1
EXHIBIT 10.39
[OPTEL LOGO]
CONFIDENTIAL
March 10, 1998
Mr. Jim Price
President
I(3)S, Inc.
1530 Riverbend Street, Suite 600
Dallas, Texas 75247-4953
Re: Strategic Alliance for the Provision of High Speed Data Services
Dear Mr. Price:
TVMAX Telecommunications, Inc., d/b/a OpTel ("OpTel") and I(3)S, Inc.
("I(3)S") have been discussing a strategic alliance for the purpose of bringing
high speed data service, including without limitation Internet service, to,
among others, OpTel's residential customers. OpTel currently provides video and
telephony services to multiple dwelling units and their residents in a number of
markets across the United States. I(3)S provides system integration and network
services, including, without limitation, high speed cable data services and
Internet services, to multiple system franchise cable operators ("MSO") private
cable operators ("PCO"), and real estate investment trusts ("REIT") nationwide.
OpTel and I(3)S desire to provide high speed data services to MDUs, current and
future, served by OpTel, and neighboring businesses, in accordance with the
terms of this agreement.
The following sets forth the terms, conditions and agreements between
the parties regarding the strategic alliance for the provision of high speed
data services:
1. Purpose of Strategic Alliance.
OpTel and I(3)S hereby form an alliance for the purpose of providing
high-speed data services, which services shall include, without limitation,
Internet services ("HSDS"), to existing and future residential and commercial
customers of OpTel and to other persons to whom OpTel and I(3)S, through their
respective networks, determine to bring HSDS. It is envisioned that OpTel
which, itself and through affiliates, provides multi-channel video and
telecommunications services principally to residents of multiple dwelling units
("MDUs"), will endeavor to market and distribute HSDS provided by I(3)S in
selected MDUs from time to time being provided multi-channel video services.
Subject to the successful completion of field testing (see Paragraph 13.N
below), OpTel will initially offer the HSDS to the First of OpTel markets
commencing approximately thirty to ninety days after the parties' execution of
this agreement, Consistent with the terms set forth in this agreement, and, at
its discretion, OpTel will offer HSDS in its other markets acceptable to I(3)S
during the term of this agreement.
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2. Structure of Relationship.
The parties hereby enter into a strategic alliance for the purposes of
providing HSDS to MDUs and other customers served by OpTel under the terms of
this agreement. Each party will keep its own books and records and
maintain its own corporate existence. The parties will not be partners or joint
venturers.
3. Roles and Responsibilities of the Parties.
A. OpTel. As part of the agreements contemplated hereby,
OpTel shall:
(i) Determine, in its sole discretion, which geographic
markets (each a "Market") it wishes to offer HSDS
pursuant to these arrangements and the timing of
OpTel's offering in each market. The criteria for
determining the eligibility of a Market will be: (i)
whether the Market has available MDUs having fully
activated coaxial cable plant passings of not less
than 3,500 residential units, and (ii) whether the
Market contains a reasonably acceptable number of
higher quality MDU's, typically referred to as "Class
A" and "Class B" properties (collectively, the
"Market Criteria").I(3)S confirms the eligibility of
each of the markets identified on Schedule I attached
hereto (each an "Approved Market"). If OpTel wishes
to offer HSDS to any Market other than an Approved
Market, such Market must meet the Market Criteria and
be approved by I(3)S before I(3)S shall be obligated
to participate in the delivery of HSDS to that Market
as described herein.
(ii) Determine, at its sole discretion, which MDUs or
other customers within a Market to bring HSDS (each a
"Property Determination"). OpTel shall have the right
to discontinue HSDS to any MDU or other customer if:
(i) OpTel ceases providing its cable television
services to such MDU, (ii) OpTel determines that it
does not have the contractual or other legal right to
provide the HSDS to such MDU via its property cable
plant, or (iii) OpTel in good faith determines that
it should discontinue the HSDS to such MDU in
response to an MDU owner's request to do so or
otherwise as OpTel in good faith deems necessary for
the proper conduct of OpTel's business or to maintain
a proper relationship with the owner of an MDU. OpTel
agrees that clause (iii) of the preceding sentence
shall be applicable only with respect to
circumstances surrounding individual MDUs or MDUs
under common or affiliated ownership and shall not
give OpTel the right to terminate this agreement in
its entirety or with respect to any Market.
(iii) Prior to or upon making a Property Determination,
establish the property network in the manner and
having the physical characteristics set forth on
Schedule A (the "Property Network") and the required
local loop route also as described on Schedule A (the
"Local Route"
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(iv) Accept orders for HSDS and related services from
subscribers (each MDU resident or other customer that
subscribes to the HSDS is herein referred to as a
"Subscriber").
(v) Perform billing and collection functions related to
HSDS.
(vi) Provide marketing of the HSDS product, as determined
by OpTel, after consultation with I(3)S,
(vii) Maintain sole responsibility for all relations with
all OpTel customers and Subscribers, including
without limitation MDU residents, owners, ownership
associations and property management, except that
I(3)S will have contact with Subscribers and MDU
owners and property management as necessary for I(3)S
to perform its obligations described in subsections
3.B(ii) and (iii) below.
(viii) Maintain such permits, licenses, franchise rights and
intellectual property rights as may be required by
applicable law or as OpTel deems desirable in
connection with these matters and its business.
(ix) ***
(MATERIAL DENOTED BY *** HAS BEEN SEPARATELY FILED
WITH THE COMMISSION PURSUANT TO AN APPLICATION FOR
CONFIDENTIALITY)
The parties expressly acknowledge and agree that the provision of HSDS
at any MDU or other facility under the agreements contemplated hereby will be
entirely derivative and dependent upon OpTel's continued right to serve the
property and to maintain a video distribution plant thereon, and all
arrangements and agreements with Subscribers are dependent upon such continuing
rights. Maintenance of these rights to serve is entirely at OpTel's discretion,
and cannot be assured. Consequently, in no event shall OpTel be responsible to
I(3)S or any Subscriber in respect of the diminution in, or loss of, such video
distribution and related rights, or any other right of access, which OpTel
might endeavor to maintain. Moreover, it is expressly understood that the
substantial majority of OpTel customers for multi-channel video services are
renters or other transient occupants
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of MDUs and there can be no expected minimum customer life. However, if OpTel's
right to serve a property terminates, OpTel ceases providing its video services
to that property, and OpTel has no further rights, or interests in the video
distribution plant at that property, nothing contained in this agreement shall
prevent I(3)S from entering into a separate arrangement with the owner of that
properly for the delivery of high-speed data services. OpTel shall use
reasonable efforts to provide I(3)S with advance notice of the date of
termination or cessation of OpTel's video services at a property.
OpTel and I(3)S periodically shall establish the expected "look and
feel" of the "Opening Screen" and other customized electronic media, so that
I(3)S can perform its obligations, and shall update such information from
time-to-lime in accordance with Schedule B.
OpTel shall, at all times, maintain sole ownership of the names,
addresses and other account information of Subscribers and other OpTel
customers; provided, OpTel shall make such information available to I(3)S
solely for purpose of facilitating the performance of its obligations
hereunder. I(3)S shall not use such information for any other purpose or
disclose such information to third parties, unless and to the extent I(3)S is
required to do so by applicable law or pursuant to OpTel's prior written
consent.
