<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ___________.
COMMISSION FILE NUMBER 0-20803
------------------------
IXC COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 75-2644120
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1122 CAPITAL OF TEXAS HIGHWAY SOUTH, 78746-6426
AUSTIN, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (512) 328-1112
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock, $.01 par value, outstanding (the only
class of common stock of the Company outstanding) was 31,798,006 on May 8, 1998.
================================================================================
<PAGE> 2
IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 1998
and December 31, 1997....................................... 3
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997.................. 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997.................. 5
Notes to Condensed Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 10
Item 3. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 13
Item 2. Changes in Securities....................................... 13
Item 3. Defaults Upon Senior Securities............................. 14
Item 4. Submission of Matters to a Vote of Security Holders......... 14
Item 5. Other Information........................................... 14
Item 6. Exhibits and Reports on Form 8-K............................ 14
SIGNATURE............................................................ 19
</TABLE>
2
<PAGE> 3
IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 199,647 $152,720
Accounts and other receivables, net of allowance for
doubtful accounts of $13,905 at March 31, 1998 and $14,403
at December 31, 1997...................................... 92,179 93,286
Other current assets........................................ 4,811 3,500
---------- --------
Total current assets.............................. 296,637 249,506
Property and equipment...................................... 781,450 724,588
Less: accumulated depreciation.............................. (131,307) (115,651)
---------- --------
650,143 608,937
Investment in unconsolidated subsidiaries................... 128,010 17,497
Deferred charges and other non-current assets............... 38,305 41,155
---------- --------
Total assets...................................... $1,113,095 $917,095
========== ========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable-trade...................................... $ 43,177 $ 81,679
Accrued service cost........................................ 40,391 44,705
Accrued liabilities......................................... 62,091 43,122
Current portion of long-term debt and capital lease
obligations............................................... 11,958 12,171
---------- --------
Total current liabilities......................... 157,617 181,677
Long-term debt and capital lease obligations, less current
portion................................................... 315,766 308,124
Unearned fiber usage revenue -- noncurrent.................. 167,436 60,957
Other noncurrent liabilities................................ 5,387 10,924
7 1/4% Junior Convertible Preferred Stock; $.01 par value;
authorized -- 3,000,000 shares of all classes of Preferred
Stock; 1,074,500 shares issued and outstanding (aggregate
liquidation preference of $107,450 at March 31, 1998 and
$105,537 and December 31, 1997)........................... 103,232 101,239
12 1/2% Junior Exchangeable Preferred Stock; $.01 par value;
authorized -- 3,000,000 shares of all classes of Preferred
Stock authorized; 318,614 shares issued and outstanding
(aggregate liquidation preference of $323,592 at March 31,
1998 and $313,786 at December 31, 1997, including accrued
dividends of $4,978 at March 31, 1998 and $4,828 at
December 31, 1997)........................................ 312,187 302,129
Stockholders' equity (deficit):
10% Junior Series 3 Cumulative Preferred Stock, $.01 par
value; authorized -- 3,000,000 shares of all classes of
Preferred Stock; no shares issued and outstanding at
March 31, 1998 and 414 shares issued and outstanding at
December 31, 1997 (aggregate liquidation preference of
$692 at December 31, 1997)............................. -- 1
6 3/4% Cumulative Convertible Preferred Stock, $.01 par
value; authorized -- 3,000,000 shares of all classes of
Preferred Stock authorized; 135,000 shares issued and
outstanding at March 31, 1998 (aggregate liquidation
preference of $135,000 at March 31, 1998).............. 2 --
Common Stock, $.01 par value; 100,000,000 shares
authorized:
shares issued and outstanding 31,735,926 at March 31,
1998 and 31,559,691
at December 31, 1997................................... 317 316
Additional paid-in capital................................ 225,379 106,559
Accumulated deficit....................................... (174,228) (154,831)
---------- --------
Total stockholders' equity (deficit).............. 51,470 (47,955)
---------- --------
Total liabilities, redeemable preferred stock and
stockholders' equity (deficit).................. $1,113,095 $917,095
========== ========
</TABLE>
See accompanying notes.
3
<PAGE> 4
IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Net operating revenue:
Private line.............................................. $ 43,815 $ 30,869
Long distance switched services........................... 85,369 53,041
-------- --------
129,184 83,910
Operating expenses:
Cost of services.......................................... 87,298 68,982
Operations and administration............................. 23,584 16,567
Depreciation and amortization............................. 19,070 10,002
-------- --------
Operating loss.................................... (768) (11,641)
Interest income............................................. 1,585 1,076
Interest income on escrow under Senior Notes................ -- 203
Interest expense............................................ (6,271) (7,746)
Equity in net loss of unconsolidated subsidiaries........... (11,265) (1,819)
Other, net.................................................. 140 --
-------- --------
Loss before (provision) benefit for income taxes and
minority interest......................................... (16,579) (19,927)
(Provision) benefit for income taxes........................ (2,645) 252
Minority interest........................................... (173) (203)
-------- --------
Net loss.................................................... (19,397) (19,878)
Dividends applicable to preferred stock..................... (11,736) (470)
-------- --------
Net loss applicable to common stockholders.................. $(31,133) $(20,348)
-------- --------
Basic and diluted loss per share............................ $ (0.98) $ (0.66)
======== ========
Weighted average basic and diluted shares................... 31,626 30,799
======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 5
IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Net cash used in operating activities....................... $(16,405) $(11,077)
Investing activities
Release of funds from escrow under Senior Notes........... -- 51,588
Deposit into escrow under Senior Notes.................... -- (18,152)
Purchase of property and equipment........................ (64,383) (68,743)
Investment in unconsolidated subsidiaries................. (7,880) (7,233)
-------- --------
Net cash used in investing activities....................... (72,263) (42,540)
Financing activities
Net proceeds from sale of convertible preferred stock..... 128,000 --
Principal payments on long-term debt and capital lease
obligations............................................ (2,043) (3,257)
Proceeds from new debt.................................... 9,016 --
Exercise of stock options................................. 1,370 14
Other financing activities................................ (748) (86)
-------- --------
Net cash provided by (used in) financing activities......... 135,595 (3,329)
-------- --------
Net increase (decrease) in cash and cash equivalents........ 46,927 (56,946)
Cash and cash equivalents at beginning of period............ 152,720 61,340
-------- --------
Cash and cash equivalents at end of period.................. $199,647 $ 4,394
======== ========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest............................................... $ 922 $ 291
======== ========
Taxes.................................................. $ 280 $ 70
======== ========
</TABLE>
See accompanying notes.
5
<PAGE> 6
IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation for
the periods indicated have been included. Operating results for the three month
period ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998. The Balance Sheet at
December 31, 1997 has been derived from the audited financial statements at that
date, but does not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. The
accompanying financial statements should be read in conjunction with the audited
consolidated financial statements (including the notes thereto) for the year
ended December 31, 1997. Certain amounts shown in the 1997 financial statements
have been reclassified to conform to the 1998 presentation.
2. BASIC AND DILUTED LOSS PER SHARE
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 128, "Earnings per Share" ("SFAS No. 128"). Statement No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share exclude any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share are very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where appropriate, restated to conform to
the Statement No. 128 requirements.
3. INCOME TAXES
Income tax expense during interim periods is calculated by using an annual
effective tax rate. For 1998, the effective tax rate includes the impact of
gains from the transactions with PSINet Inc. ("PSINet") (see Note 10) and other
indefeasible rights to use ("IRU") transactions that will occur later in the
year. The Company has determined that a valuation allowance should be applied
against the deferred tax assets arising during the first quarter of 1998 due to
the uncertainty of realizability.
4. COMMITMENTS AND CONTINGENCIES
During 1998, the Company has made and will continue to make material
commitments related to the expansion of its network.
During 1997 and 1998, the Company entered into several agreements with
major long distance carriers for the sale of dark fiber and capacity usage.
Although these agreements provide for certain penalties if the Company does not
complete construction of the defined routes within the time frame specified in
the agreements, management does not anticipate that the Company will incur any
substantial penalties under these provisions.
From time to time the Company is involved in various legal proceedings
arising in the ordinary course of business, some of which are covered by
insurance. In the opinion of the Company's management, none of the claims
relating to such proceedings will have a material effect on the financial
condition or results of operations of the Company.
6
<PAGE> 7
IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. STOCK OPTIONS
During the quarter ended March 31, 1998, the Company granted 597,000 stock
options under the 1996 Stock Plan. At March 31, 1998 stock options covering
3,289,317 shares of common stock were outstanding.
6. FINANCIAL ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. Due to the Company having no items of other
comprehensive income in any of the periods presented, the adoption of SFAS No.
130 had no impact on the Company's reporting or display of financial information
at March 31, 1998.
Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No.
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. SFAS No. 131 is effective for
financial statements for fiscal years beginning after December 15, 1997. Interim
period reporting of segment information is not required in the first year of
adoption. The adoption of SFAS No. 131 will have no impact on the Company's
consolidated results of operations, financial position or cash flows but will
affect the disclosure of segment information.
7. 1998 CONVERTIBLE PREFERRED STOCK
On March 30, 1998, the Company sold $135.0 million of 6 3/4% Cumulative
Convertible Preferred Stock ("1998 Convertible Preferred Stock") issued in the
form of depositary shares (2,700,000 depositary shares at $50 per share; each
depositary share representing 1/20 of a share of 1998 Convertible Preferred
Stock at $1,000 per share ) to qualified institutional buyers under Rule 144A of
the Securities Act. The net proceeds of approximately $128.0 million from the
offering are being used to fund capital expenditures, including a portion of the
network expansion, and for general corporate purposes, including acquisitions of
related businesses or interests therein and joint ventures. The 1998 Convertible
Preferred Stock can be converted at the option of the holder thereof into shares
of Common Stock, par value $.01 per share, of the Company at any time unless
previously redeemed or repurchased, at a conversion rate of 0.6874 shares of
common stock per depositary share (13.748 shares of Common Stock per share of
the 1998 Convertible Preferred Stock). Dividends on the 1998 Convertible
Preferred Stock are payable quarterly in arrears in cash or Common Stock, under
certain circumstances, on January 1, April 1, July 1 and October 1 of each year,
commencing on July 1, 1998. (See Footnote 12.)
8. SERIES 3 REDEMPTION
On March 31, 1998, the Company redeemed the remaining 414 shares of its 10%
Junior Series 3 Cumulative Redeemable Preferred Stock (the "Series 3 Preferred
Stock") outstanding for approximately $0.7 million in cash ($1,000 per share,
plus $0.3 million of accrued and unpaid dividends). Proceeds from the exercise
of employee stock options were used to redeem such shares.
7
<PAGE> 8
IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
9. LOSS PER SHARE
Loss per share data for the quarters ended March 31, 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
<S> <C> <C> <C>
For the quarter ended March 31, 1998:
Net loss..................................... $(19,397)
Less: Preferred stock dividends.............. (11,736)
--------
Basic and diluted loss per share............. $(31,133) 31,626 $(0.98)
======== ====== ======
</TABLE>
Options to purchase 3,289,317 shares of common stock, 1,074,500 shares of
7 1/4% Convertible Preferred Stock (each share convertible into 4.263 shares of
common stock) and 135,000 shares of the 1998 Convertible Preferred Stock (each
share convertible into 13.748 shares of common stock) were outstanding at March
31, 1998, but were not included in the computation of diluted loss per share
because they would have been anti-dilutive due to the Company's net loss.
<TABLE>
<CAPTION>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
<S> <C> <C> <C>
For the quarter ended March 31, 1997:
Net loss..................................... $(19,878)
Less: Preferred stock dividends.............. (470)
--------
Basic and diluted loss per share............. $(20,348) 30,799 $(0.66)
======== ====== ======
</TABLE>
Options to purchase 1,696,026 shares of common stock were outstanding at
March 31, 1997, but were not included in the computation of diluted loss per
share because they would have been anti-dilutive due to the Company's net loss.
10. ACQUISITIONS
On February 25, 1998, the Company consummated the agreements with PSINet
which allow each party to market and sell the products and services of the other
party. Under the terms of the agreements, the Company will provide PSINet with
an IRU 10,000 miles of OC-48 transmission capacity on its network over a 20-year
period in exchange for approximately 10.2 million shares representing just under
20% (post-issuance) of PSINet common stock. If the value of the PSINet common
stock received by the Company is less than $240.0 million at the earlier of one
year after the final delivery of the transmission capacity (scheduled for
late-1999) or four years after the transaction's closing, PSINet will pay the
Company, at its option, cash and/or deliver additional PSINet common stock to
increase the value of the cash and common stock paid by PSINet to $240.0
million. At March 31, 1998 the Company's investment in PSINet was approximately
$110.5 million. Upon delivery of the transmission capacity to PSINet, the
Company will begin to receive a maintenance fee which, as the full capacity has
been delivered, should increase to approximately $11.5 million per year. Revenue
from the IRU will be recognized over its term of 20 years as the capacity is
utilized.
On March 20, 1998, the Company acquired Network Evolutions, Inc. ("NEI")
for approximately $2.25 million by issuing 42,056 shares of the Company's Common
Stock to the former stockholder of NEI. NEI, a technology consulting and
services company that specializes in enterprise-wide IP internetworking and
network management, will provide the Company with strategic technical support
for its nationwide IP and Internet business strategy. The NEI acquisition is
being accounted for as a purchase.
8
<PAGE> 9
IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
11. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
As of March 31, 1998, the Company indirectly owned 24.5% of Marca-Tel S.A.
de C.V. ("Marca-Tel") through its ownership of 50% of Progress International LLC
("Progress International"), which owned 49% of Marca-Tel. The remaining 51% of
Marca-Tel is owned by a Mexican individual and Formento Radio Beep, S.A. de C.V.
The other 50% of Progress International is owned by Westel International, Inc.
The following is summarized financial information for Marca-Tel for the
quarters ending March 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Income Statement Data:
Net Revenue.............................................. $ 3,271 $ 78
Gross loss............................................... (692) (323)
Net loss from continuing operations...................... (4,516) (2,400)
Net loss................................................. $(7,116) (3,352)
</TABLE>
Marca-Tel is included in the financial statements of the Company as of and
for the quarters ended March 31, 1998 and 1997 as follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
(IN MILLIONS)
<S> <C> <C>
Investment in unconsolidated subsidiaries................... $10.4 $10.9
Equity in net income (loss) of unconsolidated
subsidiaries.............................................. $(6.5) $(1.7)
</TABLE>
12. SUBSEQUENT EVENTS
On April 14, 1998, the Company issued and sold an additional 20,250 shares
($20.25 million) of its 1998 Convertible Preferred Stock (405,000 depositary
shares at $50 per share) in connection with an overallotment option granted to
the initial purchasers of the 1998 Convertible Preferred Stock. The net proceeds
of $19.25 million will be used to fund capital expenditures and for general
corporate purposes.
On April 21, 1998, the Company issued $450.0 million of 9% Senior
Subordinated Notes due 2008 (the "New Notes"). In connection with the sale of
the New Notes, the Company completed its tender offer to purchase for cash all
of its outstanding 12 1/2% Senior Notes Due 2005 (the "Senior Notes"). Pursuant
to the terms of the tender offer, $284.2 million (out of $285.0 million) in
aggregate principal amount of the Senior Notes were tendered and accepted for
payment by the Company. The Company used approximately $342.7 million of the
estimated $435.6 million net proceeds of the New Notes offering to pay the
tender offer price for the Senior Notes. With the early extinguishment of the
Senior Notes, a charge of approximately $73.2 million will be recorded as an
extraordinary item in the second quarter. The remaining proceeds of the offering
will be used to fund capital expenditures and for general corporate purposes.
The New Notes are general unsecured obligations of the Company and will be
subordinate in right of payment to all existing and future senior indebtedness
of the Company and other liabilities of the Company's subsidiaries. In
connection with the consummation of the tender offer, the Senior Notes were
amended to eliminate substantially all of the restrictive covenants therein and
all guarantees given thereunder.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained below, the matters
discussed in this item are forward-looking statements that involve a number of
risks and uncertainties. The Company's actual liquidity needs, capital resources
and results may differ materially from the discussion set forth in the
forward-looking statements. For a discussion of important factors that may cause
the actual results, performance or achievements of the Company to be materially
different from those expressed or implied by the forward-looking statements, see
"Business -- Risk Factors" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997. In light of such risks and uncertainties,
there can be no assurance that the forward-looking information contained in this
item will in fact transpire.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1997
Net operating revenue for the first quarter of 1998 increased by 54.0% over
the comparable 1997 period. The majority of the increase was due to the
Company's switched long distance business which increased $32.3 million, or
60.9% over first quarter 1997. Billable minutes of use ("MOUs") for the quarter
increased over 1997 by 70.4% to 1,031 million minutes. The remainder of the
revenue growth during first quarter 1998 resulted from private line revenue
increases of $12.9 million, or 41.9% over the comparable 1997 quarter, due to
increased demand for capacity and the availability of additional capacity
resulting from the Company's network expansion.
Cost of services consists primarily of access charges paid to Local
Exchange Carriers ("LECs") and transmission lease payments to, and exchanges
with, other carriers. These costs increased 26.6% for the quarter over 1997 due
to additional leases supporting the Company's private line and switched long
distance businesses, MOUs obtained from other carriers and access charges paid
to LECs in connection with the switched services business. In July 1997, the FCC
mandated rate reductions for the connection charges paid by the long distance
carriers to LECs. The favorable impact of these rate reductions for first
quarter 1998 are reflected in the financial statements. These rate reductions
and a favorable dispute settlement contributed to the Company's year over year
gross margin percentage improvement.
Operations and administration expenses for the first quarter 1998 increased
42.4% over 1997 primarily as the result of employee costs and other operating
expenses associated with the growth in the Company's network. The Company
anticipates that as it expands, its long distance switched services business and
its fiber network, operations and administration expenses will increase, but
will decline as a percentage of revenue.
Depreciation and amortization for the 1998 quarter increased 90.7% over the
comparable 1997 period due to the increase in depreciable assets as a result of
the Company's network expansion. Depreciation and amortization will continue to
increase in conjunction with spending on capital assets to increase network
capacity.
Interest income for the 1998 quarter increased over 1997 by $.3 million
primarily due to the remaining proceeds from the Company's sale in August 1997
of $300.0 million of the Company's 12 1/2% Junior Exchangeable Preferred Stock
Due 2009 (the "1997 Exchangeable Preferred Stock").
Interest expense for the 1998 quarter decreased over the comparable quarter
in 1997 by $1.5 million. The decrease is primarily the result of additional
capitalization of interest related to the fiber network construction.
Equity in net loss of unconsolidated subsidiaries increased by $9.4 million
for first quarter 1998 over first quarter 1997. These losses primarily relate to
the Company's share of losses in the Mexican joint venture, which is
constructing a fiber network in Mexico and began operations during the first
quarter of 1997. Additionally, losses were recorded from recent acquisitions and
joint ventures entered into at the end of 1997 or during first quarter 1998.
At March 31, 1998, the Company's net carrying value in its investment in
the Mexican joint venture was $10.4 million. In February 1998, Marca-Tel
announced that it was putting further investment in new fiber routes on hold,
awaiting more suitable regulatory and market conditions. At the present time,
the Company does not anticipate significant additional funding to Progress
International for investment in Marca-Tel until
10
<PAGE> 11
the regulatory and market conditions in Mexico improve. The Company is not
obligated to continue to fund Progress International, however failure to provide
significant funding to Progress International is likely to result in a default
under Marca-Tel's financing arrangements and could result in the foreclosure of
a third party's security interest in Progress International's interest in
Marca-Tel. The Company's interest in Progress International, and thus its
indirect interest in Marca-Tel, therefore could be diluted or lost entirely. The
Company is currently in discussions with vendors, investors and investment
bankers to refinance Marca-Tel.
The income tax provision for first quarter 1998 was $2.6 million compared
to an income tax benefit of $0.3 million for the comparable quarter in 1997. The
1998 provision relates to gains recognized for income tax purposes relating to
the PSINet transactions and other IRU transactions which are expected to occur
later in the year. The deferred tax assets relating to these transactions has
been fully reserved due to the uncertainty of their realizability.
The Company experienced a net loss applicable to common stockholders of
$31.1 million for the quarter ended March 31, 1998 as compared to a net loss of
$20.3 million for the quarter ended March 31, 1997 as a result of the factors
discussed above and the increase in preferred stock dividends. The issuance of
the Company's 7 1/4% Junior Convertible Preferred Stock Due 2007 (the "1997
Convertible Preferred Stock") in April 1997, the 1997 Exchangeable Preferred
Stock in August 1997 and the payments of in-kind dividends thereon, resulted in
an increase of preferred stock dividends of $11.3 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's private line operations have historically provided positive
cash flow from operations, which have provided adequate liquidity to meet the
Company's operational needs. However, the Company's capital expenditures and,
since the issuance of the Company's 12 1/2% Senior Notes due 2005 (the "Senior
Notes") in the fourth quarter of 1995, its interest expense have been financed
with the proceeds of debt and equity securities.
Cash used in operating activities was $16.4 million for the quarter ended
March 31, 1998 compared to $11.1 million in the comparable period of 1997,
primarily as a result of operational expenses associated with the continued
development of the Company's switched long distance services business. The
Company's switched services business is expected to require cash to meet
operating expenses until sufficient traffic can be routed over the Company's
owned network.
Cash used in investing activities for the quarter ended March 31, 1998 was
$72.3 million compared to $42.5 million for the comparable period of 1997. The
increase is primarily due to escrow funding activity from the Company's senior
debt which offset cash used in investing activities by $33.4 million during the
first quarter of 1997.
Cash provided by financing activities increased to $135.6 million for the
first quarter of 1998 versus a use of cash of $3.3 million for the comparable
period in 1997. Increased funding during the first quarter of 1998 was primarily
the result of the Company issuing its 6 3/4% Cumulative Convertible Preferred
Stock ("1998 Convertible Preferred Stock") with net proceeds of $128.0 million
and the Company borrowing $9.0 million under the Company's secured equipment
facility of $28.0 million with NTFC Capital Corporation and Export Development
Corporation.
As of March 31, 1998, the Company had $199.6 million in cash. The Company
expects that its primary sources for cash over the next twelve months will be
cash on hand, cash generated by operations, proceeds of fiber use sales and the
proceeds from any additional debt, vendor and working capital financing the
Company may seek.
