<PAGE>
As filed with the Securities and Exchange Commission on May 3, 2000
Registration No. 333-34342
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GENUITY INC.
(Exact Name of Registrant as Specified in its Charter)
----------------
Delaware 7370 74-2864824
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
----------------
3 Van de Graaff Drive
Burlington, Massachusetts 01803
(781) 262-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
PAUL R. GUDONIS
Chairman and Chief Executive Officer
3 Van de Graaff Drive
Burlington, Massachusetts 01803
Telephone: (781) 262-3000
Telecopy: (781) 262-3408
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
KEITH F. HIGGINS, ESQ. IRA H. PARKER, ESQ. JOHN T. BOSTELMAN, ESQ.
PATRICK O'BRIEN, ESQ. General Counsel Sullivan & Cromwell
Ropes & Gray 3 Van de Graaff Drive 125 Broad Street
One International PlaceBurlington, Massachusetts 01803
New York, New York 10004
Boston, Massachusetts Telephone: (781) 262-3000 Telephone: (212) 558-
02110 Telecopy: (781) 262-3408 4000
Telephone: (617) 951- Telecopy: (212) 558-3588
7000
Telecopy: (617) 951-7050
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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 of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
THE SOLE PURPOSE OF THIS FILING IS TO FILE EXHIBIT 10.8.
THERE HAVE BEEN NO CHANGES TO THE PROSPECTUS.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates, except
the Securities and Exchange Commission Registration Fee and the National
Association of Securities Dealers, Inc. Filing Fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 2,640
National Association of Securities Dealers Filing Fee............ 1,500
Exchange Listing Fee............................................. *
Blue Sky Fees and Expenses....................................... 10,000
Transfer Agent and Registrar Fees................................ *
Accounting Fees and Expenses..................................... *
Directors and Officers Liability Insurance....................... *
Legal Fees and Expenses.......................................... *
Printing Expenses................................................ *
Miscellaneous.................................................... *
-------
TOTAL.......................................................... $ *
</TABLE>
- --------
* To Be Included By Amendment
ITEM 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or the board of directors of a corporation to grant, indemnity to
directors and officers in terms sufficiently broad to permit indemnification
under some circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act of 1933.
As permitted by the Delaware General Corporation Law, the certificate of
incorporation of the Registrant provides that its directors shall not be liable
to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that the exculpation from
liabilities is not permitted under the Delaware General Corporation Law as in
effect at the time the liability is determined. As permitted by the Delaware
General Corporation Law, the certificate of incorporation of the Registrant
also provides that the Registrant shall indemnify its directors to the full
extent permitted by the laws of the State of Delaware.
The Registrant is in the process of obtaining policies of insurance under
which coverage will be provided (a) to its directors and officers against loss
arising from claims made by reason of breach of fiduciary duty or other
wrongful acts, including claims relating to public securities matters and (b)
to the Registrant with respect to payments which may be made by the Registrant
to these officers and directors pursuant to the above indemnification provision
or otherwise as a matter of law.
The Underwriting Agreement provides for the indemnification of officers and
directors of the Registrant by the Underwriters against some types of
liability.
ITEM 15. Recent Sales of Unregistered Securities.
In the three fiscal years prior to the effective date of this Registration
Statement, we have issued and sold the following unregistered securities:
II-1
<PAGE>
The sales and issuances of securities listed above, other the sales and
issuances in Item , were deemed to be exempt from registration under Section
4(2) of the Securities Act or Regulation D thereunder as transactions not
involving a public offering. The sales and issuances of securities listed above
in Item were deemed to be exempt from registration under the Securities Act
by virtue of Rule 701 promulgated under Section 3(b) of the Securities Act of
1933 as transactions pursuant to compensation benefit plans and contracts
relating to compensation. All of the foregoing securities are deemed restricted
securities for purposes of the Securities Act.
ITEM 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation*
3.2 Amended and Restated Certificate of Incorporation (To Be Filed Prior
To Closing Of Offering)*
3.3 By-laws*
4.1 Specimen Class A Common Stock Certificate*
5.1 Opinion of Ropes & Gray*
10.1 2000 Long-Term Incentive Plan*
10.2 2000 Compensation Plan for Non-Employee Directors*
10.3 IRU Agreement dated as of May 2, 1997 by and between Qwest
Communications Corporation and GTE Intelligent Network Services
Incorporated(1)
10.4 First Amendment to IRU Agreement dated as of August 13, 1997(2)+
10.5 Second Amendment IRU Agreement dated as of May 29, 1998(2)+
10.6 Third Amendment to IRU Agreement dated as of November 16, 1998(2)+
10.7 Fourth Amendment to IRU Agreement dated as of February 5, 1999(2)+
10.8 Network Services Agreement by and between America Online, Inc. and BBN
Corporation effective as of December 31, 1999(2)
21.1 Subsidiaries*
23.1 Consent of Ropes & Gray (Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP+
24.1 Power of Attorney (Signature Page)+
27. Financial Data Schedule+
</TABLE>
- --------
*To Be Filed By Amendment.
+Previously Filed.
(1) Incorporated by reference to the Registration Statement of Qwest
Communications International Inc. on Form S-1/A filed with the Securities
and Exchange Commission on May 16, 1997 (File No. 333-25391). There are
portions of this agreement that have been omitted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
(2) There are portions of these agreements that have been omitted pursuant to a
request for confidential treatment filed separately with the Securities and
Exchange Commission.
Other financial statement schedules are omitted because the information
called for is not required or is shown either in the financial statements or
the notes thereto.
ITEM 17. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item 14--Indemnification
of Directors and Officers" above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against these
II-2
<PAGE>
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by the
director, officer or controlling person in connection with the securities being
registered, the Registrant 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 the indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of the issue.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of these securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in the denominations and registered in the names required by the
underwriters to permit prompt delivery to each purchaser.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Burlington, State of Massachusetts, on the 3rd day of May, 2000.
GENUITY INC.
/s/ Paul R. Gudonis
By __________________________________
Paul R. Gudonis
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Paul R. Gudonis Chief Executive Officer and May 3, 2000
____________________________________ Director (Principal
Paul R. Gudonis Executive Officer)
* Director May 3, 2000
____________________________________
Charles J. Gibney
* Director May 3, 2000
____________________________________
James L. Freeze
* Vice President, Finance May 3, 2000
____________________________________ (Principal Financial Officer
David B. Monaghan and Principal Accounting
Officer)
/s/ Paul R. Gudonis
____________________________________
*Paul R. Gudonis, Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation*
3.2 Amended and Restated Certificate of Incorporation (To Be Filed Prior
To Closing Of Offering)*
3.3 By-laws*
4.1 Specimen Class A Common Stock Certificate*
5.1 Opinion of Ropes & Gray*
10.1 2000 Long-Term Incentive Plan*
10.2 2000 Compensation Plan for Non-Employee Directors*
10.3 IRU Agreement dated as of May 2, 1997 by and between Qwest
Communications Corporation and GTE Intelligent Network Services
Incorporated(1)
10.4 First Amendment to IRU Agreement dated as of August 13, 1997(2)+
10.5 Second Amendment IRU Agreement dated as of May 29, 1998(2)+
10.6 Third Amendment to IRU Agreement dated as of November 16, 1998(2)+
10.7 Fourth Amendment to IRU Agreement dated as of February 5, 1999(2)+
10.8 Network Services Agreement by and between America Online, Inc. and BBN
Corporation effective as of December 31, 1999(2)
21.1 Subsidiaries*
23.1 Consent of Ropes & Gray (Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP+
24.1 Power of Attorney (Signature Page)+
27. Financial Data Schedule+
</TABLE>
- --------
*To Be Filed By Amendment.
+Previously Filed.
(1) Incorporated by reference to the Registration Statement of Qwest
Communications International Inc. on Form S-1/A filed with the Securities
and Exchange Commission on May 16, 1997 (File No. 333-25391). There are
portions of this agreement that have been omitted pursuant to a request for
confidential treatment filed separately with the Securities and Exchange
Commission.
(2) There are portions of these agreements that have been omitted pursuant to a
request for confidential treatment filed separately with the Securities and
Exchange Commission.
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED Exhibit - 10.8
NETWORK SERVICES AGREEMENT
by and between
AMERICA ONLINE, INC.
and
BBN CORPORATION
Effective as of December 31, 1999
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
MASTER AGREEMENT
<S> <C>
1. BACKGROUND, OBJECTIVES AND WAIVER............................................ 1
1.1. Background and Objectives............................................... 1
1.2. Termination of Original Agreement; Waiver............................... 1
2. TERM.......................................................................... 2
3. PROVISION OF SERVICES......................................................... 2
3.1. General................................................................. 2
3.2. Resale of Dedicated Resources........................................... 3
3.3. Sale of Vendor Network.................................................. 3
4. ORDERING...................................................................... 3
4.1. General................................................................. 3
4.2. Order Tracking.......................................................... 3
5. ACCEPTANCE TESTING AND FINAL ACCEPTANCE....................................... 3
6. PROPRIETARY RIGHTS............................................................ 3
6.1. Ownership of Proprietary Information.................................... 4
6.2. Ownership of Vendor Network............................................. 4
6.3. Telephone Numbers....................................................... 4
7. SERVICE LEVELS................................................................ 4
8. CHARGES AND TAXES............................................................. 4
8.1. General................................................................. 4
8.2. Taxes................................................................... 5
8.3. Certain Obligations Corresponding to the Waiver......................... 6
9. INVOICING AND PAYMENT......................................................... 6
9.1. Invoicing............................................................... 6
9.2. Payment Due............................................................. 7
9.3. Accountability.......................................................... 7
9.4. Disputed Charges........................................................ 7
10. AUDIT........................................................................ 7
10.1. Audit Rights............................................................ 7
10.2. Records Retention....................................................... 8
11. CONFIDENTIALITY.............................................................. 8
11.1. Confidential Information................................................ 8
11.2. Obligations............................................................. 8
11.3. Exclusions.............................................................. 9
11.4. Residual Knowledge...................................................... 9
11.5. Customer Data........................................................... 9
12. REPRESENTATIONS, WARRANTIES AND COVENANTS.................................... 10
12.1. Compliance with Specifications and Applicable Laws...................... 10
12.2. Non-Infringement........................................................ 10
12.3. Technology.............................................................. 10
12.4. Year 2000............................................................... 10
13. TERMINATION.................................................................. 11
13.1. Termination of Master Agreement for Cause............................... 11
13.2. No Implication Against Materiality...................................... 12
13.3. Termination for Change of Control....................................... 13
</TABLE>
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
<TABLE>
<S> <C>
13.4. Termination/Expiration Assistance; Transition Period.................... 13
14. LIABILITY AND FORCE MAJEURE.................................................. 14
14.1. Liability Restrictions.................................................. 14
14.2. Force Majeure........................................................... 14
15. INDEMNIFICATION.............................................................. 14
16. GENERAL...................................................................... 15
16.1. Binding Nature and Assignment........................................... 15
16.2. Continued Performance and Governing Law................................. 15
16.3. Entire Agreement........................................................ 15
16.4. Notices................................................................. 15
16.5. Counterparts............................................................ 16
16.6. Relationship of Parties................................................. 16
16.7. Severability............................................................ 17
16.8. Waiver of Default....................................................... 17
16.9. Cumulative Remedies..................................................... 17
16.10. Survival................................................................ 17
16.11. Publicity............................................................... 17
16.12. Certain Regulatory Events............................................... 18
16.13. Amendment............................................................... 18
16.14. Incorporation by Reference.............................................. 18
16.15. Construction............................................................ 19
SCHEDULE A Definitions........................................................... A-1
SCHEDULE B Dial-Up Access Services, Service Levels, Pricing and Other Terms...... B-1
SCHEDULE C Broadband Backhaul Services, Service Levels, Pricing and Other Terms.. C-1
SCHEDULE D Other Services........................................................ D-1
</TABLE>
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
NETWORK SERVICES AGREEMENT
This Network Services Agreement (together with the attached Schedules and
Exhibits, the "Agreement"), effective as of December 31, 1999 (the "Effective
Date"), is entered into by and between America Online, Inc., a Delaware
corporation with offices located at 22000 AOL Way, Dulles, VA 20166
("Customer"), and BBN Corporation, a Massachusetts corporation, with offices
located at 3 Van de Graaff Drive, Burlington, MA 01803 ("Vendor"). As used in
this Agreement, "Party" means either Customer or Vendor, as appropriate, and
"Parties" means Customer and Vendor. The Parties agree that the following terms
and conditions shall apply to the products and services to be provided by Vendor
under this Agreement in consideration of certain payments to be made by
Customer. Defined terms used but not defined in the body of this Master
Agreement or the Schedules (other than Schedule A) shall have the meanings given
such terms in Schedule A.
1. BACKGROUND, OBJECTIVES AND WAIVER
1.1. Background and Objectives.
-------------------------
This Agreement is being made and entered into with reference to the
following:
(a) Customer is an interactive service provider that desires to
purchase (i) fully managed, end-to-end dial-up access services,
and (ii) certain broadband backhaul services.
(b) Customer and Vendor previously contracted for Vendor to provide
certain dial-up access services in that certain BBN-AOL Dial-Up
Network Services Agreement dated September 23, 1996, as amended
by (i) that certain BBN-AOL Dial-Up Network Services Agreement
Amendment 1, dated April 29, 1997, (ii) that certain BBN-AOL
Dial-Up Network Services Agreement Amendment 2, dated September
29, 1997, (iii) that certain BBN-AOL Dial-Up Network Services
Agreement Amendment 3, dated January 29, 1998, (iv) that
certain BBN-AOL Dial-Up Network Services Agreement Amendment 4,
dated February 11, 1998, (v) that certain BBN-AOL Dial-Up
Network Services Agreement Amendment 5, dated June 30, 1998 and
(vi) that certain BBN-AOL Dial-Up Network Services Agreement
Amendment 6, dated July 28, 1999 (such agreement as amended,
the "Original Agreement").
1.2. Termination of Original Agreement; Waiver.
-----------------------------------------
(a) The Original Agreement is hereby terminated as of the Effective
Date. Except to the extent otherwise provided in this
Agreement, the obligations of the Parties arising under the
Original Agreement before the Effective Date of this Agreement
shall be governed by the Original Agreement. The obligations of
the Parties arising after the Effective Date (including with
respect to Vendor's provision of Services during the Term)
shall be governed by this Agreement.
(b) As partial consideration for entering into this Agreement, for
the respective waivers and releases set forth below
(collectively the "Waiver"), and for Vendor's obligations set
forth in Section 8.3 of this Master Agreement, each Party
hereby irrevocably waives and releases all claims, torts,
liabilities, debts, suits, demands, causes of action, actions
and rights, whether known, unknown, contingent or fixed,
against the other Party and its respective predecessors,
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
current and former Affiliates, successors, assigns, attorneys,
directors, officers, agents and employees arising from or
pertaining to the Original Agreement; provided, however, that:
(i) nothing contained in the Waiver shall release the
Parties from their respective obligations under this
Agreement (including with respect to the installed
Dedicated Dial-Up Access Ports previously provided under
the Original Agreement that Vendor is obligated to
continue to provide pursuant to Schedule B of this
Agreement); and
(ii) nothing contained in the Waiver shall apply to disputes
or any other matters between the Parties under this
Agreement, or based upon or associated with the claims
of unaffiliated third parties arising under the Original
Agreement or this Agreement.
2. TERM
The term of the Master Agreement shall begin on the Effective Date and
shall expire on December 31, 2006, unless terminated earlier in accordance
with the Agreement or extended pursuant to the relevant section in the
appropriate Schedule or otherwise by mutual written agreement (such period,
as terminated earlier or so extended, the "Term"). Each Schedule to the
Agreement shall be effective for the period of time during the Term set
forth in such Schedule.
3. PROVISION OF SERVICES
3.1. General.
-------
(a) This Agreement sets forth the terms and conditions under which
Customer may purchase Services from Vendor. Customer may
utilize the Services purchased hereunder for any lawful purpose
including in connection with any service or product offering
made available by Customer or its Special Affiliates during the
Term, providing access to an AOL Information Service, providing
the delivery of Internet access or providing other subscriber-
related services to end-users. The Parties acknowledge that
this Agreement does not: (a) grant to Vendor an exclusive
privilege to sell or otherwise provide to Customer any products
or services, or (b) except as otherwise provided by Section 3.2
of the Master Agreement, or as otherwise required by this
Master Agreement or any of the Schedules, restrict Vendor from
providing products or services to other customers of Vendor.
Customer may contract with other suppliers for the procurement
of any products or services.
(b) Customer shall (i) remain the single point-of-contact with
Vendor with respect to those Services provided to Special
Affiliates pursuant to this Agreement, including with respect
to any claims, disputes or other actions that Special
Affiliates desire to make against Vendor, (ii) remain obligated
to perform its payment obligations under the Agreement with
respect to those Services provided by Vendor to Special
Affiliates pursuant to this Agreement, and (iii) Customer
agrees to indemnify and hold Vendor harmless for claims brought
against Vendor by Special Affiliates associated with the
Services provided by Vendor to Special Affiliates pursuant to
this Agreement; provided, however, that
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CONFIDENTIAL TREATMENT REQUESTED
nothing herein applies to claims brought directly by Customer
for damages arising out of Services utilized by Special
Affiliates. For purposes of the Agreement, Services provided to
Special Affiliates pursuant to this Agreement shall be deemed
to be Services provided to Customer.
3.2. Resale of Dedicated Resources.
-----------------------------
Except as specifically set forth in Schedule B with respect to the
Dedicated Dial-Up Services, Vendor shall not resell or offer to
resell any dedicated Services ordered and accepted by Customer
regardless of whether or not such Services are utilized by Customer.
3.3. Sale of Vendor Network.
----------------------
Notwithstanding anything to the contrary in this Agreement, Customer
shall have the right of first refusal with respect to any sale or
transfer other than to a Vendor Affiliate of any unit or division
that has, as its primary business, the provision of Dedicated Dial-
Up Access Services to Customer and has Dedicated Dial-Up Access
Ports to Customer; provided, however, in no event shall Customer
have such right of first refusal in connection with (i) the sale or
transfer of a business unit that does not relate to the provision of
Services to Customer or (ii) the sale or transfer of any Vendor
assets to any entity created as a result of, or arising out of, the
closing of the proposed merger of GTE Corporation and Bell Atlantic
Corporation so long as the management of Vendor continues to have
primary management responsibility of the new entity; provided
further, however, that any transaction in which any assets of Vendor
are transferred back to any Affiliate of the combined GTE/Bell
Atlantic corporation shall not be covered by this Section.
4. ORDERING
4.1. General.
-------
The ordering of Services by Customer and the delivery of such
Services by Vendor shall be governed by the terms and conditions set
forth in the applicable Schedule of this Agreement corresponding to
such Services.
4.2. Order Tracking.
--------------
Vendor will provide Customer with weekly information on Orders as
reasonably requested by Customer in a format consistent with that
provided under the Original Agreement immediately prior to the
Effective Date of this Agreement. Vendor will provide Customer with
written reports relating to Orders as mutually agreed upon by the
Parties.
5. ACCEPTANCE TESTING AND FINAL ACCEPTANCE
Acceptance testing provisions associated with the Services are set forth in
the applicable Schedule for such Services.
6. PROPRIETARY RIGHTS
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
6.1. Ownership of Proprietary Information.
------------------------------------
(a) All right, title and interest in Customer developed software
and other Customer proprietary information (including any
Customer software or Customer proprietary information which may
be incorporated into written material or software delivered
under this Agreement), including all intellectual property
rights related thereto, will remain in Customer. Customer shall
also have all ownership rights, including copyright, to all
written reports prepared and delivered to Customer by Vendor
under this Agreement.
(b) All right, title and interest in Vendor developed software and
other Vendor proprietary information, including all
intellectual property rights related thereto, will remain in
Vendor; provided, however, any software developed by Vendor
incidental to the performance of Services for Customer, the
cost of which is separately charged to, and reimbursed by,
Customer shall be jointly owned by Vendor and Customer, with no
duty of accounting.
(c) All right, title and interest in software jointly developed by
the Parties shall be jointly owned by Vendor and Customer, with
no duty of accounting.
(d) With respect to Subsections (b) and (c) above, each Party
hereby agrees to take all actions, and execute and deliver such
documentation as is necessary to evidence the other Party's
ownership interest in and to the developed Software.
(e) Each Party hereby grants to the other Party a limited license
to utilize each other's software and other proprietary
information in connection with Vendor's performance of, and
Customer's receipt of, the Services.
6.2. Ownership of Vendor Network.
---------------------------
Except to the extent that Customer owns or has rights in certain
equipment used to provide Dedicated Dial-Up Access Ports as of the
Effective Date, or purchases Vendor Network assets pursuant to
Section 3.3 of the Master Agreement, Vendor retains title and
ownership to the Vendor Network.
6.3. Telephone Numbers.
-----------------
As between Vendor and Customer, Customer shall have title and
ownership to all telephone numbers used to provide Dial-Up Access
Services.
7. SERVICE LEVELS
All Services provided by Vendor shall comply with the applicable Service
Levels.
8. CHARGES AND TAXES
8.1. General.
-------
Charges for a Service hereunder shall not begin to accrue until after
Final Acceptance of the Service. Charges for any Service shall be as
computed pursuant to the Schedule of this Agreement corresponding to
such Service. All charges specified in the Schedules
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
fully compensate Vendor for Services. Customer will not be liable to
Vendor for any charges not expressly set forth in the Schedules or
the Master Agreement unless such charges are mutually agreed upon by
the Parties in writing. Customer shall only be obligated to pay for
Services provided in accordance with the terms of this Agreement.