OpTel shall have the right to offer complimentary HSDS to property
owners or ownership or management associations, etc., as reasonably necessary in
connection with the furtherance of this business. OpTel and I(3)S agree that
complimentary HSDS offerings shall be limited to free installation, free
Hardware and Software and free HSDS (collectively, "Complimentary Service") for
up to two (2) computers at an MDU property management or leasing office and
Complimentary Service for one computer each for up to two (2) MDU-resident
employees of management level.
B. I(3)S. As part of the agreements contemplated hereby, I(3)S
shall:
(i) Establish in each Approved Market and in each new
market designated by OpTel (provided any such new
market meets the Market Criteria and is approved by
I(3)S) the Internet point of presence ("POP") having
the features and within the time frame set forth on
Schedule C and provide the Internet service features
described on Schedule D (the "Service Features").
I(3)S shall establish the location of the
POP in each Market based on several factors,
including, without limitation, the co-location
facilities being offered by OpTel in each Market.
(ii) Provide or cause to be provided a 24-hour help desk
service line under an 800 or 888 toll free phone
material and technical support/customer help in
accordance with Schedule F (the "Customer Help
Features").
(iii) Provide in a timely manner to each Subscriber the
software described on Schedule F ("Software") and the
modern and other hardware described on such schedule
(the "Hardware"). I(3)S will make suitable
arrangements (the exact nature to be determined by
I(3)S) for the leasing or Financing of the Hardware in
order to make the Hardware available to Subscribers
at an acceptable and competitive cost, such cost
initially to be as set forth on Schedule H attached
hereto.
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(iv) Provide or cause to be provided local field service
personnel with respect to each Market to enable I(3)S
to provide the Software and Hardware to Subscribers
and provide customer-premises service of the Software
and Hardware
(v) Provide and update the customized OpTel Opening
Screen and other features in accordance with Schedule
B.
(vi) Market third-party advertising space on OpTel's
Opening Screen, such advertising to be subject to
OpTel's prior approval. Marketing design and
production costs shall be the responsibility of the
advertiser.
(vii) Provide all software and hardware and intellectual
property in connection with HSDS, all of which shall
be owned or lawfully licensed by I(3)S, and shall not
knowingly infringe upon the rights of any third party.
The HSDS proposed to be offered this letter shall be
in compliance with all required licenses. I(3)s shall
be solely responsible for compliance.
(viii) Monitor status of OpTel's Property Network and Local
Route and notify OpTel's Customer Service Department
of any Property Network or Local Route failures
detected by I(3)S in accordance with the procedures
described in Schedule G. I(3)S will not be able to
monitor the property headend and/or receiving
equipment (as distinguished from the property
distribution system) at any property where the
property receiving equipment is not being used to
deliver HSDS.
(ix) Procure and maintain in full force and effect all
required permits licenses, franchise rights,
trademarks, trademark rights, trade names, trade name
rights and copyrights which are required to conduct
the business of HSDS.
(x) ***
(MATERIAL DENOTED BY *** HAS BEEN SEPARATELY FILED
WITH THE COMMISSION PURSUANT TO AN APPLICATION FOR
CONFIDENTIALITY)
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***
(MATERIAL DENOTED BY *** HAS BEEN SEPARATELY FILED WITH THE COMMISSION
PURSUANT TO AN APPLICATION FOR CONFIDENTIALITY)
4. I(3)S Hardware and Software. I(3)S will enter into a separate
and specific agreement with each Subscriber concerning the use and purchase or
lease of the Hardware and Software. OpTel shall not be a party to any such
agreement. Except for OpTel's performance of the billing and collection
procedures set forth in Paragraph 5.B below, I(3)S agrees that OpTel shall
have no responsibility or liability for any claims arising out of the purchase
or lease of the Hardware or Software or the operation, repair or maintenance
thereof.
5. Subscriber Rates and Charges; Billing and Collection; Expenses
and Revenues.
A. Subscriber Rates and Charges and HSDS Features. OpTel and I(3)S
shall mutually establish the (i) HSDS features, (ii) HSDS Subscriber rates and
(iii) HSDS installation charges, service charges and rent or other charges
associated with a Subscriber's purchase or lease of the HSDS Hardware and
Software (the items referred to in clause (iii) being collectively referred to
as "Service and Equipment Charges"). OpTel and I(3)S intend to offer the latest
HSDS and Internet features and to set HSDS subscriber rates and Service and
Equipment Charges so as to maximize Subscriber revenues. OpTel and I(3)S agree
that the HSDS features, Subscriber rates and Service and Equipment Charges shall
always be competitive with those of other HSDS services being offered to
residents of other MDU's in the applicable Market. *** The initial HSDS
subscription rates, service levels and Service and Equipment Charges are set
forth in Schedule H attached hereto.
(MATERIAL DENOTED BY *** HAS BEEN SEPARATELY FILED WITH THE COMMISSION PURSUANT
TO AN APPLICATION FOR CONFIDENTIALITY)
B. Billing and Collection. OpTel shall perform all billing and
collection functions relating to amounts due from Subscribers for the HSDS and
Service and Equipment Charges (excluding charges for service/repair calls).
I(3)S shall perform all billing and collection functions relating to
service/repair calls. In no event shall OpTel have any liability or
responsibility for a Subscriber's failure to pay any Service and Equipment
Charges, nor shall the Alliance Revenues (defined below) be subject to any
deduction by reason of unpaid Service and Equipment Charges. All Service and
Equipment Charges received by OpTel shall be paid to I(3)S and shall not be
included in Alliance Revenues. OpTel shall provide I(3) with a monthly billing
and collections report and a report of delinquent Subscriber accounts. Unless
the parties agree otherwise, I(3)S shall terminate Internet service to any
Subscriber whose account is delinquent for greater than fifteen days or in the
event a Subscriber violates any other material term or condition of service and
fails to cure such violation within a reasonable period of time following
notice. I(3)S shall provide OpTel with written notice of each Subscriber whose
HSDS has been terminated within 24 hours following termination.
C. Expenses. Each party shall bear any and all operating and other
expenses associated with the services and equipment it is required to provide
or maintain as set forth in this agreement and each party shall maintain its
own network infrastructure which shall at all times remain the property of such
party.
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D. Allocation of Revenue. All OpTel-billed revenue received from
Subscribers, but excluding payments of Service and Equipment Charges will be
described revenues attributable to the alliance ("Alliance Revenues") and shall
be allocated and paid to OpTel or I(3)S, as the case may be, in accordance with
the sharing percentages set forth below. Each party receiving Alliance Revenues
which may be payable in whole or in part to the other party shall hold such
monies in a fiduciary capacity and trust for such party and promptly pay over
the same. By way of example only, monthly Subscriber revenues received by OpTel
shall be payable in part to I(3)S in accordance with the Sharing Percentages.
Each party shall pay the other party such other party's share (determined in
accordance with the Sharing Percentages) of all Alliance Revenues received
during a calendar month by no later than the 25th day of the following calendar
month, which payment shall be accompanied by an itemized statement of all
Alliance Revenues received by that party during the applicable calendar month
and that party's calculation of each party's share of such revenues. OpTel
shall use reasonable efforts to collect all HSDS service subscription fees from
Subscribers.
