CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
KEY COMMERCIAL TERMS SUMMARY
MASTER SERVICES AGREEMENT
Northgate Americas, Inc. / Cedarpoint Systems Integration, Inc.
Prepared by
Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, New York 10022
Matter No.: 1022-00008
March 2023 (Prepared in connection with engagement opening March 14, 2023; updated through negotiation)
FOR DISCUSSION PURPOSES ONLY — SUBJECT TO DEFINITIVE AGREEMENT
This document constitutes attorney work product and is subject to attorney-client privilege. This term sheet is a non-binding summary of principal commercial terms prepared for internal discussion purposes. It does not constitute an offer, acceptance, or binding agreement. All terms described herein are subject to negotiation and documentation in a definitive Master Services Agreement and ancillary transaction documents. Distribution is restricted to authorized representatives of Northgate Americas, Inc. and its affiliates.
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1. Parties
1.1 Customer / Licensee
Northgate Americas, Inc. is a corporation organized and existing under the laws of the State of Delaware. Northgate Americas maintains its principal executive office at 1700 Market Street, Suite 2400, Philadelphia, Pennsylvania 19103. Its registered office in the State of Delaware is located c/o Calvert Corporate Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. Northgate Americas' federal employer identification number (EIN) is 84-3291067.
Northgate Americas is a wholly owned subsidiary of Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales, with its global headquarters located at 45 Threadneedle Court, London EC2R 8AH, United Kingdom. Northgate Telecommunications PLC is listed on the London Stock Exchange under the ticker symbol NTP.L. The parent company's public reporting obligations and governance structure are relevant to certain confidentiality, data security, and change of control considerations addressed in this summary.
Key Contacts — Northgate Americas, Inc.:
Key Contacts — Northgate Telecommunications PLC (Parent Company):
For purposes of the contemplated Master Services Agreement, Northgate Americas will serve as the Customer and Licensee of the ArcMesh platform. Certain provisions of the definitive agreement — including, without limitation, confidentiality obligations, data security requirements, and intellectual property representations — may reference or extend to the broader Northgate Telecommunications PLC corporate group as appropriate, subject to negotiation of the definitive documentation.
1.2 Service Provider / Licensor
Cedarpoint Systems Integration, Inc. is a corporation organized and existing under the laws of the State of Delaware. Cedarpoint maintains its corporate headquarters at 11400 Commerce Park Drive, Suite 600, Reston, Virginia 20191. Its registered office in the State of Delaware is located c/o Calvert Corporate Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. Cedarpoint's federal employer identification number (EIN) is 52-4178503.
Cedarpoint was founded in 2009 by Rajiv Sundaram and Teresa Cho. The company currently employs approximately 1,800 individuals and reported fiscal year 2022 revenues of approximately $420,000,000. Cedarpoint specializes in managed network services, software-defined wide-area networking, and enterprise systems integration.
Key Contacts — Cedarpoint Systems Integration, Inc.:
Ownership Structure:
The majority of Cedarpoint's voting equity is held by Ridgeline Capital Partners, LP, a Delaware limited partnership with offices at 55 Arch Street, Suite 700, Greenwich, Connecticut 06830 (Managing Partner: Jonathan Kessler). Ridgeline Capital Partners holds 62% of Cedarpoint's outstanding voting equity, having acquired its controlling position in 2019 through a leveraged buyout transaction.
The remaining equity is distributed as follows:
The private-equity ownership structure and the potential for a future exit by Ridgeline Capital Partners (whether through a secondary sale, initial public offering, or other liquidity event) are relevant to the change of control provisions described in Section 10 of this summary and are expected to be a significant focus of negotiation in the definitive agreement.
For purposes of the contemplated Master Services Agreement, Cedarpoint will serve as the Service Provider and Licensor of its proprietary ArcMesh platform.
1.3 Counsel. Customer's Counsel:
Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, New York 10022
Service Provider's Counsel:
Whitfield Graves & Morrow LLP 1875 K Street NW, Suite 800 Washington, DC 20006
2. Agreement Type and Structure
The parties contemplate entering into a single Master Services Agreement governing a technology transaction in which Cedarpoint will provide managed network services to Northgate Americas and will license its proprietary ArcMesh platform (version 4.2) for use in connection with those services.
The respective roles of the parties under the MSA are as follows:
• Northgate Americas will serve as the Customer and Licensee of the ArcMesh platform, receiving managed network services and related professional services from Cedarpoint.