The Company has been significantly recapitalized since the beginning of
1998. As of May 1, 1998, the Company has incurred additional equity and debt
financing through the issuance of its 1998 Convertible Preferred Stock for net
proceeds of $147.25 million (including proceeds from exercise of the
overallotment option in April 1998) and issuance of its 9% Senior Subordinated
Notes Due 2008 ("9% Senior Subordinated Notes") for net proceeds, after
tendering for the Senior Notes, of $93.4 million. The Company is in discussions
with various investment bankers, vendors and lending institutions regarding
substantial additional
11
<PAGE> 12
debt financing for 1998 and beyond. The Company seeks to obtain sufficient
funding from these sources plus cash receipts from fiber use sales and
operations for the following major uses of cash: (i) the network expansion and
other capital expenditures; (ii) debt service; (iii) lease payments; (iv)
funding joint ventures; and (v) working capital. Capital spending in 1998 is
projected to be over $525.0 million, of which $64.4 million has been spent
through March 31, 1998. After 1998, capital expenditures are expected to be
reduced, but continue to be substantial. There can be no assurance that the
Company will be successful in obtaining the necessary financing to meet its
needs. A failure to raise cash would delay or prevent such capital expenditures
and the construction of the network expansion. Also, the foregoing capital
expenditure and cash requirements for 1998 do not take into account any
acquisitions.
The Company is required to make annual interest payments in the amount of
$40.6 million on the 9% Senior Subordinated Notes and the remaining Senior Notes
each year. The Company is also required to make principal payments of
approximately $4.0 million on other debt in 1998 including quarterly principal
payments of $560,000 from March 31, 1998 through December 31, 1999. The Company
is also required (except in certain circumstances when the dividend payment can
be a payment in kind) to pay quarterly cash dividends on the 1997 Convertible
Preferred Stock at an annual rate of 7 1/4%, on the 1998 Convertible Preferred
Stock at an annual rate of 6 3/4% and on the 1997 Exchangeable Preferred Stock
at an annual rate of 12 1/2%. The Company anticipates that such debt and equity
service payments during 1998 will be made from cash on hand.
The Company is required to make minimum annual lease payments for
facilities, equipment and transmission capacity used in its operations. In 1998,
1999, and 2000 the Company is currently required to make payments of
approximately $10.7 million, $10.7 million and $9.3 million, respectively, on
capital leases and $32.6 million, $8.7 million and $6.3 million, respectively,
on operating leases. The Company expects to incur additional operating and
capital lease costs in connection with the network expansion.
In connection with its network expansion, the Company has entered into
various construction and installation agreements with contractors.
The forward-looking statements set forth above with respect to the
estimated cash requirements relating to capital expenditures, the Company's
ability to meet such cash requirements and the Company's ability to service its
debt are based on certain assumptions as to future events. Important
assumptions, which if not met, could adversely affect the Company's ability to
achieve satisfactory results include that: (i) there will be no significant
delays or cost overruns with respect to the network expansion; (ii) the
Company's contractors and partners in cost-saving arrangements will perform
their obligations; (iii) rights-of-way can be obtained in a timely,
cost-effective basis; (iv) the routes of the network expansion are substantially
completed on schedule; (v) the Company will continue to increase traffic on its
network; and (vi) the Company can obtain vendor financing.
YEAR 2000 RISKS
The Company has reviewed its software for Year 2000 compliance. In
conjunction with that review, the Company has determined that its current
software is either Year 2000 compliant, or there are projects planned to either
upgrade or replace the existing software prior to 2000. In accordance with the
Emerging Issues Task Force of the Financial Accounting Standards Board, the
projected costs associated with upgrading or revising the Company's software to
be Year 2000 compliant will be recorded as an expense of the period rather than
capitalized. The Company currently estimates that the costs associated with such
upgrades projects will not be material to its operating results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
On March 30, 1998, the Company issued and sold 135,000 shares of its 1998
Convertible Preferred Stock in the form of Depositary Shares (each representing
1/20 of a share of 1998 Convertible Preferred Stock) for an aggregate offering
price of $135.0 million, in a private placement pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act") to Credit Suisse First
Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and NationsBanc Montgomery Securities LLC (the
"Initial Purchasers"), who subsequently sold the shares to "qualified
institutional buyers" (as defined in the Securities Act) pursuant to Section
144A of the Securities Act. The Initial Purchasers received aggregate
commissions of $1.75 per Depositary Share ($4.725 million for 2,700,000
Depositary Shares). The 1998 Convertible Preferred Stock is convertible at the
option of the holders, unless previously redeemed or repurchased, at any time
into shares of the Company's common stock (the "Common Stock") at a rate
(subject to adjustment in certain events) of 13.748 shares of Common Stock for
each share of 1998 Convertible Preferred Stock. Dividends on the 1998
Convertible Preferred Stock are payable quarterly and accrue at a rate per annum
of 6 3/4% per share on the liquidation preference thereof of $1,000 per share
($67.50 per annum per share). Dividends may, at the option of the Company, be
paid in Common Stock if, and only if, the documents governing the Company's
indebtedness that existed as of the date of issuance of the 1998 Convertible
Preferred Stock then prohibit the payment of such dividends in cash. The 1998
Convertible Preferred Stock is redeemable after April 5, 2000 subject to certain
conditions with respect to the closing price of the Common Stock in the case of
redemptions prior to April 1, 2002. The registration rights agreement entered
into by the Company with the initial purchasers of the 1998 Convertible
Preferred Stock requires that the Company file a shelf registration statement,
with the Securities Exchange Commission ("Commission") for the benefit of the
holders of the 1998 Convertible Preferred Stock, with respect to the Depositary
Shares, the 1998 Convertible Preferred Stock and the shares of Common Stock that
may be issued upon conversion thereof. The 1998 Convertible Preferred Stock
ranks pari passu with the Company's 1997 Convertible Preferred Stock and the
Company's 1997 Exchangeable Preferred Stock and senior to the Common Stock with
respect to payment of dividends and amounts upon liquidation, dissolution and
winding up.
On April 14, 1998, the Company issued and sold an additional $20.25 million
of its 1998 Convertible Preferred Stock (405,000 Depositary Shares at $50 per
share) in connection with an overallotment option granted to the Initial
Purchasers of the 1998 Convertible Preferred Stock pursuant to the same
exemptions from registration as the initial issuance. The Initial Purchasers
received aggregate commissions of $1.75 per Depositary Share ($.709 million for
405,000 Depositary Shares).
On March 20, 1998, the Company issued and sold 42,056 shares of its Common
Stock to the former stockholder of Network Evolutions, Incorporated pursuant to
Section 4(2) of the Securities Act. No underwriter or placement agent was
employed in connection with such issuance of Common Stock.
The sales and issuances of the 1998 Convertible Preferred Stock and the
Common Stock described above were deemed to be exempt from registration under
the Securities Act in reliance upon Section 4(2) thereof, as transactions not
involving a public offering. The purchasers in such private offerings of stock
represented their intention to acquire the securities for investment only and
not with a view to the distribution thereof. Appropriate legends were affixed to
the certificates representing the securities issued in such transactions. All
purchasers had adequate access, through their relationship with the Company or
otherwise, to sufficient information about the Company to make an informed
investment decision.
On March 31, 1998, the Company redeemed its 414 outstanding shares of its
10% Junior Series 3 Cumulative Redeemable Preferred Stock, par value $.01 per
share, at a per share redemption price of $1,711.71.
13
<PAGE> 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On April 21, 1998, the Company sold $450.0 million in aggregate principal
amount of its 9% Senior Subordinated Notes. Concurrently with the sale of such
notes, the Company consummated its tender offer for cash for all its Senior
Notes. Pursuant to the terms of the tender offer, approximately $284.2 million
(out of $285.0 million) in aggregate principal amount of the Senior Notes were
tendered and accepted for payment by the Company. The Company used approximately
$342.7 million of the estimated $435.6 million net proceeds from the 9% Senior
Subordinated Notes to pay the tender offer price for the Senior Notes. In
connection with the consummation of the tender offer, the Senior Notes were
amended to eliminate substantially all of the restrictive covenants therein and
all guarantees given thereunder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of IXC Communications,
Inc., as amended (incorporated by reference to Exhibit 3.1
of IXC Communications, Inc.'s Amendment No. 1 to
Registration Statement on Form S-4 (File No. 333-48079)
filed with the Commission on April 15, 1998).
3.2 Bylaws of IXC Communications, Inc., as amended (incorporated
by reference to Exhibit 3.2 of IXC Communications, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, filed with the Commission on November
14, 1998).
4.1 Indenture dated as of October 5, 1995, by and among IXC
Communications, Inc., on its behalf and as
successor-in-interest to I-Link Holdings, Inc. and IXC
Carrier Group, Inc., each of IXC Carrier, Inc., on its
behalf and as successor-in-interest to I-Link, Inc., CTI
Investments, Inc., Texas Microwave Inc. and WTM Microwave
Inc., Atlantic States Microwave Transmission Company,
Central States Microwave Transmission Company, Telcom
Engineering, Inc., on its behalf and as
successor-in-interest to SWTT Company and Microwave Network,
Inc., Tower Communication Systems Corp., West Texas
Microwave Company, Western States Microwave Transmission
Company, Rio Grande Transmission, Inc., IXC Long Distance,
Inc., Link Net International, Inc. (collectively, the
"Guarantors"), and IBJ Schroder Bank & Trust Company, as
Trustee (the "Trustee), with respect to the 12 1/2% Series A
and Series B Senior Notes due 2005 (incorporated by
reference to Exhibit 4.1 of IXC Communications, Inc.'s and
each of the Guarantor's Registration Statement on Form S-4
filed with the Commission on April 1, 1996 (File No.
333-2936) (the "S-4")).
4.2 Form of 12 1/2% Series A Senior Notes due 2005 (incorporated
by reference to Exhibit 4.6 of the S-4).
4.3 Form of 12 1/2% Series B Senior Notes due 2005 and
Subsidiary Guarantee (incorporated by reference to Exhibit
4.8 of IXC Communications, Inc.'s Amendment No. 1 to
Registration Statement on Form S-1 filed with the Commission
on June 13, 1996 (File No. 333-4061) (the "S-1 Amendment")).
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.4 Amendment No. 1 to Indenture and Subsidiary Guarantee dated
as of June 4, 1996, by and among IXC Communications, Inc.,
the Guarantors and the Trustee (incorporated by reference to
Exhibit 4.11 of the S-1 Amendment).
4.5 Purchase Agreement dated as of March 25, 1997, by and among
IXC Communications, Inc., Credit Suisse First Boston
Corporation ("CS First Boston") and Dillon Read & Co. Inc.
("Dillon Read") (incorporated by reference to Exhibit 4.12
of IXC Communications, Inc.'s Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, filed with the
Commission on May 15, 1997 (the "March 31, 1997 10-Q"))
4.6 Registration Rights Agreement dated as of March 25, 1997, by
and among IXC Communications, Inc., CS First Boston and
Dillon Read (incorporated by reference to Exhibit 4.13 of
the March 31, 1997 10-Q).
4.7 Amendment to Registration Rights Agreement dated as of March
25, 1997, by and between IXC Communications, Inc. and
Trustees of General Election Pension Trust (incorporated by
reference to Exhibit 4.14 of March 31, 1997 10-Q).
4.8 Registration Rights Agreement dated as of July 8, 1997,
among IXC Communications, Inc. and each of William G. Rodi,
Gordon Hutchins, Jr. and William F. Linsmeier (incorporated
by reference to Exhibit 4.15 of IXC Communications, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, as filed with the Commission on August 6, 1997 (the
"June 30, 1997 10-Q")).
4.9 Registration Rights Agreement dated as of July 8, 1997,
among IXC Communications, Inc. and each of William G. Rodi,
Gordon Hutchins, Jr. and William F. Linsmeier (incorporated
by reference to Exhibit 4.16 of the June 30, 1997 10-Q).
4.10 Indenture dated as of August 15, 1997, between IXC
Communications, Inc. and The Bank of New York (incorporated
by reference to Exhibit 4.2 of IXC Communications, Inc.'s
Current Report on Form 8-K dated August 20, 1997, and filed
with the Commission on August 28, 1997 (the "8-K")).
4.11 First Supplemental Indenture dated as of October 23, 1997,
among IXC Communications, Inc., the Guarantors, IXC
International, Inc. and IBJ Schroder Bank & Trust Company
(incorporated by reference to Exhibit 4.13 of IXC
Communications, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997, and filed with the Commission
on March 16, 1998 (the "1997 10-K")).
4.12 Second Supplemental Indenture dated as of December 22, 1997,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc. and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.14 of the 1997 10-K).
4.13 Third Supplemental Indenture dated as of January 6, 1998,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc. and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.15 of the 1997 10-K).
4.14 Fourth Supplemental Indenture dated as of April 3, 1998,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc., and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.15 of IXC Communications, Inc.'s Registration Statement on
Form S-3 filed with the Commission on May 12, 1998 (File No.
333-52433)).
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.15 Purchase Agreement dated as of March 25, 1998, among IXC
Communications, Inc., Goldman Sachs & Co. ("Goldman"), CS
First Boston, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill") and Morgan Stanley & Co.
Incorporated ("Morgan Stanley") (incorporated by reference
to Exhibit 4.1 IXC Communications, Inc.'s Current Report on
Form 8-K dated March 30, 1998, and filed with the Commission
on April 7, 1998 (the "April 7, 1998 8-K")).
4.16 Registration Rights Agreement dated as of March 30, 1998,
among IXC Communications, Inc., Goldman, CS First Boston,
Merrill and Morgan Stanley (incorporated by reference to
Exhibit 4.2 of the April 7, 1998 8-K).
4.17 Deposit Agreement dated as of March 30, 1998, between IXC
Communications, Inc. and BankBoston N.A. (incorporated by
reference from Exhibit 4.3 of the April 7, 1998 8-K).
4.18 Certificate of Designation of Powers, Preferences and
Relative, Participating, Optional and Other Special Rights
of 6 3/4% Cumulative Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof
(incorporated by reference to Exhibit 4.4 of the April 7,
1998 8-K).
4.19 Purchase Agreement dated as of April 16, 1998, by and among
IXC Communications, Inc., CS First Boston, Merrill, Morgan
and Nationsbanc Montgomery Securities LLC (incorporated by
reference to Exhibit 4.1 of IXC Communications, Inc.'s
Current Report on Form 8-K dated April 21, 1998, and filed
with the Commission on April 22, 1998 (the "April 22, 1998
8-K").
4.20 Registration Rights Agreement dated April 16, 1998, by and
among IXC Communications, Inc., Credit Suisse First Boston
Corporation, Merrill, Morgan and Nationsbanc Montgomery
Securities LLC (incorporated by reference to Exhibit 4.2 of
the April 22, 1998 8-K).
4.21 Indenture dated as of April 21, 1998, between IXC
Communications, Inc. and IBJ Schroder Bank & Trust Company,
as Trustee (incorporated by reference to Exhibit 4.3 of the
April 22, 1998 8-K).
10.1 Office Lease dated June 21, 1989 with USAA Real Estate
Company, as amended (incorporated by reference to Exhibit
10.1 of the S-4).
10.2 Equipment Lease dated as of December 1, 1994, by and between
DSC Finance Corporation and Switched Services
Communications, L.L.C.; Assignment Agreement dated as of
December 1, 1994, by and between Switched Services
Communications, L.L.C. and DSC Finance Corporation; and
Guaranty dated December 1, 1994, made in favor of DSC
Finance Corporation by IXC Communications, Inc.
(incorporated by reference to Exhibit 10.2 of the S-4).
10.3 Amended and Restated 1994 Stock Plan of IXC Communications,
Inc., as amended (incorporated by reference to Exhibit 10.3
of the June 30, 1997 10-Q).
10.4 Form of Non-Qualified Stock Option Agreement under the 1994
Stock Plan of IXC Communications, Inc. (incorporated by
reference to Exhibit 10.4 of the S-4).
10.5 Amended and Restated Development Agreement by and between
Intertech Management Group, Inc. and IXC Long Distance, Inc.
(incorporated by reference to Exhibit 10.7 of IXC
Communications, Inc.'s and the Guarantors' Amendment No. 1
to Registration Statement on Form S-4 filed with the
Commission on May 20, 1996 (File No. 333-2936) ("Amendment
No. 1 to S-4")).
10.6+* Third Amended and Restated Service Agreement dated as of
April 16, 1998, among IXC Long Distance, Inc., IXC Carrier,
Inc., IXC Broadband, Inc. and Excel Telecommunications, Inc.
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.7 Equipment Purchase Agreement dated as of January 16, 1996,
by and between Siecor Corporation and IXC Carrier, Inc.
(incorporated by reference to Exhibit 10.9 of the S-4).
10.8 1996 Stock Plan of IXC Communications, Inc., as amended
(incorporated by reference to Exhibit 10.10 of the IXC
Communications, Inc. Annual Report on Form 10-K for the year
ended December 31, 1996 and filed with the Commission on
March 28, 1997 (the "1996 10-K").
10.9 IRU Agreement dated as of November 1995 between WorldCom,
Inc. and IXC Carrier, Inc. (incorporated by reference to
Exhibit 10.11 of Amendment No. 1 to the S-4).
10.10 Outside Directors' Phantom Stock Plan of IXC Communications,
Inc., as amended (incorporated by reference to Exhibit 10.12
of the 1996 10-K).
10.11+ Business Consultant and Management Agreement dated as of
March 1, 1998, by and between IXC Communications, Inc. and
Culp Communications Associates.
10.12 Employment Agreement dated December 28, 1995, by and between
IXC Communications, Inc. and James F. Guthrie (incorporated
by reference to Exhibit 10.14 of the S-1 Amendment).
10.13 Employment Agreement dated August 28, 1995, by and between
IXC Communications, Inc. and David J. Thomas (incorporated
by reference to Exhibit 10.15 of the S-1 Amendment).
10.14 Special Stock Plan of IXC Communications, Inc. (incorporated
by reference to Exhibit 10.16 of the 1996 10-K).
10.15 Lease dated as of June 4, 1997, between IXC Communications,
Inc. and Carramerca Realty, L.P. (incorporated by reference
to Exhibit 10.17 of the June 30, 1997 10-Q).
10.16 Loan and Security Agreement dated as of July 18, 1997, among
IXC Communications, Inc., IXC Carrier, Inc. and NTFC Capital
Corporation ("NTFC") (incorporated by reference to Exhibit
10.18 of the June 30, 1997 10-Q).
10.17 IRU and Stock Purchase Agreement dated as of July 22, 1997,
between IXC Internet Services, Inc. and PSINet Inc.
(incorporated by reference to Exhibit 10.19 of IXC
Communications, Inc.'s Amendment No. 1 to Form 10-Q/A for
the quarter ended September 30, 1997 filed with the
Commission on December 12, 1997 (the "September 30, 1997
10-Q/A")).
10.18 Joint Marketing and Services Agreement dated July 22, 1997,
between IXC Internet Services, Inc. and PSINet Inc.
(incorporated by reference to Exhibit 10.20 of the September
30, 1997 10-Q/A).
10.19 Employment Agreement dated as of September 9, 1997, between
Benjamin L. Scott and IXC Communications, Inc. (incorporated
by reference to Exhibit 10.21 of IXC Communication Inc.'s
Amendment No. 1 to Registration Statement on S-4 filed with
the Commission on December 15, 1997 (File No. 333-37157)
("Amendment No. 1 to the EPS S-4")).
10.20 IXC Communications, Inc. 1997 Special Executive Stock Plan
(incorporated by reference to Exhibit 10.22 of Amendment No.
1 to the EPS S-4).
10.21 First Amendment to Loan and Security Agreement dated as of
December 23, 1997, among IXC Communications, Inc., IXC
Carrier, Inc., NTFC and Export Development Corporation
("EDC") (incorporated by reference to Exhibit 10.21 of the
1997 10-K).
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.22 Second Amendment to Loan and Security Agreement dated as of
January 21, 1998, among IXC Communications, Inc., IXC
Carrier, Inc., NTFC and EDC (incorporated by reference to
Exhibit 10.22 of the 1997 10-K).
11.1+ Statement of computation of earnings per share.
27.1+ Financial Data Schedule.
</TABLE>
- ---------------
+ Filed herewith.
* Certain portions of this exhibit have been omitted from this Form 10-Q and
have been filed separately, together with an application to obtain
confidential treatment with respect thereto.
(b) Reports on Form 8-K.
(1) Form 8-K dated January 8, 1998, and filed with the Commission on January 9,
1998, with respect to a press release reporting a fiber exchange agreement
between the Company and GST Telecommunications, Inc.
(2) Form 8-K dated January 30, 1998, and filed with the Commission on February
2, 1998, with respect to a press release announcing the consummation of the
Company's registered exchange offer to exchange shares of its 12 1/2% Series
B Junior Exchangeable Preferred Stock Due 2009 for all outstanding shares of
its 12 1/2% Junior Exchangeable Preferred Stock Due 2009.
(3) Form 8-K dated February 12, 1998, and filed with the Commission on February
13, 1998, with respect to a press release reporting the Company's results of
operations for the fourth quarter of 1997.
(4) Form 8-K dated March 2, 1998, and filed with the Commission on March 4,
1998, with respect to a press release announcing the closing of a
transaction with PSINet Inc.
(5) Form 8-K dated March 18, 1998, and filed with the Commission on March 18,
1998, with respect to a press release announcing the commencement of the
Company's tender offer to purchase for cash all of its outstanding 12 1/2%
Senior Notes due 2005.
18
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IXC COMMUNICATIONS, INC.,
a Delaware corporation
May 13, 1998 By: /s/ JAMES F. GUTHRIE
----------------------------------
James F. Guthrie
Executive Vice President and Chief
Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
19
<PAGE> 1
EXHIBIT 10.6
THIRD AMENDED AND RESTATED
SERVICE AGREEMENT
This Third Amended and Restated Service Agreement (this "Agreement") is
made as of April 16, 1998, (the "Effective Date"), by and between Excel
Telecommunications Inc., a Texas corporation ("Excel"), and IXC Long
Distance, Inc., IXC Carrier, Inc., and IXC Broadband Services, Inc.
(collectively, "IXC").
Background
A. Excel and Switched Services Communications, L.L.C., a subsidiary of
IXC, previously entered into that certain Second Amended and Restated
Service Agreement dated as of January 1, 1996 (the "Original
Agreement"), which provided for the provision of long distance services
to Excel.
B. Excel and IXC previously entered into a Preferred Vendor Status
Agreement dated January 1, 1996 (the "Preferred Vendor Status
Agreement").
C. Telco Communications Group, Inc. ("Telco") and IXC Carrier, Inc.
previously entered into a Service Agreement dated December 15, 1995 (the
"Telco Service Agreement").