E. Place of Payment. Alliance Revenues payable to OpTel shall be
sent to TVMAX Telecommunications, Inc., 1111 W. Mockingbird Lane, 10th Floor,
Dallas, Texas 75247, Attention: Accounts Receivable, or to such other location
of which OpTel gives I(3)S written notice. Alliance Revenues payable to I(3)S
shall be sent to I(3)S, Inc., 1530 Riverbend Street, Suite 600, Dallas, Texas
75247-4953, Attention: Accounts Receivable, or to such other location of which
I(3)S gives OpTel written notice.
F. Accounting. Each party will account periodically to the other
and maintain access to books and records to afford the other party the right to
audit and confirm these matters.
G. ***
(MATERIAL DENOTED BY *** HAS BEEN SEPARATELY FILED WITH THE COMMISSION PURSUANT
TO AN APPLICATION FOR CONFIDENTIALITY).
H. Audit Rights. Either party, upon providing the other with
fifteen days prior written notice of its desire to do so, at its expense, may
audit the records of the other relating to revenues generated from Subscribers,
Subscriber and third-party advertising revenues associated with the OpTel home
page/Opening Screen or otherwise relating to the provision of HSDS pursuant to
this agreement. Such audit shall be conducted during the other party's business
hours at its office in Dallas, Texas. If a party's audit discloses an
underpayment of that party's share of Alliance Revenue, the other party shall,
subject to its right to contest the audit, forward such underpayment to the
auditing party. If such underpayment exceeds five percent of the actual amount
of such party's share of Alliance Revenue for the last year, then, subject to
its right to contest the audit, the other party shall reimburse the auditing
party for all reasonable third-party costs of the audit. If the other party
elects to the audit, OpTel and I(3)S shall mutually agree on an independent
auditor to reaudit the Alliance Revenues for the applicable period. The
determination of such independent auditor shall be binding. If such independent
auditor determines that either party underpaid the other's share of Alliance
Revenue by more than five percent or the actual amount for the last year, then
such
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underpaying party also shall pay the cost of the second audit; otherwise, the
auditing party shall pay the cost of the second audit.
6. Term.
A. Term of Agreement. This agreement shall have an
initial term of five (5) years (the "Term") commencing on the date hereof.
Following the initial Term or any renewal Term, the Term shall automatically
renew for any additional one (1) year period. The Term and any renewal Term
shall be subject to earlier termination (a) in the event of a default or (b)
in the event that the HSDS arrangements are terminated with respect to all
Markets as described below prior to the end of the Term or any renewal Term.
All representations, warranties and indemnities of the parties shall survive
the expiration or earlier termination of the Term or any renewal thereof. Upon
termination or expiration of the Term, each party will continue to own the
equipment, hardware, software, etc. paid for, installed, owned and maintained
by that party during the Term.
B. Individual Market Terms. In any Market designated by OpTel
and in which I(3)S has established a POP in accordance with the agreements
contemplated herein, the parties agree that the service arrangements in that
Market will not be terminated (other than for default) for a period of five (5)
years from the date of activation of the first OpTel MDU in a Market (the
"Market Activation Date"). After such five (5) year period, the arrangements
with respect to such Market may only be terminated on six months' prior notice
(i.e., notice given on or after the date which is four years and six months
after the Market Activation Date). Notwithstanding the termination of the
arrangements in any Market, I(3)S shall maintain its facilities and continue to
provide the HSDS for a reasonable period of time (not to exceed six (6) months
from the date of termination) until OpTel has made arrangements with another
Internet service provider, and I(3)S shall cooperate with OpTel in an orderly
and efficient transition of the Subscribers to any other Internet service
provider designated by OpTel.
7. Nonexclusivity; Noncompetition and Most Favored Nation.
A. Nonexclusivity and Noncompetition. The agreements
contemplated hereby shall be non-exclusive as to each party. Neither party
shall be precluded from offering or providing a high-speed data service at
MDU's or other properties not being provided HSDS pursuant to this agreement;
provided, however, I(3)S will not during the Term, directly or indirectly,
market or sell HSDS in or to any MDU under contract for service with, or then
being served by, OpTel or any OpTel affiliate. During the Term, OpTel shall
not, directly or indirectly, offer or provide any high speed data service which
competes with the HSDS at any MDU or other customer location where the HSDS is
being provided pursuant to this agreement.
B. Most Favored Nation. I(3)S shall not offer HSDS to or
for the benefit of competitors of OpTel under terms which, in the aggregate,
are more favorable to such competitors than those provided to OpTel without
offering such more favorable terms to OpTel retroactive to the date first
offered to any such competitor.
8. Representations and Warranties.
OpTel and I(3)S each represents and warrants to the other that: (a) it
is now in a solvent condition and that no bankruptcy or insolvency proceedings
arc pending or contemplated by or against such party; (b) this agreement has
been duly authorized, executed and delivered by it and constitutes the legal,
valid and binding obligation of such party enforceable in accordance with its
terms; (c) no consent or approval
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of any other person or entity to the execution, delivery, performance or
enforceability of this agreement is required; (d) neither the execution of this
agreement nor the performance of the obligations contained herein by such party
will conflict with or result in a breach of the terms, conditions of provisions
of any agreement to which such party is a party or by which it is bound; and
(e) it has or will have good, valid, and indefeasible title to all equipment to
be provided by it pursuant to this agreement that pertains in any way to the
HSDS. Each person executing this agreement on behalf of a party hereto
represents and warrants that he or she is authorized to do so by all necessary
corporate, company or partnership action.
9. Insurance.
A. I(3)S' Insurance. I(3)S at its expense, shall procure and
maintain throughout the Term: (i) commercial general liability insurance on an
occurrence basis with limits of liability of not less than $5,000,000, insuring
against bodily injury, death or property damage occurring in any one accident;
(ii) standard fire and extended coverage casualty insurance covering the
Hardware, all equipment associated with each POP and all equipment for the
delivery of HSDS (excluding that to be provided by OpTel), in an amount not
less then replacement cost; and (iii) worker's compensation and employer's
liability insurance if and to the extent required by applicable law. I(3)S
shall cause OpTel to be named as an additional insured in the insurance
policies described in clauses (i) and (ii) above and shall provide OpTel with a
certificate evidencing that such insurance coverage is in full force and
effect. All insurance shall be issued by insurance companies having a rating of
A-VIII or better according to the current issue of Best's Insurance Reports.
B. OpTel's Insurance. OpTel, at its expense, shall
procure and maintain throughout the Term: (i) commercial general liability
insurance on an occurrence basis with limits of liability of not less than
$5,000,000, insuring against bodily injury, death or property damage occurring
in any one accident; (ii) standard fire and extended coverage casualty
insurance covering OpTel's cable system or major components thereof and those
items of equipment for the delivery of HSDS to be provided by OpTel; and (iii)
worker's compensation and employer's liability insurance if and to the extent
required by applicable law. OpTel shall cause I(3)S to be named as an
additional insured in the commercial general liability insurance policy and
shall provide I(3)S with a certificate evidencing that such insurance coverage
is in full force and effect. All insurance shall be issued by insurance
companies having a rating of A-VIII or better according to the current issue of
Best's Insurance Reports.
