors against any liability asserted against such
person and incurred by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under the provisions of Section 145 of the
Delaware General Corporation Law.
Article VII, Section 1 of the Registrant's Restated Bylaws provides that the
Registrant shall indemnify its directors and executive officers to the fullest
extent not prohibited by the Delaware General Corporation Law. The rights to
indemnity thereunder continue as to a person who has ceased to be a director,
officer, employee or agent and inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director or
executive officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of the Registrant (or was serving at the
Registrant's request as a director or officer of another corporation) shall be
paid by the Registrant in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Registrant as authorized by the
relevant section of the Delaware General Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
Article V, Section (A) of the Registrant's Restated Certificate of Incorporation
provides that a director of the Registrant shall not be personally liable for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions not in good faith or acts or
omissions that involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived any improper personal benefit.
The Registrant has entered into indemnification agreements with each of its
directors and executive officers. Generally, the indemnification agreements
attempt to provide the maximum protection permitted by Delaware law as it may be
amended from time to time. Moreover, the indemnification agreements provide for
certain additional indemnification. Under such additional indemnification
provisions, however, an individual will not receive indemnification for
judgments, settlements or expenses if he or she is found liable to the
Registrant (except to the extent the court determines he or she is fairly and
reasonably entitled to indemnity for expenses), for settlements not approved by
the Registrant or for settlements and expenses if the settlement is not approved
by the court. The indemnification agreements provide for the Registrant to
advance to the individual any and all reasonable expenses (including legal fees
and expenses) incurred in investigating or defending any such action, suit or
proceeding. In order to receive an advance of expenses, the individual must
submit to the Registrant copies of invoices presented to him or her for such
expenses. Also, the individual must repay such advances upon a final judicial
decision that he or she is not entitled to indemnification.
The Registrant has purchased directors' and officers' liability insurance.
The Registrant intends to enter into additional indemnification agreements with
each of its directors and executive officers to effectuate these indemnity
provisions.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
1.1++ Purchase Agreement, dated April 16, 1999, by and among the Registrant and Merrill Lynch & Co., Merrill
Lynch, Pierce Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Chase Securities Inc.
3.3* Restated Certificate of Incorporation of the Registrant.
3.5* Restated Bylaws of the Registrant.
4.2* Indenture, dated as of May 5, 1998, by and between the Registrant and State Street Bank and Trust
Company of California, N.A., as trustee, including form of the Registrant's 13 1/2% Senior Discount
Notes due 2008, Series A and form of the Registrant's 13 1/2% Senior Discount Notes due 2008, Series B.
4.3* Warrant Agreement, dated as of May 5, 1998, by and between the Registrant and State Street Bank and
Trust Company of California, N.A.
4.4* Warrant Registration Rights Agreement, dated as of May 5, 1998, by and among the Registrant and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Donaldson, Lufkin & Jenrette
Securities Corporation.
4.5* Warrant to Purchase Shares of Common Stock, dated May 19, 1998, by and between the Registrant and Sun
Financial Group, Inc.
4.6* Common Stock Purchase Warrant, dated March 3, 1999, by and between the Registrant and MCI WorldCom
Venture Fund, Inc.
4.7* Common Stock Purchase Warrant, dated March 16, 1999, by and between the Registrant and Microsoft
Corporation.
4.8* Warrant to Purchase Shares of Common Stock, dated March 31, 1999, by and between Registrant and GATX
Capital Corporation.
4.9* Warrant Purchase Agreement, dated as of April 6, 1999, by and between Registrant and MCI WorldCom
Venture Fund, Inc.
4.10* Common Stock Purchase Warrant, dated April 6, 1999, by and among Registrant and MCI WorldCom Venture
Fund, Inc.
4.11* Common Stock Purchase Warrant, dated April 6, 1999, by and among the Registrant and U.S. Telesource,
Inc.
4.12* Common Stock Purchase Warrant, dated April 5, 1999, by and among Registrant and Cisco Systems Capital
Corporation.
4.13* Rights Agreement, dated April 2, 1999, by and among Registrant and American Securities Transfer & Trust,
Inc.
4.14++ Indenture, dated as of April 23, 1999, by and between the Registrant and State Street Bank and Trust
Company of California, N.A., as trustee, including form of the Registrant's 12 3/4% Senior Notes due
2009, Series A and form of the Registrant's 12 3/4% Senior Notes due 2009, Series B.
4.15++ Notes Registration Rights Agreement, dated as of April 23, 1999, by and among the Registrant and Merrill
Lynch & Co., Merrill Lynch, Pierce Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Chase
Securities Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
4.16++ Pledge and Escrow Agreement, dated as of April 23, 1999, from the Registrant as Pledgor to State Street
Bank and Trust Company of California, N.A., as trustee.
5.1++ Opinion of Brobeck, Phleger & Harrison LLP.
9.1* Voting Trust Agreement, dated as of May 5, 1998, by and among Sprout Capital VII, L.P., Donaldson Lufkin
& Jenrette Securities Corporation, and First Union Trust Company, National Association, as trustee.
10.1* Series A Preferred Stock Purchase Agreement, dated July 3, 1997, by and among the Registrant and the
Investors listed on Schedule A thereto.
10.2* Subsequent Closing Purchase Agreement, dated December 23, 1997, by and among the Registrant and the
Investors listed on Schedule A thereto.
10.3* Series B Preferred Stock Purchase Agreement, dated March 12, 1998, by and among the Registrant and the
Investors listed on Schedule A thereto.
10.4*+ Enterprise Services Solution Agreement between Cisco Systems, Inc. and the Registrant, dated December 3,
1998
10.5* Series C Preferred Stock Purchase Agreement, dated March 3, 1999, by and among the Registrant and MCI
WorldCom Venture Fund, Inc.
10.6* Amended and Restated Investors' Rights Agreement, dated March 3, 1999, by and among the Registrant and
the Investors listed on Schedule A thereto.
10.7*+ Agreement, dated March 3, 1999, by and between the Registrant and MCI WorldCom, Inc.
10.8* Series C Preferred Stock and Warrant Purchase Agreement, dated March 16, 1999, by and among the
Registrant and Microsoft Corporation.
10.9* Amended and Restated Investors' Rights Agreement, dated March 16, 1999, by and among the Registrant and
the Investors listed on Schedule A thereto.
10.10* Distribution Agreement, dated March 16, 1999, by and among the Registrant and Microsoft Corporation.
10.11* Master Lease Agreement No. 1642 and Addendum thereto, each dated November 19, 1997, and Second Addendum
thereto, dated as of May 19, 1998, between the Registrant and Sun Financial Group, Inc.
10.12* Business Lease (Single Tenant) between the Registrant and BR Venture, LLC dated September 1998.
10.13* Employment Agreement between the Registrant and Catherine M. Hapka, dated June 10, 1997.
10.14* Employment Agreement between the Registrant and Jeffrey Blumenfeld, dated August 10, 1997.
10.15* Employment Agreement between the Registrant and James A. Greenberg, dated July 14, 1997.
10.16* Employment Agreement between the Registrant and Rand A. Kennedy, dated August 22, 1997.
10.17* 1997 Stock Option/Stock Issuance Plan.
10.18* 1999 Stock Incentive Plan.
10.19* 1999 Employee Stock Purchase Plan.
10.20* Form of Indemnification Agreement between the Registrant and each of its directors.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C>
10.21* Form of Indemnification Agreement between the Registrant and each of its officers.
10.23* Third Addendum, dated March 31, 1999, to Master Lease Agreement, dated November 19, 1997, by and among
Registrant and GATX Capital Corporation.
10.24* Master Lease Agreement, dated March 31, 1999, by and among Registrant and GATX Capital Corporation.
10.25* First Addendum, dated March 31, 1999, to Master Lease Agreement, dated March 31, 1999, by and among
Registrant and GATX Capital Corporation.
10.26* Amendment No. 1, dated April 6, 1999, to Framework Agreement, dated March 3, 1999, by and among the
Registrant and MCI WorldCom, Inc.
10.27* Series C Preferred Stock and Warrant Purchase Agreement, dated April 6, 1999, by and among the
Registrant and U.S Telesource, Inc.
10.28* Series D Preferred Stock Purchase Agreement, dated April 6, 1999, by and among the Registrant and the
Investors listed on Schedule A thereto.
10.29* Amended and Restated Investors' Rights Agreement, dated April 6, 1999, by and among the Registrant and
the Investors listed on Schedule A thereto.
10.30* Lease Agreement, dated April 5, 1999, by and among the Registrant and Cisco Systems Capital Corporation.
10.31++ Amendment No. 2, dated May 10, 1999, to Framework Agreement, dated March 3, 1999, by and among the
Registrant and MCI WorldCom, Inc.
21.1* Subsidiaries of the Registrant.
23.1++ Consent of Brobeck, Phleger & Harrison LLP (filed with Exhibit 5.1).
23.2++ Consent of PricewaterhouseCoopers LLP.
24.1++ Powers of Attorney (included on signature page).
25.1++ Statement of Eligibility of Trustee on Form T-1.
27.1++ Financial Data Schedule.
99.1++ Form of Letter of Transmittal
99.2++ Form of Notice of Guaranteed Delivery
99.3+ ACI Plus Service Agreement, dated April 6, 1999, by and between the Registrant and Qwest Communications
Corporation.
</TABLE>
- ------------------------
* Incorporated by reference to the exhibit of corresponding number filed with
our Registration Statement on Form S-1 (File No. 333-72409).
+ Certain confidential portions of this Exhibit were omitted by means of
redacting a portion of the text (the "Mark"). This Exhibit has been filed
separately with the Secretary of the Commission without the Mark pursuant to
the Registrant's Application Requesting Confidential Treatment under Rule
406 under the Securities Act.
++ Previously filed.
(b) Financial Statement Schedules included separately in the registration
statement.
All other schedules are omitted because they are not required, are not
applicable or the information is included in the Financial Statements or notes
thereto.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS
1. We hereby undertake to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
section 310 of the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the SEC under section 305 (b)(2) of the Act.
2. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than our payment of expenses
incurred or paid by one of our directors, officers or controlling persons in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
3. We hereby undertake to respond to requests for information that is
incorporated by reference into this prospectus pursuant to Items 4, 10(b), 11 or
13 of this Form, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of this registration statement through the date of responding to
the request.
4. We hereby undertake to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in this registration statement
when it became effective.
