SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-09613
FAXSAV INCORPORATED
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(Exact name of registrant as specified in its character)
Delaware 11-3025769
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
399 Thornall Street, Edison, New Jersey 08837
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(Address of principal executive offices)
Registrant's telephone number, including area code (908) 906-2000
Former name, former address and former fiscal year,
if changed since last report.
Indicate by a check 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 |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 9,795,654 shares of the
Company's Common Stock, $.01 par value, were outstanding as of May 9, 1997.
<PAGE>
FAXSAV INCORPORATED
Index to March 31, 1997 Form 10-Q
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Page
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Part I - Financial Information
Item 1. Financial Statements
Condensed Balance Sheets - March 31, 1997 and
December 31, 1996 ........................................................ 3
Condensed Statements of Operations -
Three Months Ended March 31, 1997 and 1996 ............................... 4
Condensed Statements of Cash Flow - Three Months Ended
March 31, 1997 and 1996 .................................................. 5
Notes to Condensed Financial Statements .................................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .................... 7
Part II - Other Information
Item 1. Legal Proceedings ................................................ 16
Item 2. Changes in Securities ............................................ 16
Item 3. Defaults upon Senior Securities .................................. 16
Item 4. Submission of Matters to a Vote of Security Holders .............. 16
Item 5. Other Information ................................................ 16
Item 6. Exhibits and Reports on Form 8-K ................................. 16
Signatures ....................................................... 18
2
<PAGE>
FAXSAV INCORPORATED
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 5,996,769 $ 7,923,105
Marketable securities 0 1,002,513
Accounts receivable, net of $255,754 and
$229,376 allowance for bad debts, for March 31,
1997 and December 31, 1996, respectively 2,277,877 2,015,155
Prepaid expenses and other current assets 159,563 251,417
------------ ------------
Total current assets 8,434,209 11,192,190
Property and equipment, net 4,137,600 3,495,820
Other assets, net 174,233 169,211
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Total assets $ 12,746,042 $ 14,857,221
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
Accounts payable $ 623,952 $ 263,446
Accrued expenses and
other liabilities 3,614,707 3,822,762
Obligation under capital lease 296,365 282,776
Current portion of note payable to bank 152,111 152,111
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Total current liabilities 4,687,135 4,521,095
Obligation under capital lease 314,379 398,662
Note payable to bank 240,843 278,871
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Total liabilities 5,242,357 5,198,628
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock,$0.01 par value;40,000,000 shares authorized; 9,809,876 and
9,792,010 shares issued and 9,788,487 and 9,770,621 shares outstanding as
of March 31, 1997 and December 31, 1996,
respectively 97,885 97,706
Additional paid-in capital 34,633,428 34,616,745
Accumulated deficit (27,227,613) (25,055,843)
Treasury stock, at cost 21,389 common shares
as of March 31, 1997 and December 31, 1996 (15) (15)
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Total stockholder's equity 7,503,685 9,658,593
------------ ------------
Total liabilities and stockholders' equity $ 12,746,042 $ 14,857,221
============ ============
</TABLE>
The accompanying notes are an integral part of the
condensed financial statements
3
<PAGE>
FAXSAV INCORPORATED
CONDENSED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------
1997 1996
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<S> <C> <C>
REVENUES $ 4,069,608 $ 3,614,133
COST OF SERVICE 2,644,593 2,114,301
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GROSS MARGIN 1,425,015 1,499,832
OPERATING EXPENSES:
Network operations and support 526,188 397,205
Research and development 463,375 315,247
Sales and marketing 1,453,022 1,348,495
General and administrative 805,512 686,209
Depreciation and amortization 431,286 272,241
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OPERATING LOSS (2,254,369) (1,519,565)
OTHER INCOME (EXPENSE):
Interest income (expense), net 61,225 (18,254)
Other income (expense), net 21,374 18,733
------------ ------------
Net loss ($ 2,171,770) ($ 1,519,086)
============ ============
Historical net loss per common and
equivalent share ($0.22) ($3.09)
============ ============
Shares used in computing historical net
loss per common and equivalent share 9,787,798 491,272
============ ============
Pro forma net loss per common and
equivalent share ($0.22) ($0.17)
============ ============
Shares used in computing proforma
net loss per common and
equivalent share 9,787,798 8,922,910
============ ============
</TABLE>
The accompanying notes are an integral part of the
condensed financial statements
4
<PAGE>
FAXSAV INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
---------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 2,171,770) ($ 1,519,086)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization expense 431,286 272,241
Provision for doubtful accounts 58,800 98,700
Provision for unrecoverable equipment 0 125,000
Changes in assets and liabilities:
Accounts receivable (321,522) (156,864)
Prepaid expenses and other current assets 91,854 (101,848)
Other assets (13,984) (19,141)
Accounts payable 360,506 (78,372)
Accrued expenses and other liabilities (208,054) 535,082
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Net cash used in operating activities (1,772,884) (844,288)
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CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment (1,064,105) (557,857)
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Net cash used in investing activities (1,064,105) (557,857)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made under capital lease obligation (70,694) (45,516)
Repayments under line of credit (38,028) 0
Proceeds from maturity of marketable securities 1,002,513 0
Proceeds from issuance of preferred stock, net 0 7,964,349
Proceeds from exercise of stock options and warrants 16,862 0
Treasury stock acquired 0 (2,163,878)
------------ ------------
Net cash provided by financing activities (910,653) 5,754,955
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NET INCREASE(DECREASE) (1,926,336) 4,352,810
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 7,923,105 552,370
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,996,769 $ 4,905,180
============ ============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital lease 0 $ 94,147
============ ============
</TABLE>
The accompanying notes are an integral part of the
condensed financial statements
5
<PAGE>
FAXSAV INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. However, the Company believes that the disclosures are adequate to
make the information presented not misleading. These condensed financial
statements should be read in conjunction with the financial statements and the
noted thereto included in its Annual Report on Form 10-K (Registration No.
333-09613) for the year ended December 31, 1996.
The unaudited condensed financial statements included herein reflect
all adjustments (which include only normal, recurring adjustments) which are, in
the opinion of management, necessary to state fairly the results for the three
month periods ended March 31, 1997 and 1996. The results for the three months
ended March 31, 1997 are not necessarily indicative of the results expected for
the full fiscal year.
2. Pro Forma Net Loss Per Common and Equivalent Share
Pro forma net loss per common and equivalent share for the three months
ended March 31, 1996, is based on the weighted average number of shares
outstanding during the periods presented, including the effect of a reverse
stock split for common shares of one-for-nine shares completed in October 1996
prior to the effective date of the Company's registration statement on Form S-1
and conversion of all outstanding preferred stock into 7,791,981 shares of
common stock. Pursuant to the Securities and Exchange Commission Staff
Accounting Bulletin No.83 ("SAB 83"), all shares, options and warrants issued
during the twelve months immediately preceding the initial public offering were
treated as if the had been outstanding for all periods, using the treasury stock
method and assuming a per share price of $8.00, the initial public offering
price. Common stock equivalents (i.e., convertible preferred stock and certain
stock options and warrants) issued in earlier periods have not been included
since the effect would be antidilutive.
3. Contingencies
The Company is involved in various disputes, claims or legal
proceedings and may be included in future actions including infringement on
intellectual property rights, related to its normal course of business. In the
opinion of management, all such matters are without merit or involve amounts, if
disposed of unfavorably, which would not have a material adverse effect on the
financial position or results of operations of the Company.
4. Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
No. 128"), designed to improve the EPS information provided in the financial
statements by simplifying the existing computational guidelines, revising
disclosure requirements, and increasing comparability of EPS data on an
international basis. The statement requires dual presentation of basic and
diluted EPS on the face of the income statement and a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. The adoption of this standard is
required for the fiscal year ending December 31, 1997. The Company has not yet
assessed the impact of SFAS No. 128 on the Company's results of operations.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
FaxSav Incorporated (the "Company") derives its revenues from the provision of a
variety of facsimile services largely to small to medium sized businesses and
professionals involved in international commerce. Through the end of 1995, the
Company offered its services exclusively to customers located in the United
States. In the first quarter of 1996, the Company began to focus on the broader
worldwide market for facsimile services through the introduction of client
software to enable faxing from the computer desktop using the Internet as the
means to access the FaxSav network. The Company's network in the United States
includes interconnection with the existing worldwide telephony network, enabling
delivery of facsimile transmissions to virtually any domestic or international
destination. The Company plans to continue to install Internet nodes in key
international telecommunications markets to enable the Company ultimately to
route a majority of its customers' traffic through the Internet. The Company's
revenue and expense levels have continued to increase, as the Company's customer
base has expanded and the Company has invested in the design, development and
marketing of its newer services, including faxSAV E-Z-List, a fax-to-fax
broadcast service, and the faxSAV for Internet suite of services.
This report contains certain statements of a forward-looking nature relating to
future events of the future financial performance of the Company. Stockholders
are cautioned that such statements are only predictions and that actual events
or results may differ materially. In evaluating such statements, prospective
investors should specifically consider the various factors identified in this
report, including the matters set forth under the caption "Certain Factors That
May Affect Future Results, Financial Condition and the Market Price of
Securities," which could cause actual results to differ materially from those
indicated by such forward-looking statements.
Results of Operations
The following table represents unaudited financial information expressed as a
percentage of total revenues for the periods indicated. The Company believes
that this information has been presented on a basis consistent with the
Company's audited financial statements and includes all adjustments, consisting
only of normal recurring adjustments that management considers necessary for a
fair representation for the periods presented.
Three Months Ended
March 31,
1997 1996
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Percentage of Revenues:
Revenues 100.0% 100.0%
Cost of service 65.0 58.5
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Gross margin 35.0 41.5
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Operating expenses
Net operations and support 12.9 11.0
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Research and development 11.4 8.7
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Sales and marketing 35.7 37.3
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General and administrative 19.8 19.0
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Depreciation and amortization 10.6 7.5
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Total operating expenses 90.4 83.5
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Operating loss (55.4) (42.0)
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Interest income (expense), net 1.5 (.5)
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Other income (expense), net .5 .5
----- -----
Loss before income taxes (53.4) (42.0)
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Provision for income taxes -- --
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Net loss (53.4)% (42.0)%
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7
<PAGE>
Three Months Ended March 31, 1997 and 1996
Revenues. Revenues, which consist primarily of customer usage charges, grew
12.6% to $4.1 million in the three months ended March 31, 997 from $3.6 million
in the three months ended March 31, 1996 primarily as a result of the continued
expansion of the Company's customer base, development of an international
fax-to-fax customer base in 1997, and revenues from the Company's faxSAV EZ-List
broadcast service and faxSAV for Internet suite of services first introduced in
the first quarter of 1996.
Cost of service. Cost of service consists of local access charges, leased
network backbone circuit costs and long distance domestic and international
termination charges. These are primarily variable costs based on actual
facsimile volume. Cost of service increased as a result of the increase in
facsimile volume for the period and also increased as a percentage of revenues
in the three months ended March 31, 1997 to 65.0% from 58.5% in the three months
ended March 31, 1996. The increased percentage is a result of a higher cost of
service for the revenues generated from the Company's lower priced internet
services. These revenues are being generated without complete benefit of the
lower cost internet network deployment which is in process.
Network operations and support. Network operations and support costs consist
primarily of the expenses of operating and expanding the network infrastructure,
monitoring network traffic and quality of service and providing customer support
in service installations, fax deliveries and message reporting and billing.
Network operations and support costs increased to $.5 million and 12.9% of
revenues in the three months ended March 31, 1997 from $.4 million and 11.0% of
revenues in the three months ended March 31, 1996 as a result of hiring
additional personnel to implement the Internet fax node deployment plan and to
support the Company's expanding customer base.
Research and Development. Research and development expenses consist primarily of
salaries and consulting fees paid to software engineers and development
personnel. Research and development expenses increased to $.5 million from .$3
million, representing a 47% increase, in the three months ended March 31, 1997
in comparison to the three months ended March 31, 1996 due to the continuing
development efforts for enhancements to the Company's Internet desktop-to-fax
services both in client software and network enhancements, and the continuing
development of the Company's faxSAV EZ-List broadcast service. As a percentage
of revenues, these expenses increased to 11.4% in the three months ended March
31, 1997 from 8.7% in the three months ended March 31, 1996.
Sales and Marketing. Sales and marketing expenses consist primarily of salaries
and commissions for sales and marketing staffs, promotional material preparation
and mailing costs, third-party telemarketing charges and agent and dealer
commissions. Sales and marketing expenses increased to $1.5 million for the
three months ended March 31, 1997 in comparison to $1.3 million in the three
months ended March 31, 1996, primarily for additional staff. However, as a
percentage of revenues, these costs decreased to 35.7% from 37.3% for the 1997
and 1996 periods, respectively, as a result of higher revenues.
General and administrative. General and administrative expenses consist of
expenses associated with the Company's management, accounting, finance, billing
and administrative functions. General and administrative expenses increased to
$0.8 million and 19.8% of revenues in the three months ended March 31, 1997 from
$0.7 million and 19.0% of revenues in the three months ended March 31, 1996. The
increase in total general and administrative expenses and the percentage of
revenues result from personnel increases to support the increased customer base
and expenses incurred for management information system improvements.
Depreciation and amortization. Depreciation and amortization amounted to $0.4
million and 10.6% of revenues
8
<PAGE>
in the three months ended March 31, 1997 in comparison to $0.3 million and 7.5%
of revenues in the three months ended March 31, 1996 primarily reflecting
depreciation of the Company's investment in international internet nodes and in
faxSAV Connectors installed at customer premises to allow access to the FaxSav
network.
Provision for income taxes. The Company had losses for income tax purposes for
the three months ended March 31, 1997 and 1996. Accordingly, there was no
provision or credit for income taxes for those periods. Any income tax benefits
at the Company's expected effective tax rate for these losses has been offset by
an expected increase in valuation allowance for deferred tax assets.
Liquidity and Capital Resources
The Company has financed its cash requirements for operations and investments in
equipment primarily through public and private sales of equity securities, bank
borrowings and capital lease financing. No such financings were completed in the
three months ended March 31, 1997. The net proceeds from the Company's initial
public offering completed in October 1996 amounted to $10.6 million. Cash flows
from the sales of equity securities amounted to $7.9 million in the three months
ended March 31, 1996, net of issuance costs, $2.2 million of which were used to
repurchase shares of the Company's Series D Preferred Stock from a major
stockholder pursuant to a pre-existing option.
