Exhibit 10.8
MAINTENANCE SERVICES AGREEMENT
This MAINTENANCE SERVICES AGREEMENT (the "Maintenance Agreement" or
"Agreement") is made and entered into as of the 11th day of October, 1997 (the
"Effective Date"), by and between PATHNET, INC. (hereinafter "PathNet"), a
Delaware corporation, and KN ENERGY, INC. (hereinafter, "Incumbent"), a Kansas
corporation, (collectively, the "Parties" and each, a "Party").
WITNESSETH:
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,
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. DEFINITIONS
1.1 Certain Definitions
1.1.1 "1 x 1" shall mean microwave radio configuration consisting of
a primary and a standby protect radio.
1.1.2 "Affiliate" shall mean with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or is
under common control with such Person. For the purposes of this
definition, "control" (including the terms "controlled by" and
"under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by
contract or otherwise.
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1.1.3 "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.
1.1.4 "Capacity Expansion" shall mean the increase in
telecommunication channels that the System is able to transmit,
receive and transport above those created by the installation of the
Initial System, achieved by an addition to or change in Equipment.
1.1.5 "Commissioning/Commissioned" shall mean, with respect to each
Path or Segment, the date on which such Path or Segment is fully
operational, has undergone site acceptance testing and circuits are
available for operations.
1.1.6 "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.
1.1.7 "Drop and Insert" shall mean that process wherein a part of
the information carried in a transmission system is demodulated
(dropped) at an intermediate point and different information is
entered (inserted) for subsequent transmission.
1.1.8 "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.
1.1.9 "FAA" shall mean the Federal Aviation Administration or any
other federal agency at the time administering tower registration
requirements and regulations.
1.1.10 "Facilities" shall mean the Incumbent's towers, buildings and
sites used for the purpose of operating the microwave communications
System described in Schedule F to this Maintenance Agreement.
1.1.11 "FCC" shall mean the Federal Communications Commission or any
other federal agency at the time administering the
Telecommunications Act of 1934, as amended; the Telecommunications
Act of 1996, as amended; and the rules and regulations promulgated
thereunder.
1.1.12 "Field Technician" shall mean Incumbent's employees, agents
or subcontractors certified by PathNet to provide Maintenance,
pursuant to Schedule G of this Maintenance Agreement, as they may
change and be recertified from time to time.
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1.1.13 "Force Majeure Event" shall mean an event as defined in
Section 14.3 of this Maintenance Agreement.
1.1.14 "FPM Agreement" shall mean the Fixed Point Microwave Services
Agreement by and between PathNet and Incumbent, dated September 17,
1997.
1.1.15 "Initial System" shall mean the initial system with a 1 x 1
configuration which is comprised of the first 84 DS-1's (which is
equivalent to 2,040 DS-0's) of the System and the System's 84 DS-1
protect channels.
1.1.16 "Interconnection" shall mean the point at which a private
network is connected to the publicly switched telephone network
("PSTN"). It can include IXC points of presence, tandem access
points, the central office, internet service providers or major
industrial customer points of presence. Interconnection can be
microwave or other media.
1.1.17 "IXC" shall mean an inter-exchange carrier; a telephone
company that provides long-distance telephone service between LATA's
but not within any one LATA.
1.1.18 "Losses" shall mean all losses, liabilities, damages and
claims, and all related costs and expenses, including reasonable
legal fees and disbursements and costs of investigation, litigation,
settlement, judgment, interest and penalties.
1.1.19 "Maintenance" shall mean the ongoing and scheduled
inspections, ongoing and scheduled repair, ongoing and scheduled
prevention of repair, and unscheduled, on-call corrective action or
maintenance 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.
1.1.20 "Maintenance Test Equipment" shall mean used or owned
equipment (including methods and tools) required to test and
maintain the Equipment and System in accordance with the Performance
Standards of this Maintenance Agreement and its Schedules.
1.1.21 "Monthly Services Charge" shall be as set forth in Section 5
and Schedule C of this Maintenance Agreement.
1.1.22 "Network Monitoring Center" shall mean the center established
by PathNet to monitor Incumbent's System and other Systems
comprising the PathNet network.
1.1.23 "Order Wire" shall mean a service channel consisting of a 64
kb/sec circuit between sites.
