Agreement for the Provision of Internet Services, Equipment, and Software Licenses - Online System Services Inc. and American Telecasting Inc.
AGREEMENT FOR THE PROVISION OF INTERNET SERVICES, EQUIPMENT, AND SOFTWARE
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LICENSES
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By and between ONLINE SYSTEM SERVICES, INC. ("OSS") a Colorado corporation with
its principal place of business located at 1800 Glenarm Place, Denver, Colorado
and American Telecasting, Inc., a Delaware corporation, with its principal place
of business located at 5575 Tech Center Drive, Suite 300, Colorado Springs,
Colorado 80919 ("Customer"), dated as of November 26, 1997.
1. PURPOSE / DESCRIPTION OR THE SYSTEM, EQUIPMENT, APPLICATION PROGRAMS AND
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RELATED MATERIALS AND SERVICES: 1.1 General: OSS is a company generally engaged
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in the business of providing Internet related equipment software and services
such as hardware and software selection, installation, initial training,
consulting and general assistance in the implementation and operation of a turn-
key Internet Service Provider ("ISP") business as well as documentation and
supporting materials for administration, marketing, sales and web site design
and development support for ISP systems; OSS provides and/or has the right to
license a package of OSS proprietary programs developed by OSS including but not
limited to the "Community Access Partnership" ("CAP" ) Web site software, with
future versions to include, without limitation, "Electronic Banking" and
"Electronic Commerce" functionality, and user documentation, as well as the SAGE
Application which performs subscriber management and billing functions
(hereinafter collectively described as the "Application Program ").
1.2 Scope of this Agreement: This Agreement includes the terms and
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conditions applicable to all Internet systems purchased by ATI from OSS. The
parties agree that six (6) systems will be selected and measured against certain
performance criteria, mutually agreed to by the parties as detailed in Schedule
A. Upon the successful achievement of these performance criteria or by any other
replacing criteria, mutually agreed between the parties, ATI agrees to enter
into good faith negotiations with OSS to use the services of OSS in offering
Internet services in other markets. The six (6) markets include Colorado
Springs' Denver, Portland, and the other three (3) markets will be determined at
some subsequent date by ATI management.
2. TERM: The term of the Agreement shall commence on the date set forth above,
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and shall continue for a period of five (5) years unless sooner terminated in
accordance with the terms of this Agreement including but not limited to Section
15 hereunder (the "Term").
3. PROVISIONS APPLICABLE TO EQUIPMENT SALE AND PURCHASE: Customer and OSS have
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executed two (2) Memorandums of Agreement (MOA) dated September 29, 1997, and
November 11, 1997 which provided for the purchase of hardware/software,
Application Program, and the Installation of all hardware and software. These
MOAs are incorporated herein by reference as Schedule "B". The unit pricing
terms found in these Memoranda will apply to all ISP systems sold by OSS to the
Customer. The price for any market will be determined by individual market
requirements and agreed to between OSS and Customer.
4. PROVISIONS APPLICABLE TO LICENSE OF THE APPLICATION PROGRAM: 4.1 Grant of
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Software License: During the Term in the Customer's Internet POP locations and
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subject to Customer's compliance with the terms and conditions herein, OSS
hereby grants to Customer a Software License granting Customer the right to use
and execute the Application Program and its future releases and versions
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throughout the Term, with no further costs to Customer than those set forth in
Section 8. Except for the license herein granted to Customer, it is hereby
acknowledged and agreed to by the parties that as between OSS and Customer all
rights of any nature whatsoever in and to the Application Program and any other
intellectual property relating to Cable Access America are retained exclusively
by OSS. The License shall be non-exclusive to Customer, subject to the
provisions set forth in Section 15.
4.2 Reservation of Rights: The Software License may not, under any
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circumstances whatsoever be considered a transfer, either direct or indirect of
the intellectual and/or industrial property rights of the licensed software and
Customer shall not have the right to assign, sub-license, rent, lease, sell,
encumber, or otherwise transfer any of the rights granted hereunder. Subject to
the same terms, conditions and qualifications, except for the rights expressly
granted herein, any and all rights in and to the Application Programs are hereby
reserved to OSS.
