Exhibit 10.9
MAINTENANCE SERVICES AGREEMENT
This MAINTENANCE SERVICES AGREEMENT (the "Maintenance Agreement") is made
and entered into as of the 30th day of January, 1998 (the "Effective Date"), by
and between PATHNET, INC. (hereinafter "Pathnet"), a Delaware corporation, and
NORTHERN INDIANA PUBLIC SERVICE COMPANY (hereinafter, "Incumbent"), an Indiana
corporation, (collectively, the "Parties" and each, a "Party").
W I T N E S S E T H:
WHEREAS, Pathnet is engaged in the business of creating high-capacity,
digital microwave communications systems for purposes of marketing the long
distance telecommunications capacity created by such systems;
WHEREAS, Incumbent and Pathnet have entered into a Fixed Point Microwave
Services Agreement pursuant to which, among other things, Pathnet has agreed to
construct and install a high-capacity digital microwave system utilizing
Incumbent's microwave telecommunications assets;
WHEREAS, Pathnet wishes to engage the services of Incumbent to provide
routine and corrective maintenance on Incumbent's Equipment and System and to
maintain Incumbent's Segment of the Pathnet network at a minimal level of
acceptability to ensure overall effective operations;
WHEREAS, Incumbent wishes to maintain such System for Pathnet; and
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the Parties agree as follows:
1. DEFINITIONS
1.1 CERTAIN DEFINITIONS
1.1.1 "FPM AGREEMENT" shall mean the Fixed Point Microwave
Services Agreement by and between Pathnet and Incumbent, dated
January 30, 1998.
1.1.2 "BUILD-OUT PERIOD" shall mean the period of time between
final design approval and final testing and acceptance during which
the Initial System is installed.
1.1.3 "CRITICAL SERVICE LEVELS" shall mean the service levels and
standards of operations set forth in Schedule B that are essential for
Pathnet to provide reliable, error free traffic to IXCs or other
customers for capacity.
1.1.4 "EQUIPMENT" shall mean any and all digital microwave radios,
radio components, cards, antennas, waveguides, multiplexers (OC-3 to
DS-1) and other equipment or parts as required for the operation of
the System provided and installed by Pathnet and subject to
Incumbent's Maintenance obligations under this Maintenance Agreement,
as listed on Schedule D attached hereto.
1.1.5 "EXTRAORDINARY CIRCUMSTANCES" shall mean (i) circumstances
of nature (for instance, those caused by weather yet not escalated to
a Force Majeure event); (ii) an incomplete or inaccurate Trouble
Ticket as to the identification and location of a problem (for
example, identifying a problem at a wrong Facility); or (iii) pursuant
to the provisions of Section 4.2.3, Pathnet's failure to provide
replacement Equipment or Spare Parts, as required under this
Agreement, that are beyond Incumbent's reasonable control and prevent
Incumbent from performing the Services hereunder, which
non-performance Incumbent cannot reasonably correct.
1.1.6 "FACILITIES" shall mean the Incumbent's towers, shelters,
buildings and sites used for the purpose of operating the microwave
communications System described in Schedule F to this Maintenance
Agreement.
1.1.7 "FIELD TECHNICIAN" shall mean Incumbent's employees, agents
or subcontractors qualified to provide Maintenance, pursuant to this
Maintenance Agreement, as they may change from time to time.
1.1.8 "MAINTENANCE" shall mean the ongoing and scheduled
inspections, ongoing and scheduled repair, ongoing and scheduled
prevention of repair, and unscheduled, on-call corrective action of
any and all Equipment necessary for the System to operate in
accordance with the Performance Standards as set forth in this
Maintenance Agreement and its Schedules.
1.1.9 "MAINTENANCE TEST EQUIPMENT" shall mean used or owned
equipment (including methods and tools) required to test and maintain
the Equipment and
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System in accordance with the Performance Standards of this
Maintenance Agreement and its Schedules.
1.1.10 "MONTHLY SERVICES CHARGE" shall be as set forth in Section 5
and Schedule C of this Maintenance Agreement.
1.1.11 "NEW SERVICES" shall be as defined in Section 2.3.1 of
Schedule C of this Maintenance Agreement.
1.1.12 "PASS-THROUGH EXPENSES" shall mean Incumbent's reasonable
and actual out-of-pocket expenses to be paid and reimbursed by
Pathnet, pursuant to Section 2.3.2 of Schedule C, that are outside of
the Services obligations and the costs incurred by Incumbent pursuant
to this Maintenance Agreement. Without limiting the foregoing,
Pass-Through Expenses shall include expenses for providing materials
for maintaining the Equipment pursuant to this Maintenance Agreement
including replacement units, replacement parts, spare parts, hardware
items and other miscellaneous repair and replacement expenses and any
extraordinary expenses related to the emergency ordering and
acquisition of parts; provided Pathnet has not otherwise provided such
material and such material is required under this Maintenance
Agreement.
1.1.13 "PERFORMANCE STANDARDS" shall mean individually and
collectively the quantitative and qualitative performance standards
and commitments for the services contained in this Maintenance
Agreement, including, but not limited to, the Critical Service Levels.
1.1.14 "PREVENTIVE MAINTENANCE" shall mean the ongoing and
scheduled Maintenance required for the normal operations of the
Equipment and System, as more fully described in Schedule A.
1.1.15 "REMEDIAL MAINTENANCE" shall mean unscheduled, on-call
Maintenance (i) to correct an Outage, (ii) to restore operations to
above Critical Service Levels, or (iii) to restore the Equipment and
the System to good operating condition, as more fully described in
Schedule A.