D. The parties hereto desire to amend and restate the Original Agreement
in its entirety by entering into this Agreement, which shall supersede
and replace the Original Agreement and the Telco Service Agreement, and,
in connection therewith, desire to terminate the Original Agreement, the
Telco Service Agreement and the Preferred Vendor Status Agreement.
Terms of Agreement
Accordingly, in consideration of the foregoing and for the mutual
promises set forth below, the parties hereby agree as follows:
1. Switched Access Services.
1.1 Scope of Services. As set forth below, IXC shall provide long
distance services to Excel, as set forth on Exhibit A (Xclusive
Services) and Exhibit B (Xnet Services) attached hereto (together with
the use of the IXC Online Software, the "Switched Services"). IXC shall
charge Excel for such Switched Services from the establishment of answer
supervision (i.e. call connection between the calling telephone and the
called telephone) until termination of such connection as reasonably
determined by IXC, calculated on the basis of six second increments for
the duration of the telephone calls using such Switched Services in
accordance with the rates shown in Exhibit A or Exhibit B, as
<PAGE> 2
applicable ("Usage Charges"), as such rates may be adjusted as set forth
herein and which rates are set forth on such exhibits in whole minute
increments. Beginning after the end of the second calendar quarter of
1998, Excel agrees to use its commercially reasonable efforts to deliver
a network demand forecast thirty (30) days after the end of each
calendar quarter until the Switched Services Commitment Expiration Date
in substantially the same form as the form attached hereto as Exhibit J
and incorporated herein by this reference.
1.2 Switched Services Take or Pay Commitment.
(a) Subject to Section 4, Excel shall have a "Switched Services
Take or Pay Commitment" in the aggregate amount of *, which shall
be satisfied by Excel during the period commencing on March 1,
1998, and ending twelve (12) months after the Effective Date (the
"Switched Services Commitment Expiration Date"). To the extent
that Excel has not paid (in the form of money or the receipt of
credits as specified in Section 1.2(b) hereof) for Switched
Services hereunder in an aggregate amount equal to the aggregate
amount of the Switched Services Take or Pay Commitment by the
Switched Services Commitment Expiration Date at the Usage Charge
rates specified in Exhibit A or Exhibit B, as applicable, then
Excel shall be obligated to pay to IXC * of the difference of (i)
the * Switched Services Take or Pay Commitment less (ii) the
actual amount paid by Excel during such period, whether or not
such Switched Services are used. Excel shall not be required to
make any partial or pro rata payments (periodic or otherwise) in
respect of the Switched Services Take or Pay Commitment prior to
the Switched Services Commitment Expiration Date. All Usage
Charges for domestic and international terminating minutes, 8XX
origination services, switchless services, calling cards, debit
cards and Mexico 800 origination services provided under the
Switched Services shall be counted towards the Switched Services
Take or Pay Commitment.
(b) Excel shall pay for Switched Services hereunder at the Usage
Charges reflected in Exhibit A or Exhibit B, as applicable. In
addition, all payments received by IXC from Excel (or credits
received by Excel) with respect to Switched Minutes (whether such
minutes were used by Excel under the Original Agreement or under
this Agreement) on or after March 1, 1998, shall count towards
the Switched Services Take or Pay Commitment. In addition, the
parties hereby acknowledge that the pricing for Switched Minutes
under this Agreement is lower than the pricing under the Original
Agreement and that it is the intent of the parties that Excel
receive the benefit of such new and reduced pricing for the
entire calendar year of 1998; provided Excel meets or exceeds the
Usage
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 3
Charges set forth in the last sentence of this Section 1.2(b).
Accordingly, Excel shall receive and apply such credit against
and commencing with payments to be made by Excel for minutes used
in March 1998 and continuing monthly thereafter until such credit
is fully applied. The credit received by Excel from IXC pursuant
to this Section 1.2(b) shall be refunded by Excel to IXC in the
event that Excel, under this Agreement, does not pay to IXC at
least * in Usage Charges for Switched Services in each of the
second and third calendar quarters of 1998.
(c) Upon Excel's satisfaction of the Switched Services Take or
Pay Commitment, for every * dollars (*) of additional Switched
Services revenue, Excel's Private Line Take or Pay Commitment (as
defined below) shall be credited * dollar (*), up to a credit
amount not to exceed *.
1.3 Resale of Switched Services. Subject to the terms hereof, Excel may
resell Switched Services to its customers. After the * Switched Services
Take or Pay Commitment has been met, Excel may request from time to time
to migrate additional LATAs to IXC's network, and IXC may accept or
reject such requests based upon available capacity, provided, however,
that so long as Excel is not in breach of this Agreement and uses
Switched Services in a particular LATA, IXC cannot terminate Switched
Services in such LATA or refuse to allow Excel to add additional ANIs
(as such term is defined below) in such LATA. Notwithstanding the
foregoing, however, in the event (i) Excel has a reasonable basis for
believing that it can rightfully terminate this Agreement pursuant to
Section 7 and in good faith gives notice to IXC of termination of this
Agreement under such section; (ii) such termination is later determined
not to have been made properly under this Agreement, and (iii) Excel is
required to pay damages or other relief to IXC measured in whole or in
part by its Switched Services Take or Pay Commitment over any period,
the measurement of the amount of the commitment to be paid after such
notice of termination shall be as further explained in Section 9(b)
hereof.
1.4 Excluded ANIs. As more specifically described in Exhibit F, IXC
shall process all automatic number identifiers ("ANIs") supplied by
Excel within 24 hours of receipt. IXC shall have the right to reject
ANIs supplied by Excel in the event of (i) failure to cure a material
default by Excel hereunder; (ii) the loss of certification by Excel to
provide long distance in the jurisdiction in which the ANI is located
(and only to the extent that the ANI is in such jurisdiction), or (iii)
the failure of Excel to send IXC ANIs in material compliance with the
format mutually agreed upon by the parties. Excel currently sends ANIs
to IXC in accordance with the IXC Online Process (the "IOL Process"),
and Excel and IXC hereby agree that the IOL Process is an acceptable
format for the submission of
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 4
ANIs to IXC and any change to this format shall be reasonable and shall
be given to Excel no less than fourteen (14) days prior to any such
change to the IOL Process. Excel and IXC hereby acknowledge and agree
that each will negotiate in good faith in order to execute a software
license agreement related to the IOL Process in substantially the same
form as the form attached hereto as Exhibit G and incorporated herein by
this reference.
1.5 RBOC Termination/Origination. IXC hereby acknowledges and agrees
that the Excel and Telco traffic comprising Xclusive origination
service, as it pertains to the Switched 1+ (hereinafter "Xclusive
Origination Service"), and Xclusive termination service, as it pertains
to the Switched 1+ (hereinafter, "Xclusive Termination Service"), for
the entire twelve (12) month period ("Prior Twelve Month Period")
beginning April 1, 1997 and ending March 31, 1998 (including but not
limited to the months of January 1998, February 1998, and March 1998),
when measured monthly, is in full and complete compliance with the
permissible ratios set forth in this Section 1.5 such that no surcharge
would be charged to Excel on any of Excel's traffic had such a provision
existed in the Original Agreement or on Telco's traffic had such a
provision existed in the Telco Service Agreement. Prior to this Section
1.5 being effective, IXC shall deliver to Excel an Officer's Certificate
certifying the accuracy and setting forth in reasonable detail the
following information for each month of the Prior Twelve Month Period:
(a) the percentage of Excel Xclusive Origination Service traffic in each
LATA or OCN, RBOC, and non-RBOC; and (b) the percentage of Excel
Xclusive Termination Service traffic in each LATA or OCN, RBOC, and
non-RBOC. If IXC fails to provide such information to Excel within 30
days of the Effective Date, Excel shall so notify IXC and IXC shall have
45 days from the date of such notice to provide the information as
specified in the immediately proceeding sentence or this Section 1.5
shall be deleted in its entirety and shall have no force and effect. The
parties hereto hereby agree that they will mutually agree upon
applicable ratios and cure periods for the Xnet Services as it pertains
to RBOC termination and origination and in no event shall the ratios and
cure periods for originating and terminating Xnet Services minutes be
more restrictive on Excel than those specified in this Section 1.5.
IXC hereby acknowledges and agrees that, when measured on a monthly
basis, the following is true and correct for each month of the Prior
Twelve Month Period: (i) at least * of Excel's Xclusive Termination
Service minutes terminates in a RBOC (as hereinafter defined) and (ii)
at least * of Excel's Xclusive Origination Service minutes originates
in a RBOC and but for this representation Excel would not have entered
into this Agreement. Notwithstanding anything to the contrary contained
herein, the parties hereby agree that if the actual average percentage
(measured by taking the average of each month of the Prior Twelve Month
Period ("Actual Average Percentages")) of
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 5
(i) Excel's Xclusive Termination Service minutes that terminate in a
RBOC and (ii) Excel's Xclusive Origination Service minutes that
originate in a RBOC is lower than the following percentages
("Permissible Percentages"): (a) for Xclusive Origination Service, at
least * of the minutes originate in a RBOC and (b) for Xclusive
Termination Service, at least * of the minutes terminate in a RBOC,
then the following must occur before IXC may apply any surcharge, set
forth in this Section 1.5, to any of Excel's Switched Services: (i) IXC
shall give Excel notice of the Actual Average Percentages (the "Actual
Average Percentages Notice"); (ii) Excel shall have six (6) months (the
"Six Month Period") from the receipt of the Actual Average Percentages
Notice to achieve the Permissible Percentages; (iii) the surcharges set
forth in this Section 1.5 shall only be applied to Excel's Switched
Services minutes after the Six Month Period; and (iv) Excel shall use
its commercially best efforts to bring its Xclusive Termination Service
and Xclusive Origination Service into compliance with the Permissible
Percentages. If, during the Six Month Period, the percentage (when
measured on a monthly basis) of Excel's Xclusive Origination Service
minutes originating in a RBOC is less than the corresponding percentage
of the Actual Average Percentages ("Beginning Origination Percentage"),
then IXC shall have the right to apply a * per minute surcharge to
the Xclusive Originating Service minutes by which Non-RBOC origination
exceeds the Beginning Origination Percentage of the total monthly
service of such month. If during the Six Month Period, the percentage
(when measured on a monthly basis) of Excel's Xclusive Termination
Service minutes terminating in a RBOC is less than the corresponding
percentage of the Actual Average Percentage ("Beginning Termination
Percentage"), then IXC shall have the right to apply a * per minute
surcharge to the Xclusive Terminating Service minutes by which Non-RBOC
termination exceeds the Beginning Termination Percentage of the total
monthly service of such month.
Following the service commencement date of Xclusive Origination Service
or, if applicable, the Six Month Period, Excel will maintain at least
* of the originating minutes of domestic United States traffic
("Xclusive Originating Minutes") (measured over an entire calendar
month) in a Regional Bell Operating Company and such other local
exchange companies set forth below in this Section 1.5 (collectively,
"RBOC"). In the event that Excel's Xclusive Originating Minutes exceed
* by up to and including * in Non-RBOCs (as hereinafter defined) for
two (2) consecutive months (when measured on a monthly basis), then IXC
shall give Excel written notice of such breach ("* Breach"). Upon
Excel's failure to cure a * Breach within sixty (60) days after receipt
of written notice by IXC to Excel of such breach, IXC shall have the
right to apply a * per minute surcharge to the number of Xclusive
Originating Minutes by which Non-RBOC origination exceeds * of the
total monthly service; provide however such surcharge shall only be
applied to such originating minutes used by Excel after this 60 day cure
period. In the event that Excel's Xclusive Originating
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 6
Minutes exceed * by more than but not including * when measured on a
monthly basis in Non-RBOCs, then IXC shall have the right to apply a
* per minute surcharge to the Xclusive Originating Minutes by which
Non-RBOC origination exceeds * of the total monthly service in such
month.
Following the service commencement date for the Xclusive Termination
Services or, if applicable, the Six Month Period, Excel will maintain at
least * of the terminating minutes of domestic United States traffic
("Xclusive Terminating Minutes") (measured over an entire calendar
month) in a RBOC. In the event that Excel's Xclusive Terminating Minutes
exceed * by up to and including * in Non-RBOCs for two (2)
consecutive months (when measured on a monthly basis), then IXC shall
give Excel written notice of such breach ("* Termination Breach"). Upon
Excel's failure to cure a * Termination Breach within sixty (60) days
after receipt of written notice by IXC to Excel of such breach, IXC
shall have the right to apply a * per minute surcharge to the number
of Xclusive Terminating Minutes by which Non-RBOC termination exceeds
* of the total monthly service; provide however such surcharge shall
only be applied to such terminating minutes used by Excel after this 60
day cure period. In the event that Excel's Xclusive Terminating Minutes
exceed * by more than but not including * and less than and including
* when measured on a monthly basis in Non-RBOCs, then IXC shall give
Excel written notice of such breach ("* Termination Breach"). Upon
Excel's failure to cure a * Termination Breach within thirty (30)
days after receipt of written notice by IXC to Excel of such breach, IXC
shall have the right to apply a * per minute surcharge to the number
of Xclusive Terminating Minutes by which Non-RBOC termination exceeds
* of the total monthly service; provide however such surcharge shall
only be applied to such terminating minutes used by Excel after this 30
day cure period. In the event that Excel's Xclusive Terminating Minutes
exceed * by more than but not including * when measured on a monthly
basis in Non-RBOCs, then IXC shall have the right to apply a * per
minute surcharge to the Xclusive Terminating Minutes by which Non-RBOC
termination exceeds * of the total monthly service in such month.
Notwithstanding anything to the contrary contained herein, IXC shall
provide Excel with reports setting forth in reasonable detail the
percentage of Xclusive Terminating Minutes and the percentage of
Xclusive Originating Minutes by LATA or OCN, RBOC, and Non-RBOC ("RBOC
Compliance Reports") for the following periods as follows: (i) IXC shall
deliver to Excel an RBOC Compliance Report on or before the 15th day of
each calendar month covering the first 12 days of such month's Xclusive
Terminating Minutes and Xclusive Originating Minutes and (ii) IXC shall
deliver to Excel an RBOC Compliance Report on or before the 4th day of
each calendar month covering the entire proceeding month's Xclusive
Terminating Minutes and Xclusive Originating
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 7
Minutes. If IXC fails to provide timely either of these reports, then
IXC may not apply a surcharge pursuant to this Section 1.5 to any of
Excel's traffic for such month.
Non-RBOC Origination and Termination is defined as any NPA.NXX.XXXX not
owned by the following Operating Company Numbers:
9102 NEW ENGLAND TEL&TEL
9104 NEW YORK TEL CO
9206 BELL ATLANTIC NJ
9208 BELL ATLANTIC PA
9211 BELL ATLANTIC DC
9210 BELL ATLANTIC DE
9212 BELL ATLANTIC MD
9213 BELL ATLANTIC VA
9214 BELL ATLANTIC WV
9321 OHIO BELL TEL CO
9323 MICHIGAN BELL TEL CO
9325 INDIANA BELL TEL CO
9327 WISCONSIN BELL TEL CO
9329 ILLINOIS BELL TEL CO
9417 SOUTHERN BELL TEL CO
9419 SOUTH CENTRAL BELL
9533 SOUTHWESTERN BELL
9631 NORTHWESTERN BELL
9636 MOUNTAIN BELL TEL CO
9638 PACIFIC NORTHWEST BELL
9740 PACIFIC BELL
9348 CINCINNATI BELL
9147 SOUTHERN NEW ENGLAND
TELEPHONE
9742 NEVADA BELL
1.6 Service Interconnections. In order to utilize Xnet Services, Excel
shall be solely responsible for establishing and maintaining a full
time, dedicated connection (a "Service Interconnection") between its
network and one of IXC's designated hubs, set forth in Exhibit H,
attached hereto and incorporated herein by this reference ("HUBS"),
subject to IXC's approval in accordance with the terms of this Agreement
and which approval may not be unreasonably withheld. If a Service
Interconnection is proposed to be made using a LEC, IXC may require
Excel to utilize IXC's entrance facilities or local service arrangement
("LSA") with the relevant LEC, and Excel shall be subject to a
non-discriminatory charge therefor from IXC, subject to a reasonable
upward adjustment not to exceed the actual non-discriminatory LEC charge
plus 1% of such LEC charge. Once
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<PAGE> 8
ordered, and unless otherwise provided for in this Agreement, Service
Interconnections and the circuits comprising each Service
Interconnection may only be canceled by Excel upon at least thirty days
prior written notice to IXC, or if longer, the length of the
cancellation period of the underlying carrier.
2. Private Line Services.
2.1 Scope of Services and Rates. IXC shall use its best efforts
(considering the needs of its other customers) to provide the private
line services described on Exhibit C attached hereto ("Private Line
Services" and, together with Switched Services, the "Services") for
which a Purchase Order has been accepted and duly executed by authorized
representatives of both parties. *. A form of Purchase Order relating to
the circuits ("Circuits") is attached hereto as Exhibit D. The rates for
Private Line Service are set forth in Exhibit C. Such rates are valid
(and shall not be subject to increase without Excel's prior written
consent or agreement) until the Private Line Commitment Expiration Date
(as defined below) or, if later, until forty-eight (48) months after the
Private Line Commencement Date (as defined below). IXC may thereafter
change such rates, but not for any Circuit then in service. Excel may
also order the other services listed in Exhibit C, subject to
availability.
IXC will provide IMT capacity among all of the cities listed as On-Net
cities on Exhibit C attached hereto, which shall be treated as On-Net
cities for all purposes, including rates and reconfiguration. The city
of Atlanta shall be treated as On-Net for all purposes including rates
and reconfiguration on the earlier of (i) date it is added to the IXC
network and becomes available on IXC's fiber expansion routes and (ii)
December 1, 1998. The cities of * shall be treated as On-Net cities for
purposes of rates, but not for purposes of reconfiguration, and shall
become On-Net cities, for all purposes when added to the IXC network and
becomes available on IXC's fiber expansion routes. IXC shall notify
Excel within twenty (20) business days as additional cities become
available on IXC's fiber expansion route and shall provide Excel monthly
progress reports regarding the addition of cities to the IXC network.
Further, the Off-Net rates shall be set forth on Exhibit C; except that
the pricing for * shall be the lesser of the rate set forth on Exhibit C
and * per V&H mile.
2.2 Private Line Take or Pay Commitment.
(a) Subject to Sections 1.2, 2.4, 2.5, and 4, Excel shall have a
"Private Line Take or Pay Commitment" commencing on May 1, 1998
(such date
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 9
being referred to herein as the "Private Line Commencement
Date"), and continuing until Excel has attained total cumulative
revenues under this Agreement from Private Line Services of
* (such date being referred to herein as the "Private
Line Commitment Expiration Date"). As used herein, "Private Line
Take or Pay Commitment" shall mean, with respect to a certain
period and amount, that Excel generally has the obligation to
pay for such Private Line Service hereunder in such amount by
each Benchmark Month (as hereinafter defined) during such
period, whether or not such Private Line Service is used;
however, such obligation shall be cumulative and shall be
subject to certain periodic benchmarks, which means that to
determine Excel's payment obligations under its Private Line
Take or Pay Commitment with respect to any month, the following
rules shall apply: (i) the Private Line Take or Pay Commitment
does not require Excel to use or pay for a minimum amount of
Private Line Services each and every month, rather Excel shall
be required only to meet the following benchmarks at the end of
the following months after the Private Line Commencement Date
(each, a "Benchmark Month"): (A) at the end of the twelfth
(12th) month after the Private Line Commencement Date, Excel
shall have used or paid for * million in Private Line
Services; (B) at the end of Month 18, * million; (C) at the
end of Month 24, * million; (D) at the end of Month 30, *
million; (E) at the end of Month 36, * million; (F) at the end
of Month 42, * million; and (G) at the end of Month 48, *
million (which means that at the end of each Benchmark Month,
Excel's obligation shall be solely to have used or paid for
Private Line Services during the period beginning on March 1,
1998 and ending with such Benchmark Month in an amount equal to
the amount set forth immediately after each such Benchmark Month
in this Section 2.2(a)(i)(A)-(G)); and (ii) if Excel has not met
its cumulative monthly commitment at the end of any Benchmark
Month, Excel shall have ninety (90) days from end of the
Benchmark Month to make up such deficit and become current in
its then-applicable Benchmark Monthly commitment before it is
required to pay for such deficit (provided that Excel shall be
granted a three (3) month grace period with respect to the last
Benchmark Month). In the event Excel is required to pay such
deficit, Excel shall be required to pay * of the difference
between the Benchmark Monthly commitment and the actual
cumulative usage. All private line circuit charges for Private
Line Services provided under this Agreement, under any purchase
order from Excel, and under the Telco Service Agreement form and
after March 1, 1998 and all Switched Services minutes used after
the Switched Services Take or Pay Commitment has been fulfilled
(in accordance with Section 1.2 (c)) shall be counted towards
the Private Line Take or Pay Commitment.
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 10
(b) The parties hereby acknowledge that the pricing for Private
Line Services under this Agreement is lower than pricing under
the Telco Service Agreement and that it is the intent of the
parties that Telco receive the benefit of such new pricing
retroactively, such that it shall apply to all Private Line
Services used by Telco under the Telco Service Agreement or by
Excel from and after March 15, 1998. Accordingly, to the extent
that any amounts paid by Excel or Telco with respect to all
Private Line Services used on and after March 15, 1998, that
were based on the pricing for Private Line Services under the
Telco Service Agreement, then Excel shall receive a credit
towards Private Line Services used under this Agreement in an
amount equal to the amount actually paid for such Private Line
Services less the amount that would have been due and payable by
Telco had the pricing set forth in this Agreement been in effect
and used to calculate such payments. Excel shall receive such
credit commencing with payments to be made by Excel for Private
Line Services used in March 1998 and continuing monthly
thereafter until such credit is fully applied.
(c) Subject to the terms hereof, Excel may resell the Private
Line Services to its customers.
2.3 Portability. All On-Net Service which has been in-service for at
least three (3) months and provided to Excel, Telco or Excel
Communications, Inc. ("ECI") or an affiliate or subsidiary of Excel,
Telco or ECI under the terms of this Agreement shall be subject to
Portability within all areas served by IXC's network. To invoke
Portability, Excel must provide thirty (30) days prior written notice
for reconfiguration of existing service. The replacement service must
have a term for the months remaining on the disconnected Private Line
Services and revenue equal to or greater than those associated with the
disconnected Private Line Service. The price of any On-Net replacement
Private Line Service shall be calculated pursuant to Exhibit C. A
reconfiguration charge as outlined in Exhibit C will be charged for all
circuit reconfigurations. For purposes hereof, "Portability" shall mean
to change the city or cities in the Circuit's city pair to a different
city pair location.