5. We hereby undertake:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Englewood, State of Colorado, on the 11th day of August 1999.
RHYTHMS NETCONNECTIONS INC.
BY: /S/ SCOTT C. CHANDLER
-----------------------------------------
Scott C. Chandler
CHIEF FINANCIAL OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Catherine M. Hapka and Scott C. Chandler, or
either of them, as his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and any
registration statement related to this Registration Statement and filed pursuant
to Rule 462 under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------------- -------------
* Chairman, Chief Executive Officer August 11,
- ------------------------------ and Director 1999
Catherine M. Hapka
/s/ SCOTT C. CHANDLER Chief Financial Officer August 11,
- ------------------------------ 1999
Scott C. Chandler
* Director August 11,
- ------------------------------ 1999
Kevin R. Compton
* Director August 11,
- ------------------------------ 1999
Keith B. Geeslin
* Director August 11,
- ------------------------------ 1999
Ken L. Harrison
* Director August 11,
- ------------------------------ 1999
Susan Mayer
* Director August 11,
- ------------------------------ 1999
William R. Stensrud
* Director August 11,
- ------------------------------ 1999
John L. Walecka
* Director August 11,
- ------------------------------ 1999
Edward J. Zander
<TABLE>
<S> <C> <C> <C>
*By: /s/ SCOTT C. CHANDLER
-------------------------
Scott C. Chandler
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
Exhibit 99-3
-----------------------------------------------
ACI PLUS
SERVICE AGREEMENT
-----------------------------------------------
-----------------
X
-----------------
APRIL 6, 1999
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1
<PAGE>
THIS DOCUMENT IS CONFIDENTIAL AND PROPRIETARY AND IS INTENDED SOLELY FOR USE BY
CUSTOMERS OF ACI. CUSTOMERS SHOULD NOT DISCUSS, SHOW OR REFER TO THIS
DOCUMENT WITH OR TO ANY PERSON WHO IS NOT AN EMPLOYEE OR OFFICIAL OF CUSTOMER
WITHOUT PRIOR WRITTEN APPROVAL FROM ACI.
PROVISIONING AGREEMENT, dated as of April 6, 1999, ("Effective Date") by
and between ACI Corp., a Delaware corporation ("ACI") and Qwest
Communications Corporation, a Delaware corporation (the "COMPANY").
ACI and COMPANY have reached agreement upon the terms and conditions
upon which COMPANY will purchase ACI's advanced DSL telecommunications
services and "Equipment" (as defined in Section 4) (the "Products"), which
Products are more fully defined in Attachment 2, for use and/or resale in all
geographical markets where ACI offers services in the United States (a
single geographical market shall be referred to herein as "Single Market" and
all Single Markets shall be collectively referred to herein as "the Markets")
(the Single Markets and the schedule of availability are set forth in
Attachment 5, attached hereto). COMPANY may, in its sole discretion, sell
the Products purchased from ACI to customers of the COMPANY (the "Customers")
in all Markets at such prices and upon such terms and conditions as COMPANY
may determine from time to time in accordance with the non-price terms set
forth in this Agreement.
This Agreement between ACI and COMPANY shall consist of the specific
terms set forth herein as well as the terms and conditions contained in
following Attachments:
Attachment 1: General Terms and Conditions
Attachment 2: ACI Plus Products and Pricing
Attachment 3: Schedule of Cancellation Fees and Costs
Attachment 4: Service Level Agreement
The specific terms and conditions of each of these Attachments are
incorporated into this Agreement in their entirety by this reference, and
constitute an integral part of this Agreement.
Words or terms not defined herein having well-known technical or trade
meanings shall be so construed.
The Company's billing and contact information is as follows:
COMPANY BILLING INFORMATION:
Company Name: Qwest Communications Corporation
Company Mailing Address: 700 Qwest Tower, 555 Seventeenth Street
City: Denver State: Colorado Zip: 80202
Telephone: (303) *** Fax: (303) ***
COMPANY PRIMARY CONTACT:
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 2
<PAGE>
Name: ***
Title: Primary Contact Title
Street Address: 700 Qwest Tower, 555 Seventeenth Street
City/State/Zip: Denver, Colorado 80202
E-mail Address: E-mail Address: ***
COMPANY hereby acknowledges that it has reviewed the terms and conditions
in this Agreement and each of the Attachments referred to herein, and ACI and
COMPANY have caused their duly authorized representatives to execute this
Agreement on and as of the date first set forth above.
QWEST COMMUNICATIONS CORPORATION ACI CORP.
By: By:
-------------------------------- ---------------------------------
Title: Title:
----------------------------- ------------------------------
AUTHORIZED ACI OFFICER
By:
---------------------------------
Title:
------------------------------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 3
<PAGE>
ATTACHMENT 1: GENERAL TERMS AND CONDITIONS
1. GENERAL
1.1. RELATIONSHIP. Neither this Agreement nor the provision of the
Products referred to herein to COMPANY creates a joint venture, partnership
or agency relationship between ACI and COMPANY; COMPANY is a service
provider with respect to its Customers, and ACI is only a supplier to COMPANY
with no relationship, financial or otherwise, to those Customers as a result
of this Agreement.
1.2. EGRESS CONNECTION. The types of Egress Connection available from
COMPANY's Points of Presence ("POPs") to ACI's POPs (collectively, an "Egress
Connection") are set forth in Attachment 2. Concurrently with the execution
of this Agreement, COMPANY shall deliver to ACI a fully completed and signed
Egress Connection Order Form to establish the Egress Connection that COMPANY
has selected. Depending upon the type of Egress Connection selected by
COMPANY and the Market where such Egress Connection is to be installed, ACI
shall use best efforts to install the Egress Connection within 30 calendar
days after delivery of the Egress Connection Order Form to ACI. COMPANY shall
be responsible for all installation and monthly recurring charges, as set
forth in Attachment 2, for the term of the Egress Connection specified in the
Egress Connection Order Form as of the "Acceptance Date" (as hereinafter
defined) of such Egress Connection. As used herein, "Acceptance Date" is the
date in which COMPANY accepts delivery of the installed Egress Connection.
If COMPANY fails to provide ACI notice that the Egress Connection fails to
support high speed digital throughput at the specified bandwidth in
accordance with the terms of this Agreement ("Connection Deficiency"), within
thirty (30) business days after notification by ACI of the installation of
such Egress Connection, COMPANY shall be deemed to have accepted the Egress
Connection as of the date of delivery of such installed connection. Each
term for an Egress Connection ordered pursuant to this Agreement shall be
for a minimum duration of at least a one-year period, commencing upon the
date that charges for such Egress Connection commences hereunder. COMPANY
will be responsible for the Early Termination Fees set forth in Attachment 3
if an Egress Connection is terminated by COMPANY without cause prior to the
completion of the term for which that Egress Connection was ordered. COMPANY
shall give notice to ACI at least 30 days prior to the date that an Egress
Connection is disconnected by COMPANY, and an Egress Connection may not be
disconnected until all customers served by that Egress Connection have been
disconnected. Notwithstanding anything to the contrary in this Section 1.2,
ACI shall bill COMPANY upon installation of the Egress Connection; provided
that in the event COMPANY does not accept such Egress Connection due to a
Connection Deficiency, COMPANY shall be entitled to receive a credit for
monthly recurring charges and installation charges incurred by COMPANY up to
and including the date of installation and until such time the Egress
Connection is accepted by COMPANY.
1.3. NETWORKNOW ACCESS. A) After processing COMPANY's Egress Connection
Order Form, ACI will issue to COMPANY the number of usernames (the
"Username") and passwords (the "Password"), as reasonably determined by
COMPANY, with different security access levels to enable COMPANY to access
the NetworkNow website maintained by an affiliate of ACI, which will allow
COMPANY to perform certain functions
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 4
<PAGE>
with ACI over the Internet. COMPANY and ACI understand and agree that the
information contained in and made available through NetworkNow (as well as
the Username and Password therefor) is "Confidential Information" (as defined
in Section 6.5.3) and should only be used for the purposes for which it is
intended and should not be disclosed to unauthorized persons. COMPANY and ACI
shall ensure that each of its employees is aware of the confidential and
proprietary nature of the Username and the Password and the proper use of the
information obtained from the NetworkNow website. Any unauthorized use or
disclosure of the Username or Password or any information derived from
NetworkNow is subject to Section 6.4.3 herein. Each party shall immediately
notify the other party of any unauthorized use or disclosure of such
Username, Password or information. COMPANY shall promptly contact ACI to
obtain a different Username and Password, or change the Password associated
with the compromised Username when (a) COMPANY becomes aware that the
security of the Username or the Password has been compromised in any manner,
and/or (b) the employment of one or more of the representatives of COMPANY
who has used or had access to COMPANY's Username or the Password is
terminated by COMPANY. ACI shall immediately notify COMPANY in the event
that the Username or the Password is disclosed to a third party.
B) ACI and COMPANY shall cooperate to develop additional procedures
with respect to NetworkNow to coordinate their respective activities,
maintain and share updated information and facilitate interaction between
their respective systems (including, without limitation, multiple security
access levels to deal with network engineering and billing or account
information).
1.4. NON-EXCLUSIVE DISTRIBUTOR. COMPANY shall be a non-exclusive
distributor of Products in any Market in which COMPANY is authorized to
provide Products to Customers under this Agreement. ACI reserves the
right to appoint other distributors of Products in any Market, including,
without limitation, one or more affiliates of ACI. Similarly, COMPANY shall
have the right to purchase services or Products from any other provider in
any Market.
(A) PROVISION OF PRODUCTS
2.1. AVAILABLE PRODUCTS. The Products that are available for purchase by
COMPANY under this Agreement are described in Part 1(A) of Attachment 2, as
well as the prices for those services and features that will apply during the
"Term" (as defined in Section 7) of this Agreement. Each of the Products
described in Attachment 2 will receive the benefits of the Service Level
Agreement set forth in Attachment 4 to this Agreement.
2.2. ADDITIONAL PRODUCTS. From time to time ACI shall offer COMPANY new
Products or services developed by ACI or obtained by ACI from others for use
with the Products. Any new Products or services which COMPANY elects to
order from ACI shall be considered to form part of the Products and shall be
provided upon the terms and conditions of this Agreement, together with such
additional terms and conditions which are generally applicable to the
provision of those new Products and services. This Agreement shall be
amended in a writing executed by both parties to include Additional Products.
(Except as the context may otherwise require, Available Products and
Additional Products will be collectively referred to herein as "Products").