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1.1.24 "Outage" shall mean any unscheduled interruption in
telecommunication services along the Segment that occurs after ten
(10) consecutive severely errored seconds have occurred. (Outage is
usually measured in outage seconds.)
1.1.25 "Pass-Through Expenses" shall mean Incumbent's reasonable and
actual out-of-pocket expenses to be paid and reimbursed by PathNet
that are outside (i) of the Services obligations and costs of
Incumbent pursuant to this Maintenance Agreement or (ii) the scope
of this Maintenance Agreement.
1.1.26 "Path" shall mean the physical spatial separation between
point-to-point towers, housing and microwave antenna.
1.1.27 "Person" shall mean any individual or a corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company or other entity of any kind or
any governmental authority.
1.1.28 "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.
1.1.29 "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.
1.1.30 "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.
1.1.31 "Segment" shall me an the portion of a microwave
communications network existing between two geographic points. For
purposes of this Maintenance Agreement, Segment A is the portion of
Incumbent's microwave communications network between Casper, Wyoming
and Minden, Nebraska. Segment B is the portion of Incumbent's
microwave communications network between Lisco, Nebraska and
Lakewood, Colorado.
1.1.32 "Services" shall be as defined in Section 3 and Schedule A of
this Maintenance Agreement.
1.1.33 "Site" shall mean a physical location on which a tower or
other structure is located which houses such microwave antenna,
radios and other communications equipment.
1.1.34 "SONET" shall mean Synchronous Optical Network.
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1.1.35 "Spare Parts" shall mean equipment and parts provided by
PathNet to Incumbent pursuant to the performance of Incumbent's
maintenance obligations hereunder, as set forth in Schedule E-1.
1.1.36 "Stocking Depot" shall mean an enclosed and reasonably
protected storage facility required for housing the Spare Parts
inventory.
1.1.37 "Subcontractor" shall mean without limitation, any firm,
corporation, or person working directly or indirectly for a company
that furnishes or performs a portion of the work, labor or material.
1.1.38 "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, as set forth in Schedule F.
1.2 Other Terms
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 any
Segment. The Commissioning shall occur as agreed upon by PathNet and
Incumbent pursuant to the acceptance procedures of the FPM Agreement and
shall be set forth in Schedule H, attached hereto.
2.2 Extension
This Maintenance Agreement shall be renewed automatically for successive,
one-year renewal terms and shall terminate upon expiration of the FPM
Agreement; provided that (i) Incumbent does not give PathNet notice at
least ninety (90) days before expiration of the term indicating that
Incumbent will terminate this Agreement for convenience, pursuant to
Section 9.2 hereof; (ii) PathNet does not provide notice to Incumbent that
PathNet will not renew the contract due to Incumbent's failure to perform
the Services pursuant to Section 7.2 hereof; or (iii) either Party does
not terminate this Agreement for cause pursuant to Section 9.1 hereof.
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3. SERVICES
3.1 Provision of Services
3.1.1 General. Upon Commissioning, 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; and
(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 the existing
telecommunications system, even if the service, function
or responsibility is not specifically described in this
Maintenance Agreement.
(c) Upon execution of this Maintenance Agreement and prior
to the Commissioning, 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 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 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.
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
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below Critical Service Levels, or (iii) any other
problem that threatens to adversely impact the System or
the integrity of the System, 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 shall repair the System to normal
operations within a cumulative mean time of four (4)
hours after the receipt of a Trouble Ticket.
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 must include in
Exhibit A-1 to Schedule A procedures and personnel
involved, including an escalation list of individuals
responsible for repairing the System to normal
operations, in the event of a Field Technician dispatch
which procedures shall be approved by PathNet.
(b) Notification. Notification shall be deemed to be
received by Incumbent upon initiation and notification
of a Trouble Ticket. The Network Monitoring Center shall
initiate a Trouble Ticket pursuant to the procedures set
forth in Section 3.2.6 of Schedule B.
3.3 Services Exclusions
3.3.1 Towers and Shelters. Except as provided in the 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 Agreement; provided, however, that Incumbent shall
maintain such towers and shelters as 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 is used in
conjunction with PathNet's Equipment, Incumbent shall have no maintenance
obligation or responsibility for such telephone lines or third-party
equipment. Incumbent shall, upon request by PathNet, assist in repairing
those lines so all equipment and
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systems are operational; provided that PathNet shall adjust the Monthly
Service Charge pursuant to Section 5.4 of this Maintenance Agreement.