2.4 Installation Periods/Credits. If IXC receives a firm Marketing
Service Order ("MSO") or Excel Purchase Order from Excel for DS-1 and/or
DS-3 level interexchange service between On-Net cities, IXC shall
install the applicable equipment and commence providing such service
within thirty (30) days from the date of IXC's receipt of Excel's MSO or
Excel Purchase Order (unless within 72 hours of receipt of such MSO or
Excel Purchase Order, IXC gives Excel written notice that it must
purchase equipment to fulfill the MSO or Excel Purchase Order, in which
case IXC shall have a reasonable period of time to purchase the
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<PAGE> 11
equipment and commence providing service, but not to exceed 120 days).
With respect to Off-Net cities, IXC must fill such MSOs or Excel
Purchase Order within the time period that the third party carrier must
fill IXC's orders (and IXC, upon the execution of this Agreement, shall
provide Excel with the time period for its major suppliers of private
line services). In the event IXC is unable to commence providing any
service within such time periods, Excel may cancel such MSO or Excel
Purchase Order and order such service (or portion thereof) from a third
party. Upon written request, Excel shall not be required to make any
Circuit Lease payments with respect thereto (and the related Circuit
Lease shall be terminated), and Excel shall be entitled to a reduction
in the Private Line Take or Pay Commitment in an amount equal to the
monthly recurring interexchange service charges paid by Excel to such
third parties for such service for the term of such third party circuit
leases. IXC agrees to waive all installation charges in connection with
any installations hereunder.
2.5 Outage Credits. IXC shall give Excel a credit in accordance with
IXC's then-current outage policy for periods in which any Circuit loses
continuity and fails to comply with applicable specifications.
2.6 Definitions. For purposes hereof: "Available" means all necessary
IXC equipment for a Circuit has been installed. "Activation Date" means
the date a Circuit is first made Available to Excel. "Circuit" means a
DS-0, DS-1 or DS-3. "Circuit Lease Term" means the term of a Circuit
specified in the applicable Purchase Order and such term shall not be
more than twelve (12) months in length. "Circuit Mileage" means the
length of a Circuit specified in the applicable Purchase Order. "DS-0"
means a circuit complying with TR-TSY-000333. "Switched and Special
Access Services - Transmission Parameter Limits and Interface
Combinations" Issue 1, July 1990. A "DS-1" is a signal conforming to the
requirements set forth in Sections 9.3 and 10.2 of Bellcore
TR-NWT-000499, Issue 5, December 1993. A "DS-3" is a signal conforming
to the requirements set forth in Section 9.6 and 10.5 of Bellcore
TR-NWT-000499, Issue 5, December, 1993. "Purchase Order" means any Excel
purchase order accepted by IXC. "Requested Service Date" means the date
Private Line Service on a Circuit is requested to commence specified in
the applicable Purchase Order. "Service" means transmission service
provided between North American DSX standard cross-connect panels
located in IXC's terminal locations.
3. Term.
(a) Unless earlier terminated pursuant to the terms hereof, the
term of this Agreement with respect to Switched Services (the
"Switched Services Term") shall commence on March 1, 1998 and
shall continue until the later of (a) the date on which the
Switched Services Take or Pay
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<PAGE> 12
Commitment has been met and (b) the date that is twelve (12)
months after the Effective Date. Unless earlier terminated
pursuant to the terms hereof, the term of this Agreement with
respect to Private Line Services (the "Private Line Services
Term") shall commence on the Effective Date and shall continue
until the later of (a) the date on which the Private Line Take
or Pay Commitment has been met and (b) the date that is
forty-eight (48) months after the Private Line Commencement Date
(unless the three (3) month grace period is applicable, as
provided in Section 2.2(a), and in which case, that date that is
51 months after the Private Line Commitment Date). In the event
that Excel meets the Switched Services Take or Pay Commitment
prior to the expiration of the Switched Services Term, the
Switched Services Term shall continue until the expiration of
such twelve (12)-month period and the same rates and charges for
Switched Services shall remain in effect, provided that Excel
shall no longer be subject to or required to meet any monthly
minimum commitments for Switched Services. In addition, in the
event that Excel meets the Private Line Take or Pay Commitment
prior to the expiration of the Private Line Services Term, the
Private Line Services Term shall continue until the expiration
of such forty-eight (48) or fifty-one (51) month period, as the
case may be, and the same rates and charges for Private Line
Services shall remain in effect, provided that Excel shall no
longer be subject to or required to meet any monthly minimum
commitments for Private Line Services.
(b) At the expiration of the Switched Services Term or the
Private Line Services Term, as the case may be, this Agreement
shall be extended automatically for successive 30-day periods at
the same rates but without any minimum commitments hereunder,
unless either party gives written notice at least thirty (30)
days prior to the expiration of the Switched Services Term or
the Private Line Services Term, as applicable (or any renewal
thereof), of its intent not to renew this Agreement with respect
to the provision of Switched Services or Private Line Services,
as the case may be. Termination of this Agreement with respect
to either Switched Services or Private Line Services shall not,
by itself, affect the validity of this Agreement with respect to
the other.
(c) This Agreement shall terminate in full upon the later to
occur of (i) the expiration or earlier termination (without
renewal) of the Private Line Services Term and (ii) the
expiration or earlier termination (without renewal) of the
Switched Services Term.
(d) Excel shall have a one hundred thirty-five (135) day period
(the "Migration Period") after termination of this Agreement (or
in the case of a Better Offer (as defined herein), after the
period IXC elects not to match
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<PAGE> 13
a Better Offer and the expiration of the 30 day written notice
by Excel of its intent to move its traffic) to migrate its
Switched Services and Private Line Services traffic from the IXC
network to another network. During such Migration Period, IXC
shall use commercially reasonable efforts to assist Excel with
such migration and to ensure that Excel is able to migrate its
traffic to another network without significant interruption of
service and, in connection therewith, shall continue to provide
Switched Services and Private Line Services to Excel in
accordance with the terms hereof at the same Usage Charges
specified in Exhibits A, B and C attached hereto.
4. Pricing Changes.
*
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 14
*
*
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 15
*
*
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 16
*
5. Priority. Excel shall have the first priority among IXC's customers
for all of Excel's traffic making up its Switched Services and Private
Line Take or Pay Commitments in accordance with the distribution of such
traffic set forth in Exhibit E.
6. Charges and Payment.
6.1 Invoicing.
(a) Usage Charges for Switched Services shall be billed once per
month and payable following the end of each period in which
actual Usage has been incurred.
(b) With respect to Private Line Services, Excel will be invoiced
monthly on the 20th day of each month for: (i) the monthly lease
rate for the following month as set forth on Exhibit C (prorated
for any partial month) for each Available Circuit; and (ii) the
charges for other services received. The first invoice shall be
for the first two months; each invoice thereafter shall be for
the following month.
(c) In the event that Excel is required to make any payments
hereunder with respect to its Switched Services Take or Pay
Commitment or its Private Line Take or Payment Commitment in any
month for services not actually used by Excel, then Excel shall
receive a credit in the amount of such payment to be applied
against the amount of any such future Services actually used by
Excel that exceed the applicable monthly commitment (as
calculated on a then-cumulative basis) in future months.
(d) All Usage Charges and Private Line Service charges for
Circuits shall be due and payable by Excel to IXC within 30 days
after the date of the receipt by Excel of the invoice. Each Excel
invoice must be paid by Excel via wire transfer of immediately
available U.S. funds to an account designated by IXC so that
payment is received by IXC on or before the applicable due date.
IXC agrees that (i) the Excel invoice date will be the
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 17
same day the Excel invoice is faxed to Excel, and (ii) the Excel
invoice will be faxed on a business day.
(e) IXC shall deliver to Excel written notice with respect to any
amount not received by IXC within five (5) business days after
the due dates specified in Section 6.1(d) above. In the event
that any payment remains unpaid after five (5) business days
following the date of receipt by Excel of this IXC notice for
such payment, such payment shall be deemed "past due" and shall
be subject to a late payment charge equal to the lesser of: (A)
one percent of the unpaid balance per month from the invoice
date; or (B) the maximum rate allowed under applicable state law.
(f) Notwithstanding anything to the contrary contained herein,
Excel may withhold payment on amounts disputed in good faith by
providing written notice of disputes with any Excel invoice
within thirty (30) business days after receipt of an Excel
invoice. Alternatively, Excel may pay disputed amounts or
undiscovered discrepancies without losing any of its rights of
recovery. Excel has an affirmative obligation of providing
written notice of any disputes with an Excel invoice within 120
business days after receipt by Excel. If Excel does not report a
good-faith dispute within the 120 business day period, Excel is
deemed to have waived its dispute rights for that Excel invoice
and the IXC billing system inputs and outputs, including without
limitation, the CDR and answer supervision, are deemed accurate
and final. IXC will use its best efforts to resolve timely
disputes within 30 business days after its receipt of the dispute
notice. If such dispute is not resolved to the reasonable
satisfaction of the parties within 30 business days after receipt
of such notice, then Excel may commence an arbitration proceeding
against IXC in accordance with the terms hereof.
The Excel facsimile number and contact person for purposes of this
Section is (214) 863-8959, Attention: Executive Vice President-Network
Operations with a copy to General Counsel at facsimile number (214)
863-8838. Excel may change said facsimile number and contact person upon
written notice to IXC. The IXC facsimile number and contact person for
purposes of this Section is (888) 335-1339, Attention: Billing
Department with a copy to IXC Contract Administration.
6.2 Upon the occurrence of either (a) a payment remaining past due for a period
in excess of thirty (30) days after Excel received the second invoice with
respect thereto or (b) Excel having its fifth past due payment hereunder, then
in either such case, Excel shall be in material breach (a "Material Payment
Breach") of this Agreement. Excel shall have five (5) business days after its
receipt of written notice from IXC of the Material Payment Breach to cure the
same. If Excel does not timely cure the Material Payment
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<PAGE> 18
Breach, IXC may at its sole option do any of all of the following: (i) cease
accepting or processing orders for such applicable Service; (ii) withhold
delivery of the CDR and cease exchange of information; (iii) draw on any
security deposit or other assurance of payment submitted under this Agreement;
(iv) terminate the provision of such Service or terminate the entire Agreement
without liability to Excel, which termination may include immediate cancellation
of the Services; and (v) subject to Section 8(a), pursue such other remedy or
relief as may be legally available. Payment shall be deemed made when the
transfer has been correctly confirmed by Excel's disbursing bank, so long as
payment is actually received by IXC within three (3) days thereafter.
6.3 Throughout the term of this Agreement, with respect to Excel's
customers whose ANIs are subscribed to IXC (or to any IXC overflow
carrier), Excel is responsible with respect to the Switched Services for
direct payment of or reimbursement to IXC, but not both, for the
following charges to the extent that such charges are intended by
government regulators to apply to carriers who provide
telecommunications services to end user customers: (i)
telecommunications relay service charges required by the Americans with
Disabilities Act or otherwise, (both federal and state), (ii) common
carrier regulatory fees assessed by the Federal Communications
Commission (the "FCC") under the Omnibus Budget Reconciliation Act of
1993, as amended, and (iii) universal service fund charges,
presubscribed interexchange carrier charges, and payphone compensation
charges either imposed on IXC by the FCC or state regulatory agencies
directly or imposed on IXC by other carriers or providers as required by
the FCC or state regulatory agencies. Excel will only reimburse IXC for
charges described in this Section 6.3 if such charges are actually
incurred by IXC and only to the extent that such charges directly relate
to Excel's ANIs and provided IXC promptly provides copies of invoices
and other back-up received for such charges. If Excel claims an
exemption, Excel will promptly provide to IXC evidence of such
exemption. The above charges will be included on IXC's invoices to Excel
from time to time, if appropriate. Such charges and fees described in
this Section 6.3 may not be billed more than three (3) months after IXC
is billed for such charges.
7. Failure of Performance.
(a) Except as set forth in Section 8(b), the liability of IXC for
damages for any mistake, omission, interruption, delay, error or
defect in transmission (a "Failure of Performance") occurring in
the furnishing of Services hereunder shall be limited to not
charging Excel for any Services which IXC failed to provide;
provided such Failure of Performance is not due to IXC's or its
directors, employees, agents, officers, or affiliates' gross
negligence or willful misconduct.
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<PAGE> 19
(b) In the event of a Failure of Performance, IXC shall use
commercially reasonable efforts to correct such failure as soon
as reasonably practicable in accordance with Section 26 hereof
and procedures agreed to by both parties.
(c) Excel may terminate this Agreement without incurring any
liability if (i) IXC fails to provide a transmission network as
warranted in Section 10 below (whether or not caused by force
majeure) or otherwise fails to comply with any provision of
Section 10; (ii) IXC fails to deliver call detail records
promptly on a daily basis Monday through Saturday, including all
nationally recognized holidays, for the previous 24-hour period's
traffic; or (iii) IXC fails to fulfill any of the obligations set
forth on Exhibit F; provided, however, Excel must give IXC
written notice of any such default and an opportunity to cure
such default within forty-eight (48) hours of the notice. In the
event IXC fails to cure any such default within the forty-eight
(48) hour period on more than three (3) occasions within any
twelve (12) month period, Excel may terminate this Agreement
without incurring any liability or cancellation charge relating
thereto and, in connection therewith, Excel's obligations under
its Switched Services Take or Pay Commitment and its Private Line
Take or Pay Commitment shall be terminated and of no further
force or effect. "Cure", with respect to any default involving an
action or response required within a certain timeframe, shall
mean that, for a period of one week, starting within the
forty-eight (48) hours' cure period, that IXC consistently makes
such action or response during the required timeframe.
(d) In the event that IXC loses its authority to provide long
distance service in a particular jurisdiction, Excel may, without
liability to IXC, move its Switched Services and/or Private Line
Services to other carriers, and IXC shall pay all reasonable
costs associated with such move including, but not limited to the
following (i) the cost of moving Excel's Switched Services
Traffic; (ii) any money owed, after such date that IXC loses
authority, under any Lease Agreement; and (iii) such other
reasonable costs. In such jurisdictions, Excel's Switched
Services Take or Pay Commitment shall be reduced in an amount
equal to the Switched Service charges paid by Excel to such third
party for such service, and Excel's Private Line Take or Pay
Commitment shall be reduced in an amount equal to the monthly
recurring interexchange service charges paid by Excel to such
third parties for such services for the term of such third party
circuit leases. Further, IXC shall defend, indemnify, and hold
harmless Excel from any losses, expenses, demands, and claims in
connection with IXC's failure to provide Excel the Services
described herein with proper authority.
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<PAGE> 20
(e) Excel may cancel its Purchase Order and Circuit Lease Term
for all Circuits that are subject to a Better Offer at any time
without further liability hereunder to IXC or any third party
lessor. In addition, Excel may terminate any Circuit upon 90
days' notice; provided that if termination occurs: (i) prior to
the Activation Date, Excel shall reimburse IXC for all costs of
the implementation of such Circuit; or (ii) on or after such
date Excel shall pay: (A) all charges for Service previously
rendered; and (B) the amount due through the end of the Circuit
Lease Term under the applicable Purchase Order (IXC shall use
best effort to re-lease such Circuit for such term, refunding to
Excel the amount so collected, if any).
8. Limitation of Liability; Indemnification.
(a) Subject to Sections 8(b) and 8(c) below, IXC's liability
arising out of delays in restoration of the Services to be
provided under this Agreement or out of mistakes, accidents,
omissions, interruptions, or errors or defects in transmission in
the provision of Services, shall be limited to the amounts
collected by IXC for services hereunder. In the event of a proper
cancellation or termination of this Agreement by Excel during any
period in which Excel is not in default hereunder, Excel's
liability shall be limited to the amounts due and unpaid under
this Agreement as of the date of termination. EXCEPT FOR GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, AND SUBJECT TO SECTIONS 8(b)
AND 8(c) BELOW, IN NO EVENT SHALL IXC BE LIABLE TO EXCEL OR ITS
CUSTOMERS OR ANY OTHER THIRD PARTY IN ANY RESPECT, INCLUDING,
WITHOUT LIMITATION, FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL,
INCIDENTAL, ACTUAL, PUNITIVE, OR ANY OTHER DAMAGES, OR FOR ANY
LOST PROFITS OF ANY KIND OR NATURE WHATSOEVER, ARISING OUT OF
MISTAKES, ACCIDENTS, OMISSIONS, INTERRUPTIONS, ERRORS, OR DEFECTS
IN TRANSMISSION, OR DELAYS, INCLUDING, BUT NOT LIMITED TO, THOSE
WHICH MAY BE CAUSED BY REGULATORY OR JUDICIAL AUTHORITIES,
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OBLIGATIONS
PURSUANT TO THIS AGREEMENT. EXCEPT FOR GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, AND SUBJECT TO SECTIONS 8(b) AND 8(c) BELOW,
IN NO EVENT SHALL EXCEL BE LIABLE TO IXC OR ANY THIRD PARTY FOR
ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL DAMAGES (OTHER
THAN UNPAID AMOUNTS UNDER THIS AGREEMENT), OR FOR LOST PROFITS.
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<PAGE> 21
(b) The limitation on liability set forth in Section 8(a) shall
not apply (i) to the gross negligence of willful misconduct of
any party; (ii) to any Losses for which Excel is entitled to
indemnification under Section 8(c); or (iii) to any Failure of
Performance resulting from a Year 2000 Failure. As used herein,
a "Year 2000 Failure" shall mean any Failure of Performance
resulting from the inability of any software or software
applications used by IXC or any of its On-Net suppliers (whether
owned or licensed) in connection with the provision of Services
hereunder to contain source code that can appropriately
interpret the upcoming calendar year "2000."
(c) IXC shall indemnify, defend and hold harmless and the
officers, directors, employees, agents, affiliates, successors
and assigns of Excel, from and against any and all losses,
liabilities, damages, actions, claims, costs and expenses
(including reasonable attorneys' fees and disbursements and
costs of investigation, litigation, settlement, judgment,
interest and penalties) (collectively, "Losses") arising out of
or resulting from any claim, demand, charge, action, cause of
action or other proceeding of infringement of any intellectual
property rights, including patent infringement claims, asserted
by any third party against the indemnitee resulting from the
access or use by Excel of Services hereunder, including the use
of Circuits in accordance with this Agreement.
(d) For purposes of this Section, the terms "IXC" and "Excel"
shall be deemed to include, in each case, their shareholders,
members, managers, officers, employees and affiliates (including
ECI and Telco and their respective affiliates and subsidiaries
in the case of Excel), and any person or entity assisting in its
performance pursuant to this Agreement.
9. Suspension of Service; Termination of Agreement.
In the event Excel: (i) breaches any material provision of this
Agreement not involving payment and such breach is not cured within 30
days of notice thereof by IXC to Excel, or (ii) has a Material Payment
Breach under Section 6.2 hereof; then IXC, upon notice to Excel, may at
IXC's option and in addition to such other rights or remedies as IXC
may, without any liability, have under this Agreement:
(a) take any of the actions specified in Section 6.2, which may
include suspension of Services to Excel until such time as such
circumstance is corrected or termination of this Agreement
(including after suspending Services); and
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<PAGE> 22
(b) in the event IXC terminates this Agreement pursuant to
Section 6.2, *
Notwithstanding anything to the contrary contained herein, during the
term of this Agreement and for one (1) year thereafter, IXC shall not
knowingly and expressly waives any right to do any of the following,
without the prior written consent of Excel: (i) directly contact any of
Excel's end users to inform them that their long distance service will
no longer be provided through Excel or otherwise contact any Excel end
user to market any IXC service or product; (ii) bill and collect from
Excel's end-users directly (or through its billing agents) for services
provided by IXC to them; (iii) treat Excel's end-users as IXC customers
for any purposes; or (iv) withhold delivery of CDRs, except in cases of
the non payment of undisputed Usage Charges within the time periods
provided under this Agreement.
10. Performance Standards; Warranty; Certification; Maintenance.
(a) Performance Standards. IXC shall perform all of its
obligations, and comply with all of the performance standards as
set forth on Exhibit F attached hereto.
(b) Fraud Standards. IXC's obligations concerning fraud
monitoring are set forth in Exhibit F attached hereto. In
addition, IXC agrees to seek forgiveness of payments to the
extent possible from countries (such as Guyana and the Dominican
Republic) where foreign telex companies have agreed to forego
payments for disputed calls (in the event IXC does not
reasonably seek such forgiveness, IXC agrees to be liable for
such disputed calls).
(c) Private Line Circuits. IXC hereby represents and warrants
that each Circuit contains all of the functions and features
contained in the specifications therefor and that each Circuit
will perform in accordance with and comply with such
specifications.
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 23
(d) Warranty. IXC will provide a long distance network with
transmission quality and private line services consistent with
Exhibit F. OTHER THAN AS SET FORTH IN THIS SECTION 10 AND IN
EXHIBIT F, IXC MAKES NO OTHER WARRANTY TO EXCEL OR ANY OTHER
PERSON OR ENTITY, WHETHER EXPRESS, IMPLIED, OR STATUTORY, AS TO
THE DESCRIPTION, QUALITY, MERCHANTABILITY, COMPLETENESS OR
FITNESS FOR ANY PURPOSE OF ANY SERVICE PROVIDED HEREUNDER OR
DESCRIBED HEREIN, OR AS TO ANY OTHER MATTER, ALL OF WHICH
WARRANTIES BY IXC ARE HEREBY EXCLUDED AND DISCLAIMED.
(e) System Maintenance. In the event IXC determines to interrupt
Services for the performance of routine system maintenance, IXC
will notify Excel at least five (5) business days prior to the
interruption, and such notice shall include the scope and length
of the maintenance and the times during which the maintenance
will take place, and IXC shall conduct such maintenance during
non-peak hours. No such interruption shall excuse IXC from
performance hereunder and shall not constitute a force majeure
event.
(f) Maintenance and Trouble Reporting. IXC's fees for Excel
maintenance support services are as follows:
Maintenance services shall be defined as all work performed by IXC on
equipment owned by Excel. Maintenance Service charges are not billed for
troubles found within that portion of a circuit provided by IXC. The following
billing rates apply for these services:
A. * per hour (4 hour minimum-if dispatch is required) Monday through
Friday during the business hours of 8:00 a.m. - 5:00 p.m. local time, exclusive
of the following holidays: New Year's Day, President's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and the day after Thanksgiving and
Christmas Day.
B. * per hour (4 hour minimum) for overtime work done after business
hours (defined above) and/or on holidays (defined above) and/or all day on
Saturdays and Sundays.