As a result of operating losses, cash used in operating activities amounted to
$1.8 million in the three months ended March 31, 1997, as compared to $0.8
million for the comparable period in 1996. Cash used in investing activities,
largely consisting of the purchase of equipment, amounted to $1.1 million in the
three months ended March 31, 1997 and $0.6 million for the comparable period in
1996. The equipment primarily consisted of network equipment (particularly in
the 1997 period) and faxSAV Connectors purchased by the Company for installation
at customer locations. The Company has minimum usage commitments with its
primary long-distance carriers. Through November 1997, the Company is obligated
to LDDS WorldCom for a minimum monthly usage commitment of $0.25 million for
international long distance service, and through April 1999, is obligated to MCI
Communications Corp. for a minimum monthly usage commitment for total long
distance services of $0.2 million per month.
The Company's principal sources of liquidity at March 31, 1997 included cash and
cash equivalents of $6.0 million. The Company has agreed to terms for a $0.5
million secured equipment loan line commitment from Phoenix Growth Capital Corp.
The Company has also agreed to terms for a $0.5 million secured revolving line
of credit and a $1.0 million secured equipment line of credit with Silicon
Valley Bank. Such credit lines will be available upon final approval of the loan
documentation by both parties. However, there can be no assurance that such
documentation will be approved and executed by the relevant parties. The Company
currently believes that its current cash and cash equivalents will be sufficient
to meet its anticipated cash needs for working capital and capital expenditure
requirements through at least the end of 1997. Thereafter, if the Company does
not begin to generate positive cash flows from operations in amounts that are
sufficient to satisfy the Company's liquidity requirements, it will be necessary
for the Company to raise additional funds through bank facilities, debt or
equity offerings or other sources of capital. Additional funding may not be
available when needed or on terms acceptable to the Company, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
9
<PAGE>
Certain Factors That May Affect Future Results, Financial Condition
and the Market Price of Securities.
History of Operating Losses; Accumulated Deficit. From its inception in 1989
through the three-month period ended March 31, 1997, the Company has experienced
significant operating losses. The Company incurred operating losses of $3.6
million, $4.1 million and $7.5 million during the years ended December 31, 1994,
1995 and 1996, respectively, and $2.2 million during the three months ended
March 31, 1997. The Company currently anticipates incurring further operating
losses as it attempts to expand its business and there can be no assurance that
its future operations will generate positive operating income. As of March 31,
1997, the Company had an accumulated deficit of $27.2 million.
The Company has generated net operating loss ("NOL") carryforwards for income
tax purposes of approximately $23.0 million through December 31, 1996. These NOL
carryforwards have been recorded as a deferred tax asset of approximately $8.3
million. Based upon the Company's history of operating losses and presently
known factors, management has determined that it is more likely than not that
the Company will be unable to generate sufficient taxable income prior to the
expiration of these NOL carryforwards and has accordingly reduced its deferred
tax assets to zero with a full valuation allowance.
Quarterly Fluctuations; Possible Volatility of Stock Price. The Company may in
the future experience significant quarter to quarter fluctuations in its results
of operations, which may result in volatility in the price of the Company's
Common Stock. Quarterly results of operations may fluctuate as a result of a
variety of factors, including demand for the Company's services, the
introduction of new services and service enhancements by the Company or its
competitors, market acceptance of new services, the mix of revenues between
Internet-based versus telephony-based deliveries, the timing of significant
marketing programs, the number and timing of the hiring of additional personnel,
competitive conditions in the industry and general economic conditions. The
Company's revenues are difficult to forecast. Shortfalls in revenues may
adversely and disproportionately affect the Company's results of operations
because a high percentage of the Company's operating expenses are relatively
fixed, and planned expenditures, such as the anticipated expansion of the
Company's Internet infrastructure, are based primarily on sales forecasts. In
addition, the stock market in general has experienced extreme price and volume
fluctuations, which have affected the market price of securities of many
companies in the telecommunications and technology industries and which may have
been unrelated to the operating performance of such companies. These market
fluctuations may adversely affect the market price of the Company's Common
Stock. Accordingly, the Company believes that period to period comparisons of
results of operations are not necessarily meaningful and should not be relied
upon as an indication of future results of operations. There can be no assurance
that the Company will be profitable in any future quarter. Due to the foregoing
factors, it is likely that in one or more future quarters the Company's
operating results will be below the expectations of public market analysts and
investors. Such an event would have a material adverse effect on the price of
the Company's Common Stock.
Future Capital Needs; Uncertainty of Additional Financing. The Company currently
believes that its current cash and cash equivalents will be sufficient to meet
its presently anticipated cash needs for working capital and capital expenditure
requirements through at least the end of 1997. Thereafter, if the Company does
not begin to generate positive cash flows from operations in amounts that are
sufficient to satisfy the Company's liquidity requirements, it will be necessary
for the Company to raise additional funds through bank facilities, debt or
equity offerings or other sources of capital. Additional funding may not be
available when needed or on terms acceptable to the Company, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Dependence on Network Infrastructure; No Assurance of Successful
Internet-Capable Node Deployment. The Company's future success will depend in
part upon the capacity, reliability and security of its network infrastructure
and in particular upon its ability to successfully deploy an international
network of Internet-capable facsimile nodes. The Company must continue to expand
and adapt its network infrastructure as the number of customers and the volume
of traffic they wish to transmit increases. The expansion and adaptation of the
Company's network infrastructure will require substantial financial, operational
and management resources. There can be no assurance that the Company will be
able to expand or adapt its network infrastructure to meet any additional demand
on a timely basis, at a commercially
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reasonable cost, or at all. In addition, the Company anticipates that
implementation of its price leadership strategy generally will cause its overall
gross profit margin to be reduced until a sufficient number of key international
telecommunications markets are serviced by its Internet-capable facsimile nodes.
There can be no assurance that the Company will be able to deploy the
contemplated Internet-capable facsimile node expansion on a timely basis, at a
commercially reasonable cost, or at all. Any failure of the Company to expand
its network infrastructure on a timely basis, to adapt it to changing customer
requirements or evolving industry standards or to deploy the contemplated
Internet-capable facsimile node infrastructure on a timely basis, or at all,
would have a material adverse effect on the Company's business, financial
condition and results of operations. Further, there can be no assurance that the
Company will be able to satisfy the regulatory requirements in each of the
countries currently targeted for node deployment, which may prevent the Company
from installing Internet-capable facsimile nodes in such countries and may have
a material adverse effect on the Company's business, operating results and
financial condition.
Dependence on the Internet as a Facsimile Transmission Medium. The Company
believes that its future success will depend in part upon its ability to
significantly expand its base of Internet-capable nodes and route more of its
customers' traffic through the Internet. The Company's success is therefore
largely dependent upon the viability of the Internet as a medium for the
transmission of documents. To date, the Company has transmitted a limited amount
of customer traffic over the Internet, and there can be no assurance that the
Internet will prove to be a viable communications medium, that document
transmission over the Internet will be reliable or that Internet capacity
constraints will not develop which inhibit efficient document transmission. The
Company accesses the Internet from its Internet-capable nodes by dedicated
connection to third party internet service providers. The Company pays fixed
monthly fees for such Internet access, regardless of the Company's usage or the
volume of its customers' traffic. There can be no assurance that the current
pricing structure for access to and use of the Internet will not change
unfavorably. If the Internet proves to be an impractical or unreliable medium
for document transmissions, if material capacity constraints develop on the
Internet or the current Internet pricing structure changes unfavorably, the
Company's business, financial condition and results of operations would be
materially and adversely affected.
No Assurance of Market Acceptance. The Company's ability to route existing
customers' traffic through the Internet and to sell its faxSAV PLUS service to
new customers may be inhibited by, among other factors, the reluctance of some
customers to switch from real-time fax delivery to "virtual real-time" delivery
and by widespread concerns over the adequacy of security in the exchange of
information over the Internet. The Company currently relies on encryption
technology to enable the secure transfer of customer documents over the
Internet. There can be no assurance that advances in computer capabilities, new
discoveries in the field of cryptography or other events or developments will
not result in a compromise or breach of the encryption technology or other
algorithms used by the Company to protect customer data. If the Company's
existing and potential customers do not accept "virtual real-time" delivery
through the Internet as a means of sending and receiving documents via fax, or
if any compromise of the Company's security were to occur, the Company's
business, financial condition and results of operations would be materially and
adversely affected.
Intense Competition. The market for facsimile transmission services is intensely
competitive and there are limited barriers to entry. The Company expects that
competition will intensify in the future. The Company believes that its ability
to compete successfully will depend upon a number of factors, including market
presence; the capacity, reliability and security of its network infrastructure;
the pricing policies of its competitors and suppliers; the timing of
introductions of new services and service enhancements by the Company and its
competitors; and industry and general economic trends.
The Company's current and prospective competitors generally fall into the
following groups: (i) telecommunication companies, such as AT&T Corp. ("AT&T"),
MCI Communications Corp., Inc. ("MCI"), Sprint Corp. ("Sprint"), LDDS WorldCom
Inc. ("LDDS WorldCom") and the regional Bell operating companies; (ii)
telecommunications resellers, such as Frontier Corporation, Biztel Corporation
and Eastern Telecom Corporation; (iii) Internet service providers, such as Uunet
Technologies, Inc. and NETCOM On-Line Communications Services, Inc., (iv)
on-line services providers, such as Microsoft Corporation, America Online, Inc.
and CompuServe Incorporated and (v) direct fax delivery competitors, including
Xpedite Systems, Inc. and Fax International, Inc. Many of these competitors have
greater market
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<PAGE>
presence, engineering and marketing capabilities, and financial, technological
and personnel resources than those available to the Company. As a result, they
may be able to develop and expand their communications and network
infrastructures more quickly, adapt more swiftly to new or emerging technologies
and changes in customer requirements, take advantage of acquisition and other
opportunities more readily, and devote greater resources to the marketing and
sale of their products and services than can the Company. Further, the
foundation of the Company's telephony network infrastructure consists of the
right to use the telecommunications lines of several of the above-mentioned long
distance carriers, including LDDS WorldCom and MCI. There can be no assurance
that these companies will not discontinue or otherwise alter their relationships
with the Company in a manner that would have a material adverse effect upon the
Company's business, financial condition and results of operations. In addition,
current and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their services to address the needs of the Company's current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In addition
to direct competitors, many of the Company's larger potential customers may seek
to internally fulfill their fax communication needs through the deployment of
their own computerized fax communications systems or network infrastructures for
intra-company faxing.
Increased competition is likely to result in price reductions and could result
in reduced gross margins and erosion of the Company's market share, any of which
would have a material adverse effect on the Company's business, financial
condition and results of operations. There can be no assurance that the Company
will be able to compete successfully against current or future competitors or
that competitive pressures will not have a material adverse effect on the
Company's business, financial condition and results of operations.
No Assurance of Successful Management of Growth. The Company has rapidly and
significantly expanded its operations and anticipates that significant expansion
will continue to be required in order to address potential market opportunities.
The Company anticipates significantly increasing the size of its sales and
marketing efforts following the completion of this offering, and the Company
also will be required to increase its customer support staff. There can be no
assurance that such expansion will be successfully completed or that it will
generate sufficient revenues to cover the Company's expenses. The inability of
the Company to promptly address and respond to these circumstances could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Rapid Industry Change. The telecommunications industry in general, and the
facsimile transmission business in particular, are characterized by rapid and
continuous technological change. Future technological advances in the
telecommunications industry may result in the availability of new services or
products that could compete with the facsimile transmission services provided by
the Company or reduce the cost of existing products or services, any of which
could enable the Company's existing or potential customers to fulfill their fax
communications needs more cost efficiently. There can be no assurance that the
Company will be successful in developing and introducing new services that meet
changing customer needs and respond to technological changes or evolving
industry standards in a timely manner, if at all, or that services or
technologies developed by others will not render the Company's services
noncompetitive. The inability of the Company to respond to changing market
conditions, technological developments, evolving industry standards or changing
customer requirements, or the development of competing technology or products
that render the Company's services noncompetitive would have a material adverse
effect on the Company's business, financial condition and results of operations.
Risk of System Failure; Security Risks. The Company's operations are dependent
on its ability to protect its network from interruption by damage from fire,
earthquake, power loss, telecommunications failure, unauthorized entry, computer
viruses or other events beyond the Company's control. Most of the Company's
current computer hardware and switching equipment, including its processing
equipment, is currently located at two sites. There can be no assurance that the
Company's existing and planned precautions of backup systems, regular data
backups and other procedures will be adequate to prevent significant damage,
system failure or data loss. Despite the implementation of security measures,
the Company's infrastructure may also be vulnerable to computer viruses, hackers
or similar disruptive problems caused by its customers or other Internet users.
Persistent problems continue to affect public and private data networks,
including computer break-ins and the misappropriation of confidential
information. Such computer break-ins and
12
<PAGE>
other disruptions may jeopardize the security of information stored in and
transmitted through the computer systems of the individuals, businesses and
financial institutions utilizing the Company's services, which may result in
significant liability to the Company and also may deter potential customers from
using the Company's services. Any damage, failure or security breach that causes
interruptions or data loss in the Company's operations or in the computer
systems of its customers could have a material adverse effect on the Company's
business, financial condition and results of operations.
Dependence upon Suppliers; Sole and Limited Sources of Supply. The Company
relies on third parties to supply key components of its network infrastructure,
including long distance telecommunications services and telecommunications node
equipment, many of which are available only from sole or limited sources. LDDS
WorldCom, MCI and Telstra are the primary providers of long distance
telecommunications services to the Company. The Company has from time-to-time
experienced partial interruptions of service from its telecommunications
carriers which have temporarily prevented customers in limited geographical
areas from reaching the FaxSav network. There can be no assurance that the
Company will not experience partial or complete service interruptions in the
future. The fixed term of the Company's contract with LDDS WorldCom expires on
November 30, 1997, after which the contract will continue on a month-to-month
basis until renegotiated by the parties or terminated by either party. There can
be no assurance that LDDS WorldCom and the Company's other telecommunications
providers will continue to provide long distance services to the Company at
attractive rates, or at all, or that the Company will be able to obtain such
services in the future from these or other long distance providers on the scale
and within the time frames required by the Company. Any failure to obtain such
services on a timely basis at an affordable cost, or any significant delays or
interruptions of service from such carriers, would have a material adverse
effect on the Company's business, financial condition and results of operations.