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5. RESPONSIBILITIES OF CUSTOMER: Customer shall be solely responsible for the
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costs of telecommunication services provided by the local telephone company,
interchange carriers and any other telecommunications company which may be
necessary for the Customer's use of the System. In addition, Customer shall be
responsible for insuring for the provision of adequate 110/220 volt power
circuits for the System, including backup (uninteruptible power supply, if
desired) power.
6. OSS INSTALLATION: 6.1 Installation Plan and Acceptance: With respect to
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Equipment purchased by Customer from OSS, OSS agrees that it shall promptly
provide on-site installation assistance comprised of the installation and other
services described in the Installation Plan set forth in Schedule "B" attached
hereto and such other services as the parties mutually agree are necessary to
permit Customer to begin use of the System in accordance with such Installation
Plan in compliance `with the timetable set forth therein. An OSS technician
shall be responsible to demonstrate to Customer the successful material
operation of all functions of the installed System prior to certifying in
writing that the installation has been completed.
6.2 Passage of Title/Risk of Loss/Equipment Delivery: Title to the System
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shall not pass to Customer until the issuance of the certification of the
Installation Plan and payment of the Equipment Purchase Price and any related
installation fees due and owing. Until such time as title passes to Customer
hereunder, OSS shall bear the risk of loss or damage to the System, cc any part
thereof. Unless otherwise determined by OSS, OSS shall deliver all Equipment and
Additional Equipment to Customer ROB. OSS' or manufacturer's principal place of
business, whichever is least expensive. OSS reserves the right to make partial
deliveries and to ship the Equipment or additional Equipment as it becomes
available. Delivery dates are approximate. Customer shall provide an acceptable
installation and operation environment suitable for computer equipment
6.3 Customer Responsibilities: Customer shall promptly perform all
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responsibilities it is assigned under the Installation Plan. Customer shall also
furnish to OSS, free of charge, for the period of time required for installation
of the System: 1) access during normal business hours to the location in each
territory in which the Equipment is to be placed; 2) the cooperation of a
management-level employee in each market (hereinafter the Project Leader)
knowledgeable in aspects of Customer's business and technical operations.
7. OSS ACCESS SUPPORT, COMMUNITY ACCESS PARTNER SUPPORT, TRAINING, AND
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DOCUMENTATION: OSS agrees to furnish Customer with on-going support, training,
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and documentation which supports the Internet access, Community Access
Partnership, and Web hosting services provided by the Customer. The parameters
of this support, training, and documentation are defined in Schedule "C"
attached hereto.
8. OSS PROFESSIONAL MANAGEMENT AND INTELLECTUAL PROPERTY FEES: In
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consideration of the rights and licenses granted hereunder and the support,
training, and documentation provided, Customer shall pay to OSS:
8.1 Installation and License Fee: Upon executing purchase order for the
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POP equipment for each individual market, Customer agrees to pay OSS a non-
refundable Installation and License Fee of $_______ per market The current
markets to which this fee is applicable are Colorado Springs, Denver, and
Portland.
8.2 Access Revenue Sharing: The percentages, as found in the following
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table, of all Internet Access Gross Receipts "Access" which shall be defined as
all billings by Customer or its Assignees attributable to the provision of"
Internet Access" to be defined for the purpose of this Agreement as dial-up,
dedicated, telco return and two way wireless cable modem Internet access
revenues (including webhosting revenues) minus uncollectible billings,
installation charges, value added, sales and other transactional taxes (other
than those taxes which Customer is legally obligated to pay on its own behalf):
8.3 Content Revenue Sharing: The percentages, as found in the following
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table, of Content Related Gross Receipts "Content" which shall be defined as all
fees by Customer or its Assignees attributable to all content related
activities. including but not limited to sponsorships, electronic advertising,
electronic banking and electronic commerce minus custom software and web-design
development cost, uncollectible billings, installation charges, value added,
sales and other transactional taxes (other than those taxes which Customer is
legally obligated to pay on its own behalf).
[Table]
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8.4 All Systems: The above percentages apply to those markets for which
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the Customer purchases the hardware/software and other services associated with
the CAA product.