2.3. PRICE PROTECTION. A) Products shall be ordered by COMPANY using the
ACI Products Order Form, and COMPANY shall be responsible for the
installation and monthly recurring charges applicable for each Product, as
set forth in Attachment 2 for the duration of the term specified for that
Product in the ACI Product Order Form. The minimum term for any Product
ordered shall be one (1) month from the date that the Product is installed.
Subject to paragraph 2.3(B) below, ACI represents and warrants that the
prices and charges, as set forth in Attachments 2 and 3, with the exception
of third party pass through charges, for the Products and Egress Connections
available in the Market shall not increase (without the consent of COMPANY
which consent may be withheld by COMPANY in its sole discretion throughout
the Term of this Agreement, and reserves the right to decrease such prices
for one or more of the Products or Egress Connections for all or any portion
of the Initial Term or thereafter.
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DSLAgreement_0404_1 5
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B) ACI warrants and represents that as of the date of execution of
this Agreement, the "Major Terms" (as defined in Section C below)
*** COMPANY in this Agreement are
*** ***
(collectively, a *** ) for ***
and ***; provided however, that if any *** its
*** via a written *** to its ***, such that the ***
is substantially greater than
the *** of *** herein, ACI may *** such ***
, for as long as ***
*** than that of COMPANY, *** If during the term of this
Agreement ACI shall *** Major Terms to
any other *** who obtains from ACI *** the *** products in *** the
*** as the COMPANY has agreed to in ***
, ACI shall *** COMPANY, and at
*** , shall *** to ***
such ***
Major Terms and ACI shall provide *** COMPANY
*** to the *** such *** Major Terms were *** by ACI to such
*** .
C) Commencing on the Line Commitment Commencement Date, COMPANY shall
have the right from time to time (but no more
than *** period) during the Term of this
Agreement or any renewal thereof and for a period of *** following
the expiration of the Term or any renewal thereof, to
*** *** chosen by COMPANY,- and reasonably
acceptable to ACI, to *** an *** of the ***
(taken as a whole), and *** (collectively, "Major Terms") of ACI's
*** with *** for the sole purpose of ***
*** Section 2.3(B) herein ( *** ). The following
procedures shall be followed by COMPANY, the *** and
ACI with respect to the *** set forth in this Section 2.3(C):
a) When *** ACI information and documentation ("ACI Documents"), the
*** shall have *** all documentation such ***
considers relevant to *** and may only take notes or make redacted
copies thereof;
b) The *** shall be conducted during normal business hours after a
thirty-day advance written notice from Company to ACI ***
at ACI's principal executive offices on a mutually convenient date and at
a mutually convenient time within the calender week following
such 30th day;
c) All documents *** by the *** (together with all notes
or redacted copies of ACI Documents obtained by the *** ) shall be
subject to ACI's standard and customary confidentiality agreement in favor
of ACI;
d) The *** shall not disclose *** or any information
contained therein without the prior, written consent of ACI'; and
e) The * will produce a *** (as defined herein) which shall
be delivered to COMPANY and ACI simultaneously. A *** shall be in
writing and shall (1) state the fact of whether any ***
*** COMPANY's Major Terms and *** Major Terms *** (a
*** ) and, if any *** exists, the aggregate *** ACI ***
COMPANY as a result of such *** and (2) list the *** if any, to
COMPANY's Major Terms that are necessary to *** into *** with the
provisions of Section 2.3(B) of this Agreement. If ACI shall dispute or
challenge any *** contained in the *** either party may refer any
such challenge by ACI to the *** of the *** to an arbitration
proceeding pursuant to Section 6.4.2 of this Agreement without first
complying with the Escalation Proceedings set forth in 6.4.1 hereof, and
COMPANY and ACI shall each participate in any such arbitration.
f) COMPANY shall pay the *** of *** ; provided however that,
if the *** of the *** a *** in the amounts *** to
COMPANY and such *** exceeds *** and *** or more of the
aggregate amount *** ACI to COMPANY during the period *** ,
ACI shall, within thirty (30) days of the date when the *** becomes
final (including the conclusion of any arbitration proceedings undertaken
with respect to such *** COMPANY for: (i) the *** and ***
of the *** and (ii)
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DSLAgreement_0404_1 6
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the *** COMPANY with respect to any such
*** ; and *** COMPANY's *** to reflect the
*** Major Terms.
D) The procedures set forth in Section 2.3(C) hereof shall constitute
the COMPANY's sole and exclusive remedy for any violation by ACI of the terms
of Section 2.3(B) of this Agreement. In the event that ACI fails to pay the
amounts owed within a thirty (30) day period and/or *** to ***
the *** Major Terms as a consequence of a final determination of a
violation of Section 2.3(B) hereof, COMPANY shall be entitled to seek any
remedies available under law and in equity to recover such amounts due from
ACI or to obtain the *** following the 30th day after the date
when *** becomes final as provided herein.
E) ACI and COMPANY senior level representatives shall meet at least one
(1) time each quarter to review by way of example and not limitation, the terms
and conditions of this Agreement and other agreements of the parties.
F) ACI shall endeavor to allow COMPANY to *** when using any
Product without *** if, and to the extent, that *** transmissions
do not require ACI to make any material changes or modifications to its
*** , equipment or infrastructure facilities attributable to, among other
things, hardware configuration, *** or *** utilization. If ACI
shall determine that any material changes or modifications are required or
appropriate to accommodate COMPANY's *** transmissions, ACI and COMPANY
shall negotiate mutually an adjustment in the prices charged under this
Agreement to compensate ACI for the additional costs incurred by ACI to
accommodate COMPANY's *** transmissions. Nothing herein shall require
(i) ACI to undertake any material changes or modifications to its network,
equipment or facilities which ACI considers, in its sole discretion, to be
commercially, administratively or technically inappropriate or imprudent
under the facts and circumstances existing at the time of any such
determination, or (ii) COMPANY to utilize *** transmissions at such
*** .
2.4. OTHER CHARGES. All prices set forth in the Attachments are
exclusive of applicable federal, state and local taxes, surcharges,
assessments and other governmental charges and fees (collectively, "Taxes"),
which shall be invoiced to and due from COMPANY unless COMPANY provides to
ACI a valid and effective certificate from the appropriate taxing authorities
exempting COMPANY from the Taxes that would otherwise be invoiced hereunder.
2.5. SPECIAL PROGRAMS. From time to time, ACI may offer promotional or
special pricing and discount programs relating to the Products or Egress
Connections, each of which shall form a part of, and be subject to, the
provisions of this Agreement and shall be administered upon such additional
terms and conditions as ACI may announce or provide with respect to each such
program. Company shall be entitled to participate in any one or more of those
programs upon the terms and conditions applicable to each such program
offered by ACI and this Agreement shall be amended to include such additional
terms.
2.6 VOLUME COMMITMENT. COMPANY shall order, and ACI shall provide, a
minimum of one hundred thousand (100,000) DSL lines (the "Purchase
Commitment"). The Purchase Commitment, which is more fully described in
Attachment II, attached hereto, shall terminate on the earlier of the seventh
(7th) Anniversary of the Line Commitment Commencement Date (as defined herein)
or the date on which COMPANY orders the 100,000th DSL line.
3. ORDER, INSTALLATION AND BILLING ARRANGEMENTS
3.1 SERVICE DETERMINATION. Prior to submission of an "Order" (as
defined in Section 3.2 below) COMPANY shall provide to ACI lists of, or
individual, addresses of potential Customers in the Market to determine the
availability of Products and estimated transmission speeds ("Service
Determination") for those Customers. Using the qualification database of ACI
or its affiliates, ACI will pre-qualify those potential customers and deliver
the results thereof to COMPANY within twenty-four (24) hours after delivery
of the potential Customer's address to ACI. The speeds at which ACI can
reliably deliver Products are referred to herein as the "Minimum Expected
Service Availability". COMPANY understands and acknowledges that the actual
transmission speeds delivered by ACI may vary from the transmission speeds
indicated in such Service Determination or otherwise expected by
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DSLAgreement_0404_1 7
<PAGE>
COMPANY or its Customers based upon, among other things, factors such as the
length and gauge of the line serving the Customer, and other operational
characteristics of the facilities and equipment used by ACI.
3.2 ORDER AND INSTALLATION
3.2.1 ORDERING PROCESS. A) COMPANY shall place orders for
Products with ACI by submission of an approved ACI Products Order Form (an
"Order"). Orders may be submitted by COMPANY prior to completion of the
Egress Connection necessary to accommodate those Orders, but installation
appointments will not be scheduled to occur for those Orders prior to
completion of the Egress Connection needed to accommodate those Orders. ACI
will provide COMPANY with a confirmation of the Order promptly after its
submission, which confirmation shall include a target installation date.
COMPANY shall have the right to submit an Order for any Product for a
particular Customer but ACI shall only be obligated to provide the
transmission speeds included in the Minimum Expected Service Availability
with respect to such Customer.
B) For purposes of the Purchase Commitment, Orders shall *** of
the Purchase Commitment *** such Orders have been *** ACI.
*** Market moves, Customer renewals, and Customer *** Market
transfers *** shall *** be considered Orders *** shall such
Orders *** of the Purchase Commitment.
3.2.2 EVALUATION OF PRODUCT AVAILABILITY. During the period
between the submission of the Order and no later than five (5) business days
prior to the scheduled installation date, ACI or an authorized representative
of ACI will preliminarily evaluate the parameters of the requested loop
obtained from the ILEC to determine the speeds that can be provided over that
loop and will inform COMPANY of the results of its evaluation if there is a
problem with the Product designated in the Order. Further, a portion of
this evaluation may be performed by ACI at the premises of the potential
Customer. If ACI determines during the evaluation that reliable service is
not reasonably achievable over the requested loop, ACI may propose and
evaluate alternative access strategies to achieve reliable connectivity for
such loop, each of which shall be subject to approval by COMPANY prior to
implementation. If any additional or unusual monthly or nonrecurring
charges are reasonably anticipated with implementation of the alternative
access strategies, ACI will inform COMPANY of an estimate of those costs
prior to installation. If ACI is unable to provide transmission speeds at
least equivalent to the speeds included in the *** and *** does
not *** for such *** at the *** and *** strategies
that *** provided by ACI, COMPANY shall *** and *** shall
be due to ACI in connection with such *** . If COMPANY is satisfied
with the speeds available and access strategy, the Order shall be accepted by
COMPANY and ACI at the available speeds and applicable charges for such
speed and alternative access strategy.