All of the faxboards used in the Company's telecommunications nodes are supplied
by Brooktrout Technology, Inc. ("Brooktrout"). The Company purchases Brooktrout
faxboards on a non-exclusive basis pursuant to purchase orders placed from
time-to-time, carries a limited inventory of faxboards and has no guaranteed
supply arrangement with Brooktrout. In addition to faxboards, many of the
routers, switches and other hardware components used in the Company's network
infrastructure are supplied by sole or limited sources on a non-exclusive,
purchase order basis. There can be no assurance that Brooktrout or the Company's
other suppliers will not enter into exclusive arrangements with the Company's
competitors, or cease selling these components to the Company at commercially
reasonable prices, or at all. The anticipated expansion of the Company's network
infrastructure is expected to place a significant demand on the Company's
suppliers, some of which have limited resources and production capacity. In
addition, certain of the Company's suppliers, in turn, rely on sole or limited
sources of supply for components included in their products. Failure of the
Company's suppliers to adjust to meet such increasing demand may prevent them
from continuing to supply components and products in the quantities and quality
and at the times required by the Company, or at all. The Company's inability to
obtain sufficient quantities of sole or limited source components or to develop
alternative sources if required could result in delays and increased costs in
the expansion of the Company's network infrastructure or in the inability of the
Company to properly maintain the existing network infrastructure, which would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Limited Protection of Intellectual Property Rights; Risk of Third Party Claims
of Infringement. The Company's success is dependent upon its proprietary
technology. The Company relies primarily on a combination of contract, copyright
and trademark law, trade secrets, confidentiality agreements and contractual
provisions to protect its proprietary rights. The Company has patent
applications pending for its faxSAV Connector and for its "e-mail Stamps"
security technology incorporated into its faxMailer service. There can be no
assurance that patents will issue from such applications or that present or
future patents will provide sufficient protection to the Company's present or
future technologies, services and processes. In addition, there can be no
assurance that others will not independently develop substantially equivalent
proprietary information or obtain access to the Company's know-how. Despite the
Company's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of the Company's services or to obtain and use
information that the Company regards as proprietary. In addition, the laws of
some foreign countries do not protect the Company's proprietary rights to the
same extent as do the laws of the United States. There can be no assurance that
the steps taken by the Company to protect its proprietary rights will
13
<PAGE>
be adequate or that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technologies.
The Company is not aware that any of its services, trademarks or other
proprietary rights infringe upon valid proprietary rights of third parties.
However, the Company received a letter in the third quarter of 1995 stating that
the Company's faxSAV Connector may be utilizing a call diversion methodology
patented by such correspondent. To the Company's knowledge, such third party has
not initiated a suit, action, proceeding or investigation relating to any
alleged infringement by the Company of such patent. In addition, the Company is
aware that another third party has recently brought patent infringement actions
against several facsimile service providers. There can be no assurance that
these or other third parties will not assert infringement claims against the
Company in the future. Patents have been granted recently on fundamental
technologies in the communications and desktop software areas, and patents may
issue which relate to fundamental technologies incorporated in the Company's
services. As patent applications in the United States are not publicly disclosed
until the patent issues, applications may have been filed which, if issued as
patents, could relate to the Company's services. The Company could incur
substantial costs and diversion of management resources with respect to the
defense of any claims that the Company has infringed upon the proprietary rights
of others, which costs and diversion could have a material adverse effect on the
Company's business, financial condition and results of operations. Furthermore,
parties making such claims could secure a judgment awarding substantial damages,
as well as injunctive or other equitable relief which could effectively block
the Company's ability to license and sell its services in the United States or
abroad. Any such judgment could have a material adverse effect on the Company's
business, financial condition and results of operations. In the event a claim
relating to proprietary technology or information is asserted against the
Company, the Company may seek licenses to such intellectual property. There can
be no assurance, however, that licenses could be obtained on terms acceptable to
the Company, or at all. The failure to obtain any necessary licenses or other
rights could have a material adverse effect on the Company's business, financial
condition and results of operations.
Risk of Software Defects or Development Delays. Software-based services and
equipment, such as the Company's faxSAV for Internet suite of services and the
faxSAV Connector, may contain undetected errors or failures when introduced or
when new versions are released. There can be no assurance that, despite testing
by the Company and by current and potential customers, errors will not be found
in such software or other releases after commencement of commercial shipments,
or that the Company will not experience development delays, resulting in delays
in the shipment of software and a loss of or delay in market acceptance, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations.
Dependence on Key Personnel. The Company's future performance depends in
significant part upon the continued service of its key technical, sales and
senior management personnel, none of whom is bound by an employment agreement.
Competition for such personnel is intense, and there can be no assurance that
the Company can retain its key technical, sales and managerial employees or that
it can attract, assimilate or retain other highly qualified technical, sales and
managerial personnel in the future.
Risks Related to Potential Acquisitions. The Company may in the future pursue
acquisitions of complementary services or product lines, technologies or
businesses, although the Company has no present understandings, commitments or
agreements with respect to any such acquisitions. Future acquisitions by the
Company could result in potentially dilutive issuances of equity securities, the
incurrence of debt and contingent liabilities and amortization expenses related
to goodwill and other intangible assets, which could materially adversely affect
the Company's business, financial condition and results of operations. In
addition, acquisitions involve numerous risks, including difficulties in the
assimilation of the operations, technologies, services and products of the
acquired companies and the diversion of management's attention from other
business concerns. In the event that any such acquisition were to occur, there
can be no assurance that the Company's business, financial condition and results
of operations would not be materially adversely affected.
Reliance on International Strategic Alliances. The Company intends to establish
and build an international customer base by forming strategic sales and
marketing alliances with foreign Internet service providers, telecommunications
companies and resellers. There can be no assurance that the Company will be able
to
14
<PAGE>
form or, if formed, maintain such strategic alliances. The Company's success in
developing an international customer base depends not only on the formation of
such alliances but also on the success of these partners and their ability to
market the Company's services. The failure to form and maintain such strategic
alliances or the failure of these partners to successfully develop and sustain a
market for the Company's service will have a material adverse effect on the
Company's ability to establish and build an international customer base, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Government Regulation. The Company is subject to regulation by the Federal
Communications Commission (the "FCC"), by various state public service and
public utility commissions and by various international regulatory authorities.
FaxSav is licensed by the FCC as an authorized telecommunications company and is
classified as a "non-dominant interexchange carrier." Generally, the FCC has
chosen not to exercise its statutory power to closely regulate the charges or
practices of non-dominant carriers. Nevertheless, the FCC acts upon complaints
against such carriers for failure to comply with statutory obligations or with
the FCC's rules, regulations and policies. The FCC also has the power to impose
more stringent regulatory requirements on the Company and to change its
regulatory classification. There can be no assurance that the FCC will not
change the Company's regulatory classification or otherwise subject the Company
to more burdensome regulatory requirements.
In connection with the anticipated deployment of Internet-capable nodes in
countries throughout the world, the Company will be required to satisfy a
variety of foreign regulatory requirements. The Company intends to explore and
seek to comply with these requirements on a country-by-country basis as the
deployment of Internet-capable facsimile nodes continues. There can be no
assurance that the Company will be able to satisfy the regulatory requirements
in each of the countries currently targeted for node deployment, and the failure
to satisfy such requirements may prevent the Company from installing
Internet-capable facsimile nodes in such countries. The failure to deploy a
number of such nodes could have a material adverse effect on the Company's
business, operating results and financial condition.
The Company's nodes and its faxLauncher service utilize encryption technology in
connection with the routing of customer documents through the Internet. The
export of such encryption technology is regulated by the United States
government. The Company has authority for the export of such encryption
technology other than to Cuba, Iran, Libya, North Korea, Sudan and Syria.
Nevertheless, there can be no assurance that such authority will not be revoked
or modified at any time for any particular jurisdiction or in general. In
addition, there can be no assurance that such export controls, either in their
current form or as may be subsequently enacted, will not limit the Company's
ability to distribute its services outside of the United States or
electronically. While the Company takes precautions against unlawful exportation
of its software, the global nature of the Internet makes it virtually impossible
to effectively control the distribution of its services. Moreover, future
Federal or state legislation or regulation may further limit levels of
encryption or authentication technology. Any such export restrictions, the
unlawful exportation of the Company's services, or new legislation or regulation
could have a material adverse effect on the Company's business, financial
condition and results of operations.
15
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No.
- -----------
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation
(incorporated by reference to exhibit 3.3 to the Registrant's
Registration Statement on Form S-1, Registration No. 333-09613
("Registrant's Registration Statement")).
3.2 By-laws of the Registrant (incorporated by reference to exhibit 3.4 and
3.5 to the Registrant's Registration Statement).
4.1 Specimen Common Stock Certificate (incorporated by reference to exhibit
4.1 to the Registrant's Registration Statement).
4.2 See Exhibits 3.1 and 3.2 for provisions of the Certificate of
Incorporation and Bylaws of the Registrant defining rights of holders
of Common Stock of the Registrant.
10.1 Fifth Amended and Restated Investor Rights Agreement (incorporated by
reference to exhibit 10.1 to the Registrant's Registration Statement).
10.2 Amendment and waiver to Fifth Amended and Restated Investor Rights
Agreement (incorporated by reference to exhibit 10.2 to the
Registrant's Registration Statement).
10.3 1990 Stock Option Plan (incorporated by reference to exhibit 10.3 to
the Registrant's Registration Statement).
10.4 1996 Stock Option/Stock Issuance Plan (incorporated by reference to
exhibit 10.4 to the Registrant's Registration Statement).
10.5 Form of Officer Severance Agreement (incorporated by reference to
exhibit 10.5 to the Registrant's Registration Statement).
10.6 Form of Director Severance Agreement (incorporated by reference to
exhibit 10.6 to the Registrant's Registration Statement).
10.7** Telecommunications Services Agreement, between LDDS World Com and the
Registrant, dated December 1, 1996
10.8* Agreement between MCI Telecommunications Corporation and the
Registrant, effective March 1, 1996 (incorporated by reference to
exhibit 10.9 to the Registrant's Registration Statement).
16
<PAGE>
10.9 Lease Agreement, dated May 28, 1992, between Metro Four Associates
Limited Partnership, Thornall Associates and the Registrant, as
extended and amended to date (incorporated by reference to exhibit
10.10 to the Registrant's Registration Statement).
10.10 Credit Agreement, dated July 7, 1995, between the Company and Silicon
Valley Bank, as amended to date (incorporated by reference to exhibit
10.11 to the Registrant's Registration Statement).
10.11 Letter Agreement, dated November 1, 1994 between Telstra Incorporated
and the Registrant (incorporated by reference to exhibit 10.12 to the
Registrant's Registration Statement).
10.12 Series B Preferred Stock Warrant between the Registrant and Comdisco,
Inc., dated May 30, 1991 (incorporated by reference to exhibit 10.14 to
the Registrant's Registration Statement).
10.13 Series B Preferred Stock Warrant between the Registrant and Comdisco,
Inc., dated September 16, 1992 (incorporated by reference to exhibit
10.15 to the Registrant's Registration Statement).
10.14 Series D Preferred Stock Warrant between the Registrant and Comdisco,
Inc., dated October 28, 1993 (incorporated by reference to exhibit
10.16 to the Registrant's Registration Statement).
10.15 Common Stock Warrant between the Registrant and LTI Ventures Leasing
Corp., dated February 15, 1993 (incorporated by reference to exhibit
10.17 to the Registrant's Registration Statement).
10.16 Common Stock Warrant between the Registrant and LTI Ventures Leasing
Corp., dated May 5, 1994 (incorporated by reference to exhibit 10.18 to
the Registrant's Registration Statement).
10.17 Common Stock Warrant between the Registrant and Silicon Valley
Bancshares, dated April 6, 1992 (incorporated by reference to exhibit
10.19 to the Registrant's Registration Statement).
10.18 Common Stock Warrant between the Registrant and Silicon Valley
Bancshares, dated July 7, 1995 (incorporated by reference to exhibit
10.20 to the Registrant's Registration Statement).
11. Statement Re: Computation of Earnings per Share.
27. Financial Data Schedule.
- ----------
* Confidential treatment granted
** Confidential treatment requested
(b) Reports on Form 8-K
No reports on Form 8-K.
17
<PAGE>
SIGNATURES
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.
FAXSAV INCORPORATED
-------------------
(Registrant)
Date: May 12, 1997 /s/ Thomas F. Murawski
-----------------------------------------
Thomas F. Murawski
Chief Executive Officer, President and
Chairman of the Board of Directors
Date: May 12, 1997 /s/ Peter S. Macaluso
-----------------------------------------
Peter S. Macaluso
Chief Financial Officer
(Principal Financial and Accounting Officer),
Treasurer and Secretary
18
<PAGE>
FAXSAV INCORPORATED
Exhibit Index
Exhibit No.
- -----------
3.1 Registrant's Sixth Amended and Restated Certificate of Incorporation
(incorporated by reference to exhibit 3.3 to the Registrant's
Registration Statement on Form S-1, Registration No. 333-09613
("Registrant's Registration Statement")).
3.2 By-laws of the Registrant (incorporated by reference to exhibit 3.4 and
3.5 to the Registrant's Registration Statement).
4.1 Specimen Common Stock Certificate (incorporated by reference to exhibit
4.1 to the Registrant's Registration Statement).
4.2 See Exhibits 3.1 and 3.2 for provisions of the Certificate of
Incorporation and Bylaws of the Registrant defining rights of holders
of Common Stock of the Registrant.
10.1 Fifth Amended and Restated Investor Rights Agreement (incorporated by
reference to exhibit 10.1 to the Registrant's Registration Statement).
10.2 Amendment and waiver to Fifth Amended and Restated Investor Rights
Agreement (incorporated by reference to exhibit 10.2 to the
Registrant's Registration Statement).
10.3 1990 Stock Option Plan (incorporated by reference to exhibit 10.3 to
the Registrant's Registration Statement).
10.4 1996 Stock Option/Stock Issuance Plan (incorporated by reference to
exhibit 10.4 to the Registrant's Registration Statement).
10.5 Form of Officer Severance Agreement (incorporated by reference to
exhibit 10.5 to the Registrant's Registration Statement).
10.6 Form of Director Severance Agreement (incorporated by reference to
exhibit 10.6 to the Registrant's Registration Statement).
10.7** Telecommunications Services Agreement, between LDDS WorldCom and the
Registrant, dated December 1, 1996.
10.8* Agreement between MCI Telecommunications Corporation and the
Registrant, effective March 1, 1996 (incorporated by reference to
exhibit 10.9 to the Registrant's Registration Statement).
10.9 Lease Agreement, dated May 28, 1992, between Metro Four Associates
Limited Partnership, Thornall Associates and the Registrant, as
extended and amended to date (incorporated by reference to exhibit
10.10 to the Registrant's Registration Statement).
10.10 Credit Agreement, dated July 7, 1995, between the Company and Silicon
Valley Bank, as amended to date (incorporated by reference to exhibit
10.11 to the Registrant's Registration Statement).
10.11 Letter Agreement, dated November 1, 1994 between Telstra Incorporated
and the Registrant (incorporated by reference to exhibit 10.12 to the
Registrant's Registration Statement).
10.12 Series B Preferred Stock Warrant between the Registrant and Comdisco,
Inc., dated May 30, 1991 (incorporated by reference to exhibit 10.14 to
the Registrant's Registration Statement).