8.5 Payment Dates: The Professional Management and Intellectual Property
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Fees provided for in Section 8 shall be paid by Customer on or before the
thirtieth day following each month for Gross Receipts collected by the Customer,
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with respect to the Customer Business during the previous month.
9. TAXES: Except as set forth herein to the contrary, Customer shall have the
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right to deduct the amount of any withholding taxes, value added taxes, sales
and other transactional taxes (other than those taxes which Customer is legally
obligated to pay on. its own behalf) from the moneys due to OSS hereunder;
provided, however, that Customer shall furnish to OSS, at Customer's expense,
the following information and documents: (a) an original receipt from taxing
authority with respect to the Lax; (b) a report setting forth the fees with
respect to which the tax is paid, including the statutory citations and general
description of the provision; and (c) such other information as OSS may from
time to time reasonably request to evidence .OSS' right to credit such tax
against its income tax liability.
10. AUDITS/INSPECTIONS: Customer and its Assignees shall prepare and maintain
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complete and accurate records of all matters directly relating to this
Agreement, in accordance with-generally accepted accounting principles, on a
calendar annual basis, throughout the Term and for not less than two years
thereafter. During each calendar year of the Term, and within one year after the
expiration of this Agreement, OSS, or its designated representative, may inspect
and audit such books and records, once per three month period, upon at least
thirty (30) days prior notice to Customer for the purpose of verifying and
confirming the accuracy of the payments made to OSS. In the event that any audit
reveals any error in the calculation of the amounts due to OSS, Customer shall
immediately pay or be refunded the difference unless Customer contests such
audit in good faith. In the event that the amount due to OSS exceeds five (5%)
percent of the total amount due to OSS for such audited period, Customer shall
pay the costs associated with the audit unless Customer contests such audit in
good faith. In the event Customer contests such audit, the dispute shall be
subject to Section 17.5 hereunder.
11. FORCE MAJEURE: 11.1 If OSS' or Customer's performance of any of its
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obligations hereunder are delayed or impaired by reason of any Act of God, or,
civil disturbance, strike, adverse weather condition, inability to arrange for
or delays in transportation, unavoidable casualty, inability to acquire or
delays in acquiring any component from a manufacturer or supplier, inability to
obtain or delays in obtaining any permits or any law, rule or order of any
governmental agency or official or any cause not reasonably within OSS' or
Customer's control including without limitation the non-renewal or termination
of or inability to obtain an OSS license of any of the Application Program, and
not due to any fault, neglect, act or omission on the part of OSS or Customer,
then OSS or Customer, as the case may be shall be entitled to an extension of
time for completion of same for a period equivalent to the time lost by reason
thereof; provided, however, that such party gives the other party notice thereof
within five (5) business days (unless circumstances require immediate
notification) of the commencement of such claim of delay or impairment. In the
event any delay or impairment continues for a period of one month, either party
shall have the right to terminate this Agreement in accordance with Section 15
below.
11.2 Withdrawal and Replacement: Subject to Section 11.1 above, and
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notification to and approval by Customer, at anytime during the Term, OSS shall
have the right to withdraw the Application Program or any component and upon
Customer's consent replace same with another comparable application program.
12. PERMITS: Customer shall at its sole cost, obtain all consents, licenses,
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permits, approvals, authorizations, and inspections from federal, state, and
local governmental authorities, agencies, or officials required for the
execution and completion of the installation and construction work to be
performed hereunder. Customer shall also be responsible for and correct any
violations of any such laws resulting from or in connection with their
performance of the work hereunder. Customer shall furnish OSS with such proof of
its compliance as OSS may reasonably request by giving the Customer notice
thereof.
13. CONFIDENTIALITY / PUBLIC DISCLOSURE / PROPRIETARY RIGHTS: 13.1
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Confidentiality: Each of the parties agrees to keep all proprietary ideas,
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plans and information received by or otherwise disclosed to the receiving party
from or by the disclosing party, that is marked proprietary or confidential (or
bears a marking of like import) during
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these proposed transactions confidential for a period of two years from the date
hereof The parties agree that all such proprietary ideas, plans and information
shall remain the property of the disclosing party.