3.2.3. INSTALLATION. ACI shall use best efforts to install
Products within *** after the submission of the Order. COMPANY
acknowledges that problems beyond the control of ACI (including, without
limitation, facility problems, incorrect or incomplete Customer information
supplied by COMPANY or Customer unavailability) may delay installation dates.
For Products, ACI shall schedule all installations by appointments with
Customers based upon the information supplied by COMPANY to ACI, and Product
installation appointments may be scheduled between the hours of 8:00 a.m. and
5:00 p.m. local time Monday-Friday. Once an installation appointment is
scheduled by ACI, a technical representative (the "Technical Representative")
should arrive within a two-hour window. Egress Connections shall be scheduled
by appointment with the COMPANY at a mutually convenient date and time, and
installation shall be arranged by ACI based upon the time parameters set
forth in ACI's agreements with the applicable Local Exchange Carrier in the
Market where the Egress Connection will occur.
3.2.4. PRODUCT ACCEPTANCE. Promptly after installation of a
Product at the Customer's premises, the installation will be confirmed to
COMPANY in writing.
(a) If the installed transmission speeds are not at least
equivalent to those included in the Minimum Expected Service
Availability with respect to the Customer or such other Products
as subsequently agreed to by ACI and COMPANY following the Order,
the Customer shall have a fifteen (15) business day period (the
"Acceptance Period") to use the installed Product and cancel the
installed Product if Customer is not satisfied. If the Customer
decides to cancel,
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DSLAgreement_0404_1 8
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COMPANY will incur no charge for installation, the Equipment
associated with such installation shall be immediately
returned to ACI, and no payments shall be due to ACI in
connection with such cancelled installation as a result of an
inability by ACI to provide the Minimum Expected Service
Availability or the Products subsequently agreed to by ACI and
COMPANY; provided that such cancelled Product shall ***
of the *** . If, however, the Customer is satisfied with
the speeds available to the requested loop; Customer has
ordered the exact speed of the Product delivered by ACI to
Customer; or Customer fails to cancel the installed Product
prior to the expiration of such Acceptance Period, then the
installation shall not be cancelled or cancelable and the
COMPANY shall remit payments to ACI in accordance with the
charges for the Product actually installed and the access
strategies employed with respect to that installation.
(b) If the installed transmission speeds are not at least
equivalent to the Product set forth in the Order but are at
least equivalent to those included in the Minimum Expected
Service Availability, the Customer may decline service at the
completion of the installation process or elect to use the
installed Product for the Acceptance Period. If Customer
decides to cancel within the Acceptance Period, COMPANY shall
pay to ACI the Non-Acceptance Fee set forth in Attachment 3 to
this Agreement but no monthly recurring charges shall be
charged. If, however, the Customer is satisfied with the
installed Product or shall fail to cancel the installed
Product prior to the expiration of the Acceptance Period, then
the installation shall not be canceled or cancelable and the
COMPANY shall remit payments to ACI in accordance with the
charges for the Product actually installed.
3.2.5. DEACTIVATION. In certain circumstances, it may be
necessary for a Technical Representative to assist the Customer in completing
a deactivation of the Product at the end of the service period. The COMPANY
shall notify ACI of each deactivation as soon as practicable to ascertain if
a visit by the Technical Representative to the Customer's premises will be
necessary, so that an appointment can be arranged on a timely basis. With
respect to any Customer using a Product during an Acceptance Period, COMPANY
shall notify ACI no later than three business days immediately following the
end of the Acceptance Period if that Customer has timely cancelled the installed
Product.
3.3 BILLING AND PROMPT PAYMENT.
3.3.1 BILLING PROCEDURE. At the end of each ACI billing cycle
(currently at the end of each month, ACI will provide to COMPANY a
consolidated statement (electronically or via CD-ROM) of account for all
monthly charges relating to the Products and Egress Connections for the
applicable billing period. All charges and fees for Products and Egress
Connections provided to COMPANY shall be billed by ACI directly to COMPANY,
and COMPANY shall be solely responsible for making prompt and complete
payment to satisfy all such billings in accordance with this Agreement.
Standard monthly recurring charges (if any) for Products shall be billed to
COMPANY one month in advance, and nonrecurring and installation charges for
Products and Egress Connections shall be billed in arrears. Any and all
statements of account sent by ACI to COMPANY reflecting monthly charges for
Products or Egress Connections or other costs and assessments shall be
payable to ACI within thirty (30) days of the receipt of such statement of
account. If undisputed amounts are not paid by COMPANY on or prior to the due
date, late fees shall accrue and become immediately due and payable on the
outstanding unpaid balance of undisputed amounts at the rate of fifty-five
hundredths percent (0.55%) per month or the highest rate permitted by
applicable law, whichever is lower.
3.3.2. BILLING RESOLUTION. If COMPANY in good faith disputes
any invoiced amount, it shall submit to ACI, within forty-five (45) days
following the date of the invoice, full payment of the undisputed portion of
the invoice and written documentation identifying and substantiating the
disputed amount. If COMPANY and ACI cannot, in good faith, promptly resolve
any questions or disagreements regarding a disputed billing, then the
dispute will be settled by escalation and arbitration pursuant to Section 6.4
of this Attachment 1. If COMPANY shall fail to
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DSLAgreement_0404_1 9
<PAGE>
pay any undisputed portion of any ACI billing invoice or any disputed
portions as a result of any arbitration proceeding within forty-five (45)
days after the date of such statement or the notification of any such
arbitration award, whichever is later, ACI shall have the right to issue to
COMPANY a written notice of suspension of services to COMPANY, whereupon ACI
shall have the right to disconnect the provision of any and all Products and
Egress Connections or connectivity to COMPANY not less than thirty (30) days
from the receipt by COMPANY of such written notice.
3.4. EARLY TERMINATION AND OTHER FEES. All applicable early termination
charges and other fees are set forth and more fully defined in Attachment 3.
1. The termination of any Product or Egress Connection prior to the
expiration of its applicable term will result in an Early Termination Fee.
2. A "No-Show Fee" will apply if COMPANY or any Customer fails to honor
any scheduled installation appointment unless ACI has been notified of a
change in the scheduled appointment on or prior to noon, local time, the
business day preceding the scheduled time and date of the appointment
("Cancellation Deadline").
3. An "Intra-Single Market Customer Move Fee" will apply for
re-installation of a connection for movement of a Customer connection
within the Market. No early termination fee will apply.
4. A "Service Change Fee" will apply when the COMPANY or COMPANY's
Customers elect to downgrade any Product
COMPANY shall be liable for all costs incurred by ACI arising from
COMPANY's or any Customer's early termination of any connectivity ordered
from ACI.
3.5. COMPANY RESPONSIBILITY. COMPANY shall not be relieved of any
obligation hereunder by virtue of the fact that its Customers ultimately use
the Products. COMPANY shall be financially responsible for all matters
relating to its Customers (including, without limitation, solicitation,
service requests, creditworthiness, customer service, billing and collection,
and marketing communication), and for all charges generated by its Customers.
ACI acknowledges and agrees that ACI shall not have any contractual or
financial interest in COMPANY's Customer relationships under this Agreement
and, subject to the terms hereof, COMPANY shall be free to determine the
terms and conditions of its Customer relationships; provided, however, that
COMPANY shall not obligate ACI to provide services to COMPANY for provision
to Customers except as specifically set forth in this Agreement, and shall
not misrepresent or misstate any of the qualities or capabilities of any of
the Products. COMPANY shall also be solely liable for amounts it cannot
collect from its Customers and billing adjustments it grants to its Customers
(including adjustments for erroneous charges or any other form of credit
provided by COMPANY to its Customers).
3.6. PROGRAM MANAGEMENT. ACI shall designate an ACI employee as the
full-time program manager for the business relationship between ACI and
COMPANY hereunder and who shall be dedicated to and responsible for
coordinating all matters between ACI and COMPANY in connection with the
transactions contemplated in this Agreement (the "Program Manager"). All
complaints that COMPANY may have with respect to the Products or the services
provided by ACI hereunder shall be reported to the Program Manager in the
first instance and the Program Manager will coordinate the review of, and
the implementation of necessary steps to address any such complaints within
ACI promptly after they are reported by COMPANY.
3.7 MAJOR SERVICE PROBLEMS.
(A) Nothing set forth in this Paragraph A shall affect the rights of COMPANY
under the Service Level Agreement set forth in Attachment 4 hereto with
respect to the subject matter of this Paragraph A. If at least ***
Customers of COMPANY shall concurrently experience in a *** Market any
service affecting problems (including, without limitation, service
interruptions or degradations) which are attributable to ACI's network or
operations that persist for more than three (3) hours for each such Customer and
that occur within multiple Central Offices in such *** Market ("Major
Service Problem"); the President and Chief Network Officer of ACI shall meet
on or by the following business day with COMPANY to discuss the persisting
Major Service Problem
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DSLAgreement_0404_1 10
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and explore the development and implementation of appropriate remedial
actions to correct the Major Service Problem. At any such meeting, COMPANY
shall present the evidence that it has to describe and substantiate the Major
Service Problem and the Program Manager shall present the solutions that have
been attempted by ACI to address those problems. Regardless of such meeting,
if the Major Service Problem persists for seventy-two (72) hours or more
after such three (3) hour period (or within the time period specified by a
third-party vendor whose service or equipment is responsible, in whole or in
part, for the Major Service Problem but in no event greater than forty-eight
(48) hours) ("Critical Service Problem"), the affected Customer(s), by notice
to ACI, shall have the right in its sole discretion to terminate the affected
lines without penalty (including early termination fees) and receive a credit
for any Installation Charges which COMPANY paid to ACI for the original
installation of such Customer's affected line and Monthly Recurring Charge(s)
for the affected month(s) (collectively, the "Major Service Problem Fee").
(B) If COMPANY has 5,000 working lines and thereafter COMPANY has
experienced over three (3) Critical Service Problems, Company shall have the
right, in its sole discretion, to receive the Major Service Problem Fee and
immediately terminate this Agreement without liability for early termination
or shortfall charges. In addition, termination of affected line(s),
Product(s) or the Agreement shall not limit ACI's obligations pursuant to
Section 7.3.