1.1.16 "SERVICES" shall be as defined in Section 3 and Schedule A
of this Maintenance Agreement.
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1.1.17 "STOCKING DEPOT" shall mean an enclosed and reasonably
protected storage facility required for housing the Spare Parts
inventory.
1.1.18 "SYSTEM" shall mean the high-capacity digital SONET
microwave radio equipment (6 Hz/30 MHZ) antenna, waveguides,
components, Facilities and FCC licenses, installed and assembled
capable of transmitting, receiving and transporting telecommunications
signals over the Segment set forth in Schedule F.
1.1.19 "TROUBLE TICKET" shall have the meaning set forth in Section
3.2.2 of Schedule A.
1.2 OTHER TERMS
Capitalized terms used in this Maintenance Agreement but not defined herein
shall have the definitions set forth in the FPM Agreement unless the
context dictates otherwise. References herein to Schedules are to the
Schedules attached to this Maintenance Agreement unless otherwise
specified. Other terms used in this Maintenance Agreement are defined in
the context in which they are used and shall have the meaning, there
indicated.
2. TERM
2.1 TERM
The term of this Maintenance Agreement shall be one (1) year from the
Effective Date (the "Term"). The Services and charges for the Services
shall commence upon the Commissioning of the Initial System on Segment A.
The Commissioning shall occur as agreed upon by Pathnet and Incumbent
pursuant to the acceptance procedures of the FPM Agreement and shall be
evidenced by the certificate to be attached hereto as Schedule H.
2.2 EXTENSION
The Term of this Maintenance Agreement shall be renewed automatically for
successive, one-year renewal terms until terminated. This Maintenance
Agreement may be terminated (i) by Incumbent if Incumbent gives Pathnet
notice at least ninety (90) days before expiration of the Term or a renewal
term indicating that Incumbent will terminate this Maintenance Agreement
for convenience, pursuant to Section 9.2 hereof; (ii) by Pathnet if Pathnet
provides notice to Incumbent that Pathnet will not renew this Maintenance
Agreement due to Incumbent's failure to perform the Services pursuant to
Section 7.2
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hereof; and (iii) by either Party for cause pursuant to Section 9.1 hereof.
This Maintenance Agreement shall automatically terminate upon expiration or
termination of the FPM Agreement.
3. SERVICES
3.1 PROVISION OF SERVICES
3.1.1 GENERAL. Upon Commissioning of the Initial System,
Incumbent shall provide the following Maintenance services, functions
and responsibilities on the Equipment identified in Schedule D and at
the Facilities identified in Schedule F, as such Equipment may evolve
or be supplemented, enhanced, modified or replaced during the Term
(the "Services"):
(a) the services, functions and responsibilities described in
this Maintenance Agreement and its Schedules;
(b) the services, functions and responsibilities performed by
Incumbent's personnel and Subcontractors during the twelve
(12) months preceding the Effective Date who were
responsible for maintaining Incumbent's existing analog and
digital telecommunications system, even if the service,
function or responsibility is not specifically described in
this Maintenance Agreement; and
(c) upon execution of this Maintenance Agreement and prior to
the Commissioning of the Initial System, Incumbent shall
continue to perform the maintenance duties on the Facilities
during the Build-out Period, as performed during the twelve
(12) months preceding the Effective Date.
3.1.2 IMPLIED SERVICES. If any services, functions or
responsibilities not specifically described in this Maintenance
Agreement are reasonably required for the proper performance and
provision of the Services, they shall be deemed to be implied by and
included within the scope of the Services to the same extent and in
the same manner as if specifically described in this Maintenance
Agreement. Except as otherwise expressly provided in this Maintenance
Agreement, Incumbent shall be responsible for providing the
facilities, personnel and other resources required to perform the
Services.
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3.2 SERVICES REQUIREMENTS
3.2.1 TIMING OF SERVICE.
(a) GENERAL. Incumbent shall perform all Services in at least
the intervals and time periods set forth in Schedule A.
(b) OUTAGE, CRITICAL SERVICE LEVELS, OTHER ADVERSE IMPACTS. In
the event of an (i) Outage, (ii) degradation of the System's
operation below Critical Service Levels, or (iii) any other
problem that threatens to adversely impact the System or the
integrity of the System, and except under Extraordinary
Circumstances, Incumbent shall be on-site at any Incumbent
Facility as required to provide Remedial Maintenance within
two (2) hours of receipt of a Trouble Ticket and to repair
the System to normal operations within a cumulative mean
time of four (4) hours after the receipt of a Trouble
Ticket; provided, however, that under Extraordinary
Circumstance, Incumbent Field Technicians shall use
commercially reasonable efforts to be on site as soon as
practical. Notwithstanding the foregoing, Incumbent shall
make reasonable efforts to ensure that all capacity is
restored to service as promptly as practical in order to
restore service after an Outage.
3.2.2 DISPATCH AND NOTIFICATION.
(a) DISPATCH. Incumbent shall make Field Technicians available
to provide Services twenty-four (24) hours a day, seven (7)
days a week. Pathnet shall provide System monitoring from
the Network Monitoring Center twenty-four (24) hours a day,
seven (7) days a week for reporting of System failures.
Incumbent shall include in Exhibit A-1 to Schedule A a list
of procedures and personnel involved in providing
maintenance Services, including an escalation list of
individuals who will be available and who will be
responsible for repairing the System to normal operations,
in the event of a Field Technician dispatch. Such
procedures shall be subject to approval by Pathnet which
shall not be unreasonably withheld.