13.2 Public Disclosure: OSS and Customer shall obtain the others consent
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prior to making any press release, announcement or other public disclosure
concerning this Agreement, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, each party shall be free to discuss with third
parties Internet set-vices and the design and development of ISP business,
subject to the Non-Disclosure Agreement between the parties, and to Section 15-5
hereunder.
13.3 Proprietary Rights: As between Customer and OSS, Customer
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acknowledges that OSS is the sole owner of all "System Information", defined as
all proprietary information of OSS relating to the System or OSS' services, and
Customer shall not, by reason of disclosure or access to any System Information
during the course of the parties' relationship or otherwise, acquire any right,
title, or interest in or to any System Information. No license, or other right
in or to the System Information is intended to be granted to Customer pursuant
to this Agreement or otherwise and no license or other right shall be
incorporated herein by reference, implication, or any other means with respect
to or under any invention, patent, copyright, trademark, (or any pending
application for same) trade secret, or other proprietary right contained in or
in any way relating to the System Information disclosed pursuant to this
Agreement or to which Customer may be given or have access. Customer shall not
itself, nor shall it permit, by way of carrying out its reasonable commercial
efforts, any third parties to remove any copyright except as specifically
authorized hereunder.
14. WARRANTIES AND INDEMNITIES/SPECIFICATIONS AND CAPACITY: 14.1 SERVICES AND
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SYSTEM WARRANTY: OSS MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
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AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ITS SERVICES, THE
SYSTEM, THE DESIGN OR CONDITION OF THE EQUIPMENT OR ANY APPLICATION OR ANY
OUTPUT BASED ON THE USE OF THE SYSTEM. OSS SPECIFICALLY DISCLAIMS, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
14.2 Assignment of Warranty: OSS hereby assigns to Customer (to the extent
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OSS -has the right to so assign) the benefits of any warranties or guarantees
provided to OSS by the manufacturer(s) of the System or any pans' replacements,
or additional units and agrees to provide a detailed description of same to
Customer within thirty (30) days as of the date hereof. Said assignment is not
intended to deprive OSS of its rights under said warranties and shall not be
construed to do so.
14.3 Compatibility: (a) OSS warrants and represents that the Equipment
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being sold to Customer by OSS and the Software being Licensed to Customer by OSS
hereunder are compatible. (b) Customer acknowledges that certain software and
equipment may not be compatible with the System and Customer therefore agrees
that it shall not use any equipment on which the Application Program is run
other than the Equipment, the Application Program and other software provided
hereunder without first consulting OSS. In the event that Customer fails to
inform OSS of such use, any damages to the Equipment or otherwise as a result of
such use shall be borne by Customer.
14.4 System Functions: The System shall accommodate and/or perform in an
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efficient and cost effective manner in accordance with generally accepted
industry standards, including but not limited to, the following primary and
commonly used Internet functions: Domain Name Service; Internet e-mail
processing; World Wide Web Access, News Groups, File Transfer Protocol (ftp),
Telnet, and dialup user access and perform accounting and control functions of
Customer.
14.5 Repair of Manufacturer Defects: OSS shall use best efforts to assist
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Customer in obtaining the repair of any operational deficiencies from third
party manufacturer in accordance with manufacturer's warranty assigned to
Customer herein. Nothing contained in this section shall be deemed to require
OSS to maintain the Equipment or Additional Equipment or to repair any defect
caused by Customer's failure to properly maintain the Equipment or Additional
Equipment.
Notwithstanding the above, all repair, replacement and restoration of any
Equipment or Additional Equipment manufactured by OSS will be done by OSS
without extra costs or charges to Customer.
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14.6 OSS Indemnification: OSS shall indemnify and hold Customer harmless
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from and against any claims, liabilities, damages and expenses, including,
without limitation, reasonable attorney's fees relating to or arising out of
OSS' breach of any of its material obligations under this Agreement. OSS shall
not be liable for any third party claims based upon or arising from Customers
negligent operation of the System or for any indirect, incidental or
consequential damages arising from the use of or inability to use the System
attributable to Customer's negligence, provided that OSS is not also negligent.