(C) Notwithstanding anything to the contrary set forth in this Section 3.7,
any Major Service Problem (and any resulting Critical Service Problem) caused
by COMPANY's collocated equipment installed in, or COMPANY's personnel or
authorized representatives operating in, a Central Office pursuant to or as
permitted by a Collocation Agreement, dated the date hereof, between ACI and
COMPANY (the "Collocation Agreement") shall not constitute or be deemed to
constitute a Major Service Problem or a Critical Service Problem for purposes
of this Section 3.7.
4. TECHNICAL SERVICE ARRANGEMENTS
Equipment consists of a high-speed "modem", associated wiring, cabling
and any other equipment required to provide a Customer with use of the
Products (collectively, the "Equipment"). ACI shall supply the Equipment
required to provide a Customer's premises with normal use of the Products.
Installation shall consist of a service call by a Technical Representative to
configure, enable, and test the Equipment installed at the Customer's
premises for access to the "ACI Network" (as hereinafter defined).
Verification by the Technical Representative that the Customer's premises can
properly access the ACI Network at the parameters required for use of the
Products included in the Minimum Expected Service Availability, or other
mutually agreed upon Products and Customers acceptance of the Equipment,
shall constitute final installation. COMPANY will be required to pay the
installation charges as set forth in Attachment 2 to the Agreement associated
with the Products successfully installed by ACI and accepted by Customer
(unless any such charges are waived, in whole or in part, by ACI during any
promotional or special program). As used herein, "ACI Network" shall consist
of the DSL Line from the customer premise to the local central office
("Connection Point") connected to the DSLAM and onto the local ATM backbone
through to the local market hub location (ACI Metro Service Center) and
terminated on the local ATM switch.
5. PROPRIETARY ARRANGEMENTS
5.1. USE OF NAME AND MARKS. This Agreement confers no right upon either
party to use the name, service marks, trademarks, copyrights or patents of
ACI or any of its affiliates, or COMPANY or any of its affiliates, except as
expressly provided herein. Neither ACI nor COMPANY shall take any action
which would compromise the registered copyrights or service marks of COMPANY
or any of its affiliates or ACI or any of its affiliates, respectively. In
no event may either party or its affiliates use the other party's or the
other party's affiliates' names, trademarks, service marks, trade names,
logos, designations, copyrights or other proprietary rights (collectively,
the "Marks") without the prior written consent of the other party or the
other party's affiliates, as the case may be, which may be granted or
withheld in the other party's or its affiliate's sole discretion. Each party
acknowledges that the other party and its affiliates own and shall retain
ownership of its respective Marks and agrees that it will not at any time
during or after the term of this Agreement assert or claim any interest in,
or do anything that may adversely affect the validity of such other party's
or its affiliates' Marks (including, without limitation, any act or failure
to act which may infringe or lead to the infringement of any of the other
party's or its affiliates' proprietary rights).
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Each party will provide the other party with written notice of any
breach of this Section 5.1. Such other party shall immediately use its best
efforts to eliminate and cure such breach, and shall advise the complaining
party of each of its actions to effect such cure. If, in the complaining
party's opinion, the other party fails to effect a cure within ten (10) days
of the date of the complaining party's notice, then the complaining party
may, at its option and in its sole discretion, immediately terminate this
Agreement without any liability to the other party or any other person,
except for such party's obligations under Section 7.3 hereof.
5.2. USE OF PRODUCTS. A) COMPANY will be solely responsible for the
content of any transmissions over the ACI Network from COMPANY's Points of
Presence (POPs) to the ACI Network. COMPANY agrees to provide Products to
its Customers in a manner that conforms with the non-price terms of this
Agreement and that is in compliance with all laws, rules and regulations
applicable to the provision of such Products by COMPANY. In the event the
Product purchased will provide Customer with access to the public Internet,
COMPANY shall comply, and shall procure from each Customer which is provided
Products a written agreement to comply, at all times with the requirements of
the COMPANY's Acceptable Use Policy (as amended from time to time at
COMPANY's sole discretion).
B) To maintain or improve ACI service or the ACI Network, to prevent
fraud or for other business reasons, ACI can restrict, interrupt or modify
the services provided hereunder upon commercially reasonable notice to
COMPANY but, with respect to each interruption, restriction or modification,
ACI will promptly seek to resolve any situation or condition that has caused
an interruption in service to the extent that the fault involves the ACI
Network or its equipment. ACI shall not be liable for any claim by or
against COMPANY arising out of or related to the actions of any person (other
than a claim resulting from any willful misconduct or gross negligence by
ACI) resulting in: (i) alteration, theft or destruction of COMPANY's or any
Customer's computer programs, information, data files, procedures or other
property, (ii) any losses or damages COMPANY or its Customers may suffer in
connection with COMPANY's or its Customers' use or inability to use the
Products, or (iii) any data, materials or other information transmitted or
received by or to COMPANY or its Customers or its intended recipient that are
lost or improperly intercepted via the Internet.
5.3. CHANGES TO PRODUCTS OR AGREEMENT. A) Although any Product provided
by ACI is subject to its business policies, practices, and procedures (which
ACI reserves the right to change at any time and from time to time in its
sole discretion upon advance notice to COMPANY), ACI will not materially
adversely change the Products provided to COMPANY hereunder except upon sixty
(60) days' prior written notice to COMPANY (a "Notice of Change"). Upon
delivery of notice of a material adverse change to any Product, COMPANY shall
promptly notify ACI of the Customers that will be affected by such change
(the "Affected Customers") and the then existing remaining duration of each
such Affected Customer's contract with COMPANY (excluding elective
extensions) relating to the Product(s) subject to such changes (the "Affected
Duration"). ACI shall have the option to either continue to provide the
existing Product to the Affected Customers during the Affected Duration or to
upgrade or enhance the service to an Affected Customer for the Affected
Duration of such Affected Customer's existing contract with COMPANY at ACI's
sole cost. Upon receipt of any Notice of Change, COMPANY shall not
thereafter market or submit Orders for any Products that are materially
adversely changed by ACI except as specified in the Notice of Change. Except
as set forth herein, if COMPANY otherwise elects to continue to use Products
or services after receiving a Notice of Change, those changes will apply to
COMPANY commencing on the 61st day after the date it receives the Notice of
Change. ACI shall exercise commercially reasonable efforts to avoid service
degradation, interruption or material cost to any Customers as a result of
such material adverse changes in Products for a period of sixty (60) days
after notice to COMPANY of such Product changes.
B) Notwithstanding any other provision set forth in this Agreement, ACI
shall not be liable for any failure or delay in its performance under this
Agreement (including any changes to or failure to continue to provide the
Products or services contemplated herein) due to any cause beyond ACI's
reasonable control, including, without limitation, any act of war or civil
insurrection, acts of God, earthquake, flood, embargo, riot, Year 2000
outages, sabotage, labor dispute, governmental act or change in regulatory
requirements affecting telecommunications companies similarly situated with
ACI generally, or failure of the Internet; provided, however, that COMPANY
*** Portions of this page have been omitted pursuant to a request for
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ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 12
<PAGE>
shall not be responsible for payment of any charges pursuant to this
Agreement during such failure or delay in performance with respect to such
affected Customers and ACI shall (a) give the COMPANY prompt notice of such
cause, and (b) use its commercially reasonable efforts to correct promptly
such failure or delay in performance to the extent consistent with then
applicable law and regulatory requirements. COMPANY's Customers shall be
entitled to terminate the affected lines or Products *** for ***
or any *** if such failure or delay in performance continues for ***
or more despite commercially reasonable efforts by both parties to mitigate
such failure or delay. Such terminated lines or Products shall *** the
COMPANY's ***. Termination of the affected lines or Products pursuant to
this Section shall be governed by Section 7.3.
C) Subject to ACI's commitment to maintain the standard prices for
Products and Egress Connections set forth in Attachment 2 to the Agreement
during the Initial Term of this Agreement, ACI reserves the right to
introduce new Products or marketing or promotional programs or change the
terms of any existing promotional or discount program, or in response to
business, operational or competitive developments as long as any such
Products, programs and supplemental terms are available or adopted and will
be applicable on a Market-wide basis.
5.4. CUSTOMER SUPPORT; RESTORATION OF SERVICE. COMPANY's Customers
using Available Products will be entitled to avail themselves of the ACI
customer services described in the Service Level Agreement. In the event
that a COMPANY's Customer experiences a noticeable reduction in transmission
speed or a noticeable interruption of DSL service attributable to the
Products, ACI shall, at no charge to the COMPANY or the Customer, restore
the Customer's service with respect to the Products to its condition prior to
such reduction or interruption in accordance with the "Mean Time to Restore
Service" set forth in the Service Level Agreement or issue to COMPANY the
credit set forth therein in accordance with the terms of the Service Level
Agreement; provided, however, that ACI shall not be responsible for any such
reduction or interruption arising from or caused by any equipment or services
which are beyond ACI's control (including without limitation a Customer's
computer or software).
6. LEGAL CONSIDERATIONS.
6.1. LIMITATION OF LIABILITY. Notwithstanding anything to the contrary
contained in this Agreement and except as set forth in Sections 5.2, 6.3 and
Attachment 4, IN NO EVENT SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE FOR
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES (INCLUDING,
WITHOUT LIMITATION, LOSS OF PROFITS, CUSTOMERS OR GOODWILL ARISING FROM THE
RELATIONSHIP OR CONDUCT OF BUSINESS HEREUNDER).
6.2. WARRANTIES.
Subject to the limitations set forth below, in the event that the
Equipment installed by ACI at a Customer's premises is determined to be
defective or otherwise becomes non-operational during the term of this
Agreement, ACI will within thirty-six (36) hours deliver replacement
Equipment to the Customer upon receipt of notice of a malfunction of the
Equipment, and COMPANY agrees to cause the defective or non-operational
Equipment to be returned to ACI.
WARRANTIES AND REMEDIES SET FORTH IN THIS AGREEMENT AND THE SERVICE LEVEL
AGREEMENT ARE THE ONLY WARRANTIES AND REMEDIES WITH RESPECT TO THE
PRODUCTS, AND ARE IN LIEU OF ANY OTHER WARRANTY, WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
Any warranties provided by ACI under this Agreement shall not apply to any
situation where (a) any Product, Equipment or other service has been
installed or serviced by anyone other than ACI or its authorized Technical
Representatives, (b) the Equipment has experienced misuse or unusual damage,
and/or (c) any Product, Equipment or other service is not used in compliance
with the available operating instructions established by ACI or the original
manufacturer. Except as expressly provided in this Agreement, this Agreement
shall not provide third parties (including Customers) with any rights,
privileges, causes of action or claims against ACI or COMPANY.