8.2. Taxes.
-----
The Parties' respective responsibilities for taxes arising under or
in connection with this Agreement shall be as follows:
(a) Vendor shall be responsible for any sales, use, excise, value-
added, services, consumption, and other taxes and duties payable
by Vendor on any goods or services that are used or consumed by
Vendor in providing the Services where the tax is imposed on
Vendor's acquisition or use of such goods or services and the
amount of tax is measured by Vendor's costs in acquiring such
goods or services.
(b) Customer shall be responsible for any sales, use, excise, value-
added, services, consumption, or other tax that is assessed on
any particular Service received by Customer from Vendor.
Customer shall also be responsible for any sales, use, excise,
value-added or consumption taxes imposed on goods purchased by
Customer from Vendor under the Agreement. If and to the extent
any tax described in this Subsection (b) is reduced or
eliminated during the Term, Vendor shall reduce or eliminate any
charges for such taxes, as appropriate. If and to the extent any
tax described in this Subsection (b) is increased during the
Term, or a new tax is imposed upon any particular Service
received by Customer from Vendor, then Customer shall have full
responsibility for such increase or tax.
(c) The Parties agree to cooperate with each other to enable each to
more accurately determine its own tax liability. Neither Party
will act unreasonably in assisting the other Party in
minimizing, to the extent legally permissible, such other
Party's tax liability to the extent legally permissible. Each
Party shall provide and make available to the other any resale
certificates, information regarding out-of-state or out-of-
country sales or use of equipment, materials or services, and
other exemption certificates or information reasonably requested
by either Party.
(d) Each Party shall promptly notify the other Party of, and
coordinate with the other Party the response to and settlement
of, any claim for taxes asserted by applicable taxing
authorities for which a Party is responsible hereunder, it being
understood that with respect to any claim arising out of a form
or return signed by a Party to this Agreement, such Party shall
have the right to elect to control the response to and
settlement of the claim, but the other Party shall have all
rights to participate in the responses and settlements that are
appropriate to its potential responsibilities or liabilities. If
Customer requests Vendor to challenge the imposition of any tax,
Customer shall reimburse Vendor for the reasonable legal fees
and expenses it incurs. Customer shall be entitled to any tax
refunds or rebates granted to the extent such refunds or rebates
are of taxes that were paid by Customer, including taxes charged
to Customer as Out-of-Pocket Expenses. Customer shall be
responsible for interest and penalties incurred to
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
the extent such interest and penalties are related to taxes paid
or payable by Customer.
8.3. Certain Obligations Corresponding to the Waiver.
-----------------------------------------------
Promptly after execution of this Agreement, Customer shall pay to
Vendor [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] dollars ($[*Material Omitted and
Separately Filed Under an Application for Confidential Treatment])
which amount represents an [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] of (i) the [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment] dollars ($[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]) withheld by Customer under
the Original Agreement and (ii) the [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] dollars
($[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]) that Vendor has agreed to [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment]
to Customer from [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] or its Affiliates for
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] specifically affecting the Customer network in
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]
9. INVOICING AND PAYMENT
9.1. Invoicing.
---------
(a) Vendor will invoice Customer for amounts due under this Agreement
(including with respect to provision of Services to Special
Affiliates) on a monthly basis in arrears. Each invoice shall
contain the same information as provided under the Original
Agreement immediately prior to the Effective Date of this
Agreement, additional, similar information with respect to the
Broadband Backhaul Services and Other Services, and any
additional information as the Parties may otherwise agree. Each
invoice will separately state those charges for the Dial-Up
Access Services that are attributable to the provision of
backhaul functions. Out-of-Pocket Expenses, if any, and Monthly
Pass-Through Expenses will be billed monthly based upon actual
and accrued costs, and such expenses shall be trued up on a
quarterly basis. Upon any request by Customer, Vendor will
provide Customer with access to books and records (including
bills and invoices) from third party providers for all Out-of-
Pocket Expenses and Monthly Pass-Through Expenses. Any refunds or
credits arising from an Out-of-Pocket Expense reimbursed by
Customer or a Monthly Pass-Through Expense shall be remitted to
Customer, and Vendor shall report and transmit to Customer any
misdirected refunds or credits.
(b) To the extent a credit may be due Customer pursuant to this
Agreement, Vendor shall provide Customer with an appropriate
credit against amounts then due and owing; if no further payments
are due to Vendor, Vendor shall pay such amounts to Customer
within thirty (30) calendar days. In the event such payment is
not made to Customer when due, Vendor will pay a late fee equal
to the lesser of (a) one (1) percent of the amount of such
charges per month; or (b) the maximum amount permissible by law.
(c) The detailed accounting of actual and accrued costs described in
Section 3.D of the Original Agreement will be limited to costs
incurred in the first quarter of Customer's fiscal year 2000 and
the final true-up with respect to accrued
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CONFIDENTIAL TREATMENT REQUESTED
costs (as described in the Original Agreement) will be completed
and provided to Customer by March 31, 2000; and with respect to
actual costs, Vendor will use all commercially reasonable efforts
to work with its providers to reconcile actual costs as soon as
reasonably practicable. Subject to Section 8.3 of this Master
Agreement and to the last sentence of Section 8.1(a)(i) of
Schedule B, Vendor will invoice Customer for all amounts due
under the Original Agreement as of the Effective Date, and
Customer will pay to Vendor such amounts due, in accordance with
Section 9.2 of this Master Agreement.
9.2. Payment Due.
-----------
Subject to the other provisions of this Article 9, all undisputed
charges shall be due and payable by Customer within thirty (30)
calendar days after receipt of a proper invoice for such amount. In
the event that any such charges are not received by Vendor within
five (5) business days after receipt by Customer of written notice
from Vendor indicating that such charges have not been paid within
such thirty-day period, then commencing as of the original due date,
Customer will pay a late fee equal to the lesser of (a) one (1)
percent of the amount of such charges per month; or (b) the maximum
amount permissible by law. All undisputed amounts due and payable to
Vendor under this Article 9 shall be paid, at Customer's option,
either (i) by check payable to the order of Vendor or (ii) by
electronic funds transfer to Vendor from account(s) designated by
Customer.
9.3. Accountability.
--------------
Both Parties shall maintain complete and accurate records of and
supporting documentation for the amounts billable or owed and
credits applicable to either Party under the terms of this
Agreement, in accordance with generally accepted accounting
principles applied on a consistent basis. Both Parties agree to
provide the other Party with documentation and other information
with respect to any amount claimed or owed as may be reasonably
requested by either Party to verify accuracy and compliance with the
provisions of this Agreement.
9.4. Disputed Charges.
----------------
Customer shall pay undisputed charges when such payments are due
under this Article 9. Customer may withhold payment of particular
charges that Customer disputes in good faith. To the extent that
Vendor is entitled to such payment withheld pursuant to resolution
of the underlying dispute, Customer shall pay to Vendor such
payments plus any interest accrued from the date such payments are
withheld by Customer at a rate equal to one percent (1%) per month
on the disputed amounts. Upon resolution of the dispute against
Vendor, Vendor will pay Customer interest equal to one percent (1%)
per month on the amounts overpaid or under-withheld by Customer.
10. AUDIT
10.1. Audit Rights.
------------
Each Party, after reasonable notice, shall have the right to conduct
reasonable audits of the other Party, through a third party
independent auditor as selected by the Party conducting the audit or
through any other mutually agreeable means, and subject to
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CONFIDENTIAL TREATMENT REQUESTED
reasonable confidential requirements, to enforce a Party's rights
and/or enforce the other Party's obligations under this Agreement.
10.2. Records Retention.
-----------------
Until three (3) years after document creation, each Party will
maintain, and provide to the other Party and its auditors access
upon request to, records, documents and other information subject to
audit under the Agreement.
11. CONFIDENTIALITY
11.1. Confidential Information.
------------------------
Vendor and Customer each acknowledge that they may be furnished
with, receive, or otherwise have access to Confidential Information
(as defined below) of or concerning the other Party. As used in this
Agreement and subject to Section 11.3 of the Master Agreement,
"Confidential Information" means any information, in any form,
furnished or made available directly or indirectly by one Party (the
"Disclosing Party") to the other (the "Receiving Party") relating to
or disclosed in the course of the negotiation or performance of this
Agreement, that is, or should be reasonably understood to be,
confidential or proprietary to the Disclosing Party, and shall
include the material terms of this Agreement (including all
information relating to prices and purchase commitments), invoices
and any supporting information provided by Vendor or Customer with
respect to such invoices, information audited pursuant to Article
10, all Customer Data, Customer's customer and member information,
automatic number identification ("ANI") data and information, the
relations of the Disclosing Party with its customers, employees and
service providers, technical processes and formulas, source codes,
product designs, sales, cost and other unpublished financial
information, product and business plans, projections and marketing
data.
11.2. Obligations.
-----------
(a) Any proprietary rights in Confidential Information disclosed by
a Party shall remain with such Party. Customer and Vendor shall
only disclose Confidential Information of the other Party
internally on a "need-to-know" basis. Customer and Vendor shall
each use at least the same degree of care, but in any event no
less than a reasonable degree of care, to prevent disclosing to
third parties the Confidential Information of the other as it
employs to avoid unauthorized disclosure, publication or
dissemination of its own information of a similar nature;
provided that a Party may disclose such information to an
entity performing or receiving Services hereunder or to an
independent third-party auditor on a "need-to-know" basis where
(i) the provision or receipt of Services or audit by such
entity is authorized under this Agreement, (ii) such disclosure
is necessary or otherwise naturally occurs in that entity's
scope of responsibility, and (iii) the entity agrees in writing
to assume confidentiality restrictions no less stringent than
those described in this Section 11.2. Any disclosure to such
entity shall be under the terms and conditions as provided
herein.
(b) Each Party shall take reasonable steps to ensure that its
employees, agents and to the extent applicable, third party
auditors comply with this Article 11. In the event of any
unauthorized disclosure or loss of, or inability to account
for, any
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CONFIDENTIAL TREATMENT REQUESTED
Confidential Information of the Disclosing Party, the Receiving
Party shall promptly, at its own expense: (i) notify the
Disclosing Party in writing; (ii) take such actions as may be
necessary or reasonably requested by the Disclosing Party to
minimize the violation; and (iii) cooperate in all reasonable
respects with the Disclosing Party to minimize the violation
and any damage resulting therefrom. With respect to any
Confidential Information disclosed to the Receiving Party, the
nondisclosure obligation shall last for five (5) years from the
date of disclosure of such Confidential Information.
11.3. Exclusions.
----------
(a) "Confidential Information" shall exclude any particular
information that (i) was, at the time of disclosure to it,
lawfully in the public domain; (ii) after disclosure to it, is
lawfully published or otherwise lawfully becomes part of the
public domain through no fault of the Receiving Party; (iii)
except for the material terms of the Agreement, was lawfully in
the possession of the Receiving Party at the time of disclosure
to it; (iv) was received after disclosure to it from a third
party who had a lawful right to disclose such information to it
without any obligation to restrict its further use or
disclosure; and (v) was independently developed by the
Receiving Party without reference to Confidential Information
of the Disclosing Party. In addition, a Party shall not be
considered to have breached its obligations by disclosing
Confidential Information of the other Party to the minimum
extent required to satisfy any legal requirement of a competent
government body provided that, immediately upon receiving any
such request and to the extent that it may legally do so, such
Party advises the Disclosing Party promptly and prior to making
such disclosure in order that the Disclosing Party may
interpose an objection to such disclosure, take action to
assure confidential handling of the Confidential Information,
or take such other action as it deems appropriate to protect
the Confidential Information.
(b) Nothing in this Article 11 shall be construed or interpreted as
a representation or agreement to restrict assignment or
reassignment of a Party's employees. Subject to each Party's
obligations under the Agreement, neither Party shall be
precluded from participating in business activities that may be
competitive with the other Party.
11.4. Residual Knowledge.
------------------
Nothing contained in this Agreement shall restrict either Party from
the use of any ideas, concepts, know-how, methodologies, processes,
technologies, algorithms or techniques relating to the Services that
either Party, individually or jointly, develops or discloses under
this Agreement, provided that in doing so such Party does not breach
its obligations under this Article or infringe the intellectual
property rights of the other Party or third parties who have
licensed or provided materials to such Party.
11.5. Customer Data.
-------------
(a) Without limiting Vendor's obligations under Section 11.2 of the
Master Agreement with respect to Customer Data, Vendor shall
only use Customer Data to the extent necessary to fulfill its
obligations under this Agreement.
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CONFIDENTIAL TREATMENT REQUESTED
(b) Vendor shall institute "standard industry practices" physical
and logical security measures with respect to facilities and
systems used to provide the Services, including with respect to
any shared processing or network environments and with respect
to the access and controls it affords to its employees,
Affiliates and subcontractors (including the employees of each)
to guard against, identify and promptly terminate the
unauthorized access, alteration or destruction of Customer
Data.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1. Compliance with Specifications and Applicable Laws.
--------------------------------------------------
Vendor covenants that it shall perform the Services in accordance
with the terms of this Agreement. Vendor represents that the
Services offered to Customer are, and warrants that after the
Effective Date Services purchased by Customer shall be, in
conformance with applicable federal, state and local laws and
regulations, including FCC requirements and specifications.
12.2. Non-Infringement.
----------------
Vendor warrants that the Services shall not knowingly infringe, and
that Vendor shall perform its responsibilities under this Agreement
in a manner that does not infringe, or constitute an infringement or
misappropriation of, any patent, copyright, trademark, trade secret
or other proprietary rights of Customer or any third party.
12.3. Technology.
----------
Vendor covenants that in the event that Vendor provides any hardware
and software upgrades as part of the Services, such upgrades shall
be without additional charge to Customer. Vendor will implement
software and hardware upgrades to the extent such upgrades are
necessary to maintain the quality of Services as specified in this
Agreement, stay consistent with industry standards and otherwise
meet its obligation to provide Services hereunder.
12.4. Year 2000.
---------
Vendor represents that the Services offered to Customer are, and
warrants that Services provided to Customer shall be, Year 2000
Compliant. "Year 2000 Compliant" means that the Services satisfy the
requirements set forth below:
(a) Limited Warranty. Vendor warrants that the Services will be
----------------
Year 2000 Compliant, pursuant to the terms of this Section 12.4
(hereinafter referred to in this Section as the "Year 2000
Compliance Limited Warranty"). Vendor warrants that in
connection with Calendar-Related data and Calendar-Related
processing of Date Data or of any System Date, the Services, as
a whole or by its components, as to the Year 2000 will not
malfunction, will not cease to function, will not generate
incorrect data, will not produce incorrect results, and will
represent dates without ambiguity when providing Calendar-
Related data to and accepting Calendar-Related data from other
automated, computerized, and/or software systems and users via
use interfaces, electronic interfaces, and data storage.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
In the event of any Year 2000 Noncompliance with respect to the
Services when and as specified herein, Vendor shall, as
Customer's sole and exclusive remedy, repair or replace the
affected Services within a reasonable period of time as
determined by the severity of the failure and the level of
effort necessary to correct such failure.
Vendor shall meet the obligations set forth in this Year 2000
Compliance Limited Warranty provided that all Customer or third
party supplied computer software, computer firmware, and
computer hardware that directly interface with the Services,
co-exist with the Services, or directly influence the Services'
operation, are also demonstrated to comply with this Year 2000
Compliance Limited Warranty.
(b) Disclaimer. Except as provided by this Year 2000 Compliance
----------
Limited Warranty, Vendor shall not be liable for any failure
of the AOLnet to be Year 2000 Compliant.
(c) Definitions. For the purposes of this Year 2000 Compliance
-----------
Limited Warranty, the following defined terms shall have the
following meanings:
(i) "AOLnet" means that portion of the Customer network in
the United States, which is managed by Vendor. "AOLnet"
does not include equipment, telephone circuits, networks,
network equipment, or telephone circuits not owned or
controlled by Vendor.
(ii) "Calendar-Related" refers to date values based on the
Gregorian calendar, which includes Leap Years, and to all
uses in any manner of those date values, including
without limitation, manipulations calculations,
conversions, comparisons, and presentation.
(iii) "Date Data" means any Calendar-Related data the inclusive
range January 1, 1900 through December 31, 2035, which
the Services uses in any manner.
(iv) "System Date" means any Calendar-Related data value in
the inclusive range January 1, 1985 through December 31,
2035 (including the natural transition between such
values), which the Services shall be able to use as its
current date while operating.
(v) "Year 2000" Noncompliance" means any failure of the
Services to be Year 2000 Compliant.
13. TERMINATION
13.1. Termination of Master Agreement for Cause.
-----------------------------------------
(a) Customer's Right to Terminate. In addition to any other rights
-----------------------------
or remedies to which Customer may be entitled under this
Agreement, in the event that:
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CONFIDENTIAL TREATMENT REQUESTED
(i) Vendor commits a material breach of this Agreement, which
breach is not cured within thirty (30) calendar days
after notice of breach from Customer to Vendor;
(ii) Vendor commits repeated material breaches of this
Agreement, even if cured;
(iii) Vendor violates either Section 3.2 (Resale of Dedicated
Resources) or Vendor's core obligations with respect to
the most-favored customer provisions set forth in the
Schedules (e.g., Section 8.3(b) of Schedule B); or
(iv) there is a total or near-total outage of any of the
Services that, while it may last fewer than thirty (30)
calendar days, is widespread and prolonged enough to
justify a reasonable person, considering all relevant
industry standards, to terminate the Agreement,
then Customer may, at its option and in its sole discretion,
exercise the Agreement Termination Right for cause; provided,
however, if Customer's termination for cause right is solely
related to the Other Services, Customer may only exercise the
Agreement Termination Right with respect to the Other Services.
In the event of a termination of Customer's obligations with
respect to the Purchase Commitments as a result of termination
of the Agreement or any Schedule, Customer shall have no
further liability to Vendor with respect to such Purchase
Commitments. To the extent new services are added to this
Agreement, defaults will be as specified therein.
(b) Vendor's Right to Terminate. In addition to any other rights
---------------------------
or remedies to which Vendor may be entitled under this
Agreement, in the event that
(i) Customer commits a material breach of this Agreement,
including non-payment of undisputed amounts due and owing
to Vendor in accordance with the terms of this Agreement,
which breach is not cured within thirty (30) calendar
days after notice of breach from Vendor to Customer; or
(ii) Customer fails to meet its obligations with respect to
the Purchase Commitments in accordance with and subject
to the terms of this Agreement, which failure is not
cured within thirty (30) calendar days after notice of
failure from Vendor to Customer; provided, however,
Customer shall be deemed not to have failed to meet its
Purchase Commitments if it pays Vendor such amounts that
Customer would have otherwise had to pay if Customer
actually met such Purchase Commitments,
then Vendor, at its option and in its sole discretion, may
terminate this Agreement; provided, however, if Vendor's
termination for cause right is solely related to the Other
Services, Vendor may only exercise the Agreement Termination
Right with respect to the Other Services. To the extent new
services are added to this Agreement, defaults will be as
specified therein.
13.2. No Implication Against Materiality.
----------------------------------
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CONFIDENTIAL TREATMENT REQUESTED
The inclusion of any provision, obligation or duty in Section 13.1,
or any statement in this Agreement, that a particular provision,
obligation or duty is "material" shall not be construed to imply
that any other provision, obligation or duty in this Agreement is
not material.
13.3. Termination for Change of Control.
---------------------------------
In the event of (a) a change in control of Vendor where such control
is acquired, directly or indirectly, in a single transaction or
series of related transactions, (b) all or substantially all of the
assets of Vendor are acquired by or transferred to any entity, or
(c) Vendor is merged with or into another entity to form a new
entity, then at any time after any such event, Customer may, at its
option and in its sole discretion, exercise the Agreement
Termination Right; provided, however, nothing in this Section shall
apply in a change in control resulting from or arising out of the
closing of the proposed merger of GTE Corporation and Bell Atlantic
Corporation (including any transaction in which any assets of Vendor
are transferred back to any Affiliate of the combined GTE/Bell
Atlantic corporation), unless the acquirer or merged entity is (i) a
Significant Competitor of Customer (as such list of Significant
Competitors may be modified from time-to-time by Customer on notice
following August 31, 2000 to add additional significant competitors
of Customer) or (ii) one of the following entities: MCI Worldcom,
Sprint, Qwest or Level 3, or an Affiliate of such entities.
13.4. Termination/Expiration Assistance; Transition Period.
----------------------------------------------------
Upon expiration of this Agreement or any Schedule, or upon any
termination or cancellation of this Agreement or any Schedule by
either Party (whether or not for cause), Customer may decommission
all Services corresponding to the Agreement or any such Schedule, as
applicable, and Vendor shall (i) provide Customer, or at Customer's
request Customer's designee, reasonable assistance and consultation
to enable Customer (or Customer's designee) to ensure a smooth and
timely transition of network control and management to Customer (as
applicable), and to transition Customer's purchase of services
similar to the Services then expiring or being terminated to another
vendor, and (ii) continue to provide the Services then expiring or
being terminated to Customer (at prices then in effect as of the
date of such expiration, termination or cancellation) and otherwise
perform all of its obligations under this Agreement (such
obligations described in this Section 13.4 collectively "Transition
Assistance") for a period (the "Transition Period") to be determined
by Customer in its sole and absolute discretion; provided, however,
that unless otherwise specified in a Schedule to the Agreement, the
Transition Period shall not be longer than twelve (12) months after
the effective date of such expiration, termination or cancellation.
If the provision of such Transition Assistance follows a notice of
termination by Vendor pursuant to Section 13.1(b) of this Master
Agreement as a result of Customer's non-payment of undisputed
amounts owed to Vendor, then Customer shall pay Vendor monthly in
advance plus an equitable portion of the unpaid charges giving rise
to termination that compensates Vendor for the provision of such
Transition Assistance. As part of its obligation to provide
Transition Assistance, Vendor shall include transferring all rights
to Customer at no additional charge, for Customer and its designees'
exclusive use, any telephone numbers used in providing the Services
so that Customer or its designee may utilize such numbers in
providing services (subject to the provisions of Schedule B
regarding Vendor's obligations to obtain such telephone numbers for
Customer).