10.13 Series B Preferred Stock Warrant between the Registrant and Comdisco,
Inc., dated September 16, 1992 (incorporated by reference to exhibit
10.15 to the Registrant's Registration Statement).
<PAGE>
10.14 Series D Preferred Stock Warrant between the Registrant and Comdisco,
Inc., dated October 28, 1993 (incorporated by reference to exhibit
10.16 to the Registrant's Registration Statement).
10.15 Common Stock Warrant between the Registrant and LTI Ventures Leasing
Corp., dated February 15, 1993 (incorporated by reference to exhibit
10.17 to the Registrant's Registration Statement).
10.16 Common Stock Warrant between the Registrant and LTI Ventures Leasing
Corp., dated May 5, 1994 (incorporated by reference to exhibit 10.18 to
the Registrant's Registration Statement).
10.17 Common Stock Warrant between the Registrant and Silicon Valley
Bancshares, dated April 6, 1992 (incorporated by reference to exhibit
10.19 to the Registrant's Registration Statement).
10.18 Common Stock Warrant between the Registrant and Silicon Valley
Bancshares, dated July 7, 1995 (incorporated by reference to exhibit
10.20 to the Registrant's Registration Statement).
11. Statement Re: Computation of Earnings per Share.
27. Financial Data Schedule.
- ----------
* Confidential treatment granted
** Confidential treatment requested
(b) Reports on Form 8-K
No reports on Form 8-K.
WILMAX UNIVERSAL(TM) TSA#FSI-961201
This TELECOMMUNICATIONS SERVICES AGREEMENT (hereinafter
referred to as the "Agreement" or the "TSA") is entered into as of the 1st day
of December, 1996, by and between WORLDCOM NETWORK SERVICES, INC. d/b/a WilTel,
a Delaware corporation, with its principal office at One Williams Center, Tulsa,
Oklahoma, 74172 ("WilTel") and FAXSAV, INCORPORATED, a Delaware corporation,
with its principal office at 399 Thornall St., Edison, NJ 08837 ("Customer").
WITNESSETH:
WilTel agrees to provide and Customer agrees to accept switched
telecommunications services ("Switched Services") and other associated services
(collectively the "Services"), (i) as described in the Service Schedules
identified herewith, (ii) subject to the terms and conditions contained in this
Agreement, including without limitation those terms and conditions contained in
the Program Enrollment Terms ("PET") which are attached hereto and incorporated
herein by reference, and (iii) in conformity with each Service Request
(described below) which is accepted hereunder.
In the event of a conflict between the terms of this Agreement, the
PET, the Service Schedule and the Service Request(s), the following order of
precedence will prevail: (1) PET, (2) Service Schedule, (3) the Agreement, and
(4) Service Request(s).
NOW, THEREFORE, in consideration of the above premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Applicable Terms.
(A) Service Term This Agreement shall commence as of the
Effective Date set forth in the PET and shall be subject to the "Service Term"
as described therein (which Service Term shall include any automatic
extensions). Customer shall be liable for all charges associated with actual
usage of the Service in question during the Service Term and any extension
thereof.
(B) PET The PET, as subscribed to by the parties, shall set
forth the Discount Schedule applicable to Switched Service charges due under
this Agreement, Customer's Minimum Monthly Commitment, if any, and other
information necessary to provide the Service under this Agreement.
Page 1 of 13 CONFIDENTIAL
<PAGE>
(C) Start of Service WilTel's obligation to provide and
Customer's obligation to accept and pay for non-usage sensitive charges for
Service shall be binding to the extent provided for in this Agreement upon the
submission of an acceptable Service Request to WilTel by Customer. Customer's
obligation to pay for usage sensitive charges for Switched Services shall
commence with respect to any Service as of the earlier of (i) the "Requested
Service Date" set forth in each Service Request, or (ii) the date the Service in
question is made available to Customer and used ("Start of Service"). Start of
Service for particular Services shall be further described in the Service
Schedule relevant to the Switched Service in question.
(D) Service Schedules Services to be provided under this
Agreement shall be described in the WilTel Service Schedule which is subscribed
to by authorized representatives of WilTel and Customer (collectively referred
to as the "Service Schedules"). Each Service Schedule shall become a part of
this Agreement to the extent that it describes the particular Services therefor,
specific terms and other information necessary or appropriate for WilTel to
provide such Service(s) to Customer.
(E) Service Requests Customer's requests to initiate or cancel
Services shall be described in an appropriate WilTel Service Request ("Service
Requests"). Service Requests may consist of machine readable tapes, facsimiles
or other means approved by WilTel. Further, Service Requests shall specify all
reasonable information, as determined by WilTel, necessary or appropriate for
WilTel to provide the Service(s) in question, which shall include without
limitation, the type, quantity and end point(s) (when necessary) of circuits
comprising a Service Interconnection as described in the applicable Service
Schedules, or automatic number identification ("ANI") information relevant to
the Service(s), the Requested Service Date, and charges, if any, relevant to the
Services described in the Service Request. After WilTel's receipt and
verification of a valid Service Request for SWITCHED Service (as defined in the
Service Schedule) requiring a change in the primary interexchange carrier
("PIC"), WilTel agrees to (i) submit the ANI(s) relevant to such Service
Requests to the following local exchange carriers ("LECs") (with which WilTel
currently has electronic interface capabilities) within ten (10) days:
Ameritech, Bell Atlantic, BellSouth, Nynex, Pacific Bell, Southwestern Bell, US
West, GTE and United, and (ii) submit the ANI(s) relevant to such Service
Requests to those LECs with which WilTel does not have electronic interface
capabilities within a reasonable time.
2. Cancellation.
(A) Cancellation Charge At any time after the Effective Date,
Customer may cancel this Agreement if Customer provides written notification
thereof to WilTel not less than thirty (30) days prior to the effective date of
cancellation. In such case (or in the event WilTel terminates this Agreement as
provided in Section 8), Customer
Page 2 of 13 CONFIDENTIAL
<PAGE>
shall pay to WilTel all charges for Service provided through the effective date
of such cancellation plus a cancellation charge (the "Cancellation Charge")
equal to [ * ] percent ([ * ]%) of the Minimum Monthly Commitment, if any, (as
described in the PET) that would have become due for the unexpired portion of
the Term.
(B) Liquidated Damages It is agreed that WilTel's damages in
the event Customer cancels Service shall be difficult or impossible to
ascertain. The provision for a cancellation charge in Subsection 2(A) above is
intended, therefore, to establish liquidated damages in the event of a
cancellation and is not intended as a penalty.
(C) Cancellation Without Charge Notwithstanding anything to
the contrary contained in Subsection 2(A) above, Customer may cancel this
Agreement without incurring any cancellation charge if (i) WilTel fails to
provide a network as warranted in Section 9 below; (ii) WilTel fails to deliver
call detail records promptly based on the frequency selected by Customer (i.e.,
monthly, weekly or daily); or (iii) WilTel fails to submit ANI(s) relevant to
such Service Requests to the LECs within the time period described in Subsection
1(E) above. Provided, however, Customer must give WilTel written notice of any
such default and an opportunity to cure such default within five (5) days of the
notice. In the event WilTel fails to cure any such default within the five-day
period on more than three (3) occasions within any six (6) month period,
Customer may cancel this Agreement without incurring any cancellation charge.
3. Customer's End Users.
(A) End Users Customer will obtain and upon WilTel's request
provide WilTel (within two (2) business days of the date of the request) a
written Letter of Agency ("LOA") acceptable to WilTel [or with any other means
approved by the Federal Communications Commission ("FCC")], for each ANI
indicating the consent of the end users of Customer ("End Users") to be served
by Customer and transferred (by way of change of such End User's designated PIC)
to the WilTel network prior to order processing. Each LOA will provide, among
other things, that the End Users have consented to the transfer being performed
by Customer or Customer's designee. When applicable, Customer will be
responsible for notifying End Users, in writing (or by any other means approved
by the FCC) that (i) a transfer charge will be reflected on their LEC bill for
effecting a change in their primary interexchange carrier, (ii) the entity name
under which their interstate, intrastate and/or operator services will be billed
(if different from Customer), and (iii) the "primary" telephone number(s) to be
used for maintenance and questions concerning their long distance service and/or
billing. Customer agrees to send WilTel a copy of the documentation Customer
uses to satisfy the above requirements promptly upon request of WilTel. WilTel
may change the foregoing requirements for Customer's confirming orders and/or
for notifying End Users regarding the transfer charge at any time in order to
conform with applicable FCC and state regulations.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 3 of 13 CONFIDENTIAL
<PAGE>
Provided, however, Customer will be solely responsible for ensuring that the
transfer of End Users to the WilTel network conforms with applicable FCC and
state regulations, including without limitation, the regulations established by
the FCC with respect to verification of orders for long distance service
generated by telemarketing as promulgated in 47 C.F.R., Part 64, Subpart K,
ss.64.1100 or any successor regulation(s).
(B) Transfer Charges/Disputed Transfers Customer agrees that
it is responsible for (i) all charges incurred by WilTel to change the PIC of
End Users to the WilTel network, (ii) all charges incurred by WilTel to change
End Users back to their previous PIC arising from disputed transfers to the
WilTel network plus an administrative charge equal to [ * ] percent ([ * ]%) of
such charges, and (iii) any other damages suffered by or awards against WilTel
resulting from disputed transfers.
(C) Excluded ANIs WilTel has the right to reject any ANI
supplied by Customer for any of the following reasons: (i) WilTel is not
authorized to provide or does not provide long distance services in the
particular jurisdiction in which the ANI is located, (ii) a particular ANI
submitted by Customer is not in proper form, (iii) Customer is not certified to
provide long distance services in the jurisdiction in which the ANI is located,
(iv) Customer is in default of this Agreement, (v) Customer fails to cooperate
with WilTel in implementing reasonable verification processes determined by
WilTel to be necessary or appropriate in the conduct of business, or (vi) any
other circumstance reasonably determined by WilTel which could adversely affect
WilTel's performance under this Agreement or WilTel's general ability to
transfer its other customers or other end users to the WilTel network, including
without limitation, WilTel's ability to electronically effect PIC changes with
the LECs. In the event WilTel rejects an ANI, WilTel will notify Customer as
soon as possible of its decision specifically describing the rejected ANI and
the reason(s) for rejecting that ANI, and will not incur any further liability
under this Agreement with regard to that ANI. Further, any ANI requested by
Customer for Switched Service may be deactivated by WilTel if no Switched
Service billings relevant thereto are generated in any three (3) consecutive
calendar month/billing periods. WilTel will be under no obligation to accept
ANIs within the three (3) full calendar month period preceding the scheduled
expiration of the Term.
(D) Records Customer will maintain documents and records
("Records") supporting Customer's re-sale of Switched Service, including, but
not limited to, appropriate and valid LOAs from End Users for a period of not
less than 12 months or such other longer period as may be required by applicable
law, rule or regulation. Customer shall indemnify WilTel for any costs, charges
or expenses incurred by WilTel arising from disputed PIC selections involving
Switched Service to be provided to Customer for which Customer cannot produce an
appropriate LOA relevant to the ANI and PIC charge in
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 4 of 13 CONFIDENTIAL
<PAGE>
question, or when WilTel is not reasonably satisfied that the validity of a
disputed LOA has been resolved.
(E) Customer Service Customer will be solely responsible for
billing the End Users and providing the End Users with customer service.
Customer agrees to immediately notify WilTel in the event an End User notifies
Customer of problems associated with the Service, including without limitation,
excess noise, echo, or loss of Service.
4. Customer's Responsibilities.
(A) Expedite Charges In the event Customer requests
expeditious Service and/or changes to Service Orders and WilTel agrees to such
request, WilTel will pass through the charges assessed by any supplying parties
(e.g., local access providers) involved at the same rate to Customer. WilTel may
further condition its performance of such request upon Customer's payment of
additional charges to WilTel.
(B) Fraudulent Calls Customer shall indemnify and hold WilTel
harmless from all costs, expenses, claims or actions arising from fraudulent
calls of any nature which may comprise a portion of the Service to the extent
that the party claiming the call(s) in question to be fraudulent is (or had been
at the time of the call) an End User of the Service through Customer or an end
user of the Service through Customer's distribution channels. Customer shall not
be excused from paying WilTel for Service provided to Customer or any portion
thereof on the basis that fraudulent calls comprised a corresponding portion of
the Service. In the event WilTel discovers fraudulent calls being made (or
reasonably believes fraudulent calls are being made), nothing contained herein
shall prohibit WilTel from taking immediate action (without notice to Customer)
that is reasonably necessary to prevent such fraudulent calls from taking place,
including without limitation, denying Service to particular ANIs or terminating
Service to or from specific locations.
5. Charges and Payment Terms.
(A) Payment WilTel billings for Service are made on a monthly
basis (or such other basis as may be mutually agreed to by the parties)
following Start of Service. Subject to Subsection 5(D) below, Service shall be
billed at the rates as described in the PET, and Service Requests, as the case
may be. Discounts, if any, applicable to the rates for certain Switched Services
are also set forth in the PET. Customer will pay each WilTel invoice in full for
Switched Service within thirty (30) days of the invoice date set forth on each
WilTel invoice to Customer ("Due Date"). If payment is not received by WilTel on
or before the Due Date, Customer shall also pay a late fee in the amount of the
lesser of [ * ] percent ([ * ]%) of the unpaid balance of the Service charges
per month or the maximum lawful rate under applicable state law.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 5 of 13 CONFIDENTIAL
<PAGE>
(B) Definitions Time of day rate periods (including WilTel
Recognized National Holidays) will be as described in WilTel's F.C.C. Tariff No.
5.
(C) Taxes Customer acknowledges and understands that WilTel
computes all charges herein exclusive of any applicable federal, state or local
use, excise, gross receipts, sales and privilege taxes, duties, fees or similar
liabilities (other than general income or property taxes), whether charged to or
against WilTel or Customer because of the Service furnished to Customer
("Additional Charges"). Customer shall pay such Additional Charges in addition
to all other charges provided for herein.
(D) Modification of Charges WilTel reserves the right to
eliminate Service offerings, modify charges and/or add charges for Service
offerings (which charge modifications shall not exceed then-current generally
available WilTel charges for comparable services), upon not less than sixty (60)
days prior notice to Customer, which notice will state the effective date for
the charge modification. In the event WilTel notifies Customer of the
elimination of a Service offering and/or an increase in the charges, Customer
may terminate this Agreement, without incurring a cancellation charge only with
respect to the Service offering affected by the increase in charges. In order to
cancel that offering, Customer must notify WilTel, in writing, at least thirty
(30) days prior to the effective date of the increase in charges. Further, in
the event Customer cancels its subscription to a Switched Service offering as
described in this Subsection 5(D), WilTel and Customer agree to negotiate in
good faith concerning Customer's Minimum Monthly Commitment, if any, described
in the PET.