• Cedarpoint will serve as the Service Provider and Licensor, delivering managed network services across Northgate Americas' enterprise node locations and licensing its proprietary ArcMesh platform (version 4.2) for deployment in connection with those services.
The definitive MSA is expected to be governed by a single master agreement supplemented by the following exhibits, schedules, and ancillary documents:
Exhibits:
Schedules:
In addition to the exhibits and schedules to the MSA, the parties anticipate executing a tri-party escrow agreement (as described in Section 11 below) and a transition services side letter (as described in Section 17 below) as ancillary transaction documents.
The MSA structure is designed to provide a comprehensive framework governing the full scope of the commercial relationship, while allowing for operational flexibility through individual Statements of Work issued under the master agreement. Each SOW will describe the specific services, deliverables, timelines, and acceptance criteria applicable to particular workstreams, including the migration from Northgate Americas' legacy MPLS infrastructure as described in Section 5.5 and Section 17 below.
3. Term and Renewal
3.1 Initial Term
The initial term of the MSA shall be five (5) years, commencing on the signing date. Per the anticipated structure of MSA Section 2.1, signing and closing of the MSA are expected to be simultaneous — that is, the MSA will become effective immediately upon execution by both parties, with no separate closing date or conditions precedent to effectiveness.
The parties are targeting an execution date of June 9, 2023. Assuming execution on that date, the initial term would expire on June 8, 2028.
3.2 Renewal. Following expiration of the initial five-year term, the MSA will automatically renew for two (2) successive renewal terms of two (2) years each, unless either party provides written notice of non-renewal not less than 180 days prior to the expiration of the then-current term (whether the initial term or any renewal term).
If both automatic renewal periods are exercised, the maximum potential duration of the MSA under its current terms (absent any termination for cause, change of control termination, or termination for convenience) would be nine (9) years total (five-year initial term plus two two-year renewal terms), extending through June 8, 2032.
The 180-day advance notice requirement for non-renewal is designed to provide both parties with sufficient lead time to plan for transition, re-procurement, or renegotiation. The parties should consider during negotiation of the definitive agreement whether the non-renewal notice must be delivered in any particular form (e.g., certified mail, overnight courier) and the address to which such notice must be sent.
4. Total Contract Value and Fee Structure
4.1 Total Contract Value (TCV)
The total contract value over the five-year initial term is $75,000,000 (fixed). This figure represents the aggregate of all managed network services fees, ArcMesh platform license and maintenance fees, and professional services fees over the full initial term, and does not include any fees that may be incurred during renewal periods.
4.2 Annual Contract Value (ACV)
The annual contract value is $15,000,000 per year ($75,000,000 ÷ 5 = $15,000,000). The ACV figure assumes level annual payments across the five-year initial term. Annual escalation mechanics, if any, will be specified in Exhibit C (Pricing Schedule) to the definitive MSA and may result in year-over-year variation from this base ACV figure.
4.3 Monthly Run-Rate
The monthly run-rate is $1,250,000 per month ($15,000,000 ÷ 12 = $1,250,000). The monthly run-rate forms the baseline for service credit calculations under the SLA provisions described in Section 6 below.
4.4 Fee Composition (Annual)
The annual contract value is composed of three principal fee components, allocated as follows:
The managed network services component, representing 70% of ACV, encompasses ongoing network operations, 24×7 NOC monitoring, incident management, and the day-to-day operational activities required to maintain the SD-WAN infrastructure across Northgate Americas' 340 enterprise node locations. This component is the primary fee base against which service level credits are calculated.
The ArcMesh platform license and maintenance component, representing 20% of ACV, covers the non-exclusive license to use the ArcMesh platform (version 4.2) during the term of the MSA, including ongoing software maintenance, updates, patches, and standard support services associated with the platform.
The professional services component, representing 10% of ACV, covers implementation services, migration services (including the transition from Greystone Network Solutions' legacy MPLS infrastructure as described in Section 5.5 and Section 17), network optimization consulting, and other professional services engagements conducted under Statements of Work issued pursuant to the MSA.
4.5 Payment Terms
Cedarpoint will issue invoices to Northgate Americas on a monthly basis. Net payment terms (i.e., the number of days following receipt of invoice within which payment must be made) are to be negotiated in connection with the definitive MSA. Industry-standard terms for engagements of this nature typically range from Net 30 to Net 45, and the parties should expect this to be a point of commercial discussion.