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ACI Corp. Feb. 1999
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DSLAgreement_0404_1 13
<PAGE>
6.3. PATENT INFRINGEMENT. ACI will indemnify, defend and hold COMPANY
harmless from and against any and all costs, liabilities, losses and expenses
(including, without limitation, reasonable attorney's fees) resulting from
any claim, suit, action or proceeding (collectively, an "Action") brought
against COMPANY alleging that customary use of the Products by COMPANY or
COMPANY's Customers infringes or contributes to the infringement of any
issued United States patent or letters patent (but excluding any infringement
contributorily caused by COMPANY's business or COMPANY's equipment). COMPANY
shall promptly notify ACI of any Action, and ACI shall have the right to
control any such Action and shall have the right to conclude a settlement of
any such Action which shall be binding upon COMPANY. ACI shall have the
right, in order to avoid or settle any Action, to substitute at ACI's expense
non-infringing equipment, material, processes or Products, or to modify its
Products or the Equipment to become non-infringing, or to obtain necessary
licenses to use the infringing equipment, material, processes or Products, in
each case consistent with ACI's obligations under this Agreement.
6.4. DISPUTE RESOLUTION; ENFORCEMENT OF CONFIDENTIALITY OBLIGATIONS
6.4.1. ESCALATION. Except as otherwise specifically provided in
Section 2.3 of this Agreement, any controversy or claim arising out of,
relating to or in connection with this Agreement shall, in the first
instance, be resolved by a panel of two (2) executives from each party. In
the event such panel is unable to resolve the dispute within thirty (30)
days, the issue shall be escalated to an Executive Vice-President from each
party. In the event the Executive Vice-Presidents are unable to resolve the
dispute within thirty (30) days, the issue shall be escalated to the
respective Chief Executive Officers of the parties. If the Chief Executive
Officers are unable to resolve the dispute within thirty (30) days, either
party may then refer such dispute to arbitration in accordance with
Subsection 6.4.2 hereof.
6.4.2. ARBITRATION. Any controversy or claim arising out of,
relating to or in connection with this Agreement that has not been resolved
pursuant to Subsection 6.4.1 hereof shall be resolved through arbitration
pursuant to and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, as modified by the terms of
this Subsection 6.4.2 set forth below:
(a) Arbitration shall be conducted at a location in Denver, Colorado to be
agreed upon by the parties.
(b) Arbitration shall be conducted by three (3) arbitrators, with each party
to this Agreement selecting one (1) arbitrator each and the two selected
arbitrators then selecting the third arbitrator.
(c) Prior to the commencement of the arbitration, each party shall be
entitled to take limited discovery, including the rights to request a
reasonable number of documents, to serve no more than twenty (20)
interrogatories and to take no more than three (3) depositions. This
limited discovery shall be conducted in accordance with the Federal
Rules of Civil Procedure, which shall be interpreted and enforced by the
arbitrators.
(d) The arbitrators shall, as soon as practicable and upon fifteen (15)
days' written notice to each party, conduct an arbitration hearing and
proceeding on the merits of the dispute and thereafter shall issue a
written decision explaining the basis for the decision, including
findings of fact and conclusions of law. The decision of the arbitrators
shall be based upon a majority vote.
(e) Each party shall bear its own costs and expenses arising out of any
arbitration (including the costs of the arbitrator selected by it), and
shall bear equally the costs, expenses and fees of the third party
arbitrator.
(f) Any arbitration arising out of or relating to this Agreement or any
alleged breach or non-performance thereof may include by consolidation,
joinder or other manner any other person or persons which or whom a party
to the arbitration reasonably believes to be substantially involved in a
common question of fact or law.
(g) The agreement to arbitrate shall be specifically enforceable under
prevailing law. Except for misapplication of law, any award rendered by
the arbitrators shall be final, binding and enforceable by any
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ACI Corp. Feb. 1999
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DSLAgreement_0404_1 14
<PAGE>
party to the arbitration, and judgment may be rendered upon it in
accordance with applicable law in a court of competent jurisdiction.
(h) The parties acknowledge that this Agreement evidences a transaction
involving interstate commerce. The United States Arbitration Act shall
govern the interpretation, enforcement, and proceedings pursuant to the
arbitration clause in this Agreement.
6.4.3. CONFIDENTIALITY OBLIGATIONS. A) Neither party shall disclose
to any third party during the Term of this Agreement and during the three (3)
year period immediately following the termination or expiration of this
Agreement, any of the terms, conditions, or information of a confidential
nature exchanged between the parties, including information regarding the
Products, services and related programs as well as information about
Customers, unless disclosure is required by any state or federal governmental
agency, otherwise required to be disclosed by law or is necessary in any
proceeding establishing rights or obligations under this Agreement.
B) Any information, including trade secrets, reports, documents and/or data
or data collection of one party (the "Disclosing Party") that are furnished
or made available or otherwise disclosed to the other party or any of its
employees, contractors, agents, or subsidiaries (the "Receiving Party")
pursuant to the terms and conditions of this Agreement shall be deemed as
confidential information ("Confidential Information"). Confidential
Information shall be: (i) deemed the property of the Disclosing Party; (ii)
be held strictly in confidence by the Receiving Party with the same degree of
care that the Receiving Party treats its own proprietary business
information; and (iii) be used by the Receiving Party only for those purposes
required to perform its obligations under this Agreement. Information
previously known to the Receiving Party free of any confidentiality
obligation and the Receiving Party can demonstrate its prior actual
knowledge, or subsequently made public by a third party shall not be deemed
Confidential Information. In the event of any unpermitted disclosure by a
Receiving Party, the Disclosing Party shall be entitled to seek such relief
as may be available to it at law or in equity, including, without limiting
the generality of the foregoing, any proceedings to: (i) obtain damages for
any breach of this Agreement; (ii) seek any preliminary injunction or
restraining order for specific performance; or (iii) enjoin the breach of
such provision..
C) This Section supercedes any pre-existing agreement or understanding
between the parties with respect to confidentiality.
6.5. INDEMNIFICATION. Each party hereto (as "Indemnitor") shall
indemnify, defend and hold harmless the other party hereto (as "Indemnitee")
and its affiliates from and against any and all liabilities, costs, damages,
fines, assessments, penalties and expenses (including reasonable attorney's
fees and expenses) resulting from any breach of, or failure to comply with,
any provision of this Agreement by ACI, its employees or agents.
7. TERM OF AGREEMENT; TERMINATION PROVISIONS
7.1. RENEWAL. Unless otherwise set forth herein, this Agreement shall
commence on the Effective Date and shall continue until the tenth (10th)
anniversary of the "Line Commitment Commencement Date" (as defined in
Attachment 2) ("Term"); provided however, the Purchase Commitment obligations
of COMPANY shall terminate on the earlier of the seventh (7th) anniversary of
the Line Commitment Commencement Date (as defined herein) and the date on
which COMPANY orders the 100,000th DSL line. This Agreement shall only renew
upon mutual agreement of the parties
7.2. TERMINATION. In addition to COMPANY's right of termination set
forth in Section 3.7, either party may terminate this Agreement upon written
notice to the other party in the event that such party (i) is in material
breach of a material provision hereof and such breach is not cured within
sixty (60) days after written notice of such breach, or (ii) becomes bankrupt
or insolvent, or makes an assignment for the benefit of creditors, if such
proceedings are not dismissed within sixty (60) days after commencement.
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ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 15
<PAGE>
In addition, COMPANY may elect to terminate this Agreement upon ***
notice to ACI and *** for any *** or *** in the event that
(a) ACI terminates the Collocation Agreement without any right by ACI to
terminate the Collocation Agreement pursuant to the terms thereof, or (b)
COMPANY terminates the Collocation Agreement pursuant to any right COMPANY
has under the Collocation Agreement and ACI shall have repeatedly failed to
perform its material obligations under the Collocation Agreement and such
repeated failures shall have resulted in costs or other liabilities to
COMPANY not cured or satisfied by ACI in excess of ***
during the *** .
7.3. EFFECT OF TERMINATION. In the event of any termination pursuant
to Section 7.2 hereof as a result of ACI's breach of its obligations under
this Agreement, ACI agrees to cooperate with COMPANY, on a commercially
reasonable efforts basis, to transition existing Customer contracts of
COMPANY to another network operator; provided, however, that ACI shall be
obligated to assist such transition if, and only during the period that,
COMPANY is in full compliance with its payment obligations as of the date of
termination by COMPANY and COMPANY continues to perform its other obligations
to ACI under this Agreement. The termination of this Agreement under any
provision of this Article 7 shall not affect the terms of any of the
provisions of Article 6, this Section 7.3, and/or Article 8 of this
Agreement, each of which shall continue in full force and effect following
such termination.
7.4 CHANGE IN CONTROL. This Agreement shall continue in force
regardless of any acquisitions or changes of control of either party and
shall be binding upon the successors and permitted assigns of each.
8. MISCELLANEOUS PROVISIONS
8.1. NOTICES. Any notices or other communication under this Agreement
must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt); (b) sent by
facsimile (with written confirmation of receipt) or (c) two (2) days after being
deposited for delivery with a nationally recognized overnight delivery
service, and addressed or sent, as the case may be, to the appropriate
addresses or facsimile numbers set forth below (or to such other addresses or
facsimile numbers as a party may designate by notice to the other party):
(a) if to COMPANY, to the address, numbers and person designated on page
2 of this Agreement with a copy to General Counsel;
(b) if to ACI, to:
ACI Corp.
6933 South Revere Parkway
Englewood, Colorado 80112-3931
Tel. No.: (303) 476-4200
Fax No.: (303) 476-4201
Attn: Chief Financial Officer
with a copy to:
Jeffrey Blumenfeld, Esq.
Blumenfeld & Cohen
1615 M Street, N.W., Suite 700
Washington, D.C. 20036
Tel No.: 202-955-6300
Fax No.: 202-955-6460
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ACI Corp. Feb. 1999
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DSLAgreement_0404_1 16
<PAGE>
8.2. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties do not need to sign the same counterpart.
8.3. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (together with the
Attachments referred to herein) constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings (both oral and
written), and is not intended to, and does not, confer upon any other person
any rights or remedies with respect to the subject matter of this Agreement.