(E) Billing Disputes Notwithstanding the foregoing, late fees
shall apply (but shall not be due and payable for a period of sixty (60) days
following the Due Date therefor) for amounts reasonably disputed by Customer,
provided Customer: (i) pays all undisputed charges on or before the Due Date,
(ii) presents a written statement of any billing discrepancies to WilTel in
reasonable detail on or before the Due Date of the invoice in question, and
(iii) negotiates in good faith with WilTel for the purpose of resolving such
dispute within said sixty (60) day period. In the event such dispute is resolved
in favor of WilTel, Customer agrees to pay WilTel the disputed amounts together
with any applicable late fees within ten (10) days of the resolution. In the
event such dispute is resolved in favor of Customer, Customer will receive a
credit for the disputed charges in question and the applicable late fees. In the
event the dispute can not be resolved within such sixty (60) day period (unless
WilTel has agreed in writing to extend such period) all disputed amounts
together with late fees shall become due and payable, and this provision shall
not be construed to prevent Customer from pursuing any available legal remedies.
WilTel shall not be obligated to consider any Customer notice of billing
discrepancies which are
Page 6 of 13 CONFIDENTIAL
<PAGE>
received by WilTel more than sixty days following the Due Date of the invoice in
question.
(F) Suspension of Service In the event charges due pursuant to
WilTel's invoice are not paid in full by the Due Date, WilTel shall have the
right, after giving Customer ten (10) days prior notice, to suspend all or any
portion of the Service to Customer ("Suspension Notice") until such time
(designated by WilTel in its Suspension Notice) as Customer has paid in full all
charges then due to WilTel, including any late fees. Following such payment,
WilTel shall reinstitute Service to Customer only when Customer provides WilTel
with satisfactory assurance of Customer's ability to pay for Service (i.e., a
deposit, letter of credit or other means acceptable to WilTel) and Customer's
advance payment of the cost of reinstituting Service. If Customer fails to make
the required payment by the date set forth in the Suspension Notice, Customer
will be deemed to have canceled the Service suspended effective as of the date
of suspension. Such cancellation shall not relieve Customer for payment of
applicable cancellation charges as described in Section 2.
6. Credit. Customer's execution of this Agreement signifies
Customer's acceptance of WilTel's initial and continuing credit approval
procedures and policies. WilTel reserves the right to withhold initiation or
full implementation of Service under this Agreement pending WilTel's initial
satisfactory credit review and approval thereof which may be conditioned upon
terms specified by WilTel, including, but not limited to, security for payments
due hereunder in the form of a cash deposit or other means. WilTel reserves the
right to modify its requirements, if any, with respect to any security or other
assurance provided by Customer for payments due hereunder in light of Customer's
actual usage when compared to projected usage levels upon which any security or
assurance requirement was based.
7. Creditworthiness. If at any time there is a material adverse
change in Customer's creditworthiness, then in addition to any other remedies
available to WilTel, WilTel may elect, in its sole discretion, to exercise one
or more of the following remedies: (i) cause Start of Service for Service
described in a previously executed Service Request to be withheld; (ii) cease
providing Service pursuant to a Suspension Notice; (iii) decline to accept a
Service Request or other requests from Customer to provide Service which WilTel
may otherwise be obligated to accept and/or (iv) condition its provision of
Service or acceptance of a Service Request on Customer's assurance of payment
which shall be a deposit or such other means to establish reasonable assurance
of payment. An adverse material change in Customer's creditworthiness shall
include, but not be limited to: (i) Customer's default of its obligations to
WilTel under this or any other agreement with WilTel; (ii) failure of Customer
to make full payment of charges due hereunder on or before the Due Date on three
(3) or more occasions during any period of twelve (12) or fewer months or
Customer's failure to make such payment on or before the Due Date in any two (2)
consecutive months; (iii) acquisition of Customer (whether in whole or by
majority or controlling interest) by an entity which is insolvent, which is
subject to bankruptcy or insolvency proceedings, which owes past due
Page 7 of 13 CONFIDENTIAL
<PAGE>
amounts to WilTel or any entity affiliated with WilTel or which is a materially
greater credit risk than Customer; or, (iv) Customer's being subject to or
having filed for bankruptcy or insolvency proceedings or the legal insolvency of
Customer.
8. Remedies for Breach. In the event Customer is in breach of this
Agreement, including without limitation, failure to pay charges due hereunder by
the date stated in the Suspension Notice described in Subsection 5(F), WilTel
shall have the right, after giving Customer five (5) days prior notice, and in
addition to foreclosing any security interest WilTel may have, to (i) terminate
this Agreement; (ii) withhold billing information from Customer; and/or (iii)
contact the End Users (for whom calls are originated and terminated solely over
facilities comprising the WilTel network) directly and bill such End Users
directly until such time as WilTel has been paid in full for the amount owed by
Customer. If Customer fails to make payment by the date stated in the Suspension
Notice and WilTel, after giving Customer five (5) days prior notice, terminates
this Agreement as provided in this Section 8, such termination shall not relieve
Customer for payment of applicable cancellation charges as described in Section
2 above.
9. Warranty. WilTel will use reasonable efforts under the
circumstances to maintain its overall network quality. The quality of Service
provided hereunder shall be consistent with telecommunications common carrier
industry standards, government regulations and sound business practices. WILTEL
MAKES NO OTHER WARRANTIES ABOUT THE SERVICE PROVIDED HEREUNDER, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE.
10. Liability; General Indemnity; Reimbursement.
(A) Limited Liability IN NO EVENT WILL EITHER PARTY HERETO BE
LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
LOSSES OR DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF REVENUE, LOSS OF
CUSTOMERS OR CLIENTS, LOSS OF GOODWILL OR LOSS OF PROFITS ARISING IN ANY MANNER
FROM THIS AGREEMENT AND THE PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS
HEREUNDER.
(B) General Indemnity In the event parties other than Customer
(e.g., Customer's End Users) shall have use of the Service through Customer,
then Customer agrees to forever indemnify and hold WilTel, its affiliated
companies and any third-party provider or operator of facilities employed in
provision of the Service harmless from and against any and all claims, demands,
suits, actions, losses, damages, assessments or payments which those parties may
assert arising out of or relating to any defect in the Service.
(C) Reimbursement Customer agrees to reimburse WilTel for all
reasonable costs and expenses incurred by WilTel due to WilTel's direct
participation (either as a party or witness) in any administrative, regulatory
or criminal proceeding concerning Customer
Page 8 of 13 CONFIDENTIAL
<PAGE>
if WilTel's involvement in said proceeding is based solely on WilTel's provision
of Services to Customer.
11. Force Majeure. If WilTel's performance of this Agreement or
any obligation hereunder is prevented, restricted or interfered with by causes
beyond its reasonable control including, but not limited to, acts of God, fire,
explosion, vandalism, cable cut, storm or other similar occurrence, any law,
order, regulation, direction, action or request of the United States government,
or state or local governments, or of any department, agency, commission, court,
bureau, corporation or other instrumentality of any one or more such
governments, or of any civil or military authority, or by national emergency,
insurrection, riot, war, strike, lockout or work stoppage or other labor
difficulties, or supplier failure, shortage, breach or delay, then WilTel shall
be excused from such performance on a day-to-day basis to the extent of such
restriction or interference. WilTel shall use reasonable efforts under the
circumstances to avoid or remove such causes or nonperformance and shall proceed
to perform with reasonable dispatch whenever such causes are removed or cease.
12. State Certification. Customer warrants that in all
jurisdictions in which it provides long distance services that require
certification, it has obtained the necessary certification from the appropriate
governmental authority. Further, if required by WilTel, Customer agrees to
provide proof of such certification acceptable to WilTel. In the event Customer
is prohibited, either on a temporary or permanent basis, from conducting its
telecommunications operations in a given state, Customer shall (i) immediately
notify WilTel by facsimile, and (ii) send written notice to WilTel within
twenty-four (24) hours of such prohibition.
13. Interstate/Intrastate Service. Except with respect to Switched
Service specifically designated as intrastate Service or international Service,
the rates provided to Customer in a Service Schedule are applicable only to
Switched Service if such Service is used for carrying interstate
telecommunications (i.e., Service subject to FCC jurisdiction). WilTel shall not
be obligated to provide Switched Service with end points within a single state
or Switched Service which originates/terminates at points both of which are
situated within a single state. In those states where WilTel is authorized to
provide intrastate service (i.e., telecommunications transmission services
subject to the jurisdiction of state regulatory authorities), WilTel will, at
its option, provide intrastate Service pursuant to applicable state laws,
regulations and applicable tariff, if any, filed by WilTel with state regulatory
authorities as required by applicable law.
14. Authorized Use of WilTel Name. Without WilTel's prior written
consent, Customer shall not (i) refer to itself as an authorized representative
of WilTel whenever it refers to the Services in promotional, advertising or
other materials, or (ii) use WilTel's logos, trade marks, service marks, or any
variations thereof in any of its promotional, advertising or other materials.
Additionally, Customer shall provide to WilTel for its prior review and written
approval, all promotions, advertising or other materials or activity using or
displaying WilTel's
Page 9 of 13 CONFIDENTIAL
<PAGE>
name or the Services to be provided by WilTel. Customer agrees to change or
correct, at Customer's expense, any such material or activity which WilTel, in
its sole judgment, determines to be inaccurate, misleading or otherwise
objectionable. Customer is explicitly authorized to only use the following
statements in its sales literature: (i) "Customer utilizes the WilTel network",
(ii) "Customer utilizes WilTel's facilities", (iii) "WilTel provides only the
network facilities", and (iv) "WilTel is our network services provider".
15. Notices. Notices under this Agreement shall be in writing and
delivered to the person identified below at the offices of the parties as they
appear below or as otherwise provided for by proper notice hereunder. Customer
shall notify WilTel in writing if Customer's billing address is different than
the address shown below. The effective date for any notice under this Agreement
shall be the date of actual receipt of such notice by the appropriate party,
notwithstanding the date of mailing.
If to WilTel: WorldCom Network Services, Inc.
One Williams Center, 28th Flr
Tulsa, OK 74172
Attn: Carrier Sales Dept.
If to Customer: Faxsav, Incorporated
399 Thornall Street
Edison, NJ 08837
Telephone No._________________
Fax No.:______________________
16. No-Waiver. No term or provision of this Agreement shall be
deemed waived and no breach or default shall be deemed excused unless such
waiver or consent shall be in writing and signed by the party claimed to have
waived or consented. A consent to waiver of or excuse for a breach or default by
either party, whether express or implied, shall not constitute a consent to,
waiver of, or excuse for any different or subsequent breach or default.
17. Partial Invalidity; Government Action.
(A) Partial Invalidity If any part of any provision of this
Agreement or any other agreement, document or writing given pursuant to or in
connection with this Agreement shall be invalid or unenforceable under
applicable law, rule or regulation, that part shall be ineffective to the extent
of such invalidity only, without in any way affecting the remaining parts of
that provision or the remaining provisions of this Agreement. In such event,
Customer and WilTel will negotiate in good faith with respect to any such
invalid or unenforceable part to the extent necessary to render such part valid
and enforceable.
(B) Government Action Upon thirty (30) days prior notice,
either party shall have the right, without liability to the other, to cancel an
affected portion of the Service if any material rate or term
Page 10 of 13 CONFIDENTIAL
<PAGE>
contained herein and relevant to the affected Service is substantially changed
(to the detriment of the terminating party) or found to be unlawful or the
relationship between the parties hereunder is found to be unlawful by order of
the highest court of competent jurisdiction to which the matter is appealed, the
FCC, or other local, state or federal government authority of competent
jurisdiction.
18. Exclusive Remedies. Except as otherwise specifically provided
for herein, the remedies set forth in this Agreement comprise the exclusive
remedies available to either party at law or in equity.
19. Use of Service. Upon WilTel's acceptance of a Service Request
hereunder, WilTel will provide the Service specified therein to Customer upon
condition that the Service shall not be used for any unlawful purpose. The
provision of Service will not create a partnership or joint venture between the
parties or result in a joint communications service offering to any third
parties, and WilTel and Customer agree that this Agreement, to the extent it is
subject to FCC regulation, is an inter-carrier agreement which is not subject to
the filing requirements of Section 211(a) of the Communications Act of 1934 (47
U.S.C. ss. 211(a)) as implemented in 47 C.F.R. ss. 43.51.
20. Choice of Law; Forum.
(A) Law This Agreement shall be construed under the laws of
the State of Oklahoma without regard to choice of law principles.
(B) Forum Any legal action or proceeding with respect to this
Agreement may be brought in the Courts of the State of Oklahoma in and for the
County of Tulsa or the United States of America for the Northern District of
Oklahoma. By execution of this Agreement, both Customer and WilTel hereby submit
to such jurisdiction, hereby expressly waiving whatever rights may correspond to
either of them by reason of their present or future domicile. In furtherance of
the foregoing, Customer and WilTel hereby agree to service by U.S. Mail at the
notice addresses referenced in Section 15. Such service shall be deemed
effective upon the earlier of actual receipt or seven (7) days following the
date of posting.
21. Proprietary Information.
(A) Confidential Information The parties understand and agree
that the terms and conditions of this Agreement, all documents referenced
(including invoices to Customer for Service provided hereunder) herein,
communications between the parties regarding this Agreement or the Service to be
provided hereunder (including price quotes to Customer for any Service proposed
to be provided or actually provided hereunder), as well as such information
relevant to any other agreement between the parties (collectively, "Confidential
Information"), are confidential as between Customer and WilTel.
Page 11 of 13 CONFIDENTIAL
<PAGE>
(B) Limited Disclosure A party shall not disclose Confidential
Information unless subject to discovery or disclosure pursuant to legal process,
or to any other party other than the directors, officers, and employees of a
party or a party's agents including their respective brokers, lenders, insurance
carriers or bona fide prospective purchasers who have specifically agreed in
writing to nondisclosure of the terms and conditions hereof. Any disclosure
hereof required by legal process shall only be made after providing the
non-disclosing party with notice thereof in order to permit the non-disclosing
party to seek an appropriate protective order or exemption. Violation by a party
or its agents of the foregoing provisions shall entitle the non-disclosing
party, at its option, to obtain injunctive relief without a showing of
irreparable harm or injury and without bond.
(C) Press Releases The parties further agree that any press
release, advertisement or publication generated by a party regarding this
Agreement, the Service provided hereunder or in which a party desires to mention
the name of the other party or the other party's parent or affiliated
company(ies), will be submitted to the non-publishing party for its written
approval prior to publication.
(D) Survival of Confidentiality The provisions of this Section
21 will be effective as of the date of this Agreement and remain in full force
and effect for a period which will be the longer of (i) one (1) year following
the date of this Agreement, or (ii) one (1) year from the termination of all
Service hereunder.