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CONFIDENTIAL TREATMENT REQUESTED
14. LIABILITY AND FORCE MAJEURE
14.1. Liability Restrictions.
----------------------
The liability restrictions and limitation provisions for each
Service provided hereunder are set forth in the associated Schedule
for such Service.
14.2. Force Majeure.
-------------
(a) No Party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to
the extent such default or delay is caused, directly or
indirectly, by fire, flood, lightning, earthquake, elements of
nature or acts of God, strikes, lock-outs or other labor
disturbance, riots, civil disorders, rebellions or revolutions
in any country, or any other cause beyond the reasonable
control of such Party; provided, however, that the non-
performing Party is without fault in causing such default or
delay, and such default or delay could not have been prevented
by reasonable precautions and cannot reasonably be circumvented
by the non-performing Party through the use of alternate
sources, workaround plans or other means (each a "Force Majeure
Event"). The failure of a supplier or subcontractor of Vendor
to perform under its agreement with Vendor shall not constitute
a Force Majeure Event for Vendor except to the extent such
supplier's or subcontractor's failure to perform is caused by a
Force Majeure Event.
(b) In such event the non-performing Party shall be excused from
further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such
Party continues to use its commercially reasonable best efforts
to recommence performance or observance whenever and to
whatever extent possible without delay. In the event the Vendor
is the non-performing Party, Customer shall be excused from
paying for any Services affected by the Force Majeure Event.
Any Party so delayed in its performance shall immediately
notify the Party to whom performance is due by telephone (to be
confirmed in writing within two (2) business days of the
inception of such delay) and describe at a reasonable level of
detail the circumstances causing such delay.
15. INDEMNIFICATION
Each Party agrees to indemnify, defend and hold harmless the other
Party and its Affiliates and their respective officers, directors,
employees, agents, successors, and assigns, from any and all losses,
liabilities, damages and claims, and all related costs and expenses
(including reasonable legal fees and disbursements and costs of
investigation, litigation, settlement, judgment, interest and
penalties) arising from, in connection with, or based on allegations
of, any of the following:
(a) third party claims arising from the indemnifying Party's
material breach of any obligation, representation or warranty
under this Agreement;
(b) any claims of infringement of any patent, trademark, trade
secret, copyright or other proprietary rights, alleged to have
occurred based upon the provision by
Page 14
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CONFIDENTIAL TREATMENT REQUESTED
the indemnifying Party of materials, services or other
resources to the indemnified Party;
(c) the death or bodily injury of any agent, employee, customer,
business invitee, or business visitor of the indemnified Party
or any other person caused by the tortious conduct of the
indemnifying Party; or
(d) the damage, loss or destruction of any real or tangible
personal property caused by the tortious conduct of the
indemnifying Party.
16. GENERAL
16.1. Binding Nature and Assignment.
-----------------------------
This Agreement shall accrue to the benefit of and be binding upon
the Parties hereto and any purchaser or any successor entity into
which either Party has been merged or consolidated or to which
either Party has sold or transferred all or substantially all of its
assets. Neither Party may, or shall have the power to, assign this
Agreement or delegate such Party's obligations hereunder without the
prior written consent of the other, which consent shall not be
unreasonably withheld or delayed, except that Customer may assign
its rights and obligations under this Agreement without the approval
of Vendor to an entity which acquires all or substantially all of
the assets of Customer, to any Affiliate of Customer, or to a
successor in a merger or acquisition of Customer. Notwithstanding
anything to the contrary in this Section, but not affecting any of
Customer's rights under Section 13.3, Customer hereby consents to
the assignment of this Agreement to any entity created as a result
of or arising out of the closing of the proposed merger of GTE
Corporation and Bell Atlantic Corporation, including any transaction
in which any assets of Vendor are transferred back to any Affiliate
of the combined GTE/Bell Atlantic corporation.
16.2. Continued Performance and Governing Law.
---------------------------------------
(a) Each Party agrees to continue performing its obligations under
this Agreement while any dispute is being resolved except to
the extent the issue in dispute precludes performance (dispute
over payment shall not be deemed to preclude performance).
(b) This Agreement and performance under it shall be governed by
and construed in accordance with the laws of the State of
Delaware without regard to its choice of law principles.
16.3. Entire Agreement.
----------------
This Agreement, including any attached Schedules, sets forth the
entire agreement of the Parties with respect to the transactions set
forth herein.
16.4. Notices.
-------
All notices, requests, demands, and determinations under this
Agreement (other than routine operational communications or as
otherwise specifically set forth herein (e.g., e-mail orders and
Customer acceptance/rejection of Dedicated Dial-Up Access Ports or
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CONFIDENTIAL TREATMENT REQUESTED
other Services)), shall be in writing and shall be deemed duly given
(i) when delivered by hand, (ii) one (1) business day after being
given to an express, overnight courier with a reliable system for
tracking delivery, (iii) when sent by confirmed facsimile with a
copy delivered by another means specified in this Section, or (iv)
four (4) business days after the day of mailing, when mailed by
United States mail, registered or certified mail, return receipt
requested, postage prepaid, and addressed as follows:
--------------------------------------------------------------------
To Customer: To Vendor:
----------- ---------
America Online, Inc. BBN Corporation
12100 Sunrise Valley Drive 9810 Patukent Woods Drive
Reston, Virginia 20190 Columbia, MD 21046
Attn: Geraldine MacDonald, Vice Attn: Vice President and
President AOLnet Operations General Manager
Fax: (703) 265-5988 Fax: (410) 309-8315
Copies to: Copy to:
--------- -------
America Online, Inc. GTE Internetworking
22000 AOL Way 3 Van de Graaff Drive
Dulles, Virginia 20166 Burlington, MA 01803
Attn: General Counsel Attn: General Counsel
Fax: (703) 265-1495 Fax: (781) 262-3408
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
Attn: President Of Business Affairs
Fax: (703) 265-1206
--------------------------------------------------------------------
A Party may from time to time change its address or designee for
notification purposes by giving the other prior written notice of
the new address or designee and the date upon which it will become
effective.
16.5. Counterparts.
------------
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the
Parties hereto.
16.6. Relationship of Parties.
-----------------------
The Parties to this Agreement are independent contractors. Neither
Party is an agent, representative, or partner of the other Party.
Neither Party shall have any right, power or authority to enter into
any agreement for or on behalf of, or incur any obligation or
liability of, or to otherwise bind, the other Party. This Agreement
shall not be interpreted or construed to create an association,
agency, joint venture or partnership between the Parties or to
impose any liability attributable to such a relationship upon either
Party.
Page 16
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CONFIDENTIAL TREATMENT REQUESTED
16.7. Severability.
------------
In the event that any provision of this Agreement conflicts with the
law under which this Agreement is to be construed or if any such
provision is held invalid by a court with jurisdiction over the
Parties, such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in
accordance with applicable law. The remainder of this Agreement
shall remain in full force and effect.
16.8. Waiver of Default.
-----------------
No amendment, waiver or discharge hereof shall be valid unless in
writing and signed by an authorized representative of the Party
against which such amendment, waiver, or discharge is sought to be
enforced. A delay or omission by either Party hereto to exercise
any right or power under this Agreement shall not be construed to
be a waiver thereof. A waiver by either of the Parties hereto of
any of the covenants to be performed by the other or any breach
thereof shall not be construed to be a waiver of any succeeding
breach thereof or of any other covenant herein contained.
16.9. Cumulative Remedies.
-------------------
Except as otherwise expressly provided herein, all remedies
provided for in this Agreement shall be cumulative and in addition
to and not in lieu of any other remedies available to either Party
at law, in equity or otherwise.
16.10. Survival.
--------
Articles 10, 11, 14, 15, and 16 of this Master Agreement and,
Section 1.2 of this Master Agreement, Schedule A, and Section 6.6
of Schedule B will survive the completion, expiration, termination
or cancellation of the Agreement. In addition, any obligations
which expressly or by their nature are to continue after
termination, cancellation or expiration of the Agreement shall
survive and remain in effect.
16.11. Publicity.
---------
(a) Promotional Materials. Each Party shall submit to the other
---------------------
Party, for its prior written approval, which will not be
unreasonably withheld or delayed, any marketing, advertising,
or other promotional materials to the extent such materials
reference the other Party or the other Party's trade names,
trademarks, and service marks (such materials the
"Promotional Materials").
(b) Press Releases. The Parties will prepare a mutually
--------------
acceptable joint press release for release following the
Effective Date. Each Party will submit to the other Party,
for its prior written approval, which will not be
unreasonably withheld or delayed, any press release or any
other public statement (each, a "Press Release") related to
the transactions contemplated hereunder. Without limiting the
generality of the foregoing, the inclusion in any such Press
Release of any Confidential Information or any information
relating to prices or purchase commitment terms of this
Agreement shall be grounds for withholding approval of such
Press Release.
Page 17
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CONFIDENTIAL TREATMENT REQUESTED
16.12. Certain Regulatory Events.
-------------------------
In the event that Vendor is obligated under applicable law to
provide any of the Services in accordance with tariffs filed with a
governmental authority, then Vendor shall file the terms and
conditions of this Agreement with such authority such that
applicable law will require no change in the obligations of each
Party under the Agreement. In the event that Vendor fails to file
the terms and conditions of this Agreement in accordance with this
Section, Customer may, at its option and in its sole discretion,
exercise the Agreement Termination Right for cause for those
Schedules corresponding to the affected Services.
16.13. Amendment.
----------
This Agreement shall not be modified, amended or in any way altered
except by an instrument in writing signed by both Parties.
16.14. Incorporation by Reference.
--------------------------
Schedules A, B, C and D (including any Exhibits attached to such
Schedules) are hereby incorporated by reference into this Master
Agreement.
Page 18
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CONFIDENTIAL TREATMENT REQUESTED
16.15. Construction.
------------
The Parties agree that this Agreement was jointly drafted by the
Parties and each Party further agrees that they shall not assert a
claim that a particular provision should be construed against the
other Party as the drafter of the provision. In addition, the
headings and the table of contents in the Agreement are intended to
be for reference purposes only and shall in no way be construed to
modify or restrict, and shall not be considered in the construction
or interpretation of, any of the terms or provisions of the
Agreement.
IN WITNESS WHEREOF, Customer and Vendor have each caused this Agreement to be
signed and delivered by its duly authorized officer as of the Effective Date.
AMERICA ONLINE, INC. BBN CORPORATION
By: ___________________________ By: ________________________________
Printed: ______________________ Printed: ___________________________
Title: ________________________ Title: _____________________________
Page 19
<PAGE>
CONFIDENTIAL TREATMENT
SCHEDULE A
Definitions
"Acceptance Criteria" means the criteria used to determine whether a Service is
ready for Final Acceptance. The Acceptance Criteria shall include the
requirements that the Service complies with all mutually agreed-upon testing
criteria as set forth in a Schedule to the Agreement and such other criteria as
may be developed and agreed upon by the Parties.
"Affiliate" of any entity means any other entity controlling, controlled by or
under common control with such entity.
"Agreement" has the meaning set forth in the preamble to the Master Agreement.
"Agreement Termination Right" means the right of a Party to terminate, without
cost or liability and as of the date specified in a written notice of
termination to Vendor, (a) the Schedule to which the breach giving rise to such
Agreement Termination Right relates, or (b) the entire Agreement. Any Schedule
not so terminated shall remain in full force and effect.
"Aggregate DSL Subscriber Lines" means the aggregate number of Subscriber Lines
providing xDSL broadband services that utilize the Broadband Backhaul Services
provided by Vendor or its Affiliates or the broadband backhaul services of any
other party. "Aggregate DSL Subscriber Lines" shall exclude Subscriber Lines of
any entity purchased, acquired, or merged with Customer or any Affiliate that,
as of the date of such purchase, acquisition or merger, are contractually
committed to another vendor of broadband backhaul services; provided that such
Subscriber Lines of such entity shall be excluded only for so long as the
duration (determined as of the date of such purchase, acquisition, or merger) of
such contractual commitment plus a mutually agreeable transition period.
"Aggregate Other Broadband Subscriber Lines" means the aggregate number of
Subscriber Lines providing broadband services that utilize the Broadband
Backhaul Services provided by Vendor or its Affiliates or the broadband backhaul
services of any other party. "Aggregate Other Broadband Subscriber Lines" shall
exclude (a) Subscriber Lines that transmit [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] (b) Subscriber Lines that
utilize [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] that are [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], and (c) Subscriber Lines of any
entity purchased, acquired, or merged with Customer or any Affiliate that, as of
the date of such purchase, acquisition or merger, are contractually committed to
another vendor of broadband backhaul services; provided that such Subscriber
Lines of such entity shall be excluded only for so long as the duration
(determined as of the date of such purchase, acquisition, or merger) of such
contractual commitment plus a mutually agreeable transition period.
"Aggregate Subscriber Lines" means the Aggregate DSL Subscriber Lines and
Aggregate Other Broadband Subscriber Lines, collectively.
"All New Ports MP Change Date" shall mean, for any New Dial-Up Market Price
Notice, the later of (a) the New Dial-Up Market Price Effective Date
corresponding to such New Dial-Up Market Price Notice, and (b) April 1, 2001.
"ANI" has the meaning set forth in Section 11.1 of the Master Agreement.
"AOL Average" means, for a particular Service Level metric, the average
[*Material Omitted and Separately Filed Under an Application for Confidential
Treatment].
"AOL Information Service" means a service (a) containing branding owned or
controlled by Customer or a Customer Affiliate, or using all or a portion of
Customer's or a Customer Affiliate's network or backend systems, or (b) in which
content, communications services and/or transactions are provided to end-users
through the use of any protocols, standards, platforms, media or other
methodology now or hereafter existing (including the Internet and similar
protocols, standards and platforms) from host server computers through the use
of client software resident on other computers or access devices.
"Applicable DUP Purchaser" has the meaning set forth in Section 8.3(b) of
Schedule B.
"Area Delivery Target" has the meaning set forth in Section 2.2(b) of Schedule
B.
Schedule A - Page 1
<PAGE>
CONFIDENTIAL TREATMENT
"Base Port MP Change Date" shall mean, for any New Dial-Up Market Price Notice,
the later of (a) the New Dial-Up Market Price Effective Date corresponding to
such New Dial-Up Market Price Notice, and (b) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
"BPS", whether or not capitalized, shall mean bits per second.
"Broadband Backhaul" shall means the facility and associated managed services,
however provided in terms of technology, for receiving broadband traffic from
the public switched telephone network, a cable network, or a wireless network,
satellite network or other technologies, and delivering that traffic to a
Customer facility, where the end-user has initiated the connection. "Broadband
Backhaul" includes the provision of interconnection to an aggregation point and
the transport of bits from that aggregation point to a Customer facility.
"Broadband Backhaul Delivery Period" means, with respect to any New LATA, the
period commencing on the date Customer provides Vendor with the corresponding
New LATA Notice and ending on the later of (a) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] days following such date,
and (b) if and only if Vendor has performed its obligations with respect to the
ATM intra-LATA interconnect (e.g., ordering of the circuit, management of the
associated third-party vendors), [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] days following the date on which the
local access provider is ready to activate the ATM intra-LATA interconnect in
such New LATA.
"Broadband Backhaul Market Vendor" has the meaning set forth in 7.2(a)(i)(2) of
Schedule C.
"Broadband Backhaul Purchase Commitments" means the DSL Purchase Commitment and
the Other Broadband Purchase Commitment, collectively.
"Broadband Backhaul Services" means (i) Broadband Backhaul ordered by Customer
pursuant to an Order to the extent accepted by Vendor pursuant to Schedule C and
managed network services associated therewith (including those services
described in Article 5 of Schedule C), and (ii) any other services described in
an Order to the extent accepted by Vendor pursuant to Schedule C, each of (i)
and (ii) as such services may change in accordance with the Agreement.
"Broadband Specifications" has the meaning set forth in Article 8 of Schedule C.
"Broadband Term" has the meaning set forth in Article 1 of Schedule C.
"Comparable Broadband Backhaul Services" means managed broadband backhaul
services that are comparable to Broadband Backhaul provided under Schedule C
(including comparable nationwide geographic distribution of Subscriber Lines
utilizing Broadband Backhaul and comparable terms and conditions).
"Comparable Dial-Up Services" means dedicated, managed dial-up access services
(not including usage-based dial-up access services) that are comparable to Dial-
Up Access provided under Schedule B (including comparable nationwide geographic
distribution of Dedicated Dial-Up Access Ports, and comparable terms and
conditions).
"Confidential Information" has the meaning set forth in Section 11.1 of the
Master Agreement.
"Covered Subscriber Line" has the meaning set forth in Section 2.1(b) of Exhibit
C-2 of Schedule C.
"Customer" has the meaning set forth in the preamble to the Master Agreement.
"Customer Data" means (i) all information or data provided to, or otherwise
learned or exposed to Vendor, Vendor's Affiliates or subcontractors by or on
behalf of Customer or end users of Customer's services in conjunction with use
of the Services (including such information that is transmitted by or through
the network(s) used to provide the Services), and (ii) information derived from
such information.
"Dedicated Dial-Up Access Port" is a Dial-Up Access Port that is (a) available
solely to the Customer and Special Affiliates, as applicable, and the end users
of Customer's and Special Affiliates' services, and (b) is not available to any
other party.
"Dial-Up Acceptance Test Period" has the meaning set forth in Section 2.7(a) of
Schedule B.
"Dial-Up Acceptance Testing" has the meaning set forth in Section 2.7(a) of
Schedule B.
Schedule A - Page 2
<PAGE>
CONFIDENTIAL TREATMENT
"Dial-Up Access" is the facility and associated end-to-end, managed services,
however provided in terms of technology, for receiving analog or ISDN in-bound
calls from the public switched telephone network on demand and converting those
signals to digital form for transmission over digital networks, where the end-
user has initiated the call. "Dial-Up Access" includes the provision of Dial-Up
Access Ports.
"Dial-Up Access Port" is the capacity to offer Dial-Up Access to one (1)
incoming analog or ISDN in-bound call, plus signaling channels.
"Dial-Up Access Services" means (i) the "modems," managed, end-to-end network
services associated therewith, provided by Vendor to Customer under the Original
Agreement, (ii) Dial-Up Access ordered by Customer pursuant to an Order to the
extent accepted by Vendor pursuant to Schedule B and fully managed, end-to-end
network services associated therewith (including those services described in
Article 6 of Schedule B, and (iii) any other services described in an Order to
the extent accepted by Vendor pursuant to Schedule B, each of (i), (ii) and
(iii) as such services may change in accordance with the Agreement.
"Dial-Up Access Specifications" mean those Specifications described in Section
9.1 of Schedule B.
"Dial-Up Access Term" shall have the meaning set forth in Article 1 of Schedule
B.
"Dial-Up Market Vendor" has the meaning set forth in Section 8.3(a)(i)(2) of
Schedule B.
"Dial-Up Market Vendor Trigger" has the meaning set forth in Section 8.3(a)(i)
of Schedule B.
"Dial-Up Nonconformity" has the meaning set forth in Section 2.7(b)(i) of
Schedule B.
"Dial-Up Purchase Commitment" has the meaning set forth in Section 2.8(a) of
Schedule B.
"Disclosing Party" has the meaning set forth in Section 11.1 of the Master
Agreement.
"DSL Purchase Commitment" has the meaning set forth in Section 2.1 of Exhibit C-
1 of Schedule C.
"Effective Date" has the meaning set forth in the preamble to the Master
Agreement.
"Existing Calling Areas" means any rate center or calling area in which Vendor
(a) before the Effective Date provided, or agreed to provide, Dial-Up Access
Services to Customer (e.g., pursuant to the Original Agreement), or (b) during
the Term provides, or agrees to provide (e.g., pursuant to an Order), Dial-Up
Access Services to Customer.
"Existing Dedicated Dial-Up Access Port" has the meaning set forth in Section
8.1(b) of Schedule B.
"Existing LATA" means, at any given point in time, any LATA in which Vendor has
already provisioned Broadband Backhaul for xDSL for any customer.
"Final Acceptance" has the meaning set forth in Section 2.7(c) of Schedule B.
"Force Majeure Event" has the meaning set forth in Section 14.2 of the Master
Agreement.
"Include," "includes", and "including", whether or not capitalized, shall mean
"include but are not limited to", "includes but is not limited to", and
"including but not limited to", respectively.
"Incremental New Ports MP Change Date" shall mean, for any New Dial-Up Market
Price Notice, the later of (a) the New Dial-Up Market Price Effective Date
corresponding to such New Dial-Up Market Price Notice, and (b) [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment].
"L2TP" means Layer Two Tunneling Protocol.
"Leased Items" has the meaning set forth in Section 8.1(a)(ii) of Schedule B.
"Master Agreement" shall mean the Agreement excluding the Schedules to the
Agreement.
"Measurement Date" has the meaning set forth in Section 3.1 of Exhibit C-1 of
Schedule C.
"Monthly Aggregate Subscriber Line Charge" has the meaning set forth in Section
2.3(a) of Exhibit C-2 of Schedule C.
"Monthly DAP Charge" has the meaning set forth in Section 8.1(b) of Schedule B.
"Monthly EDAP Charge" has the meaning set forth in Section 8.1(a) of Schedule B.
Schedule A - Page 3
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CONFIDENTIAL TREATMENT
"Monthly Pass-Through Expenses" has the meaning set forth in Section 7.1(b) of
Schedule C.
"Monthly Per Subscriber Line Charge" has the meaning set forth in Section 2.1 of
Exhibit C-2 of Schedule C.
"Monthly Subscriber Line Aggregate" has the meaning set forth in Section 2.3(a)
of Exhibit C-2 of Schedule C.
"Monthly Target" has the meaning set forth in Section 2.2 of Schedule B.
