Contract analysis

ARTICLE 1 — DEFINITIONS AND INTERPRETATION

Section 1.1 — Definitions As used in this Agreement, the following terms shall have the meanings set forth below: "Acceptable Use Policy" means the policy governing Customer's use of the ArcMesh Platform and the Managed Network Services, as attached hereto as Exhibit D and as may be updated by Service Provider from time to time with Customer's prior written consent (such consent not to be unreasonably withheld). "ACV

Section 1.2 — Interpretation The following rules of interpretation shall apply to this Agreement: (a) The headings and captions contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of any provision of this Agreement. (b) The word "including" and words of similar import, when used in this Agreement, shall mean "including without limitation," unless the co

Section 2.1 — Effective Date and Commencement This Agreement shall become effective upon execution by both Parties on the Effective Date. The signing and closing of this Agreement shall occur simultaneously, and the Services shall commence on the Closing Date. The Customer entity entering into this Agreement is Northgate Americas, Inc., a Delaware corporation (registered office: c/o Calvert Corporate Services, Inc.,

Section 2.2 — Initial Term The initial term of this Agreement (the "Initial Term") shall be a period of five (5) years commencing on the Effective Date and expiring on the fifth (5th) anniversary of the Effective Date, unless earlier terminated in accordance with Article 13 or extended in accordance with Section 2.3. During the Initial Term, the Total Contract Value shall be Seventy-Five Million Dollars ($75,000,000)

Section 2.3 — Renewal Terms Following the expiration of the Initial Term, this Agreement shall automatically renew for up to two (2) successive renewal periods of two (2) years each (each, a "Renewal Term"), unless either Party provides written notice of non-renewal to the other Party at least one hundred eighty (180) days prior to the expiration of the then-current term (whether the Initial Term or a Renewal Term).

Section 3.1 — Managed Network Services Service Provider shall provide to Customer managed wide-area network (WAN) services (the "Managed Network Services") across three hundred forty (340) Nodes in twenty-eight (28) states of the United States and three (3) provinces of Canada, as listed in Schedule 1. The Managed Network Services shall include, without limitation: (a) SD-WAN deployment and optimization utilizing the

Section 3.2 — ArcMesh Platform License Subject to the terms and conditions of this Agreement, Service Provider hereby grants to Customer a non-exclusive, non-transferable license to use the ArcMesh Platform version 4.2 during the Term solely in connection with the Managed Network Services. The license granted herein is limited solely to Customer's internal business operations across the three hundred forty (340) mana

Section 3.3 — Professional Services Service Provider shall provide implementation, migration, and optimization services (the "Professional Services") as described in Exhibit A. The Professional Services shall include the migration from Customer's legacy MPLS infrastructure, previously provided by Greystone Halcyon Software, to Service Provider's SD-WAN/ArcMesh Platform. The Migration shall be conducted in three (3) p

Section 3.4 — Service Descriptions Detailed descriptions of all Services to be provided under this Agreement, including the Managed Network Services, the ArcMesh Platform license, and the Professional Services, are set forth in Exhibit A (Statement of Work / Service Descriptions). Service Provider may from time to time propose modifications to the scope of the Services; provided, however, that any material modificati

Section 3.5 — Service Provider Personnel Service Provider shall be responsible for providing qualified personnel sufficient to perform the Services in accordance with the terms of this Agreement. All Service Provider personnel who will have access to Customer's premises, systems, or Confidential Information shall be subject to background checks conducted at Service Provider's expense, in accordance with Customer's th

ARTICLE 4 — SERVICE PROVIDER'S OBLIGATIONS

Section 4.1 — Standard of Care Service Provider shall perform all Services under this Agreement in a professional and workmanlike manner, consistent with the degree of skill and care ordinarily exercised by qualified professionals providing similar managed network services to enterprises of comparable size and complexity. Without limiting the foregoing, Service Provider shall comply with all applicable federal, state

Section 4.2 — Key Personnel Service Provider shall designate a dedicated service delivery manager for the Northgate account, whose name and contact information shall be provided to Customer on or prior to the Closing Date. Service Provider shall not reassign, remove, or replace any key personnel assigned to the Northgate account without providing Customer with at least thirty (30) days' prior written notice and obtai