4. EQUIPMENT; FACILITIES
4.1 Equipment
The Equipment that Incumbent shall be responsible for maintaining in the
performance of the Maintenance Services are 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 and Incumbent shall store
Spare Parts to the Equipment at the Storage Depot in the type and
quantity as agreed upon and as set forth in Schedule E; provided
that Incumbent may supplement the Spare Parts beyond Incumbent's
designated allocation of Spare Parts at its sole discretion.
Incumbent shall store such 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.
4.2.2 Replacement Equipment. At its sole discretion, PathNet may
replace any Equipment, provided that such Equipment does not
materially 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 the labor and other
associated costs of installing any such Equipment, pursuant to any
Monthly Services Charge adjustment set forth in Section 5.4 of this
Maintenance Agreement.
4.3 Facilities
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Incumbent shall be responsible for performing the Services at the
Facilities as 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, upon
Commissioning of any Segment, 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.
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 of Incumbent or
franchise taxes.
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
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procedures set forth in Section 2.2 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, or (iii) 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 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
Agreement.
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 as
provided by Incumbent by appointing a new Maintenance provider.
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 in the event of
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an 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 to free, 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 the operation of the Initial System.
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 Agreement
or (ii) supplements the Services, Incumbent shall 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; SAVINGS CLAUSE
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 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 Customer. The Parties expect
and understand that the Critical Service Levels may improve over
time. PathNet and Incumbent shall 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.
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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 equipment 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
request by PathNet, Incumbent shall provide PathNet with information
and access to such tools and procedures for purposes of
verification.
8.2 Audit and Inspection Rights
8.2.1 Incumbent shall maintain accurate logs and dispatch reports,
recording any reported Outages or operations below Critical Service
Levels and the appropriate actions taken to restore service. PathNet
shall have the right to audit any and all reports maintained by
Incumbent. These reports shall be available to PathNet for its
inspection at Incumbent's Facilities and a copy of the compilation
of these reports is to be forwarded to PathNet on a quarterly basis.
8.2.2 PathNet shall have the right to inspect the Facilities and
Equipment Maintenance at any time upon reasonable notice to
Incumbent and to supplement such Maintenance during PathNet's
inspection; provided PathNet complies with any and all Incumbent
security procedures.
8.3 Savings Clause
PathNet's failure to perform any of its responsibilities set forth in this
Agreement (other than as provided in Section 9.1.2) shall not be deemed to
be grounds for non-performance by Incumbent; provided, however, that
Incumbent's non-performance of its obligations under this Agreement shall
be excused if, and to the extent, (i) such Incumbent 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, notwithstanding
PathNet's failure to perform (with PathNet reimbursing Incumbent for its
additional Pass-Through Expenses for such efforts).
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
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its duties or obligations which collectively constitute a material
breach of this Maintenance Agreement, 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.
9.1.2 In the event that PathNet fails: (i) to pay Incumbent
undisputed charges due under this Agreement totaling at least Five
Thousand ($5,000) Dollars and fails to make such payment within
thirty (30) days of notice from Incumbent of the failure to make
such payment or (ii) upon thirty (30) days' prior written notice
from Incumbent to PathNet, 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 on-hundred and twenty
(120) 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) this Maintenance
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 this Agreement to provide the Services at
Incumbent's Facilities. Such independent Maintenance provider shall assume
the obligation of Incumbent 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 Agreement
for cause, PathNet shall provide a third-party Maintenance provider to
perform the Services, and Incumbent shall reasonably cooperate with such
provider. Upon termination for any reason or expiration of this
Maintenance Agreement, PathNet shall have the right to full and free
access to all Facilities to supplement or perform the Services in accord
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.
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. Incumbent agrees to keep such Maintenance Aids
confidential and to use its best efforts to prevent the unauthorized
disclosure and use of such Maintenance Aids.
11.2 Incumbent agrees to use its best efforts not to allow copies of any
Maintenance Aids furnished by PathNet to be made without the prior written
consent. Incumbent may make necessary copies of Maintenance Aids installed
as part of its providing the Services subject to Incumbent's obligations
under this 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 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
(a) Incumbent represents and warrants that it shall use its best
efforts to use efficiently the resources or services necessary
to
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provide the Services. Incumbent represents and warrants that
it shall use its best 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 Agreement.