10. Indemnities.
A. General Indemnities. OpTel agrees to indemnify and
defend I(3)S against and hold I(3)S harmless from all fines, suits, claims,
demands, causes of actions, costs, damages and liability of every kind,
including but not limited to attorneys fees and expenses (collectively,
"Claims"), resulting from (i) any bodily injury, death and/or damage to
property that results from or is caused by the negligence or willful misconduct
of I(3)S or any of its employees, agents or contractors; and (ii) the breach
of any representation, covenant or warranty of OpTel contained in this
agreement. I(3)S agrees to indemnify and defend OpTel against and hold OpTel
harmless from all Claims resulting from (i) any bodily injury, death and/or
damage to property that results from or is caused by the negligence or willful
misconduct of I(3)S or any of its employees, agents or contractors, and (ii)
the breach of any representation, covenant or warranty of I(3)S contained in
this agreement.
B. I(3)S Defense and Indemnity-Obligations. I(3)S, at
its sole expense, shall defend OpTel and its affiliated entities, and their
respective directors, officers, employees and agents ("OpTel Affiliates"),
against any and all third-party Claims (including without limitation
third-party
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Claims to which any OpTel Affiliate becomes subrogated) arising out of or
relating to the provision of Internet services, including without limitation,
all Claims arising out of or relating to (i) publishing activities, including
without limitation, content, obscenity and indecency; (ii) hosting activities,
including without limitation, security, privacy, and compensation and taxes;
and (iii) the violation or infringement of any Intellectual Property Right (as
defined below) (collectively, "Internet Claims"); provided, however, the
foregoing shall not include any Internet Claims arising solely by reason of the
actions of any OpTel Affiliate. The defense of any Claim under the preceding
sentence shall be handled by legal counsel chosen by I(3)S and reasonably
acceptable to OpTel, I(3)S and its legal counsel shall consult with OpTel and
its legal counsel in the defense of any such Claim. OpTel shall have the right,
but not the obligation, to participate in the defense of any such Claim in with
its own counsel at its own expense. Without limiting any of the foregoing,
I(3)S shall defend, indemnify and hold harmless the OpTel Affiliates from and
against any and all third-party Internet Claims arising out of or relating to
any act or omission of f I(3)S or any of its employees, agents or contractors;
provided, however, the foregoing shall not include Internet Claims arising
solely out of the parties offering or provision of HSDS to MDUs as contemplated
by the terms of this agreement.
C. Intellectual Property Rights Indemnification. I(3)S
shall defend, indemnify and hold harmless OpTel from and against any and all
Claims arising out of or relating to any actual or alleged infringement of any
third party's trade secret, trademark, service mark, copyright, patent or other
intellectual property right (each an "Intellectual Property Right") in
connection with the use of any Intellectual Property Right by I(3)S or its
employees, agents or contractors, in connection with the performance of its
obligations under this agreement. In connection with I(3)S's obligations
pursuant to the immediately preceding sentence, OpTel shall (i) give I(3)S
prompt written notice of all actions, claims or threats against OpTel of
infringement or violation of Intellectual Property Rights; and (ii) cooperate
fully with I(3)S in defending against any Claims, including making known or
available to the I(3)S, upon reimbursement of all costs associated with
provision or reproduction of, all records and document pertaining to any
Claims; provided, however, OpTel's failure to do either of the foregoing shall
not in any way limit, reduce or diminish I(3)S' obligations under this
paragraph except to the extent, and only to the extent, that OpTel's failure
has an actual adverse effect on I(3)S' ability to defend against any of the
Claims.
11. Events of Default, Remedies and Dispute Resolution.
A. Events of Default; Remedies. The occurrence of any
one of the following events by a party shall be an event of default by such
party under this agreement:
(i) A party shall fail to pay when due any sum of
money required to be paid under this agreement to the other party, and such
failure continues for twenty days after the failing party receives written
notice thereof from the other party.
(ii) A party shall fail to perform or observe any
term, condition or agreement contained in this agreement (other than a failure
described in clause (a) above) and such failure is not cured within sixty days
after the failing party receives written notice thereof from the other party,
but if such failure is of a nature that it reasonably cannot be cured within
such sixty day period (but is susceptible of being cured), the failing party
shall not be in default if such party commences to cure such failure within
such sixty day period and thereafter diligently pursues the curing of same to
completion.
(iii) A representation or warranty of a party
contained herein shall be untrue or misleading in any material respect when
made.
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(iv) A party shall become insolvent, shall admit in
writing its inability to pay its debts when due, shall make a transfer in fraud
of its creditors, or all or substantially all of its assets or its interest in
this agreement are levied on by execution or other legal process.
(v) A party shall file a petition under any section
or chapter of the U.S. Bankruptcy Code, as amended, or under any similar
federal or state law or statute; or a party shall be adjudged bankrupt or
insolvent in proceedings filed against it; or a receiver or trustee shall be
appointed for all or substantially all of the assets or a party and such
receivership or bankruptcy shall not be dismissed within sixty days from the
appointment of the receiver or trustee.
Upon the occurrence of an event of default by a party, the non-defaulting party
may terminate this agreement by written notice to the defaulting party, bring
an action against the defaulting party for damages and/or otherwise seek any
remedy available at law or in equity (including specific performance and
injunctive relief). If for any reason this agreement or the arrangements in any
Market are terminated, I(3)S shall maintain its facilities and continue to
provide the HSDS for a reasonable period of time (not to exceed six (6) months
from the date of termination) until OpTel has made arrangements with another
Internet service provider, and I(3)S shall cooperate with OpTel in an orderly
and efficient transition of the Subscribers to any other Internet service
provider designated by OpTel.
B. Informal Dispute Resolution. In the event of any dispute or
controversy between the parties of any kind or nature, upon the written request
of either party, each of the parties will appoint a designated officer whose
task it will be to meet for the purpose of resolving such dispute or
controversy or to negotiate for an adjustment to any provision of this
agreement needed to resolve such dispute or controversy. Such officers will
meet at a mutually agreeable location within ten (10) business days of the date
of the notice requesting informal dispute resolution. Such officers will
discuss the dispute or controversy and negotiate in good faith in an effort to
resolve the dispute or controversy or renegotiate the applicable section or
provision of this agreement without the necessity of any formal proceeding
relating thereto; provided, neither party shall be obligated by this paragraph
to waive a default by the other party or otherwise compromise any right that it
may have. No formal proceedings for the judicial or arbitrational resolution of
such dispute or controversy may be commenced until either or both of the
designated officers conclude in good faith that an amicable resolution through
continued negotiation of the matter at issue is not likely to occur.
C. Arbitration. The parties agree that it is not in either
party's best interest to engage in expensive and protracted litigation to
resolve any dispute between the parties hereto. Accordingly, if any disputed
matter in any way arising out of or in connection with this agreement cannot be
resolved between the parties, then each party agrees exclusively to submit such
disputed matter to binding arbitration in Dallas County, Texas or such other
mutually acceptable location in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. THEREFORE, EACH OF THE PARTIES
HERETO EXPRESSLY WAIVES THE RIGHT TO A TRIAL BY JURY AND A TRIAL BY COURT IN
CONNECTION WITH ANY AND ALL DISPUTES ARISING IN ANY MANNER OUT OF THIS
AGREEMENT. The arbitration hearing shall take place within sixty (60) days
after written demand by either party or as soon thereafter as an arbitrator can
be appointed. The matter shall be submitted to a single arbitrator
knowledgeable of such rules and industry standards. The arbitrator will be
instructed to consider, in making any determination, the customary practices in
the industry to the extent such practices exist. The arbitrator shall be
instructed to award the prevailing party reasonable attorneys fees and costs.
Punitive damages shall not be recoverable in any arbitration initiated pursuant
to this agreement. A
12
I(3)S, Inc.