22. Successors and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
or assigns, provided, however, that Customer shall not assign or transfer its
rights or obligations under this Agreement without the prior written consent of
WilTel, which consent shall not be unreasonably withheld, and further provided
that any assignment or transfer without such consent shall be void.
23. General.
(A) Survival of Terms The terms and provisions contained in
this Agreement that by their sense and context are intended to survive the
performance thereof by the parties hereto shall so survive the completion of
performance and termination of this Agreement, including, without limitation,
provisions for indemnification and the making of any and all payments due
hereunder.
(B) Headings Descriptive headings in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
(C) Industry Terms Words having well-known technical or trade
meanings shall be so construed, and all listings of items shall not be taken to
be exclusive, but shall include other items, whether
Page 12 of 13 CONFIDENTIAL
<PAGE>
similar or dissimilar to those listed, as the context reasonably requires.
(D) Rule of Construction No rule of construction requiring
interpretation against the drafting party hereof shall apply in the
interpretation of this Agreement.
24. Entire Agreement. This Agreement consists of (i) all the terms
and conditions contained herein, and, (ii) all documents incorporated herein
specifically by reference. This Agreement constitutes the complete and exclusive
statement of the understandings between the parties and supersedes all proposals
and prior agreements (oral or written) between the parties relating to Service
provided hereunder. No subsequent agreement between the parties concerning the
Service shall be effective or binding unless it is made in writing and
subscribed to by authorized representatives of Customer and WilTel.
IN WITNESS WHEREOF, the parties have executed this WilMAX
UNIVERSAL(TM) Telecommunications Services Agreement on the date first written
above.
WORLDCOM NETWORK SERVICES, FAXSAV, INCORPORATED
INC. d/b/a WilTel
By:/s/ Jos. S. Cusick By:/s/ Peter S. Macaluso
----------------------- --------------------------
(Signature) (Signature)
Joseph S. Cusick Peter S. Macaluso
-------------------------- -----------------------------
(Print Name) (Print Name)
Regional Sales Manager II Vice President and CFO
-------------------------- -----------------------------
(Title) 12-6-96 (Title)
Page 13 of 13 CONFIDENTIAL
<PAGE>
WILMAX UNIVERSAL(TM)
AMENDED AND RESTATED
PROGRAM ENROLLMENT TERMS
These Amended and Restated Program Enrollment Terms (the "PET") are
made this 1st day of December, 1996 (the "Effective Date"), by and between
WorldCom Network Services, Inc. d/b/a WilTel ("WilTel") and FaxSav, Inc.
formerly known as Digitran Corp. ("Customer") and are a part of their agreement
for switched services, more particularly identified as TSA# FSI-961201 (the
"Agreement"). In accordance with the Agreement, charges to Customer for Service
obtained thereunder shall be subject to the Discount Schedule set forth below
and the Agreement shall also be subject to the terms and conditions set forth
herein.
1. PRIOR AGREEMENT: The parties acknowledge that they previously
executed those certain Program Enrollment Terms (the "Prior PET"), Pricing
Exhibit (the "Prior Pricing Exhibit"), and Service Schedule (the "Existing
Service Schedule") to the Agreement all of which are dated April 4, 1994. As of
the Effective Date the parties agree that the Prior PET and the Prior Pricing
Exhibit shall be canceled in their entirety and of no further force or effect
with the exception of certain accrued obligations arising under the Prior PET
such as the payment of money or application of credits accruing prior to the
Effective Date. Further, as of the Effective Date, all Service currently being
provided Customer under the Agreement will be provisioned and maintained by
WilTel taking into account the terms and conditions of this Amended PET and the
Existing Service Schedule.
2. SERVICE TERM: The Service Term shall commence as of the
Effective Date stated above and shall continue for a period of Twelve (12)
Months (the "Service Term"). Upon the expiration of the Service Term, the
Service in question will continue to be provided pursuant to the same terms and
conditions as are then in effect (including without limitation, the applicable
rates and discounts then in effect), subject to termination by either party upon
thirty (30) days prior written notice to the other party. WilTel will not be
obligated to accept any Service Request under the Agreement if Customer's
initial Service Request is not submitted by Customer within thirty (30) days of
the date of this PET and further subject to a Requested Service Date within
ninety (90) days of the date of this PET.
3. DISCOUNT SCHEDULE:
(A) Commencing with the Effective Date and continuing through
the end of the Service Term (including any applicable extensions thereto),
Customer's discount (the "Discount") will be as determined under this Subsection
2(A) taking into account any increase as
Page 1 of 10 CONFIDENTIAL
<PAGE>
described in Subsection 2(B) below. The Discount is based on the number of
months contained in the Service Term divided by 12. If the number of months is
less than 12, the month-to-month (MTM) discounts shall apply. If the product of
the division is equal to or greater than 1 but less than 2, the 1-Year discounts
apply; if the product of the division is equal to or greater than 2 but less
than 3, the 2-Year discounts apply; and, if the product of the division is equal
to or greater than 3, the 3-Year discounts apply. Throughout the Service Term
including any applicable extensions thereto, Customer will automatically receive
the next higher discount when Customer's eligible Monthly Revenue reaches the
next level.
SERVICE TERM
Monthly Revenue (a) MTM 1-YR 2-YR 3-YR
------------------- --- ---- ---- ----
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ] [ * ]
(a) For purposes of this Agreement, "Monthly Revenue" will include all of
Customer's gross measured and per call Switched Service charges (i.e., Directory
Assistance and both Domestic and International) plus (i) three (3) times
Customer's first $[ * ] recurring monthly Private Line Interexchange Service
charges (i.e., both Domestic and International) from WilTel, (ii) two (2) times
Customer's second $[ * ] recurring monthly Private Line Interexchange Service
charges (i.e., both Domestic and International) from WilTel, and (iii)
Customer's recurring monthly Private Line Interexchange Service charges (i.e.,
both Domestic and International) from WilTel in excess of $[ * ]. Monthly
Revenue shall exclude any pro rata charges, access charges, ancillary or special
feature charges, such as, Authorization codes or CDR Tapes, or any other charges
other than those identified by the relevant WilTel invoice as Monthly Recurring
Interexchange Service charges or Switched Service charges.
(b) If Customer's Monthly Revenue is less than $[ * ], Customer must maintain at
least one (1) DS-1 circuit comprising a Service Interconnection as defined in
the Service Schedule with respect to TERMINATION Service and/or 800 ORIGINATION
Service.
(B) If Customer's Minimum Commitment (as described in Section
3 below) is equal to or greater than $[ * ], all of the percentages shown in the
Discount Schedule above will be increased by the following amounts based on
Customer's Minimum Commitment
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 2 of 10 CONFIDENTIAL
<PAGE>
If Customer's Minimum The applicable percentages
Commitment is at least will be increased by
---------------------- --------------------
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
EXAMPLE: Assume Customer's Minimum Commitment is $[ * ] and the Service
Term is twenty-four (24) months. Commencing with the Effective Date and
continuing through the end of the Service Term (including any applicable
extensions thereto), Customer's applicable discount percentage will be
[ * ] ([ * ]%) if Customer's actual Monthly Revenue is less than $[ * ];
[ * ] percent ([ * ]%) if Customer's actual Monthly Revenue is between
$[ * ] and $[ * ], inclusive; [ * ] percent ([ * ]%) if Customer's actual
Monthly Revenue is between $[ * ] and $[ * ], inclusive; and [ * ] percent
([ * ]%) if Customer's actual Monthly Revenue is equal to or greater than
$[ * ].
4. CUSTOMER'S MINIMUM REVENUE COMMITMENT:
(A) Commencing with the Effective Date and continuing through
the end of the Service Term including any applicable extensions thereto
("International Commitment Period"), Customer agrees to maintain, on a
take-or-pay basis, International Monthly Revenue (as described herein) of at
least $250,000. For purposes of this Agreement, Customer's "International
Monthly Revenue" will be comprised of all of Customer's gross (i.e., prior to
the application of discounts) measured and per call Switched Service charges
(i.e., Directory Assistance and both Domestic and International) associated with
a call to an International location (excluding Puerto Rico, the United States
Virgin Islands, Canada and Mexico).
(B) At any time during the Service Term of this Agreement,
Customer may modify Customer's International Sub-Commitment ("Customer's
Modified International Sub-Commitment") for the remainder of the International
Commitment Period by notifying WilTel in writing. Commencing with the first day
of the month following at least thirty (30) days after WilTel receives the
notice described herein, (i) Customer's Modified International Sub-Commitment
will be effective, and (ii) Customer's International rates will correspond with
the applicable rates shown on Schedule 4 and Schedule 5 based on Customer's
Modified International Sub-Commitment.
(C) In the event Customer does not maintain Customer's
International Sub-Commitment (or Customer's Modified International
Sub-Commitment, if applicable) in any month during the International Commitment
Period, then for those month(s) only, Customer will pay WilTel the difference
between the greater of (i) Customer's International Sub-Commitment (or
Customer's Modified International Sub-Commitment) and Customer's actual
International Monthly Revenue
Page 3 of 10 CONFIDENTIAL
<PAGE>
as defined above (the "International Deficiency Charge"), or (ii) the Deficiency
Charge calculated under Section 4 above. If applicable, the International
Deficiency Charge will be due at the same time payment is due for Service
provided to Customer, or immediately in an amount equal to Customer's
International Sub-Commitment for the unexpired portion of the International
Commitment Period if WilTel terminates this Agreement based on Customer's
default.
(D) In consideration of Customer's International Commitment
hereunder, Customer will receive the following Special International Rates to
the countries listed below. Customer understands and agrees the Special
International Rates are based on Customer maintaining the International
Commitment described in Subsection 4(A) above.
Country Special International Rates
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 4 of 10 CONFIDENTIAL
<PAGE>
5. DEFICIENCY CHARGE: In the event Customer does not maintain the
designated Minimum Revenue Commitment in any month during the Commitment Period,
then for those month(s) only, Customer will pay WilTel the difference between
Customer's Minimum Revenue Commitment and Customer's actual Monthly Revenue as
described in Section 2 (the "Deficiency Charge"). The Deficiency Charge will be
due at the same time payment is due for Service provided to Customer, or
immediately in an amount equal to Customer's Minimum Revenue Commitment for the
unexpired portion of the Service Term, if (i) Customer cancels all circuits
comprising all Service Interconnections as described in the Service Schedules,
or (ii) WilTel terminates this Agreement based on Customer's default.
EXAMPLE: Customer's Minimum Revenue Commitment is $500,000 and Customer's
actual Monthly Revenue as described in Section 2 for one month during the
Commitment Period is $430,000 (determined on a gross basis). The
Deficiency Charge for that month will be $70,000 which will be due at the
same time payment is due for Services provided by WilTel in that month.
6. APPLICATION OF DISCOUNTS:
(A) After determining Customer's applicable discount
percentage based on the Discount Schedule described in Section 2 above, the
applicable percentage will be applied to Monthly Revenues comprised of
Customer's Interstate (including Alaska, Hawaii, the United States Virgin
Islands and Puerto Rico unless otherwise noted herein) measured usage charges
(which includes 1+ and 800 usage, whether switched access or dedicated access or
travel card usage).
(B) During the Service Term of the Agreement, accumulated
credits derived from the applicable Discounts will be applied in arrears
commencing with the first day of the month following the Effective Date, that
is, the Discount will be applied to Customer's measured usage charges for the
preceding month (the "Discount Period"). The initial Discount Period shall
include any partial calendar month following Start of Service, or such other
time basis as may be mutually determined by the parties.
(C) Each Discount will result in the application of a credit
obtained during the Discount Period to the WilTel invoice to Customer relevant
to the billed measured Switched Service for the calendar month next following
the completion of each Discount Period, provided Customer has paid undisputed
charges (including any late fees, if applicable) for that month and has not
otherwise been subject to a Suspension Notice in accordance with the Agreement.
Failure of Customer to comply with the foregoing provision shall entitle WilTel
to withhold any credit due Customer for the Discount Period in question until
such charges (including late fees) have been paid in full.
Page 5 of 10 CONFIDENTIAL
<PAGE>
7. RATES:
(A) TERMINATION Service
(i) Interstate Rates Per Minute
$[ * ] Day, $[ * ] Nonday within the 48 contiguous
United States except with respect to termination in the
SUPERSAVER LATAs described below.
(ii) Interstate Extended Rates Per Minute
SEE the DEDICATED ACCESS Service Extended Rates
described in Subsection 6(D) below.
(iii) Interstate SUPERSAVER Rates Per Minute
$[ * ] Day, $[ * ] Nonday. These rates are only
available and only apply to Interstate TERMINATION
Service calls to the SUPERSAVER LATAs set forth on
Schedule 1 attached hereto (i.e., Intrastate
TERMINATION Service calls will not be subject to
SUPERSAVER Rates).
(iv) Intrastate Rates Per Minute [ * ].
SEE the DEDICATED ACCESS Service Intrastate rates
shown on Schedule 2 attached hereto.
(v) International (excluding Canada and Mexico) Rates
Per Minute [ * ].
SEE DEDICATED ACCESS Service International rates
shown on Schedule 5 attached hereto. [Note: The
applicable "Rate Plan" will be as determined under
Section 8 below.]
(vi) Canada and Mexico Rates Per Minute [ * ].
SEE the DEDICATED ACCESS Service Canada and Mexico
rates shown on Schedule 3 attached hereto.
(B) 800 ORIGINATION Service
(i) Interstate Rates Per Minute
$[ * ] Day, $[ * ] Nonday within the 48 contiguous
United States.
(ii) Interstate Extended Rates Per Minute
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 6 of 10 CONFIDENTIAL
<PAGE>
SEE the DEDICATED ACCESS Service rates described
in Subsection 6(D) below.
(iii) Intrastate Rates Per Minute [ * ].
SEE DEDICATED ACCESS Service Intrastate Rates
shown on Schedule 2 attached hereto.
(iv) Canada Rates Per Minute [ * ].
SEE the DEDICATED ACCESS Service Mexico and Canada
rates shown on Schedule 3 attached hereto.
(C) SWITCHED ACCESS Service
(i) Interstate Rates Per Minute
$[ * ] Day, $[ * ] Nonday within the 48 contiguous
United States.
(ii) Interstate (1+) Extended Rates Per Minute
$[ * ] Day, $[ * ] Nonday from the 48 contiguous
United States to Hawaii.
$[ * ] Day, $[ * ] Nonday from the 48 contiguous
United States to Alaska, Puerto Rico and the
United States Virgin
Islands.
$[ * ] Day, $[ * ] Nonday from Hawaii to the 48
contiguous United States.
(iii) Interstate (800) Extended Rates Per Minute [ * ].
$[ * ] Day, $[ * ] Nonday from Hawaii to the 48
contiguous United States.