(b) Each Party represents and warrants to the other that:
(i) 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
(ii) 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.
12.4 Insurance
Incumbent warrants and represents that during the term of this Agreement
and any extension thereof, Incumbent shall maintain at Incumbent's expense
all of the necessary insurance 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 request.
12.5 Security and Safety Procedures
In the event PathNet is required to supplement the Services, PathNet shall
comply with all reasonable Incumbent security and safety procedures as
provided by the Incumbent in fulfilling its obligations.
12.6 Disclaimer
EXCEPT AS PROVIDED IN THIS MAINTENANCE AGREEMENT, THERE ARE NO OTHER
EXPRESS WARRANTIES AND THERE ARE NO IMPLIED WARRANTIES, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
ON THE PART OF EITHER PARTY.
13. INDEMNITIES
13.1 Indemnification by PathNet.
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To the maximum extent permitted by law, PathNet shall release, protect,
defend and hold harmless Incumbent and its Affiliates and its and their
respective officers, directors, employees and agents from and against any
and all Losses arising from (i) personal injury, disease, death, property
damage, pollution and environmental damage (including clean-up and all
fines and penalties of any nature) to the extent directly or indirectly
caused by or related to the negligence (whether simple or gross; active or
passive), strict or absolute liability or fault of PathNet, its Affiliates
or its or their officers, directors, employees, agents or contractors and
(ii) the breach of any representation or warranty set forth in this
Maintenance Agreement by PathNet.
13.2 Indemnification by Incumbent.
To the maximum extent permitted by law, Incumbent shall release, protect,
defend and hold harmless PathNet and its Affiliates and its and their
respective officers, directors, employees and agents from and against any
and all Losses arising from (i) personal injury, disease, death, property
damage, pollution and environmental damage (including clean-up and all
fines and penalties of any nature) to the extent directly or indirectly
caused by or related to the negligence (whether simple or gross; active or
passive), strict or absolute liability or fault of Incumbent, its
Affiliates or its or their officers, directors, employees, agents or
contractors and (ii) the breach of any representation or warranty set
forth in this Maintenance Agreement by Incumbent.
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 SUBSECTION 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
INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
14.2.2 The limitations set forth in subsection shall not apply to
the indemnification obligations set forth in Section 11.
14.2.3 Each Party shall have a duty to mitigate damages for which
the other Party
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is responsible.
14.3 Force Majeure
Neither Party shall be liable to the other for any delays or damages
or failure to act, except for the obligation to make payment when
due, owing to, occasioned by or caused by reason of strikes,
lockouts, fire, flood, the elements, Acts of God, wars, blockades,
insurrections, riots, landslides, earthquakes, lightning, storms and
civil disturbances beyond the control of the Party affected thereby,
and delays due to any of the above causes shall not be deemed to be
a breach or failure to perform under this Agreement (collectively a
"Force Majeure Event"); provided, however, that the Party delayed by
such event shall provide notice thereof to the other Party as soon
as reasonably possible specifying all facts relating thereto, the
anticipated consequences thereof, and any proposed actions to be
taken in mitigation of adverse consequences. Neither Party shall,
however, be relieved of liability for failure of performance due to
a claimed Force Majeure Event hereunder if such failure is due to
causes arising out of its own negligence or to removable causes that
it fails to remove or remedy with reasonable dispatch.
15. DISPUTE RESOLUTION
15.1 Informal Dispute Resolution.
15.1.1 Role of Program Manager. In the event Incumbent has a
dispute, controversy or other complaint relating to PathNet's performance
of PathNet's rights and obligations under this Agreement, Incumbent shall
have the right to first contact the Program Manager to resolve such
dispute, controversy or other complaint. If Incumbent is not satisfied
with the resolution provided by the Program Manager, Incumbent may resort
to the arbitration procedures set forth in this Section 15.