March 10, 1998
Page 12
judgment on any award entered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, either party may
seek in a court of competent jurisdiction a provisional remedy, including but
not limited to, injunctive relief, attachment, or claim and delivery, without
waiving the right to arbitration.
12. Notices. Any notice or other communication allowed or
permitted to be given under this agreement by one party to the other shall be
in writing and sent via U.S. Mail, hand delivery or overnight express delivery.
Any notice shall be deemed to have been given when deposited with the U.S.
Postal Service if sent by U.S. Mail. Notices and other communications given by
other means shall be deemed given when received at the place for the giving of
notice. For the purposes of giving notices hereunder, the following addresses
shall be applicable until changed by giving the other party notice of the
change:
TVMAX Telecommunications, Inc. I(3)S, Inc.
1111 W. Mockingbird, 10th Floor 1530 Riverbend Street, Suite 600
Dallas, Texas 75247 Dallas, Texas 75247-4953
Attn: Legal Department Attn: Jim Price
13. Other and Miscellaneous.
A. Ownership of Intellectual Property Rights. Each party
shall maintain ownership of its own brands, trademarks, etc. and nothing in the
agreement shall give either party a right in intellectual property owned by the
other.
B. Taxes. Each party shall be responsible for its own
taxes.
C. Force Majeure. Whenever a period of time is
prescribed in this agreement for action to be taken by either party, such party
will not be liable or responsible for, and there shall be excluded from the
computation for any such period of time, any delays due to strikes, riots, work
stoppages, shortages of labor or materials, war, governmental delays,
governmental preemption or priorities or other controls in connection with a
national or other public emergency, acts of God, casualties, utility outages,
Applicable Laws, or any other causes beyond the reasonable control of such
party; provided this subsection shall not apply to an obligation by either
party for the payment of money.
D. Mechanic's Liens. I(3)S shall not grant, create or
allow to exist by reason of any act of I(3)S or its employees, agents or
contractors any mechanics or materialman's lien or similar encumbrance on any
multifamily property being served by OpTel or on OpTel's cable television
system at such property.
E. Confidentiality. Unless otherwise agreed to in
writing, each party agrees (a) except as required by law, to keep confidential
all of the financial or service terms of this agreement and all Proprietary
Information (defined below) of the other party and not to disclose or reveal any
such Proprietary Information to any person other than those employed by the
receiving part or acting on its behalf who need to know the Proprietary
Information to carry out that party's obligations under this agreement, provided
that any such person acting on the receiving party's behalf is bound by the
terms of this paragraph, and (b) not to use Proprietary Information received
from the other party for its own benefit or any other purpose other than in
connection with the performance of that party's obligations under this
agreement. Each party acknowledges that it is responsible for any breach of the
terms hereof by it or its representatives involving unauthorized disclosure or
use of Proprietary Information. In the event that pursuant to applicable law or
regulation or legal process, either party is requested to disclose any
13
I(3)S, Inc.
March 10, 1998
Page 13
Proprietary Information of the other party, the receiving party will provide
the disclosing party with prompt notice of such request(s) to enable the
disclosing party to seek an appropriate protective order or other appropriate
remedy and/or waive compliance with the provisions of this agreement. In the
event that such protective order or other remedy is not obtained or the
disclosing party waives compliance with the provisions of this agreement, the
receiving party shall furnish only that portion of the Proprietary Information
that it is advised by written opinion of counsel is legally required to be
furnished and shall exercise reasonable commercial efforts to obtain a
protective order or other reliable assurance that confidential treatment will
be accorded the Proprietary Information. "Proprietary Information" means all
information about a party furnished by it or its representatives to the other
party on or after the date hereof, and regardless of the manner in which it is
furnished together with all analyses, compilations, studies, summaries,
extracts or other documents, whether prepared by the disclosing party or
others, which contain or otherwise reflect such information, including, without
limitation, financial status, customer lists, marketing strategy, business
plans and organizational structure. Proprietary Information shall not include,
however, information which (a) is or becomes generally available to the public
other than as a result of a disclosure by the receiving party or by any of the
receiving party's representatives, (b) becomes available to the receiving party
on a non-confidential basis from a person other than the disclosing party or
its representatives who is not otherwise bound by a confidentiality agreement
with the disclosing party or the disclosing party's representatives, or is not
otherwise prohibited from transmitting the information to the receiving party,
or (c) is independently developed by the receiving party prior to disclosure to
it by the disclosing party or its representatives. In the event that the
disclosing party at any time so requests, the receiving party will promptly
deliver to the disclosing party or destroy all of the Proprietary Information
of the disclosing party, including all copies thereof, in the receiving party's
possession or in the possession of any of the receiving party's
representatives, and will promptly confirm such destruction in writing. Without
prejudice to the rights and remedies otherwise available to either party, a
disclosing party shall be entitled to equitable relief by way of injunction if
the receiving party or any of the receiving party's representatives breaches or
threaten to breach any of the provisions of this paragraph, without the
necessity of proving irreparable harm or posting bond or other security. The
obligations of the parties under this paragraph shall terminate five (5) years
after the termination of this agreement.
F. Press Releases and Other Disclosures. All public
communications with respect to the matters set forth in this agreement must be
approved by both parties, subject to any required reporting or disclosure under
state or federal securities laws or in accordance with agreements between a
party and its investors.
G. Assignment. I(3)S shall have the right to assign
this agreement to any person; provided, however, I(3)S shall not have the right
to assign this agreement if (i) the financial strength of the assignee is less
than (I(3)S' financial strength measured as of the date of this agreement, (ii)
the assignee is not reasonably capable of performing all of the obligations of
I(3)S under this agreement, or (iii) the assignee is a PCO, MSO or other
provider of cable television services, or a Regional Bell Operating Company or
other incumbent local exchange telephone company. A change in control of I(3)S
shall be considered an assignment. OpTel shall have the right to assign this
agreement to any person; provided, however, OpTel shall not have the right to
assign this agreement to any non-affiliated entity if the financial strength of
such entity is less than OpTel's financial strength measured as of the date of
this agreement. As a condition to the assignment of this agreement by either
party, the assignee of such party must, in writing, agree to assume and perform
the obligations of the assigning party from and after the date of such
assignment.
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I(3)S, Inc.
March 10, 1998
Page 14
H. Attorneys' Fees. In the event of any dispute,
arbitration or litigation between the parties concerning this agreement, the
prevailing party shall be entitled to recover from the other reasonable
attorneys fees and costs.
I. Binding Agreement. This agreement is binding on and
enforceable against the parties and their respective legal representatives,
successors and assigns.
J. Choice of Law; Venue. This agreement has been made
and entered into in the State of Texas, and shall be governed by and construed
in accordance with the law of the State of Texas. OpTel and I(3)S agree that
venue of any action or proceeding under or with reference to this agreement
shall lie solely in Dallas County, Texas.
K. Severability; No Partnership. If any provision of this
agreement should be held to be invalid or unenforceable, the validity and
enforceability of the remaining provisions of this agreement shall not be
affected thereby. Nothing herein contained shall be construed to create any
partnership or joint venture between the parties.
L. Entire Agreement; Amendments. This agreement
supersedes any prior agreements between the parties concerning the Property and
the subject matter hereof, and no statements, representations or agreements,
oral or written, not contained in this agreement shall have any force or
effect. This agreement may not be amended or added to in any way except by
written instruments executed by both parties or their respective successors in
interest.