Except as otherwise expressly provided herein, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the successors
and permitted assigns of the parties hereto. Neither party may assign or
transfer its rights or obligations under this Agreement to any third party
without the prior written consent of the other party, which consent shall not
be unreasonably withheld; provided, however, that either party may assign its
rights and obligations under this Agreement (a) in whole or in part to any
subsidiary or parent of such party as long as such party remains primarily
obligated under this Agreement, and/or (b) in whole as part of a corporate
reorganization, consolidation, merger, or sale of all or substantially all of
its assets.
8.4. GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, regardless of
the laws that might otherwise govern the applicable principles of conflicts
of laws thereof, and any dispute or controversy arising out of the Agreement
shall have its venue in the state or federal courts and arbitration panels
located in metropolitan Denver, Colorado, and each of the parties hereby
consents to that venue and the jurisdiction of any such court or arbitration
panel. Any and all remedies conferred upon any party by this Agreement shall
be deemed cumulative and not exclusive of any other remedy conferred hereby,
or by law or at equity upon a party, and the exercise by a party of one
remedy will not preclude the exercise of any other remedy.
8.5. AMENDMENT; WAIVER; SEVERABILITY. Except as otherwise
specifically provided in this Agreement, no alteration, modification,
amendment or addition shall be valid and enforceable unless in each instance
such alteration, modification, amendment or addition is expressed in writing
and signed by or on behalf of the party against which such alteration,
modification, amendment or addition is to be enforced. No waiver of any
nature, whether by conduct or otherwise, shall be deemed to be or construed
as a continuing waiver of any breach of or non-compliance with any other term
or provision of this Agreement or any other agreement to which such party is
subject. If any term or provision of this Agreement is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.
8.6. CUSTOMER COMPLAINTS. COMPANY shall immediately notify ACI of
(a) any action, complaint or other filing by any Customer involving or
regarding any aspect of ACI's Products contemplated herein (including,
without limitation, ACI's installation, repair service or Equipment
replacement practices or programs) (collectively, the "ACI Services"); (b)
any complaint proceeding, investigation, subpoena or other action (formal or
informal) instituted by, or filed with, any federal, state or municipal
government agency, body, commission or official involving or regarding the
ACI Services; and (c) any pending or threatened action, suit or proceeding
before or by any court or arbitrator involving or regarding the ACI Services
(collectively, a "Complaint Proceeding"). COMPANY shall promptly provide to
ACI any and all information in COMPANY's possession, and true and complete
copies of any and all documentation that COMPANY has, relating to the factual
basis underlying any such Complaint Proceeding. Each of ACI and COMPANY
shall cooperate in all reasonable respects and otherwise assist each other
and their respective legal advisors in preparing any appropriate defense,
settlement or compromise of any such Complaint Proceeding.
8.7 PUBLICITY. Except as required by law or any disclosure
obligations applicable to such party, COMPANY and ACI shall not publicize nor
disclose any aspect or contents of this Agreement or its relationship with
each other in any way.
*** Portions of this page have been omitted pursuant to a request for
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ACI Corp. Feb. 1999
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DSLAgreement_0404_1 17
<PAGE>
ATTACHMENT 2: ACI PLUS PRODUCTS AND PRICING
I. QWEST PRICING PLAN
The Pricing set forth herein is based on the significant equity investment of
COMPANY in the parent company of ACI and the "take or pay" Purchase
Commitment of COMPANY set forth in Section 2.6 of the Agreement and this
Attachment 2.
A. *** RECURRING CHARGES *** FOR PRODUCTS
-------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------- Special Conditions or
Purchase 100,000 Line Considerations
Commitment Commitment
Level -------------------
Bandwidth Suggested *** TO
List Price COMPANY
>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
128Kbps $ 90.00 *** Only offered ***
- ----------------------------------------------------------------------
256Kbps $100.00 ***
- ----------------------------------------------------------------------
384Kbps $125.00 ***
- ----------------------------------------------------------------------
512Kbps $155.00 ***
- ----------------------------------------------------------------------
768Kbps $190.00 ***
- ----------------------------------------------------------------------
1Mbps $225.00 ***
- ----------------------------------------------------------------------
1-2Mbps x $270.00 ***
1Mbps ***
- ----------------------------------------------------------------------
2-3Mbps x $320.00 ***
1Mbps
- ----------------------------------------------------------------------
3Mbps x $425.00 ***
1Mbps
- ----------------------------------------------------------------------
5Mbps x $575.00 ***
1Mbps
- ----------------------------------------------------------------------
7Mbps x $725.00 ***
1Mbps
- ----------------------------------------------------------------------
</TABLE>
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DSLAgreement_0404_1 18
<PAGE>
B. NON-RECURRING CHARGES FOR PRODUCTS ***
<TABLE>
<CAPTION>
Installation
Charges
*** *** *** *** or CPE
*** term term greater term ONLY
- ---------------------------------------
Bandwidth
- ---------------------------------------
<S> <C> <C> <C> <C> <C>
128Kbps *** *** *** *** ***
256Kbps *** *** *** *** ***
384Kbps *** *** *** *** ***
512Kbps *** *** *** *** ***
768Kbps *** *** *** *** ***
1-2Mbps x *** *** *** *** ***
1Mbps *** *** *** *** ***
2-3Mbps x *** *** *** *** ***
1Mbps *** *** *** *** ***
1Mbps *** *** *** *** ***
3Mbps x *** *** *** *** ***
1Mbps
5Mbps x
1Mbps
7Mbps x
1Mbps
- ---------------------------------------
</TABLE>
** Includes *** and ***
** Charges, as set forth in Attachment 3, will apply to *** of minimum
*** .
COMPANY Egress Circuit Pricing***
This is the *** .
<TABLE>
<CAPTION>
*** Only Service ****
--------------------- --------------------------------
*** Non- *** Non-
Recurring Recurring Recurring Recurring
Charges Charges Charges
--------------------- --------------------------------
<S> <C> <C> <C> <C>
------------------------------- --------------------------------
*** *** *** *** ***
------------------------------- --------------------------------
*** *** *** *** ***
------------------------------- --------------------------------
</TABLE>
***Includes ***
****COMPANY shall *** for its *** and *** for ***
Service for *** to the *** .
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ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 19
<PAGE>
II. QWEST VOLUME COMMITMENT PROVISION
COMPANY shall place Orders, as defined in Section 3.2.1, and ACI shall
provide a minimum of 100,000 DSL lines (the "Purchase Commitment") for
providing ACI DSL services during the "Line Commitment Period" (defined
below). The Line Commitment Period shall begin on the first day of the month
in which the parties have mutually certified, by completing and signing the
Commencement Date Certificate set forth in Schedule 2A, that ACI has 1,250
Connection Points in commercial service in a minimum of twenty-nine (29)
CMSAs and/or MSAs ("Line Commitment Commencement Date"), and shall end on the
seventh (7th) anniversary date or the date on which COMPANY satisfies the
Purchase Commitment, whichever date is earlier.
Targeted Milestone *** * Milestone Line Target
*** *** lines ordered
*** *** lines ordered
*** *** lines ordered
*** *** lines ordered
*** *** lines ordered
*** *** lines ordered
*** *** lines ordered
*"TARGETED MILESTONE *** SHALL REFER TO THE LAST *** OF
THE *** PERIOD COMMENCING ON THE LINE COMMITMENT COMMENCEMENT DATE AND
EACH *** THEREOF.
ACI acknowledges and agrees that COMPANY may satisfy the Milestone Line
Target(s) at any time prior to the applicable Milestone *** . Further,
COMPANY may satisfy its Purchase Commitment at any time prior to the expiration
of the Line Commitment Period, and thereafter *** under this Agreement.
In addition, any Orders placed by COMPANY prior to the Line Commitment
Commencement Date *** of the Purchase Commitment.
In the event COMPANY has not satisfied the Milestone Line Target on or
prior to the applicable Targeted Milestone *** COMPANY shall pay an
amount equal to the difference between the Milestone Line Target and the
aggregate number of Orders during the period commencing on the date hereof and
ending on the applicable Milestone *** the average rate per line ordered
multiplied by *** ; provided, however, that COMPANY shall be entitled
to obtain a *** time during the *** Milestone ***
through the 5th Milestone *** of this Agreement in its ***
discretion ( *** ). In the event COMPANY does not satisfy the Milestone
Line Target in the year immediately following such *** in ***
the *** applicable to the Milestone *** , COMPANY shall ***
that would have been *** COMPANY had COMPANY not elected *** .
The following examples are illustrative of certain results under these
principles:
EXAMPLE (1) - At the end of *** COMPANY has *** which is
*** . ACI would invoice the COMPANY per the following calculation -
*** (assumed *** ) equals *** to be *** COMPANY and
*** ACI.
EXAMPLE(2) - At the end of *** , COMPANY has *** which is
*** . ACI would invoice the COMPANY per the following calculation -
*** (assumed *** ) equals *** to be *** COMPANY
and *** ACI.
COMPANY shall use commercially reasonable efforts to deter Customer's from
terminating installed Orders prior to expiration of their term agreements.
"MSA" shall mean Metropolitan Statistical Area as such term is defined in
"OMB Bulletin 98-06: Revised Statistical Definitions of Metropolitan Areas
(MAs) and Guidance on Uses of MA Definitions" which is available from the
National Technical Information Service (Accession Number PB98-146160).
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DSLAgreement_0404_1 20
<PAGE>
"CMSA" shall mean Consolidated Metropolitan Statistical Area as such term is
defined in "OMB Bulletin 98-06: Revised Statistical Definitions of
Metropolitan Areas (MAs) and Guidance on Uses of MA Definitions" which is
available from the National Technical Information Service (Accession Number
PB98-146160).
"Connection Point" shall mean ACI's physical collection within an ILEC
serving wire center, or adjacent to an ILEC wire center, or adjacent to the
ILEC Digital Loop Carrier, which enables ACI to order and provision unbundled
network loops from the ILEC in support of DSL services.
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ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 21
<PAGE>
SCHEDULE 2A
COMMENCEMENT DATE CERTIFICATE
THIS COMMENCEMENT DATE CERTIFICATE is made as of ________________ by ACI
Corp. ("ACI").
WHEREAS, ACI and Qwest Communications Corporation ("COMPANY") entered into
an Agreement dated as of April 4, 1999, whereby, among other things, ACI agreed
to provide and COMPANY agreed to order certain DSL services.