"New Broadband Backhaul Market Price" has the meaning set forth in Section
7.2(a)(i)(1) of Schedule C.
"New Broadband Backhaul Market Price Effective Date" means the date that is
ninety (90) calendar days after the New Broadband Backhaul Market Price Notice
Date corresponding to a New Broadband Backhaul Market Price Notice provided by
Customer.
"New Broadband Backhaul Market Price Notice" has the meaning set forth in
Section 7.2(a)(ii) of Schedule C.
"New Broadband Backhaul Market Price Notice Date" has the meaning set forth in
Section 7.2(a)(ii) of Schedule C.
"New Broadband Backhaul Market Price Response" has the meaning set forth in
7.2(a)(ii) of Schedule C.
"New Calling Area" means any rate center or calling area which is not an
Existing Calling Area.
"New Dial-Up Market Price" has the meaning set forth in Section 8.3(a) of
Schedule B.
"New Dial-Up Market Price Effective Date" means the date that is ninety (90)
calendar days after the New Dial-Up Market Price Notice Date corresponding to a
New Dial-Up Market Price Notice provided by Customer.
"New Dial-Up Market Price Notice" has the meaning set forth in Section
8.3(a)(ii) of Schedule B.
"New Dial-Up Market Price Notice Date" has the meaning set forth in Section
8.3(a)(ii) of Schedule B.
"New Dial-Up Market Price Response" has the meaning set forth in Section
8.3(a)(ii) of Schedule B.
"New LATA" means, at a given point in time, any LATA in which Vendor has not
already provisioned Broadband Backhaul for xDSL for any customer.
"New LATA Notice" has the meaning set forth in Section 3.1(c) of Schedule C.
"New Port" means any Dedicated Dial-Up Access Port that is not a Existing Dial-
Up Access Port.
"NOC" means a network operations center.
"Non-Terminable Breach" means a breach that does not, in and of itself, give
rise to Customer's right to exercise the Agreement Termination Right.
"Normalization Methodology" has the meaning set forth in Section 8.4(a) of
Schedule B.
"Order" means any valid order submitted by Customer pursuant to a Schedule to
this Agreement to the extent accepted or deemed accepted by Vendor pursuant to
such Schedule.
"Order Fulfillment Period" has the meaning set forth in Section 2.2 of Schedule
B.
"Original Agreement" has the meaning given in Section 1.1(b) of the Master
Agreement.
"Other Broadband Purchase Commitment" has the meaning set forth in Section 2.2
of Exhibit C-1 to Schedule C.
"Other Services Purchase Commitment" has the meaning set forth in Schedule D.
"Other Vendors' Decom Share" means for any calendar quarter, the amount
calculated as (a) the total number of Dedicated Dial-Up Access Ports [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment],
divided by (b) the total number of Dedicated Dial-Up Access Ports [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment].
"Out-of-Pocket Expenses" shall mean reasonable, verifiable and actual out-of-
pocket expenses and associated taxes, if any, incurred by a Party, but
Schedule A - Page 4
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CONFIDENTIAL TREATMENT
excluding that Party's overhead costs (or allocations thereof), administrative
expenses or other mark-ups.
"Owned Items" has the meaning set forth in Section 8.1(a)(ii) of Schedule B.
"Party" and "Parties" has the meaning set forth in the preamble to the Master
Agreement.
"Peak Resale Window" has the meaning set forth in Section 4(b) of Schedule B.
"POP" means point of presence.
"Pre-Term Private Line Agreements" has the meaning set forth in Schedule D.
"Press Release" has the meaning set forth in Section 16.11(b) of the Master
Agreement.
"Private Line Services" has the meaning set forth in Schedule D.
"Promotional Materials" has the meaning set forth in Section 16.11(a) of the
Master Agreement.
"Purchase Commitments" means (i) the Dial-Up Purchase Commitment, (ii) the
Broadband Backhaul Purchase Commitments, and (iii) the Other Services Purchase
Commitment, collectively.
"Receiving Party" has the meaning set forth in Section 11.1 of the Master
Agreement.
[*Material Omitted and Separately Filed Under an Application for Confidential
Treatment]
"Reportless Ports" has the meaning set forth in Section 8.5(a) of Schedule B.
"Resold Dial-Up Access" has the meaning set forth in Section 4(a) of Schedule B.
"Service Levels" means the quantitative and qualitative service levels
identified as such the Schedules to this Agreement.
"Services" means, collectively (i) Dial-Up Access Services, (ii) Broadband
Backhaul Services, (iii) Other Services, and (iv) any other services that the
Parties mutually agree in writing that are governed by the terms of this
Agreement.
"Significant Competitor" means, solely with respect to Section 13.3 of the
Master Agreement, any of the following entities or their Affiliates (which
entities may be modified from time-to-time by Customer on notice following
August 31, 2000): [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
"Special Affiliate" means, with respect to Customer, (i) Customer's Affiliates,
(ii) any other entity in which Customer holds, either directly or indirectly, at
least an [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] equity interest, or (iii) any entity which operates or
distributes, or is authorized to operate or distribute, an AOL Information
Service.
"Specifications" means the specifications and other requirements for the
Services identified as such in a Schedule to the Agreement.
"Subscriber Line" means a dedicated connection, between an end user of services
of Customer or one of its Affiliates and an aggregation point, that is activated
and purchased by Customer or one or its Affiliates to provide services to such
end user.
"Term" has the meaning set forth in Article 2 of the Master Agreement.
"Transition Assistance" has the meaning set forth in Section 13.4 of the Master
Agreement.
"Transition Period" has the meaning set forth in Section 13.4 of the Master
Agreement.
"Valid Order Rejection Reason" has the meaning set forth in Section 2.3(a) of
Schedule B.
"Vendor" has the meaning set forth in the preamble to the Master Agreement.
"Vendor Broadband Subscriber Line" means a Subscriber Line used to transmit
broadband services that utilize the Broadband Backhaul Services provided by
Vendor or its Affiliates.
"Vendor Decom Share" means for any calendar quarter, the amount calculated as
(a) the total number of Dedicated Dial-Up Access Ports [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment], divided by
(b) the total number of Dedicated Dial-Up Access Ports [*Material Omitted and
Schedule A - Page 5
<PAGE>
CONFIDENTIAL TREATMENT
Separately Filed Under an Application for Confidential Treatment].
"Vendor ISP Affiliate" means any Affiliate of Vendor that offers online or
Internet connectivity services (e.g., an Internet service provider) to
consumers.
"Vendor Network" means any and all of the network or networks that support
Services ordered and accepted by Customer hereunder.
"Waiver" has the meaning set forth in Section 1.2(b) of the Master Agreement.
Schedule A - Page 6
<PAGE>
CONFIDENTIAL TREATMENT
SCHEDULE B
Dial-Up Access Services, Service Levels, Pricing and Other Terms
1. TERM
The term of this Schedule B shall begin on the Effective Date and shall
expire on December 31, 2006, unless terminated earlier in accordance with
the Agreement, or extended by mutual written agreement (such period, as
terminated earlier or so extended, the "Dial-Up Access Term").
2. ORDERING
2.1. New Markets.
-----------
Vendor from time to time shall deliver to Customer a listing of any
new rate centers or calling areas that are in addition to the Existing
Calling Areas within which Vendor is willing to provide Dial-Up Access
Services.
2.2. Customer Submission of Orders.
-----------------------------
To order any Dial-Up Access Services, Customer shall submit to Vendor
an order for such services covering the three-calendar month period
beginning at least ninety (90) days following submission of the order
(such three-month period the "Order Fulfillment Period"). Each order
will set forth the following:
(a) the cumulative number of Dedicated Dial-Up Access Ports that
Vendor must have installed and activated as of the end of each
calendar month of an Order Fulfillment Period (for each calendar
month, such number the "Monthly Target"), and
(b) the number of incremental Dedicated Dial-Up Access Ports for each
calling area ordered by Customer during an Order Fulfillment
Period (for each calling area, the "Area Delivery Target").
Each order will be clearly marked as such, and will be delivered by
Customer via electronic mail to such individuals designated in writing
from time to time by Vendor. An e-mailed order will be valid only if
it is submitted by the Vice President of AOLnet Operations, the
Director for AOLnet Capacity Planning, or a designee of either.
2.3. Vendor Acceptance or Rejection of Orders.
----------------------------------------
(a) Acceptance and Rejection Process.
--------------------------------
Vendor shall, within ten (10) business days after receipt of a
valid order pursuant to Section 2.2 of this Schedule B, notify
Customer of one of the following:
(i) its acceptance of such order; or
Schedule B - Page 1
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CONFIDENTIAL TREATMENT
(ii) its rejection of such order in whole or in part; provided
that Vendor may reject an order if and only to the extent
(1) the Monthly Target for a calendar month exceeds the
prior month's Monthly Target by more than [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports, (2) such order
requests Dial-Up Access Services to be delivered in a New
Calling Area, (3) such order does not reflect the same
approximate weighted distribution of Dedicated Dial-Up
Access Ports across Existing Calling Areas, or (4) such
order requests the provision of Dedicated Dial-Up Access
Ports in excess of the Dial-Up Purchase Commitment (each of
(1), (2), (3) and (4) a "Valid Order Rejection Reason").
If Vendor fails to provide Customer with such notice within such
ten-day period, then such order shall be deemed accepted by
Vendor. Vendor shall be obligated to deliver, in accordance with
this Schedule B, the Dial-Up Access Services requested by
Customer in an order to the extent such order is accepted or
deemed accepted by Vendor. If Vendor rejects an order (or a
portion thereof) for the reason described in Subsection (ii)(3)
above, following notice of such objection by Vendor, the Parties
will mutually agree on an equitable resolution consistent with
the intent of this Section.
(b) Rejections by Vendor.
--------------------
To the extent that Vendor rejects an order (or portion thereof)
for any reason other than a Valid Order Rejection Reason, the
Dial-Up Purchase Commitment shall be reduced by the number of
Dedicated Dial-Up Access Ports wrongfully rejected by Vendor.
(c) Additional Tasking.
------------------
For any Order Fulfillment Period, in the event Vendor requests,
Customer will provide Vendor with additional tasking of Dedicated
Dial-Up Access Ports for Existing Calling Areas; provided,
however, that such additional tasking shall not result in total
tasking in excess of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] Dedicated Dial-
Up Access Ports above the Monthly Target for the third month of
the such Order Fulfillment Period. Customer will designate the
Existing Calling Areas in which any of the Dedicated Dial-Up
Access Ports corresponding to such additional tasking will be
provided by Vendor. Any additional tasking shall not affect the
Monthly Targets.
2.4. Cancellation Without Cause and Rescheduling of Orders.
-----------------------------------------------------
(a) Pre-Acceptance or Pre-Rejection Cancellation or Modification by
---------------------------------------------------------------
Customer.
--------
Prior to acceptance or rejection of an order by Vendor, Customer
may rescind or modify, in whole or in part in its sole
discretion, such order.
(b) Post-Acceptance Cancellation or Modification by Customer.
--------------------------------------------------------
Schedule B - Page 2
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CONFIDENTIAL TREATMENT
(i) Customer may cancel or modify an Order in whole or in part
at any time in its discretion prior to the delivery of the
corresponding Dedicated Dial-Up Access Ports set forth in
such Order; provided, however, that except to the extent
otherwise agreed by Vendor, such cancellation or
modification shall not result in circumstances that would
constitute a Valid Order Rejection Reason. For any such
cancellation or modification, Customer will pay to Vendor
any incremental Out-of-Pocket Expenses actually incurred as
a result of such cancellation or modification and that could
not reasonably have been avoided by Vendor. Customer shall
have no liability to Vendor for an Order cancelled pursuant
to this Subsection (i) other than payment to Vendor of such
Out-of-Pocket Expenses.
(ii) Customer's cancellation or modification of an Order pursuant
to this Subsection (b) shall not relieve Customer of its
obligations with respect to the Dial-Up Purchase Commitment.
In the event of significant changes to an Order by Customer,
Vendor may provide Customer with notice of impaired ability
to deliver, and the Parties shall mutually agree upon
appropriate changes to the Monthly Targets.
2.5. Delivery.
--------
(a) Notification of Delivery by Vendor.
----------------------------------
Vendor shall only deliver Dedicated Dial-Up Access Ports that
Vendor reasonably and in good faith believes will satisfy the
applicable Acceptance Criteria. Upon delivery of any Dedicated
Dial-Up Access Port (but no sooner than such delivery), Vendor
shall provide to Customer notification of such delivery by e-mail
to the Vice President of AOLnet Operations, the Director for
AOLnet Capacity Planning, or a designee of either. For purposes
of Subsection (e) of Section 2.5, delivery of any Dedicated Dial-
Up Access Port shall be deemed made upon Customer's receipt of
such e-mail from Vendor.
(b) Early Delivery By Vendor.
------------------------
Vendor may deliver Dedicated Dial-Up Access Ports ordered by
Customer before the commencement of the corresponding Order
Fulfillment Period.
(c) Initial Testing Failure of Dedicated Dial-Up Access Ports.
---------------------------------------------------------
Notwithstanding the deemed delivery date described in the last
sentence of Subsection (a) of this Section, if any Dedicated
Dial-Up Access Port provided in a month is not accepted by
Customer prior to the 15/th/ day of the next month, then such
Dedicated Dial-Up Access Port will be deemed not to have been
delivered during the first month.
(d) Delivery of Additional Tasking.
------------------------------
In any month, Customer shall not be required to accept any
Dedicated Dial-Up Access Ports in excess of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports
Schedule B - Page 3
<PAGE>
above the Monthly Target for such month. With respect to any
calling area, Customer shall not be required to accept any more
Dedicated Dial-Up Access Ports in excess of the then-current Area
Delivery Target for such calling area.
(e) Vendor Failures to Deliver.
--------------------------
(i) Failure to Meet Monthly Target. If Vendor fails to deliver
------------------------------
the Monthly Target in any month by more than [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] Dedicated Dial-Up Access Ports, then
Customer may reduce the Dial-Up Purchase Commitment by the
number of Dedicated Dial-Up Access Ports over [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] that Vendor fails to so deliver.
(ii) Late Delivery.
-------------
Vendor shall use demonstrable good faith diligent efforts to
deliver Dedicated Dial-Up Access Ports in accordance with an
Order prior to the end of the corresponding Order
Fulfillment Period. Customer may reduce the Dial-Up
Purchase Commitment by the number of Dedicated Dial-Up
Access Ports included in an Order (A) for which Vendor has
not delivered a substantial portion of a Area Delivery
Target by the end of the corresponding Order Fulfillment
Period and (B) with respect to which Vendor has not used
such efforts. In addition, Customer may cancel, at no cost
or liability to Customer, the unfilled portion of the Order
pertaining to such Dedicated Dial-Up Access Ports. In the
event of such cancellation, Customer shall have no payment
obligations to Vendor with respect to the Dedicated Dial-Up
Access Ports corresponding to the cancelled portion or
portions of the Order. Upon Customer's request, Vendor
shall provide Customer with information and supporting
documentation which demonstrates Vendor's good faith
diligent efforts to deliver all Dedicated Dial-Up Access
Ports set forth in an Order prior to the end of the
corresponding Order Fulfillment Period (e.g., documents
showing Vendor's ordering of circuits from an access
provider necessary to provision such ordered Dedicated Dial-
Up Access Ports as well as the corresponding response from
such access providers (e.g., firm order commitment)).
2.6. Ordering Process Review.
-----------------------
The Parties acknowledge that the ordering process set forth in this
Article 2 may require modification during the Dial-Up Access Term, and
that in such event the Parties shall meet to discuss amending this
Schedule to reflect any mutually agreed-upon modifications.
2.7. Acceptance Testing and Final Acceptance.
---------------------------------------
(a) Acceptance Testing. Dedicated Dial-Up Access Ports ordered
------------------
hereunder will require acceptance testing by Customer as
described in this Section. Customer will have up to a
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] business day period from the
date
Schedule B - Page 4
<PAGE>
CONFIDENTIAL TREATMENT
such Dedicated Dial-Up Access Ports are delivered to Customer
(the "Dial-Up Acceptance Test Period") in which to perform any
reasonable testing as Customer in its sole discretion deems
appropriate to determine whether such Dedicated Dial-Up Access
Ports conform to their applicable Acceptance Criteria (the "Dial-
Up Acceptance Testing"). If such Dedicated Dial-Up Access Ports
meet their applicable Acceptance Criteria, Customer will notify
Vendor (by electronic mail) that such Dedicated Dial-Up Access
Ports have received Final Acceptance pursuant to Subsection (c)
of this Section. Dedicated Dial-Up Access Ports activated and
accepted by Customer prior to the Effective Date in accordance
with the Original Agreement will be deemed accepted for purposes
of this Agreement.
(b) Failure to Satisfy Acceptance Criteria.
--------------------------------------
(i) If Dedicated Dial-Up Access Ports fail to conform to their
Acceptance Criteria (each such failure a "Dial-Up
Nonconformity"), Customer will notify Vendor within the
Acceptance Test Period (by electronic mail), specifying
the nature of the failure in reasonable detail. Vendor
will remove rejected Dedicated Dial-Up Access Ports from
service pending further troubleshooting and corrective
action. At no additional charge to Customer, Vendor shall
use commercially reasonable efforts to repair, replace or
otherwise correct the Dial-Up Nonconformity (and any other
problems of which it has knowledge) as soon as reasonably
practicable after receiving notice from Customer so that
the Dedicated Dial-Up Access Ports meet the applicable
Acceptance Criteria.
(ii) Upon completion of such efforts and Vendor's re-release of
Dedicated Dial-Up Access Ports to Customer, Customer shall
have an additional [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] business
day period to retest the re-delivered Dedicated Dial-Up
Access Ports to determine whether the previously reported
Dial-Up Nonconformity has been corrected and if such
Dedicated Dial-Up Access Ports otherwise then meet the
applicable Acceptance Criteria. This process will be
repeated as necessary until all Dial-Up Nonconformities
are corrected and such Dedicated Dial-Up Access Ports meet
the applicable Acceptance Criteria.
(iii) Notwithstanding Subsection (ii) above, if after [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] attempts for curing Dial-Up
Nonconformities, Vendor has not delivered such Dedicated
Dial-Up Access Ports conforming to the applicable
Acceptance Criteria, then Customer may:
(1) allow Vendor to continue to try to correct any Dial-
Up Nonconformities;
(2) if mutually agreed upon by the Parties, accept such
Dedicated Dial-Up Access Ports in their
nonconforming condition and reduce Vendor's charges
for such Dedicated Dial-Up Access Ports by a
reasonable amount as mutually determined by the
Schedule B - Page 5
<PAGE>
Parties that shall reflect the reduced value of such
Dedicated Dial-Up Access Ports; or
(3) (A) cancel, in whole or in part, at no cost or
liability to Customer the portion of the
corresponding Order that does not conform as of a
date specified in a written notice of cancellation
issued by Customer, and (B) so long as the Dial-Up
Nonconformities affect at least [*Material Omitted
and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted
and Separately Filed Under an Application for
Confidential Treatment] %) of the Order, cancel, in
whole or in part, at no cost or liability to
Customer the unfilled portion of the corresponding
Order as of a date specified in a written notice of
cancellation issued by Customer. Customer shall have
no payment obligations to Vendor with respect to any
cancelled portion of an Order.
(c) Final Acceptance. Dedicated Dial-Up Access Ports ordered by
----------------
Customer shall be deemed to be accepted (such acceptance the
"Final Acceptance") only upon the earlier of: (i) receipt by
Vendor of written notice by Customer certifying that such
Dedicated Dial-Up Access Ports conform to the applicable
Acceptance Criteria; or (ii) the expiration of the Dial-Up
Acceptance Testing Period for such Dedicated Dial-Up Access Ports
without notice of rejection by Customer. Notwithstanding anything
to the contrary herein, Final Acceptance of Dedicated Dial-Up
Access Ports shall only occur in accordance with the terms of
this Agreement. Use of Dedicated Dial-Up Access Ports for
business, profit, or any other purpose before Final Acceptance
shall not constitute Final Acceptance by Customer.
2.8. Dial-Up Purchase Commitments.
----------------------------
(a) Dial-Up Purchase Commitments.
----------------------------
The Monthly Targets for Customer's purchase commitments are set
forth in Exhibit B-1. The minimum commitments specified in
Exhibit B-1 collectively, and as may be adjusted pursuant to the
Agreement, shall be referred to as the "Dial-Up Purchase
Commitment". All Dedicated Dial-Up Access Ports ordered by
Customer pursuant to an Order shall contribute to Customer's
satisfaction of the Dial-Up Purchase Commitment. Customer shall
not be obligated to purchase any Dial-Up Access Services in
excess of the Dial-Up Purchase Commitment (as such commitment may
be adjusted pursuant to the Agreement).
(b) Application of Reductions in Purchase Commitments.
-------------------------------------------------
In the event that Customer is entitled to a reduction in the
Dial-Up Purchase Commitment pursuant to the Agreement, each
commitment described in Subsections (a), (b), (c), and (d) of
Exhibit B-1 shall be reduced by the amount of such reduction.
The Parties shall mutually agree upon a reasonable notification
process with respect to reductions in the Dial-Up Purchase
Commitment.
Schedule B - Page 6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(c) Substitution of Purchase Commitments Under International
--------------------------------------------------------
Agreements.