M. Counterparts. This agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All such counterparts shall be construed together and shall
constitute one instrument, but in making proof hereof it shall only be
necessary to produce one such counterpart.
N. Field Testing. As soon as reasonably possible after
the complete execution of this agreement, OpTel and I(3)S shall commence to
field test (the "Field Test") the HSDS product at up to three (3) MDU's to be
selected by OpTel (each a "Test MDU"). The Field Test at any Test MDU shall
continue for up to ninety days from service activation, but may be terminated
earlier by the agreement of the parties. Except as provided in this subparagraph
below, all of the terms of this agreement, including without limitation all of
the terms concerning each party's obligations and each party's responsibilities
for costs, shall be applicable to the Field Test. OpTel and 1(3)S agree that at
one Test MDU Subscribers at the Test MDU will not be charged for the HSDS and
will not be charged any Service and Equipment Charges during the Field Test. At
the other Test MDU's, OpTel and I(3)S shall charge residents HSDS subscription
rates and Service and Equipment Charges in order to perform a "marketing" test
of the HSDS product. By no later than twenty days following the completion of
the Field Testing, OpTel shall notify I(3)S whether OpTel believes the Field
Testing was successful. If OpTel determines that the Field Test was successful,
then this agreement shall continue in full force and effect. In which case,
provided OpTel can make appropriate arrangements with the owner of the Test MDU,
the HSDS will be continued at the Test MDU on a retail basis and residents that
wish to subscribe to the HSDS will be obligated to commence paying the monthly
subscription rate and make appropriate arrangements to purchase and/or lease the
Hardware and Software. If OpTel determines that the Field Test was not
Successful, then OpTel shall be entitled to terminate this agreement and neither
party shall have any liabilities or obligations to the other; except that, if
either (i) OpTel terminates this agreement or (ii) appropriate arrangements
cannot be made with the owner of the Test MDU and OpTel decides not to continue
the HSDS at the Test MDU on a retail basis, then OpTel shall reimburse I(3)S in
an amount equal to the out-of-pocket costs incurred by I(3)S in connection with
providing the HSDS to the Test MDU
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I(3)S, Inc.
March 10, 1998
Page 15
during the Field Test (such amount not to exceed $7,500). The parties intend
that if the Field Test(s) are considered to have been successful, as described
above, the parties shall proceed immediately to implement this agreement in
accordance with the terms hereof.
TVMAX Telecommunications, Inc.,
a Delaware corporation
By: /s/ LOUIS BRUNEL
-------------------------------
Name: Louis Brunel
Title: President & CEO
I(3)S, INC., a Texas corporation
By: /s/ J. R. PRICE
-------------------------------
Name: J. R. Price
Title: CEO
16
SCHEDULE A
PROPERTY NETWORK AND
LOCAL LOOP CHARACTERISTICS
OPTEL'S RESPONSIBILITIES:
1. Cause CATV infrastructure to comply with the FCC technical requirements
set forth in 47 C.F.R. Section 76.605.
2. Upgrade property CATV infrastructure to provide bi-directional cable
delivery to all Subscribers.
3. Cause the upgraded bi-directional CATV infrastructure to meet or exceed
the following minimal operational requirements of the I(3)S cable modem
system:
- ---------------------------------------------------------------------------------------
Minimum Cable Television Network Value
Requirements for i3s.net HSDS
- ---------------------------------------------------------------------------------------
Amplitude variations inband
Forward channel 5 dB total
Return channel 5 dB total
- ---------------------------------------------------------------------------------------
Group delay variation inband
Forward channel 60 nsec/MHz, 240 nsec total
Return channel 200 nsec/MHz, 800 nsec total
- ---------------------------------------------------------------------------------------
Maximum tap to tap variation 27 dB
- ---------------------------------------------------------------------------------------
Dynamic range on receiver -15 dBmV to +15 dBmV
- ---------------------------------------------------------------------------------------
Maximum return/upstream loss @ 40 MHz 49 dB
- ---------------------------------------------------------------------------------------
Minimum carrier to noise 22 dB
Referenced to Analog Carrier 37 dBC
- ---------------------------------------------------------------------------------------
Minimum carrier to interference 25 dB
Referenced to Analog Carrier 40 dBC
- ---------------------------------------------------------------------------------------
4. Provide two (2) six MHz video channels within the CATV infrastructure
bandwidth on Internet served properties; one (1) in the spectrum from
54 MHz to 750 MHz and one (1) in the 5 MHz to 50 MHz spectrum; and,
where available, reserve another two (2) additional video channels, in
the same spectrums for future expansion as Subscriber penetration on the
property increases.
5. Provide space, reasonable security and power for data communication
equipment necessary to provide Internet delivery and other data
services on the property.
6. Reimburse I(3)S for I(3)S' cost to acquire the I(3)S-specified data
communication equipment conforming to the I(3)S design for HSDS and
necessary to provide termination and delivery of HSDS between the
Subscriber and the I(3)S POP in each Market, which equipment will be
installed on each property jointly by I(3)S and OpTel technicians.
7. Order, provision, install and maintain local loop pathways between each
property and I(3)S POP in each Market with a bandwidth of not less than
1.544 mb/s (T1). In addition, as the number of Subscribers on each
property increases, scale the local loop bandwidth so that each
17
simultaneously active user averages approximately 1 mb/s ninety eight
percent (98%) of the time provided OpTel determines that it is
economically feasible and necessary for the provision of HSDS. Both
parties acknowledge that the end-to-end performance of HSDS is
probabilistic and subject to anomalous short-lived usage patterns by
Subscribers which will affect both the utilization of the local-loop
circuits and the i3s.net national backbone from time to time. In the
event OpTel determines in its sole discretion that provisioning
additional local loop or other bandwith is not economically feasible,
then, with respect to the affected property, I(3)S will be relieved of
any obligations contained in this agreement to remain competitive in
terms of HSDS speed.
8. Provide coaxial connection (coax drop) to each Subscriber's unit
consistent with location of Subscriber's CPU and/or requested location.
I(3)S RESPONSIBILITIES:
1. Install, maintain and operate data delivery equipment for each property
offering HSDS. Installation and maintenance will meet or exceed
manufacturer's specifications. OpTel, through its local Market support
team, will assist I(3)S with pre-installation engineering planning and
site survey questionnaires, installation, testing and preparation of
maintenance schedules.
2. Integrate all data delivery equipment for each property into the I(3)S
Element Management System portion of its Network Management Platform
using SNMP and RMON.I(3)S will monitor all data delivery equipment
twenty-four hours per day, seven day per week (24x7).
3. Configure and operate all data delivery equipment to efficiently
integrate with the rest of the i3s.net network.
18
SCHEDULE B
I3S INFORMATION OPERATIONS - CONTENT PRODUCTION;
OPTEL START PAGE - PRODUCTION AND UPDATING
1. I(3)S operates an information content operation for creating original
content or aggregating content created by others and licensed to I(3)S
for inclusion in the I(3)S body of content. This material will consist
of informational, educational, recreational, entertainment and business
content. This body of content will be offered to Subscribers of the HSDS
product.
2. I(3)S creates content as creative and/or business opportunities present
themselves. The I(3)S content will be updated as I(3)S, using its
editorial judgment, sees fit.