14.7 Customer Indemnification: Customer shall indemnify and hold harmless
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OSS from and against any claims, liabilities, damages and expenses, including,
without limitation, reasonable attorney's fees relating to or arising out of a
breach of any of Customer's material obligations hereunder.
15. DEFAULT / TERMINATION: 15.1 Default: Either party may immediately
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terminate this Agreement upon thirty (30) days prior written notice to the other
party (the "Non-Terminating Party") and upon the occurrence of any of the
following events of default by the Non-Terminating Party and the Non-Terminating
Party's failure to cure same within fifteen (15) days of notice: the Non-
Terminating Party's breach of any material obligation under this Agreement; the
Non-Terminating Party's failure to make timely payment to OSS in accordance with
the payment obligations set forth in this Agreement; the Non-Terminating Parry
ceases to do business or sells all or a portion of its assets used in the
business of providing Internet service using the System:, or the Non-Terminating
Party files for bankruptcy or a trustee or receiver is appointed or the Non-
Terminating Party makes an assignment for the benefit of creditors.
15.1.a Mutual Termination: Anything herein to the contrary
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notwithstanding, Customer and OSS may mutually elect to terminate this Agreement
at any time by counter-signing a Notice of Termination setting forth the
effective date of such termination no sooner than thirty (30) days following the
delivery of such counter-signed document to both parties. If Customer and OSS
terminate this Agreement in accordance with the provisions of this Subsection
15.1.A, in addition to any payment required to be made to OSS pursuant to
Subsection 15.2 hereunder, OSS shall be entitled to be reimbursed by Customer
for all of OSS' Professional Management and Intellectual Property Fees earned by
OSS prior to the effective date of such termination.
15.1.b Performance based termination: Should any market fail to meet the
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performance criteria as defined in schedule "A" within the specified time frame,
then either party may elect to terminate this agreement for that specific market
by a written notice of termination.
15.1.c Termination Upon Sale of Customer: Anything herein to the contrary
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notwithstanding, Customer may, upon ninety (90) days prior written notice to OSS
terminate this Agreement in the event that any "unaffiliated entity" acquires
control of Customer. For purposes hereof, an "unaffiliated entity" shall mean a
person, company or business whose ownership or management is not controlled by,
controlling or under common control with Customer.
If Customer and OSS terminate this Agreement in accordance with the
provisions of this Subsection 15.1.b and 15.1c, in addition to any payment
required to be made to OSS pursuant to Subsection 15.2 hereunder, OSS shall be
entitled to be reimbursed by Customer or to retain from the amount of monies
previously paid by Customer under this Agreement the amount of non-cancelable
costs actually incurred or committed in connection with OSS' performance under
this Agreement, in addition to all of OSS Professional Management and
Intellectual Property Fees earned by OSS prior to the effective date of such
termination and the purchase price of any equipment delivered to Customer prior
to such effective date.
15.1d Other Termination: Customer reserves the right to terminate this
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agreement for any of the markets in which they have deployed Internet services
and which is bound by the terms of this Agreement The following Termination Fees
to be paid to OSS apply to each market for which Customer desires to terminate
this Agreement, (1) If this agreement is terminated within the first twelve (12)
months there will be no additional fees due OSS. (2) If this Agreement is
terminated between the end of month 12 and prior to the end of month 24 of the
date of first commercial launch of Internet services in a market, Customer shall
pay OSS a fee of $50,000; (3) For the period from the beginning of month 25 to
the end of the term of this Agreement, the Termination Fee shall be the greater
of $100,000 or an amount equal to the Earned OSS Professional Management and
Intellectual Property Fee for the month immediately preceding the issuance of
the Notice of Termination multiplied by the number of
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months remaining in the unelapsed portion of the Five (5) Year Term had such
termination not have taken effect ("Termination Fee"). For example, assuming the
OSS' Fee for the month prior to the issuance of the Termination Notice is $4,000
and 30 months of the Term has elapsed at the effective date of termination, the
Termination Fee owing to OSS would be $120,000.