C. As requests for maintenance services are typically made via
telephone, IXC must be advised in writing as to the person(s) who are authorized
to request service. It is Excel's responsibility to keep IXC apprised of any
changes to its list of representative(s).
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 24
D. To request technical assistance and help under the maintenance
services, a call must be made to IXC's Network Control Center at (800) 426-1488.
This number should be used for IXC technical assistance, troubleshooting or
testing of circuits, not for service impairment or outages. The person calling
in must be on the authorized list in order to commit for charges for this
technical assistance. If that person is not on the list, the request cannot be
accommodated.
The Network Control Center personnel will take the call, record the
caller's name and phone number along with facts concerning the assistance and
support needed. The caller will then be given the number of the "Assistance
Ticket." Upon completion of work, this "Assistance Ticket" will be given to
IXC's Accounting Department, and Excel will subsequently be billed based upon
the information on that ticket. A copy will be attached to the invoice.
Except for emergencies, IXC's technicians cannot be dispatched unless
requests are made in accordance with the above call-out procedure. IXC hereby
represents and warrants that it will perform all services under this Section 10
in a good and workman-like manner and in accordance with the applicable
performance standards set forth on Exhibit F.
11. Notices. Each notice, consent, approval, request, claim, demand,
direction or other communication (each, a "notice") relating to this
Agreement shall be in writing and shall be: (i) given in person; (ii)
sent by registered or certified mail (return receipt requested) or
courier; or(iii) transmitted by facsimile machine, with a copy of such
transmission delivered by one of the foregoing methods. Each properly
given notice shall be deemed to have been given as of the earlier of
(i) delivery, (ii) four days after the date of mailing, or (iii) the
date of facsimile transmission (receipt of which is orally confirmed or
which date is indicated by the facsimile machine of any party). Notices
not given in person shall be made to the following persons at the
following addresses and facsimile telephone numbers (which may be
changed only by properly given notice):
If to IXC: IXC Communications, Inc.
1122 Capitol of Texas Hwy. South
Austin, Texas 78746
Attention: Contract Administration
with a copy to: IXC Communications, Inc.
1122 Capitol of Texas Hwy. South
Austin, Texas 78746
Attention: General Counsel
If to Excel: Excel Telecommunications, Inc.
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<PAGE> 25
8750 N. Central Expressway, Suite 2000
Dallas, Texas 75231
Attention: Kenny A. Troutt
with a copy to: J. Christopher Dance, Esq.
Excel Telecommunications, Inc.
8750 N. Central Expressway, Suite 2000
Dallas, Texas 75231
12. Subject to Laws. This Agreement is subject to all applicable
federal, estate and local laws, and regulations, rulings and orders of
governmental agencies, including, but not limited to, the
Telecommunications Act of 1996, the Communications Act of 1934, as
amended, the Rules and Regulations of the Federal Communications
Commission ("FCC") and state public utility or service commissions
("PSC"), tariffs and the obtaining and continuance of any required
certification, permit, license, approval or authorization of the FCC
and PSC or any governmental body.
13. Assignment. Neither party shall assign or transfer its rights or
obligations under this Agreement without the prior written consent of
the other party, which shall not be unreasonably withheld or delayed,
except that each party shall be entitled to assign the Agreement to its
Affiliates and to create a security interest in this Agreement in favor
of its lenders. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. In the event of an assignment hereof
by a party, such party shall remain directly and primarily liable for
the performance or its obligations hereunder and the other party may
enforce the provisions hereof against such party without demand upon or
proceeding in any way against any other person. For purposes of this
Agreement, "assignment" shall include, without limitation, any sales or
other transfers involving in the aggregate over fifty percent (50%) of
the assets (including without limitation, ANIs, customer lists and
relationships) or business of such entity, and, in the case of such an
assignment, the assigning party shall ensure that the recipients of any
such assets or business, assume, jointly and severally, the obligations
of the assigning party hereunder.
14. Arbitration. The parties agree that in the event a dispute shall
rise between the parties as to their respective rights, duties and
obligations under this Agreement, such disputes shall be exclusively
resolved by binding arbitration under the Rules of the American
Arbitration Association with arbitration to be held at Dallas, Texas.
The arbitrator shall be given all rights and may award, in addition to
declaratory relief, damages as provided for herein and shall award
attorney fees and costs to the prevailing party inclusive of activities
in the
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<PAGE> 26
enforcement and appeal of the award. This provision shall not prohibit
either party from seeking permanent or preliminary injunctive, relief in
any court of competent jurisdiction. The award of the arbitrator may be
enforced in any court of competent jurisdiction. Excel may, at its
option, continue to accept what it considers to be below-standard
service and pay the charges hereunder relating thereto during such
pendency of such arbitration, without prejudice thereto.
15. Governing Law. This Agreement shall be interpreted and enforced in
accordance with, and its validity and performance shall be governed by,
the laws of the State of Texas without regard to its principles of
choice of law.
16. Severability. The provisions of this Agreement shall be interpreted,
if possible, so as to be valid, legal, and enforceable. The provisions
of this Agreement are intended to be severable. In the event any
provision contained herein is to be invalid, illegal, or unenforceable
in any jurisdiction: (i) such provision shall, as to such jurisdiction,
be ineffective to the extent so invalid, illegal, or unenforceable
without affecting the validity, legality, or enforceability thereof in
any other jurisdiction or the remaining provisions of this Agreement,
which shall remain in force and effect; and (ii) to the extent legally
permissible, a valid, legal, and enforceable provision which reflects
the original intent and economic interest of the parties shall be
substituted for such invalid, illegal, or unenforceable provision.
17. Cumulative Rights and Remedies. Except as otherwise set forth
herein, the assertion by a party of any right or the obtaining of any
remedy hereunder shall not preclude such party from asserting or
obtaining any other right or remedy, at law or in equity, hereunder, or
under any other agreement or instrument, or otherwise.
18. Waiver. The delay or failure of either party to enforce or insist
upon compliance with any of the terms or conditions of this Agreement or
to exercise any remedy provided herein, the waiver of any term or
condition of this Agreement, or the granting of an extension of time for
performance shall not constitute the permanent waiver of any term,
condition or remedy or under this Agreement, and this Agreement and each
of its provisions shall remain at all times in full force and effect
until modified as provided herein.
19. Facsimile Delivery. This Agreement may be delivered by facsimile
transmission of an executed counterpart signature nature page hereof,
and after attachment of such transmitted signature page, to a copy of
this Agreement, such copy shall have the same effect and evidentiary
value as copies delivered with original signatures. Any party delivering
this Agreement by facsimile transmission shall deliver to the other
party, as soon as practicable after such
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<PAGE> 27
delivery, an original executed counterpart signature page of this
Agreement.
20. Amendment. Except as otherwise provided in this Agreement, any
amendment to this Agreement must be in writing and signed by both
parties.
21. Termination of Prior Agreements. Each of the Original Agreement, the
Telco Service Agreement and the Preferred Vendor Status Agreement is
hereby terminated and, from and after the date hereof, none of the
provisions thereof (including any provisions under the Original
Agreement or the Telco Service Agreement relating to minimum commitments
or any provisions under the Preferred Vendor Status Agreement relating
to rights of first refusal and IXC's status as a preferred vendor) shall
have any further force or effect. Without limiting the foregoing, IXC
hereby acknowledges that, as of the date hereof, Excel was not in breach
of or in default under the Original Agreement or the Preferred Vendor
Status Agreement and Telco was not in breach of or in default under the
Telco Service Agreement (or, if there was any such breach or default,
IXC hereby waives it) and IXC was not entitled to any amounts or
payments thereunder. In addition, Excel hereby acknowledges that, as of
the date hereof, IXC was not in breach of or in default under the
Original Agreement, the Preferred Vendor Status Agreement or the Telco
Service Agreement (or, if there was any such breach or default, Excel
hereby waives it) and Excel was not entitled to any amounts or payments
thereunder; other than the payment of * Dollars, which payment IXC shall
pay to Excel within ten (10) days of the Effective Date and which
payment shall settle prior disputes between the parties.
22. Final Agreement. This Agreement and the other agreements entered
into by the parties as of the date, hereof sets forth the entire
understanding of the parties with respect to the subject matter hereof
and supersede any and all prior agreements, arrangements or
understandings related thereto, including without limitation the
Original Agreement, the Telco Service Agreement and the Preferred Vendor
Status Agreement, and no representation, promise, inducement or
statement of intention has been made by or on behalf of IXC which is not
embodied in such agreement
23. Effect of Termination. Upon the expiration or termination of this
Agreement and except as specifically set forth herein, this Agreement
shall no longer have any force or effect and neither party shall have
any further obligation hereunder. No such expiration or termination
shall affect, however, any then-existing claim, right, remedy,
obligation or defense of any party with respect to (i) any payment to be
made hereunder or (ii) any breach of any obligation hereunder.
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* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 28
24. Confidential Information.
(a) Treatment of Information. Each party acknowledges that all
Confidential Information (as such term is defined below) of the
other party is a trade secret of the other party. All
Confidential Information of any party remains its exclusive
property. Each party: (i) shall not reproduce or use any
Confidential Information of the other party or its affiliates,
however acquired and whether acquired before, during or after
the term of this Agreement, except to the extent reasonably
required for the performance hereof; and (ii) except as set
forth herein, shall not disclose, or allow the disclosure of,
any such Confidential Information to any person (including its
own personnel and affiliates) without the written consent of
such other party, except (i) to employees and directors of such
party as necessary for the performance of its obligations
hereunder; (ii) to third parties rendering professional
accounting, financial, consulting, or legal services to such
party; (iii) to third parties providing financing, insurance or
brokerage services to such party; or (iv) to potential
purchasers of such party.
"Confidential Information" shall mean, with respect to a party, all of
the following, whether oral or written: the terms of this Agreement, all
business and financial reports, statements, and other information, cost
data, customer names and numbers, customer calling patterns and calling
volumes, customer lists, data, designs, design specifications,
developments, documentation, "know-how" experience, information
concerning customers, contracts, operations, sales, personnel, products
or suppliers, knowledge, marketing information, methods, models, plans,
policies, practices, price data, procedures, processes, products,
programs, research, software, specifications, strategies, supplier
lists, technical information, test data, trade secrets, owned by,
generated by, or disclosed by, such party or of any affiliate of such
party and any other information normally understood to be or designated
as confidential or proprietary by such party, including any of Excel's
electronically transmitted information to or through IXC's network
whether or not marked as "CONFIDENTIAL" or otherwise so identified,
except to the extent publicly known other than by breach hereof, in the
public domain, obtained from any person not in breach of any obligation
to such party, or independently developed by the other party. All
analyses, compilations, studies or other documents prepared by a party
using Confidential Information of the other party shall also be deemed
to be Confidential Information of such other party. Each party shall
use, in maintaining the confidentiality of the Confidential Information
of the other party, at least the same degree of care it uses, or, if
greater, that a prudent person would use, in maintaining the
confidentiality of its own information of a similar nature.
Notwithstanding anything to the contrary contained herein, IXC shall not
disclose Confidential Information to any of its
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<PAGE> 29
affiliates or departments that market long distance, local
telecommunications services, internet, paging, cellular, or other
telecommunications products to the end user.
(b) Required Disclosure. Notwithstanding the foregoing, however,
any party may make Confidential Information of the other party
available (i) on a confidential basis to its lenders and (ii) as
required by law, judicial order or federal or state securities
disclosure rules. To the extent any party is required to
disclose Confidential Information by any court or governmental
agency, such party shall, if permitted by applicable law,
promptly inform the other party of such requirement with
sufficient time to allow the other party to seek a protective
order restraining such disclosure, and if reasonably requested
to do so, shall cooperate with such other party (at the expense
of such other party) to obtain such protective order.
(c) Obligations Upon Termination . Upon the termination of this
Agreement and at the request of any party, the other party to
whom such Confidential Information has been disclosed shall
promptly return all materials relating to, based on, or
incorporating the Confidential Information of such party or,
with such party's written consent, promptly destroy such
materials; provided, however, that one copy may be retained by
the legal counsel of such other party. The obligations of each
party hereunder relating to Confidential Information shall
survive the termination of this Agreement for a period of five
years.
(d) Equitable Remedies. In the event any party falls to perform
any obligation hereunder relating to Confidential Information,
the other party will suffer irreparable harm give to reasons and
will not have an adequate remedy at law for monetary damages.
Accordingly, in addition to any other remedy available at law or
in equity, such other party shall be entitled to injunctions (or
other appropriate equitable remedies) to prevent a breach of
this Agreement and to obtain specific enforcement of the
performance of such obligation, without the posting of a bond or
other security.
Neither party shall in any manner advertise or publish or release for
publication any statement mentioning the other party or the fact that the other
party has furnished or contracted to furnish goods and services hereunder or
quote the option of any employees of such other party, unless written consent of
such other party shall first be obtained or unless required by law.
-29-
<PAGE> 30
Notwithstanding the foregoing, the existence and terms of this Agreement
may be disclosed, but only on a confidential basis, by either party to
investors or potential investors in securities of either party and/or in
any filing with the Securities and Exchange Commission and/or filed as
an exhibit thereto, so long as the other party is given fourteen (14)
days' notice thereof and an opportunity to comment prior to ruling.
25. Insurance. Throughout the term of this Agreement and any extension
thereof, each party shall maintain, and, upon written request, shall
provide to the other proof of adequate liability insurance:
(a) Worker's compensation insurance up to the amount of the
statutory limit in the state or states where work is to be
performed;
(b) Employer's liability insurance with a limit of not less than
$200,000 per claim with an all-states endorsement;
(c) Comprehensive general liability insurance with a limit of not
less than $1,000,000 per occurrence for bodily injury liability
and property damage liability, including coverage extensions, for
blanket contractual liability, personal injury liability and
products and completed operations liability.
(d) Comprehensive Auto Liability insurance with a limit of not
less than $1,000,000 per accident for Bodily Injury Liability and
Property Damage Liability arising out of the ownership,
maintenance, or use of any vehicle in the performance of this
Agreement.
26. Force Majeure. Neither party shall be liable for any failure of
performance hereunder (except for obligations to make payments) due to
causes beyond its reasonable control, including, but not limited to:
acts of God, fire, explosion, vandalism, cable cut, storm or other
similar catastrophes; any law, order, regulation, direction, action or
request of the United States government, or of any other government,
including state and local governments having jurisdiction over either of
the parties, or of any department, agency, commission, court, bureau,
corporation or other instrumentality of any one or more, of said
governments, or of any civil or military authority; national
emergencies; insurrections; riots; wars; or strikes, lock outs, work
stoppages or other labor difficulties; provided that (a) the party that
is unable to perform shall immediately begin using all commercially
reasonable efforts to recommence performance; (b) excused performance
under this section shall not exceed a reasonable time period; and (c)
the inability to perform by reason of a Year 2000 Failure shall not
excuse performance hereunder.
-30-
<PAGE> 31
27. Taxes. The amounts payable by Excel under this Agreement do not
include any federal, state or local sales, use or utility taxes. Within
10 business days after the first provision of Service hereunder, Excel
must furnish to IXC, and keep current during the term of this Agreement,
valid and appropriate tax exemption certificates for all applicable
jurisdictions (federal, state and local) in which it performs customer
billing. Excel is responsible for properly taxing its customers and for
the proper and timely reporting and payment of applicable taxes to the
taxing authorities. If Excel fails to provide and maintain the required
certificates, IXC may charge Excel and Excel shall pay such applicable
taxes.
28. No Personal Liability. Each action or claim against any party
arising under or relating to this Agreement shall be made only against
such party as a corporation (or limited liability company), and any
liability relating thereto shall be enforceable only against the assets
of such party. No party shall seek to pierce the corporate or limited
liability company veil or otherwise seek to impose any liability
relating to, or arising from, this Agreement against any shareholder,
employee, officer or director or manager of the other party. Each of
such persons is an intended beneficiary of the mutual promises set forth
in this section and shall be entitled to enforce the obligations of this
section.
29. Further Documents. Each party shall execute and deliver all other
documents necessary to fully perform its obligations hereunder.
30. Battle of the Forms. Unless otherwise expressly agreed to in
writing, in the event of a conflict between this Agreement and any
purchase order or other document forming part of any order placed
hereunder, the terms and conditions hereof shall govern.
31. Counterparts. This Agreement may be executed in more than one
counterpart with the same effect as if all executing parties had
executed the same document. Each such counterpart shall be deemed an
original and such counterparts, taken together, shall constitute one and
the same document.
32. Authority. Each individual executing below on behalf of a party
hereby personally represents and warrants to the other party that such
individual is duly authorized to so execute, and to deliver, this
Agreement.
33. General Construction. The text of this Agreement shall not be
construed for or against any particular party. In particular, because
each party has reviewed and had the opportunity to bargain to revise
this Agreement, no inference in favor of, or against, any party shall be
drawn from the fact that such party has drafted any portion hereof.
Titles of sections contained herein are included for convenience of
reference only and are not intended to affect the meaning of the
-31-
<PAGE> 32
text thereof.
34. Business Relationship. This Agreement shall not create any agency,
employment, joint venture, partnership, representation, or fiduciary
relationship between the parties. Neither party shall have the authority
to, nor shall any party attempt to, create any obligation on behalf of
the other party.
35. Fees and Expenses. Neither party shall be responsible for the
payment of claims for (i) any fees or commissions of any broker, finder,
consultant, intermediary or commission agent relating to this Agreement
or the subject matter hereof incurred by the other party or (ii) any
legal or other fees incurred by the other party incidental to the
preparation, execution and delivery of this Agreement.
36. Certain Additional Provisions.
(a) CDR/Electronic Exchange. IXC will offer electronic
transmission of CDRs as set forth in Exhibit C.
(b) Operator Services. "Operator Services" are calls made via 00,
0- or 0+ dialing sequences that require the assistance of an
operator to complete, such as but not limited to, collect calls
and bill-to-third-number calls. Operator Services specifically
exclude calling card operator assistance calls which are deemed
to be part of the calling card Services. "500/700/900 network
calls" are those calls made to various information providers
utilizing telephone numbers with 500, 700 or 900 dialing
sequences. Operator Services and 500/700/900 network calls are
not included in the Services, but may be made available to
subscribers via the IXC Network. If Operator Services or
500/700/900 network calls utilized by subscribers, any revenues
collected for Operator Services and 500/700/900 calls are
retained solely by IXC. IXC may revise its rates for Operator
Services and 500/700/900 calls at any time.
(c) RespOrg and Customer 800 Numbers. For purposes of this
Agreement "RespOrg" shall mean the responsible organization (as
defined in the telecommunications industry's general rules with
respect to 800 number portability) for managing and administering
account records in the 800 Service Management System Database.
Excel shall act as its own RespOrg with respect to Services
hereunder. All 800 telephone numbers and their successors ordered
onto the IXC Network by Excel for which Excel is the RespOrg art
referred to as Excel 800 Numbers.
(d) Order Processing Procedures. IXC will utilize the order
processing
-32-
<PAGE> 33
procedures set forth in Exhibit F.
(e) SS-7 Network Availability. IXC's Network will be configured
to complete Excel's calls using a common channel Signaling
System 7 network. Utilizing this network shall provide Calling
Party Number (CPN) caller ID/ANI information, where and if
available.
(f) Service Blockage. IXC's obligations concerning blockage of
Service are set forth in Exhibit F.
(g) Certification. IXC hereby represents and warrants that IXC
is licensed and certified by the proper regulatory agencies to
provide interstate, intrastate and International long distance
services, as contemplated herein, in every jurisdiction where
required.
(h) Billing Increments. IXC's billing increments are set forth
in Exhibit A.
37. Excel Certification. Excel hereby represents and warrants that it is
certified to do business in all jurisdictions in which it conducts
business and is in good standing in all such jurisdictions. Excel
further represents and warrants that it is certified by the proper
regulatory agencies to provide interstate, intrastate and international
long distance services to end-users in those jurisdictions where such
services are to be provided by Excel. Excel shall keep current during
the term of this Agreement copies of its Certificates of Public
Convenience and Necessity or similar documents certifying Excel's
interstate, intrastate, or international operating authority in any
local, state, or federal jurisdiction (collectively, "Service Compliance
Certificates") and furnish copies thereof to IXC within thirty (30) days
of written request by IXC; provided that IXC shall not be permitted to
make such request more than once every 12-month period (provided
further, Excel will use reasonable efforts to furnish such copies within
fifteen (15) days; provided however that the failure to comply with this
15 day period shall in no way give rise to a breach of this Agreement
nor shall it permit IXC to refuse or withhold Service in a particular
jurisdiction). In the event Excel fails to provide such Service
Compliance Certificates within such 30-day period, IXC shall provide
Excel with written notice detailing such failure. If Excel has not
provided such Service Compliance Certificates within thirty (30) days
after receipt of such notice, IXC shall then have the right to refuse or
withhold Service in any jurisdiction in which Excel's Service Compliance
Certificate has not been furnished to IXC. Excel shall defend and
indemnify IXC from any direct and actual losses, expenses, demands and
claims in connection with Excel's failure to maintain such Service
Compliance Certificates. Such indemnification shall include costs and
expenses (including reasonable attorney's fees) incurred by IXC
-33-
<PAGE> 34
in settling, defending or appealing any claims or actions brought
against it relating to Excel's failure to maintain such Service
Compliance Certificates.
-34-
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year
first above written.
IXC CARRIER, INC. EXCEL
TELECOMMUNICATIONS, INC.
By: /s/ Ben L. Scott By: /s/ Kenny A. Troutt
--------------------------------- --------------------------
Name: Ben L. Scott Kenny A. Troutt
Title: President and CEO Chief Executive Officer
IXC LONG DISTANCE, INC.
By: /s/ Ben L. Scott
---------------------------------
Name: Ben L. Scott
Title: President and CEO
IXC BROADBAND SERVICES, INC.
By: /s/ Ben L. Scott
---------------------------------
Name: Ben L. Scott
Title: President and CEO
-35-
<PAGE> 36
<TABLE>
<CAPTION>
LIST OF EXHIBITS
----------------
<S> <C>
Exhibit A Switched Services (Xclusive); Usage
Charges
Exhibit B Switched Services (Xnet); Usage Charges
Exhibit C Private Line Services; Usage Charges;
On-Net Cities
Exhibit D Private Line Purchase Order
Exhibit E LATA List
Exhibit F Performance Standards
Exhibit G Software License Agreement
Exhibit H HUB List
Exhibit I Xnet Traffic Use
Exhibit J Network Demand Certification
</TABLE>
-36-
<PAGE> 37
EXHIBIT A & B - XCLUSIVE & XNET SWITCHED SERVICE PRICING
CUSTOMER: Excel Telecommunications, Inc.