----------
If Vendor offers Customer or Special Affiliates dial-up access
services for provision outside of the United States (excluding
Japan) at market competitive prices and terms:
(i) Customer will use commercially reasonable efforts to
encourage such Special Affiliates to purchase in the
aggregate for all such Special Affiliates [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dial-Up Access Ports from Vendor or Vendor's
Affiliates at such market competitive prices and terms; and
(ii) If as of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] such Special
Affiliates have not ordered, committed to order or purchase,
or actually purchased, in the aggregate for all such Special
Affiliates, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] Dial-Up Access Ports
from Vendor or Vendor's Affiliates at market competitive
prices and terms with durations of at least [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] years, then Customer shall purchase
a number of Dedicated Dial-Up Access Ports under this
Agreement equal to the difference between [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports and the actual
number of dial-up access ports that such Special Affiliates
in the aggregate ordered, committed to order or purchase, or
actually ordered from Vendor or Vendor's Affiliates as of
such date (as determined utilizing the Normalization
Methodology if applicable). Notwithstanding the foregoing,
if (1) a Special Affiliate is offered services by a third
party similar to the Dial-Up Access Services ordered or
purchased pursuant to this Agreement at prices and terms
more competitive than those offered by Vendor or Vendor's
Affiliates to such Special Affiliate in a country in which
Vendor either has operations or has indicated an intent in
which to operate, (2) such Special Affiliate, in its sole
discretion, requests Vendor to provide Dial-Up Access
Services at prices and terms at least as favorable to
Special Affiliate as such prices and terms offered by such
third party, and (c) Vendor or Vendor's Affiliates declines
to provide such services at such prices and terms, then
Customer's obligation under this Subsection (c) shall be
reduced by the aggregate amount of Dial-Up Access Ports
purchased by such Special Affiliate from such third party.
3. RELOCATION OF DIAL-UP ACCESS SERVICES
Customer shall have the right to direct at any time a change in the
location in which Dial-Up Access Services are provided within Existing
Calling Areas (including a reallocation of Dedicated Dial-Up Access Ports
among locations). In the event that Customer provides Vendor with notice
of such direction, Vendor shall comply with such direction within a
reasonable time; provided, however, that (a) any additional reasonable
costs incurred by Vendor, including any
Schedule B - Page 7
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
reasonable service termination or service activation costs, will be
reimbursed by Customer on an Out-of-Pocket Expenses basis, (b) with respect
to Dial-Up Access Services, Customer shall not direct relocation of more
than [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] Dedicated Dial-Up Access Ports in any given
calendar month; and (c) such relocation shall result in the same
approximate weighted distribution of Dedicated Dial-Up Access Ports across
Existing Calling Areas.
4. RESALE OF DIAL-UP ACCESS SERVICES
(a) Unless otherwise agreed by Customer in writing:
(i) Each Dedicated Dial-Up Access Port shall be exclusively
available to Customer and its Special Affiliates to whom
Vendor is providing Dedicated Dial-Up Services; and
(ii) Vendor shall not resell or offer to resell any Dedicated
Dial-Up Access Port ordered and accepted by Customer;
provided however, that Vendor may continue to provide access, at
current levels or levels that are lesser than current levels and
consistent with Vendor's obligations under section 10 of the
Original Agreement, as amended, with respect to (A) until (but no
later than) January 31, 2000, Dedicated Dial-Up Access Ports
(excluding the approximately [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] rotaries)
to those Vendor customers that are using such Dedicated Dial-Up
Access Ports as of the Effective Date, and (B) until (but no
later than) February 29, 2000, the approximately [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] rotaries to those Vendor customers that
are using the same as of the Effective Date (such access "Resold
Dial-Up Access"), subject to Vendor's payment to Customer of
access royalties calculated pursuant to this Article 4. At no
time during the Peak Resale Window (as defined below) may access
that Vendor is permitted to provide to customers pursuant to this
Subsection (a) exceed [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] %) of the Dedicated Dial-Up Access Port
capacity that Vendor is required to provide pursuant to this
Schedule B.
(b) Access royalties payable by Vendor pursuant to Subsection (a) of
this Article 4 for Resold Dial-Up Access authorized pursuant to
such Subsection (a) and occurring before January 1, 2000 shall be
calculated as follows:
(i) For each of the first [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
aggregate hours of Resold Dial-Up Access in a calendar
month, the applicable access royalty shall be [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(ii) For each of the first [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] hours
of Resold Dial-Up
Schedule B - Page 8
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Access in a calendar month in excess of the [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] hours described in Subsection (i)
of this Subsection (b), the applicable access royalty shall
be [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] cents ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]) per hour per month.
(iii) For each hour of Resold Dial-Up Access in a calendar month
in excess of the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] aggregate
hours described in Subsections (i) and (ii) of this
Subsection (b), the applicable access royalty shall be
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] cents ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]) per hour per month.
The number of hours of Resold Dial-Up Access during the hours
between 8:00 p.m. local time and midnight local time daily (such
daily period the "Peak Resale Window") for Resold Dial-Up Access
occurring before January 1, 2000 shall not exceed [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] %) of the aggregate number of hours of
Resold Dial-Up Access, measured quarterly, except that the number
of hours of Resold Dial-Up Access occurring before January 1,
2000 during the Peak Resale Window shall not exceed [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
%) for Dedicated Dial-Up Access Ports beyond [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]. In the event that Vendor does not comply with such
restriction, Vendor will pay Customer, in addition to the access
royalties described above, an additional access royalty of
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] cents ($[*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]) per port
per hour for each hour of Resold Dial-Up Access sold in violation
of such restriction.
(c) Access royalties payable by Vendor pursuant to Subsection (a) of
this Article 4 for Resold Dial-Up Access authorized pursuant to
such Subsection (a) and occurring on or after January 1, 2000 but
before or during February 29, 2000, for each hour of Resold Dial-
Up Access shall be [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] cents ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]) per hour per month. The number of hours
of Resold Dial-Up Access during the Peak Resale Window for Resold
Dial-Up Access occurring on or after January 1, 2000 but before
February 29, 2000 shall not exceed [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
percent ([*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] %) of the aggregate
number of hours of Resold Dial-Up Access during such period,
measured quarterly. In the event that Vendor does not comply with
such restriction, Vendor will pay Customer, in addition to the
access royalties described in this Subsection (c), an additional
access royalty of [*Material Omitted and Separately Filed Under
an Application for
Schedule B - Page 9
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Confidential Treatment] cents ($[*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]) per port
per hour for each hour of Resold Dial-Up Access sold in violation
of such restriction.
(d) For any Resold Dial-Up Access occurring in violation of
Subsection (a) of this Article 4 with respect to the Vendor
customers referenced in the proviso of such Subsection (a),
Vendor shall pay Customer, as its sole and exclusive remedy, an
amount equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] dollars ($[*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]) per port per hour for each hour of
Resold Dial-Up Access in violation of Subsection (a) of this
Article 4, and any such violation shall not be deemed to be a
breach triggering a termination right under Section 13.1(a) of
the Master Agreement. For any other resale of Dedicated Dial-Up
Access Ports in violation of Subsection (a) of this Article 4,
Vendor shall pay to Customer the [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
per hour charge described in this Subsection, and such violation
shall also be deemed a material breach entitling Customer to
terminate the Agreement in accordance with Section 13.1(a) of the
Master Agreement. Vendor shall promptly report to Customer any
Resold Dial-Up Access occurring in violation of Subsection (a) of
this Article 4.
(e) Promptly following the end of each of first three calendar months
after the Effective Date (i.e., December, 1999, and January,
February 2000), Vendor will provide Customer with a report
summarizing the aggregate number of hours of Resold Dial-Up
Access or other Services for such month and the corresponding
access royalties, if any, payable by Vendor pursuant to this
Article 4.
5. TRANSITION PERIOD AND LIMITATION OF LIABILITY
5.1. Transition Period.
-----------------
The Transition Period applicable to Dial-Up Access Services shall be
equal to three months for each [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] Dial-Up Access Ports
existing as of the effective date of expiration, termination or
cancellation (but in no event shorter than 12 months).
5.2. Liability Restrictions.
----------------------
(a) Subject to Subsection (e) of this Section, the liability of
Vendor to Customer for all damages arising out of or related to
the Services provided under this Schedule will be limited to, and
will not exceed, in the aggregate during any calendar year,
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
%) of the aggregate amounts paid to Vendor by Customer (excluding
Out-of-Pocket Expenses) under this Schedule and the Original
Agreement during the twelve (12) month period preceding the date
of the event giving rise to such damages. Subject to Subsections
(c) and (e) of this Section, the liability of Vendor to Customer
for damages arising out of or related to Services provided under
this Schedule caused by the acts or omissions of third parties
beyond the reasonable control of
Schedule B - Page 10
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Vendor will be further limited and will not exceed, in the
aggregate during any calendar year, [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
Dollars ($[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]).
(b) By way of example and without limitation, in the event that four
events occur in calendar year 2000, as described below, for which
Vendor would have liability to Customer under Subsection (a) of
this Section, then Vendor's liability to Customer for each such
event would be as follows:
(i) An event in March 2000 that is not caused by the acts or
omissions of third parties causing Customer damages of $17
million, with the preceding twelve month amounts paid of
$350 million, the liability of Vendor to Customer for such
event would be $[*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; and
(ii) An event in June 2000 that is caused by the acts or
omissions of third parties beyond the reasonable control of
Vendor causing Customer damages of $12 million, with the
preceding twelve months amounts paid of $375 million, the
liability of Vendor to Customer for such event would be
$[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subject to Vendor's
obligations set forth in Subsection (c) of this Section;
and
(iii) An event in October 2000 that is not caused by the acts or
omissions of third parties causing Customer damages of $15
million, with preceding twelve month amounts paid of $400
million, the liability of Vendor to Customer for such event
would be $[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(iv) An event in December 2000 that is caused by the acts or
omissions of third parties beyond the reasonable control of
Vendor causing Customer damages of $3 million, with the
preceding twelve months amounts paid of $425 million, the
liability of Vendor to Customer for such event would be
$[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subject to Vendor's
obligations set forth in Subsection (c) of this Section.
(c) In the event of any liability of Vendor to Customer for damages
arising out of or related to Services provided under this
Schedule caused by the acts or omissions of third parties beyond
the reasonable control of Vendor, then the Parties agree as
follows:
(i) Vendor agrees to vigorously pursue the recovery of damages
against the third party causing the damage, including
through negotiations, dispute resolution, or both, to
maximize the damages recoverable against such third party;
Schedule B - Page 11
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) Vendor agrees to pass through to Customer any amounts that
Vendor actually recovers from such third party relating to
damages incurred in connection with Services provided to
Customer under this Schedule; and
(iii) Customer agrees that in the event that Vendor has paid any
amounts to Customer pursuant to Subsection (a) of this
Section prior to the recovery of damages from a third
party, that Vendor may reduce the amount of recovery
received from such third party by the amount previously
paid to Customer in respect of such event causing the
damages.
(iv) Amounts recovered by Vendor from third parties shall first
be passed on to Customer until Customer's full damages are
satisfied.
(d) IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A PARTY
BE LIABLE TO THE OTHER PARTY FOR INDIRECT OR CONSEQUENTIAL,
EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
(e) The limitations set forth in Subsection (a) of this Section shall
not apply with respect to (i) intentional breach by Vendor; (ii)
damages occasioned by an intentional tort or the gross negligence
of Vendor; (iii) damages occasioned by Vendor's breach of its
obligations described in Article 11 (Confidentiality) of the
Master Agreement, or (iv) claims subject to indemnification
pursuant to this Agreement (such amounts paid by the indemnitee
to third parties shall be deemed to be direct damages) other than
claims subject to the indemnity set forth in Section 15(a) of the
Master Agreement.
(f) Each Party shall have a duty to reasonably mitigate (i.e.,
minimize) damages for which the other Party is responsible.
6. DESCRIPTION OF DIAL-UP ACCESS SERVICES
Dial-Up Access Services shall include the provision of Dial-Up Access and
all associated fully managed, end-to-end network service functions
including the following:
6.1. General Requirements.
--------------------
(a) Vendor shall provide, for each individual Existing Calling Area,
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Customer shall be provided [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] prior to use by Vendor to provide the
Services.
(b) Vendor shall acquire and manage [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] utilized
by Customer during the Term.
(c) Vendor shall provide [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] including the
following:
Schedule B - Page 12
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) provision of [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(ii) resolution of [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(iii) support of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(iv) maintenance of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(d) In the event that Customer requests a change to its access
method(s), hub architecture, or network bandwidth from that which
is described in this Schedule B (other than a request for
increased throughput priced pursuant to Section 8.1(c) of this
Schedule B), Vendor will provide Customer with Vendor's proposed
increase, if any, to the prices set forth in this Schedule B. To
the extent that Customer accepts such proposal, Vendor shall
provide the Dial-Up Access Services in accordance with the
requested change and Vendor's proposal to the extent accepted by
Customer.
(e) Vendor will utilize GNI for delivery of data traffic to
Customer's data centers; provided that, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. The Parties agree to establish [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
6.2. Network Engineering.
-------------------
Vendor agrees to provide network engineering to address operational
and long-term planning issues.
6.3. Operations.
----------
Vendor will provision, staff, and operate a NOC (currently in
Columbia, Maryland) with dedicated support for Customer and a backup
NOC at a separate location (such backup NOCs currently located in
Chantilly, Virginia). The scope of this task will include the
following Vendor support services for the network:
(a) Operation of the NOC and [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(b) Operation of all NOC equipment [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];
(c) Coordination of the [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]:
(i) Initiation of a [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
Schedule B - Page 13
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) Upon arrival of the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(iii) Upon notification to the [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]; and
(iv) Upon restoration of service by the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment];
(d) Initiation of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(e) Utilization of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) Measurements of the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(iii) Monitoring and recording the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]; and
(iv) Accounting for the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(f) Providing [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) Supporting [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) Ensuring that [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(iii) Identifying and tracking [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];
(iv) Supporting the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(v) Providing [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(vi) Maintaining [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(g) Performing [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
Schedule B - Page 14
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(h) Providing [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(i) Maintaining and providing [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(j) Maintaining an [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(k) Acting as Customer's agent in [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];
(l) Using [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(m) Providing [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(n) Providing a [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(o) Subject to Section 8.5(a) of this Schedule B, delivering the
following reports to Customer-designated representatives:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
Customer may request additional reports that assist in improving
the quality of the Vendor Network and Customer's networks. Vendor
will provide these additional reports, or the raw data, subject
to technical reasonableness.
6.4. Network Support Organization.
----------------------------
Vendor shall structure the provision of Services in a manner that will
enable Vendor to rapidly build out its networks and deliver quality
Services.
Schedule B - Page 15
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(a) Program Management: Vendor's program management group shall
------------------
responsible for the management of the Services as a whole. The
program management team shall be led by a program executive who
has direct and immediate access to the senior management of
Vendor and a program manager who reports to such program
executive. The program management team shall be (i) the primary
point of contact between Vendor and Customer and shall coordinate
the activity of all functional groups within Vendor and (ii)
responsible for project and financial management of the Services.
(b) Engineering: Vendor shall maintain an network engineering group
-----------
that shall handle the technical aspects of the Services,
resolution of problems escalated by the NOC, planning for future
network expansion, and improvement of performance and process.
Such engineering group shall interact directly with Customer and
the NOC.
(c) Deployment: Vendor shall maintain a deployment team consisting of
----------
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(d) Operations: Vendor's NOC shall handle the operation and
----------
maintenance of the Vendor Network. The NOC will be connected to
Customer's central facilities, including a direct telephone link
to the Customer operations center. The NOC's monitoring
capability shall be set up to detect and correct most network
problems before they are visible to Customer or its customers.
6.5. Other Services.
--------------
(a) The NOC shall direct maintenance activities based on input from
the monitoring systems and Customer. Vendor shall handle a large
majority of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) Vendor agrees not to restrict Customer's [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(c) The Parties shall use commercially reasonable efforts to
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(d) Vendor shall announce [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(e) Vendor shall reasonably coordinate with Customer regarding any
maintenance activity.
6.6. Telephone Numbers Used to Provide Dial-Up Access Services.
---------------------------------------------------------
(a) Upon (i) the request of Customer from time to time, (ii)
expiration of the Agreement or Schedule B of the Agreement, or
(iii) any termination of the Agreement or Schedule B of the
Agreement, Vendor shall provide Customer with a complete listing
of telephone numbers used to provide Dial-Up Access Services.
Ownership of such telephone number shall be governed by the
Master
Schedule B - Page 16
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Agreement. Vendor shall not provide such telephone numbers
for use by Vendor (except to the extent necessary for Vendor
to provide the Dial-Up Access Services) or any third party
(other than third parties designated by Customer from time
to time) without prior written permission from Customer.
(b) For each telephone number to a Dial-Up Access Port equipment
location, and upon the decommissioning of corresponding
Dial-Up Access Services and upon the expiration or
termination of this Schedule B or the Agreement:
(i) If such telephone number is provided by Vendor or an
Affiliate of Vendor, Vendor shall, to the extent
legally permitted to do so, obtain the rights
necessary for Customer or a designee of Customer to
utilize such telephone number to provide services
upon any expiration or termination of this Schedule
B; and
(ii) If such telephone number is provided by an entity
other than by Vendor or an Affiliate of Vendor, then
Vendor shall use commercially reasonable efforts to
obtain the rights necessary for Customer or a
designee of Customer to utilize such telephone number
to provide services upon any expiration or
termination of this Schedule B.
(c) Vendor shall provide Customer with no less than thirty (30)
days advance written notice before it changes any telephone
number to a Dial-Up Access Port equipment location. Vendor
shall not utilize any new telephone number to provide Dial-
Up Access Services until Customer has accepted such
telephone number in the manner described in Section 2.7 of
this Schedule B. In the event of any such change, (i)
Vendor shall provide Dial-Up Access Services using both the
original telephone number and the new telephone number for a
minimum of seven (7) calendar days after acceptance by
Customer of the new number, and (ii) the total number of
Dedicated Dial-Up Access Ports utilized for both telephone
numbers shall at all times be equal to or greater than the
total number of Dedicated Dial-Up Access Ports utilized for
the original telephone number.
7. SERVICE LEVELS FOR DIAL-UP ACCESS SERVICES
This Article 7 sets forth the Service Levels that Vendor is required to
meet or exceed pursuant to Article 7 of the Master Agreement, certain
remedies for Vendor's failure to achieve the Service Levels, as well as
terms and conditions with respect to Service Level reporting and
adjustment. For each of the Service Levels set forth in this Article 7,
scheduled maintenance by Vendor (or a third party) coordinated with
Customer pursuant to Section 6.5(a) of this Schedule B will be excluded
from the Service Level performance calculations.
7.1. Service Levels.
--------------
Dial-Up Access Services provided under the Agreement shall be
implemented with redundancy. In addition, any Dial-Up Access Port
equipment locations in which Vendor provides Services [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].
(a) Vendor Network Availability.
---------------------------
- --------------------------------------------------------------------------------
Schedule B - Page 17
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) "Network Availability" shall mean the percentage of the
time that [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(ii) The Service Level applicable to Network Availability shall
be as follows: Network Availability for each calendar
month shall exceed [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] %). Vendor's
performance relative to such Service Level shall be
reported by Vendor on a monthly basis for each calendar
month.
(iii) In the event that Network Availability is below [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] %) as measured in [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] such event shall constitute a material breach
of the Agreement.
(b) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] for any day of a
calendar month is calculated as (A) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(ii) The Service Level applicable to [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] shall be as follows: [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. Customer will provide reporting to Vendor
summarizing Vendor's performance with respect to this
Service Level.
(iii) In the event that Vendor fails to meet the Service Level
corresponding to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] In the
event that Vendor fails to meet the Service Level
corresponding to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. Vendor
shall be relieved of its obligation to meet the Service
Level applicable to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] to
the extent that such failure is caused by a significant
change in the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] over the
same period.
(c) Call Blocking.
-------------
- --------------------------------------------------------------------------------
Schedule B - Page 18
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) "Call Blocking Event" [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
Vendor shall provide to Customer reporting each calendar
day of each calendar month showing the [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]. Using such reporting and other information,
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(ii) The Service Level applicable to Call Blocking Events shall
be as follows: [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. Vendor's
performance relative to such Service Level shall be
reported by Customer on a monthly basis for each calendar
month.
(iii) In the event that the Vendor does not satisfy the Service
Level set forth in Subsection (ii) of this Subsection (c)
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], then Customer, as
its sole and exclusive remedy, shall [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment] equal to (A) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
multiplied by (B) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(d) Training Failure Event Percentage.
---------------------------------
(i) "Training Failure Event" means, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. "Training Failure Event Percentage" [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] means (A) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(ii) The Service Level applicable to Training Failure Event
Percentage shall be as follows: [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(e) Ineffective Call Percentage.
---------------------------
(i) "Ineffective Call Percentage" means, for any calendar
month, the amount calculated as (A) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(ii) The Service Level applicable to Ineffective Call
Percentage shall be as follows: Ineffective Call
Percentage for each calendar month shall not exceed
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an
Application for Confidential
- --------------------------------------------------------------------------------
Schedule B - Page 19
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Treatment] %). Vendor's performance relative to such
Service Level shall be reported by Vendor on a daily
basis.
(f) Customer Reported Problems.
--------------------------
(i) "Customer Reported Problem" means [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. "Customer Reported Problem Average" for any
calendar month means [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(ii) The Service Level applicable to Customer Reported Problem
Average shall be as follows: The Customer Reported Problem
Average for each calendar month of the Term shall be less
than the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. Vendor's
performance relative to such Service Level shall be
reported by Customer on a monthly basis for each calendar
month.
(g) Monthly Abnormal Disconnect Percentage.
--------------------------------------
(i) "Daily Abnormal Disconnect Percentage" means, for each
calendar day of the Term, the amount calculated as (A)
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], divided by (B)
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. "Monthly Abnormal
Disconnect Percentage" means, for each calendar month of
the Term, the amount calculated as (x) [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment], divided by (y) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(ii) The Service Level applicable to Monthly Abnormal
Disconnect Percentage shall be as follows: Monthly
Abnormal Disconnect Percentage during a calendar month
shall be less than [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]
percentage points above the corresponding [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] for such month. Vendor's
performance relative to such Service Level shall be
reported by Customer on a monthly basis for each calendar
month.