Section 4.3 — Subcontracting Service Provider shall not subcontract or delegate any material portion of the Services without the prior written consent of Customer, which consent may be withheld in Customer's reasonable discretion. For purposes of this Section, a "material portion" of the Services shall mean any component of the Services that, individually or in the aggregate, represents more than ten percent (10%) of

Section 4.4 — Compliance with Laws Service Provider shall comply with all applicable laws, statutes, regulations, ordinances, rules, and industry standards in the performance of the Services, including without limitation all applicable federal and state telecommunications regulations in the United States, applicable telecommunications regulations in Canada, and applicable data protection and privacy laws in both juri

Section 5.1 — Fee Structure In consideration of the Services to be provided by Service Provider under this Agreement, Customer shall pay to Service Provider the following Fees: (a) Total Contract Value. The Total Contract Value over the five (5)-year Initial Term shall be Seventy-Five Million Dollars ($75,000,000). (b) Annual Contract Value. The Annual Contract Value shall be Fifteen Million Dollars ($15,000,000) per

Section 5.2 — Most Favored Nation Pricing (a) MFN Warranty. Service Provider represents, warrants, and covenants that the per-unit pricing charged to Customer for the Managed Network Services shall not exceed the lowest per-unit pricing offered by Service Provider to any Comparable Customer. For purposes of this Section, a "Comparable Customer" means any customer of Service Provider that receives managed network serv

Section 5.3 — Invoicing and Payment Terms (a) Invoicing. Service Provider shall invoice Customer on a monthly basis in arrears for all Fees accrued during the preceding calendar month. Each invoice shall be in a form reasonably acceptable to Customer and shall contain sufficient detail to permit Customer to verify the amounts invoiced, including itemization by fee category, applicable Service Credits, and any adjustm

Section 5.4 — Annual Escalation Fees shall be subject to annual escalation commencing on the second (2nd) Contract Year, as set forth in Exhibit C. Annual escalation shall not exceed the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) as published by the United States Bureau of Labor Statistics for the twelve (12)-month period ending on the last day of the immediately preceding Contrac

Section 5.5 — Taxes (a) Exclusive of Taxes. All Fees set forth in this Agreement are exclusive of applicable sales, use, value-added (VAT), goods and services (GST), harmonized sales (HST), and similar taxes, duties, levies, and governmental charges. (b) Customer Responsibility. Customer shall be responsible for all such taxes, except for taxes based on Service Provider's net income, capital, or franchise taxes. Cust

ARTICLE 6 — SERVICE LEVELS AND CREDITS

Section 6.1 — Service Level Targets Service Provider shall provide the Managed Network Services in accordance with the service levels set forth in this Article 6 and in Exhibit B (the "Service Level Agreement" or "SLA"). The primary SLA target for network availability shall be ninety-nine and ninety-five hundredths percent (99.95%) monthly uptime, measured on a per-Node basis across all three hundred forty (340) mana

Section 6.2 — SLA Measurement and Reporting (a) Monthly Reports. Service Provider shall provide Customer with monthly SLA performance reports within ten (10) Business Days following the end of each calendar month. Each report shall detail actual uptime percentages for each Node, any SLA failures and their root causes, aggregate network performance statistics, and any Service Credits earned during the reporting period

Section 6.3 — Service Credits In the event that Service Provider fails to meet the 99.95% monthly uptime SLA target for any Node, Customer shall be entitled to Service Credits as follows: Service Credits shall be calculated based on the total Monthly Run-Rate of One Million Two Hundred Fifty Thousand Dollars ($1,250,000). Service Credits shall be applied as a credit against the next monthly invoice following the mont

Section 6.4 — Service Credit Cap The maximum aggregate annual Service Credits payable to Customer in any Contract Year shall be capped at thirty percent (30%) of the annual Managed Services Fees, or Three Million One Hundred Fifty Thousand Dollars ($3,150,000) per Contract Year (calculated as $10,500,000 × 30%). Service Credits shall be Customer's sole and exclusive monetary remedy for Service Provider's failure to m

Section 6.5 — Material Breach for Persistent SLA Failure If Service Provider's uptime performance falls below ninety-nine and fifty hundredths percent (99.50%) for any Node for three (3) consecutive calendar months, such persistent failure shall constitute a Material Breach of this Agreement entitling Customer to terminate this Agreement for cause pursuant to Section 13.2. Customer shall provide Service Provider with