3. Certain portions of this content will be offered to all HSDS
Subscribers free of charge (Basic Content). Other portions of the
content will be offered to HSDS Subscribers on an optional fee basis
for unlimited access to a fixed package of content (Premium Content).
Another certain portion of the content will be offered to HSDS
Subscribers on an optional fee basis for access to a specific
time-limited event (Pay-Per-View Content). In addition to the fees
charged to customers for content, I(3)S will solicit and sell
advertising that will appear on certain portions of the content.
4. I(3)S may elect to bill Subscribers directly or request that OpTel bill
Subscribers as part of their regular monthly billing for service as part
of a HSDS/content bundle. All OpTel-billed revenues relating to I(3)S
content offering will be included in Alliance Revenues and subject to
the Sharing Percentages.
5. I(3)S or its content partners will design, produce and update, as
necessary, all content and be responsible for all such costs.
6. I(3)S shall design, produce and update, as necessary, a customized start
page (the "Start Page") for HSDS Subscribers, which shall be used
primarily to market and promote the HSDS and OpTel's current and future
video, telecommunications and other services. In addition, the Start
Page will include hyperlinks to OpTel corporate Web sites as directed by
OpTel. The Start Page shall meet the technical, functional and
appearance requirements reasonably specified by OpTel, subject to
reasonable approval by I(3)S. I(3)S shall update and maintain the Start
Page throughout the Term in accordance with directions from OpTel and
the terms of this agreement. I(3)S may offer HSDS Subscribers Start
Pages that are personalized (by property) and that, in addition to the
features described above, may promote the I(3)S content offerings and
provide direct hyperlinks to the I(3)S content.
19
SCHEDULE C
POINT OF PRESENCE
FEATURES AND ESTABLISHMENT REQUIREMENTS
I(3)S RESPONSIBILITIES:
1. Acquire, install and maintain data communication equipment at each POP
for the termination and transmission of HSDS from properties to the
i3s.net national network backbone.
2. Determine the location of its main presence in each Market to be
consistent with its own operational practices (which currently include
co-locating within its carrier's central offices in each Market).
However, I(3)S will establish multiple POPs in each market sufficient
to minimize local loop transport from properties. Moreover, where
desired by OpTel, I(3)S will co-locate certain data communication
equipment within OpTel facilities in order to concentrate
OpTel-provided local loops terminating in OpTel facilities for
transport to the I(3)S regional POP. In those markets where I(3)S will
co-locate equipment within OpTel facilities, OpTel will provide,
without charge, suitable space, reasonable security and power for the
I(3)S equipment consistent with I(3)S operational practices and provide
reasonable monitored access for I(3)S support staff in order that the
equipment can be maintained or serviced in the case of failure.
3. Acquire, install, maintain and operate Internet peering relationships
at public and private Internet Exchange Points (EP) with other Tier 1
Internet backbone networks throughout the United States.
4. Acquire, install, maintain and operate computers and software to
provide Network Management and provide Internet services for
Subscribers. To provide these functions, I(3)S will employ a
combination of locally-distributed-to-the-POP servers as well as
globally centralized servers consistent with its overall network design
and operational practices.
5. Order, provision, install, maintain and operate data transport/carriage
pathways from each POP, EP and/or NOC with a bandwidth not less than 45
mb/s (DS-3) interconnection. In addition, as the number of Subscribers
on Market increases, scale the bandwidth so that each simultaneously
active user averages approximately 1 mb/s ninety eight percent (98%) of
the time. Both parties acknowledge that the end-to-end performance of
HSDS is probabilistic and subject to anomalous short-lived usage
patterns by Subscribers which will affect both the utilization of the
local-loop circuits and the i3s.net national backbone from time to
time.
6. Establish a POP as described above in each Approved Market within
ninety (90) days after its receipt of written notice from OpTel
requesting same. If OpTel desires to provide HSDS to a Market that is
not an Approved Market, then, I(3)S shall use reasonable efforts to
establish a POP in that Market. Within twenty (20) days after OpTel's
written notice to I(3)S that OpTel desires to provide HSDS to a Market
that is not an Approved Market, I(3)S shall notify OpTel whether it
will establish a POP in that Market and the date by which it will
establish such POP. In order to coordinate the delivery of HSDS in any
such Market, I(3)S will use reasonable efforts to provide OpTel with
thirty (30) days prior notice of the date upon which the POP will be
ready for service.
20
SCHEDULE D
DEFINITION OF HIGH-SPEED DATA SERVICES (HSDS)
FEATURES AND REQUIREMENTS
The I(3)S HSDS includes, but is not limited to:
1. Data Network services that provide transport and peering functions to
the global Internet, including, without limitation:
a. A broadband access network on MDU properties composed of one
or more headend reference nodes, a coaxial or hybrid fiber
coaxial (HFC) cable television distribution system and one or
more cable data modems (CDM);
b. A local loop network that connects the headend reference node
on each MDU property to the I(3)S regional point-of-presence
(POP) in each metropolitan area served by I(3)S;
c. A regional point-of-presence network that connects the POP to
the i3s.net national Internet backbone;
d. A national Internet backbone consisting of broadband
communication facilities for the transport of data among I(3)S
POPs and public and private Exchange Points where data and
Internet routing information will be exchanged with other
networks peered with i3s.net;
e. A National Operations Center (NOC).
2. Certain computer services that include, but not limited to:
a. Membership system for user authentication and authorities;
b. Personalization services for customizing content to user
preferences;
c. Internet mail (SMTP and POP3);
d. Internet newsgroups (NNTP) composed of approximately 25,000
newsgroups;
e. Internet World Wide Web (HTTP) services;
f. Internet chat (IRC and MIRC);
g. White-pages-style directory services;
h. Internet locator services;
i. Conferencing and collaboration bridges;
j. Streaming multimedia services such as Microsofts NetShow and
Progressive Network's RealMedia;
k. Electronic commerce services.
3. A branded suite of client software that includes, but not limited to:
a. Web browser;
b. Mail reader;
c. News reader;
d. Chat client;
e. Conferencing and collaboration client;
f. Appropriate plug-ins and ActiveX controls.
4. Certain customer service functions that include, but not limited to:
a. A National Customer Care Center;
b. A telephone and network-based customer help desk;
c. A Trouble Reporting facility;
d. A customer billing system.
21
5. Certain multimedia-rich content that showcases the capabilities of HSDS
that includes, but not limited to:
a. Original content created by I(3)S;
b. Aggregated content created by others but licensed by I(3)S and
improved for uses in a HSDS system;
c. Aggregated content created by others but licensed by I(3)S and
used unimproved.
22
SCHEDULE E
CUSTOMER HELP LINE
SERVICE AND REQUIRED FEATURES
OPTEL RESPONSIBILITIES:
1. Provide toll free numbers for:
a. Inquiries about the HSDS product
b. Ordering and scheduling installation of HSDS products
c. Billing inquiries
d. Tier 1 technical support inquires
2. Operate 24x7 customer service call center operation.
3. Maintain sufficient customer service staff and call center capacity to
connect to Subscribers within 5 minutes of call entering processing
operation.
4. Resolve billing issues within 24 hours 95% of time.
5. Resolve property network issues within 24 hours 95% of time.
6. Develop and publish escalation procedure for Help Desk and attendants
related to network issues.