15.2 Effect of Termination: Upon the termination of this Agreement: 1)
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the Non-Terminating Party, its receivers, trustees, assigns or other
representatives shall immediately surrender all rights, licenses and privileges
granted under this Agreement, cease using or displaying the other party's
trademarks, service marks or logos, shall cease to identify itself with the
other party in any way, shall immediately pay any and all outstanding payments
due to the other party; and shall return to the other party any and all property
belonging to such other party including without limitation, all manuals,
billing, and other proprietary software and informational materials furnished by
the other party to the breaching party, and 2) Any Equipment fully paid for
shall remain Customer Equipment; provided, however, that as to any Equipment for
which Customer has made partial payment, Customer shall: provide full payment
immediately upon termination and the Equipment shall be delivered to Customer
upon full payment; or such Equipment shall be returned to OSS and OSS shall
refund Customer the difference between the fair market value of the returned
Equipment (after deduction of costs of retrieving and shipping such Equipment)
and the total amount due for the purchase of the Equipment.
15.3 Non Release of Obligations: No termination of this Agreement shall
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release Customer from any obligation to pay OSS any amounts accrued or become
payable prior to the date of termination.
15.4 Survival: The provisions of Sections 13, 14, 15.2, 15.4 and 17.1
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shall survive the expiration or termination of this Agreement.
16. INTELLECTUAL PROPERTY / INFRINGEMENT CLAIMS: If Customer receives a claim
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that any Equipment or Application Program manufactured or provided by OSS
infringes upon any patent, copyright, or other intellectual property interest,
Customer shall immediately notify OSS in writing. OSS shall have the exclusive
authority to handle any such claims and, at its sole option will: I) settle or
defend the claim; 2) procure for Customer the right to use the Equipment and
Application Program or compatible Equipment and Application Program; 3) replace
or restore the Equipment and Application Program; and 4) indemnify Customer from
liability arising from any of the foregoing up to the amount of any fees
theretofore paid by Customer to OSS under this Agreement. In the event that any
Equipment or Application Program is not manufactured nor provided by OSS, OSS
shall not be required to indemnify Customer except to the extent such
infringement arises from OSS' integration of such Equipment or Application
Program or the System. OSS shall also not be required to indemnify Customer for
any claims of infringement relating to Equipment or Application Program modified
or altered in any way or made to Customer's designs or specifications without
OSS consent.
17. MISCELLANEOUS: 17.1 Non Waiver: A failure by either party to enforce any
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right hereunder shall not constitutes a waive of such right or any other right,
and shall not modify the rights or obligations of either party under this
Agreement; 17.2 Notice: Any notice required to be given under this Agreement
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shall be provided in writing and delivered by hand or by registered mail to the
party's address indicated herein; 17.3 Severability: The invalidity or
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unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision, the remaining provisions
being deemed to continue in full force and effect, 17.4 Governing law: The
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Agreement shall be governed by and construed under the laws of Colorado; 17.5
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Dispute Resolution: The parties hereby agree and consent to the exclusive
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jurisdiction and venue of the state courts situated in Colorado, USA for
resolution of any dispute arising from this Agreement 17.6 Entire Agreement:
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This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and communications whether oral or in writing,
between the parties with respect to the subject matter of this Agreement. No
amendment or modification of this Agreement shall be effective unless made in
writing and signed by OSS and Customer; 17.7 Relationship of Parties: There is
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no intent within this Agreement to grant a franchise, create a partnership,
joint venture, or business relationship between the parties other than that
described within this Agreement. Customer and OSS are and at all times shall
remain independent contractors and shall have no authority to bind the other to
any commitments of any kind; 17.8 Assignment. This Agreement is non-assignable
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except to any Affiliate. Any assignment by either party hereto, except as
provided above, shall require the written approval of the other party, such
approval not to be unreasonably withheld; 17.9 Successors in Interest: This
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Agreement shall inure to the benefit of and be binding upon the successors in
interest to either of the parties.
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Each of the parties hereto who have executed and delivered this binding
Agreement hereby confirm its effectiveness and validity as of the date first
written above.
ONLINE SYSTEM SERVICES [Corporate Seal]
By: /s/
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R. Steven Adams
Date: _________________________________
STARSTREAM [Corporate Seal]
By: /s/
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Robert Hostetler, President
Date: _________________________________
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