Annual escalation mechanics — including any Consumer Price Index adjustments, fixed percentage escalators, or other pricing adjustment mechanisms — will be specified in Exhibit C (Pricing Schedule) to the definitive MSA. The interaction between any annual escalation provisions and the Most Favored Nation pricing terms described in Section 7 below should be carefully considered during drafting.
Late payment provisions, including interest on overdue amounts and suspension rights, will also be addressed in the definitive agreement.
5. Scope of Services
The services to be provided by Cedarpoint under the MSA encompass the following principal workstreams:
5.1 Managed WAN Services
Cedarpoint will provide managed wide-area network services across Northgate Americas' enterprise network footprint, comprising 340 enterprise node locations distributed across 28 United States states and 3 Canadian provinces. The specific node locations will be identified in Schedule 1 to the MSA. The managed WAN services will include circuit management, traffic engineering, quality-of-service configuration, and end-to-end network performance management for the entirety of Northgate Americas' North American wide-area network.
5.2 SD-WAN Deployment
Cedarpoint will deploy and optimize a software-defined wide-area networking (SD-WAN) solution across Northgate Americas' enterprise network using Cedarpoint's proprietary ArcMesh platform (version 4.2). The ArcMesh platform provides centralized network orchestration, dynamic path selection, application-aware routing, and integrated security functions. Cedarpoint will be responsible for initial deployment, configuration, and ongoing optimization of the ArcMesh platform at each of Northgate Americas' 340 node locations.
5.3 Network Operations Center (NOC)
Cedarpoint will provide 24×7 Network Operations Center (NOC) monitoring from the following Cedarpoint-operated facilities:
The dual-NOC architecture provides geographic redundancy and ensures continuous monitoring and incident response capability in the event that either facility experiences a service disruption. NOC services include real-time network monitoring, alarm management, first-level incident triage and escalation, and coordination with Northgate Americas' internal network operations teams.
5.4 Performance Reviews
Cedarpoint will conduct quarterly network performance reviews and deliver written optimization reports to Northgate Americas. These quarterly reviews will address network utilization trends, SLA performance metrics, capacity planning recommendations, incident root cause analyses, and recommendations for network topology or configuration changes designed to improve performance or reduce cost. The quarterly review cadence aligns with Northgate Americas' internal operational planning cycles and provides a structured forum for ongoing service governance.
5.5 Migration from Legacy Infrastructure
A critical component of the initial engagement involves the migration of Northgate Americas' network infrastructure from its legacy MPLS environment — currently provided by Greystone Halcyon Software (McLean, Virginia) — to Cedarpoint's SD-WAN/ArcMesh platform. This migration is expected to proceed in three (3) phases over an eighteen (18)-month period from services commencement:
• Phase 1: Assessment, planning, and pilot deployment at a subset of node locations
• Phase 2: Broad-scale migration and parallel-run operations
• Phase 3: Decommissioning of legacy MPLS circuits and final cutover
Detailed migration planning, coordination with Greystone Network Solutions, parallel-run requirements, rollback procedures, and acceptance testing criteria will be specified in the Transition Services Side Letter described in Section 17 below.
5.6 Cybersecurity. Cedarpoint will provide cybersecurity monitoring, threat detection, and incident response services for the managed network perimeter. These services include continuous security event monitoring, intrusion detection and prevention, distributed denial-of-service (DDoS) mitigation, vulnerability assessment, and coordinated incident response procedures. Cybersecurity services will be governed by the Data Security & Privacy requirements set forth in Exhibit E to the MSA, including data breach notification obligations and security audit rights as described in Section 14 below.
5.7 Dedicated Account Management
Cedarpoint will assign a dedicated service delivery manager to the Northgate Americas account. The dedicated service delivery manager will serve as the primary operational point of contact for Northgate Americas, responsible for service coordination, escalation management, performance reporting, and facilitation of the quarterly business reviews described in Section 5.4 above. The definitive MSA is expected to include provisions addressing the qualifications, replacement, and continuity requirements for the dedicated service delivery manager.
6. Service Levels and Credits
6.1 Availability SLA
Cedarpoint will commit to a network availability target of 99.95% monthly uptime, measured on a per-node basis across Northgate Americas' 340 enterprise node locations. Monthly uptime will be calculated as the total number of minutes in the applicable calendar month minus the total number of minutes of unscheduled downtime, divided by the total number of minutes in the applicable calendar month. The detailed methodology for calculating uptime, including definitions of "unscheduled downtime," planned maintenance windows, force majeure exclusions, and measurement tools, will be specified in Exhibit B (Service Level Agreement) to the definitive MSA.