XCLUSIVE INTERSTATE PRICING (1+SWITCHED, 8XX SWITCHED & XPIN)
<TABLE>
<CAPTION>
MONTHLY VOLUME SWITCHED DEDICATED
-------------- -------- ---------
<S> <C> <C>
Take or Pay Pricing * *
</TABLE>
UNDER-UTILIZATION CHARGE. An under-utlization fee per DS-1 for both Xclusive &
Xnet Services will be applied to the monthly invoice based on the following
schedule:
<TABLE>
<CAPTION>
Minutes Per Trunk* Under-utilization Fee**
- ------------------ -----------------------
<S> <C>
0-19,999
20,000-39,999
40,000-59,999 *
60,000-79,999
80,000-99,999
100,000+
</TABLE>
*The average is calculated over all trunks. Usage includes both Xclusive
outbound and inbound Service.
**The penalty is applied on all trunks based on average minutes of uage per
trunk.
A trunk is an equivalent T-1 based on 24 DS-0's.
XCLUSIVE INTERSTATE EXTENDED AREAS PRICING (DAY RATES 8 AM TO 5 PM
MONDAY-FRIDAY)*
<TABLE>
<CAPTION>
1+ CALLS TO 1+ CALLS FROM 8XX CALLS TO 8XX CALLS FROM
DEDICATED SWITCHED SWITCHED SWITCHED DEDICATED SWITCHED
---------------------- ------------- ------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Hawaii
Alaska
USVI/PR
Guam *
Northern
Mariana Is.
</TABLE>
NORTHERN MARIANA IS. INCLUDE ROTA, SAIPAIN & TINIAN.
*SUBJECT TO AVAILABILITY
XCLUSIVE INTERSTATE EXTENDED AREAS PRICING (NON-DAY RATES)*
<TABLE>
<CAPTION>
1+ CALLS TO 1+ CALLS FROM 8XX CALLS TO 8XX CALLS FROM
DEDICATED SWITCHED SWITCHED SWITCHED DEDICATED SWITCHED
---------------------- ------------- ------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Hawaii
Alaska
USVI/PR
Guam *
Northern
Mariana Is.
</TABLE>
NORTHERN MARIANA IS. INCLUDE ROTA, SAIPAIN & TINIAN.
*SUBJECT TO AVAILABILITY
Page 1
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 38
XCLUSIVE INTRASTATE PRICING (1+ SWITCHED, 8XX SWITCHED & XPIN) OUTBOUND &
INBOUND
<TABLE>
<CAPTION>
STATE SWITCHED DEDICATED CARD CALLS
- ----- -------- --------- ----------
<S> <C> <C> <C>
Alabama
Arizona
Arkansas
Ca (Intrastate)
Ca (Intralata)
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska *
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
</TABLE>
DIRECTORY ASSISTANCE CALLS: *
Page 2
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 39
XCLUSIVE & XNET INTERNATIONAL PRICING
<TABLE>
<CAPTION>
Country Code Switched Dedicated
- ------- ---- -------- ---------
<S> <C> <C> <C>
Afghanistan 93
Albania 355
Algeria 213
American Samoa 684
Andorra 376
Angola 244
Anguilla 809
Antigua/Barbuda 809
Argentina 54
Armenia 374
Aruba 297
Ascension Island 247
Australia 61
Australian External Territories 672
Austria 43
Azerbaijan 994
Bahamas 809
Bahrain 973
Bangladesh 880
Barbados 809
Belarus 375
Belgium 32
Belize 501
Benin 229 *
Bermuda 809
Bhutan 975
Bolivia 591
Bosnia and Herzegovina 387
Botswana 267
Brazil 55
British Virgin Is. 809
Brunei 673
Bulgaria 359
Burkina Faso 226
Burundi 257
Cambodia 855
Cameroon 237
Cape Verde 238
Cayman Is 809
Central Africa 236
Chad 235
Chile 56
China 86
Colombia 57
Comoros/Mayotte Is. 269
Congo 242
Cook Is. 682
Costa Rica 506
Cote d'Ivoire 225
Croatia 385
</TABLE>
Page 3
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 40
<TABLE>
<S> <C> <C> <C>
Cuba 53
Cyprus 357
Czech 42
Denmark 45
Diego Garcia 246
Djibouti 253
Dominica 809
Dominican Rep. 809
Ecuador 593
Egypt 20
El Salvador 503
Equatorial Guinea 240
Eritrea 291
Estonia 372
Ethiopia 251
Faeroe Is. 298
Falklands Is. 500
Fiji 679
Finland 358
France, Monaco 33
French Antilles 596
French Guiana 594
French Polynesia 689
Gabonese Republic 241
Gambia 220 *
Georgia 995
Germany 49
Ghana 233
Gibralter 350
Greece 30
Greenland 299
Grenada 809
Guadeloupe 590
Guantanamo 539
Guatemala 502
Guinea 224
Guinea-Bissau 245
Guyana 592
Haiti 509
Honduras 504
Hongkong 852
Hungary 36
Iceland 354
India 91
Indonesia 62
Inmarsat - East Atlantic 871
Inmarsat - Indian Ocean 872
Inmarsat - Pacific Ocean 873
Inmarsat - West Atlantic 874
Iran 98
Iraq 964
Ireland 353
Israel 972
Italy, Vatican City 39
Jamaica 809
</TABLE>
Page 4
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 41
<TABLE>
<CAPTION>
Country Code Switched Dedicated
- ------- ---- -------- ---------
<S> <C> <C> <C>
Japan 81
Jordan 962
Kazakhstan 992
Kenya 254
Kiribati 686
Korea, South 82
Kuwait 965
Kyrgyzstan 996
Laos 856
Latvia 371
Lebanon 961
Lesotho 266
Liberia 231
Libya 218
Liechtenstein 41
Lithuania 370 *
Luxembourg 352
Macau 853
Macedonia 389
Madagascar 261
Malawi 265
Malaysia 60
Maldives 960
Mali 223
Malta 356
Marshall Is. 692
Mauritania 222
Mauritius 230
Micronesia 691
Moldova 373
Mongolia 976
Montserrat 809
Morocco 212
Mozambique 258
Myanmar/Burma 95
Namibia 264
Nauru 674
Nepal 977
Netherlands 31
Netherlands Antilles 599
Nevis Island
New Caledonia 687
New Zealand 64
Nicaragua 505
Niger 227
Nigeria 234
Niue Is 683
Norway 47
Oman 968
Pakistan 92
Palau 680
Panama 507
Papua New Guinea 675
Paraguay 595
Peru 51
</TABLE>
Page 5
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 42
<TABLE>
<CAPTION>
Country Code Switched Dedicated
- ------- ---- -------- ---------
<S> <C> <C> <C>
Philippines 63
Poland 48
Portugal 351
Qatar 974
Reunion Is. 262
Romania 40
Russia 7
Rwanda 250
San Marino 378
Sao Tome 239
Saudi Arabia 966
Senegal 221
Seychelles Is. 248
Sierra Leone 232
Singapore 65
Slovenia 386 *
Solomon Is. 677
Somalia 252
South Africa 27
Spain 34
Sri Lanka 94
St. Helena 290
St. Kitts and Nevis 809
St. Lucia 809
St. Pierre and Miquelon 508
St. Vincent and Grenadines 809
Sudan 249
Suriname 597
Swaziland 268
Sweden 46
Switzerland 41
Syrian Arab Republic 963
Taiwan 886
Tanzania 255
Thailand 66
Togo 228
Tonga Is. 676
Trinidad/Tobago 809
Tunisia 216
Turkey 90
Turkmenistan 993
Turks/Caicos 809
Tuvalu 688
Uganda 256
Ukraine 380
United Arab Emirates 971
United Kingdom 44
Uruguay 598
Uzbekistan 998
Vanuatu 678
Venezuela 58
Viet Nam 84
Wallis & Futuna 681
Western Samoa 685
Yemen Arab Republic 967
</TABLE>
Page 6
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 43
<TABLE>
<CAPTION>
Country Code Switched Dedicated
- ------- ---- -------- ---------
<S> <C> <C> <C>
Yugoslavia & Serbia 381
Zaire 243 *
Zambia 260
Zimbabwe 263
</TABLE>
1. DEDICATED ACCESS RATES ARE FOR XNET INTERNATIONAL AND XCLUSIVE DEDICATED
ACCESS SERVICES.
2. AUSTRALIAN EXTERNAL TERRITORIES INCLUDE: NORFOLK IS., CHRISTMAS IS. AND
COCOS IS.
3. ALL INTERNATIONAL CALLS EXCLUDING CALLS TO MEXICO ARE BILLED IN 30
SECOND INITIAL, AND 6 SECOND ADDITIONAL INCREMENTS.
4. ALL CALLS TO MEXICO ARE BILLED IN FULL MINUTE INCREMENTS.
XCLUSIVE & XNET INTERNATIONAL - MEXICO RATES (CALLS TO MEXICO)
<TABLE>
<CAPTION>
SWITCHED ACCESS DEDICATED ACCESS
PER MINUTE PER MINUTE
BAND RATES RATES
---- ---------------- ----------------
<S> <C> <C>
1
2
3
4
5 *
6
7
8
</TABLE>
CALLS TO MEXICO ARE BILLED IN WHOLE MINUTE INCREMENTS.
XCLUSIVE & XNET INTERNATIONAL - CANADA RATES (CALLS TO CANADA)
<TABLE>
<CAPTION>
SWITCHED ACCESS DEDICATED ACCESS
--------------- ----------------
INITIAL 30 ADDT'L INITIAL 30 ADDT'L
SECONDS 6 SECONDS SECONDS 6 SECONDS
--------------------- -----------------------
<S> <C> <C> <C> <C>
* *
</TABLE>
XCLUSIVE & XNET INTERNATIONAL - 8XX CALLS FROM CANADA TO US 48 STATES*
<TABLE>
<CAPTION>
PEAK OFF-PEAK
---- --------
INITIAL 30 ADDT'L INITIAL 30 ADDT'L
SECONDS 6 SECONDS SECONDS 6 SECONDS
---------------------------- -------------------------
<S> <C> <C> <C> <C>
To Switched Access * *
To Dedicated Access * *
</TABLE>
CANADIAN PEAK PERIOD IS 8 AM TO 5 PM MONDAY THROUGH FRIDAY.
OFF-PEAK IS ALL OTHER TIMES.
*XPIN CALLS FROM CANADA ARE RATED AT THE SAMES PRICES AS SWITCHED ACCESS INBOUND
8XX CALLS FROM CANADA.
XCLUSIVE & XNET CARD SERVICES: CALLING & DEBIT CARDS
<TABLE>
<CAPTION>
INTERSTATE CALLS DAY NON-DAY
- ---------------- --- -------
<S> <C> <C>
Base Rates
with 3 Year Term *
</TABLE>
*for intrastate card rates, see intrastate rate schedules
Page 7
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 44
<TABLE>
<CAPTION>
DAY NON-DAY
--- -------
<S> <C> <C>
Calls Originating in Canada *
</TABLE>
DAY = 8:00 A.M. TO 5:00 P.M. MONDAY THROUGH FRIDAY
<TABLE>
<CAPTION>
Surcharges - per call:
<S> <C>
Domestic Termination
Canada Termination or Origination
Mexico Termination *
Other International Termination
</TABLE>
International Usage Charges, as contracted at the switched access international
rates, apply to international calls in addition to the surcharges shown above.
<TABLE>
<CAPTION>
ON-DEMAND FEATURE CHARGES (1):
<S> <C>
Audio Text * per Minute
Message Store & Forward * per Message
Operator Assistance
Station to Station * per Message
Person to Person Not available
</TABLE>
<TABLE>
<CAPTION>
Conference Calling (Charges applied to each participant)
<S> <C>
Set-up Charge *
Day Rate/Minute *
Non-Day Rate/Minute *
Int'l Rate/Minute Per Int'l Switched Rate
</TABLE>
There are no charges for Speed Dialing or Variable Credit Limits.
(1) On Demand features apply to calling card calls, not debit card calls.
BILLING INCREMENTS:
<TABLE>
<S> <C>
Domestic* 6 seconds, then 6 seconds
Domestic* to Canada 30 seconds, then 6 seconds
Domestic* to Mexico 30 seconds, then 6 seconds
Domestic* to Overseas 30 seconds, then 6 seconds
Extended Areas (Hawaii, Alaska,
Puerto Rico, US Virgin Islands,
Guam, Northern Mariana Islands) 6 seconds, then 6 seconds
</TABLE>
*Domestic includes the 50 states (US).
XCLUSIVE & XNET TOLL FREE SERVICE FROM MEXICO TO US 48 STATES*
<TABLE>
<CAPTION>
MONTHLY VOLUME ORIGINATING SWITCHED ACCESS DEDICATED ACCESS
OF TOLL FREE SVC. BAND DAY NIGHT DAY NIGHT
- ----------------- ----------- --- ----- --- -----
<S> <C> <C> <C> <C> <C>
$750,000+ 1 * *
2
</TABLE>
*TOLL FREE SERVICE FROM MEXICO IS SUBJECT TO AVAILABILITY.
IXC RESERVES THE RIGHT TO ADJUST PRICING WITH FIFTEEN (15) DAYS WRITTEN NOTICE.
DAY = 8 AM TO 5 PM MONDAY THROUGH FRIDAY FOR TOLL FREE SERVICE FROM MEXICO
BAND 1 IS THE SAME AS BANDS 1,2 AND 3 ON XNET TERMINATING PRODUCTS
BAND 2 IS THE SAME AS BANDS 4, 5 AND 6 ON XNET TERMINATING PRODUCTS
Page 8
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 45
XNET LEX INTERSTATE & INTRASTATE TERMINATION RATES
<TABLE>
<CAPTION>
INTERSTATE USAGE INTRASTATE USAGE
OPERATING COMPANY OCN NO. RATE/MINUTE RATE/MINUTE
- ----------------- ------- ----------- -----------
<S> <C> <C> <C>
Ameritech, OH 9321
Ameritech, MI 9323
Ameritech, IN 9325
Ameritech, WI 9327
Ameritech, IL 9329
Bell Atlantic, NJ 9206
Bell Atlantic, PA 9208
Bell Atlantic, DE 9210
Bell Atlantic, DC 9211
Bell Atlantic, MD 9212
Bell Atlantic, VA 9213
Bell Atlantic, WV 9214
Bell South, FL 9417
Bell South, GA 9417
Bell South, NC 9417
Bell South, SC 9417 * *
South Central Bell, AL 9419
South Central Bell, KY 9419
South Central Bell, LA 9419
South Central Bell, MS 9419
South Central Bell, TN 9419
NYNEX, CT 9102
NYNEX, MA 9102
NYNEX, ME 9102
NYNEX, NH 9102
NYNEX, RI 9102
NYNEX, VT 9102
NYNEX, NY 9104
NYNEX, NY Metro 9104
PacTel, CA 9740
PacTel, NV 9742
Southwestern Bell, AR 9533
Southwestern Bell, KS 9533
Southwestern Bell, MO 9533
Southwestern Bell, OK 9533
Southwestern Bell, TX 9533
US West, IA 9631
US West, MN 9631
US West, ND 9631
US West, NE 9631
</TABLE>
Page 9
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 46
<TABLE>
<CAPTION>
INTERSTATE INTRASTATE
OPERATING COMPANY OCN NO. RATE/MINUTE RATE/MINUTE
- ----------------- ------- ----------- -----------
<S> <C> <C> <C>
US West, SD 9631
US West, AZ 9636
US West, CO 9636
US West, ID 9636
US West, MT 9636
US West, NM 9636
US West, UT 9636
US West, WY 9636
US West, OR 9638
US West, WA 9638
SNET 9147
Cincinnati Bell 9348
GTE, AK 3009
GTE, AL 4331
GTESW, AR 4341 * *
GTE, CA 2319
GTE, CA
GTE, FL 0328
GTE, HI 3100
GTEN, IA 4311
GTENW, ID 4321
GTE, IL 1015
GTE, IN 0779
GTE, IN 0772
GTE, KY 0407
GTE, MI 0695
GTEN, MN 4312
GTE, MO 1922
GTEN, MO 4313
GTE, NC 0509
GTES, NC 4334
GTEN, NE 4314
GTESW, NM 4342
GTE, OH 0615
GTESW, OK 4343
GTENW, OR 4323
GTE, PA 0169
GTES, SC 4335
GTE, TX 2154
GTESW, TX 4344
GTE, VA 0233
GTES, VA 4337
GTENW, WA 4324
GTE, WI 0886
United, FL 0341
United, IL 9329
United, IN 0832
United, KS 1842
United, MN 1456
United, MO 1957
</TABLE>
Page 10
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 47
<TABLE>
<CAPTION>
INTERSTATE INTRASTATE
OPERATING COMPANY OCN NO. RATE/MINUTE RATE/MINUTE
- ----------------- ------- ----------- -----------
<S> <C> <C> <C>
United, NC 0470
United, NE 1595
United, NJ 0138
United, NV 1842
United, OH 0661
United, OR 2400 * *
United, PA 0209
United, SC 0506
United, TN 0581
United, TX 2084
United, VA 0567
United, WA 2400
Other Independents
NECA
</TABLE>
XNET LEX INTERSTATE PRICING
<TABLE>
<CAPTION>
MONTHLY VOLUME 8XX ORIGINATIONS
-------------- ----------------
<S> <C>
Term: 3 Years
$500,001+
Top LATA's *
Standard *
NECA *
</TABLE>
Page 11
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 48
ANCILLARY SERVICE CHARGES
<TABLE>
<CAPTION>
SERVICE EXPLANATION APPLIED CHARGE
- ------- ----------- ------- ------
IN THE EVENT OF A DISCREPANCY BETWEEN ANCILLARY SERVICE CHARGES LISTED BELOW AND
THOSE OF THE EXISTING EXCEL/IXC AGREEMENT, THOSE ANCILLARY SERVICE CHARGES
OUTLINED IN THE EXISTING EXCEL AGREEMENT SHALL BE APPLICABLE.
<S> <C> <C> <C>
ANI Administration Per ANI loaded into our switches. Required when an ANI has Monthly */ANI
(1) international blocking, account codes, or other switched-based
features.
IC Pay IC Pay is a 1+ switched access option allowing the Reseller to Monthly * per IC Pay'
designate that a WTN PIC order not result in a PIC charge from PIC
the LEC to the end-user.
Account Codes Install fee per BTN/ANI verified account code table. Non-recurring */table
Monthly fee per BTN/ANI vertified account code table. Monthly */table
8XX Service Administrative Charge for each 8XX number Monthly * per 8XX#
8XX number reservation - one time charge per number reserved Non-recurring */8XX#
Monthly fee for each 8XX number listed at the (800)555-1212 Monthly */listing
Installation charge for signaling and trunking required for ANI Non-recurring */trunk
delivery on 8XX calls.
Installation charge for direct termination overflow. Non-recurring */DTO trunk
Charged for each change to direct termination overflow routing. Per change */DTO trunk
Installation charge for dialed number identification service (DNIS) Non-recurring */trunk
Charged for each change to DNIS Per change */trunk
XPIN Service Install fee per Xpin 8XX number. Non-recurring * per 8XX#
Monthly fee per Xpin 8XX number. Monthly * per 8XX#
CDR Delivery (2) Monthly charge for CDR via On-Line by dial-up access. Monthly *
Monthly charge for CDR via On-Line by direct line access. Monthly *
Monthly charge for CDR via Tape or Diskette. Monthly *
CDR Daily (for Xnet) Monthly * per CDR
Transport for Installation charges for transport service - includes
Interconnection all telco charges Non-recurring Pass-through
Monthly charges for transport service - includes all telco charges Monthly Pass-through
Monthly Minimum Usage per DS-1 Monthly See 6.C./MSA
Local Loops Installation charges for dedicated trunk, includes all telco charges Non-recurring Pass-through
Monthly charges for dedicated trunk, includes all telco charges Monthly Pass-through
Installation charges for Echo Cancellers (when required) Non-recurring *
Monthly charges for Echo Cancellers (when required) Monthly *
Order processing fee - to accompany each order for local loop Non-recurring *
or special access order.
Reseller ID Setup (3) Set-up charge per Reseller I.D. Non-recurring *
Maintenance charge per Reseller I.D. Monthly *
Changes to Reseller I.D. Profile. Per change *
700 Branding (4) Set-up charge per Custom 700 Branding Message. Non-recurring * per network
Calling Card Set-up charge for the Calling Card Custom Printing Option Non-recurring * per set-up
Print Option Printing charge (includes shipping) Per Card Printed *
Debit Card Service Retail Rate Table set-up - no charge for the 1st 3 tables Per table, after 1st 3 *
Language set-up fee, applies to up to 2 addt'l languages Per Additional
The 1st is free. Language *
Custom Recordings for scripts. Per Incident Pass-through
</TABLE>
Page 12
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
Mexico Toll Free Installation Per Switched # *
Service Installation Per Dedicated # *
Monthly Recurring Per Switched # *
Monthly Recurring Per Dedicated # *
Minimum Monthly Usage Per Switched # *
Minimum Monthly Usage Per Dedicated # *
Directory Assistance Per call *
</TABLE>
(1) ANI Administration Charges are waived for Xclusive Services.
(2) CDR delivery charges are waived for Xclusive Services.
(3) Reseller ID set-up charges are waived for the 1st 3 reseller profiles.
Check w/your Account Manager or Account Executive for details. An
example of a change to the Reseller I.D. profile is a change of address.
(4) First 700 Branding set-up is at no charge. These charges apply to custom
branding after the 1st 700 number.
Notes:
A. All monthly fees are pro-rated. All others are not.
B. No charges are eligible for volume or term discounts.
C. Ancillary charges are applied at the time of initial account set-up.
Charges for changes are applied when changes occur.
Page 13
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 50
EXHIBIT C - PRIVATE LINE PRICING
<TABLE>
<CAPTION>
SERVICE TYPE RATE/DS-0 V&H MILE
<S> <C> <C>
ON-NET SERVICE:
DS-1 *
DS-3 *
Minimum Circuit Charges: DS-1 *
DS-3 *
OFF-NET SERVICE:
Las Vegas DS-3 Service *
</TABLE>
Service is for a twelve (12) month minimum term.
NOTES:
1. ALL PRIVATE LINE SERVICE TO CITIES NOT LISTED ON EXHIBIT C WILL BE
PRICED AT IXC'S ACTUAL COST PLUS *.