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(b) NOTIFICATION. Notification of a Trouble Ticket shall be
deemed to be received by Incumbent upon initiation by
Pathnet or Incumbent and electronic receipt by Incumbent.
The Network Monitoring Center shall initiate a Trouble
Ticket pursuant to the procedures set forth in Section 3.2.6
of Schedule A.
3.3 SERVICES EXCLUSIONS
3.3.1 TOWERS AND SHELTERS. Except as provided in Section 2 of
Schedule A, this Maintenance Agreement does not include maintenance
obligations for any tower, tower lighting, FCC or FAA tower regulatory
requirement or equipment shelter which shall be owned and maintained
by Incumbent outside of the scope of this Maintenance Agreement;
provided, however, that Incumbent shall maintain such towers and
shelters as reasonably required to support the continuous and reliable
operation of the System and network without material degradation to
either the Equipment or System.
3.3.2 OTHER EXCLUSIONS. In the event that telephone lines,
equipment or interconnections provided by or required by third parties
are used in conjunction with the Equipment, Incumbent shall have no
maintenance obligation or responsibility for such telephone lines
equipment, or interconnections or interfaces with such items.
Incumbent shall, upon reasonable request by Pathnet, make commercially
reasonable attempts to assist in repairing those lines so all
equipment and systems are operational; provided that Pathnet shall
adjust the Monthly Service Charge pursuant to Section 5.4 of this
Maintenance Agreement to reflect such additional services.
3.4 OUTSOURCING.
In addition to, and not in place of, any rights of Incumbent under this
Maintenance Agreement, Incumbent shall, with the consent of Pathnet which
consent shall not be unreasonably withheld, have the right to engage third
party Subcontractors to perform any or all of the Services or Incumbent's
rights and obligations under this Agreement; provided such third party
Subcontractors are trained and certified, pursuant to the terms of this
Maintenance Services Agreement, to maintain the System at Incumbent's cost.
In the event Incumbent hires Subcontractors to carry out its
responsibilities hereunder, Incumbent shall advise each Subcontractor of
the confidentiality obligations for Proprietary Information under SECTION
12.2 of the FPM Agreement and cause, prior to performance, each such
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Subcontractor to agree to maintain the confidentiality of the Proprietary
Information on terms substantially similar to the terms applicable to
Incumbent.
4. EQUIPMENT; FACILITIES
4.1 EQUIPMENT
The Equipment that Incumbent shall be responsible for maintaining in the
performance of the Maintenance Services is set forth in Schedule D, and may
be amended from time to time as such Equipment may change or may be
replaced, modified, or enhanced over time as a result of new technology;
provided that Pathnet shall provide written notice to Incumbent of any such
amendment. In the event of a Capacity Expansion under the FPM Agreement,
Pathnet shall supplement and modify the Equipment set forth in Schedule D
to include any additional Equipment required for such Capacity Expansion.
4.2 SPARE PARTS; REPLACEMENT EQUIPMENT
4.2.1 SPARE PARTS. Pathnet shall provide at its expense and
Incumbent shall store Spare Parts for the Equipment at the Stocking
Depot in the type and quantity as mutually agreed upon and set forth
in Schedule E. Incumbent shall store Spare Parts at appropriate depots
to allow for a reasonable response within the time parameters set
forth in Section 3.2 and Schedule A of this Maintenance Agreement.
Pathnet, through the Network Management Center, shall assist Incumbent
in identifying modules or Spare Parts necessary to expedite any
required repairs. Incumbent shall utilize the modular exchange
program that Pathnet has established in order to maintain an adequate
inventory of Spare Parts. Incumbent shall be responsible for
notifying Pathnet of any shortages in type or quantities of Spare
Parts required to meet Incumbent's obligations to provide Services
under this Maintenance Agreement; provided that Pathnet shall ship any
such requested Spare Parts in accordance with the Spare Parts shipping
procedures set forth in Schedule G. Pathnet shall also provide the
equipment repair assistance set forth in Schedule G.
4.2.2 REPLACEMENT EQUIPMENT. At its sole discretion and in
accordance with the terms of the FPM Agreement, Pathnet may replace
any Equipment, provided that such Equipment does not materially
interfere with or degrade the Initial System and Pathnet provides
reasonable notice of such replacement to Incumbent. Upon reasonable
notice to Incumbent that any such Equipment requires replacing,
Incumbent shall be responsible for providing reasonable labor and
installation services in connection with installing any such
Equipment, with the cost of such
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labor and installation services eligible for a Monthly Services Charge
adjustment as set forth in Section 5.4 of this Maintenance Agreement.
4.2.3 Pathnet's failure to perform its obligations under this
Section 4 shall be deemed to be grounds for non-performance by
Incumbent; provided that Incumbent's non-performance of its
obligations under this Maintenance Agreement shall be excused if, and
to the extent, (i) such Incumbent's non-performance results from
Pathnet's failure to perform its responsibilities and (ii) Incumbent
provides Pathnet with reasonable notice of such non-performance and
uses commercially reasonable efforts to perform.
4.3 FACILITIES
Incumbent shall be responsible for performing the Services at the
Facilities set forth in Schedule F. Pursuant to the FPM Agreement, the
Facilities shall be maintained at the environmental conditions necessary to
support the Equipment, in accordance with the manufacturers' specifications
set forth in the FPM Agreement.
5. CHARGES
5.1 GENERAL
All Monthly Services Charges to be paid by Pathnet to Incumbent are set
forth in this Section 5 or in Section 2.1 of Schedule C. Pathnet shall not
be required to pay Incumbent any amounts for the Services in addition to
those payable to Incumbent under this Section 5 or Schedule C, except as
provided for in Section 2.2 of Schedule C.