6.2 Service Credit Structure
In the event that Cedarpoint fails to meet the 99.95% monthly uptime commitment at any node location, Northgate Americas will be entitled to service credits calculated as a percentage of the monthly managed services fee, as set forth in the following table:
Service credits represent Northgate Americas' sole and exclusive financial remedy for SLA failures within the credit framework. Service credits will be applied as offsets against the next monthly invoice following the month in which the SLA failure occurred. The definitive MSA will specify the process by which Northgate Americas must request service credits, including any required reporting timelines, documentation, and dispute resolution procedures.
6.3 Annual Credit Cap
The maximum aggregate service credits that Northgate Americas may receive in any contract year shall not exceed 30% of the annual managed services fees, which equals $3,150,000 (30% × $10,500,000 annual managed network services fee). This annual credit cap limits Cedarpoint's financial exposure under the SLA credit structure while preserving Northgate Americas' right to pursue other remedies, including termination for cause, in the event of chronic or severe SLA failures.
6.4 Material Breach Trigger
Notwithstanding the service credit structure and annual credit cap, three (3) consecutive months of uptime performance below 99.50% at any node location shall constitute a material breach of the MSA, entitling Northgate Americas to terminate the MSA for cause in accordance with the termination provisions described in Section 16.1 below. This material breach trigger ensures that persistent underperformance that threatens the operational integrity of Northgate Americas' network infrastructure cannot be addressed solely through the financial remediation of service credits, but rather gives rise to Northgate Americas' right to exit the relationship.
7. Most Favored Nation Pricing
Cedarpoint will warrant that the per-unit pricing charged to Northgate Americas for managed network services under the MSA shall not exceed the lowest per-unit pricing offered by Cedarpoint to any other customer of comparable volume, defined as any customer with 200 or more managed nodes. Northgate Americas' network comprises 340 managed nodes, placing it clearly above the comparable-volume threshold.
The benchmark comparison period for purposes of the MFN analysis shall be the trailing twelve (12) months immediately preceding the date of any MFN inquiry or audit.
A pricing differential shall be deemed to trigger MFN remedies only if the differential between the per-unit pricing charged to Northgate Americas and the lowest per-unit pricing offered to a comparable-volume customer exceeds 3%. This de minimis threshold is intended to account for immaterial pricing variations arising from differences in service configuration, geographic distribution, or other commercially reasonable factors.
If an MFN audit reveals a pricing differential exceeding 3%, the following remedies shall apply:
(a) Retroactive Credit. Cedarpoint must issue a retroactive credit to Northgate Americas within 45 days of the date on which the pricing differential is determined, calculated as the aggregate of the excess amounts charged over the applicable benchmark comparison period.
(b) Prospective Pricing Adjustment. Cedarpoint must adjust Northgate Americas' prospective pricing to eliminate the differential within 30 days of the date on which the pricing differential is determined.
Audit Rights. Northgate Americas shall be entitled to conduct one (1) MFN compliance audit per calendar year. The costs associated with such audit shall be allocated as follows:
• If the audit reveals an MFN violation (i.e., a pricing differential exceeding 3%), Cedarpoint shall bear the costs of the audit.
• If the audit does not reveal an MFN violation, Northgate Americas shall bear the costs of the audit.
Detailed MFN terms, including the methodology for calculating per-unit pricing, adjustments for service mix differences, the audit process, confidentiality protections applicable to competitor pricing data, and dispute resolution mechanisms, will be set forth in Schedule 3 to the MSA.
8. Indemnification
8.1 Cedarpoint's Indemnification Obligations
Cedarpoint shall defend, indemnify, and hold harmless Northgate Americas, its parent company, affiliates, and their respective officers, directors, employees, and agents from and against any losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to the following:
(a) Third-party intellectual property infringement claims arising from or relating to Northgate Americas' authorized use of the ArcMesh platform (version 4.2) as deployed under the MSA;
(b) Data breaches caused by Cedarpoint's negligence or willful misconduct, including unauthorized access to, disclosure of, or loss of Northgate Americas' data within Cedarpoint's custody or control;
(c) Claims for bodily injury or property damage arising from the acts or omissions of Cedarpoint's personnel while on Northgate Americas' premises in connection with the performance of services under the MSA; and
(d) Regulatory penalties, fines, or enforcement actions arising from Cedarpoint's failure to comply with applicable telecommunications regulations, including but not limited to FCC regulations, state public utility commission requirements, and CRTC regulations applicable to the Canadian portions of the managed network.