Section 6.6 — Root Cause Analysis In the event of any SLA failure, Service Provider shall provide Customer with a detailed root cause analysis report within five (5) Business Days of the occurrence of such SLA failure. The root cause analysis shall identify the cause of the failure, the corrective actions taken or planned, and the measures implemented to prevent recurrence. On a quarterly basis, Service Provider shal

ARTICLE 7 — INTELLECTUAL PROPERTY

Section 7.1 — Service Provider IP All intellectual property rights in and to the ArcMesh Platform, including all patents, copyrights, trademarks, trade secrets, know-how, and other proprietary rights therein, and all enhancements, modifications, updates, and derivative works thereof, shall remain the sole and exclusive property of Service Provider. Nothing in this Agreement shall be construed as transferring or assig

Section 7.2 — Customer IP All data, content, configurations, and materials provided by Customer to Service Provider in connection with the Services (collectively, "Customer Data") shall remain the sole and exclusive property of Customer. Service Provider shall have no rights in or to Customer Data except as reasonably necessary for Service Provider to perform the Services in accordance with this Agreement. Service Pr

Section 7.3 — License Grant The license to use the ArcMesh Platform granted to Customer is as set forth in Section 3.2. The scope of such license is limited to use in connection with the three hundred forty (340) managed Nodes identified in Schedule 1, and Customer shall not use the ArcMesh Platform in connection with any additional nodes or locations without Service Provider's prior written consent and the execution

Section 7.4 — Feedback and Improvements Customer may, from time to time, provide Service Provider with suggestions, feedback, ideas, or recommendations regarding the ArcMesh Platform or the Services (collectively, "Feedback"). Customer hereby acknowledges and agrees that Service Provider shall own all rights, title, and interest in and to any improvements, modifications, enhancements, or new features developed by Ser

Section 7.5 — Third-Party IP Service Provider represents and warrants that, to Service Provider's knowledge, the ArcMesh Platform and the Services as provided under this Agreement do not infringe, misappropriate, or otherwise violate any intellectual property rights of any third party. In the event that any third-party intellectual property infringement claim is asserted against Customer arising from Customer's use o

ARTICLE 8 — DATA SECURITY AND PRIVACY

Section 8.1 — Data Security Obligations Service Provider shall comply with the Data Security Requirements set forth in Exhibit E throughout the Term and for a period of two (2) years following the expiration or termination of this Agreement with respect to any Customer Data remaining in Service Provider's possession or control. Without limiting the foregoing, Service Provider shall implement and maintain industry-sta

Section 8.2 — Data Breach Notification Service Provider shall notify Customer of any actual or reasonably suspected data breach or unauthorized access, use, disclosure, or destruction of Customer Data (a "Security Incident") within twenty-four (24) hours of Service Provider's discovery of such Security Incident. Such notification shall include, to the extent known at the time, (i) the nature and scope of the Security

Section 8.3 — Data Localization All Customer Data shall be stored, processed, and transmitted only within the United States and Canada. Service Provider shall not transfer, store, process, or permit access to Customer Data from any location outside of the United States and Canada without Customer's prior written consent. Service Provider shall implement technical and administrative controls to ensure compliance with

Section 8.4 — Audit Rights Customer shall have the right to audit Service Provider's compliance with the Data Security Requirements and this Article 8 once per calendar year upon not less than thirty (30) days' prior written notice to Service Provider. Such audits may be conducted by Customer's internal audit personnel or by a qualified third-party auditor engaged by Customer and reasonably acceptable to Service Prov

ARTICLE 9 — REPRESENTATIONS AND WARRANTIES

Section 9.1 — Mutual Representations and Warranties Each Party represents and warrants to the other Party as of the Effective Date as follows: (a) Organization and Standing. Such Party is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, and has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its business as

Section 9.2 — Service Provider Representations and Warranties Service Provider additionally represents and warrants to Customer as follows: (a) Standard of Performance. The Services shall be performed in a professional and workmanlike manner, consistent with industry standards for managed network services provided to enterprises of comparable size and complexity. (b) Conformance to Specifications. The ArcMesh Platfor

Section 9.3 — Customer Representations and Warranties Customer additionally represents and warrants to Service Provider as follows: (a) Customer Data Rights. Customer has all necessary rights, licenses, consents, and authorizations in and to all Customer Data and content transmitted over the managed network, including the right to transmit such data over the ArcMesh Platform and the managed network infrastructure. (b