2. IXC, UPON REQUEST FROM EXCEL, SHALL PROVIDE AN OFFICER'S CERTIFICATE NO
MORE THAN ONCE PER YEAR CERTIFYING IXC'S ACTUAL COST FOR OFF-NET
SERVICES.
Page 14
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 51
EXHIBIT C - ON-NET CITY LISTING
<TABLE>
<CAPTION>
LOCATION LATA ADDRESS /(NPA)NXX
- -------- ---- ------------------------------
<S> <C> <C>
Abilene, TX 550 1049 N. Third, #500,
(915)675
Akron, OH 325 1 Cascade Plaza, Suite 1950,
Main & Bowery, (216)535
Albuquerque, NM 664 200 Lomas Blvd., N.W.,
13th Floor, (505)247
Amarillo, TX 546 Amarillo Petroleum Bldg.,
203 W. 8th, Suite 607/608
(806)373
Ann Arbor, MI 346 1615 Plymouth Rd, (313)994
Austin, TX 558 621 Pleasant Valley Road
(512)389
Bakersfield, CA 734 1430 Truxton Ave., Suite 730
(805)327
Baltimore, MD 238 1220 S. Howard (301)752
Battle Creek, MI 348 175 Main Street (616)962
Bay City, MI 344 100 E. Hart (517)667
Chicago, IL 358 Prudential Bldg., Suite 4001
130 E. Randolph, (312)861
Cincinnati, OH 922 2300 Carew Tower, #4701
441 Vine Street, (513)651
Cleveland, OH 320 R.F. Keith Bldg., Suite 2117
1621 Euclid Ave., (216)771
Columbus, OH 324 Borden Bldg., Leval 2B
180 E. Broad St., (614)469
Colorado Springs, CO 658 102 S. Tejon, # 780, (719)471
Corpus Christi, TX 564 606 N. Carancahua, Suite 816
(512)882
Dallas, TX 552 2223 Houston Street, (214)969
Dallas, TX 552 Tower of the Americas, #380
2323 Bryan, (214)954
Dayton, OH 328 1 Nat'l Bank Bldg., Ste. 2220
130 W. Second, (513)461
Denver, CO 656 Bell Building, 931 14th Street,
Suite 622, (303)572
Detroit, MI 340 1860 Gratio Avenue, (313)259
Detroit, MI 340 Book Bldg., Suite 2609
1249 Washington (313)961
El Paso, TX 540 El Paso Natl Bank Bldg.
201 E. Main, #1702, (915)533
Flint, MI 340 2001 S. Grand Traverse
(313)767
Fresno Term, CA 728 Guarantee Savings, #1201
B1171 Fulton Mall, (209)268
Fresno, CA 728 4605 E. Vine, (209)486
Ft. Worth, TX 552 WT Waggoner Bldg.,
810 Houston,
Suite 1705, (817)870
Grand Rapids, MI 348 209 Graham, S.W., (616)235
Harlingen, TX 568 513 E. Jackson, Matz Bldg.,
(210)425
Houston, TX 560 293 N. Main Street, (713)224
Indianapolis, IN 336 Merchants Bank Bldg.,
11 S. Meridian, #1798/1799
(317)637
Jackson, MI 346 170 W. North Street,
(517)783
Kalamazoo, MI 348 303 Mill Street, (616)385
Kansas City, MO 524 Bank of Kansas City, # 1704
1125 Grand Ave., (816)283
Lansing, MI 346 230 South Street, (517)482
Los Angeles, CA 730 One Wilshire, 624 S. Grand
Suite 1615, (213)689
Lubbock, TX 544 1220 Broadway, Ste. 1901,
(806)762
McAllen, TX 568 200 S. 10th Street, Ste. 704,
(210)687
Midland, MI 344 1000 Jefferson, (517)631
Midland, TX 542 KMID-TV Studio, LaForce
Blvd @ Air Terminal(915)561
New York, NY 132 60 Hudson St., Ste. 206
(212)285
Newark, NJ 224 744 Broad Street, 3rd Floor
(201)824
Oklahoma City, OK 536 Liberty Tower, Suite 3020,
100 N. Broadway, (405)232
Philadelphia, PA 228 2401 Locust St., 2nd Floor
(215)564
Phoenix, AZ 666 2600 N. Central, Suite 1702
Phelps-Dodge Twr, (602)279
Pittsburgh, PA 234 Oliver Bldg., 535 Smithfield
Suite 2650, (412)281
Pontiac, MI 344 324 S. Saginaw, (313)338
Royal Oak, MI 3100 W. 14 Mile Road
(313)435
Saginaw, MI 344 315 Meredith, (517)771
San Angelo, TX 961 36 E. Twohig, 15th Floor
(915)653
San Antonio, TX 566 660 S. Santa Rosa, (210)225
San Francisco, CA 722 Metropolitan Life Bldg.
Suite 3800C
425 Market St., (415)543
Southbend, IN 332 211 West Washington St.
19th Floor, (219)233
St. Louis, MO 520 900 Walnut, Suite 220
(314)231
Sunnyvale, CA 722 111 Uranium, (408)739
Toledo, OH 326 319 Madison Ave., Suite 2901
(419)242
Tucson, AZ 668 Arizona Bank Bldg., #1610
33 N. Stone, (520)792
Tulsa, OK 538 3500 S. 26th West Ave.
(918)584
Waco, TX 556 100 S. 26th Street, (817)750
Washington, D.C. 236 1828 L Street, N.W., #260
(202)833
</TABLE>
Page 15
<PAGE> 52
SECTION 2. UNIFORM SALES & USE TAX CERTIFICATION FORM
Issued to: IXC, 5000 Plaza on the Lake, Suite 200, Austin, Texas 78746
Certify that: Excel Telecommunications, Inc., ______________________________ is
registered and/or identified with the below listed cities and/or states within
which your firm would deliver purchases to us and that any such purchases are
for wholesale, resale, ingredients or components of a new product to be resold,
leased, rented or used in the normal course of our business. We are in the
business of wholesaling, retailing, manufacturing, leasing, renting or providing
non-taxable services or products.
Check applicable box: (___) Single Purchase Certificate
(____) Blanket Certificate
Is engaged as a registered (where applicable): (____) Wholesaler
(____) Lessor (____) Retailer (____) Manufacturer
(____) Exempt Organization Use (____) Other (Specify) __________________
Product or service rendered by Customer: _______________________________________
<TABLE>
<CAPTION>
STATE REGISTRATION OR I.D. NO. STATE REGISTRATION OR I.D. NO.
<S> <C> <C> <C>
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
- ------------- ------------------------ --------------- -------------------------
</TABLE>
I further certify that if any property so purchased tax free is used or consumed
by the firm as to make it subject to a sales or use tax we will pay the tax due
direct to the proper taxing authority when state law so provides or inform the
seller for added tax billing. This certificate shallbe part of each order which
we may hereafter give to you, unless otherwise specified, and shall be valid
until cancelled by us in writing or revoked by the city or state.
Exemption Claimed: (___) Resale (___) Federal Government
(___) Exempt Organization (___) State & Local Government
(___) Direct Payment Permit (___) Other (Specify)____________________________
I swear and affirm that the information on this form is true and correct as to
every material matter.
- --------------------------------------------------------------------------------
Signature Title Date
Page 16
<PAGE> 53
EXHIBIT D - PRIVATE LINE SERVICE ANCILLARY PRICING
<TABLE>
<CAPTION>
NON-RECURRING CHARGES DS-0 DS-1 DS-3
<S> <C> <C> <C>
New Order Installation ......Waived for On-Net Services......
Order Change
Order Cancellation (prior to activation)
ASR (new or disconnect) Special Access
ASR Supplement * * *
Order Expedite
Reconfiguration
DACS Charge (switching only)
DACS Port Charge (Bell access to DACS)
DS-1 DACS Port
</TABLE>
<TABLE>
<CAPTION>
OTHER CHARGES MONTHLY RECURRING NON-RECURRING
<S> <C> <C>
Cross-Connect Charge (Other Interexchange carrier, local access or customer
interconnect/collocation facility to Supplier local access or bypass facility
within the same Supplier POP):
DS-1
DS-3 * *
OC-3*
OC-12*
OC-48*
Interconnect Charge (Supplier POP to Supplier POP in the same city or local
area using Supplier owned or leased transmission systems, with no Supplier
long haul attached at either Supplier POP):
DS-1
DS-3
OC-3* * *
OC-12*
OC-48*
M1/3 - 1 Year Term
Echo Canceller (per circuit end)
Second End Loop (Ex: for ADPCM)
Rack Space I.C.B - Subject to Availability
Shelf Space */ea/mo. I.C.B.
DC Power */amp/mo (5 amp minimum;
5 amp increments)
</TABLE>
NOTES:
1. ALL CHARGES INCURRED BY SUPPLIER ON CUSTOMER'S BEHALF FROM ANY LOCAL
EXCHANGE CARRIER, COMPETITIVE ACCESS PROVIDER OR COMPETITIVE LOCAL
EXCHANGE CARRIER WILL BE DIRECTLY PASSED ON TO THE CUSTOMER.
2. SERVICES NOT DESCRIBED ABOVE WILL BE CONSIDERED SPECIAL HANDLING AND
CHARGES WILL BE ASSESSED ON AN INDIVIDUAL CASE BASIS (ICB).
3. ALL PRIVATE LINE ANCILLARY SERVICE CHARGES TO CITIES NOT LISTED ON
EXHIBIT C WILL BE PRICED ON AN INDIVIDUAL CASE BASIS AND WILL BE SUBJECT
TO THE TERMS AND CHARGES OF THE UNDERLYING CARRIER.
*All OC product cross-connects and interconnects will be provided based upon
availability. OC interconnects shall have a minimum term of 12 months.
Page 17
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 54
EXHIBIT D
Req'st Svc Date:___________ IXC - PRIVATE LINE
Accepted Earlier Activation: PURCHASE ORDER
Y _____ N _____ MARKET SERVICE ORDER
(MSO)
CKT ID: __________________
OFFICE USE ONLY
MSO # ________________________
RELATED MSO:__________________
PURCHASE ORDER FORM FOR CUSTOMER ORDER NO:_________________
Pursuant to the THIRD AMENDED AND RESTATED SERVICE AGREEMENT by and between IXC
as Supplier and EXCEL TELECOMMUNICATIONS, INC. as Customer,
dated__________________, 1998, Customer orders and Supplier shall provide the
following Digital Transmission Service:
<TABLE>
<CAPTION>
QTY RATE TERM MILES
<S> <C> <C> <C> <C> <C> <C> <C>
New _______ Renew __________
Cancel _______ Disconnect __________ DS-3 ____ _____ _____ ____
Change _______ Expedite Y____ N___ DS-1 ____ _____ _____ ____
On Net _______ Off Net __________ DS0 ____ _____ _____ ____
Protocol Reconfigure __________ CIF ____ _____ _____ ____
Other ________________________________ Other ____ _____ _____ ____
</TABLE>
Customer Contact: ________________ Phone #: ________________ Fax # __________
Technical Contact ________________ Phone #: ________________ Fax # __________
CITY LOCATION A: ________________ CITY LOCATION B:___________________________
- --------------------------------------------------------------------------------
Special _____________ Switched _____ Special ___________ Switched ________
Bypass Y ____ N ____ Owner _____ Bypass Y ____N ____ Owner ________
LESSOR TO PROVIDE CFA: Y ____ N ____ LESSOR TO PROVIDE: CFA: Y____ N_____
LOA: Y ____ N_____ ASR: Y ____ N ____ LOA: Y____ N____ ASR: Y____N_____
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CUSTOMER (LESSEE) TO PROVIDE: CUSTOMER (LESSEE) TO PROVIDE:
LOA: Y___ N_____ Coordinated Convert Y___ N____ LOA: Y__N___ Coordinated Convert Y___N___
CIF Arrangement Y___N____ CIF Attach Y___N___ CIF Arrangement Y___N___ CIF Attach __N__
Special Instructions __________________ ________ Special Instructions _____________________
</TABLE>
<TABLE>
<CAPTION>
MONTHLY LEASE RATE: NON RECURRING CHARGES:
<S> <C> <C> <C>
Monthly IXC Charge: $ ___________ Installation $ ____________ ASR: $______
Eqpt. Lease Charge: $ ___________ Installation $ ____________ Reconfig $______
Echo Canceller: $ ___________ Installation $ ____________ Expedite $______
CIF Racks: $ ___________ Installation $ ____________
CIF Power: $ ___________ Installation $ ____________
Other $ ___________ Installation $ ____________
TOTAL: $ ___________ TOTAL OF NON RECURRING CHARGES:$_______
</TABLE>
IN WITNESS WHEREOF, the parties have executed this PURCHASE ORDER on the
_____day of_______19______
- --------------------------------- -----------------------------------------
SUPPLIER APPROVAL/TITLE CUSTOMER AUTHORIZED REPRESENTATIVE/
(Service Provider) TITLE (CUSTOMER)
PLEASE FAX THIS DOCUMENT TO CUSTOMER SERVICE FAX # (512) 433-7810
FOR OFFICE USE ONLY VERSION 3.0 10/2/97
Page 18
<PAGE> 55
EXHIBIT D - PRIVATE LINE SERVICE ANCILLARY PRICING
<TABLE>
<CAPTION>
NON-RECURRING CHARGES DS-0 DS-1 DS-3
<S> <C> <C> <C>
New Order Installation
Order Change
Order Cancellation (prior to activation)
ASR (new or disconnect) Special Access
ASR Supplement * * *
Order Expedite
Reconfiguration
DACS Charge (switching only)
DACS Port Charge (Bell access to DACS)
DS-1 DACS Port
</TABLE>
<TABLE>
<CAPTION>
OTHER CHARGES MONTHLY RECURRING NON-RECURRING
------------- ----------------- -------------
<S> <C> <C>
Cross-Connect Charge (Other Interexchange carrier, local access or customer
interconnect/collocation facility to Supplier local access or bypass facility
within the same Supplier POP):
DS-1
DS-3 * *
OC-3*
OC-12*
OC-48*
Interconnect Charge (Supplier POP to Supplier POP in the same city or local
area using Supplier owned or leased transmission systems, with no Supplier
long haul attached at either Supplier POP):
DS-1
DS-3
OC-3* * *
OC-12*
OC-48*
M1/3 - 1 Year Term
2 Year Term
3 Year Term
Echo Canceller (per circuit end)
Second End Loop (Ex: for ADPCM)
Rack Space I.C.B - Subject to Availability
Shelf Space */ea/mo. I.C.B.
DC Power */amp/mo (5 amp minimum; 5 amp increments)
</TABLE>
NOTES:
1. ALL CHARGES INCURRED BY SUPPLIER ON CUSTOMER'S BEHALF FROM ANY LOCAL
EXCHANGE CARRIER, COMPETITIVE ACCESS PROVIDER OR COMPETITIVE LOCAL
EXCHANGE CARRIER WILL BE DIRECTLY PASSED ON TO THE CUSTOMER.
2. SERVICES NOT DESCRIBED ABOVE WILL BE CONSIDERED SPECIAL HANDLING AND
CHARGES WILL BE ASSESSED ON AN INDIVIDUAL CASE BASIS (ICB).
3. ALL OF THE ABOVE CHARGES ARE SUBJECT TO CHANGE WITH A 30-DAY NOTICE.
4. ALL PRIVATE LINE ANCILLARY SERVICE CHARGES TO CITIES NOT LISTED ON
EXHIBIT C WILL BE PRICED ON AN INDIVIDUAL CASE BASIS AND WILL BE SUBJECT
TO THE TERMS AND CHARGES OF THE UNDERLYING CARRIER.
*All OC product cross-connects and interconnects will be provided based upon
availability. OC interconnects shall have a minimum term of 12 months.
Page 19
* Confidential material has been omitted and filed
separately with the Securities and Exchange Commission.
<PAGE> 56
EXHIBIT E - XNET TOP LATA'S
<TABLE>
<CAPTION>
LATA NAME LATA NUMBER
- --------- -----------
<S> <C>
New York 132
Newark 224
Philadelphia 228
Pittsburgh 234
Washington, D.C. 236
Indianapolis 336
Detroit 340
Chicago 358
Raleigh 422
Atlanta 438
Miami 460
New Orleans 490
St. Louis 520
Kansas City 524
Dallas 552
Houston 560
San Antonio 566
Minneapolis 628
Denver 656
Phoenix 666
Portland 672
Las Vegas 721
San Francisco 722
Sacramento 726
Los Angeles 730
San Diego 732
Monterey 736
Bakersfield 734
Atlantic City 220
Trenton 222
</TABLE>
Page 20
<PAGE> 57
EXHIBIT F
PERFORMANCE STANDARDS
IXC will not be responsible for performance degradation due to conditions of
force majeure, subject to the limits set forth in Section 26. However, in such
case, IXC must use its best efforts for the restoration of network and systems.
"Network" is defined as those elements which affect transmission and
completion of calls. "Systems" are defined as those elements that
support the business operations. The following criteria must be met:
1. IXC shall deliver billable Call Detail Record ("CDR") collection
and distribution to Excel promptly on a daily basis Monday
through Saturday, including nationally recognized holidays, for
the previous period's traffic. This requires all billable CDRs
be transmitted in totality to Excel's pickup point, including
daily processing rejects, which are reasonably determined by
both parties to be rejects
2. IXC must be able to collect, partition and duplicate at least
five (5) million billable CDRs per day (and remove nonbillable
CDRs) from the network at present architectural and capacity
design. IXC shall archive CDRs for not less than two (2) years.
3. Automatic Number Identification ("ANIs") not identified in
either IXC or Excel's database must have their CDRs identified
as Casual Calls CDRs. Casual Call Distribution must occur daily
based upon a twenty-eight (28) day aging cycle distribution
whereby CDR allocation to an Excel ANI will be passed to Excel.
4. "Systems" availability will not be lower than 98 percent in any
thirty (30) day period. This excludes scheduled downtime in a
monthly production schedule mutually agreeable to both parties
(provided that IXC shall be allowed downtime each twenty-four
(24) hours from 10:00 p.m. to 7:00 a.m.), and downtime for new
load implementation, backups, maintenance and unplanned outages.
Notwithstanding anything in the Agreement to the contrary, in
the event of a default under this Section4, Excel shall so
notify IXC. In order to cure such default, IXC must notify Excel
that the underlying problem has been corrected, specifying a
specific time of such corrections, which must have been within
forty-eight (48) hours of receipt of Excel's notice. From such
notice from IXC, systems availability will
Page 21
<PAGE> 58
not be lower than 98 percent measured in the period ending 7,
14, 21 and 30 days thereafter. In such event, such default will
be deemed to be cured.
5. IXC shall provide monthly summary billing and invoicing with
originating and terminating LATAs identified in format which
will assure ease of reconciliation of monthly CDR billing
matched to the delivered billable CDRs for that period.
6. Order Entry for Switched 1+ Service must be processed within
twenty-four (24) hours, and for 800 Switched Service, within
twenty-four (24) hours, excluding Sundays and nationally
recognized holidays except that in cases where Excel's Resporg
provides the 800 number, order entry shall be processed within
seventy-two (72) hours, for orders which are reasonably
determined to be valid by both parties.
7. IXC's Fraud Management system must be capable of initiating a
"Fast Kill" and "Restoration" within five (5) minutes of the
request and meet mutually agreeable Excel specific parameters on
the ANI level. IXC will provide advanced notification of
activities or changes on global parameters.
8. The Network must provide seven (7) day per week, twenty-four
(24) hour day coverage of technical administrative functions.
9. IXC must act on problems affecting transmission service on IXC's
network and use its best efforts to resolve such problem within
four (4) hours from the time service is affected.
10. IXC shall use its best efforts to report problems affecting
network or its support functions to Excel within 30 minutes of
occurrence. Problems affecting traffic and performance must be
reported and updated, and IXC must notify Excel when the
condition has been remedied. Excel may submit a "trouble ticket"
identifying the specific trouble items with the ability to query
the status of that ticket. Excel must give approval before the
trouble ticket is closed. Problems affecting IXC's alarm, fraud,
and CDR collection functions shall be high priority, problems
affecting all other functions shall be acted upon within two (2)
hours.
11. IXC shall provide Excel with busy hour report no less often than
once a month. IXC's access network shall be engineered so that
no more than one call in one hundred originating calls will be
blocked during any hour. IXC shall relieve blockage conditions
by means of rerouting terminating traffic to an off-network
provider immediately upon identification of blockage
Page 22
<PAGE> 59
from the time such blockage first occurs. Engineered trunk
groups augments shall then be issued within ten (10) working
days from the time such blockage first occurs.
12. The Private Line Services shall meet IXC's performance standards
for DS-1 and DS-3 services as in effect as of March 16, 1998,
copies of which are attached to this Exhibit F and incorporated
herein by reference and made a part hereof for all purposes.
13. Crossover of DS-1 to DS-3. At such time as Excel has leased up
to 12 DS-1 Circuits between a given city pair or at such point
that Excel requests a cross over, the pricing of such DS-1
Circuits shall cross over ("Cross Over") to DS-3 pricing and
Excel shall be given by IXC DS-3 capacity between such city
pair. Notwithstanding anything to the contrary contained herein
or in the applicable Purchase Order, upon a Cross Over, Excel
without liability to IXC or any third party, shall terminate
such DS-1 Purchase Order and shall enter into a new Purchase
Order for the DS-3 capacity and such Purchase Order shall have a
Circuit Lease Term equal to an average of the remaining months
on the DS-1 Purchase Orders prior to the Cross Over.
14. All software or software applications used by IXC (or any of
IXC's On-Net suppliers) in the provision of Services hereunder
shall be fully Year 2000 Compliant. As used herein, "Year 2000
Compliant" means that the relevant software or software
applications shall contain source code that can appropriately
interpret the upcoming calendar year "2000."
Page 23
<PAGE> 60
EXHIBIT G - SOFTWARE LICENSE AGREEMENT
This Software License Agreement (this "Agreement") is made and entered into this
____ day of _____________, 1998 (the "Effective Date"), by and between IXC, a
Delaware corporation ("IXC") and Excel Telecommunications, Inc., a Texas
corporation ("LICENSEE").
R E C I T A L S
A. IXC is a provider of telecommunications services and LICENSEE is a
customer of IXC pursuant to the Telecommunications Service Agreement
("TSA") to which this Agreement is attached to as Exhibit C.
B. IXC has developed and owns all right, title and interest in and to a
proprietary collection of computer programs known as "IXC Online -
Customer Module" which IXC makes available to its customers (the
"Software") so as to enable IXC's customers to access a certain database
maintained by IXC relating to the telecommunications traffic carried by
IXC (the "Database").