8.2 Northgate's Indemnification Obligations
Northgate Americas shall defend, indemnify, and hold harmless Cedarpoint, its officers, directors, employees, and agents from and against any losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to the following:
(a) Claims arising from Northgate Americas' use of the ArcMesh platform outside the scope of the license granted under the MSA, including any unauthorized modification, sublicensing, or distribution of the platform; and
(b) Third-party claims relating to content, data, or information provided by Northgate Americas and transmitted over the managed network, including but not limited to claims of defamation, invasion of privacy, or infringement of third-party intellectual property rights in such content.
8.3 Indemnification Caps
The aggregate indemnification obligations of each party are subject to the following caps, calculated based on the aggregate fees paid by Northgate Americas during the twelve (12) months immediately preceding the date on which the applicable claim first arises:
The asymmetric cap structure (200% for Cedarpoint versus 100% for Northgate Americas) reflects Cedarpoint's role as the service provider and licensor bearing the greater operational and technology risk under the MSA. The 200% cap for Cedarpoint provides Northgate Americas with meaningful recovery potential in the event of a significant failure, while the 100% cap for Northgate Americas limits the customer's exposure to the amount of fees paid.
8.4 Carve-Outs from Cap (Uncapped)
The following categories of liability are carved out from Cedarpoint's indemnification cap and are uncapped — that is, Cedarpoint's indemnification obligations with respect to these categories are not subject to any dollar limitation:
• intellectual property infringement (Section 8.1(a) above)
• Willful misconduct
• Data breach (Section 8.1(b) above)
• Confidentiality breach (Section 13 below)
These carve-outs reflect the view that certain categories of harm — particularly those involving theft, misuse, or loss of Northgate Americas' intellectual property or data — present risks of such magnitude and are so fundamentally within Cedarpoint's control that they should not be subject to contractual caps on liability. The scope and application of these carve-outs will be among the most closely negotiated provisions of the definitive MSA.
9. Insurance Requirements
Cedarpoint shall be required to obtain and maintain, at its own expense, throughout the term of the MSA (including any renewal terms), insurance coverage with the following minimum limits:
Current Carrier: Cedarpoint's current insurance carrier for cyber liability and technology errors & omissions coverage is Braeburn Mutual Insurance Company, headquartered in Hartford, Connecticut. The parties should confirm at the time of closing that Braeburn Mutual's financial strength rating and claims-paying ability satisfy Northgate Americas' underwriting requirements.
Certificate of Insurance. Cedarpoint shall deliver to Northgate Americas certificates of insurance evidencing the required coverage prior to the services commencement date and upon each renewal of such policies. Northgate Americas, Inc. shall be named as an additional insured under each applicable policy.
Notice of Cancellation. The definitive MSA and/or the insurance exhibit will specify Cedarpoint's obligation to provide Northgate Americas with advance written notice of any material modification, cancellation, or non-renewal of any required insurance policy. Industry-standard notice periods typically range from 30 to 60 days, and the specific period will be negotiated in connection with the definitive agreement.
Detailed insurance requirements — including policy form specifications, deductible/retention limits, subrogation waiver provisions, and evidence-of-coverage obligations — will be set forth in Exhibit F to the MSA.
10. Change of Control
10.1 Definition (Four-Prong)
For purposes of the MSA, a "Change of Control" with respect to Cedarpoint shall mean the occurrence of any of the following:
(i) The acquisition by any person, entity, or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) of more than 50% of Cedarpoint's outstanding voting equity securities, whether by purchase, merger, tender offer, or otherwise;
(ii) Any merger, consolidation, or corporate reorganization of Cedarpoint in which Cedarpoint is not the surviving entity, or following which the holders of Cedarpoint's voting equity immediately prior to the transaction hold less than 50% of the voting equity of the surviving or resulting entity;
(iii) A sale, lease, exchange, or other disposition of all or substantially all of Cedarpoint's assets (whether in a single transaction or a series of related transactions); or
(iv) A change in a majority of the members of Cedarpoint's board of directors within any twelve (12)-month period, other than changes that are approved or recommended by the then-existing board of directors.
10.2 Current Ownership Context
As described in Section 1.2 above, Ridgeline Capital Partners, LP currently holds 62% of Cedarpoint's voting equity. The remaining equity is held by Rajiv Sundaram (18%), Teresa Cho (12%), and other employees and early investors (8%).