I(3)S RESPONSIBILITIES
1. Provide toll free number for:
a. Technical support for all HSDS issues
b. Technical support for Subscriber CPU hardware and software issues
related to HSDS
c. Technical support for cable modem issues
2. Answer toll free line consistent with the OpTel/I(3)S service co-brand
3. Operate 24x7 customer service call center operation.
4. Maintain sufficient customer service staff and call center capacity to
connect to Subscribers within 5 minutes of call entering processing
operation.
5. Resolve technical issues within 24 hours 95% of time.
6. Develop and publish escalation procedure for Help Desk and attendants
related to network issues.
7. Develop and publish escalation procedures for OpTel to contact
regarding technical issues related to the network.
8. Provide training support for OpTel's customer service representatives
(train-the-trainer support).
23
SCHEDULE F
SUBSCRIBERS' HARDWARE AND SOFTWARE INSTALLATION
SPECIFICATIONS AND INSTALLATION REQUIREMENTS
OPTEL SHALL:
1. Develop a standard ISP contract for Subscribers with terms and
conditions reasonably acceptable to I(3)S.
2. Train its customer service representatives to follow I(3)S-provided
procedures to try to verify that potential Subscribers' personal
computers meet the I(3)S established minimum requirements for the
supplied software and the HSDS service.
3. Schedule an appointment with each new Subscriber to meet the I(3)S
installation personnel for the installation of the HSDS in the
Subscriber's unit.
4. Supply I(3)S with Subscribers' information required to install,
provision and complete the set up of Subscribers' HSDS service (the
nature of which to be provided by I(3)S). OpTel and I(3)S will jointly
develop an appropriate paper-form-based system or automated system to
facilitate this process.
5. Provide coaxial connection to the Subscriber's specified location.
6. Verify that the coaxial connection completed to the Subscriber's
specified location meets or exceeds the minimum operational
requirements for the I(3)S supplied cable modem and the I(3)S HSDS
service described in Schedule A.
7. Verify that all CATV services function properly after I(3)S completes
installation.
I(3)S SHALL:
1. Maintain a sufficient inventory of cable modems in each Market and
develop procedures to restock Markets with cable modems as used in
Subscriber installations.
2. Issue and install the required number of cable modems for the service
requested by the Subscriber. Develop contract for subscribers for cable
modem lease with terms and conditions reasonably acceptable to OpTel.
3. Meet the Subscriber at the Subscriber's residence at the scheduled time
at least 95% of time.
4. Install the required cable modem(s) in the Subscriber's unit.
5. Install any required network interface cards (NICs), TCP/IP protocols
and Internet software suite in the Subscriber's personal computer.
6. Offer the Subscriber a brief introduction to the HSDS to be performed
at the time of installation. This introduction will include how to
launch the service, how to find the training material on the i3s.net
Web site, how to find the Subscriber Support Section on the i3s.net Web
site and how to call for technical assistance or support.
7. Obtain signatures required to verify that installation was executed
properly and to the satisfaction of the Subscriber.
24
8. Provide OpTel with a copy of the installation transaction documentation
verifying that the completed installation is ready for billing. This
documentation will include the cable modem delivery receipt, the ISP
contract, the completed work order and Subscriber's signature verifying
that the installation was executed properly.
9. I(3)S installation technicians shall present a neat, well-groomed and
professional appearance and shall efficiently perform the procedures
described above in a professional and courteous fashion.
25
SCHEDULE G
PROCEDURES FOR DETECTION AND NOTICE
OF OPTEL PROPERTY NETWORK AND LOCAL LOOP FAILURES
OPTEL SHALL:
1. Designate an engineering point of contact for I(3)S Network Operations
Center (NOC) to report problems or failures twenty-four hours per day,
seven days per week (24x7).
I(3)S SHALL:
1. Use the cable modem system and certain network management features that
it provides to monitor the availability and quality of OpTel's property
network (its CATV plant).
2. Report to OpTel's designated engineering point of contact any problems
observed by the I(3)S NOC in the course of operating the cable modem
system network management features.
3. Report to OpTel's designated engineering point of contact any problems
determined by Subscriber contact in the course of operating the
Subscriber Help Desk.
4. Offer to OpTel a read-only direct computer interface into the I(3)S
cable modem system's network management platform for the purposes of
direct observation of the information produced by the management
platform and possible enhancement of OpTel's property network
operations. If OpTel elects to implement a read-only direct-computer
interface, OpTel will be responsible for all of the costs associated
with such an interface.
26
SCHEDULE H
HSDS INITIAL SUBSCRIBER RATES, SERVICE LEVELS
AND INSTALLATION AND EQUIPMENT CHARGES
I(3)S and OpTel agree that, initially, the HSDS Subscriber rates, service
levels and installation and equipment charges shall be:
64 kb/s contention-based non-burstable ***
1.00 mb/s contention-based burstable ***
1.54 mb/s contention-based with reserved bandwidth ***
Small office, home office (SOHO) ***
Vanity DNS hosting ***
Installation fee ***
Network interface card (NIC) ***
LanCity LCp cable modem purchase ***
Monthly rental of LCp ***
* Additional monthly fees may be charged to non-cable subscribers. These
fees may vary by both market and service level of HSDS.
Notes: The rates, levels and charges set forth above are subject to change as
provided in this agreement. I(3)S and OpTel agree that rates may be
reviewed as frequently as required and may vary by Market.
(MATERIAL DENOTED BY *** HAS BEEN SEPARATELY FILED WITH THE
COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIALITY).
27
SCHEDULE I
APPROVED MARKETS
I(3)S agrees that the following OpTel Markets, with 3,500+ units, meet the
Market Criteria and are eligible for the delivery of HSDS:
San Francisco, CA
San Diego, CA
Los Angeles, CA
Phoenix, AZ
Denver, CO
Colorado Springs, CO
Dallas-Fort Worth, TX
Houston, TX
Chicago, IL
Miami-Fort Lauderdale, FL
I(3)S currently has plans to open regional POPs in the following Markets in
calendar year 1998. If OpTel has 3500 or more units in any of the following
Markets, then such Markets will meet the Market Criteria and be eligible for
the delivery of HSDS.
San Jose, CA Pennsauken, NJ
Washington DC Las Vegas, NV
Tampa, FL New York, NY
Atlanta, GA Portland, OR
Detroit, MI Seattle, WA
St. Louis, MO Milwaukee, WI
Charlotte, NC
I(3)S also currently plans to open local concentrator locations (access nodes
on the i3s.net network without the full capabilities of a regional POP, but
connected directly to one or more regional POPs) in the following cities:
Birmingham, AL Kansas City, KS/MO Akron, OH
Huntsville, AL Wichita, KS Cincinnati, OH
Scottsdale, AZ Louisville, KY Cleveland, OH
Tucson, AZ Boston, MA Columbus, OH
Bakersfield, CA Marlborough, MA Oklahoma City, OK
Sacramento, CA Westborough, MA Philadelphia, PA
Orlando, FL Baltimore, MD Providence, RI
Jacksonville, FL Mt. Pleasant, MI Memphis, TN
Macon, GA Raleigh/Durham, NC Nashville, TN
Savannah, GA Greensboro, NC Austin, TX
Bettendorf, IA Omaha, NB Corpus Christi, TX
Des Moines, IA Edison, NJ El Paso, TX
Peoria, IL Jersey City, NJ San Antonio, TX
Rantoul, IL Plainsboro, NJ Norfolk, VA
Indianapolis, IN Rochester, NY Richmond, VA