$[ * ] Day, $[ * ] Nonday from Alaska to the 48
contiguous United States.
$[ * ] Day, $[ * ] Nonday from Puerto Rico to the
48 contiguous United States.
$[ * ] Day, $[ * ] Nonday from the United States
Virgin Islands to the 48 contiguous United States.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 7 of 10 CONFIDENTIAL
<PAGE>
(iv) Intrastate Rates Per Minute [ * ].
SEE the SWITCHED ACCESS Service Intrastate rates
shown on Schedule 2 attached hereto.
(v) International (excluding Canada and Mexico) Rates
Per Minute [ * ].
SEE the SWITCHED ACCESS Service International
rates shown on Schedule 4 attached hereto. [Note:
The applicable "Rate Plan" will be as determined
under Section 8 below.]
(vi) Canada and Mexico Rates Per Minute [ * ].
SEE the SWITCHED ACCESS Service Canada and Mexico
rates shown on Schedule 3 attached hereto.
(D) DEDICATED ACCESS Service
(i) Interstate Rates Per Minute
$[ * ] Day, $[ * ] Nonday within the 48 contiguous
United States.
(ii) Interstate (1+) Extended Rates Per Minute
$[ * ] Day, $[ * ] Nonday from the 48 contiguous
United States to Hawaii.
$[ * ] Day, $[ * ] Nonday from the 48 contiguous
United States to Alaska, Puerto Rico and the
United States Virgin
Islands.
(iii) Interstate (800) Extended Rates Per Minute [ * ].
$[ * ] Day, $[ * ] Nonday from Hawaii to the 48
contiguous United States.
$[ * ] Day, $[ * ] Nonday from Alaska to the 48
contiguous United States.
$[ * ] Day, $[ * ] Nonday from Puerto Rico to the
48 contiguous United States.
$[ * ] Day, $[ * ] Nonday from the United States
Virgin Islands to the 48 contiguous United States.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 8 of 10 CONFIDENTIAL
<PAGE>
(iv) Intrastate Rates Per Minute [ * ].
SEE the DEDICATED ACCESS Service Intrastate rates
shown on Schedule 2 attached hereto.
(v) International (excluding Canada and Mexico) Rates
Per Minute [ * ].
SEE the DEDICATED ACCESS Service International
rates shown on Schedule 5 attached hereto. [Note:
The applicable "Rate Plan" will be as determined
under Section 8 below.]
(vi) Canada and Mexico Rates Per Minute [ * ].
SEE the DEDICATED ACCESS Service Canada and Mexico
rates shown on Schedule 3 attached hereto.
(E) TRAVEL CARD Service:
(i) Basic Interstate TRAVEL CARD Service Rates Per
Minute
$[ * ] Day, $[ * ] Nonday within the 48 contiguous
United States.
(ii) Basic Intrastate TRAVEL CARD Service Rates Per
Minute [ * ].
SEE the SWITCHED ACCESS Service Intrastate rates
shown on Schedule 2 attached hereto.
(iii) Basic International (excluding Canada and Mexico)
TRAVEL CARD Service Rates Per Minute [ * ].
SEE the SWITCHED ACCESS Service International
rates shown on Schedule 4 attached hereto. [Note:
The applicable "Rate Plan" will be as determined
under Section 8 below.] International TRAVEL CARD
Service calls from the 48 contiguous United States
to International locations (excluding only Canada)
are subject to a surcharge of $[ * ] per call.
(iv) Basic Canada TRAVEL CARD Service Rates Per Minute
[ * ].
$[ * ] Day, $[ * ] Nonday from the 48 contiguous
United States to Canada. TRAVEL CARD Service calls
from the 48 contiguous United States to Canada are
subject to a surcharge of $[ * ] per call.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 9 of 10 CONFIDENTIAL
<PAGE>
$[ * ] Day, $[ * ] Nonday from Canada to the 48
contiguous United States. TRAVEL CARD Service
calls from Canada to the domestic United States
are subject to a surcharge of $[ * ] per call.
(v) Basic Mexico TRAVEL CARD Service Rates Per Minute
[ * ].
SEE the SWITCHED ACCESS Service Mexico rates shown
on Schedule 3 attached hereto. TRAVEL CARD Service
calls from the 48 contiguous United States to
Mexico are subject to a surcharge of $[ * ] per
call.
(vi) Enhanced TRAVEL CARD Service Pricing [Note:
Enhanced features to TRAVEL CARD Service are
available at the rates shown on Schedule 5
attached hereto.] [ * ]
(F) Directory Assistance
(i) Interstate Rate Per Call [ * ].
(ii) Intrastate Rate Per Call [ * ].
IN WITNESS WHEREOF, the parties have executed these WilMAX
UNIVERSAL(TM) Program Enrollment Terms on the date first written above.
WORLDCOM NETWORK SERVICES, FAXSAV, INC.
INC. d/b/a WilTel
By:/s/ Jos. S. Cusick By:/s/ Peter S. Macaluso
----------------------- --------------------------
(Signature) (Signature)
Joseph S. Cusick Peter S. Macaluso
-------------------------- -----------------------
(Print Name) (Print Name)
Regional Sales Manager II Vice President and CFO
-------------------------- -----------------------
(Title) 12-6-96 (Title)
ATTACHMENTS:
Schedule 1 SUPERSAVER LATAs
Schedule 2 Intrastate Rates
Schedule 3 Canada and Mexico Rates
Schedule 4 SWITCHED ACCESS Service International Rates
Schedule 5 DEDICATED ACCESS Service International Rates
Schedule 6 ENHANCED TRAVEL CARD Service Rates
Schedule 7 International Rate Periods
Schedule 8 Canada, Mexico and Nonmainland Rates from Hawaii
Schedule 9 Switched International Rates 1+ from Hawaii
* Confidential treatment requested pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
Page 10 of 10 CONFIDENTIAL
<PAGE>
Schedule 1
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 1 CONFIDENTIAL
<PAGE>
Schedule 2
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 1 CONFIDENTIAL
<PAGE>
Schedule 3
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 1 CONFIDENTIAL
<PAGE>
Schedule 4
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 6 CONFIDENTIAL
<PAGE>
Schedule 4
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 2 of 6 CONFIDENTIAL
<PAGE>
Schedule 4
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 3 of 6 CONFIDENTIAL
<PAGE>
Schedule 4
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 4 of 6 CONFIDENTIAL
<PAGE>
Schedule 4
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 5 of 6 CONFIDENTIAL
<PAGE>
Schedule 4
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 6 of 6 CONFIDENTIAL
<PAGE>
Schedule 5
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 6 CONFIDENTIAL
<PAGE>
Schedule 5
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 2 of 6 CONFIDENTIAL
<PAGE>
Schedule 5
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 3 of 6 CONFIDENTIAL
<PAGE>
Schedule 5
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 4 of 6 CONFIDENTIAL
<PAGE>
Schedule 5
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 5 of 6 CONFIDENTIAL
<PAGE>
Schedule 5
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 6 of 6 CONFIDENTIAL
<PAGE>
Schedule 6
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 2 CONFIDENTIAL
<PAGE>
Schedule 6
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 2 of 2 CONFIDENTIAL
<PAGE>
Schedule 7
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 5 CONFIDENTIAL
<PAGE>
Schedule 7
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 2 of 5 CONFIDENTIAL
<PAGE>
Schedule 7
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 3 of 5 CONFIDENTIAL
<PAGE>
Schedule 7
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 4 of 5 CONFIDENTIAL
<PAGE>
Schedule 7
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 5 of 5 CONFIDENTIAL
<PAGE>
Schedule 8
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 2 CONFIDENTIAL
<PAGE>
Schedule 8
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 2 of 2 CONFIDENTIAL
<PAGE>
Schedule 9
[
*
]
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 1 of 6 CONFIDENTIAL
<PAGE>
Schedule 9
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 2 of 6 CONFIDENTIAL
<PAGE>
Schedule 9
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 3 of 6 CONFIDENTIAL
<PAGE>
Schedule 9
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 4 of 6 CONFIDENTIAL
<PAGE>
Schedule 9
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 5 of 6 CONFIDENTIAL
<PAGE>
Schedule 9
[
*
]
* Confidential treatment requested
pursuant to Rule 24b-2 under
the Securities Exchange Act of
1934, as amended.
Page 6 of 6 CONFIDENTIAL
<PAGE>
WILMAX UNIVERSAL(TM)
SERVICE SCHEDULE
This Service Schedule is made as of the 1st day of December, 1996,
by and between WorldCom Network Services, Inc. d/b/a WilTel ("WilTel") and
Faxsav Incorporated ("Customer") and is a part of their agreement for switched
services, identified as TSA# FSI-96 1201 (the "Agreement"). Neither Customer nor
WilTel shall be obligated with respect to the Service described below, nor any
other condition of Service until Customer has submitted and WilTel has accepted
a Service Request with respect to the particular Services.
1. WILMAX SERVICES: During the Service Term of the Agreement,
WilTel will provide the following Services (all as more particularly described
herein), (i) to and from the locations below, (ii) for the charges set forth in
the Program Enrollment Terms (the "PET") dated concurrently herewith, and (iii)
subject to the Discount Schedule, if any, set forth in the PET:
(a) WilMAX Extended Network Termination Service ("TERMINATION
Service") which is WilTel's termination of calls received from Customer's
Service Interconnection(s).
(b) WilMAX Extended Network 800 Service ("800 ORIGINATION
Service") which is the origination of calls by WilTel and the termination of
such calls to Customer's Service Interconnection(s).
(c) WilMAX Switched Access Service ("SWITCHED Service") which
is the origination and termination of calls solely over facilities comprising
the WilTel network.
(d) WilMAX Dedicated Access Service ("DEDICATED ACCESS
Service") which is the origination and termination of calls solely over
facilities comprising the WilTel network.
(e) WilMAX TRAVEL CARD Service ("TRAVEL CARD Service") which
is the origination and termination of calls solely over facilities comprising
the WilTel network.
2. START OF SERVICE:
(a) Start of Service for TERMINATION Service will occur
concurrently with the activation of each circuit comprising Service
Interconnections relevant to WilTel TERMINATION Service.
(b) Start of Service for 800 ORIGINATION Service will occur
concurrently with the activation of each circuit comprising Service
Interconnections relevant to 800 ORIGINATION Service.
(c) Start of Service for SWITCHED Service will occur on (i) an
ANI by ANI basis concurrently with the activation of each ANI to be served, and
(ii) an 800 Number by 800 Number basis concurrently with the activation of each
800 Number.
Page 1 of 7 CONFIDENTIAL
<PAGE>
(d) Start of Service for DEDICATED ACCESS Service will occur
concurrently with the activation each circuit comprising Service
Interconnections relevant to DEDICATED ACCESS Service.
(e) Start of Service for TRAVEL CARD Service will occur on a
Code by Code basis concurrently with the activation of each Code.
3. SERVICE INTERCONNECTIONS - TERMINATION SERVICE AND
800 ORIGINATION SERVICE:
(a) In order to utilize TERMINATION Service and 800
ORIGINATION Service, one or more full time dedicated connections between
Customer's network and the WilTel network at one or more WilTel designated
locations ("WilTel POP") must be established ("Service Interconnection(s)").
Each Service Interconnection shall be comprised of one or more DS-1 circuits.
(b) The circuit(s) comprising each Service Interconnection to
a WilTel POP shall be requested by Customer on the appropriate WilTel Service
Request. Each Service Request for TERMINATION Service or 800 Origination Service
will describe (among other things) the WilTel POP to which a Service
Interconnection is to be established, the Requested Service Date therefor, the
type and quantity of circuits comprising the Service Interconnection and any
charges and other information relevant thereto, such as, Customer's terminating
or originating switch location, as the case may be. Such additional information
may be obtained from Customer or gathered by WilTel and recorded in Technical
Information Sheets provided by WilTel.
(c) Once ordered, and unless otherwise provided for in this
Agreement, Service Interconnections or the circuits comprising each Service
Interconnection may only be canceled by Customer upon not less than thirty (30)
days prior written notice to WilTel.
(d) Absent the automatic number identification ("ANI") of the
calling party, Customer shall provide WilTel with a written certification (the
"Certification") of the percentage of interstate (including international) and
intrastate minutes of use relevant to the minutes of traffic to be terminated in
the same state in which the WilTel POP is located to which the Service
Interconnection is made. This Certification shall be provided by Customer prior
to Start of Service for any Service Interconnection and may be modified from
time to time by Customer and subject to recertification upon the request of
WilTel which requests shall not be made unilaterally by WilTel more than once
each calendar quarter. Any such modification(s) or Certification(s) shall be
effective as of the first day of any calendar month and following at least
forty-five (45) days notice from Customer. In the event Customer fails to make
such Certification, the relevant minutes of use will be deemed to be subject to
the Intrastate Rates provided for in the Pricing Exhibit. In the event WilTel or
any other third party requires an audit of WilTel's interstate/intrastate
minutes of traffic, Customer agrees to cooperate in such audit at its expense
and make its call detail records, billing systems and other necessary
information reasonably available to WilTel or any third party solely for the
purpose of verifying Customer's interstate/intrastate minutes of traffic.
Customer agrees to indemnify WilTel for any liability WilTel incurs in the event
Customer's Certification is different than that determined by the audit.
(e) Customer shall be solely responsible for establishing and
maintaining each Service Interconnection over facilities subject to WilTel's
approval. Service Interconnections shall only be
Page 2 of 7 CONFIDENTIAL
<PAGE>
comprised of DS-1 facilities unless otherwise provided for in the Service
Request and agreed to in writing by WilTel. If a Service Interconnection is
proposed to be made via a local exchange carrier, WilTel will have the authority
to direct Customer to utilize WilTel's entrance facilities or local serving
arrangement ("LSA") with the relevant local telephone operating company, and
Customer will be subject to a non-discriminatory charge therefor from WilTel.
The monthly recurring charge relevant to Customer's use of LSA capacity shall be
subject to upward adjustment by WilTel from time to time. Such adjustment, if
any, shall not exceed the rate that otherwise would be charged for the
equivalent switched access capacity between the same points by the relevant
local telephone operating company pursuant to its published charges for the type
of service in question.
(f) If other private line interexchange facilities are
necessary to establish a Service Interconnection, and such facilities are
requested from WilTel, such facilities will be provided on an individual case
basis.
(g) Commencing with the first full calendar month following
Start of Service for each circuit comprising a Service Interconnection and
thereafter, Customer will maintain an average loading of traffic per DS-1 (or
DS-1 equivalent circuit) of not less than [ * ] minutes of use per calendar
month/billing period ("Minimum Monthly Usage"). In the event Customer fails to
obtain the required Minimum Monthly Usage level for the circuits comprising each
Service Interconnection, WilTel will charge and Customer will pay $[ * ]
multiplied by the difference between the Minimum Monthly Usage and the actual
minutes of use for the circuit(s) comprising the Service Interconnection in
question ("Minimum Usage Charge"). WilTel TERMINATION Service and 800
ORIGINATION Service minutes carried over the same Service Interconnection, if
any, shall be included in determining if Customer has met the Minimum Monthly
Usage requirement.
