FWIW, here is terms of LOA regarding ATHM selling network assets to T
Term Sheet
1. AT&T and At Home will enter into a long-term contract for the provision
Engineering and Operations Services by AT&T to At Home, including the
services described in Exhibit 1 to this Term Sheet. Engineering Services
relating to network operations and capacity planning and delivery will be
within scope, as will network systems engineering, architecture and
operations/integration testing. Engineering projects not related to
network functions (such as client software development) will not be in
scope. Engineering related to the development of market service
descriptions will not be within scope, unless otherwise agreed. Operation
and implementation of the market service descriptions will be within
scope.
2. In addition to the services described in paragraph 1, the parties will,
upon consummation of the definitive agreements (collectively, the
"Agreement"), replace the IRU Capacity Agreement dated as of December 19,
1998 between At Home and AT&T (the "IRU") with a long-term lease pursuant
to which At Home will obtain transport services to meet its requirements
from AT&T. AT&T will pay At Home an amount (the "IRU Price") equivalent to
the greater of (i) $75 million, or (ii) the fair market value of the IRU,
not to exceed $85 million. At Home will make lease payments in accordance
with the pricing parameters set forth in Exhibit 2 (provided however that
if the price paid is greater than $75 million, the prices listed will be
adjusted accordingly). In addition to the lease, At Home will obtain from
AT&T services necessary to support the At Home backbone infrastructure, as
well as its local transport requirements. Where At Home is under current
contract with other suppliers, AT&T will assume management of those
contracts on At Home's behalf, with the intention to move the transport to
AT&T as soon as feasible where this does not disadvantage At Home. The
lease agreement will contain the same essential terms as the IRU, and will
provide that AT&T will finance capacity upgrades on commercially
reasonable terms to be set forth in the lease agreement. The lease
agreement will have a term of twenty (20) years, independent of the length
of the outsourcing arrangement.
In order to provide the services contemplated, AT&T, at its option, may
acquire, at book value, certain assets (to be specifically identified in
the definitive documentation) from At Home which enable AT&T to integrate
use of those assets with AT&T assets in order to achieve efficiencies in
providing service to At Home. Among the assets that are subject to
transfer are At Home network assets, test lab assets and infrastructure
assets (including the network operations centers in Redwood City and
Toronto, Canada). In addition, AT&T shall be entitled to offer At Home
personnel (to be specifically identified in the definitive documentation)
associated with such functions employment at AT&T, and At Home will use
its reasonable best efforts to facilitate and support such transfer of
personnel.
A-1
3. Reference is made to the Service Level Plan (the "TSLP") among At Home,
Comcast Corporation ("Comcast"), and Cox Communications ("Cox"), dated
March 28, 2000. At Home shall not enter into any service level commitments
with Cox or Comcast, or any person or entity, in each case that could
require compliance by AT&T under the arrangements contemplated by this
Term Sheet, without AT&T's consent, which consent will not be unreasonably
withheld. Where AT&T does so consent, and the performance of the functions
underlying the SLA have been outsourced and are within the sole control
and responsibility of AT&T, the parties expectation is that AT&T's SLAs to
At Home will parallel the performance metrics so agreed by At Home with
third parties, provided however, that the parties also agree that the
financial consequences attached to those SLAs will not be parallel, and
that AT&T's maximum annual liability will be as set forth in paragraph 9.
At Home represents that as of the date of the Letter of Agreement, it has
not entered into any SLAs with Cox, Comcast, or any person or entity, in
each case that could require compliance by AT&T under the arrangements
contemplated by this Term Sheet. AT&T shall not be responsible to At
Home's customers, and shall only be responsible to At Home to the extent
agreed to in the definitive agreements between them.
4. AT&T agrees that it will not integrate network assets of At Home with
those of AT&T unless it is able to maintain a mutually agreed standard for
logical separation of At Home's traffic. However, At Home acknowledges
that the price savings offered by AT&T in Exhibit 2 are based on AT&T's
ability to integrate network assets of At Home with those of AT&T to gain
efficiencies. Therefore, if AT&T is unable to integrate network assets
while maintaining the agreed-upon standard for logical separation of At
Home's traffic, the parties agree that the pricing for the services
provided will be renegotiated, with the understanding that those prices
will not exceed what it would cost At Home to meet the same performance
standards on its own. In order to establish a baseline to measure the cost
savings described above, At Home and AT&T will create a baseline unit cost
metric that, beginning with projected costs as set forth in At Home's plan
of record (taking into account SLAs that may be entered with Cox and
Comcast and the projected volumes over the relevant contract period)
approved by At Home's board of directors on or prior to the date hereof,
establish what At Home's costs are, and are projected to be without AT&T's
technical assistance or the projected Outsourcing arrangement, including
network integration.
5. The Agreement will contain provisions relating to AT&T's operation of the
network with a view to preserving At Home's current business
opportunities. |