Section 9.4 — Disclaimer EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, OR NON-INFRINGEMENT. WITHOUT LIMITING THE FOREGOING, SERVICE PROVIDER DOES NOT WARRANT THAT THE ARCMESH PLATFORM OR THE SERVICES WILL

Section 9.5 — Closing Deliverables As conditions to the effectiveness of this Agreement, the following deliverables shall be exchanged on or prior to the Closing Date: (a) Service Provider Deliverables. Service Provider shall deliver to Customer the following: (i) An officer's certificate, executed by an authorized officer of Service Provider, certifying (A) that Service Provider has full corporate authority to enter

Section 10.1 — Definitions For purposes of this Article 10, the following terms shall have the meanings set forth below: (a) "Indemnified Party" means the Party entitled to indemnification under this Article 10. (b) "Indemnifying Party" means the Party obligated to provide indemnification under this Article 10. (c) "Losses" means any and all damages, liabilities, losses, judgments, settlements, costs, and expenses (i

Section 10.2 — Service Provider Indemnification Obligations Service Provider shall indemnify, defend, and hold harmless Customer and its Affiliates and their respective officers, directors, employees, agents, successors, and permitted assigns (collectively, the "Customer Indemnified Parties") from and against all Losses arising out of or relating to: (a) intellectual Property Infringement. Any claim, action, or proce

Section 10.3 — Customer Indemnification Obligations Customer shall indemnify, defend, and hold harmless Service Provider and its Affiliates and their respective officers, directors, employees, agents, successors, and permitted assigns (collectively, the "Service Provider Indemnified Parties") from and against all Losses arising out of or relating to: (a) Misuse of ArcMesh Platform. Any claim, action, or proceeding by

Section 10.4 — Indemnification Caps (a) Service Provider Cap. Service Provider's aggregate indemnification liability under this Article 10 (subject to the carve-outs set forth in Section 10.5) shall not exceed two hundred percent (200%) of the aggregate Fees paid or payable by Customer during the twelve (12)-month period immediately preceding the event or claim giving rise to the indemnification obligation. By way of

Section 10.5 — Carve-Outs from Cap The following categories of indemnification claims shall not be subject to the indemnification caps set forth in Section 10.4 and shall be uncapped: (a) Claims arising from intellectual property infringement under Section 10.2(a); (b) Claims arising from willful misconduct or fraud by either Party; (c) Claims arising from a data breach under Section 10.2(b); and (d) Claims arising f

Section 10.6 — Indemnification Procedures (a) Notice. The Indemnified Party shall provide the Indemnifying Party with prompt written notice of any claim, action, or proceeding for which indemnification is sought under this Article 10 (a "Claim"). Failure to provide prompt notice shall not relieve the Indemnifying Party of its indemnification obligations except to the extent that the Indemnifying Party is materially p

Section 10.7 — Mitigation Each Party shall take commercially reasonable steps to mitigate any Losses for which it is entitled to indemnification under this Article 10. The failure to mitigate shall reduce the Indemnifying Party's liability to the extent that such Losses could have been reasonably avoided or mitigated.

ARTICLE 11 — LIMITATION OF LIABILITY

Section 11.1 — Exclusion of Consequential Damages EXCEPT AS SET FORTH IN SECTION 11.2, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS, LOST REVENUE, LOSS OF BUSINESS OPPORTUNITY, LOSS OF DATA (OTHER THAN COSTS OF DATA RECOVERY), OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, ARISING OUT OF OR RELATI

Section 11.2 — Carve-Outs from Exclusion The exclusion of consequential damages set forth in Section 11.1 shall not apply to: (a) Indemnification obligations of either Party under Article 10; (b) Breach of confidentiality obligations under Article 12 by either Party; (c) Willful misconduct or fraud by either Party; and (d) Infringement of Service Provider's intellectual property rights in the ArcMesh Platform by Cust

Section 11.3 — Aggregate Liability Cap Except for the carve-outs set forth in Section 11.2, each Party's total aggregate liability arising out of or relating to this Agreement, whether based on contract, tort (including negligence), strict liability, or any other theory of liability, shall not exceed two hundred percent (200%) of the Fees paid or payable by Customer in the twelve (12)-month period immediately precedi