NOW, THEREFORE, pursuant to Attachment 2 of the Agreement, ACI hereby
certifies as follows:
1. The date on which ACI has commercial service in a minimum of twenty-nine
(29) CMSAs and/or MSAs in each such CMSA or MSA and has at least 1,250
Connection Points in commercial service in such locations is
_______________________
IN WITNESS WHEREOF, the parties have caused this Commencement Date
Certificate to be signed and delivered as of the date first above written.
ACI Corp.
By: ________________________________
Title: _____________________________
Qwest Communications Corporation
By: ________________________________
Title: _____________________________
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ACI Corp. Feb. 1999
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DSLAgreement_0404_1 22
<PAGE>
ATTACHMENT 3: SCHEDULE OF CANCELLATION AND OTHER FEES
COMPANY shall be responsible for the following fees and charges in
accordance with the terms of the Agreement:
I. EARLY TERMINATION
(A) ACI PLUS PRODUCTS:
If COMPANY cancels an Order for a Product prior to installation for
any reason other than a failure by ACI to provide a Product at
transmission speeds needed by Customer or because Customer has not
accepted the Products, a charge equal to the third party early
termination penalties actually incurred by ACI as a direct result of
such cancellation will be assessed against the COMPANY and payable
to ACI; provided that ACI shall use its best efforts to mitigate
such penalties. ACI agrees that such charge shall be a ***
of any third party charges.
Early Termination Fee. If a Product is disconnected prior to the
expiration of the term for that Product without cause, an "Early
Termination Charge" (as hereinafter defined) shall be assessed
against COMPANY and payable to ACI. As used herein, the "Early
Termination Charge" shall be equal to the *** Customer would
have been charged based on the "Actual Term" (as hereinafter
defined); *** the *** actually paid by Customer; ***
a *** dollar ($ *** ) modem fee, if applicable, if such
modem is returned and is reusable. As used herein, "Actual Term"
shall be defined as the number of months accrued from the
installation date to the date of termination. For example, if a
Customer disconnects a 128Kbps Product in month six (6) of a twelve
(12) month term and returns the modem in good condition, COMPANY
shall pay an Early Termination Charge with respect to that Customer
calculated as follows: $ *** .
(B) EGRESS CONNECTIONS:
If COMPANY cancels an Order for an Egress Connection prior to
installation of the ordered Egress Connection, any and all third
party charges actually incurred by ACI up to the date of
cancellation and/or as a direct result of such cancellation will be
assessed against the COMPANY and payable to ACI; provided that ACI
shall use its best efforts to mitigate such charges. ACI agrees
that such charge shall be a *** of any third party charges.
Early Termination Fee. If COMPANY cancels an Egress Connection
after installation of the Egress Connection and prior to completion
of the applicable contracted term without case, a charge of ***
for a DS-1 early termination and *** for a DS-3 early
termination, as the case may be, will be assessed against COMPANY
and payable to ACI.
II. OTHER FEES AND CHARGES
(A) LATE CANCELLATION OR NO SHOW FEE:
1. If an installation appointment is cancelled after the
Cancellation Deadline, a charge equal to the third party charges or
early termination penalties actually incurred by ACI as a direct
result of such cancellation will be assessed against the COMPANY
and payable to ACI; provided that ACI shall use its best efforts to
mitigate such charges and penalties. ACI agrees that such charge
shall be a *** of any third party charges.
2. If the Customer is not available at the scheduled time and date
to permit installation to proceed as scheduled, a charge of ***
will be assessed against COMPANY and payable to ACI.
(B) EGRESS MOVE
Charges will be supplied upon request. (Allow 30 days for receipt
of a firm quote.)
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 23
<PAGE>
(C) INTRA-MARKET CUSTOMER MOVE
No cancellation charge will apply to a Customer's move within a
Market. However, a *** charge for reinstallation
(notwithstanding the technology or Product upgrade or downgrade)
will be assessed against COMPANY and payable to ACI with respect to
an intra-Market move. The term of the Product at the new location
will be for at least *** from the date that reinstallation is
completed at the new location.
(D) MINIMAL INSIDE WIRING
This is included in the charges for a normal installation. Normal or
minimal inside wiring shall include up to *** of wiring and
installation of one customary RJ11 Jack or Biscuit Jack (according
to the Customer's preference) in an accessible location situated in
a standard, two-story building.
(E) EXTENSIVE INSIDE WIRING
COMPANY must notify ACI in the original Order if additional wiring
at the Customer's premises will be one-hour or greater. ACI reserves
the right to require such wiring to be completed by others and/or to
schedule extensive wiring at a different time than the installation
appointment, but will make every effort to coordinate this additional
wiring with the installation. If ACI is not notified of additional
wiring requirements, ACI reserves the right to reschedule the
installation appointment at no cost to COMPANY (and such rescheduled
appointment shall supercede and nullify ACI's original installation
commitment).
Time and Materials at the following rates: *** /Minimum Charge
*** additional 15 minutes
(F) ORDER NON-ACCEPTANCE FEE:
An installation charge equal to *** of the installation fee.
(G) SERVICE CHANGE FEE:
A *** charge will be assessed against the Company whenever a
change of service is made for a downgrade. No additional charge
will be assessed for upgrades; provided that COMPANY does not
charge Customer for such upgrades.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 24
<PAGE>
ATTACHMENT 4: ACI SERVICE LEVEL AGREEMENT
NETWORK AVAILABILITY
ACI is committed to providing a reliable network for COMPANY and its Customers.
With that goal, ACI's
*** for Network Availability is *** . ACI's Regional Network
Availability is defined as:
1 - ***
The availability *** does not account for *** Egress Connections,
natural disasters, "Scheduled Maintenance" (as hereinafter defined) on ACI's
Network, scheduled or unscheduled *** on the customer *** , or end
user equipment outages. *** is calculated commencing with the date and
time on which the *** the trouble *** and ending upon
confirmation from ACI that the Network Availability has been restored. As
used herein "Scheduled Maintenance" shall be defined as routine maintenance
to the network electronics or equipment in the ACI Network for replacement or
upgrades to hardware or software and is customarily performed during the
hours of 1:00 A.M. to 3:00 A.M. (local time). Such Scheduled Maintenance is
not usually service affecting.
If ACI does not meet *** Regional Network Availability per the above
definition, ACI will *** for *** or *** of the *** .
NETWORK DELAY
ACI is committed to providing a fast network for COMPANY and its Customers.
ACI supports *** for the time to transmit a *** message from the
DSL Access Multiplexer interface up to, *** , the COMPANY's egress and
back. This measurement
*** .
ACI defines round trip message delay as the *** the following:
time from when the *** of the outgoing message *** until when the
*** of the message *** ;
time from when the *** of the incoming message *** until when the
*** of the message *** .
If ACI does not meet the delay *** for the *** , ACI will ***
of the *** attributable to *** .
THROUGHPUT
ACI is committed to minimizing network congestion for COMPANY and its
Customers. ACI's *** for the Customer to achieve the speed of their
contracted access through the ACI's Regional Network is *** over a ***
. Throughput is defined as the ability of the network to transmit traffic
at the contracted access speed.
If ACI does not meet the throughput *** , ACI will *** of the ***
attributable to *** .
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 25
<PAGE>
MEAN RESPONSE TIME
ACI commits itself to providing the best customer care experience in the
telecommunications industry. To that end, ACI promises to answer the phone
within *** of the *** , and a Customer is *** no ***
than *** .
MEAN TIME TO RESTORE SERVICE
ACI commits itself to restoring service within certain periods of time based
on severity of the problem, and whether single or multiple Customers are
affected. ACI guarantees restoration of services within the following time
frames:
CUSTOMER CONNECTIONS:
mean time to repair within *** ( *** ) - *** of ***
if not repaired *** .
mean time to repair within *** ( *** ) - *** of ***
if not repaired *** .
ACI will manage the local loop vendor (or Incumbent Local Exchange Carrier)
on behalf of COMPANY for any repairs or problems related to ACI-provided
Customer connections.
GENERAL TERMS
All Network Performance Parameters are based on the assumption that COMPANY
and its Customer networks are appropriately engineered (i.e., Egress
Connections are within reasonable over-subscription limits). If ACI
determines that the COMPANY or Customer network is inappropriately
configured, *** .
*** will be *** for Availability, Throughput, or Network Latency
*** of installation. COMPANY must *** to ACI for *** .
*** provided by ACI hereunder shall not be *** for any *** or
greater than *** for the *** within any given *** and
*** for the installation charge.
*** will be *** to COMPANY for any *** or other *** or
*** (including, without limitation, any *** to *** service
under its Network Availability, Network Delay, and Throughput commitments
contained herein) which are caused by or contributed to (a) *** , (b) by
any third party (including the COMPANY or Customer), (c) by atmospheric or
environmental conditions, (d) by any Act of God or natural disaster, or (e)
by any person who is not controlled by, or under common control with, ACI.
ACI will nevertheless use its reasonable efforts to seek a prompt resumption
of service, resolution of transmission problems and/or rescheduled
installation in circumstances where such efforts have a reasonable likelihood
of achieving those results promptly.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 26
<PAGE>
OTHER
COMPANY and ACI shall *** Service Level Agreement *** designed
for COMPANY.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 27
<PAGE>
ATTACHMENT 5. MARKETS
ACI MARKETS
<TABLE>
<CAPTION>
# MSA Size
<S> <C> <C> <C>
1 San Diego M In svc
2 San Francisco L In svc
3 Oakland M In svc
4 San Jose L In svc
5 Los Angeles L In svc
6 Orange County M In svc
7 Chicago L In svc
8 NYC L In svc
9 Sacramento S In svc
10 Philadelphia L In svc
11 Boston L In svc
12 Wash, DC L In build
13 Seattle M In build
14 Portland M In build
15 Denver L In build
16 Minneapolis L In build
17 Detroit L In build
18 Milwaukee M In build
19 Austin M TBD
20 Raleigh/Durham M TBD
21 Phoenix M TBD
22 Atlanta L TBD
23 Cleveland M TBD
24 Dallas L TBD
25 Tampa Bay M TBD
26 Hartford S TBD
27 St. Louis M TBD
28 Miami L TBD
29 Indianapolis M TBD
30 Houston L TBD
31 Columbus M TBD
32 Salt Lake M TBD
33 Kansas City M TBD
</TABLE>
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
ACI Corp. Feb. 1999
All Rights Reserved
DSLAgreement_0404_1 28