5.2 PASS-THROUGH EXPENSES
Pass-Through Expenses shall be paid directly by Pathnet or through
Incumbent upon Pathnet's prior approval and acceptance of such Pass-Through
Expenses. If the Parties agree that a particular Pass-Through Expense is
to be paid by Pathnet directly, Incumbent shall promptly provide Pathnet
with the original invoice for such expense. Pathnet shall pay for
Pass-Though Expenses as agreed upon by the Parties based on the procedures
set forth in Section 2.3 of Schedule C.
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5.3 TAXES
The Parties' respective responsibilities for taxes arising under or in
connection with this Maintenance Agreement shall be as follows:
5.3.1 Each Party shall be responsible for any personal or real
property taxes on property it owns or leases, for franchise and
privilege taxes on its business, and for taxes based on its net income
or gross receipts.
5.3.2 Pathnet shall be responsible for any sales, use, excise,
value-added services, consumption, and other taxes and duties payable
by Incumbent on any goods or services used or consumed in providing
the Services, where the tax is imposed on Incumbent's acquisition or
use of such goods or services and the amount of tax is measured by
Incumbent's costs in acquiring such goods or services; provided,
however, that Pathnet shall not be responsible for any Federal, state
or local income taxes or franchise taxes of Incumbent.
5.4 NEW SERVICES
Pathnet shall pay Incumbent for the performance of any New Services
requested by Pathnet and accepted by Incumbent outside of the core Services
for maintenance. Pathnet shall pay for such New Services as agreed upon by
the Parties based on the procedures set forth in Section 2.3 of Schedule C.
Such New Services may include, without limitation: (i) performance of
services at the interconnection facilities between Pathnet's network and
the System, (ii) cost of Equipment removal upon Pathnet's termination of
this Maintenance Agreement, (iii) performance of installation services for
replacement equipment, or (iv) any other services not included in the
Services as defined in this Maintenance Agreement.
6. INVOICING AND PAYMENT
As calculated from the Monthly Services Charges and any and all charges for New
Services and Pass-Through Expenses, pursuant to Schedule C, Incumbent shall send
Pathnet a quarterly invoice covering the fees and charges for the last calendar
quarter for the prior three months' Services. Pathnet shall pay the amount of
each quarterly invoice within thirty (30) days of receipt by Pathnet. Such
Monthly Service Charges shall be due and payable whether or not the Equipment is
operating. Any and all disputes with regard to charges payable under this
Maintenance Agreement shall be settled in accordance with Section 15 of this
Maintenance Agreement.
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7. PERFORMANCE STANDARDS
7.1 GENERAL
Incumbent shall perform the Services at least to the level and degree of
accuracy, quality, completeness, timeliness, responsiveness and efficiency
as set forth in the Critical Service Levels in Schedule B. At all times,
Incumbent's level of performance shall meet Performance Standards as
identified in this Maintenance Agreement and its Schedules and shall be
consistent with industry standards.
7.2 FAILURE TO PERFORM
7.2.1 Incumbent recognizes that its failure (i) to meet any
Critical Service Level, (ii) correct any Outage, or (iii) remedy any
other problem that threatens to adversely impact the operation of the
System may have a material adverse impact on the business and
operations of Pathnet. Accordingly, in the event that Incumbent
repeatedly (i) fails to meet any Critical Service Level, (ii) correct
any Outage, or (iii) remedy any other problem that threatens to
adversely impact the operation of the System, for reasons other than
the wrongful actions of Pathnet or circumstances that constitute Force
Majeure under this Maintenance Agreement, Pathnet, at its sole
discretion, may elect (i) to not renew this Maintenance Agreement or
(ii) to supplement the provision of Services by Incumbent by
appointing a new Maintenance provider in accordance with Section 9.3.
7.2.2 In the event of any problem affecting the operation of the
System (including, without limitation, the events listed in Section
7.2.1), Incumbent shall (i) investigate and report to Pathnet the
causes of such problem or Outage; (ii) advise Pathnet of the status of
remedial efforts being undertaken with respect to such problems; (iii)
correct the problem as soon as practical and restore the System's
operation to the Critical Service Levels; and (iv) take appropriate
preventive measures so that the problem does not recur.
7.2.3 Pathnet or its designee shall have the right, subject to the
terms of this Maintenance Agreement and the FPM Agreement, to
reasonable, full and immediate access to any and all affected
Facilities to repair the Equipment or System and to supplement the
Services if operations fall below the Performance Standards; provided
such supplemental Maintenance will not degrade or interfere with the
operation of the Initial System or Incumbent's use of its Facilities
for its current or future operations, provided also that such future
operations do not interfere with the
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System pursuant to Section 5.4.2 of the FPM Agreement. Upon Pathnet's
prior notification, Incumbent shall reasonably cooperate with Pathnet or
its designee, including providing any escorts necessary for Pathnet to
supplement the Services.
7.2.4 In the event Pathnet either (i) does not renew this
Maintenance Agreement or (ii) supplements the Services, Pathnet will
arrange for an independent Maintenance provider to provide any or all
of the Services hereunder, including any or all of the Services
relating to maintenance of the Initial System; provided Incumbent
shall also have the right to continue to maintain the Initial System
at Incumbent's sole expense, so long as such maintenance shall not
impact Pathnet's ability to maintain the System.