C. LICENSEE desires to license from IXC and IXC desires to grant to
LICENSEE, on the terms and subject to the conditions of this Agreement,
a license to use the Software so as to enable LICENSEE to access the
Database.
A G R E E M E N T
In consideration of the foregoing recitals and the mutual covenants, agreements,
representations and warranties contained herein and in the TSA, the parties
intending to be legally bound, hereby agree as follows:
I. GRANT OF LICENSE.
A. Subject to the terms and conditions of this Agreement, IXC
hereby grants to LICENSEE a license (the "License") to use the
Software in object code form only, solely on, together with and
as an integral part of a single Qualified Configuration (as
defined in Section 3.1, below) solely for interconnection to the
Database for purposes of accessing any one or more of the
various functions made available at the sole discretion of IXC,
including, without limitation, order entry, entry and retrieval
of customer information, trouble reporting, status inquiries,
report writing and expense tracking.
B. SCOPE OF LICENSE. The License is nonexclusive and
nontransferable and only extends to LICENSEE. LICENSEE agrees
that it shall not, without the prior written consent of IXC,
which consent may be withheld by IXC in its sole and absolute
discretion, (i) transfer or sublicense the Software to any third
party, directly or indirectly, manually or electronically, (ii)
assign this Agreement or any interest herein to any third party,
or (iii) contract, create, incur, assume or allow to exist any
claim, mortgage, lien, security interest or other charge or
encumbrance with respect to this Agreement or the Software to
any third party.
C. RETENTION OF RIGHTS. The License places no restriction on IXC's
right to use, market, distribute, license or sell the Software
(or any portion thereof) to any third party. All rights not
expressly granted herein are retained by IXC.
II. TERM. This Agreement and the License created hereunder shall remain in
effect until the earlier to occur of (i) the termination of the TSA, or
(ii) either party giving to the other 30 days' prior written notice of
such party's election to terminate this Agreement.
III. INSTALLATION OF THE SOFTWARE ON THE QUALIFIED CONFIGURATION. IXC shall be
responsible for installing the Software on the Qualified Configuration
(the "Installation") in accordance with the terms and conditions of this
Section 3.
A. THE QUALIFIED CONFIGURATION. The required hardware and software
to enable LICENSEE to use the Software is hereinafter referred
to as the "Qualified Configuration" and shall consist of the
hardware and software configuration which is more fully
described on Schedule 1 attached hereto and incorporated herein
by this reference. LICENSEE, at its cost, shall be responsible
for procuring the Qualified Configuration. At all times during
the term of this Agreement, LICENSEE, at its cost, shall be
responsible for maintaining the Qualified Configuration,
including, without limitation, purchasing and utilizing any and
all third-party software, and all updates or new releases
pertaining thereto, as may be required to ensure that the
Software continues to operate on the Qualified Configuration.
To ensure satisfactory operation of the Software, Customer
hereby agrees and acknowledges that the Software is intended for
use with Windows NT and Windows 95 which is part of the
Qualified Configuration. Any other version of Windows, is not
considered a Qualified Configuration. IXC provides technical
support assistance for the Software in conjunction with Windows
NT and for no other operating software.
Customer hereby assumes any risks in connection with the use of
any operating software other than Windows NT and Windows 95 in
connection with the Software. Customer hereby waives any claim
or cause of action against IXC that may arise in connection with
Customer's use of operating software other than Windows NT in
connection with the Software.
B. PERFORMANCE OF THE INSTALLATION. In order to enable IXC to
expeditiously perform the Installation, as soon as practicable
after the Effective Date, LICENSEE shall allow IXC access,
during normal business hours, to the Qualified Configuration.
Upon gaining such access to the Qualified Configuration, IXC
shall commence with the Installation and shall diligently pursue
completion thereof.
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<PAGE> 61
IV. MAINTENANCE OF THE DATABASE. LICENSEE acknowledges that IXC must from time
to time perform periodic maintenance of the Database which may result in a
temporary shutdown of the Database and, during such times, IXC may suspend
entry of new orders to the Database. IXC agrees to provide LICENSEE with
as much advance notice as is reasonably possible of any such planned or
scheduled maintenance.
V. REVISIONS, ADDITIONS AND MODIFICATIONS. IXC may from time to time provide
LICENSEE with revisions of the Software. LICENSEE shall accept such
revisions, provided that if the revisions change existing procedures or
file formats for order entry, response files and call detail records
("CDRs"), IXC will provide LICENSEE with at least 30 days' prior written
notice of such revisions, and shall instruct LICENSEE, without charge, in
the installation and use of the revisions.
VI. ADDITIONAL OBLIGATIONS OF IXC.
A. FILE PRIVACY. IXC will take all commercially reasonable action
to protect LICENSEE's files and data from being accessed by any
third parties other than those third parties, if any, that may
have been authorized by LICENSEE to access such files and data.
B. FILE SECURITY. IXC will archive for a reasonable period of time,
all of LICENSEE's CDR data and will provide a copy of the most
recent data to LICENSEE at such times that invoices are
generated under the TSA. Nonetheless, IXC cannot guarantee that
IXC's files and data will not be lost or altered and, therefore,
LICENSEE hereby agrees to be solely responsible for maintaining
a procedure external to the Database for maintaining and
archiving all of its CDR data.
VII. ADDITIONAL OBLIGATIONS OF LICENSEE.
A. COMMUNICATION COSTS. LICENSEE shall be responsible for all
communication costs from LICENSEE's facility to the designated
Database server location, including, without limitation, all
equipment and telephone costs and any connection charges
thereto.
B. LETTERS OF AUTHORIZATION. LICENSEE acknowledges and agrees that
certain of the services available on the Database require
executed end-user Letters of Authorization/Agency ("LOAs").
LICENSEE shall maintain a file of all requisite LOAs and supply
photocopies of such LOAs to IXC within five (5) business days of
IXC's request, in accordance with the directions provided to
LICENSEE at such time.
C. AUTHORIZED USERS. LICENSEE shall maintain and provide to IXC,
within five (5) business days of its receipt of written notice
from IXC requesting such information, a list of all persons
authorized by LICENSEE to use the Software. All such persons
shall be employees of LICENSEE and LICENSEE shall take all
action necessary to ensure that such users do not (i) violate
any of the terms and conditions of this Agreement, or (ii)
access any files or data for licensees other than LICENSEE.
VIII. TRADEMARK RIGHTS. IXC has adopted and owns certain trademarks and service
marks used in identifying and marketing IXC technology, products and
services including, but not limited to the marks "IXC" and "IXC On-Line"
(collectively, the "Trademarks"). LICENSEE recognizes and concedes for all
purposes that any trademarks, logos or trade names affixed by IXC to IXC
technology, products and services, whether or not registered, constitute
the exclusive property of IXC and cannot be used by LICENSEE, nor shall
LICENSEE use any confusingly similar mark, logo or trade name.
IX. PROPRIETARY RIGHTS; CONFIDENTIAL INFORMATION. Full copyright and title to
the Software shall at all times remain with IXC. Customer agrees to (i)
maintain in confidence any confidential information of IXC obtained by
Customer during the term of this Agreement, and (ii) refrain from
disclosing confidential information of IXC to anyone until that
information shall be in the public domain.
X. NO WARRANTY; LIMITATION OF LIABILITY. IXC EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES WITH RESPECT TO THE SOFTWARE, INCLUDING ALL IMPLIED WARRANTIES
OR CONDITIONS OF TITLE, NONINFRINGEMENT, FITNESS OR SUITABILITY FOR ANY
PARTICULAR PURPOSE. LICENSEE ACKNOWLEDGES AND AGREES THAT IXC'S MAXIMUM
AGGREGATE LIABILITY TO LICENSEE UNDER THIS AGREEMENT SHALL IN NO EVENT
EXCEED $25,000.00.
XI. WARRANTY OF AUTHORITY. Each of the individuals signing this Agreement on
behalf of a party hereto warrants and represents that such individual is
duly authorized and empowered to enter into this Agreement and bind such
party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.
IXC EXCEL TELECOMMUNICATIONS, INC.
By: By:
-------------------------------- -------------------------------------
Title: Title:
----------------------------- ----------------------------------
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<PAGE> 62
SCHEDULE 1
The following constitutes the minimum recommended requirements for IXC OnLine.
Based on the work functions used and volumes of work, other configurations may
also be supported.
HARDWARE FOR PC PLATFORM
[ ] Processor: Intel 486/66
[ ] At least 16 MB RAM for NT 3.51; 32 MB RAM for NT 4.0, Win95
[ ] High Density (1.44 MB) 3.5" floppy disk drive
[ ] Hard Disk with a minimum of 1 GB of storage (driven by CDR volumes)
[ ] SCSI Controller preferred to IDE (but not mandatory)
[ ] 101 Keyboard
[ ] Mouse (at least 2 button)
[ ] Network cards that are compatible with Windows NT (if connected to LAN)
CD-ROM
[ ] Double speed or faster; supported by Windows NT (for billing via CD-ROM)
VIDEO CARD AND MONITOR
[ ] SVGA, 800 x 600 resolution screen (1024 x 768 resolution is acceptable as
well, but the screen will appear smaller.)
[ ] 15" Color Monitor, 0.28" dot pitch
SOFTWARE AND OPERATING SYSTEM
[ ] Windows NT Workstation (version 3.51 or 4.0) or Windows 95
MISCELLANEOUS SOFTWARE
[ ] Virus checking programs (NT and Win 95 compatible)
[ ] Any relational database that can read .DBF (database) files so that order
status can be tracked (Examples of programs that read these files: FoxPro,
Paradox, Oracle, Excel, Approach, Access.)
SECURITY
[ ] IXC OnLine will scan for viruses as files are transferred to the system. As
such, only ASCII file uploads will be accepted. Files suspected of
containing a virus will not be processed by IXC OnLine, and the user will be
notified of the problem.
INTERACTIVE INTERFACE REQUIREMENTS
If the interface with IXC OnLine is dial-up, the requirements (in addition to
the "Common Requirements" stated above) are as follows:
[ ] Hayes compatible modem at 28.8 kbps (async)
[ ] For batch ASCII file transfer, Procomm Plus or a comparable communication
transfer software (must support X-modem and Z-modem protocols) is
recommended.
USERS WHO WILL ENTER ORDERS INTERACTIVELY NEED NOT PURCHASE THIS SOFTWARE.
[ ] Sufficient hard disk storage to receive CDR files; 1 Gig + recommended.
(Based on your specific volumes.)
[ ] Windows NT Remote Access Service - native to Windows NT (for interactive
use)
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<PAGE> 63
If the physical interface with IXC OnLine is via a DEDICATED LINE, then the
requirements, in addition to the "Common Requirements" stated above, are as
follows:
[ ] 56 / 64 kbps line (DS-0) from customer site to IXC determined location (to
be confirmed based on IXC's WAN configuration)
[ ] CSU/DSU for line termination (to be confirmed based on IXC's WAN
configuration) - coordinate with IXC MIS department
[ ] Router connection or Eicon card
DATABASE CONFIGURATION
Many of the preparations required for the establishment of your database
must be performed by IXC. After receiving a fully executed contract,
your Account Manager will require your assistance in completing some of
these tasks, such as your Customer Profile and Calling Card Setup.
ACCESS TO IXC ONLINE
Once you have met all of the hardware and software requirements, you
will be given your assigned User ID's and passwords, as well as the
software that will allow you to access IXC OnLine.
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<PAGE> 64
TAXES ON TELECOMMUNICATIONS SERVICES - Contact IXC's Tax Department at
512-427-3849 for assistance in completing this form
Please check one of the following:
______ Telecommunications services purchased from Supplier are for resale
purposes in the normal course of our business (or are subject to other
tax exemptions). These services are exempt from federal, state and local
taxes.
IF CHECKED, COMPLETE SECTION 1 & SECTION 2 BELOW FOR THE APPLICABLE
STATES WHERE SERVICE IS PROVIDED.
______ Telecommunications services purchased from Supplier are not for resale
purposes, but are purchased for our own use. These services are not
subject to other exemptions.
IF CHECKED, SIGN HERE: ______________________________ DATE:____________________
SECTION 1. CERTIFICATE OF EXEMPTION FROM FEDERAL EXCISE TAXES ON COMMUNICATIONS
SERVICES AND FACILITIES
The undersigned hereby certifies that the service furnished by Supplier is
exempt from the Federal Excise Tax on Communications and Facilities imposed by
Internal Revenue Code (IRC) Section 4251 because the undersigned is exempt under
IRC Section 4253 for such reason as marked below (check one). The undersigned
agrees to notify Supplier in writing when the claimed status no longer applies.
____ A nonprofit hospital referred to in IRC Section 170 (b)(1)(A)(ii) which
is exempt from income tax under Section 501 (a).
____ A nonprofit educational organization described in IRC Section (170)
(b)(1)(A)(ii) which is exempt from income tax under Section 501 (a).
____ A School which is operated as an activity of an organization described
in IRC Section 501 (C)(3) which is exempt from income tax under Section
505(a), and operates as described in IRC Section 4253 (j).
____ The U.S. government, government of a State, political subdivision of a
state of the District of Columbia.
____ The American Red Cross or an international organization described in
Internal Revenue Code Sections 7701 (a) (18) and 4253 (c).
____ A news service company of the type referred to in Internal Revenue Code
Section 4253 (b).
____ Diplomatic, consular or other officers of foreign governments
temporarily residing in the United States who are nationals of the
foreign country on a diplomatic mission.
____ The service will be used exclusively in the rendering of a
communications services upon which tax is imposed by IRC Section 4251.
It is understood that no tax will be collected by Supplier on charges
for said service and that it will be the responsibility of the
undersigned to collect such tax as may be due from its customers.
____ The service, which is defined in Section 4252 (b)(2), is for use by a
common carrier, telephone or telegraph company, or radio broadcasting
station or network in the conduct of its business as such.
FOR THIS CERTIFICATE TO BE VALID YOU MUST CHECK ONE OF THE ABOVE BOXES, SIGN AND
DATE THE CERTIFICATE AND PROVIDE AN EFFECTIVE DATE. ANY MODIFICATIONS TO THE
ABOVE WILL RENDER THE CERTIFICATE NULL AND VOID.
THE EXEMPT STATUS OF THE UNDERSIGNED IS EFFECTIVE AS OF _______________________.
Customer: Excel Telecommunications, Inc. FEDERAL TAX I.D. __________________
I swear under penalty of fines, imprisonment, or both, together with cost of
prosecution that the statement contained herein are true to the best of my
knowledge.
- --------------------------------------------------------------------------------
Signature Title Date
Page 28
<PAGE> 1
EXHIBIT 10.11
CULP Communications Associates
5 Hedge Lane
Austin, Texas 78746
(512) 327-4338
Business Consultant
and
Management Agreement
Agreement made this 1st day of March 1998, between IXC Communications, Inc.,
hereinafter referred to as the Corporation, and Culp Communications Associates,
hereinafter referred to as CCA.
In consideration of the mutual promises herein contained, the parties hereto
agree as follows:
1. Term: This Agreement will be for an initial term of six months commencing
on 01 March 1998 and will be extended month to month thereafter unless
terminated by either party in writing.
2. Duties: The duties of CCA will include the rendering of consultation
and management services to the Corporation upon its request. CCA will make
itself available to consult with the Board of Directors, the officers, and
department heads of the Corporation ("Corporate Management"), at reasonable
times to be agreed upon between the parties.
3. Conflicts: CCA shall be free to represent or perform services for any
other clients, provided that it does not interfere or conflict with its
duties under this Agreement. CCA shall inform Corporation of its current
client list and shall inform Corporation of any potential conflicts which
may develop during the term of this Agreement.
4. Compensation: For services rendered hereunder CCA will receive a daily sum
equal to $1,000.00 per day or $500.00 per half day. A detailed statement of
services rendered, specifying the number of days of services performed will
be submitted to Corporation by CCA on a monthly basis.
In addition to the compensation specified herein, Corporation shall also
reimburse CCA for all out of pocket expenses incurred by CCA arising out of
its performance under the terms of this Agreement, including all travel
expenses. Allowable travel expenses shall include reimbursement for all
travel expenses normally reimbursable to the senior executives of
Corporation. All costs to CCA for said out of pocket expenses and travel
expenses shall be chargeable to the Corporation, and the Corporation shall
reimburse and pay over to CCA said costs upon receipt of written invoices
itemizing such costs.
5. Office space: Corporation will make available to CCA, for the term of this
Agreement, suitable office space, reasonable secretarial support, and phone
service for the performance of its duties under this agreement.
<PAGE> 2
6. Assignment: Because of the personal nature of the services to be rendered,
this Agreement may not be assigned by CCA without Corporation's prior
written consent, which may be withheld for any reason or no reason at all.
However, this Agreement will inure to the benefit of and be binding on
Corporation's successors and assigns.
7. Early Termination: It is agreed that CCA may terminate this Agreement upon
14 days written notice to Corporation in the event that Joe Culp accepts
full time employment during the term of this Agreement or any extension
thereof.
8. Assistants: If it is reasonably necessary for CCA to have the aid of
assistants or the services of other persons, companies or firms in order to
properly perform the duties and obligations required of CCA. CCA may from
time to time, with the prior approval of the Corporation, employ, engage or
retain the same. All costs to CCA for said services shall be chargeable to
the Corporation, assuming that the Corporation has given prior approval,
and the corporation shall reimburse and pay over to CCA said costs upon
receipt of written invoices itemizing such costs.
9. Limited Liability: With regards to the services to be performed by CCA
pursuant to the terms of this Agreement, neither CCA nor any employee or
agent of CCA, shall be liable to the Corporation, or to anyone who may
claim any right due to this relationship with the Corporation for any act
or omissions in the performance of said services on the part of CCA or on
the part of the agents or employees of CCA, except when said acts or
omissions of CCA are due to willful misconduct or culpable negligence. The
Corporation shall hold CCA free and harmless from any obligations, costs,
claims, judgments, attorneys fees and attachments arising from or growing
out of the services rendered to the Corporation pursuant to the terms of
this Agreement or in any way connected with the rendering of said services,
except when the same shall arise due to the willful misconduct or culpable
negligence of CCA, and CCA is adjudged to be guilty of willful misconduct
or culpable negligence by a court of competent jurisdiction.
10. Remedies: If any action at law or equity is necessary to enforce the terms
of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs, and necessary disbursements in addition to any
other relief to which he may be entitled.
11. Texas Law: This Agreement shall be construed under and in accordance with
the laws of the State of Texas. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision thereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
12. Independent Contractor: In performing Services pursuant to this Agreement,
CCA shall be, and at all times shall act as an independent contractor. CCA
shall not make any contract or commitment or incur any charge or expense in
the name of IXC. CCA expressly agrees, acknowledges and stipulates that
neither this Agreement nor the performance of CCA's obligations or duties
hereunder shall ever result in CCA, or anyone employed by CCA, being:
<PAGE> 3
(i) an employee or servant of IXC; or (ii) entitled to any benefits from
IXC including, but not limited to pension, profit sharing, or accident,
health, medical, life or disability insurance benefits or coverage, to
which employees of IXC may be entitled. The sole and only compensation or
benefit of any nature to which CCA shall be entitled are the payments
provided for herein. CCA will be responsible for all required federal,
state and local government withholdings or deductions for taxes or similar
charges, or otherwise pursuant to law, regulation or order with respect to
payment by Corporation of such compensation. The provisions of this
paragraph shall survive termination of this Agreement. IXC shall have no
right to direct or control CCA or its employees and agents but shall have
the right to conduct normal inspections of work in progress and conduct
regular reviews and receive periodic updates of progress.
13. Prior Agreements Superseded: This Agreement constitutes the sole and only
Agreement of the parties hereto constitutes the sole and only Agreement of
the parties hereto with regard to your consulting duties as outlined
herein. This Agreement supersedes any prior understandings or written or
oral agreements between the parties with regards to the subject.
Executed this the 24th day of April, 1998.
Culp Communication Associates
by /s/ JOE C. CULP
---------------------------
Joe C. Culp, President
IXC Communications, Inc.
by /s/ BENJAMIN L. SCOTT
---------------------------
Benjamin L. Scott
President and CEO
<PAGE> 1
EXHIBIT 11.1 -- COMPUTATION OF PER-SHARE LOSS
IXC COMMUNICATIONS, INC
COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1997
--------- --------
<S> <C> <C>
LOSSES
Adjusted net loss....................................... $ (19,397) $(19,878)
Less: Dividends applicable to preferred stock........... (11,736) (470)
--------- --------
Net loss applicable to common stockholders.............. (31,133) (20,348)
Extraordinary loss...................................... -- --
--------- --------
Net loss applicable to common stockholders before
extraordinary items.................................. $ (31,133) $(20,348)
========= ========
BASIC
Number of shares used to compute loss applicable to
common stockholders.................................. 31,626 30,799
========= ========
DILUTED
Number of shares used to compute loss applicable to
common stockholders.................................. 31,626 30,799
========= ========
BASIC LOSS PER SHARE
Before extraordinary item............................... $ (0.98) $ (0.66)
Extraordinary loss...................................... -- --
--------- --------
Net loss................................................ $ (0.98) $ (0.66)
========= ========
DILUTED LOSS PER SHARE
Before extraordinary item............................... $ (0.98) $ (0.66)
Extraordinary loss...................................... -- --
--------- --------
Net loss................................................ $ (0.98) $ (0.66)
========= ========
</TABLE>
Note: 1997 loss per share data has been restated in accordance with the adoption
of the Financial Accounting Standards Board Statement 128 and the
Securities Exchange Commission Staff Accounting Bulletin 98.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 199,647,000
<SECURITIES> 0
<RECEIVABLES> 106,084,000
<ALLOWANCES> 13,905,000
<INVENTORY> 0
<CURRENT-ASSETS> 296,637,000
<PP&E> 781,450,000
<DEPRECIATION> 131,307,000
<TOTAL-ASSETS> 1,113,095,000
<CURRENT-LIABILITIES> 157,617,000
<BONDS> 285,000,000
0
1,350
<COMMON> 317,000
<OTHER-SE> 51,470,000
<TOTAL-LIABILITY-AND-EQUITY> 1,113,095,000
<SALES> 0
<TOTAL-REVENUES> 129,184,000
<CGS> 0
<TOTAL-COSTS> 87,298,000
<OTHER-EXPENSES> 42,654,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,271,000
<INCOME-PRETAX> (16,579,000)
<INCOME-TAX> 2,645,000
<INCOME-CONTINUING> (19,397,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,397,000)
<EPS-PRIMARY> (0.98)
<EPS-DILUTED> (0.98)
</TABLE>