Ridgeline Capital Partners is a private equity fund, and its investment in Cedarpoint is subject to the typical fund lifecycle dynamics applicable to private equity sponsors, including the potential for a future exit through a sale to a strategic or financial buyer, a secondary transaction, or an initial public offering. Any such exit transaction could trigger the Change of Control provisions described in this Section 10. The change of control protections are accordingly a critical element of the MSA from Northgate Americas' perspective, ensuring that Northgate Americas retains the ability to evaluate the creditworthiness, operational capabilities, and strategic alignment of any successor entity to Cedarpoint.
10.3 Notice Obligation
Cedarpoint shall be required to provide Northgate Americas with written notice of any anticipated Change of Control at least ninety (90) days prior to the anticipated closing of the relevant transaction. The notice shall include a description of the proposed transaction, the identity of the proposed acquirer or successor, and such other information as Northgate Americas may reasonably require to evaluate the proposed transaction's impact on the services relationship.
10.4 Northgate's Election Rights
Upon receipt of a Change of Control notice from Cedarpoint, Northgate Americas shall have the right, exercisable within sixty (60) days of receipt of such notice, to elect one of the following:
(a) Consent to Assignment. Northgate Americas may consent to the assignment of the MSA to the successor entity or surviving corporation resulting from the Change of Control transaction. Such consent shall not be unreasonably withheld, conditioned, or delayed, provided that the successor entity demonstrates adequate financial capacity, technical capability, and willingness to assume all of Cedarpoint's obligations under the MSA.
(b) Termination. Northgate Americas may elect to terminate the MSA by providing Cedarpoint with 180 days' written notice of termination. Such termination shall be subject to the transition assistance, pro-rata refund, and escrow release provisions described in Section 10.5 below.
10.5 Consequences of Termination on Change of Control
In the event that Northgate Americas elects to terminate the MSA in connection with a Change of Control, the following consequences shall apply:
(a) Transition Assistance. Cedarpoint shall provide reasonable transition assistance services to Northgate Americas at no additional cost to facilitate the orderly migration of Northgate Americas' network services to an alternative provider or to Northgate Americas' own internal operations.
(b) Pro-Rata Refund. Northgate Americas shall receive a pro-rata refund of any fees that have been prepaid for service periods extending beyond the effective date of termination.
(c) Escrow Release. The funds held in the transition/wind-down escrow described in Section 11 below shall be released to Northgate Americas in accordance with the release conditions specified in the tri-party escrow agreement.
10.6 Anti-Assignment. Any assignment of the MSA by Cedarpoint without Northgate Americas' prior written consent shall be void and of no force or effect. This anti-assignment provision operates in conjunction with the Change of Control provisions to ensure that Northgate Americas maintains visibility into and control over the identity and capabilities of the entity providing mission-critical network services to Northgate Americas' operations.
Detailed Change of Control provisions, including post-closing covenants, successor entity qualification criteria, and transition timeline requirements, will be set forth in Schedule 2 to the MSA.
11. Transition / Wind-Down Escrow
To provide financial protection in the event of termination of the MSA (whether due to a Change of Control, material breach, or natural expiration), the parties will establish a transition/wind-down escrow account with the following terms:
Escrow Agent:
Dravello National Bank 401 South Tryon Street, Suite 1200 Charlotte, North Carolina 28202 Relationship Manager: Brian Caulfield Escrow Account Reference: FNB-ESC-2023-07742
Annual Deposit Amount: $750,000 per year, representing 5% of first-year ACV (5% × $15,000,000 = $750,000).
Aggregate Escrow Cap: $3,750,000 ($750,000 × 5 years over the initial five-year term).
Funding Schedule:
The source of escrow deposits (whether from Cedarpoint's operating funds, from a portion of the fees paid by Northgate Americas, or from another source) will be specified in the tri-party escrow agreement. The parties should also negotiate the allocation of any interest or investment income earned on the escrowed funds during the pendency of the escrow.
Release Conditions. The escrowed funds shall be released upon the occurrence of any of the following events:
• Termination of the MSA in connection with a Change of Control (funds released to Northgate Americas);
• Termination of the MSA for material breach (funds released to the non-breaching party, as applicable);
• Natural expiration of the MSA at the end of the initial term or any renewal term (funds released in accordance with the terms of the escrow agreement).