8. PERIODIC REVIEWS; AUDIT RIGHTS
8.1 REVIEWS
8.1.1 ANNUAL REVIEW. As part of the annual renewal of this
Maintenance Agreement, Pathnet and Incumbent shall review the Critical
Service Levels and the Monthly Service Charges paid to Incumbent.
Pathnet and Incumbent shall mutually agree to make adjustments to the
Critical Service Levels, as appropriate, to reflect (i) improved
performance capabilities associated with advances in technology and
methods to perform the Services and (ii) modifications in the
performance requirements of Pathnet's customers. The Parties expect
and understand that the Critical Service Levels may improve over time.
Pathnet and Incumbent shall mutually agree to make adjustments
pursuant to Schedule C to the Monthly Service Charges to reflect the
material changes in the performance of the Services in accordance with
any such revised Critical Service Levels.
8.1.2 MAINTENANCE TEST EQUIPMENT. Incumbent shall utilize the
necessary measurement and monitoring tools and procedures, including,
but not limited to, the Maintenance Test Equipment as set forth in
Exhibit E-2 to Schedule E and other additional equipment reasonably
necessary to measure and to report operational performance of the
System against the applicable Critical Service Levels. Such
measurement and monitoring tools and equipment shall permit reporting
at a level of detail sufficient to verify compliance with Critical
Service Levels and shall be reviewable by Pathnet upon reasonable
notice. Upon reasonable request by Pathnet, Incumbent shall provide
Pathnet with information and access to such tools and procedures for
purposes of verification.
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8.2 AUDIT AND INSPECTION RIGHTS
8.2.1 Incumbent shall maintain accurate logs and dispatch reports
that record any reported Outages or operations below Critical Service
Levels and the appropriate actions taken to restore service. Pathnet
shall have the right to reasonably audit any and all such reports
maintained by Incumbent. These reports shall be available to Pathnet
for its reasonable inspection at Incumbent's Facilities and a copy of
the compilation of these reports is to be forwarded to Pathnet on a
quarterly basis. Such reports shall be considered Proprietary
Information of Incumbent and protected in accordance with Section 12.2
of the FPM Agreement; provided Pathnet shall have the right to
disclose such reports to any equity owner, debt provider, lender, or
other creditor; any potential customer or purchaser of capacity, any
potential party to a merger or acquisition, any service provider under
this Maintenance Agreement; or any other attorneys, consultants or
financial advisors.
8.2.2 Pathnet shall have the right to reasonably inspect the
Facilities and Equipment at any time upon reasonable notice to
Incumbent and to supplement the Maintenance Services during Pathnet's
inspection; provided Pathnet complies with any and all Incumbent
security procedures and the provisions of the FPM Agreement.
9. TERMINATION
9.1 TERMINATION FOR CAUSE
9.1.1 In the event that Incumbent: (i) commits a material breach
of this Maintenance Agreement, which breach is not cured within thirty
(30) days after notice of breach from Pathnet to Incumbent or (ii)
commits numerous breaches of its duties or obligations which
collectively constitute a material breach of this Maintenance
Agreement (and Incumbent has been previously notified of such
breaches), Pathnet may, by giving reasonable written notice to
Incumbent, terminate this Maintenance Agreement, in whole or in part,
as of the date specified in the notice of termination. If Pathnet
chooses to terminate this Maintenance Agreement in part, the charges
payable to Incumbent under this Maintenance Agreement will be
equitably adjusted to reflect those services that are terminated.
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9.1.2 In the event that Pathnet fails: (i) to pay Incumbent
undisputed charges due under the Maintenance Agreement totaling at
least Two Thousand Dollars ($2,000) (excluding any reimbursement of
Pass-Through Expenses) and fails to make such payment within thirty
(30) days of notice from Incumbent of the failure to make such payment
or (ii) otherwise fails to fulfill its obligations, Incumbent may, by
giving written reasonable notice to Pathnet, terminate this
Maintenance Agreement as of the date specified in the notice of
termination.
9.2 TERMINATION FOR CONVENIENCE
Incumbent may terminate this Maintenance Agreement for convenience and
without cause at any time by giving Pathnet at least ninety (90) days'
prior written notice before the end of the Term of this Maintenance
Agreement indicating that Incumbent will not renew this Maintenance
Agreement; provided, however, that Pathnet, its Affiliates, agents or
Subcontractors may, at Pathnet's sole discretion, supplement or perform the
Services set forth in this Maintenance Agreement.
9.3 TERMINATION OR EXPIRATION ASSISTANCE
In the event (i) Incumbent terminates this Maintenance Agreement for
convenience; (ii) Pathnet does not renew this Maintenance Agreement because
of Incumbent's failure to perform, or (iii) the FPM Agreement expires,
Pathnet shall propose and Incumbent shall approve, which approval shall not
be unreasonably withheld, a third-party, independent Maintenance provider,
at least forty-five (45) days before termination or expiration of the FPM
Agreement to provide the Services at Incumbent's Facilities. Such
independent Maintenance provider shall provide the Services and assume the
obligations of Incumbent hereunder for any successive terms coterminous
with the remaining term of the FPM Agreement, unless such provider is
replaced by Pathnet before the expiration of the term of this Maintenance
Agreement or any extension thereof. In the event either Party terminates
this Maintenance Agreement for cause, Pathnet shall provide a third-party
Maintenance provider to perform the Services, and Incumbent shall
reasonably cooperate with such provider. Upon expiration or termination of
this Maintenance Agreement, Pathnet shall, for the remaining term of the
FPM Agreement, perform or cause to be performed the services required to
meet Pathnet's operational requirements (including Spare Parts and
equipment repair assistance on the Initial System) and shall have the right
to full and reasonable access to all Facilities in accordance with the
terms of the FPM Agreement in order to supplement or perform the Services
in accordance with the Performance Standards.