(iii) In the event that Vendor fails to meet the Service Level
corresponding to Monthly Abnormal Disconnect Percentage
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. In the event that
Vendor fails to meet the Service Level corresponding to
Monthly Abnormal Disconnect Percentage by [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. Vendor shall be relieved of its
obligation to meet the Service Level applicable to Monthly
Abnormal Disconnect Percentage to the extent
- --------------------------------------------------------------------------------
Schedule B - Page 20
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
that [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(h) Packet Loss Percentage.
----------------------
(i) "Packet Loss Percentage" means, for a calendar month, the
quantity calculated as (A) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(ii) The Service Level applicable to Packet Loss Percentage
shall be as follows: Packet Loss Percentage for each
calendar month of the Term shall be less than [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] %) for such month. Vendor's performance
relative to such Service Level shall be reported by Vendor
on a monthly basis.
(i) Latency.
-------
(i) "Latency" means [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(ii) The Service Level applicable to Latency shall be as
follows: Average Latency for a calendar month shall be
less than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] for such month.
Vendor's performance relative to such Service Level shall
be reported by Customer on a monthly basis for each
calendar month.
(j) Time to Respond and Time to Restore Service Levels.
--------------------------------------------------
(i) "Time to Respond" means the elapsed time between (i) the
time that [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], until (ii) the
moment that [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. "Mean Time to
Respond" for a calendar month shall mean the average of
all times corresponding to Time To Respond during such
calendar month. "Time to Restore" means the elapsed time
between (i) the time that [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], until (ii) the moment that [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]. "Mean Time to Restore" for a calendar month
shall mean the average of all times corresponding to Time
To Repair during such calendar month. "Mean Maximum Time
to Restore" for a calendar month shall mean the [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
- --------------------------------------------------------------------------------
Schedule B - Page 21
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) The Service Levels applicable to Mean Time to Respond and
Mean Time to Restore shall be as follows:
(1) Mean Time to Respond for each calendar month shall
be less than [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment] minutes;
(2) Mean Time to Restore for each calendar month shall
be less than or equal to [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment] minutes;
(3) Mean Maximum Time to Restore for each calendar
month shall be less than [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment] hours.
Vendor's performance relative to the foregoing Service
Levels shall be reported by Vendor on a monthly basis for
each calendar month.
7.2. Failure to Perform.
------------------
If Vendor fails to meet any Service Level, Vendor shall (a) promptly
notify Customer of such failure (unless Customer first discovered and
notified Vendor of such failure), (b) investigate and report on the
causes of the failure; (c) advise Customer, as and to the extent
requested by Customer, of the status of remedial efforts being
undertaken with respect to such failure; (d) take commercially
reasonable efforts to correct the failure, and begin meeting the
Service Levels; and (e) take appropriate preventive measures to
minimize the likelihood of the failure recurring. Notwithstanding the
foregoing, Vendor's failure to use commercially reasonable efforts to
meet or correct Service Level failures with respect to the [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment] in and of itself shall not constitute a breach of the
Agreement. With respect to those Service Levels for which Vendor's
performance is measured against [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], Vendor shall
not be deemed in breach of such Service Levels to the extent that
Customer uses [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
7.3. Reporting.
---------
Vendor shall provide Customer with the following reports, in a
detailed format reasonably satisfactory to Customer:
(a) Usage Reports, including:
(i) Daily reports on [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; and
(ii) Daily reports on [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; and
(b) Daily reports on [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
- --------------------------------------------------------------------------------
Schedule B - Page 22
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
In addition, upon Customer's request, Vendor shall provide Customer
with [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. In addition, [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment],
Vendor shall provide to Customer a daily report [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]. In
the event of a Network outage, Vendor will [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
7.4. Meetings.
--------
Vendor and Customer shall hold weekly meetings at Customer's site or
via telephone conference call (unless otherwise requested by Customer)
to assess Vendor's performance under this Schedule B. During
emergency situations, meetings will be held at least on a daily basis.
7.5. Periodic Review of Service Levels.
---------------------------------
As requested by Customer or Vendor, Customer and Vendor shall review
the Service Levels described in this Schedule B and shall make
mutually agreed-upon adjustments to them as appropriate to reflect
performance capabilities associated with advances in the technology
and methods used to provide the Dial-Up Access Services.
8. PRICING
This Article 8 describes the methodologies for calculating the charges
under this Schedule B and relating pricing terms and conditions. The
charges calculated pursuant to this Schedule B, and any other charges
expressly set forth in the Master Agreement, shall fully compensate Vendor
for the provision of the Dial-Up Access Services.
8.1. Pricing for Dial-Up Access Services.
-----------------------------------
(a) Monthly EDAP Charge.
-------------------
(i) The monthly recurring charge (such charge, as may be
adjusted pursuant to the Agreement, the "Monthly EDAP
Charge") for one (1) Dedicated Dial-Up Access Port
corresponding to the first [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Dedicated Dial-Up Access Ports of the Dial-Up
Purchase Commitment only (such port an "Existing Dedicated
Dial-Up Access Port") shall be set at the Existing DAP
Market Price, as set forth in Exhibit B-2, and shall be
automatically reduced according to the schedule set forth
in Exhibit B-2. In addition, the Monthly EDAP Charge may
be further reduced as provided in this Article 8 of this
Schedule B. The Parties acknowledge that the Monthly EDAP
Charge described in the first sentence of Article 2 of
Exhibit B-2 shall apply [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] and
Vendor shall provide Customer with a refund of any amounts
paid for the corresponding Dial-Up Access Services in
excess of such price under the Original Agreement.
- --------------------------------------------------------------------------------
Schedule B - Page 23
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) Following a review of the applicable leases (but in no
event later than 45 days after the Effective Date), Vendor
shall inform Customer as to the extent to which it desires
to (1) assume the operating leases for certain modems,
racks and cables for the Existing Dedicated Dial-Up Access
Ports leased by Customer (collectively the "Leased
Items"), and (2) purchase certain modems, racks and cables
for the Existing Dedicated Dial-Up Access Ports owned by
Customer (collectively, the "Owned Items"). To the extent
that the Parties agree, the Parties shall enter into an
amendment under which (A) Vendor shall assume the
operating leases for the Leased Items, subject to the
terms of such leases and to the rights of third parties in
such Leased Items, and (B) Customer shall pass to Vendor
title for the Owned Items pursuant to economic terms to be
mutually agreed upon, subject to Customer's rights in such
equipment. Such amendment shall reflect that, with respect
to Vendor's assumption of the leases of the Leased Items,
Customer will, on a pass-through expense basis (i.e.,
without markup), pay leasing costs as and when required
under the terms of the leases for the Leased Items. Such
amendment shall also reflect that any cost savings
achieved by Vendor with respect to leasing and capital
costs for the Leased Items will be shared equally between
Customer and Vendor. If Vendor decides not to assume the
leases for the Leased Items, the rights and obligations of
the Parties with respect to the Leased Items shall be as
described in the Original Agreement. If Vendor decides not
to purchase the Owned Items, Customer shall continue to
bear the actual capital costs of the Owned Items in
accordance with the terms of the Original Agreement.
(b) Monthly DAP Charge.
------------------
The monthly recurring charge (such charge, as may be reduced
pursuant to the Agreement, the "Monthly DAP Charge") for one (1)
Dedicated Dial-Up Access Port other than an Existing Dedicated
Dial-Up Access Port shall be set at the DAP Initial Market Price,
as set forth in Exhibit B-2, and shall be automatically reduced
according to the schedule set forth in Exhibit B-2. In addition,
the Monthly DAP Charge may be further reduced as provided in this
Article 8 of Schedule B. The Monthly DAP Charge shall fully
compensate Vendor for the provision of the corresponding Dial-Up
Access Services (including all capital costs of providing the
corresponding Dial-Up Access Services (excluding hub routers
resident at Customer's data centers)).
(c) Additional Bandwidth.
--------------------
For each additional [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] bps of average
bandwidth available at peak per user outbound (and [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] bps inbound) per Dedicated Dial-Up Access
Port that Customer requests Vendor to provide hereunder, Vendor
shall provide such additional bandwidth at a charge to Customer
that is no greater than [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] ($[*Material
Omitted and Separately Filed Under an Application for
Confidential
- --------------------------------------------------------------------------------
Schedule B - Page 24
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Treatment]) per Dedicated Dial-Up Access Port per month for each
additional [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] bps of such bandwidth.
8.2. Decommissioning of Dedicated Dial-Up Access Ports.
-------------------------------------------------
(a) Beginning [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], Customer may
decommission Dedicated Dial-Up Access Ports that either
contribute to the satisfaction of the Dial-Up Purchase Commitment
or to Customer's satisfaction of its obligation described in
Section 2.8(c)(ii) of this Schedule B, without liability, subject
to the following:
(i) Customer will provide one hundred twenty (120) days prior
written notice of the calling areas in which Dedicated
Dial-Up Access Ports are to be decommissioned, as well as
the associated quantities of Dedicated Dial-Up Access
Ports to be decommissioned in each such area;
(ii) the Vendor Decom Share for a calendar quarter shall not
(in the cumulative and not more than a de minimis amount)
exceed the Other Vendors' Decom Share for such quarter;
(iii) the decommissioning of Dedicated Dial-Up Access Ports
pursuant to this Subsection (a) shall not materially
change Customer's proportional distribution of Dedicated
Dial-Up Access Ports across Existing Calling Areas; and
(iv) if the decommissioning of Dedicated Dial-Up Access Ports
pursuant to this Subsection (a) causes the aggregate
number of Dial-Up Access Ports to fall below [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] of the number of Dedicated Dial-Up
Access Ports comprising the Dial-Up Purchase Commitment,
then Vendor may, upon six months' prior notice to
Customer, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], Vendor shall
provide Transition Assistance pursuant to Section 13.4 of
the Master Agreement.
(b) Customer may decommission any Dedicated Dial-Up Access Ports
other than those to which Subsection (a) of this Section applies
(including (A) any Dedicated Dial-Up Access Ports ordered at any
time for delivery after [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], and (B) any
Dedicated Dial-Up Access Ports ordered in excess of those
necessary to satisfy the Dial-Up Purchase Commitment), without
liability and as of a decommissioning date specified by Customer
upon one hundred twenty (120) days' prior written notice to
Vendor; provided, however, that Customer may decommission
Dedicated Dial-Up Access Ports pursuant this Subsection only to
the extent that the first day of the month in which Final
Acceptance occurred for such ports is at least twelve (12) months
prior to the decommissioning date requested by Customer pursuant
to this Subsection (b).
(c) Customer shall not be responsible for any charges for a Dedicated
Dial-Up Access Port to the extent such charges correspond to the
time after the requested
- --------------------------------------------------------------------------------
Schedule B - Page 25
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
decommissioning date of which Customer provides Vendor with
notification pursuant to this Schedule B.
8.3. Adjustments to Pricing for Dial-Up Access Services.
--------------------------------------------------
(a) New Dial-Up Market Price.
------------------------
(i) Definitions.
(1) "New Dial-Up Market Price" for any Dial-Up Access
shall mean the price [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment]. To calculate the New
Dial-Up Market Price pursuant to this Subsection,
the price [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment].
(2) "Dial-Up Market Vendor" shall mean a vendor (not
including a Special Affiliate) that at any time
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. For the
purpose of this Subsection, Special Affiliate
shall only be deemed to include Subsections (i)
and (ii) of the definition of "Special Affiliate"
in Schedule A.
(ii) Notification Process.
Customer may provide Vendor with notice at any time of a
New Dial-Up Market Price (each such notice, a "New Dial-Up
Market Price Notice" and the date of such notice as
determined pursuant to Section 16.4 of the Master
Agreement, the "New Dial-Up Market Price Notice Date").
Each New Dial-Up Market Price Notice will contain (A) the
New Dial-Up Market Price calculation and [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], and (B) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. No later than thirty (30) calendar days after
the New Dial-Up Market Price Notice Date corresponding to
a New Dial-Up Market Price Notice, Vendor will respond to
Customer by notifying Customer in writing whether it will:
(1) accept the validity of the proposed New Dial-Up
Market Price and reduce prices to the applicable
New Dial-Up Market Price in accordance with
Subsection (iii) of this Subsection (a),
(2) accept the validity of the proposed New Dial-Up
Market Price and decline to reduce prices to the
New Dial-Up Market Price in accordance with the
corresponding New Dial-Up Market Price Notice, or
(3) dispute the validity of the proposed New Dial-Up
Market Price.
- --------------------------------------------------------------------------------
Schedule B - Page 26
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(each a "New Dial-Up Market Price Response"). Vendor shall
not unreasonably dispute the validity of a proposed New
Dial-Up Market Price.
(iii) Reduction Process.
In the event Vendor accepts a proposed New Dial-Up Market
Price pursuant to clause (1) of Subsection (ii) of this
Subsection (a), then:
(1) Effective as of the Incremental New Ports MP
Change Date, the Monthly DAP Charge [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment], and with respect to
such New Ports, Vendor will, if requested by
Customer, [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(2) Effective as of the All New Ports MP Change Date,
the Monthly DAP Charge [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment], and with respect to such
New Ports, Vendor will, if requested by Customer,
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(3) Effective as of the Base Port MP Change Date, the
Monthly EDAP Charge [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment], and with respect to such
New Ports and Existing Dial-Up Access Ports,
Vendor will, if requested by Customer, [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment].
Notwithstanding the foregoing:
(4) If Vendor accepts the validity of a proposed New
Dial-Up Market Price and reduces prices to the
applicable New Dial-Up Access Market Price in a
given calendar year, then Vendor shall not be
obligated to provide Customer with any additional
New Dial-Up Market Price Response with respect to
any New Dial-Up Market Price Notice for which the
corresponding New Dial-Up Market Price Effective
Date occurs in such calendar year.
(5) Vendor shall not be obligated to [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment]. For example, if the
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], then
Vendor will only be obligated to [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment]. If during the
following month [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment], then Vendor will be
- --------------------------------------------------------------------------------
Schedule B - Page 27
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
obligated to [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment].
(6) Vendor shall not be obligated to [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment].
(7) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(iv) Decommissioning Process.
If Vendor declines to reduce the Monthly DAP Charge or the
Monthly EDAP Charge to the New Dial-Up Market Price
pursuant to clause (2) of Subsection (ii) of this
Subsection (a), then Customer may, in its sole discretion,
do either or both of the following: (A) terminate the
Dial-Up Purchase Commitment, and (B) decommission
Dedicated Dial-Up Access Ports, subject to the following
restrictions:
(1) Customer will provide [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment] days prior written notice
of the calling areas in which Dedicated Dial-Up
Access Ports are to be decommissioned, as well as
the associated quantities of Dedicated Dial-Up
Access Ports to be decommissioned in each such
area;
(2) Customer may only decommission a number of
Dedicated Dial-Up Access Ports no greater than the
number of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(3) The effective date of decommission applicable to a
Existing Dial-Up Access Port shall not be earlier
than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(4) The decommissioning of Dedicated Dial-Up Access
Ports pursuant to this Subsection (iv) shall
result in the same approximate weighted
distribution of Dedicated Dial-Up Access Ports
across Existing Calling Areas.
(5) The right to decommission arising from any
particular New Dial-Up Market Price Notice shall
cease, on a prospective basis if and when Vendor
delivers a New Dial-Up Market Price Response, in
response to a later New Dial-Up Market Price
Notice, accepting a proposed New Dial-Up Market
Price pursuant to clause (1) of Subsection (ii) of
this Subsection (a).
(v) Dispute Resolution Process.
If Vendor reasonably disputes the validity of the New
Dial-Up Market Price pursuant to clause (3) of Subsection
(ii) of this Subsection (a), then
- --------------------------------------------------------------------------------
Schedule B - Page 28
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
each Party shall promptly escalate to the senior-executive
level all efforts by such Party to resolve such dispute.
(vi) Example.
For example:
(1) If Customer provides Vendor with [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment].
(2) Pursuant to [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment].
(3) Pursuant to [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment].
(4) Pursuant to [*Material Omitted and Separately
Filed Under an Application for Confidential
Treatment].
(5) If Customer provides [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment], Vendor would be obligated
to [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. Such
obligation would not be contrary to [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment] (a), because the
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. If Vendor
accepts [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment],
Vendor would, if requested by Customer, [*Material
Omitted and Separately Filed Under an Application
for Confidential Treatment], Vendor will, if
requested by Customer, [*Material Omitted and
Separately Filed Under an Application for
Confidential Treatment].
(b) [*Material Omitted and Separately Filed Under an Application for
--------------------------------------------------------------
Confidential Treatment].
----------------------
(i) As long as the aggregate number of Dial-Up Access Ports
then being purchased or ordered by Customer exceeds that
of any other customer of Vendor, Vendor shall not provide
dial-up access services that are Comparable Dial-Up
Services to any other Applicable DUP Purchaser (1)
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], or (2) [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. As of the Effective Date, Vendor
acknowledges that [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. In the
event that the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], Vendor
shall provide Customer with written notification of such
event within
- --------------------------------------------------------------------------------
Schedule B - Page 29
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
thirty (30) calendar days of the occurrence of such event. For
the purposes of this Subsection, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. "Applicable DUP Purchaser" shall mean any party
(including any Vendor Affiliate that resells Dial-Up Access
purchased from Vendor or another Vendor Affiliate) that is
obligated to purchase, that actually purchases, or that seeks to
purchase from Vendor or its Affiliates Dial-Up Access at any
time equivalent to more than [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] Dial-Up
Access Ports.
(ii) As long as the aggregate number of Dial-Up Access Ports then
being purchased or ordered by Customer exceeds that of any other
customer of Vendor, to the extent that Vendor provides
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] that are not [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], then Vendor shall offer, on a quarterly basis, to
provide to Customer [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; provided,
however, that if Customer's service requirements would
necessitate changes to such terms and conditions, the Parties
shall work in good faith to adjust such terms and conditions as
mutually agreed to satisfy such requirements. To the extent that
Customer accepts [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], Vendor shall provide
such services as ordered by Customer pursuant to a separate
Schedule to the Master Agreement, such services shall be deemed
Services to which the Master Agreement applies, such services
shall be subject to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. In the event
of [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], Customer shall have no further
liability to Vendor with respect to such portion of the Dial-Up
Purchase Commitment replaced pursuant to this Subsection (ii).
(iii) As long as the aggregate number of Dial-Up Access Ports then
being purchased or ordered by Customer exceeds that of any other
customer of Vendor, Vendor shall offer to Customer, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] (1) at prices that are [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], and (2) pursuant to terms and
conditions that are [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(iv) For any price proposal made by Vendor to Customer at any time
during the Term, Vendor shall in good faith represent to
Customer in writing whether or not such proposal is being made
for reasons that include Vendor's belief that an adjustment may
be required pursuant to this Subsection (b).
Schedule B - Page 30
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(v) Customer may audit Vendor's compliance with this Subsection (b)
pursuant to Article 10 of the Master Agreement. In the event
that Vendor fails to comply with this Subsection (b) [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], then Vendor shall [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment], the difference between (1) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], and (2) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(c) Regulatory Changes Affecting Pricing.
------------------------------------
In the event that any change in applicable Federal regulations results
in a significant, demonstrable change in Vendor's costs to provide the
Dial-Up Access Services, then:
(i) in the case of a cost increase, Vendor may pass such applicable
cost increase along to Customer on an Out-of-Pocket Expense basis
so long as such increase is passed along to all of Vendor's other
Dial-Up Access customers to which such costs are not prohibited
from being passed; provided, however, Customer may elect, with
120 days notice, to decommission in accordance with Subsection
(a)(iv) of this Section any of the Dial-Up Access Ports affected
by such Federal regulatory cost increase (however, Customer shall
not be required to pay such cost increase during the 120-day
decommissioning notice period); provided further, however, that
(A) the decommissioning of Dedicated Dial-Up Access Ports across
the Vendor Network pursuant to this Subsection shall be in
proportion to the approximate weighted distribution of Dedicated
Dial-Up Access Ports across Existing Calling Areas, and (B) the
date and, proportional rate restrictions on decommissioning in
Subsection (a)(iv) of this Section shall not apply with respect
to decommissioning under this Section; and
(ii) in the event of a cost decrease, Vendor shall pass such decrease
to Customer.
In connection with any such increase or decrease, Vendor shall
identify the Dial-Up Access Ports affected by such regulatory cost
change and the amount of the applicable change to the Monthly EDAP
Charge or Monthly DAP Charge for such affected Dial-Up Access Ports.
Any such regulatory cost change passed -through to Customer shall take
effect as of the first day of the calendar month immediately following
delivery of the regulatory cost change notice and shall continue in
effect until the date on which the next New Dial-Up Market Price
becomes applicable to such affected Dial-Up Access Ports.
8.4. Normalization Methodology And Conversion Of Services.
----------------------------------------------------
(a) Normalization Methodology.
-------------------------
For purposes of Sections 2.8(c) and 8.3(b)(ii) of this Schedule B, and
for purposes of the definitions of "Other Vendors' Decom Share" and
"Vendor's
Schedule B - Page 31
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Decom Share" set forth in Schedule A, in order to normalize a
commitment to order or purchase dial-up access provided on a usage
basis with a commitment to order or purchase Dedicated Dial-Up Access
Ports provided under this Agreement, a commitment to order or purchase
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] shall be deemed equivalent to a commitment to
purchase one (1) Dedicated Dial-Up Access Port for such month (such
conversion methodology collectively the "Normalization Methodology").
(b) Conversion of Services.
----------------------
Upon Customer's request, Vendor shall reasonably and in good faith
discuss with Customer without further obligation the modification of
the pricing methodologies applicable to the Dial-Up Access Services
that may be purchased by Customer under this Schedule B as necessary
to convert certain Dial-Up Access Services to hourly or similar usage
based pricing.