15.1.2 Notice of Breach, Cure and Remedies. In the event of a
material breach by either PathNet or Incumbent (the "Breaching Party"),
the other Party (the "Non-Breaching Party") shall send by certified mail a
written notice of such material breach to the Breaching Party setting
forth the specific allegations of such breach. Upon receipt of the notice
of breach, the Breaching Party shall have thirty (30) days to cure such
breach. In the event the Breaching Party fails to cure such breach, as
determined by the Non-Breaching Party in its sole discretion, and the
Breaching Party determines, in its sole discretion, that it has cured such
breach, either the Breaching Party or the Non-Breaching Party may invoke
the arbitration procedures set forth in Section 15.2 to resolve whether
such breach has been cured.
15.2 Arbitration.
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15.2.1 Arbitration; Resolution of Disputes. Subject to Section 15.1,
any and all disputes and controversies between Incumbent and PathNet
concerning this Agreement (each a "Dispute") shall be subject to
resolution as set forth in this Section 15.
15.2.2 Referral to Binding Arbitration. Each Party shall have the
right, but not the obligation, to refer any Dispute for final resolution
by binding arbitration in accordance with the American Arbitration
Association (the "Association") Rules for Arbitration of business disputes
(the "Arbitration Rules").
15.2.3 Binding Effect. The Parties acknowledge and agree that (i)
the award in any arbitration shall be final, conclusive and binding on the
Parties and (ii) any such arbitration award be a final resolution of the
Dispute between the Parties to the same extent as a final judgment of a
court of competent jurisdiction.
15.2.4 Use of Courts and Other Legal Remedies. Each Party covenants
and agrees that it shall not resort to any court for legal remedies
concerning any Dispute other than to enforce a final decision by the
arbitrators or for preliminary, interim or provisional equitable relief in
aid of arbitration.
15.2.5 Arbitration Process.
(a) Site and Arbitration Tribunal. Absent agreement to the contrary
by the Parties, the arbitration will be conducted in New York, New York,
by a panel of three (3) arbitrators with expertise in the fields of
telecommunications engineering and construction.
(b) Limitation on Awards. Arbitrators may not award (i) the right to
terminate this Agreement or any of the rights and obligations hereunder,
or (ii) any other right or remedy that contravenes the terms and
conditions of this Agreement.
(c) Period of Limitations. In the event the Party claiming a Dispute
under Section 17.1.2 does not institute binding arbitration within four
(4) years after notice of breach, such Party shall forever be barred from
bringing a claim on the specific subject matter of such Dispute.
(d) Attorneys' Fees. The arbitrator shall award the reasonable cost,
including attorneys' fees, to the prevailing Party.
16. MISCELLANEOUS
16.1 Notice Provision
All notices pertaining to disputes arising from this Maintenance Agreement
shall be directed to a corporate or partnership entity or employee
designated by the signators as having full rights and responsibilities to
address such issues. Notices under this
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Maintenance Agreement shall be sufficient only if personally delivered by
a commercial prepaid delivery or courier service or mailed by certified or
registered mail, return receipt requested to a party at its address set
forth in the signature block below or as amended by notice pursuant to
this subsection. If not received sooner, notice by mail shall be deemed
received five (5) business days after deposit in the U.S. mail. All
notices shall be delivered as follows:
If to PathNet:
Michael A. Lubin, Esquire
Vice President and General Counsel
PathNet, Inc.
6715 Kenilworth Avenue, Suite 200
Riverdale, Maryland 20737
If to Incumbent:
Mr. Tom Bruscino
Director, Telecommunications
KN Energy
370 Van Gordon Street
Lakewood, CO 80228-8304
16.2 Binding Nature: Entire Agreement
PathNet and Incumbent acknowledges (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 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
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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 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
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 noncompliance 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
New York, 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
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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.
16.12 Relationship of Parties
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. Incumbent is not an agent of PathNet and has no authority to
represent PathNet as to any matters, except as expressly authorized in
this Maintenance Agreement.
16.13 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.
16.14 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Maintenance
Service Agreement, or caused it to be executed by a duly authorized officer, as
of the date first written above.
PATHNET, INC. KN ENERGY, INC.
By: /s/ Dave Schaeffer By: /s/ Thomas Bruscino
------------------------------- -------------------------------
Name: DAVE Schaeffer Name: Thomas Bruscino
----------------------------- -----------------------------
Title: Chairman Title: Director Telecommunications
---------------------------- ----------------------------
Date: 10/13/97 Date: 10/10/97
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