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10. RELATIONSHIP OF THE PARTIES
Nothing in this Maintenance Agreement will imply a joint venture, partnership,
or principal-agent relationship between the Parties. Neither Party will have
any right, power or authority to act or create any obligation, express or
implied, on behalf of the other Party, pursuant to this Maintenance Agreement.
Incumbent, in furnishing the Services hereunder, is acting as an independent
contractor, and Incumbent has the sole right and obligation to supervise,
manage, contract, direct, procure, perform or cause to be performed all work to
be performed by Incumbent under this Maintenance Agreement.
11. PROPRIETARY RIGHTS AND COPYRIGHTS
11.1 Maintenance software, training materials, manuals or other
proprietary information furnished by Pathnet ("Maintenance Aids") for
Incumbent's use are either Pathnet's property or property of third parties
and are proprietary. The Maintenance Aids shall be considered to be
Proprietary Information of Pathnet and shall be protected in accordance
with Section 12.2 of the FPM Agreement.
11.2 Incumbent may make necessary copies of Maintenance Aids installed
as part of its providing the Services subject to Incumbent's obligations
under this Maintenance Agreement.
12. REPRESENTATIONS AND WARRANTIES
12.1 WORK STANDARDS
Incumbent represents and warrants that the Services shall be rendered with
promptness and diligence and shall be executed in a workmanlike manner, in
accordance with the practices and high professional standards used in
well-managed commercial telecommunications operations performing services
similar to the Services. Incumbent represents and warrants that it shall
use adequate numbers of qualified individuals with suitable training,
education, experience, and skill to perform the Services.
12.2 MAINTENANCE
Incumbent represents and warrants that it shall maintain the Equipment so
that it operates in accordance with its specifications, including (i)
maintaining equipment in good operating
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condition, subject to normal wear and tear, and (ii) undertaking repairs
and preventive maintenance on Equipment in accordance with the applicable
Equipment manufacturers' recommendations.
12.3 EFFICIENCY AND COST EFFECTIVENESS
Incumbent represents and warrants that it shall use commercially reasonable
efforts to use efficiently the resources or services necessary to provide
the Services. Incumbent represents and warrants that it shall use its
commercially reasonable efforts to perform the Services in the most
cost-effective manner consistent with the required level of quality and
performance as set forth in this FPM Agreement.
12.4 WARRANTIES OF EACH PARTY
Each Party to this Maintenance Agreement hereby warrants that:
(a) It has the requisite corporate or partnership power and authority
to enter into this Maintenance Agreement and to carry out the
transactions contemplated by this Maintenance Agreement; and
(b) The execution, delivery and performance of this Maintenance
Agreement and the consummation of the transactions contemplated
by this Maintenance Agreement have been duly authorized by the
requisite corporate or partnership action on the part of such
Party.
12.5 INSURANCE
Incumbent warrants and represents that during the Term of this Maintenance
Agreement, Incumbent shall maintain at Incumbent's expense and pursuant to
its self-insured reserves the necessary insurance coverage for all
Incumbent's employees, agents or affiliates required to perform the
Services, including, but not limited to, Worker's Compensation, disability,
and unemployment insurance, and to provide Pathnet with certification
thereof upon reasonable request.
12.6 SECURITY AND SAFETY PROCEDURES
In the event Pathnet is required to supplement the Services, Pathnet shall
comply with the provisions of this Maintenance Agreement relating to access
to the Facilities, shall comply
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with all reasonable Incumbent security and safety procedures as provided by
the Incumbent, and shall comply with all provisions of the FPM Agreement
relating to access.
12.7 DISCLAIMER
EXCEPT AS PROVIDED IN THIS MAINTENANCE AGREEMENT, NEITHER PATHNET NOR
INCUMBENT MAKES ANY OTHER EXPRESS WARRANTIES AND THERE ARE NO IMPLIED
WARRANTIES WITH RESPECT TO THE SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF
THIS MAINTENANCE AGREEMENT. PATHNET AND INCUMBENT HEREBY DISCLAIM THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO ANY AND ALL OF THE FOREGOING. EXCEPT FOR AS SET FORTH IN THIS
MAINTENANCE AGREEMENT AND ITS SCHEDULES, INCUMBENT DISCLAIMS ALL WARRANTIES
REGARDING THE SERVICES AS TO AVAILABILITY, OPERATION, CORRECTNESS,
AVAILABLE BANDWIDTH, ACCURACY, OR RELIABILITY OF THE SYSTEM.
13. INDEMNITIES
13.1 INDEMNIFICATION BY INCUMBENT
Incumbent agrees to indemnify, defend and hold harmless Pathnet and its
Affiliates and their respective officers, directors, employees, agents,
successors and assigns from and against any and all Losses and threatened
Losses arising from, in connection with, or based on allegations of, any of
the following:
(a) any claims resulting from the infringement by Incumbent, its
Affiliates or Subcontractors of any patent, trade secret,
copyright or other proprietary rights alleged to have occurred as
a result of the use of systems or other resources provided by
Pathnet to Incumbent in violation of any applicable licenses or
the terms of this Agreement.
(b) the untruth, inaccuracy or breach of any representation or
warranty of Incumbent set forth in this Maintenance Agreement.