The escrow arrangement will be governed by a tri-party escrow agreement among Northgate Americas, Inc., Cedarpoint Systems Integration, Inc., and Dravello National Bank, to be negotiated and executed concurrently with the MSA. The escrow agreement will address, among other matters, investment of escrowed funds (including permissible investment vehicles and risk parameters), allocation and payment of escrow agent fees, procedures for joint instructions, and dispute resolution mechanisms applicable to claims on the escrowed funds.
12. Intellectual Property
Cedarpoint will grant Northgate Americas a non-exclusive license to use the ArcMesh platform (version 4.2) during the term of the MSA (including any renewal terms). The license is limited to Northgate Americas' internal use in connection with the managed network services provided under the MSA and does not include the right to sublicense, distribute, modify, reverse engineer, or create derivative works of the ArcMesh platform, except as may be expressly permitted in the definitive agreement.
Ownership of ArcMesh Platform. All intellectual property rights in and to the ArcMesh platform — including patents, copyrights, trade secrets, trademarks, and all derivative works, improvements, and enhancements developed by or on behalf of Cedarpoint — shall remain the exclusive property of Cedarpoint. Nothing in the MSA shall be construed to transfer any ownership interest in the ArcMesh platform or any other Cedarpoint intellectual property to Northgate Americas.
IP Infringement Defense and Indemnification. Cedarpoint shall be solely responsible for the defense and indemnification of Northgate Americas with respect to any third-party claims alleging that Northgate Americas' authorized use of the ArcMesh platform infringes any patent, copyright, trade secret, or other intellectual property right of any third party. As described in Section 8.1(a) and Section 8.4 above, Cedarpoint's IP infringement indemnification obligation is carved out from the general indemnification cap and is uncapped.
Ownership of Northgate Data. Northgate Americas shall retain all right, title, and interest in and to all data, content, and information transmitted over the managed network or processed through the ArcMesh platform. Cedarpoint shall have no ownership interest in Northgate Americas' data and shall not use, disclose, or process such data except as necessary to perform its obligations under the MSA and as authorized by Northgate Americas.
The definitive MSA will include additional intellectual property provisions addressing, among other matters, license scope and restrictions, third-party open source components embedded in the ArcMesh platform, escrow of source code (if applicable), IP indemnification procedures (including notice requirements, assumption of defense, and settlement authority), and the parties' respective rights upon termination or expiration of the MSA.
13. Confidentiality
The MSA will include mutual confidentiality obligations under which each party agrees to protect the confidential and proprietary information of the other party from unauthorized use and disclosure. Confidential information will be broadly defined to include, without limitation, business plans, financial information, customer data, technical specifications, pricing information, trade secrets, and any other information that is designated as confidential or that a reasonable person would understand to be confidential given the circumstances of its disclosure.
The parties previously entered into a mutual non-disclosure agreement, executed on February 22, 2023, in connection with the initial evaluation and negotiation of the proposed MSA. The confidentiality provisions of the definitive MSA are expected to supersede and incorporate the provisions of the predecessor NDA, such that the NDA will terminate upon the effective date of the MSA and the MSA's confidentiality provisions will govern all confidential information exchanged between the parties, including information disclosed prior to the MSA's effective date under the NDA.
As described in Section 8.4 above, breach of confidentiality by Cedarpoint is carved out from Cedarpoint's indemnification cap and is subject to uncapped liability. This carve-out reflects the critical importance of confidentiality protections given the nature of the information to which Cedarpoint will have access in connection with its management of Northgate Americas' network infrastructure, including network architecture details, traffic patterns, and data flowing across the managed network.
The definitive MSA will specify standard confidentiality provisions including permitted disclosures (e.g., to affiliates, advisors, and as required by law), the return or destruction of confidential information upon termination, survival periods for confidentiality obligations following expiration or termination of the MSA, and equitable remedies available in the event of breach.
14. Data Security and Privacy
Cedarpoint shall comply with comprehensive data security and privacy requirements as set forth in Exhibit E to the MSA. Exhibit E is expected to address, among other matters, Cedarpoint's obligations with respect to physical and logical security controls, access management, encryption standards, employee background checks, security awareness training, vulnerability management, and compliance with applicable privacy laws and regulations (including, without limitation, the California Consumer Privacy Act, the Canadian Personal Information Protection and Electronic Documents Act, and applicable state data breach notification statutes).
Data Breach Notification. Cedarpoint will be required to notify Northgate Americas promptly (within a specified timeframe to be negotiated, typically 24 to 72 hours) upon discovery of any actual or reasonably suspected data breach involving Northgate Americas' data. The notification obligations will include a description of the nature of the breach, the categories and approximate number of affected data records, the measures taken to contain and remediate the breach, and a point of contact for further information.