Example: Customer's actual monthly usage for 2 DS-1s
comprising Customer's Service Interconnection at WilTel POP A is [ * ] minutes
and Customer's actual monthly usage for 2 DS-1s comprising Customer's Service
Interconnection at WilTel POP B is [ * ] minutes. Customer would be subject to a
Minimum Usage charge of $[ * ] since Customer's Minimum Monthly Usage at WilTel
POP A was below [ * ] [[ * ]] and no Minimum Monthly Usage Charge for the
Service Interconnection at WilTel POP B, because Customer exceeded the required
minimum of [ * ] in actual minutes of use for the 2 DS-1s comprising the Service
Interconnection at WiTel POP B.
(h) Customer may cancel circuits comprising the Service
Interconnection(s) at any time without liability to WilTel for cancellation
charges. In the event Customer does not have a Minimum Commitment and Customer
cancels all circuits comprising all Service Interconnections at any time during
the Service Term, the Cancellation Charge described in Subsection 2(A) of the
Agreement shall not apply. Provided, however, Customer shall nevertheless be
liable to pay WilTel a cancellation charge (regardless of the number of DS-1 or
DS-1 equivalent circuits comprising the Service Interconnection(s) in question)
of $[ * ] multiplied by the number of months (or pro rata portion thereof)
remaining in the Service Term ("Carrier Service Cancellation Charge").
(i) Because the damages to WilTel from Customer's cancellation
or termination of all circuits comprising all Service Interconnections prior to
completion of the Service Term is difficult if not impossible to determine, the
Carrier Service Cancellation Charge due to WilTel in accordance with this
Subsection is intended by the parties to establish liquidated damages payable by
Customer to WilTel and not as a penalty of any kind.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 3 of 7 CONFIDENTIAL
<PAGE>
4. SERVICE INTERCONNECTIONS - DEDICATED ACCESS:
(a) In order to utilize DEDICATED ACCESS Service, one or more
full time dedicated connections between an End User's private branch exchange
("PBX") or other customer premise equipment and the WilTel network at one or
more WilTel designated locations ("WilTel POP") must be established ("Dedicated
Service Interconnection(s)"). Each Dedicated Service Interconnection shall be
comprised of one or more DS-1 circuits or DS-3 circuits, as the case may be.
(b) The circuit(s) comprising each Dedicated Service
Interconnection to a WilTel POP shall be requested by Customer on the
appropriate WilTel Service Request. Each Service Request for DEDICATED ACCESS
Service will described (among other things) the WilTel POP to which a Dedicated
Service Interconnection is to be established, the Requested Service Date
therefor, the type and quantity of circuits comprising the Dedicated Service
Interconnection and any charges and other information relevant thereto, such as,
the location of the end user's originating or terminating location, as the case
may be. Such additional information may be obtained from Customer or gathered by
WilTel and recorded in Technical Information Sheets provided by WilTel.
(c) Once ordered, and unless otherwise provided for in this
Agreement, Dedicated Service Interconnections or the circuits comprising each
Dedicated Service Interconnection may only be canceled by Customer upon not less
than thirty (30) days prior written notice to WilTel.
(d) WilTel will provision and maintain local access facilities
between the End User Location and the WilTel POP, subject to any LEC charges
plus other applicable terms and charges set forth in WilTel's F.C.C. Tariff No.
5. If other private line interexchange facilities are necessary to establish a
Dedicated Service Interconnection, such facilities will be provided on an
individual case basis.
(e) Customer may elect to be responsible for establishing each
Dedicated Service Interconnection over facilities subject to WilTel's approval.
Dedicated Service Interconnections shall only be comprised of DS-1 facilities
unless otherwise provided for in the Service Request. If a Dedicated Service
Interconnection is proposed to be made via a local exchange carrier, WilTel will
have the authority to direct Customer to utilize WilTel's entrance facilities or
local serving arrangement ("LSA") with the relevant local telephone operating
company, and Customer will be subject to a non-discriminatory charge therefor
from WilTel. The recurring charge relevant to Customer's use of LSA capacity
shall be stated in the corresponding Service Request subject, however, to upward
adjustment by WilTel. Such adjustment if any, shall not exceed the rate that
otherwise would be charged for the equivalent capacity between the same points
by the relevant local telephone operating company pursuant to its published
charges for the type of service in question.
(f) DEDICATED ACCESS SERVICE MINUTES OF USE ARE
NOT SUBJECT TO AGGREGATION FOR THE PURPOSE OF DETERMINING IF
CUSTOMER HAS MET ITS MINIMUM MONTHLY USAGE FOR TERMINATION
SERVICE OR 800 ORIGINATION SERVICE.
5. BILLING INCREMENTS: U.S. Domestic (including Alaska, Hawaii,
United States Virgin Islands and Puerto Rico) Service calls will be billed in
six (6) second increments and subject to a six (6) second minimum charge (i)
utilizing Hardware Answer Supervision where available, and (ii) with respect
Page 4 of 7 CONFIDENTIAL
<PAGE>
to 800 Services, commencing with Customer's switch wink or answer back. If
Customer is found to be non-compliant in passing back appropriate answer
supervision, i.e., answer back, WilTel reserves the right to suspend 800 Service
or deny requests by Customer for additional Service until appropriate compliance
is established. All international calls will be billed in six (6) second
increments and subject to a thirty (30) second minimum charge.
6. FORECASTS: Before Customer's initial order for Service,
Customer shall provide WilTel with a forecast regarding the number of minutes
expected to be terminated or originated in various LATAs and/or Tandems, so as
to enable WilTel to configure optimum network arrangements. In the event
Customer's Service traffic volumes result in a lower than industry standard
completion rate or otherwise adversely affect the WilTel Network, WilTel
reserves the right to block the source of such adverse traffic at any time.
Customer will provide WilTel with additional forecasts from time to time upon
WilTel's request which shall not be more frequent than once every three (3)
months.
7. RBOC TERMINATION/ORIGINATION: Following Start of Service for
TERMINATION SERVICE or 800 ORIGINATION Service, Customer will maintain at least
[ * ]% of the minutes of traffic (during any calendar month or pro rata portion
thereof) comprising Customer's TERMINATION Service or 800 Service for
termination or origination in a Tandem owned and operated by a Regional Bell
Operating Company ("RBOC Terminations/Originations") and subject to such RBOC's
tariffed access charges. WilTel shall have the right to apply a ($[ * ]) per
minute surcharge to the number of minutes by which Non-RBOC
Terminations/Originations exceed [ * ]% of total monthly TERMINATION Service or
800 ORIGINATION Service minutes.
8. SERVICE INTERCONNECTION INSTALLATION:
(a) DS-1 circuits comprising all Service Interconnections
(including Dedicated Service Interconnections) will be subject to a nonrecurring
$[ * ] per DS-1 switch port installation charge.
(b) DS-3 circuits comprising all Service Interconnections
(including Dedicated Service Interconnections) will be subject to a nonrecurring
per DS-3 switch port installation charge as determined on an individual case
basis.
9. CDR TAPES: WilTel will provide Call Detail Records for
WilTel's Services in machine readable form ("CDR Tapes") subject to the
provisions set forth below:
(a) WilTel will provide Customer one (1) CDR Tape once each
month in one of several magnetic tape formats (to be selected on Customer's
Service Request) which WilTel currently is then making available to its
Customers. Monthly CDR Tapes under this Subsection are provided at no charge.
(b) Customer may order a monthly delivery of toll records on
3.5" floppy diskette subject to a recurring charge of $[ * ] per month.
(c) Customer may order and WilTel will provide Customer one
(1) CDR Tape once each week in one of several magnetic tape formats (to be
selected on Customer's Service Request) which WilTel currently is then making
available to its Customers. Weekly CDR Tapes under this Subsection are subject
to a recurring monthly charge of $[ * ].
(d) Customer may request and WilTel may provide Customer with
daily Call Detail Records electronically ("Daily CDR"). Daily CDR under this
Subsection is subject to a nonrecurring charge of
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 5 of 7 CONFIDENTIAL
<PAGE>
$[ * ]. All leased-line and equipment costs necessary to implement Daily CDR
will be0 determined on an individual case basis depending on Customer's specific
configuration.
10. 800 NUMBERS:
(a) 800 numbers will be issued to Customer (i.e., issuance
equates to activation or reservation, whichever occurs first) on a random basis.
Customer requests for specific numbers will be considered by WilTel, and if
provided, will be subject to additional charges as set forth below and WilTel's
then current reservation policy which shall also apply to any randomly selected
and reserved 800 number. At any time preceding three (3) months from the
scheduled expiration of the Service Term, Customer may only reserve 800 numbers
in an amount equal to the greater of (i) [ * ], or (ii) [ * ] percent ([ * ]%)
of the total number of 800 numbers activated by WilTel for Customer. Customer
requests for 800 numbers inconsistent with the above stated conditions may be
considered by WilTel on an individual case basis. 800 numbers reserved for
Customer will be activated upon Customer's request, however, each 800 number
will be subject to reversion to WilTel without notice to Customer after sixty
(60) days from issuance to Customer in the event WilTel records no level of
measured charges associated with such number as of the expiration or after said
sixty (60) day period. Customer agrees to pay WilTel $[ * ] per month for each
800 number either reserved or activated for Customer by WilTel.
(b) Customer Request for Specific Numbers - $[ * ] per
individual number.
(c) Customer specifically agrees that regardless of the method
in which an 800 number is reserved for or otherwise assigned to Customer, that
Customer will not seek any remedy from WilTel under a theory of detrimental
reliance or otherwise that such 800 number(s) are found not to be available for
Customer's use until such 800 number is put in service for the benefit of
Customer, and that such 800 number(s) shall not be sold, bartered, brokered or
otherwise released by Customer for a fee ("800 Number Trafficking"). Any attempt
by Customer to engage in 800 Number Trafficking shall be grounds for reclamation
by WilTel for reassignment of the 800 number(s) reserved for or assigned to
Customer.
11. RESPORG SERVICES: Responsible Organization Services (relevant
to 800 Numbers) if provided by WilTel are provided pursuant to WilTel's F.C.C.
Tariff No. 5.
12. LIMITATION OF ORIGINATION OR TERMINATION LOCATIONS:
(a) TERMINATION Service: (i) origination is available from any
WilTel POP; and (ii) termination is to any direct dialable location worldwide.
(b) 800 ORIGINATION Service: (i) origination is available from
locations in the 50 United States, the United States Virgin Islands, Puerto Rico
and Canada; and (ii) termination is to any Customer designated Service
Interconnection.
(c) SWITCHED Service (1 +): (i) origination is available from
all equal access exchanges in the 48 contiguous United States except in LATA 921
(Fishers Island, NY); and (ii) termination is to any direct dialable location
worldwide.
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 6 of 7 CONFIDENTIAL
<PAGE>
(d) SWITCHED Service (800): (i) origination available from
locations in the 50 United States, the United States Virgin Islands, Puerto Rico
and Canada; and (ii) termination is available to locations in the 48 contiguous
United States.
(e) DEDICATED ACCESS Service (1+): (i) origination is
available from locations in the 48 contiguous United States; and (ii)
termination is available to any direct dialable location worldwide.
(f) DEDICATED ACCESS Service (800): origination is available
from locations in the 50 United States, the United States Virgin Islands, Puerto
Rico and Canada; and (ii) termination is available to any Customer designated
Dedicated Service Interconnection.
(g) TRAVEL CARD Service: (i) origination is available from
locations in the 50 United States, the United States Virgin Islands, Puerto Rico
and Canada; (ii) termination is available to locations in the 48 contiguous
United States for calls from locations in the 50 United States, the United
States Virgin Islands, Puerto Rico and Canada; and (iii) termination is
available to locations in the 50 United States, the United States Virgin
Islands, Puerto Rico and Canada for calls from locations in the 48 contiguous
United States; (iv) International Origination is available from select locations
for termination within the 48 contiguous states; (v) Enhanced features to the
WilMAX Travel Card Service are available as described in the attached schedule
for WilMAX Enhanced Travel Card Pricing.
13. AUTHORIZATION CODES: WilTel will supply Customer with
authorization codes ("Codes") containing nine (9) digits for use with a
corresponding 800 Service number for origination and termination of Travel Card
calls. The Codes may be obtained by Customer in blocks of ten (10) not to exceed
a total of 1000 Codes at any one time. WilTel reserves the right to deny access
to any Code at any time.
14. INBOUND PORTION OF TRAVEL CARD CALL: The inbound service portion
of a TRAVEL CARD Service call (i.e., the 800 Service) must be provided by
WilTel.
15. ACCOUNTING CODES: For every billed telephone number (BTN)
requested by Customer, whether verified or non-verified, Customer shall pay a
monthly recurring charge of $[ * ].
IN WITNESS WHEREOF, Customer has executed this WilMAX UNIVERSAL(TM)
Service Schedule on the date first written above.
FAXSAV, INCORPORATED
Customer's Initials /s/ PSM
-------------
/s/ JSC
-------------
12-6-96
* Confidential treatment requested pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Page 7 of 7 CONFIDENTIAL
EX-11
Statement Re: Computation of Earnings per Share
FaxSav Incorporated
Pro forma earnings per share
EXHIBIT 11
Three Months Ended
March 31
1997 1996
----- -----
Net loss (2,171,770) (1,519,086)
========== ==========
Weighted average number of
common and equivalent shares
used in computing pro forma
loss per share:
Actual 9,787,798 327,354
Effect of converting all
preferred into common stock 0 8,595,556
---------- ----------
9,787,798 8,922,910
========== ==========
Pro forma net loss per common
and equivalent share $ (0.22) $ (0.17)
========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Faxsav,
Inc. financial statements, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,996,769
<SECURITIES> 0
<RECEIVABLES> 2,533,631
<ALLOWANCES> 255,754
<INVENTORY> 0
<CURRENT-ASSETS> 8,434,209
<PP&E> 6,808,843
<DEPRECIATION> 2,671,242
<TOTAL-ASSETS> 12,746,042
<CURRENT-LIABILITIES> 4,687,138
<BONDS> 0
0
0
<COMMON> 97,870
<OTHER-SE> (15)
<TOTAL-LIABILITY-AND-EQUITY> 12,746,042
<SALES> 4,069,608
<TOTAL-REVENUES> 4,069,608
<CGS> 2,644,593
<TOTAL-COSTS> 3,679,384
<OTHER-EXPENSES> (21,374)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,225
<INCOME-PRETAX> (2,171,770)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,171,770)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