8.5. Technological Change.
--------------------
Vendor acknowledges that quality of the Dial-Up Access Services is critical
to the satisfaction of the users of Customer's services and will work to
minimize any quality issues associated with the rapid implementation of new
service technologies.
(a) Changes in [*Material Omitted and Separately Filed Under an
-----------------------------------------------------------
Application for Confidential Treatment]
---------------------------------------
In the event that Vendor determines that [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
which is used as of the Effective Date to provide [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment]
to Customer [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; provided, however, that:
(i) Vendor shall provide Customer with notification of [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] which notice shall be provided no less
than sixty (60) days before deploying such change;
(ii) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] is [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] for any
given telephone number for more than forty-five days; and
(iii) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], any reports under Section 6.3 (o) or
7.3 (a) of this Schedule B other than the reports described in
Section 7.3 (a)(i) of this Schedule B, then:
(1) Vendor may deploy [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment];
(2) with respect to any [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]; and
(3) if Vendor is unable to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
Schedule B - Page 32
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
(b) Technology Briefing.
-------------------
Vendor will provide Customer with a semi-annual technology
briefing detailing [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
Information exchanged by the Parties in conjunction with
such briefing shall be deemed Confidential Information for
the purposes of the Agreement.
9. SPECIFICATIONS AND ACCEPTANCE CRITERIA
9.1. Specifications.
--------------
Dedicated Dial-Up Access Ports provided hereunder shall fully conform
with the following Specifications (collectively, the "Dial-Up Access
Specifications"):
(a) By [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], Vendor will provision [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) The Dial-Up Access Services shall [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Access methods shall include:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(viii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ix) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
Schedule B - Page 33
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(x) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(c) Vendor, [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], shall comply [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] described in Subsection (b) of this
Section.
9.2. Acceptance Criteria.
-------------------
The following Acceptance Criteria shall apply to Dedicated Dial-Up
Access Ports:
Newly activated Dedicated Dial-Up Access Ports will fail Dial-Up
Acceptance Testing if any of the following thresholds is met:
(a) greater than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(b) greater than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(c) greater than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
provided, however, that notwithstanding the foregoing, [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]. The Acceptance Test Period will be [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
Customer will not [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Schedule B - Page 34
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B-1
Dial-Up Purchase Commitment
1. CONFIDENTIALITY
This Exhibit specifies the Monthly Targets for Customer's Dial-Up Purchase
Commitments pursuant to Schedule B. The Parties specifically acknowledge
that the purchase commitment information contained herein is highly
confidential and that its disclosure to the public or third parties could
cause significant harm to either Customer or Vendor or both.
2. DIAL-UP PURCHASE COMMITMENT
The [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] Target for the following [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment] shall be as
follows:
(a) For [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Target shall be [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];
(b) For [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Target shall be [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment];
(c) For [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Target shall be [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]; and
(d) For [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment], the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] Target shall be [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] (except as
otherwise mutually agreed upon by the Parties).
Exhibit B-1 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B-2
Prices for Dial-Up Access Services
1. CONFIDENTIALITY
This Exhibit specifies the prices for Dial-Up Access Services provided
pursuant to the Master Agreement and Schedule B. The Parties specifically
acknowledge that the pricing information contained herein is highly
confidential and that its disclosure to the public or third parties could
cause significant harm to either Customer or Vendor or both.
2. MARKET PRICE FOR EXISTING DIAL-UP ACCESS PORTS
The Monthly EDAP Charge shall be set at [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], which price,
effective from [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] through [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], shall be [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment] dollars ($[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]). [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]:
(a) From [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] through [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment];
(b) From [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment],
(c) From [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
Notwithstanding the foregoing, [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
3. MARKET PRICE FOR DIAL-UP ACCESS PORTS
The Monthly DAP Charge shall be set at [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], which price,
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]shall be [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. From [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment] shall
be [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Notwithstanding the foregoing, [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment].
Exhibit B-2 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE C
Broadband Backhaul Services, Service Levels, Pricing and Other Terms
1. TERM
The term of this Schedule C shall begin on the Effective Date and shall
expire on December 31, 2004, unless terminated earlier in accordance with
the Agreement; provided that Customer may, with the consent of Vendor,
renew such term for three (3) additional one (1) year periods by giving
Vendor at least thirty (30) days notice prior to the end of the applicable
term or renewal period (such period, as terminated earlier or so extended,
the "Broadband Term").
2. CONSTRUCTION OF AGREEMENT WITH RESPECT TO NON-XDSL BROADBAND SERVICES
(a) Although this Agreement governs Broadband Backhaul Services for
both xDSL and other broadband services, the Parties acknowledge
that the particular rights, duties and obligations set forth
herein, including service levels, delivery of service, failure to
meet service levels, failure to deliver service, the Broadband
Specifications, and other provisions, and the impact of such
matters on related purchase commitments as well as other rights
and remedies, have been worked out in the particular context of
xDSL broadband services. Therefore, although the rights, duties
and obligations herein apply to broadband services other than
xDSL, the Parties agree to negotiate in good faith how certain
provisions herein that are stated in terms particularly relevant
to xDSL broadband services will apply in the context of broadband
services other than xDSL.
(b) The Parties acknowledge and agree that with respect to certain
Broadband Backhaul Services used to provide any non-xDSL or non-
cable broadband service with [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] utilized
for an xDSL or cable broadband service and for which delivery of
such non-xDSL or non-cable service [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
the Other Broadband Purchase Commitment and the pricing set forth
in Exhibit C-2 of this Schedule C shall each be adjusted, as
mutually agreed, to reflect an appropriate methodology; provided,
however, that (i) with respect to the adjustment to the Other
Broadband Purchase Commitment, such adjustment shall only be made
to reflect such appropriate methodology, and the commitment
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] shall not be increased or reduced but
shall be applied to the adjusted methodology, and (ii) Section
7.2 of this Schedule C shall continue to apply to the Other
Broadband Purchase Commitment and pricing, as adjusted.
3. ORDERING AND ACCEPTANCE CRITERIA
3.1. Ordering.
--------
Schedule C - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(a) Forecasts of Customer's Expected Broadband Backhaul Services
------------------------------------------------------------
Needs in New LATAs. At the start of every calendar quarter,
------------------
Customer will provide Vendor with a [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
forecast that sets forth those New LATAs in which Customer
expects it will need Broadband Backhaul Services [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) Ordering Broadband Backhaul Services in Existing LATAs. The
------------------------------------------------------
Parties shall mutually agree upon the standards and procedures
for ordering [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. The Parties specifically
agree that a principal objective of the ordering process shall be
to meet in a timely manner [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. The
Parties shall mutually agree upon changes from time to time to
the ordering process to facilitate the provision of Broadband
Backhaul Services to Customer.
(c) Launch of Broadband Backhaul Services in New LATAs. Customer
--------------------------------------------------
shall direct the launch of [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. Any time
Customer requests that Vendor provision Broadband Backhaul
Services in a New LATA, Customer will provide Vendor with
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. In the event that Customer [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], the Parties will mutually agree upon the
extent, if any, that [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] Customer will
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(d) Geographic Distribution. Notwithstanding the foregoing:
-----------------------
(i) the distribution of Vendor Broadband Subscriber Lines
providing xDSL broadband services will be approximately
proportional to the nationwide distribution of all of the
Aggregate DSL Subscriber Lines; and
(ii) the distribution of Vendor Broadband Subscriber Lines
providing broadband services other than xDSL will be
approximately proportional to the nationwide distribution of
all of the Aggregate Other Subscriber Lines.
For the purposes of this Subsection (d), "distribution" means the
distribution of the corresponding Vendor Broadband Subscriber
Lines across rural versus urban areas, across the contiguous
states of the United States, and between Covered Subscriber Lines
and non-Covered Subscriber Lines. In the event that Vendor
believes Customer has provided Vendor with tasking that is
inconsistent with this Subsection (d), the Parties will mutually
agree on an equitable resolution consistent with the intent of
this Section. In January and July of each calendar year,
Customer shall provide Vendor with relevant information regarding
the distribution of Aggregate Subscriber Lines.
Schedule C - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(e) Reports on Subscriber Line Activations. At least once per week
--------------------------------------
Customer will provide Vendor a report on the number of Vendor
Broadband Subscriber Lines activated from each service provider
by LATA for the previous seven (7) day period.
3.2. Delivery.
--------
(a) General. Vendor shall provision Broadband Backhaul Services for
-------
each Existing LATA in accordance with the standards and
procedures described in Section 3.1(b) of this Schedule C. Vendor
shall use demonstrable good faith diligent efforts to provision
Broadband Backhaul Services for each New LATA within [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] of its receipt of a New LATA Notice
corresponding to such New LATA.
(b) Reductions in Broadband Purchase Commitments for Delivery
---------------------------------------------------------
Failures.
--------
(i) Definitions.
(1) "Failure Percentage" means, as of a Measurement Date,
the percentage resulting from [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]
(2) "Failure Threshold Percentages" means the percentage
set forth in the following table:
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(3) "Threshold Difference" as of a Measurement Date equals
the Failure Percentage minus the Failure Threshold
Percentage, except that the Threshold Difference can
never be less than zero.
(ii) Reduction Calculation. Reduction of the Broadband Purchase
Commitments shall be as set forth in Section 3.1 of Exhibit
C-1 of this Schedule C.
(iii) Examples. Examples of reductions in the Broadband Purchase
Commitments for delivery failures are set forth in Section
3.2 of Exhibit C-1 of this Schedule C.
(c) If Vendor fails to (i) provision Broadband Backhaul Services for
a New LATA within [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment] days of its receipt of
a New LATA Notice corresponding to such New LATA, and (ii) use
demonstrable good faith diligent efforts to provision Broadband
Backhaul Services for such New LATA, then Customer may terminate
its obligations with respect to the Broadband Backhaul Purchase
Commitments. Upon Customer's request, Vendor shall provide
Customer with information and supporting documentation which
demonstrates Vendor's good faith diligent efforts to provision
such services for the applicable New LATA within [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] days of receipt of the corresponding
Schedule C - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
New LATA Notice (e.g., documents showing Vendor's ordering of
circuits in such New LATA).
3.3. Acceptance Criteria.
-------------------
(a) Prior to notifying Customer [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], Vendor
will [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
(b) The Broadband Backhaul Services will be deemed accepted
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] when the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. Vendor will reasonably cooperate with acceptance
testing by Customer. Customer will begin providing the Broadband
Backhaul Services to its end-customers as soon as reasonably
practicable after Customer completes its acceptance testing.
3.4. Broadband Backhaul Purchase Commitments.
---------------------------------------
Customer agrees to purchase Broadband Backhaul Services according to
the purchase commitments set forth in Exhibit C-1 of this Schedule C.
4. TERMINATION
4.1. Vendor Termination.
------------------
In the event that the aggregate number of Vendor Broadband Subscriber
Lines:
(a) is less than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] as of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment];
(b) is less than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] as of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment];
(c) is less than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] as of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]; or
(d) is less than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] as of [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment],
Vendor may within thirty (30) calendar days of the applicable calendar
day set forth above for the corresponding Vendor Broadband Subscriber
Line threshold provide Customer with notice of termination of this
Schedule C. Such termination shall become effective on the date
specified in such notice (which date shall be no earlier than one
hundred fifty (150) calendar days following the date of such notice
and no later than the end of the Broadband Term) unless within thirty
(30) calendar days of the date of such
Schedule C - Page 4
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
notice, the number of Vendor Broadband Subscriber Lines is equal to or
greater than such corresponding threshold. In the event of such
termination, (i) Customer shall have no liability to Vendor for
failure to achieve the Broadband Purchase Commitments, and (ii) except
with respect to the provision of Transition Assistance pursuant to
this Section, Vendor shall have no liability to Customer. Upon such
termination, Vendor shall provide Transition Assistance in accordance
with Section 13.4 of the Master Agreement. Nothing in this Section
shall be deemed to affect the obligations of Customer with respect to
the Broadband Purchase Commitments so long as Vendor has not provided
Customer with a notice of termination pursuant to this Section.
4.2. Termination of xDSL Field Trials.
--------------------------------
The xDSL field trials described in the Original Agreement for (a)
Phoenix, Arizona, (b) San Francisco, California, (c) Birmingham,
Alabama, (d) northern Virginia, and (e) Redmond, Washington shall be
terminated as of January 31, 2000; provided, however, that any of such
field trials will be continued upon the request of Customer. In the
event of any such continuation, Customer shall reimburse Vendor for
Out-of-Pocket Expenses incurred by Vendor as a result of such
continuation.
5. DESCRIPTION OF SERVICES
Vendor shall provide nationwide (i.e., within the forty-eight contiguous
states of the United States plus Hawaii) broadband (including xDSL, cable,
wireless and satellite technologies) backbone integration services
combining inter- and intra-LATA interconnects, aggregation equipment, co-
location, backbone transport and network management control. Such services
shall include the provision of the services described in this Article 5.
5.1. Summary and Implementation Plan.
-------------------------------
Vendor will provide program management, network engineering,
deployment, and operations support for broadband network services
integration for Customer.
(a) Program Management.
------------------
Vendor will assign a Program Management Team that will be
responsible for the [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. The Program
Management Team will serve as [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. Such team
will coordinate the activity of all [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
and will be responsible for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(b) Network Engineering.
-------------------
Vendor will provide network engineering expertise to address
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] that arise [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. Vendor will be responsible for
Schedule C - Page 5
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(c) Deployment.
----------
Vendor will assign a Deployment Team that will consist of
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Such team will be responsible for
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(d) Operations.
----------
Vendor's NOCs will handle the operation and maintenance of the
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. The NOC shall be connected to
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
5.2. Design and Topology of the Vendor Network.
-----------------------------------------
Vendor will utilize its Global Network Infrastructure (GNI) backbone
for transport of broadband traffic to Customer data centers;
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. The Parties agree to establish a mutually
acceptable [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], including with respect to
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] where both Parties have [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
(a) Equipment Configuration.
-----------------------
Vendor acknowledges that quality of the Broadband Backhaul
Services is critical to the satisfaction of the users of
Customer's services and will work to minimize any [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. Vendor will utilize a [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. Customer will reasonably cooperate with
Vendor in the testing and implementation of any [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. A sample configuration of equipment is
described below.
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) Points of Presence (POPs).
-------------------------
Vendor currently locates broadband POPs in GTE Internetworking
GNI facilities. Such GNI facilities provide space for [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(c) Network Topology.
----------------
Schedule C - Page 6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(i) The Vendor Network utilized to provide Broadband Backhaul
Services is currently structured as a [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. Broadband POPs will be located at [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment].
(ii) Traffic from [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(iii) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(iv) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Under this Schedule C, Vendor is not
currently responsible for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(d) Vendor agrees that any changes to the Broadband Backhaul Services or
to the Vendor Network used to provide the Broadband Backhaul Services
will be fully functional with services provided by Customer without
modification of, or addition to, client or host software used to
provide services provided by Customer that utilize the Broadband
Backhaul Services.
(e) In the event that Customer requests a change to the hub architecture,
or network bandwidth from that which is described in this Schedule C
(other than a request for increased throughput priced pursuant to
Section 8(a) of this Schedule C), Vendor will provide Customer with
Vendor's proposed increase, if any, to the prices set forth in this
Schedule C. To the extent that Customer accepts such proposal, Vendor
shall provide the Broadband Backhaul Services in accordance with the
requested change and Vendor's proposal to the extent accepted by
Customer.
5.3. Deployment.
----------
(a) Vendor will take the following steps in preparation for deploying
equipment used to provide the Broadband Backhaul Services as may be
appropriate:
(i) Coordinating [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) Negotiating with [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(iii) Negotiating with [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(iv) Coordinating with [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
Schedule C - Page 7
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(v) Procuring [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) Receiving, storing, and tracking [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]; and
(vii) Scheduling [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) Preparation.
-----------
(i) Site Survey. Vendor will conduct site surveys in order to
identify [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] which must be completed
prior to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(ii) Inventory of Materials. Vendor will prepare inventories of
materials prior to [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(iii) Equipment Staging. Vendor will stage and test all equipment in a
central location [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. Staging consists of
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(iv) Shipping. Vendor will arrange for shipping of the [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(v) Installation. Vendor will install [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. Installation includes the following activities:
(1) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(2) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(3) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(4) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(5) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
Schedule C - Page 8
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(6) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(7) [*Material Omitted And Separately Filed Under an Application
for Confidential Treatment]; and
(8) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
(c) Maintenance.
-----------
(i) Vendor will perform maintenance of equipment used to provide the
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]. Vendor will handle most [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(ii) Vendor will cooperate with Customer with respect to new versions
of software used to provide those services provided by Customer
that utilize the Broadband Backhaul Services.
(iii) Vendor shall reasonably coordinate with Customer regarding any
maintenance activity.
(d) Quality Control.
---------------
Vendor will maintain a Quality Control Program to ensure all
reasonable commercial standards applicable to Broadband Backhaul
Services are adhered to.
5.4. Management of Circuits.
----------------------
Vendor will manage the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. Vendor will utilize existing
procedures and systems for [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]. As part of the installation
activities outlined above, Vendor will [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
5.5. Operations.
----------
Vendor will provision, staff and operate a NOC (currently in Columbia,
Maryland) with dedicated support for Customer and a backup NOC at a
separate location (such backup NOC is currently located in Chantilly,
Virginia). Responsibilities of Vendor's operations support team include the
following:
(a) Operation of the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) Operation of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Schedule C - Page 9
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(c) Utilization of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) Monitoring [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(ii) Measuring [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(iii) Monitoring [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(iv) Tracking [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(d) Coordination and management of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(e) Coordination and reporting of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(f) Support of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(g) Identification and tracking of [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(h) Support for [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(i) Provision of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(j) Maintenance of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(k) Coordination of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] and maintenance of [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].
(l) Support of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] in accordance with [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].
(m) Delivery of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
Schedule C - Page 10
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(vii) Upon Customer's request, Vendor shall provide Customer with
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] Broadband Backhaul Services under this
Schedule C. In addition, for [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] Broadband
Backhaul Services under this Schedule C, Vendor shall provide to
Customer a daily report [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], Vendor will work
cooperatively with Customer to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], and, upon
Customer's reasonable request, Vendor will provide [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]. In the event of a [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], Vendor will
work cooperatively with Customer to share additional [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment], and, upon Customer's reasonable request, Vendor will
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(viii) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]:
(1) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(2) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(3) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(4) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
Schedule C - Page 11
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(5) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(6) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(7) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(8) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(9) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(10) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(11) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]; and
(12) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment],
provided that Vendor shall provide Customer with weekly reports on
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor shall provide such reports to Customer
on a daily basis. Customer may periodically request additional reports
that assist in improving network quality and [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment].
Vendor will provide these additional reports, or the raw data, subject
to technical reasonableness.
5.6. Aggregation Router Equipment.
----------------------------
(a) Aggregation router equipment used to provide the Broadband Backhaul
Services shall be [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] and shall not be [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment].
(b) Customer may specify [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
5.7. Excluded Functions.
------------------
Vendor shall not be responsible for providing the following with respect to
the Broadband Backhaul Services:
(a) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
Schedule C - Page 12
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(b) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment];
(c) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]; and
(d) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
6. SERVICE LEVELS
For each of the Service Levels set forth in this Article 6, scheduled
maintenance by Vendor (or a third party) coordinated with Customer pursuant
to Section 5.3(c)(i) of this Schedule C will be excluded from the Service
Level performance calculations.
6.1. Availability.
------------
(a) "Broadband Network Availability" for a calendar month is defined
as the percentage calculated as (i) [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], divided by (ii) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(b) The Service Level applicable to Broadband Network Availability
for a calendar month shall be as follows: Broadband Network
Availability for each calendar month shall exceed [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. Vendor shall provide Customer on a daily
basis with reports on Broadband Network Availability, and
Vendor's performance relative to such Service Level shall be
measured on a monthly basis for each calendar month.
(c) In the event that Broadband Network Availability is below
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ( [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment]
%) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
6.2. Packet Loss.
-----------
(a) "Broadband Packet Loss Percentage" means, for a calendar month, the
quantity calculated as (i) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], divided by (ii)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) The Service Level applicable to Broadband Packet Loss Percentage shall
be as follows: Broadband Packet Loss Percentage for each calendar
month shall be less than or equal to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] percent
([*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] %) for such month. Vendor shall provide
Customer on a daily basis with reports on
Schedule C - Page 13
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Broadband Packet Loss Percentage, and Vendor's performance relative to
such Service Level shall be measured on a monthly basis for each
calendar month.
6.3. Failed Sessions.
---------------
(a) "Failed Sessions" means [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
(b) The Service Level applicable to Failed Sessions shall be that no more
than [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] percent ([*Material Omitted and Separately
Filed Under an Application for Confidential Treatment] %) [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment]. Vendor shall provide Customer on a daily basis with
reports on Failed Sessions, and Vendor's performance relative to such
Service Level shall be measured on a monthly basis for each calendar
month.
6.4. Abnormal Disconnects.
--------------------
(a) "Broadband Abnormal Disconnect Percentage" means, for each calendar
day of the Broadband Term, the amount calculated as (i) [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment], divided by (ii) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]. "Monthly Broadband
Abnormal Disconnect Percentage" means, for each calendar month of the
Broadband Term, the amount calculated as (x) [*Material Omitted and
Separately Filed Under an Application for Confidential Treatment],
divided by (y) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) The Service Level applicable to Monthly Broadband Abnormal Disconnect
Percentage shall be as follows: Monthly Broadband Abnormal Disconnect
Percentage during a calendar month shall not exceed [*Material Omitted
and Separately Filed Under an Application for Confidential Treatment]
percent ([*Material Omitted and Separately Filed Under an Application
for Confidential Treatment] %). Vendor's performance relative to such
Service Level shall be reported by Customer on a monthly basis for
each calendar month, if technically feasible.