Data Breach Indemnification. As described in Section 8.1(b) and Section 8.4 above, data breaches caused by Cedarpoint's negligence or willful misconduct are subject to indemnification by Cedarpoint, and such indemnification obligations are carved out from Cedarpoint's general indemnification cap and are uncapped.
Audit Rights. Northgate Americas shall have the right to conduct periodic audits of Cedarpoint's data handling practices, security controls, and compliance with the data security and privacy requirements set forth in Exhibit E. The audit provisions will specify the frequency of permitted audits (typically one to two per calendar year), advance notice requirements, the scope of audit access (including facility inspections, document reviews, and personnel interviews), and the confidentiality protections applicable to audit findings. Northgate Americas may also require Cedarpoint to provide annual third-party audit reports (e.g., SOC 2 Type II reports) as evidence of compliance with applicable security and privacy standards.
15. Governing Law and Dispute Resolution
The MSA and all ancillary agreements shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of laws principles that would require the application of the laws of another jurisdiction.
The specific dispute resolution mechanism — including whether disputes will be subject to binding arbitration, litigation in state or federal courts, mediation as a prerequisite to litigation, or a tiered escalation process — will be negotiated and specified in the definitive MSA. The parties should consider the relative advantages and disadvantages of arbitration versus litigation given the technical nature of the services, the multi-jurisdictional scope of the engagement, and the potential for disputes involving injunctive or other equitable relief (e.g., confidentiality or IP infringement matters) that may be more effectively adjudicated by courts of competent jurisdiction.
16. Termination
16.1 Termination for Cause
Either party may terminate the MSA for cause upon the occurrence of a material breach by the other party that remains uncured following delivery of written notice specifying the nature of the breach and a cure period (to be specified in the definitive MSA; cure periods for material breach in agreements of this nature typically range from 30 to 60 days, depending on the nature of the breach).
As described in Section 6.4 above, three (3) consecutive months of uptime performance below 99.50% at any node location shall constitute a material breach entitling Northgate Americas to terminate the MSA for cause. In such event, the service level performance data maintained by Cedarpoint shall serve as prima facie evidence of the breach, subject to Cedarpoint's right to dispute the accuracy of such data through the dispute resolution mechanisms specified in the MSA.
16.2 Termination for Change of Control
Northgate Americas may terminate the MSA in connection with a Change of Control event in accordance with the election rights and procedures described in Section 10 above. Termination for Change of Control requires 180 days' written notice and triggers Cedarpoint's obligations to provide transition assistance at no additional cost, issue a pro-rata refund of prepaid fees, and consent to the release of transition/wind-down escrow funds to Northgate Americas.
16.3 Termination for Convenience
The parties anticipate that the definitive MSA will include provisions addressing termination for convenience by either party (or, at minimum, by Northgate Americas as Customer). The specific terms of any termination for convenience right — including the required notice period, the scope of wind-down obligations, any early termination fees or minimum commitment protections payable to Cedarpoint, and the treatment of prepaid fees and escrow funds — remain to be negotiated. Given the five-year term and $75,000,000 total contract value, Cedarpoint is expected to seek appropriate financial protections (such as an early termination fee calculated as a percentage of the remaining contract value) to mitigate the economic impact of a convenience termination, particularly during the early years of the engagement when Cedarpoint's upfront investment in migration and deployment has not yet been fully recouped.
17. Migration / Transition Services
A central objective of the MSA engagement is the migration of Northgate Americas' wide-area network infrastructure from the legacy MPLS environment currently operated by Greystone Halcyon Software (McLean, Virginia) to Cedarpoint's SD-WAN/ArcMesh platform. This migration is expected to be one of the most operationally complex and risk-intensive workstreams under the MSA, and the parties have agreed to supplement the MSA with a dedicated Transition Services Side Letter that will address the migration in detail.
The migration is planned to proceed in three (3) phases over an eighteen (18)-month period from the services commencement date, as outlined in Section 5.5 above. The Transition Services Side Letter will include, among other matters:
• Detailed coordination protocols between Cedarpoint, Northgate Americas, and Greystone Network Solutions during the parallel-run and cutover periods;
• Requirements for parallel operation of the legacy MPLS network and the new SD-WAN/ArcMesh platform during the transition period, including the duration of parallel-run periods at each node location;