(c) the liability of Pathnet for (i) any personal injury, disease or
death of any person, (ii) damage to or loss of any property,
money damages or specific performance owed to any third party (by
contract or operation of law), or (iii) any fines, penalties,
taxes, claims, demands, charges, actions, causes of
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action, assessments, environmental response costs, environmental
penalties, injunctive obligations, to the extent caused by,
arising out of, or in connection with, negligent actions or
omissions or willful misconduct of Incumbent, its employees,
Subcontractors or agents.
13.2 INDEMNIFICATION BY PATHNET
Pathnet agrees to indemnify, defend and hold harmless Incumbent and its
Affiliates and their respective officers, directors, employees, agents,
successors and assigns from and against any and all Losses and threatened
Losses arising from, in connection with, or based on allegations of, any of
the following:
(a) except as set forth in SECTION 13.1(a), any claims of
infringement of any patent, trade secret, copyright or other
proprietary rights alleged to have occurred because of systems or
other resources provided by Pathnet to Incumbent.
(b) the untruth, inaccuracy or breach of any representation or
warranty of Pathnet set forth in this Maintenance Agreement.
(c) the liability of Incumbent for any (i) personal injury, disease
or death of any person, (ii) damage to or loss of any property,
money damages or specific performance owed to any third party (by
contract or operation of law), or (iii) any fines, penalties,
taxes, assessments, environmental response costs, environmental
penalties or injunctive obligations to the extent caused by,
arising out of; or in connection with, negligent actions or
omissions or willful misconduct of Pathnet, its employees,
Subcontractors or agents.
(d) the liability of Incumbent arising out of any or all obligations
to or contracts with customers to purchase Excess Capacity or
Incumbent Excess Capacity.
13.3 INDEMNIFICATION PROCEDURES
With respect to any third party claims, the following procedures shall
apply:
13.3.1 NOTICE. Promptly after receipt by an entity entitled to
indemnification under Section 13.1 or Section 13.2 of notice of
the commencement or threatened commencement of any civil,
criminal, administrative or investigative action or proceeding
involving a claim in respect of which the indemnitee will seek
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indemnification pursuant to any such Section, the indemnitee
shall notify the indemnitor of such claim in writing. No failure
to so notify an indemnitor shall relieve it of its obligations
under this Maintenance Agreement except to the extent that it can
demonstrate damages attributable to such failure. Within fifteen
(15) days following receipt of written notice from the indemnitee
relating to any claim, but no later than ten (10) days before the
date on which any response to a complaint or summons is due, the
indemnitor shall notify the indemnitee in writing if the
indemnitor elects to assume control of the defense and settlement
of that claim (a "NOTICE OF ELECTION").
13.3.2 PROCEDURE FOLLOWING NOTICE OF ELECTION. If the indemnitor
delivers a Notice of Election relating to any claim within the
required notice period, the indemnitor shall be entitled to have
sole control over the defense and settlement of such claim;
provided that, (i) the indemnitee shall be entitled to
participate in the defense of such claim and to employ counsel at
its own expense to assist in the handling of such claim, and (ii)
the indemnitor shall obtain the prior written approval of the
indemnitee before entering into any settlement of such claim or
ceasing to defend against such claim. After the indemnitor has
delivered a Notice of Election relating to any claim in
accordance with Section 13.3.1 above, the indemnitor shall not be
liable to the indemnitee for any legal expenses incurred by the
indemnitee in connection with the defense of that claim. In
addition, the indemnitor shall not be required to indemnify the
indemnitee for any amount paid or payable by the indemnitee in
the settlement of any claim for which the indemnitor has
delivered a timely Notice of Election if such amount was agreed
to without the written consent of the indemnitor.
13.3.3 PROCEDURE WHERE NO NOTICE OF ELECTION IS DELIVERED. If the
indemnitor does not deliver a Notice of Election relating to any
claim within the required notice period, the indemnitee shall
have the right to defend the claim in such manner as it may deem
appropriate, at the cost and expense of the indemnitor. The
indemnitor shall promptly reimburse the indemnitee for all such
costs and expenses.
13.4 SUBROGATION
In the event that an indemnitor shall be obligated to indemnify an
indemnitee pursuant to Section 13.1 or Section 13.2, the indemnitor shall,
upon payment of such indemnity in full,
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be subrogated to all rights of the indemnitee with respect to the claims to
which such indemnification relates.
14. LIABILITY
14.1 GENERAL INTENT
Subject to the specific provisions of this Article 14, it is the intent of
the Parties that each Party shall be liable to the other Party for any
actual damages incurred by the non-breaching Party as a result of the
breaching Party's failure to perform its obligations in the manner required
by this Maintenance Agreement.
14.2 LIABILITY RESTRICTIONS
14.2.1 SUBJECT TO SECTION 14.2.2 BELOW, 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 LOST PROFITS, INDIRECT OR
CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES,
ARISING OUT OF OR IN CONJUNCTION WITH THIS MAINTENANCE
AGREEMENT EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
14.2.2 The limitations set forth in Section 14.2.1 shall not apply
with respect to (i) damages occasioned by the willful
misconduct or gross negligence of a Party and (ii) damages
occasioned as a result of the indemnification obligations
set forth in Section 13 if and to the extent any third party
shall be awarded such damages explicitly excluded in Section
14.2.1.
14.3 FORCE MAJEURE
14.3.1 No Party shall be liable for any default or delay in the
performance of its obligations under this Maintenance
Agreement (i) if and to the extent such default or delay is
caused, directly or indirectly, by a Force Majeure event,
(ii) provided 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
can not reasonably be circumvented by the non-
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performing Party through the use of alternate sources, work
around plans or other means.