6.5. Failure to Perform.
------------------
(a) If Vendor fails to meet any Service Level, Vendor shall (i) promptly
notify Customer of such failure (unless Customer first discovered and
notified Vendor of such failure), (ii) investigate and report on the
causes of the failure; (iii) advise Customer, as and to the extent
requested by Customer, of the status of remedial efforts being
undertaken with respect to such failure; (iv) take commercially
reasonable efforts to correct the failure, and begin meeting the
Service Levels; and (v) take appropriate preventive measures to
minimize the likelihood of the failure recurring.
Schedule C - Page 14
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(b) Notwithstanding the foregoing, Vendor's failure to meet or
correct Service Level failures under this Schedule C during the
first six months following the Effective Date shall not
constitute a breach of the Agreement.
(c) Notwithstanding the foregoing, Vendor's failure to use
commercially reasonable efforts to meet or correct Service Level
failures with respect to the Abnormal Disconnects in and of
itself shall not constitute a breach of the Agreement.
(d) Vendor shall not be deemed in breach of such Service Levels to
the extent that such breach is attributable to [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment].
(e) Notwithstanding anything to the contrary to this Agreement, under
no circumstances shall Customer be permitted to terminate any
portion of the Agreement other than this Schedule C as a result
of any material breaches, whether cured or uncured, of the
Service Levels in this Schedule C.
6.6. Meetings.
--------
Vendor and Customer shall hold weekly meetings at Customer's site or
via telephone conference call (unless otherwise requested by Customer)
to assess Vendor's performance under this Schedule C. During
emergency situations, meetings will be held at least on a daily basis.
6.7. Periodic Review of Service Levels.
---------------------------------
As requested by Customer or Vendor, Customer and Vendor shall review
the Service Levels described in this Schedule C and shall make
mutually agreed-upon adjustments to them as appropriate to reflect
performance capabilities associated with advances in the technology
and methods used to provide the Broadband Backhaul Services.
7. PRICING
7.1. Charges for Broadband Backhaul Services.
---------------------------------------
(a) The monthly charges for the Broadband Backhaul Services shall be
computed as the applicable Monthly Aggregate Subscriber Line
Charges calculated pursuant to Exhibit C-2 plus the Monthly Pass-
Through Expenses calculated pursuant to Subsection (b) of this
Section.
(b) Monthly Pass-Through Expenses.
-----------------------------
(i) "Monthly Pass-Through Expenses" means the following third-
party charges incurred by Vendor to provide the Broadband
Backhaul Services (including Broadband Backhaul Services not
yet accepted by Customer) during a calendar month of the
Broadband Term, for which Customer shall reimburse Vendor on
an Out-of-Pocket Expenses basis:
(1) Third-party charges for the
Schedule C - Page 15
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] is necessary
to provide the Broadband Backhaul Services; and
(2) Third-party charges approved in advance by Customer for
the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] at Customer's
facilities.
(ii) Vendor shall act as payment agent for Customer with respect
to the Monthly Pass-Through Expenses and shall pay the
corresponding third-party charges comprising the Monthly
Pass-Through Expenses.
(iii) Vendor shall use commercially reasonable efforts to
minimize the amount of Monthly Pass-Through Expenses, by
among other means identifying and considering multiple
sources for the services and materials corresponding to
such expenses.
7.2. Adjustments to Pricing for Services.
-----------------------------------
(a) Broadband Backhaul Market Price.
-------------------------------
(i) Definitions.
(1) "New Broadband Backhaul Market Price" shall mean the
price (or, if applicable, prices and corresponding
volumes) [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. To
calculate the New Broadband Backhaul Market Price
pursuant to this Subsection, the price for Comparable
Broadband Backhaul Services shall be reasonably
adjusted to reflect the difference between [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(2) "Broadband Backhaul Market Vendor" shall mean a vendor
(not including a Special Affiliate) that [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. For the purpose of this
Subsection, Special Affiliate shall only be deemed to
include Subsections (i) and (ii) of the definition of
"Special Affiliate" in Schedule A.
(ii) Notification Process.
Customer may provide Vendor with notice at any time of a New
Broadband Backhaul Market Price (each such notice, a "New
Broadband Backhaul Market Price Notice" and the date of such
notice as determined pursuant to Section 16.4 of the Master
Agreement, the "New Broadband Backhaul Market Price Notice
Date"). Each New Broadband Backhaul Market Price Notice
will contain (A) the New Broadband Backhaul Market Price
calculation and [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], and (B)
information sufficient to [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. No
later than thirty (30) calendar days after the Broadband
Backhaul
Schedule C - Page 16
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Market Price Notice Date corresponding to a New Broadband
Backhaul Market Price Notice, Vendor will respond to
Customer by notifying Customer in writing whether it will:
(1) accept the validity of the proposed New Broadband
Backhaul Market Price and reduce prices to the
applicable New Broadband Backhaul Market Price in
accordance with Subsection (iii) of this Subsection
(a),
(2) accept the validity of the proposed New Broadband
Backhaul Market Price and decline to reduce prices to
the New Broadband Backhaul Market Price in accordance
with Subsection (iii) of this Subsection (a), or
(3) dispute the validity of the proposed New Broadband
Backhaul Market Price
(each a "New Broadband Backhaul Market Price Response").
Vendor shall not unreasonably dispute the validity of a
proposed New Broadband Backhaul Market Price.
(iii) Reduction Process.
In the event Vendor accepts a proposed New Broadband
Backhaul Market Price pursuant to clause (1) of Subsection
(ii) of this Subsection (a), then effective as of the later
of (a) the New Broadband Backhaul Market Price Effective
Date corresponding to such New Broadband Backhaul Market
Price Notice, and (b) [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], the
Monthly Per Subscriber Line Charge will be reduced to the
New Broadband Backhaul Market Price set forth in the
corresponding New Broadband Backhaul Market Price Notice,
and with respect to such Broadband Backhaul Services,
Vendor will, if requested by Customer, [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]; provided, however, that Vendor shall not be
obligated to [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
Notwithstanding the foregoing:
(1) Vendor shall not be obligated to reduce the Monthly Per
Subscriber Line Charge at a rate that is more rapid
than the rate at which the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] provides Customer with [*Material Omitted
and Separately Filed Under an Application for
Confidential Treatment] relative to the applicable
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], as measured
monthly.
Schedule C - Page 17
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Example 1 - [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]: For
example, [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment].
Example 2 - [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]: For
example, if instead, [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment].
(2) Vendor shall not be obligated to match the average
bandwidth available per user at peak for the Comparable
Broadband Backhaul Services corresponding to a New
Broadband Backhaul Market Price at a rate that is more
rapid than the rate in which the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] provides [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
relative to the applicable [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(3) A New Broadband Backhaul Market Price shall be
applicable only during such periods as [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(iv) Decommissioning Process.
If Vendor declines to reduce the Monthly Per Subscriber Line
Charge to the New Broadband Backhaul Market Price pursuant
to clause (2) of Subsection (ii) of this Subsection (a),
then Customer may, in its sole discretion, do either or both
of the following: (A) terminate the Broadband Backhaul
Purchase Commitment, and (B) disconnect Vendor Broadband
Subscriber Lines from the Vendor Network, subject to the
following restrictions:
(1) Customer will provide [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]
days prior written notice of the LATA or other
geographic area in which Vendor Broadband Subscriber
Lines are to be disconnected from the Vendor Network,
as well as the associated quantities of Vendor
Broadband Subscriber Lines to be disconnected in each
such LATA or other geographic area.
(2) Customer may not order the disconnection of Vendor
Broadband Backhaul Subscriber Lines from the Vendor
Network in amounts greater than the number of the
Aggregate Subscriber Lines utilizing Comparable
Broadband Backhaul Services that are provided to
Customer by other entities at or below such New
Broadband Backhaul Market Price.
Schedule C - Page 18
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(3) The disconnection of Vendor Broadband Subscriber Lines
from the Vendor Network pursuant to this Subsection
7.2(a)(iv) shall result in the same approximate
weighted distribution of Vendor Broadband Subscriber
Lines across all Existing LATAs. For the purposes of
this Subsection (3), "distribution" means the
distribution of the corresponding Subscriber Lines
across rural versus urban areas, across the contiguous
states of the United States, and between Covered
Subscriber Lines and non-Covered Subscriber Lines.
(v) Dispute Resolution Process.
If Vendor reasonably disputes the validity of the New
Broadband Backhaul Market Price pursuant to clause (3) of
Subsection (ii) of this Subsection (a), then each Party
shall promptly escalate to the senior-executive level all
efforts by such Party to resolve such dispute.
(b) [*Material Omitted and Separately Filed Under an Application
------------------------------------------------------------
for Confidential Treatment]
---------------------------
(i) As long as the aggregate number of Vendor Broadband
Subscriber Lines exceeds that of any other customer of
Vendor, Vendor shall not provide [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] to any other [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment]. For
the purposes of this Subsection, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. In the event that the [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment], Vendor shall [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment],
Vendor shall [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment]. "Applicable BB
Purchaser" shall mean any party (including any Vendor
Affiliate that resells Broadband Backhaul Services purchased
from Vendor) that is obligated to purchase, that actually
purchases, or that seeks to purchase from Vendor Broadband
Backhaul Services at any time for more than the Applicable
BB Volume for the then-current calendar year. "Applicable BB
Volume" means (A) [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] subscriber
lines, (B) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines,
(C) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines,
(D) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines,
and (E) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] subscriber lines.
(ii) As long as the aggregate number of Vendor Broadband
Subscriber Lines exceeds that of any other customer of
Vendor, to the extent that Vendor provides broadband
backhaul services that are not Comparable Broadband Backhaul
Services, then Vendor shall offer, [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]
Schedule C - Page 19
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
to provide to Customer such broadband backhaul services at
the prices charged or available to, and upon the terms and
conditions applicable to, any Applicable BB Purchaser;
provided, however, that if [*Material Omitted and Separately
Filed Under an Application for Confidential Treatment], the
Parties shall work in good faith to [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. To the extent that Customer accepts [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor shall [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment]. For purposes of this Subsection (ii), broadband
backhaul services that are not Comparable Broadband Backhaul
Services include, but are not limited to, an end-to-end
broadband service which includes the local loop, and usage-
based broadband backhaul services.
(iii) As long as the aggregate number of Vendor Subscriber Lines
exceeds that of any other customer of Vendor, Vendor shall
offer to Customer [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(iv) For any price proposal made by Vendor to Customer at any
time during the Term, Vendor shall in good faith represent
to Customer in writing whether or not such proposal is being
made for reasons that include Vendor's belief that an
adjustment may be required pursuant to this Subsection (b).
(v) Customer may audit Vendor's compliance with this Subsection
(b) pursuant to Article 10 of the Master Agreement. In the
event that Vendor fails to comply with this Subsection (b)
(e.g., fails to adjust pricing in accordance with this
Subsection (b)), then Vendor shall [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment] with respect to the aggregate volume of Broadband
Backhaul Services purchased hereunder [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
8. SPECIFICATIONS
The Broadband Backhaul Services provided hereunder shall fully conform with
the following Specifications (collectively, the "Broadband
Specifications"):
(a) Vendor will [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] For each [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], Vendor shall provide such [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] at a charge to Customer that [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment] ($[*Material Omitted and Separately Filed
Under an Application for Confidential Treatment]) [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
(b) Each circuit used to provide Broadband Backhaul Services between
the [*Material Omitted and Separately Filed Under an Application
for
Schedule C - Page 20
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Confidential Treatment] shall have [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
(c) [*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], will be fully compliant with (i)
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment], as such referenced specifications may
change from time to time, provided that Vendor shall not be
required to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], but shall be required to
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment] within a commercially reasonable period
of time after such software is provided and after successful
testing by Vendor.
(d) If Vendor changes [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment], it will be [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]. As of the Effective Date, [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(e) The Broadband Backhaul Services will support the following
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vi) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(vii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(viii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
Schedule C - Page 21
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ix) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment];
(x) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]; and
(xi) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
The Parties acknowledge and agree that as of the Effective Date,
the [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]. The Broadband Backhaul Services will
support any [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] provided by the
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
(f) Any Broadband Backhaul Market Vendor shall support the [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment].
The Parties acknowledge and agree that this Article 8 does not set
forth a complete listing of required specifications applicable to
Broadband Backhaul Services that are used to provide any non-xDSL
services. Any such specifications not set forth in this Article 8
shall be mutually agreed upon by the Parties pursuant to Article 2 of
this Schedule C.
9. LIABILITY RESTRICTIONS
(a) Subject to Subsection (d) of this Section, the liability of
Vendor to Customer for all damages arising out of or related to
the Services provided under this Schedule will be limited to, and
will not exceed, in the aggregate during any calendar year, ten
percent (10%) of the aggregate amounts paid to Vendor by Customer
(excluding Out-of-Pocket Expenses and Monthly Pass-Through
Expenses) under this Schedule during the twelve (12) month period
preceding the date of the event giving rise to such damages;
provided, however, for the initial twelve (12) months following
the Effective Date, the foregoing cap shall be no less than Five
Million Dollars ($5,000,000). Subject to Subsections (b) and (d)
of this Section, the liability of Vendor to Customer for damages
arising out of or related to Services provided under this
Schedule caused by the acts or omissions of third parties beyond
the reasonable control of Vendor will be further limited and will
not exceed, in the aggregate during any calendar year, the lesser
of (i) five percent (5%) of the aggregate amounts paid to Vendor
by Customer (excluding Out-of-Pocket Expenses and Monthly Pass-
Through Expenses) under this Schedule during the twelve (12)
month period preceding the date of the event giving rise to such
damages, or (ii) Ten Million Dollars ($10,000,000); provided,
however, for the initial twelve (12) months following the
Effective Date, the foregoing cap shall be no less than Three
Million Dollars ($3,000,000).
(b) In the event of any liability of Vendor to Customer for damages
arising out of or related to Services provided under this
Schedule caused by the acts or omissions
Schedule C - Page 22
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
of third parties beyond the reasonable control of Vendor, then the
Parties agree as follows:
(i) Vendor agrees to vigorously pursue the recovery of damages
against the third party causing the damage, including through
negotiations, dispute resolution, or both, to maximize the
damages recoverable against such third party;
(ii) Vendor agrees to pass through to Customer any amounts that
Vendor actually recovers from such third party relating to
damages incurred in connection with Services provided to
Customer under this Schedule;
(iii) Customer agrees that in the event that Vendor has paid any
amounts to Customer pursuant to Subsection (a) of this Section
prior to the recovery of damages from a third party, Vendor may
reduce the amount of recovery received from such third party by
the amount previously paid to Customer in respect of such event
causing the damages; and
(iv) Amounts recovered by Vendor from third parties shall be first
passed on to Customer until Customer's full damages are
satisfied.
(c) IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A PARTY BE
LIABLE TO THE OTHER PARTY FOR INDIRECT OR CONSEQUENTIAL, EXEMPLARY,
PUNITIVE OR SPECIAL DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
(d) The limitations set forth in Subsection (a) of this Section shall not
apply with respect to (i) intentional breach by Vendor; (ii) damages
occasioned by an intentional tort or the gross negligence of Vendor;
(iii) damages occasioned by Vendor' breach of its obligations
described in Article 11 (Confidentiality) of the Master Agreement, or
(iv) claims subject to indemnification pursuant to this Agreement
(such amounts paid by the indemnitee to third parties shall be deemed
to be direct damages) other than claims subject to the indemnity set
forth in Section 15(a) of the Master Agreement.
(e) Each Party shall have a duty to reasonably mitigate (i.e., minimize)
damages for which the other Party is responsible.
Schedule C - Page 23
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C-1
Broadband Backhaul Purchase Commitment
1. CONFIDENTIALITY
This Exhibit specifies Customer's Broadband Backhaul Purchase Commitments
pursuant to Schedule C. The Parties specifically acknowledge that the
purchase commitment information contained herein is highly confidential and
that its disclosure to the public or third parties could cause significant
harm to either Customer or Vendor or both.
2. BROADBAND BACKHAUL PURCHASE COMMITMENTS
2.1. DSL Purchase Commitment.
-----------------------
Customer agrees to order Broadband Backhaul Services such that:
(a) Commencing upon the Effective Date through [*Material Omitted
and Separately Filed Under an Application for Confidential
Treatment]; and
(b) Commencing upon [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] through [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment]
(such commitment, as may be reduced pursuant to the Agreement, the
"DSL Purchase Commitment").
2.2. Other Broadband Purchase Commitments.
------------------------------------
Customer agrees to order Broadband Backhaul Services such that,
during the [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
2.3. Provision of Subscriber Line Information.
----------------------------------------
Customer will provide Vendor with information regarding the number of
Vendor [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
3. REDUCTION IN BROADBAND PURCHASE COMMITMENTS FOR DELIVERY FAILURE
3.1. Reduction Calculation.
---------------------
Reduction of the Broadband Backhaul Purchase Commitments pursuant to
Section 3.2(b)(ii) of Schedule C shall be determined in accordance
with this Section. As of the [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment], the Parties will
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
Exhibit C-1 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
3.2. Example of Reduction Calculation.
--------------------------------
This Section 3.2 sets forth examples, referenced in Section
3.2(b)(iii) of Schedule C, of reductions in the Broadband Backhaul
Purchase Commitments for delivery failures pursuant to Section 3.2(b)
of Schedule C.
(a) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(c) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Exhibit C-1 - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(d) As of [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]:
(i) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(ii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Exhibit C-1 - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C-2
Prices for Broadband Backhaul Access Services
1. CONFIDENTIALITY
This Exhibit C-2 specifies the prices for Broadband Backhaul Services
provided pursuant to the Master Agreement and Schedule C. The Parties
specifically acknowledge that the pricing information contained herein is
highly confidential and that its disclosure to the public or third parties
could cause significant harm to either Customer or Vendor or both.
2. PRICES FOR BROADBAND BACKHAUL SERVICES
2.1. Monthly Per Subscriber Line Charge.
----------------------------------
"Monthly Per Subscriber Line Charge" shall be defined as follows:
(a) If a Vendor Broadband Subscriber Line is a Covered Subscriber
Line, and
(i) the Monthly Subscriber Line Aggregate is equal to or
greater than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
(ii) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(vi) the Monthly Subscriber Line Aggregate is greater than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) If a Vendor Broadband Subscriber Line is not a Covered Subscriber
Line, and
(i) the Monthly Subscriber Line Aggregate is equal to or
greater than [*Material Omitted and Separately Filed Under
an Application for Confidential Treatment];
Exhibit C-2 - Page 1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(ii) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iii) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(iv) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment];
(v) the Monthly Subscriber Line Aggregate is greater than or
equal to [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment]; and
(vi) the Monthly Subscriber Line Aggregate is greater than
[*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
Notwithstanding the foregoing, each of the foregoing Monthly Per
Subscriber Line Charges may be [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
2.2. Proration of Monthly Per Subscriber Line Charge.
-----------------------------------------------
If Customer is able to provide Vendor with information [*Material
Omitted and Separately Filed Under an Application for Confidential
Treatment], then Vendor shall [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment] If Customer is not
able to provide Vendor with such information, then
(a) no later than [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment] days after the end of
each calendar month, Customer will provide Vendor [*Material
Omitted and Separately Filed Under an Application for
Confidential Treatment], and
(b) for each [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment], Customer shall pay
[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment].
2.3. Monthly Aggregate Subscriber Line Charge.
----------------------------------------
(a) "Monthly Aggregate Subscriber Line Charge" for a calendar month
shall mean the greater of:
(i) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment]; and
(ii) [*Material Omitted and Separately Filed Under an Application
for Confidential Treatment].
Exhibit C-2 - Page 2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
For example, if [*Material Omitted and Separately Filed Under an
Application for Confidential Treatment].
(b) Except with respect to [*Material Omitted and Separately Filed
Under an Application for Confidential Treatment].
(c) Notwithstanding the foregoing, Vendor will [*Material Omitted and
Separately Filed Under an Application for Confidential
Treatment].
Exhibit C-2 - Page 3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE D
Other Services
During the Term, Customer will order from Vendor services (excluding Dial-Up
Access Services, Broadband Backhaul Services and Dial-Up Access Services
provided outside of the United States) (such services to be ordered the "Other
Services") such that the aggregate charges paid to Vendor and Vendor's
Affiliates for such Other Services are equal to or greater than [*Material
Omitted and Separately Filed Under an Application for Confidential Treatment]
dollars ($[*Material Omitted and Separately Filed Under an Application for
Confidential Treatment]) (such commitment the "Other Services Purchase
Commitment"); provided, however, that charges payable for such Other Services
ordered or purchased by Customer or a Special Affiliate of Customer during
December 1999 (collectively, the "Pre-Term Private Line Agreements") shall
contribute toward Customer's satisfaction of the Other Services Purchase
Commitment. Any orders or purchases of Other Services shall be subject to terms
and conditions mutually agreed upon by the Parties, which may include terms and
conditions similar to those set forth in the Master Agreement. Any agreement
for Vendor to provide Other Services to Customer that are private line services
(such services collectively the "Private Line Services") shall contain a most-
favored customer provision substantially similar to the one set forth in Section
8.3(b) of Schedule B. In the event that (i) Customer is offered by a third
party services similar to the Private Line Services at prices and terms more
competitive that those offered by Vendor or Vendor's Affiliates to Customer,
(ii) Customer, in its sole discretion, requests Vendor to provide Private Line
Services at prices and terms at least as favorable to Customer as such prices
and terms offered by such third party, and (iii) Vendor or Vendor's Affiliates
declines to provide Private Line Services at such prices and terms, then the
Other Services Purchase Commitment shall be reduced by the aggregate charges
paid to such third party for such services.
Schedule D - Page 1