14.3.2 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 best efforts to recommence
performance or observance whenever and to whatever extent
possible without delay. 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) days of the inception of such delay) and
describe at a reasonable level of detail the circumstances
causing such delay.
15. DISPUTE RESOLUTION
15.1 ARBITRATION; RESOLUTION OF DISPUTES
Any and all disputes and controversies between Incumbent and Pathnet
concerning the negotiation, interpretation, performance, breach or
termination of this Maintenance Agreement (each a "Dispute") shall be
subject to resolution by the procedure set forth in Section 17.2 of the FPM
Agreement which is hereby incorporated herein.
16. MISCELLANEOUS
16.1 NOTICE PROVISION
Notice shall be served and deemed received in accordance with the
provisions of Section 18.1 of the FPM Agreement which is hereby
incorporated herein.
16.2 BINDING NATURE; ENTIRE AGREEMENT
Pathnet and Incumbent acknowledge (i) that each has read and understands
the terms and conditions of this Maintenance Agreement and agrees to be
bound by such terms and conditions, (ii) that this Maintenance Agreement is
the complete and conclusive statement of the agreement between the Parties,
and (iii) that this Maintenance Agreement sets forth the entire agreement
and understanding between the Parties relating to the subject matter
hereof. All understandings and agreements, oral and written, heretofore
made between Incumbent and Pathnet relating to the subject matter hereof
are merged in this Maintenance
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Agreement which alone, fully and completely expresses their agreement on
the subject matter of maintenance service to be provided by Incumbent. The
provisions of this Maintenance Agreement are separate and apart from the
provisions of the FPM Agreement and may not in any way affect either
Party's obligations with regard to the FPM Agreement.
16.3 AMENDMENT
No modification of, additions to or waiver of this Maintenance Agreement
shall be binding upon Incumbent and Pathnet unless such modification is in
writing and signed by an authorized representative of each Party.
16.4 SEVERABILITY
If any term or provision of this Maintenance Agreement shall to any extent
be held by a court or other tribunal to be invalid, void or unenforceable,
then that term or provision shall be inoperative and void insofar as it is
in conflict with law, but the remaining terms and provisions of this
Maintenance Agreement shall nevertheless continue in full force and effect
and the rights and obligations of the Parties shall be deemed to be
restated to reflect newly as possible the original intentions of the
Parties in accordance with applicable law.
16.5 HEADINGS
Section and paragraph headings used in this Maintenance Agreement are for
reference and convenience only and are not to be deemed or construed to be
part of this Maintenance Agreement.
16.6 CONSENTS AND APPROVAL
Except where expressly provided as being in the sole discretion of a Party,
where agreement, approval, acceptance, consent, or similar action by either
Party is required under this Maintenance Agreement, such action shall not
be unreasonably delayed or withheld. An approval or consent given by a
Party under this Maintenance Agreement shall not relieve the other Party
from responsibility for complying with the requirements of this Maintenance
Agreement, nor shall it be construed as a waiver of any rights under this
Maintenance Agreement, except as and to the extent otherwise expressly
provided in such approval or consent.
16.7 COMPLIANCE WITH LAWS AND REGULATIONS
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Each Party shall perform its obligations in a manner that complies with the
applicable Federal, state and local laws, regulations, ordinances and codes
(including identifying and procuring required permits, certificates,
approvals and inspections). If a charge of non-compliance by either Party
with any such laws, regulations, ordinances or codes occurs, the Party
charged with such non-compliance shall promptly notify the other Party of
such charges in writing.
16.8 GOVERNING LAW
This Maintenance Agreement and the rights and duties of the Parties shall
be governed and interpreted in accordance with the laws of the State of
Indiana, other than the choice of law rules thereof.
16.9 BINDING NATURE AND ASSIGNMENT
This Maintenance Agreement shall be binding on the Parties hereto and their
respective successors and assigns. Neither Party may or shall have the
power to assign this Maintenance Agreement without the prior written
consent of the other, except that either Party may assign its rights and
obligations under this Maintenance Agreement without the approval of the
other Party to an entity which acquires all or substantially all of the
assets of that Party to any subsidiary or Affiliate or successor in a
merger or acquisition of that Party; provided that in no event shall any
such assignment relieve that Party of its obligations under this
Maintenance Agreement.
16.10 WAIVER
Failure or delay on the part of Incumbent or Pathnet to exercise any right,
power or privilege under this Maintenance Agreement shall not constitute a
waiver of any right power or privilege of this Maintenance Agreement.
16.11 TIME TO SUE
No action shall be brought for any breach of this Maintenance Agreement
more than two (2) years after the accrual of such cause of action, except
where applicable law provides for a shorter limitation period, in which
event that period should apply.
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16.12 SURVIVAL
Any provision of this Maintenance Agreement which contemplates performance
or observance subsequent to any termination or expiration of this
Maintenance Agreement shall survive any termination or expiration of this
Maintenance Agreement and continue in full force and effect.
16.13 COVENANT OF GOOD FAITH
Each Party agrees that in its respective dealings with the other Party
under or in connection with this Maintenance Agreement, it shall act in
good faith.
IN WITNESS WHEREOF, the Parties hereto have executed this Maintenance
Agreement, or caused it to be executed by a duly authorized officer, as of the
date first written above.
PATHNET, INC. NORTHERN INDIANA PUBLIC
SERVICE COMPANY
By: /s/ Dave Schaeffer By: /s/ Robert J. Schacht
------------------------------ ------------------------------
Name: Dave Schaeffer Name: Robert J. Schacht
Title: Chairman Title: VP, Energy Distribution
Operations
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